FSKNOW-HOW RETURNS! I AGUINEAN FUNERAL I THE 1946 FOREIGN SERVICE ACT

2010 TAX GUIDE INSIDE!

$4.50 /FEBRUARY 2011 OREIGN ERVICE FJOURNAL STHE MAGAZINE FOR FOREIGN AFFAIRS PROFESSIONALS

THINK GLOBALLY,ACT NATIONALLY The Economic/Commercial Function

OREIGN ERVICE FJOURNAL S CONTENTS February 2011 Volume 88, No. 2

F OCUSON The Economic/Commercial Function

U.S. ECONOMIC DIPLOMACY:THE NEXT 50 YEARS / 17 A distinguished practitioner explains why international economic issues are now central to U.S. foreign policy. By Alan Larson

U.S. ECONOMIC &COMMERCIAL INTERESTS: AN FCS OFFICER’S VIEW / 25 Working with other sections of the mission, ECON and FCS can be more than the sum of their parts. Cover illustration by Curtis Parker By Michael A. Lally

THE IMPORTANCE OF PROTECTING INTELLECTUAL PROPERTY RIGHTS / 32 State cannot go after IP infringers one DVD at a time, but there PRESIDENT’S VIEWS / 5 are steps that all posts can take to raise awareness of the issue. WikiLeaks and Diplomacy By David Drinkard in the Digital Age By Susan R. Johnson DOING WELL BY DOING GOOD: FS KNOW-HOW / 14 STATE’S ECONOMIC POLICY EFFORTS / 37 For Better Fraud Interviews, EEB seeks to be a force multiplier for the integrated application Think Like a Lawyer of the diplomatic and economic instruments of American power. By Jeffrey E. Zinsmeister By Jose W. Fernandez REFLECTIONS / 88 The Russians Are Coming THE TOP 14 ECONOMIC WONKISMS / 41 By Ginny Young Who says economics is a dismal science? Here is a tongue-in-cheek guide to help you keep up with the current policy discussion. LETTERS / 7 By Stephan Thurman CYBERNOTES / 9 MARKETPLACE / 11 BOOKS / 75 IN MEMORY / 77 INDEX TO ADVERTISERS / 86

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 3 OREIGN ERVICE CONTENTS FJOURNAL S

FEATURE Editor STEVEN ALAN HONLEY THE GRAND SYLI’S FUNERAL / 45 Senior Editor SUSAN B. MAITRA A retired FSO recalls his part in the chaotic burial Associate Editor of an African president many years ago. SHAWN DORMAN By Mark Wentling AFSA News Editor AMY MCKEEVER FSHERITAGE Ad & Circulation Manager ED MILTENBERGER Art Director SELDEN CHAPIN:FATHER OF THE CARYN SUKO SMITH 1946 FOREIGN SERVICE ACT / 48 Editorial Intern The first director general of the Foreign Service had MOHAMMAD ALHINNAWI many other accomplishments to his credit, as well. Advertising Intern By Jack Binns LARISSA FALK EDITORIAL BOARD TED WILKINSON AFSAN EWS Chairman KELLY ADAMS-SMITH 2010 TAX GUIDE / 55 JOSEPH BRUNS STEPHEN W. BUCK BRIEFS,AGGELER / 56 JULIE GIANELLONI CONNOR SEEKING DIPLOMATIC MEMORABILIA / 71 MARY E. GLANTZ GEORGE JONES EVENT CALENDAR /CLASSIFIEDS / 72 KATE WIEHAGEN LEONARD LYNN ROCHE RACHEL SCHNELLER JAMES P. SEEVERS

THE MAGAZINE FOR FOREIGN AFFAIRS PROFESSIONALS Foreign Service Journal (ISSN 0146-3543), 2101 E Street, N.W., Washington, D.C. 20037-2990 is published monthly with a combined July-August issue by the American Foreign Service Associa- tion (AFSA), a private, nonprofit organization. Material appearing herein represents the opin- ions of the writers and does not necessarily rep- resent the views of the Journal, the Editorial Board or AFSA. Writer queries and submissions are invited, preferably by e-mail. Journal sub- scription: AFSA members – $13 included in an- nual dues; others – $40. For foreign surface mail, add $18 per year; foreign airmail, $36 per year. Periodical postage paid at Washington, D.C., and at additional mailing offices. Indexed by Public Affairs Information Services (PAIS). The Journal is not responsible for unsolicited manuscripts, photos or illustrations. Advertising inquiries are invited. The appearance of advertisements herein does not imply the endorsement of the services or goods offered. TELEPHONE: (202) 338-4045 FAX: (202) 338-8244 or (202) 338-6820 E-MAIL: [email protected] WEB: www.afsa.org; www.fsjournal.org © American Foreign Service Association, 2011. Printed in the U.S.A. Send address changes to: AFSA Attn: Address Change 2101 E Street N.W. Washington DC 20037-2990 Printed on 50-percent recycled paper, of which 10 percent is post-consumer waste.

4 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 PRESIDENT’S VIEWS WikiLeaks and Diplomacy in the Digital Age BY SUSAN R. JOHNSON

The ongoing debate about across organizational lines, is the usual review process? the WikiLeaks release of to understand how the leak How were Foreign Service person- more than 250,000 State De- happened. A good place to nel briefed about Net-Centric Diplo- partment cables has mainly start is a Dec. 31 Washington macy and trained in the use of the focused on whether making Post article titled “WikiLeaks SIPDIS caption (automatically distrib- volumes of sensitive diplo- Reveals Flaws of Informa- uting secret cables into SIPRNet)? matic reporting public was tion-Sharing Tool,” which What about other agency users? If the justified. One side applauds tells the story of an obscure goal was to pre-empt terrorist threats, the documents’ release in the name of State Department database called Net- were the cables captioned SIPDIS rel- freedom of speech and transparency, Centric Diplomacy. Established in evant to this objective? Did we at State while the other cites the responsibility 2006 and connected to a giant Defense ask hard questions about SIPRNet and not to divulge stolen classified informa- Department system known as the Se- its protections against unauthorized tion, as well as privacy rights. cret Internet Protocol Router Network, downloading? Did reporting officers, A parallel debate continues on the Net-Centric Diplomacy became “the deputy chiefs of mission and ambassa- impact of the documents’ release. conduit for what was perhaps the dors understand that whenever they Some welcome it, arguing that the ben- biggest heist of sensitive U.S. govern- added the SIPDIS caption, their audi- efits of greater understanding of diplo- ment information in modern times.” ence became ridiculously large? macy and diplomats outweigh the costs As reporter Jory Warrick explains, Post-9/11 pressures to share infor- of inhibiting diplomatic dialogue with after 9/11 sharing information relevant mation about potential terrorist threats Foreign interlocutors. Many also em- to terrorist plots and other threats be- were understandable. But did we ever phasize the leak’spotential to endanger came a priority for all federal agencies, identify the risks involved and propose sources and make the work of diplo- including State. But because of design measures to manage and minimize mats that much harder. flaws and confusion among its users, them? If so, was the problem with im- Wherever each of us comes down the database became a repository for a plementation, and can it be fixed? on these questions, we can all agree vast array of reporting cables and other In the end, we at the Department of that the theft of this incredible volume materials that were never meant to be State are responsible for both sharing of diplomatic correspondence is a real shared outside the department. and protecting our sensitive informa- blow to the Department of State. And Thorough as the article is, here are tion effectively. Before the Internet, it raises serious questions about the just a few of the many questions it does accessing and spiriting away a quarter risks of compiling shared databases of not answer: How and at whose initia- of a million cables would have been un- sensitive information. tive did we decide to establish the Net- thinkable. Now it is not. The best way to minimize the dan- Centric Database? How was it fund- Clearly, we failed to grasp just how ger of future disclosures on this scale, ed? Which key stakeholders were in- dynamic cyberspace is. Our future de- while still sharing vital information volved? If some were not, why not? cisions must take into account the im- What criteria for including classified re- plications of digital information and Susan R. Johnson is the president of the porting were established and by cyberspace management for the con- American Foreign Service Association. whom? Did the concept go through duct of diplomacy. I

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 5

LETTERS

Remembering the perfect PRT-man in her article. With Low in Rhodesia ... Counterinsurgency But I am not sure every PRT officer I was in the Foreign Service from In a perfect world, Patricia Thom- needs to be nearly as perfect as she de- 1970 to 1979. My last post was South son’s recommendations for recruiting scribes. That said, there should be a Africa, where I was a political officer, the “best and the brightest” for national campaign plan (as in Viet- but I also had the Rhodesia (now Zim- Provincial Reconstruction Teams nam), which those stationed in the babwe) portfolio. would be taken to heart (November provinces would implement as well as In 1976, when I arrived there, that Speaking Out, “Making Provincial Re- they could, given local conditions and job basically meant following develop- construction Teams More Effective”). the “canon of resources” available. ments through newspapers and meet- When I was a first-tour FSO, my The problem with recruiting too ing with the occasional Rhodesian recruitment for the Civil Operations many perfect PRT-men is that coun- passing through town — Bishop Abel and Rural Development Support pro- terinsurgency is not a reliable career Muzorewa, Ndabagini Sithole, etc. gram, where I served from 1969 to outside the military. I recall that after But once the “Anglo-American” ef- 1971, came in the form of a telegram Vietnam, everybody (even the mili- fort got under way, I began working in assigning me to the pacification effort. tary) wanted to forget about coun- support of talks — from Secretary of The cable also informed me that in terinsurgency. Indeed, many of the State Henry Kissinger’s trip to see order to make the next training cycle young Foreign Service officers who South African Prime Minister John at the Foreign Service Institute’s Viet- had served so ably with CORDS strug- Vorster and Rhodesian Prime Minis- nam Training Center, I would have to gled to gain career status in the U.S. ter Ian Smith, through Andrew leave post in about 10 days. Agency for International Develop- Young’s trips (as emissary to Africa) As a young FSO, I probably had ment. once the negotiations moved to Malta few of the management skills Thom- Thomson concludes that making and then Lancaster House in London. son also found lacking in the more the changes she recommends will re- I wasn’t around for the endgame, senior officers who typically lead the quire a real investment, and asks if we but did start going to Zambia and PRTs in Iraq and Afghanistan. Our can afford it. Unfortunately, Con- Mozambique to see key players Joshua province senior adviser in Vietnam gress thinks not, and has only given Nkomo and Robert Mugabe, and then was a senior FSO, but not the corpo- modest support to Secretary of State became the support staff for our ef- rate-style manager Thomson de- Hillary Rodham Clinton’s funding re- forts in Salisbury (now Harare). scribes. Even so, under his leader- quests. At the time, Stephen Low was the ship we moved some 18,000 refugees So, where will PRT members go U.S. ambassador to Zambia, and he out of camps and back into their after Afghanistan? My guess is back became a key mediator in the Rhode- homes. The key to success in my dis- to the Foreign Service, back to the sian transition. At one point, he trict, and I suspect in any counterin- military, and back to the university. moved to Salisbury, then the capital of surgency setting, was the provision of Alfred R. Barr Rhodesia, taking a suite at the Meke- physical security for the people. FSO, retired les Hotel downtown. I believe that Thompson describes Washington, D.C. I can remember many a session

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 7 L ETTERS
with him and other interlocutors, but and I shared a love of music. He Both in the field and in Washing- my most vivid memory is of him play- played the cello; I, the trumpet. ton, supported by some billions of dol- ing his cello. While no Yo-Yo Ma, he Steve, of course, knew that Dakar lars over the past 40 years, USAID has was quite accomplished, and playing was my first Africa assignment. The probably had the most significant im- certainly provided him the respite he most interesting and relevant bit of pact of any development agency in ad- needed during those heated negotia- advice he gave me was that I should dressing problems of rapid population tions. try to slip into “Guinee-dite-portu- growth. Steve and I then went our separate guese” (Guinea-Bissau) if I could fig- Neither did the author mention the ways, with me leaving the Foreign ure out how to do it. He had suc- efforts of the United Nations Fund for Service to make my way in the non- ceeded once. He also suggested I get Population Activities, another major governmental organization world. We acquainted with the Dakar office of donor for many decades. crossed paths from time to time, most the African Party for the Independ- Charles N. Johnson recently in October 2010 in Washing- ence of Guinea and Cape Verde, USAID FSO, retired ton, D.C. He didn’t recognize me known as PAIGC, which might facili- Gainsville, Va. I right off, and was obviously quite tate my entry. I managed it twice. weak, but after I reintroduced myself The first visit was assisted by a we spent quite awhile reliving those Lebanese merchant in Bathurst, who Send your days in Salisbury. He was lucid and arranged for a Portuguese Air Force engaged, very much his old self. I was pilot to fly his single-engine plane from Letter to the Editor delighted to see him, and we promised Bissau to pick me up in Bathurst. The to [email protected]. to get together again soon. second visit was preceded by a meeting I left the next week for a trip to with Amilcar Cabral and his PAIGC Ghana, Ethiopia and Liberia, from team in Sekou Toure’s Conakry. Our where I write. I never got that chance, ambassador in Dakar, Mercer Cook, You Are Our and am devastated to hear the news of encouraged both adventures, but I his passing. He was indeed a great doubt they would have happened with- Eyes & diplomat, an insightful and experi- out Steve’s initiative. Ears! enced negotiator, a “key player” in Steve replaced me many years later every sense of the phrase, and a fine (November 1979) as ambassador to human being. My condolences to his Nigeria. What a coincidence! It was family and friends. not just music that we had in common. Dear Readers: Steve McDonald Don Easum In order to produce a high- Director, Africa Program FSO, retired quality product, the FSJ depends Woodrow Wilson New York, N.Y. on the revenue it earns from International Center advertising. You can help for Scholars Where Credit Is Due with this. Washington, D.C. I read the December Speaking Out Please let us know the names by Raymond Malley, “U.S. Foreign of companies that have provided ... And in Dakar Economic Assistance in Perspective,” good service to you — a hotel, I remember Steve and Sue Low for with great interest. But I was stunned insurance company, auto dealership, or other concern. their generosity and across-the-board that in writing about the problem of A referral from our readers kindness when my wife, Penny, our rapid population growth, he gave is the best entrée! two (soon to be three) children and I credit to the World Bank, Scandina- all arrived in Dakar in the late summer vian aid agencies and private groups, Ed Miltenberger of 1963. I was Steve’s replacement, but neglected to mention the role of Advertising & Circulation Manager Tel: (202) 944-5507 and he and Sue were heading off to the U.S. Agency for International De- E-mail: [email protected] their new assignment in Brazil. Steve velopment.

8 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 CYBERNOTES

QDDR Release: Into the Dustbin of History? 50 Years Ago... On Dec. 15 the Department of he modern diplomat finds himself drawing upon almost every State finally released the Quadrennial field of human knowledge, using information about people and Tevents in even the remotest areas, and employing skills which Diplomacy and Development Review, an 18-month study it conducted with were seldom needed by his professional forebears. He is called upon to struggle the U.S. Agency for International De- with facts that can never be quite complete, with situations which cannot be com- velopment as an answer to the Penta- pressed into simple generalizations, with a future which, though dimly seen, is upon him before he is satisfied that he sees the present. The common myth that a gon’s venerable Quadrennial Defense diplomat’s role at the end of a cable or a telephone is of decreasing importance is Review. simply nonsense. The daily cables underscore the critical role being played by Titled “Leading Through Civilian those who are remote from Washington. Power,” the report is dedicated to the late Ambassador Richard Holbrooke, — Secretary of State Dean Rusk, “Greetings from the New Secretary,” FSJ, who began his Foreign Service career February 1961. with USAID in Vietnam and died just days before the document went to press. change, democracy and governance, allowing more State civil servants to The full text of the report and an ex- and humanitarian assistance. For its serve overseas and expanding oppor- ecutive summary are both available on part, State should commit more of its tunities for them to convert to the For- the department’s home page (www. senior diplomats’ time to advancing eign Service; using limited-term ap- state.gov/qddr), but here are some development issues, and promote “de- pointments to put outside experts in highlights: velopment diplomacy” as a discipline the field; tripling mid-level hiring at The State Department must reor- that recognizes the interdependence of USAID and expanding interagency ro- ganize to address transnational issues the two missions and offers best prac- tations; and establishing multiyear stra- more effectively. Among other changes, tices for managing foreign assistance. tegic plans for State and USAID that State should create under secretariats State must embrace conflict preven- bring together all country-level plan- for economic growth, energy and the tion and response as a core mission, ning for diplomacy, development and environment, and for civilian security, both in Washington and in the field. broader foreign assistance into a single, democracy and human rights, as well Among other changes, the current overarching strategy. (As of Fiscal Year as a coordinator for cyberissues. Civilian Response Corps should be re- 2013, USAID’sbudget proposal will be USAID should be rebuilt to serve as placed with a more flexible and cost- included in the broader State foreign the pre-eminent global development in- effective Expert Corps that can deploy assistance request.) stitution. As the lead agency for the nongovernmental personnel overseas. There was virtually no media cover- presidential initiatives on food security Both agencies should “work smart- age of the document’s release, other and global health, it should focus on six er” by reforming personnel, procure- than a handful of Washington Post ar- areas: sustainable economic growth, ment and planning capabilities. Spe- ticles (www.washingtonpost.com) food security, global health, climate cific steps the report advocates include: and a single passing reference in an op-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 9 C YBERNOTES
ed by New York Times columnist open the question of how the United sonnel and management,” prioritizing Nicholas Kristof (www.nytimes.com). States will resolve situations where the two agencies’ roles and missions, More encouragingly, a number of non- diplomacy and development will re- and setting metrics for success. governmental organizations and think- quire different approaches and trade- The Center for Strategic and Inter- tanks (but none representing conser- offs.” national Studies offers a wealth of vative perspectives, such as the Her- For its part, the Stimson Center is- short but detailed commentaries on itage Foundation or the American En- sued a detailed scorecard grading the different facets of the report in what it terprise Institute) have posted analyses QDDR’s recommendations by assign- calls a “Pivot Points” overview (http:// and commentaries on their Web sites. ing up to four stars to each in terms of csis.org). Those reactions have generally been how well it implements the goals State Sixteen former and retired senior positive but qualified. Here is a small set for the process when it began in career officials from State and USAID, but hopefully representative sample. 2009 (www.stimson.org). The report including Kenneth Yalowitz, director Paul O’Brien, Oxfam America’svice gets top marks in several categories, of the John Sloan Dickey Center for president for policy and advocacy cam- but no stars at all in such areas as de- International Understanding at Dart- paigns, called the document “com- scribing “a budget planning process mouth College, have issued an assess- pelling yet incomplete” (www.oxfam that would link decisions about fund- ment of their own (http://dickey.dart america.org). He noted that it “leaves ing programs to decisions about per- mouth.edu). The signatories strongly support the QDDR’s main themes, including Site of the Month: www.acronymfinder.com the emphasis on building civilian Now offering more than a million definitions, each sourced and fact-checked, power, and concur with Sec. Clinton AcronymFinder.com bills itself as the world’s largest and most comprehensive dic- and Admiral Mike Mullen, Chairman tionary of acronyms, abbreviations and initialisms. (Acronyms are abbreviations of the Joint Chiefs of Staff, on the formed by terms from a word or series of words that are pronounced as a word, need to rebalance national security re- such as radar or scuba. Initialisms are formed from the initial letter or letters of sev- sources. But they caution that State eral words or parts of words, which are then pronounced letter by letter; e.g., BBC and USAID are unlikely to escape or CIA.) Users can also search for more than 850,000 U.S. and Canadian postal growing pressures for federal budget codes, and can nominate new acronyms and initialisms for inclusion. tightening, and therefore urge more Whether you search by an acronym’s first letter or type it into the box, the results attention to planning for cuts and ed- are filtered according to the following categories: Information Technology, Military & ucating stakeholders on how such re- Government, Business & Finance, Science & Medicine, Organizations & Schools, ductions could impair American and Slang & Pop Culture. “DCM,” for instance, can stand for any of 78 phrases, of interests. which “Deputy Chief of Mission” ranks third (after “Dilated Cardiomyopathy” and The final page of the report’s ex- “Dichloromethane”). To facilitate the process of finding an exact match, look first ecutive summary acknowledges that under the category most likely to fit the context. “Execution is everything. We are Writing on the site’s blog, founder Mike Molloy (who identifies himself as CAW: fully aware of the reams of paper in Chief Acronym Wrangler) comments that when he started in 1986 with a document published reports that simply gather listing about 1,000 definitions, he never imagined that, a quarter-century later, that dust on bookshelves across Washing- 40-page document would have grown a thousand times as large. ton, D.C. Secretary Clinton is ada- By the way, if you’re searching for a term no longer in common use, you may mant that the QDDR not be one of wish to visit AcronymFinder’s predecessor, AcronymAttic.com (www.acronymattic. those reports.” If the apathy sur- com). The two sites use the same technology, but the three million terms and defi- rounding the report’s issuance is any nitions on the older site have not been verified and are no longer being updated. In guide, living up to that commitment addition, AcronymAttic is much more basic in the searches it can conduct and the will be tremendously challenging, data it can display for queries. particularly given the recent shift on — Steven Alan Honley, Editor Capitol Hill. — Steven Alan Honley, Editor

10 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 C YBERNOTES

Is State Concerned Enough minorities are actually becoming more WWW.FSJOURNAL.ORG about Religious Freedom? attractive targets, because they lack the Click on the Marketplace tab on the marquee Among other provisions of the 1998 militias and tribal structures needed to International Religious Freedom Act, defend themselves. To counter this the State Department is required to trend, the commission recommends produce an annual report on freedom the appointment of a U.S. envoy for of worship in every country around the human rights in Iraq. AFSA Legacy world. And on Nov.17, 2010, State duly As we went to press in early January, afsa.org/CFCFAD.cfm released an executive summary of the however, State had taken no action on latest edition, detailing conditions in 198 that recommendation. Nor had it an- AKA Hotel residences countries (www.state.gov). nounced this year’s list of Countries of stay-aka.com Among the report’s conclusions: Particular Concern, though Assistant Genuine religious freedom does not Secretary of State for Democracy, Clements International exist in North Korea; freedom of reli- Human Rights and Labor Michael Pos- clements.com gion is neither recognized nor pro- ner told reporters that the list would be tected in Saudi Arabia; the South issued sometime in January. Diplomatic Automobile Sales Sudanese government does a far better While USCIRF Chairman Leonard diplosales.com job of ensuring free worship than its Leo thanked Secretary of State Hillary counterpart in Khartoum; and the Rodham Clinton for her strong en- Hirshorn Company, The Burmese regime has tried to force stu- dorsement of the commission’s work, hirshorn.com dents to convert to Buddhism. he expressed disappointment at the A key fact-finding partner for State delay, which also occurred in 2008 and in this endeavor is the independent 2009, a Nov. 20 article in the Christian Inside A U.S. Embassy U.S. Commission on International Re- Examiner (www.christianexaminer. afsa.org/inside/ ligious Freedom (www.uscirf.gov). com) reports. The same article quotes The USCIRF limits its focus to the Rep. Chris Smith, R.-N.J., a leading ProMax most egregious violators of religious congressional proponent of religious Promaxrealtors.com freedom, producing recommendations liberty, as urging the Obama adminis- on which ones State should designate tration to follow up CPC designations SDFCU as Countries of Particular Concern. In with sanctions where needed. sdfcu.org addition to recommending that all of In fact, the CPC list generally does 2009’s violators remain on the 2010 not change very much from year to TetraTech CPC list, the commission wants State year: Burma, China, Iran and Sudan Tetratech.com to add five more: Iraq, Nigeria, Pak- have all been designated as worst of- istan, Turkmenistan and Vietnam. fenders each year since the first report WJD The USCIRF is particularly con- in 1999. Other countries on the cur- wjdpm.com cerned about the situation in Iraq. rent list include Eritrea, North Korea, While many Middle Eastern countries Saudi Arabia and Uzbekistan. have experienced periods of intense Most of the countries on the current Christian emigration in the past, the list did not react officially to the com- outflow from Iraq has accelerated mission’s report, but Tehran struck alarmingly. More than half of the coun- back hard. In a statement posted on try’sChristian community has fled since the Iranian Foreign Affairs Ministry 2003, reducing its count to 500,000 in a Web site (www.mfa.gov.ir) on Nov. population of almost 30 million. And 19, spokesman Ramin Mihman-Doust When contacting an advertiser, kindly while general violence in Iraq has de- labeled the document a product of mention the Foreign Service Journal. creased markedly, religious and ethnic “Washington’s anti-Islamism and dou-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 11 C YBERNOTES

have identified and will propose a number of cuts to the State Department and Iforeign aid budgets. There is much fat in these budgets, which makes some cuts obvious. Others will be more difficult but necessary to improve the efficiency of U.S. efforts and accomplish more with less. We must shift our foreign aid focus from failed strategies rooted in an archaic post-World War II approach that, in some instances, perpetuates corrupt governments, to one that reflects current real- ities and challenges and empowers grassroots and civil society. I plan on using U.S. contributions to international organizations as leverage to press for real reform of those organizations, such as the United Nations, and will not hesitate to call for withdrawal of U.S. funds to failed entities like the discredited Human Rights Council if improvements are not made. — From a Dec. 8 press release issued by Rep. Ileana Ros-Lehtinen, R-Fla., incoming chairman of the House Foreign Affairs Committee; http://thecable.foreignpolicy.com.

ble standards.” He also cited U.S. re- “global zero,” a world without nuclear jection of the Goldstone Report (a weapons, by endorsing it in a speech in 2009 United Nations investigation Prague in April 2010. charging Israel, as well as Hamas, with Over the course of three days at the committing war crimes during the summit, survivors of the nuclear at- Gaza War) as an example of America’s tacks on Hiroshima and Nagasaki, “contradictory attitude” toward human who are known as the Hibakusha (the rights in the Middle East. “explosion-affected people”), testified — Mohammad Alhinnawi, about their painful experiences living in Editorial Intern the shadow of the 1945 bombings and the discrimination they have experi- Getting to Zero enced in Japanese society ever since. On Nov. 12-14, 2010, the world’s In a final declaration, conference Nobel Peace laureates held their 11th participants urged further reductions world summit (www.nobelforpeace- in American and Russian nuclear summits.org) in a symbolic location: stockpiles, but also made an impas- Hiroshima, Japan, the first city in his- sioned plea for the United States to tory to be hit by a nuclear bomb. sign the Ottawa Treaty, which bans the Among the laureates who participated use of land mines. (Although Wash- in the event were the Dalai Lama; for- ington is not a signatory, it stopped mer Soviet President Mikhail Gor- using land mines after the 1991 Per- bachev; former Polish President Lech sian Gulf War and ceased production Walesa; and Mohamed ElBaradei, for- altogether in 1997.) Russia, China and mer head of the International Atomic India are among the other holdouts, Energy Association. but 156 countries have signed the Ot- As the 2009 recipient of the Nobel tawa Treaty, commonly known as the Peace Prize, President Barack Obama Mine Ban Treaty. was invited but did not attend. Obama Archbishop Desmond Tutu and had given a big boost to the goal of U.S. peace activist Jody Williams made

12 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 C YBERNOTES
a personal appeal to the president on tributed almost evenly across Latin in 139 countries thus far. grounds of morality in “President America, Africa, Europe and Asia — • The average age of volunteers is Obama Should Join the Mine Ban were working in 71 posts serving 77 currently 28, but 7 percent of the Corps Treaty,” published Dec. 2 in McClatchy countries. That total represents an in- are over 50; the oldest individual cur- (www.mcclatchydc.com). Citing the crease of nearly 1,000 from the previ- rently serving is 86. suffering of innocent civilians affected ous year. The agency recently re- • Nineteen percent of volunteers by war and its aftermath, they urged opened programs in Colombia, In- are minorities, 60 percent are women the president to recognize that “the donesia and Sierra Leone, and also re- and 90 percent hold at least a bachelor’s devastating impact of land mines on instated its suspended program in degree. civilians is a terror of its own sort.” Madagascar. • Education remains the most pop- — Mohammad Alhinnawi, In Washington Post articles that ular sector of service, but other sought- Editorial Intern appeared on Oct. 29 and Dec. 8 (www. after areas include health and HIV/ washingtonpost.com) reporter Ed AIDS prevention, business develop- The Peace Corps Is In! O’Keefe shared some fun facts about ment, youth development and environ- More people are volunteering with the Peace Corps, which became an in- mental and agricultural projects. the Peace Corps (www.peacecorps. dependent federal agency in 1981 and • The District of Columbia and Vir- gov) than at any time since 1970, the will celebrate its 50th anniversary this ginia both rank among the top states agency announced on Oct. 28. As of September: and metropolitan regions in terms of Sept. 30, the end of Fiscal Year 2010, • More than 200,000 Americans producing Peace Corps Volunteers. I 8,655 Peace Corps Volunteers — dis- have served as Peace Corps Volunteers — Steven Alan Honley, Editor

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FEBRUARY 2011/FOREIGN SERVICE JOURNAL 13 FS KNOW-HOW For Better Fraud Interviews, Think Like a Lawyer

BY JEFFREY E. ZINSMEISTER

ike many FSOs, I used to be a Applicant: Yes. lawyer. As many other former The goal is to Consul: If during the interview you Lattorneys can attest, practicing avoid confusion and don’t understand a question I ask, law involves far more paperwork and prevent applicants please tell me. I don’t want you to an- far less romance than “Ally McBeal.” It from later pleading swer a question you don’t understand. did, however, teach me skills that have Will you please tell me if you don’t un- proven unexpectedly useful in my con- ambiguity as an derstand something I say? sular tour. excuse for a false Applicant: Yes. Much entry-level consular work in- answer. There are two reasons for this line volves interviewing strangers, people of questioning, which apply with equal who you know only from a few sheets
force in the context of depositions and of paper. Crudely put, we try to get a consular interviews. First, it gives con- better understanding of who these • “Funneling” the interview to drill fused applicants more courage to speak strangers are by asking a few questions. down to the important facts; and up and interrupt the consular officer if It’s very similar to what lawyers do • Repeating important questions they do not understand a question. In when taking depositions. inorder to elicit definitive answers and my experience, some applicants — es- For those fortunate enough never to prevent backpedaling by a dishonest in- pecially the less sophisticated and less have seen a deposition, the process in- terviewee. educated — are intimidated enough by volves picking a potential witness, read- This article explains each technique the formal interview process to feel ing background documentation about in turn, using excerpts from a fiancée compelled to answer every question him or her, and then interviewing that visa interview I conducted as an exam- posed immediately, even if they did not person to ascertain what he or she ple. (To protect the applicants’ privacy, understand it fully. knows in preparation for trial. The I have changed dates and other identi- Second, these preliminary questions transcript can also be used later at the fying details from these interviews, and are a bulwark against untruths. Law- trial itself to impeach a witness whose paraphrased answers.) yers use them in depositions to prevent testimony on the stand differs from a witness from giving one answer in a what he or she said at the deposition. Technique 1: deposition, changing it on the witness Like consular interviews, deposi- Preliminary Questions stand, and then attributing the incon- tions are both fact-gathering and fraud- The use of preliminary questions sistency to a misunderstanding of the prevention tools. It may come as no begins with having the applicant prom- attorney’s question during the deposi- surprise, then, that some deposition ise to speak up if he or she does not un- tion. Likewise, in consular interviews techniques are also useful at the con- derstand a question. For example, the they discourage applicants from blam- sular window. My favorites among fiancée visa interview I am using as an ing subsequent false statements on the these are: example began like this: grounds that they misunderstood my • Using preliminary questions to set Consul: I’ll be conducting this in- Portuguese, or that they were some- the tone of the questioning and avoid terview in Portuguese. Can you under- how confused by the wording of a confusion on the part of the applicant; stand me when I speak in Portuguese? question.

14 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 FSK NOW -H OW

Technique 2: Technique 3: Repeating “Funneling” Your Interview Important Questions “Funneling” in the context of dep- The consular officer This last technique dovetails nicely ositions and consular interviews is a with the end of the “funneling” process. questioning technique designed to should begin with broad, After you have drilled down to the im- elicit precise statements from a depon- portant fact or facts at issue, you elicit ent or interviewee. As another excerpt open-ended queries, then the key information again using a dif- from the same fianceé visa interview ferently worded question. demonstrates, it consists of beginning ask narrower questions Doing so reaps benefits with both with broad questions to capture as honest and dishonest applicants. If an much data as possible, identifying the to close factual gaps. honest applicant was confused by your key pieces of information therein, and initial questioning, or if you made an using progressively narrower questions error in the native language that cre- to obtain accurate, unambiguous an- ated a misunderstanding, the reworded swers regarding those points: question will often reveal the problem Consul: Sir, please tell me about Applicant: No. and allow the applicant to clarify. how you met your fiancée. Consul: Not even on Facebook? If, on the other hand, an applicant is Applicant: Well, she came for a Applicant: No. lying, he or she will further cement the visit on vacation, and we fell in love im- Consul: So just to be clear, you had untruth in the record, making it impos- mediately. never communicated with her in any sible to later blame the falsehood on a Consul: When was that? way before Feb. 23, 2009? misunderstanding, confusion, or your Applicant: It was in February 2009; Applicant: That’s correct. use of his/her native tongue. she came on Feb. 11, 2009. This conversation represents a ver- Refer back to the last question of Consul: Feb. 11 was when you met bal “funnel.” It is wide at the top, the excerpt above. After “funneling” her, or when she arrived in the coun- where the interviewer uses broad, my questions to drill down to the pre- try? open-ended questions (When? Where? cise issue of when the two people first Applicant: That’swhen she arrived. How?) to elicit as much relevant infor- communicated, I rephrased the key I met her two weeks later, on Feb. 23. mation as possible. Then the questions question one last time, deliberately Consul: Was that the first time you grow narrower and more direct, at- mentioning the specific date of Feb. had met her? tempting to “close the gaps” in the tes- 23, 2009. I did so because his fiancée Applicant: Yes. timony by asking if the interviewee is wrote in the petition that they had Consul: You didn’t know her be- sure he/she hasn’t forgotten anything, communicated extensively on Face- fore? The petition states that you were or hasn’t made false assumptions (in book and via e-mail and telephone born in the same town. this case, assuming that “meeting” his before that date. I wanted there to Applicant: No, I didn’t. She left for fiancée didn’t include Facebook inter- be no ambiguity in what I was asking, the United States when she was young. actions). and wanted a precise, definitive an- Consul: So, Feb. 23 was the first The point of this process is both to swer. time you ever spoke or corresponded dispel confusion or honest misunder- Once the applicant confirmed his with her? standings between the consular officer earlier response, I confronted him Applicant: That’s right. and the applicant, and to leave little with what the petitioner had written. Consul: You never spoke to her be- room for an applicant to plead ambigu- Even though the applicant struggled fore that date, not even on the tele- ity as an excuse for a false answer. (For mightily to talk his way out of the con- phone? example, “I didn’t know you meant tradiction with a host of excuses, my Applicant: No, not even on the Facebook when you asked me when I earlier line of questioning had already telephone. first spoke with her. We Facebooked closed off all avenues of escape. Consul: Not even over the Inter- for a while before she came here on va- (Moreover, one such excuse — that he net? cation.”) hadn’t understood my Portuguese —

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 15 FSK NOW -H OW

Repeating questions reaps benefits with both honest and dishonest applicants.

was also precluded by my preliminary questions, as detailed above.)

Fewer Confused Applicants and Better Revocation Memos I have found that by treating inter- views as mini-depositions, I can apply skills I learned during my prior career that are relevant and helpful. On sev- eral occasions, using those skills has prevented genuinely confused appli- cants from inadvertently creating the impression that they were lying to me. On other occasions, these methods have helped create the basis for strong revocation memoranda. But the best thing about the tech- niques is that you don’t have to have any legal training to understand and use them at the window. So if I have piqued your interest, please give them a try and let me know what you thought of the experience, be it posi- tive, negative or mixed. Or if you are a veteran consular hand who is al- ready familiar with these methods, I would welcome your feedback, as well. Either way, just e-mail me at [email protected]. I

Jeffrey E. Zinsmeister, a former com- mercial litigator,is a first-tour,political- coned FSO in Praia. He will work in the narcotics affairs section in Mexico City beginning in spring 2012.

16 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUSONTHE E CONOMIC /C OMMERCIAL F UNCTION

U.S. ECONOMIC DIPLOMACY: THE NEXT 50 YEARS Jane Sterrett

A DISTINGUISHED PRACTITIONER EXPLAINS WHY INTERNATIONAL ECONOMIC ISSUES ARE NOW CENTRAL TO U.S. FOREIGN POLICY.

BY ALAN LARSON

ithout my realizing it at the time, the 1960s and early 1970s shaped the foundations of my thinking about U.S. economic diplomacy. The presidency of John F. Kennedy provided the “Sputnik moment” for reinvigoratingW the competitiveness of the American economy, while the conflict in Vietnam forced me and others to reflect on the trade-offs between guns and butter. And President Richard Nixon’s decision to take the United States off the gold standard made my graduate school program in international economics feel much less abstract and theoretical.

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Though I did not know it when To build a transformed tem. The Great Recession of 2007- Nixon announced his decision in 2009 was not a normal setback, but August 1971, I was about to embark global economy, rather the end of an economic era. on an intellectual and professional Accordingly, the traditional tools adventure that continues to this day. State will need to revamp of policy response — expansionary Most of that adventure took place fiscal and monetary policy — will not during my 32 years as a State De- the way in which it conducts by themselves restore economic partment Foreign Service officer growth. We cannot go back to where (1973-2005). economic diplomacy. we were. The old global economy During that third of a century, has been destroyed, and we are the State Department and its diplo- building a new one. mats played a vital role in helping create the dynamic The major stakeholders in the old global economy — global economy of today, with all of its challenges and including the United States, Europe, China and Japan — promise. It has been a fantastic privilege for me to be a fell into lazy economic patterns and habits that now need part of this history. to be set aside. As stakeholders and trustees of the global As I reflect on the next half-century, I have become economy, the governments of these economies have a re- convinced that the importance of international econom- sponsibility to establish new frameworks that impose dis- ics and of economic diplomacy in U.S. foreign policy will cipline and work for the benefit of all. only grow. There will be great opportunities and chal- These new frameworks must: lenges for the State Department and its diplomats. Stated • discipline the international exchange rate and pay- in its broadest terms, the task will be to help bring about ments system; not only a lasting recovery of the global economy, but also • promote compatibility among national economic its transformation. This transformation will affect every strategies; corner of international economic policy, including devel- • ensure national budgetary discipline; opment, trade, finance, transportation, telecommunica- • transform the international energy system; tions and more. • strengthen the open international investment and It is a privilege to serve the United States of America trade regime; as a diplomat. We represent a great country that will play • promote the growth of the developing countries; an indispensable role during a period of transition. Young • foster innovation, including through the spread of in- FSOs with an interest in international economics can look formation technology; and forward to careers full of excitement and opportunities to • eradicate international business bribery and corrup- make a difference. I have no crystal ball, but I expect the tion. future to bring some of the following challenges. As an economist, I know market forces can be effective tools in enforcing good government behavior. As a for- Transformation and Recovery mer diplomat, I know that intergovernmental institutional in the Global Economy arrangements play a necessary supporting role. As an in- For there to be a recovery in the global economy, there ternationalist, I know that American statesmanship is must be a transformation of the international financial sys- needed to persuade governments that they can protect their national interests only if they also promote the Alan Larson, a retired career ambassador,is currently sen- greater global good. And as a career government official ior international policy adviser at Covington & Burling. who served in both Republican and Democratic adminis- During his 32-year Foreign Service career, he served as trations, I know that only a renewed commitment to bi- under secretary for economic affairs (1999-2005), assis- partisanship can foster the necessary changes in U.S. tant secretary for economic and business affairs (1996- economic policy. 1999) and ambassador to the Organization for Economic The establishment of a new international system that Cooperation and Development (1990-1993), among many encourages the major economies to pursue compatible other assignments. growth strategies, and allows smooth adjustments where

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needed — and the position of the Sec. Clinton’s QDDR signed to depress the value of the United States within that frame- dollar and take advantage of its role work — are issues in which the wisely strengthens the as a reserve currency to evade State Department must play an im- budget discipline. The U.S. must portant role. But State need not — economic capabilities rein in its budget deficit to safe- indeed, should not — be involved guard its economic future and the in decisions Federal Reserve Chair- of the State Department stability of the global economy, as man Ben Bernanke makes to set well as its national security. monetary policy. and puts the focus on For the system to become bal- George Shultz, who headed anced and sustainable, it needs both the State Department and the economic growth. stronger mechanisms to enforce Department of the Treasury discipline on the major stakehold- (among many other governmental ers and make them more account- positions), has rightly observed that those are the two able for the policies they pursue. Members of the Group Cabinet departments with the strongest interest in, and of 20 and international organizations like the International appreciation for, the importance of a stable international Monetary Fund must formulate stronger international economic framework. Leaders in both departments un- rules to avoid exchange rate manipulation. derstand that the Bretton Woods system that grew out of American ambassadors, deputy chiefs of mission and the ashes of World War II needs to be modernized and economic ministers in G-20 countries will have detailed strengthened. interactions with foreign officials and economists on these In today’s dynamic global economy, national economies issues. Thoughtful and knowledgeable State Department must constantly adjust to far-reaching changes in tech- officials such as Secretary of State Hillary Rodham Clin- nologies and competitive situations. Past financial sys- ton, Under Secretary for Economic Affairs Robert D. tems — including the fabled gold standard and the Hormats, Assistant Secretary for Economic, Energy and Bretton Woods system — were not effective in facilitating Business Affairs Jose W. Fernandez and their advisers such adjustments. need to be a part of the diplomacy that builds this new in- Floating international exchange rates provide a system ternational framework. that can be more effective in accommodating big shifts, Peer reviews of national economic policies conducted such as the rise of the emerging nations (e.g., the BRIC by organizations such as the IMF and the Organization countries: Brazil, Russia, India and China) and major for Economic Cooperation and Development need to be technological advances that drive economic change. A more searching, more rigorous and more public. In the floating exchange rate system only works well, however, if future, the private sector and international business com- the major economies in the system refrain from manipu- munity will be more vocal about the policy changes that lating their currencies for competitive advantage. Other- governments need to make. wise, the costs of adjustment will not be shared fairly, and the system will become financially, economically and po- The Role of State litically unsustainable. To build a transformed global economy, the State Today, the international payments system is funda- Department will need to revamp the way in which it mentally out of balance and unsustainable. China is fol- conducts economic diplomacy. Sec. Clinton’s recently lowing a growth strategy based on artificially depressing completed Quadrennial Diplomacy and Development the value of its currency in order to promote exports. Eu- Review wisely advocates strengthening the economic ca- rope’s commitment to the integrity of the euro zone is pabilities of the State Department and putting the focus under challenge because the European Union has not on promoting economic growth. maintained the internal discipline it promised on national As a result, the State Department and its diplomats budget deficits and financial sector surveillance. have an increasingly important role in reporting foreign As for the United States, the anchor of the system, we thinking about the management of our economy to Wash- are widely suspected of following a monetary policy de- ington — which the Obama administration, Congress and

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Federal Reserve should seriously Resolving the perceived more urgent national priorities. consider. Conversely, State must The PRC’s growth will become convey U.S. thinking about the tension between promoting more balanced and more sustain- management of other countries’ able once the country opens its economies to their authorities. growth and combating capital market to foreign invest- The rise of the emerging nations ments, promotes investment in do- was one of the most significant climate change will be mestic infrastructure, and encour- events of the last 20 years. In my ages somewhat higher levels of work today as senior international a key challenge for household consumption by provid- policy adviser at Covington & Burl- ing a basic social safety net, among ing, I routinely turn for advice and economic-coned FSOs. other measures. information to the U.S. embassy in Chinese purchases of U.S. Brasilia, New Delhi, Moscow or Treasury bonds have been wel- Beijing if I have a client issue involving one of the so- come at a time when the U.S. government has been bor- called BRIC countries. Much of the U.S. private sector rowing heavily. In the future, however, Chinese does the same. purchases of U.S. government paper should gradually give American diplomats in these embassies, and embassies way to increased investments in productive business assets in other G-20 member-states, interact at close range with in the United States and Europe — which must welcome economic officials who shape perceptions and policies in those productive investments. Establishing a strong bi- countries that profoundly shape the global economy. The lateral framework of protection is an important task for department rightly has increased staffing for the eco- the Strategic and Economic Dialogue. nomic sections of these embassies and for the offices in In our various economic dialogues with the European State that backstop those missions. Union and Japan, State and Treasury should encourage The State Department necessarily plays an essential each to place more emphasis on achieving growth, in- role in the management of bilateral economic relation- cluding through regulatory reform. The State Depart- ships with the emerging countries. In relationships like ment and its diplomats have traditionally taken the lead in the Strategic & Economic Dialogue with China and com- our economic cooperation with these strong U.S. allies; parable dialogues with India, Brazil, Russia and Mexico, we must continue to do so in the future. U.S. diplomats build personal relationships with the offi- It will be a political challenge, of course, for the U.S. cials who will make policy, leading to greater understand- and major economic partners to acknowledge that their ing of the goals each side pursues and the strategies that national economic policies can and must be formulated will make those goals achievable. in full consideration of the interests and policies of others. Adopting new and more compatible economic growth Already, American families have been reducing their bor- policies is a political, society-wide issue; fundamentally, it rowing and the share of their income devoted to con- is a learning process. U.S. diplomats, who have daily con- sumption. The problem is that the U.S. government has tact with foreign policymakers and citizens, can reinforce not done the same. the reality that economic growth is essential and interna- tional competition increases productivity and advances Energy Security living standards. In short, it is a win-win proposition, not The State Department has played a crucial role in pro- a zero-sum game. moting energy security for the last 40 years, including China, for instance, can grow in a more sustainable way through creating and strengthening the International En- if it raises consumption and moves away from a policy of ergy Agency. State officials understand that “energy in- depressing the value of its currency. Relying to an unsus- dependence” is a myth and that security is a collective tainable degree on exports as a source of economic growth good that can only be attained through concerted action is dangerous for Beijing and for the international system. with other countries. The subsidization of Chinese exports through a variety of Today, the threat of global climate change provides a mechanisms is a crutch that takes resources away from new rationale to undertake concerted policies to move to

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more efficient patterns of energy Young FSOs with an interest States Trade Representative, which use and to develop new and renew- is building this international frame- able forms of energy. Yet for many in international economics work. countries, including the United For instance, long-term interna- States, there is a perceived tension can look forward to tional investments are required for between effective action to pro- the transformation of the energy mote economic growth and effec- careers full of excitement economy. These investments can tive action to combat climate create new renewable energy sys- change. During the next 50 years, and opportunities to tems to promote energy security the State Department and Ameri- by reducing dependence on im- can diplomats will be engaged in make a difference. ported oil and slowing climate shaping the international frame- change. These international in- works to reconcile these two vital vestments will only occur on the goals. needed scale, however, if investment-receiving countries offer long-run and enforceable guarantees of fair regula- International Investment and Trade Rules tory treatment. A strong global economy needs an open trade system Foreign investors need to know that if they have a dis- and an international investment regime with enforceable pute with a foreign government, they have the option of rules. In both respects the State Department will con- seeking a resolution through binding international dispute tinue to be the closest partner of the Office of the United settlement in arbitration panels.

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 21 F OCUS

Doing Its BIT Development inevitably States has proved to be a good tool Toward this end, for more than a for balancing the benefits of an year now the Obama administra- involves coordination with open investment policy with the tion has been reviewing the Bilat- need to protect that narrow class eral Investment Treaty framework, other agencies, other donors of U.S. businesses whose foreign mindful that such agreements are a acquisition could threaten national useful tool in creating jobs in the and the private sector. security. The State Department United States and in achieving en- must continue to play a strong vironmental goals, such as pro- leadership role in CFIUS. gress against climate change. The administration has been exploring BIT negotiations with China and India, Transportation and Telecommunications an agenda that should be expanded to include the Euro- The State Department’s expertise on international pean Union and Japan. However, the process will move transportation and telecommunications issues is a price- slowly until the White House and Congress reach a meet- less asset. Through the Open Skies policies of recent ing of the minds on related issues. In particular, trade decades, the State Department and Transportation De- and investment agreements should include guarantees partment have totally transformed the international avi- that neither party will lower labor and environmental ation system. Still, new challenges loom on the horizon, standards in order to attract investment. including opening up aviation to international investment The Committee on Foreign Investment in the United flows and working out internationally efficient means for that sector to help meet the challenge of global climate change. Telecommunications and the industries associated with the Internet have been, and will probably continue to be, drivers of the global economy. International gov- ernance of telecommunications will undoubtedly expand tremendously during the next half-century. The inter- ests of the United States will be best served by ap- proaches that are industry-friendly, market-oriented and designed to protect our security interests. Increasing flows of investment — both inbound and outbound — will be essential if the United States is to preserve its leadership in this sector.

Eradicating Bribery and Corruption In order to achieve a transformed international econ- omy that produces a recovery that is balanced and sus- tainable, the international system must be free of bribery and corruption. Towards the end, the OECD Anti- Bribery Convention provides an international framework loosely modeled on the U.S. Foreign Corrupt Practices Act. In the United States, enforcement of the FCPA has been vigorous. We cannot rest on our laurels, however. Europe is improving its performance in identifying and prosecuting international bribery, though much needs to be done. (Japan’s performance is perceived by Trans- parency International to be lagging.)

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Many emerging economies, such as China, India and transformational component of 21st-century economic Russia, are not parties to the OECD Anti-Bribery Con- diplomacy. vention. And even if they were, the convention does Before joining the State Department, I taught middle not make it a prosecutable offense to engage in the school students at a self-help school outside Kiambu, bribery of foreign government officials to gain or retain Kenya. I continue to believe that development is not business. only a moral imperative, but also an opportunity for Nonetheless, we should be encouraged by recent re- American foreign policy. ports, that these governments are considering accession During Foreign Service assignments in Sierra Leone, to the OECD convention and enactment of such laws. Zaire (now the Democratic Republic of the Congo) and Accordingly, the international business community Jamaica, I learned a lot about how development works, should lend strong support to the enforcement of the and does not work, in practice. My academic training at OECD Anti-Bribery Convention and to the accession of the University of Iowa, where I earned a Ph.D., collided China, India and Russia to that agreement. with the realities I confronted in running the ambas- sador’s self-help program, assisting investors in develop- Promoting Development ing countries, and using the trade incentives of the I am delighted with the State Department’s strong Caribbean Basin Initiative to spur economic develop- focus on development and Secretary Clinton’s initiative in ment that might supplant drug production. conducting the first Quadrennial Diplomacy and Devel- As under secretary of State for economic affairs from opment Review. Development was a significant part of 1999 to 2005, I worked closely with U.S. Agency for In- my own Foreign Service career, and I believe it will be a ternational Development Administrator Andrew Natsios

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 23 F OCUS

and Agriculture Secretary Ann Veneman to enhance our agency matches the State Department in looking at in- support for food security, our advocacy for agricultural ternational economic policy issues through a broad na- biotechnology and our active support for the United Na- tional interest lens that closely corresponds to the tions food agencies. The Obama administration’s wel- perspective of the president. come emphasis on these goals, including the Feed the Throughout my diplomatic career, I found my closest Future initiative, constitutes a strong platform on which bureaucratic allies at the NSC and the National Eco- the United States can make food security a central goal of nomic Council. I think it will continue to be very im- our economic diplomacy. portant for the State Department and its economic Development can and should be a bipartisan element diplomats to embrace the presidential perspective. This of economic diplomacy. I was privileged to help design is the best way to serve the country and to expand the de- the Millennium Challenge Corporation launched by the partment’s influence. George W. Bush administration. The MCC provides sus- tained development assistance for those countries that Training and Recruitment are doing the most to help themselves. Having been a beneficiary of State’s University Eco- The State Department must continue to play a strong nomic Training program, I take a great interest in leadership role with the World Bank and regional devel- strengthening economic and commercial training. The opment banks. During the Clinton administration the department can play its necessary role in economic diplo- United States made a valiant, but ultimately unsuccess- macy only if officers have the technical skills to interact ful, effort to establish a Middle East Development Bank on an equal footing with experts from other economic that could both promote development and support departments such as Treasury on technical issues. State peace. I still believe this idea is sound, so I hope the needs to fund such programs, and diplomats need to in- Obama administration will consider relaunching this ef- vest the time and effort to take advantage of them. fort. In strategically important countries such as Iraq, Commercial and Business Advocacy Afghanistan and Pakistan, the United States will need to As under secretary of State for economic affairs, I had pursue its interests with a larger share of development the opportunity to meet with every class of American am- and diplomacy, and a smaller share of military expendi- bassadors going out to post. I told them that I looked for- ture, than in the past. State Department officials such as ward to the day when I needed to respond to complaints Charlie Ries, Pat Haslach and Tony Wayne have already that an ambassador or an embassy had been too zealous shown that FSOs have an indispensable role to play in in advocating on behalf of U.S. business interests! promoting economic development in such countries. Ex- Commercial and business advocacy is a critically im- peditionary diplomacy will be a continuing part of the portant role for the State Department. Growing exports role of the State Department, and expeditionary eco- are crucial to the success of the U.S. economy, and the ex- nomic diplomacy will be a central focus of that role. pertise of U.S. diplomats can be the crucial difference in Whether or not it occurs in a war zone, development the success or failure of a project. Through the generos- work inevitably involves a great deal of coordination with ity of private donors, the State Department is able to pro- other agencies, other donors and the private sector. The vide recognition to officers at all levels who demonstrate involvement of other players only enhances the impor- dedication and success in business advocacy. tance of the on-the-ground experience and practical skills of FSOs and the use of economic diplomacy. A Rewarding Career Economic diplomacy was a great adventure through- The Interagency Process out my Foreign Service career, and I believe it will The formulation of international economic policy will remain a stimulating and richly rewarding field for increasingly be done through interagency processes es- many years to come. So let me extend to the next gen- tablished within the framework of the National Security eration of economic diplomats my best wishes for ca- Council, the National Economic Council and other reers that will be as exciting and as rewarding as mine White House bodies. Yet in my experience, no other has been. I

24 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUSONTHE E CONOMIC /C OMMERCIAL F UNCTION

U.S. BUSINESS INTERESTS: AN FCS OFFICER’S VIEW

WORKING WITH OTHER SECTIONS OF THE MISSION, ECON AND FCS CAN BE MORE THAN THE SUM OF THEIR PARTS.

BY MICHAEL A. LALLY

iven the scale and speed velopment and the private sector also play important roles of international business in our “Hot, Flat and Crowded” in achieving overall economic and trade objectives in the world (to quote the title of Thomas Friedman’s influential host country. book),G embassies are increasingly tasked with economic policy engagement and trade promotion in support of U.S. Two Sides of the Same Coin? foreign policy interests. The focus on this portfolio is back The DNA of economic and commercial officers differs in the spotlight again with President Barack Obama’s Na- significantly. Commercial officers eschew reporting and tional Export Initiative, which aims to double U.S. exports cable writing in favor of developing business-to- by 2015 and support the millions of U.S. jobs sustained by government and business-to-business transactions and overseas sales. contributing to the bottom line: increased U.S. exports and Strong coordination between each diplomatic mission’s jobs. Economic officers develop niche expertise through economic section (generally called ECON) and the Com- analysis of macroeconomic developments, using strong merce Department’s Commercial Service (“CS,” better writing skills and timely reporting to feed the policy known in embassies as FCS) is a sine qua non for success. process in Washington. While this article focuses on that relationship from an FCS Differences in the metrics each section uses also play a perspective, let me also acknowledge that the embassy role. For example, FCS offices are accountable for a spe- front office, the public diplomacy section, the Foreign cific number of export success transactions in their mar- Agricultural Service, the U.S. Agency for International De- kets, with implications for each post’s human and fiscal resource levels. In addition to supporting goals as defined Michael A. Lally is currently commercial counselor in by the chief of mission, senior commercial officers tend to Ankara. Since entering the U.S. Commercial Service in be selective about where they spend their limited time and 1993, he has served in Kiev, Almaty, Baku, Philadelphia resources to ensure they meet their goals and support the and Mexico City. He wishes to thank governmental and National Export Initiative. private-sector colleagues who contributed advice and ideas Economic sections generally do not have such hard to this article. metrics, but the depth, breadth and timeliness of report-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 25 F OCUS

ing and analysis are useful measure- The DNA of economic and and business development requires ments of their effectiveness. adaptive, flexible approaches to se- It is also the case that commer- commercial officers differs cure policy goals and best serve cial officers spend their entire ca- American companies. reers in this cone, whereas econo- significantly, but they can For example, when engaging the mic officers may have broader expe- host government on a market entry rience through consular, manage- achieve synergy by working barrier, a good FCS officer ensures ment or other assignments. the economic section has input into Many of my FCS and ECON together to advance the process to determine where colleagues concur that personalities best to influence the issue at hand. play an outsized role in determining U.S. policy objectives. Likewise, ECON’s specialized ex- the effectiveness of the two sections’ pertise in macroeconomics, intel- interactions. Without doubt, a lectual property rights and energy smooth, collaborative relationship between section chiefs policy often has direct value to American firms. Strong and agency heads and their staffs goes a long way. working relationships between ECON and FCS and an A strong and supportive front office further facilitates engaged front office will ensure that relevant country team the process by laying out clear expectations, demanding members are “firing on all cylinders” to provide valuable coordination on key matters, and actively monitoring the information and analysis. process to manage the conflicts that will occasionally arise. In many of my posts, I have gauged the teamwork quo- Economic Policy Goals vs. tient by a simple measure: the number of phone calls and Business Practicality face-to-face meetings in a given week that advise, assist The nexus of policy imperative and business practical- and augment a given set of issues. ity requires strong collaboration among post leadership, Previously, ECON and FCS could somewhat simplisti- ECON, FCS and the Washington interagency community. cally draw bright lines between policy analysis and busi- While overarching U.S. foreign economic and trade policy ness development. However, the growing speed of objectives such as macroeconomic coordination, free and international commerce has increasingly blurred this dis- fair trade, and transparency are broadly in sync with the tinction, requiring thoughtful leadership from post man- goals of U.S. business overseas, a careful balance must be agement and solid communication and execution from maintained to ensure that both long-term U.S. policy goals country team members. and business interests are factored into the policymaking Economic officers’ work with host-government officials process. This is increasingly important given the cutthroat can provide broad context and policy intent with implica- competition seen on major projects around the world, and tions for U.S. policy and American private-sector market the emergence of new Asian business competitors who positions. At the same time, FCS contacts with key busi- move quickly and adroitly. ness leaders can provide “ground truth” to test the some- A case in point I saw firsthand back in the 1990s was times flowery policy rhetoric that often graces govern- U.S. energy transportation policy in the former Soviet mental meetings. To put it bluntly, foreign governments Union. Washington expended an enormous amount of po- will frequently tell us what we want to hear, but informed litical capital in support of a visionary, well-executed “mul- business opinion can provide a reality check on our poli- tiple pipeline” strategy throughout Central Asia and the cymaking. Caucasus. The region’s energy sources and multiple trans- As a rule, FCS should be the embassy’s primary inter- portation options supported these newly independent locutor with U.S. and host-country businesses and trade states’ economic development, while new resources aug- associations, given its mission and expertise, and its U.S. mented the security of supply — especially important and overseas network. ECON should lead on policy mat- given the huge spike in hydrocarbon demand in the early ters, reporting and analysis, given its strengths: institutional part of the 21st century. focus and mission. But these are not hard-and-fast bound- Given the United States government’s unique leverage aries, for the day-to-day work of commercial diplomacy and its network of high-level relationships across the re-

26 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUS

gion, our companies were in a With the growing speed rebuffed U.S. government advocacy strong position to benefit from for greater American content in American “soft power,” getting in on of international commerce, multibillion dollar tenders. In their the ground floor of energy develop- view, government advocacy should ment in the region, and winning the distinction between not interfere with a firm’s business contracts to create jobs at home. decisions. But these two complementary goals policy analysis and business In the end, U.S. firms received a were not explicitly joined, for policy small portion of contracts in deals necessity (get the pipelines built) development has become that were largely, if not wholly, in- largely won out over practicality fluenced by Washington. The les- (pursue an equally well-coordi- increasingly blurred. son to be learned: integrate U.S. nated, sustained effort to use this soft power on the policy side with leverage to ensure U.S. firms get the real needs of U.S. firms in a hy- their share of the business). percompetitive global market place. An astute ambassador Such advocacy is inherently difficult when bidding on and deputy chief of mission can work with the rest of the projects tendered by private-sector firms, which make country team to make that very case to Washington deci- their procurement decisions based largely on commercial sion-makers. and technical criteria. This disconnect became particu- Indeed, trade advocacy is an area particularly well- larly evident when the same firms that lobbied Washing- suited to country team coordination, for it directly benefits ton for policy support with host governments in the region American firms. Commerce’s Trade Advocacy Center co-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 27 F OCUS

ordinates assistance for U.S. com- As a rule, FCS should be fuse the concerns of the private pany bids on major projects through sector with the stated (and largely phone calls, letters and meetings at the primary interlocutor genuine) interest of the host gov- a senior level, from the White ernment to attract American trade House on down. Based on anec- with U.S. and host-country and investment. Led by a business- dotal evidence, this interagency co- savvy, team-building front office, operation is now often seen in businesses and trade USAID, ECON and FCS all used foreign military sales and defense their respective strengths to secure advocacy, where State, Commerce associations, while ECON a series of policy reforms and im- and Defense support the foreign prove the business climate. policy, commercial and defense di- should lead on policy matters, USAID trade and investment mensions of a given transaction. policy advisers, often accomplished In order to be competitive in a reporting and analysis. attorneys and experts in their own given tender, U.S. firms typically right, helped draft and redraft laws seek the embassy’s advice regarding and regulations in cooperation with host-government considerations and third-country com- the host government. FCS used its contacts with Ameri- petition. For example, when a state-owned airline issues can firms and the local business community to identify the a Request for Proposal for purchase of several aircraft, the specifics of a problem with customs, standards or banking, effort will affect many parts of the host-government bu- then shared this real-world perspective with USAID con- reaucracy and, indirectly, the U.S. embassy country team. tractors. And ECON ensured that key host-government An economic section’s contacts with the finance ministry representatives were informed of our efforts to ensure can provide insight into the availability of sovereign guar- buy-in to the process at all levels, and provided reporting antees for the transaction, while FCS’s relationships with and analysis to keep Washington informed and prepared American and host-country firms can inform negotiating for VIP visits where we could push key issues to resolu- strategies. In addition, the political section can provide tion. early warning of the arrival of a high-level governmental To frame key issues for senior host-government deci- delegation from a competitor country. sion-makers, the mission produced a trade and investment Last but not least, FCS can work with the U.S. Export- non-paper with short descriptions of each business issue Import Bank to develop a project finance proposal that lu- and a two- or three-sentence recommendation on how to bricates the transaction, while the U.S. Trade and resolve it. Ambassador Beth Jones used her well-devel- Development Agency’s training grants program can aug- oped relationships with the host government to push for ment the bid. The stakes are high: a well-orchestrated results, creatively weaving in U.S. VIP visits and pushing country team that executes well on such a transaction can for movement before their arrival, when leverage was at often influence a successful outcome — securing business its peak. This approach was gratefully embraced by Amer- for small, medium and large U.S. firms and creating ican and local firms, which rarely wanted to take on these needed jobs at home. issues with the host government for fear of reprisal. Such cooperation led to the rollback of controversial A Standard for Intra-Mission Cooperation customs pre-shipment verifications; elimination of manda- In my experience, the “Holy Grail” of intra-mission co- tory temporary warehousing that raised the cost of doing operation was seen in Kazakhstan in the mid-1990s. Aware business; and rescission of compulsory oil and gas insur- that the newly independent states represented markets ance provisions, among other reforms. Perhaps even more with major potential, U.S. firms rushed in to scout the importantly, that initial missionwide team effort spawned prospects. But the initial euphoria soon turned to cyni- the founding of a local chapter of the American Chamber cism, as the weak legal infrastructure stymied efforts to of Commerce, thereby creating a long-term mechanism for trade and invest. trade and investment policy engagement. And the sense To respond effectively to increasing expressions of busi- of cooperation and camaraderie in working together on a ness concern, Embassy Almaty needed a mechanism to major, successful joint project increased trust between

28 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUS

agencies and bolstered mission morale When engaging a host arrangement must set clear expecta- — something not to be overlooked. tions early on, however. Some non- government on a market FCS posts expect more support than is Think Globally, Act Locally practical, particularly given staffing With only 80 FCS posts worldwide, entry barrier, a good limitations and travel budget cuts in re- nearly half of our embassies do not cent years. have full-time FCS staff to work the FCS officer ensures the Fortunately, a memorandum of un- business portfolio. While some em- derstanding has been created between bassies have formal “partnership post” economic section has Commerce and State that lays out arrangements with FCS offices in a clear responsibilities on both sides, in- given region, the Commercial Ser- input into the process. cluding building commercial work into vice’s severe budget and human re- officer work plans at supported part- source constraints since 2005 have nership posts; elaborating training hampered its ability to support State economic-coned col- needs; and delivering FCS-branded services at State leagues. ECON posts. However, given likely budget cuts in Fiscal Partnerships between embassies facilitate virtual sup- Year 2012, cooperation and creativity will still be needed. port of non-FCS posts by giving advice on advocacy mat- Some economic sections have bridged the funding gap ters, putting together business delegations to the United through Business Facilitation Incentive Fund proposals States and resolving trade disputes affecting American managed by State. For instance, the BFIF can fund travel firms in the host country. A strong partnership post by economic officers and Locally Engaged Staff to major

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 29 F OCUS

The Seven Habits of Highly Effective Trade and Economic Portfolios

• Meet regularly and discuss substantively. Chaired by the am- • Play to your strengths. If one section has more knowledge of bassador or DCM, regular meetings of relevant section chiefs and or contacts on a given issue, even if outside its normal portfolio, agency heads with the trade and economic portfolio should focus let that office lead the engagement. Business results should guide on key policy developments, business opportunities and upcom- the resources, not artificial bureaucratic boundaries. ing VIP visits to advance mission goals, rather than rote updates • Network the interagency community. In addition to the rele- of who is doing what (which should be happening daily, anyway). vant geographic and functional bureaus, the Commerce Depart- • Multiply resources. Cooperation and communications can ment’s Office of Market Access and Compliance, the Foreign ensure cross-pollination of ideas and opportunities to identify al- Agricultural Service, USAID and the Office of the U.S. Trade Rep- lies and detractors on a given policy goal. resentative may all have a stake in a given issue. As the central ex- • Consult before you do. Strategic and operational plans should ecution point, well-led posts should ensure that the entire be shared in draft before finalized to head off overlap and confu- interagency community is brought into the process. sion. • Tell the story. Posts should tap the public affairs section and • Share and share alike. No section of a mission “owns” a par- the Commerce Department to highlight key trade policy opportu- ticular contact in a ministry or private firm. These are mission nities and business development. This can be done by placing contacts to be cultivated as a team, not in competition. Common ambassadorial op-eds and using other messaging to highlight bi- courtesy and common sense dictate that advance coordination be lateral business opportunities and U.S. policy developments af- undertaken to avoid bumping into each other in the minister’s an- fecting the host country. teroom. — Michael A. Lally

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trade shows in the United States, to Partnerships between gain a better understanding of the which they can lead a delegation of broader trade and economic portfo- host-country buyers. Other success- embassies facilitate virtual lio. And, despite likely bureaucratic ful proposals have funded a USA resistance to such an idea, rotations Trade booth in major local trade support of non-FCS posts. placing FCS officers temporarily in shows, allowing missions to meet ECON jobs and vice versa will clear host-country businesses and identify up the occasional confusion about potential importers. what each section contributes to the mission. Resourceful economic officers also work closely with In summary, increasing globalization has very practical partner posts to use the 108 FCS offices in the United implications for every mission’s trade and economic port- States to spread the word about key tenders, privatizations folio. More American companies will ask for embassy sup- and investment opportunities in the host country. The U.S. port to meet overseas business opportunities and chall- Trade and Development Agency also funds reverse trade enges. Washington and host governments will negotiate to missions in selected markets, by which local decision-mak- lift technical barriers to trade, and use the trade and in- ers are invited to the United States to meet with American vestment component to build additional pillars for the bi- firms in key industry sectors. lateral relationship. First-tour and second-tour ECON and FCS officers By working with other sections of the mission, ECON would be well advised to take the “Business Council for In- and FCS can be more than the sum of their individual ternational Understanding” course at the Foreign Service parts — if coordination, cooperation and communication Institute to learn more about each other’s tradecraft and are the rule. I

Help AFSA Go Green and Save Some Green t Please make sure we have your e-mail address!

As AFSA prepares to institute more environmentally friendly practices, significantly reducing our consumption of paper, we are asking our members to please ensure that we have their valid e-mail addresses on file. This will allow us to contact you by e-mail rather than cluttering up your home with paper mail, and it also leads to significant savings in postage.

We ask our active-duty members to give us their “.gov” e-mail addresses, as those are unlikely to change throughout your career. For all others, any valid e-mail address works! American Foreign Thanks for helping us go green — and save some green! Service Association You can submit your e-mail address either by sending it to [email protected] or visiting www.afsa.org www.afsa.org/addresschange.cfm. Art: iStockphoto.com

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 31 F OCUSONTHE E CONOMIC /C OMMERCIAL F UNCTION

THE IMPORTANCE OF PROTECTING INTELLECTUAL PROPERTY RIGHTS

STATE CANNOT GO AFTER IP INFRINGERS ONE DVD AT A TIME, BUT THERE ARE STEPS THAT ALL POSTS CAN TAKE TO RAISE AWARENESS OF THE ISSUE.

BY DAVID DRINKARD

merica’sfirst diplomat, benefits of IP protection for innovation and develop- Benjamin Franklin, benefited from our nation’s early es- ment. tablishment of an intellectual property regime. Our State’s actions on intellectual property protection FoundingA Fathers ensured that Article I, Section 8, of have a direct impact on the U.S. economy. Protection of the U.S. Constitution gives Congress explicit authority IP rights gives consumers confidence that the products “to promote the progress of science and useful arts, by they buy are legitimate and will work as expected; pro- securing for limited times to authors and inventors the vides incentives to artists and inventors to create artistic exclusive right to their respective writings and discover- works and much-needed innovations and inventions; and ies.” More than two centuries later, the Department of stimulates economic output, creating jobs. State plays a key role in protecting those rights. The Organization for Economic Cooperation and De- Toward that end, in 2005 Congress created State’s Of- velopment estimated in 2007 that global cross-border fice of International Intellectual Property Enforcement trade in tangible, counterfeit and pirated products was as to strengthen the department’s ability to combat coun- high as $250 billion. The OECD report does not take terfeiting and piracy. IPE, which spearheads these efforts, into account domestically produced and consumed falls under the Trade Policy and Programs Deputate in the products or non-tangible pirated digital products, so the Bureau of Economic, Energy and Business Affairs. The impact is almost certainly greater. And these costs are office oversees enforcement of American intellectual expected to grow exponentially if enforcement is not im- property rights overseas, represents the State Depart- proved. ment in interagency IPR policy discussions, participates The United States’ transition to a knowledge-based actively in bilateral and multilateral negotiations to im- economy makes the efforts of all agencies involved in IP prove enforcement of those rights, and promotes the protection all the more relevant. Rarely do intellectual property infringements occur as isolated events. Recent David Drinkard is a Foreign Service officer working in the cases revealed that large-scale counterfeiting operations Economic Department’s Office of Intellectual Property En- had ties to organized crime and, in some cases, terrorist forcement. He previously served in Tel Aviv and Ankara. organizations.

32 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUS

The Role of the IPEC State’s use of a $4 million forcement, which led to a World Demonstrating its commitment Customs Organization award rec- to this issue, the Obama administra- fund for IPR criminal ognizing substantial progress. tion appointed an Intellectual Prop- The State Department criminal erty Enforcement Coordinator, enforcement training and enforcement training program is de- Victoria Espinel, in December 2009. signed to complement private-sec- A key element of the Joint Strategic technical assistance is a tor training initiatives by addressing Plan on IP Enforcement that she re- gaps that can only be filled by deliv- leased this past June is aimed at unit- great example of ery of government-to-government ing the efforts of all federal agencies assistance. A strong criminal en- with a stake in intellectual property interagency cooperation. forcement deterrent is required to to pursue several joint initiatives, address the increasing involvement both domestically and overseas, of sophisticated trans-national or- through the establishment of various working groups. ganized crime groups in IPR crimes. The working group on overseas staffing is chaired by IPE does not go after IP infringers “one DVD at a IPE and recently directed 17 key posts to create IPR work- time,” but there are steps that all posts can take to raise ing groups and develop a yearly IP action plan. At em- awareness of IP protection. Many have implemented an bassies and consulates worldwide, State economic officers anti-piracy policy explicitly stating that purchasing coun- are on the front line of the battle to protect U.S. intellec- terfeit and pirated goods is not allowed. Others have up- tual property rights, responding to complaints raised by dated the Country-Specific Information pages at http:// U.S. companies and vigorously pressing foreign govern- travel.state.gov to include information for American citi- ments to combat piracy and counterfeiting. zens about the dangers associated with purchasing coun- Six posts also are staffed by U.S. Patent and Trademark terfeit and pirated goods. Office IP attachés, as mandated by the Pro-IP Act of 2008, Immigration and Customs Enforcement is launching a and two posts have Department of Justice IP Law En- campaign linking posts to the National IPR Coordination forcement Coordinators to assist in developing cases re- Center, another group that State’s office cooperates with, lated to IP infringement. Both USPTO and DOJ are from the embassy Internet page to report IP infringements interested in expanding these programs and their presence and infringers all over the world. The center (www. overseas. ice.gov/iprcenter) coordinates the efforts of 13 agencies to combat piracy and counterfeiting and ensure that coun- State’s Role terfeit products do not find their way into the U.S. gov- A great example of interagency cooperation in combat- ernment supply chain. ing piracy and counterfeiting is found in State’s implemen- On “Cyber Monday” (the Monday after Thanksgiving tation of a $4 million congressional “soft” earmark for IPR — Nov. 29 last year) the National IPR Center announced criminal enforcement training and technical assistance. In seizure orders against 82 domain names of commercial this program, the Bureau of International Narcotics and Web sites as part of their ongoing investigation, “Opera- Law Enforcement Affairs and the Bureau of Economic, tion In Our Sites.” These sites were all found to be en- Energy and Business Affairs collaborate to target INL gaged in the illegal sale and distribution of counterfeit funds for long-term capacity-building programs in less de- goods and copyrighted works. veloped nations through cooperation with other agencies. Countries that do not offer “adequate and effective” Examples include a multiyear program in Paraguay, protection of IPR or “fair and equitable market access to which established new enforcement units and capabilities United States persons that rely upon intellectual property that did not exist before; regional training for sub-Saharan rights” are “named and shamed” in the annual Special 301 Africa enforcement units designed to increase cross-bor- Report prepared by the Office of the U.S. Trade Repre- der cooperation, with particular emphasis on combating sentative. The preparation of the report relies heavily on the health and human safety threat of counterfeit medi- analysis from posts around the world and coordination by cines; and long-term capacity building for Mexican law en- State’s IPE office.

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This year’s report will follow one President Obama appointed Tanzania and Guinea. from the U.S. International Trade IPE also benefits from public Commission on the nature and the first Intellectual outreach efforts by Secretary of scope of intellectual property right State Hillary Rodham Clinton and infringement in China and the Property Enforcement other senior department officials, IPEC’s updated report on the im- who regularly stress the importance plementation of the Joint Strategic Coordinator, Victoria of protecting intellectual property Plan. Reinforcing the importance of rights. This underscores the fact the issue, the Congressional Inter- Espinel, in December 2009. that for the United States, protection national Anti-Piracy Caucus tradi- of our intellectual property is a core tionally issues its own watch list after national economic interest. A recent the publication of each Special 301 Report. World Bank study on the impact of patenting, as it relates to economic growth in 92 countries from 1960 to 2000, Success Stories found that a 20-percent increase in the annual number of While piracy affects the entire U.S. economy, counter- patents granted, regardless of where the technologies orig- feit medicines are a particularly serious global menace. inated, was associated with an increase of 3.8 percent in Recognizing that it is vital to our interests at home and output. abroad to address this challenge, numerous agencies and bureaus within State are cooperating on this issue. One Engaging with China on IPR of IPE’s contributions is in working with posts and the Bu- Understandably, the need to support innovation and reau of Public Affairs and Public Diplomacy to undertake protect intellectual property rights is highlighted in the a global campaign against counterfeit medicines. In 2010, National Export Initiative, and no country receives more our office worked in various locations to increase public scrutiny in this respect than China. U.S. exports to the awareness about the dangers of these products. People’s Republic of China have quadrupled since 2000, • Consulate General São Paulo organized awareness making it America’s fastest-growing export market. But seminars bringing together the University of São Paulo and concerns persist regarding Beijing’s commitment to the the University of Texas College of Pharmacy, fostering vi- protection and enforcement of intellectual property rights, brant discussion among approximately 200 pharmacy stu- so we continue to engage with the Chinese at the highest dent participants. levels on this issue. • Embassy Colombo worked with key private-sector Over the past year, U.S. Ambassador to China Jon and public-sector partners to conduct the first in a series of Huntsman, Under Secretary for Economic, Energy and four workshops across the country under the banner “Pro- Agricultural Affairs Robert D. Hormats and Intellectual tecting Sri Lankan Families from Counterfeit Drugs.” Property Enforcement Coordinator Victoria Espinel, as This program received nationwide media attention and re- well as numerous congressional delegations and other U.S. sulted in public commitments by Sri Lanka’s minister of government officials, have all stressed the importance of health and local pharmaceutical industry groups to take IPR enforcement and protection with their Chinese coun- immediate steps to fight counterfeit drugs. terparts. They have emphasized that such protection is • Embassy Nairobi partnered with the Kenyan govern- not just for the benefit of multinationals, but is crucial to ment and the private sector to conduct the first two of four promoting innovation within China. public town hall outreach events in the capital and in When Under Secretary Hormats addressed a recent In- Mombasa. The latter meeting garnered a large amount of ternet Forum in Beijing, he noted that during at least 70 press coverage, including a radio interview with program trips to the country he has regularly engaged his Chinese speakers broadcast to more than a million listeners. counterparts on the benefits of strengthening the PRC’s Other countries where State Department-funded pub- intellectual property rights regime. Under the direction lic diplomacy programs to address this problem have been of Amb. Huntsman, Mission China is building coalitions implemented or are planned include Bolivia, Peru, Jordan, among U.S. and Chinese government officials, businesses Congo (Brazzaville), Bosnia, Ukraine, Paraguay, Sudan, and educators to strengthen IP protection and enforce-

34 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUS

ment, and to highlight how such Countries that do not offer structural change so that strength- protections enhance economic de- ened enforcement can become sus- velopment and innovation in both adequate protection of tainable. our countries. These alliances — The participation of numerous under the banner of “Entrepreneurs intellectual property rights high-level PRC officials in Amb. Unite” — are a critical component Huntsman’s IPR Dialogue in Bei- in achieving our IP objectives. are “named and shamed” in jing last November, and improved The message appears to be tak- access to government offices and ing root. In October 2010 China’s the annual Special 301 Report business chambers, may also be State Council announced a six- signs of closer cooperation on the month campaign of heightened en- prepared by the Office of the issue. Washington pressed the Chi- forcement, called the Program for a nese government on these issues at Special Campaign on Combating U.S. Trade Representative. the December meeting of the Joint IPR Infringement and Manufac- Commission on Commerce and ture and Sales of Counterfeit and Trade, and built upon those efforts Shoddy Commodities. While some cynics dismissed this during the state visit of President Hu Jintao to the United as “just another campaign,” it is the first time that any- States in early 2011. thing like it has been announced by the State Council and Progress on both the State Council campaign and these coordinated across multiple Chinese ministries. The cam- government-to-government dialogues will be highlighted paign represents an opportunity to press for appropriate in submissions from industry and Mission China for inclu-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 35 F OCUS

sion in the USTR’s Special 301 Re- While piracy affects the entire keener; the challenge is tougher; port, to be published in April. and that is why innovation is more U.S. economy, counterfeit important than ever. It is the key to The Value of good, new jobs for the 21st century. Protecting Innovation medicines pose a particularly That’s how we will ensure a high The Founding Fathers’ foresight quality of life for this generation and with regard to intellectual property serious global public health future generations.” rights laid the foundation for our Everyone wants to live in soci- strong economy by ensuring the and safety threat. eties where promoting cultural de- freedom to innovate and offering in- velopment, fostering innovation centives to encourage innovation. and growth, and protecting public More than two centuries later, Pres. Obama launched the health and safety are goals that are cherished and fostered. U.S. government’s Strategy for American Innovation, in- So we should be wary of all arguments for weakening in- tended to direct more than $100 billion in American Re- tellectual property protections, which would put these val- covery and Reinvestment Act funds to projects that will ues at risk and undermine our future. spur innovation. With that basic principle in mind, State’s Office of In- In announcing the program in 2009, the president com- tellectual Property Enforcement is dedicated to protect- mented: “History should be our guide. The United States ing the right of 21st-century Benjamin Franklins to benefit led the world’s economies in the 20th century because we from their inventions and creations — not just at home but led the world in innovation. Today, the competition is all over the world. I

Watch for the October FSJ’s annual roundup of books by current and former members of the Foreign Service and their families.

2011 ANNUAL FS AUTHORS ROUNDUP

36 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUSONTHE E CONOMIC /C OMMERCIAL F UNCTION

DOING WELL BY DOING GOOD: STATE’S ECONOMIC POLICY EFFORTS

EEB SEEKS TO BE A FORCE MULTIPLIER FOR THE INTEGRATED APPLICATION OF THE DIPLOMATIC AND ECONOMIC INSTRUMENTS OF AMERICAN POWER.

BY JOSE W. FERNANDEZ

he Obama administration which was awarded a $21 million deal to supply the Philip- recognizes that robust international economic engagement pine Central Bank with 4,600 metric tons of coin metal, to is a critical contributor to our nation’s prosperity and se- multinational enterprises like Boeing and Engine Alliance curity.T Led by Under Secretary of State for Economic, (a General Electric/Pratt & Whitney joint venture) which, Energy and Agricultural Affairs Robert D. Hormats and respectively, won bids to supply Emirates Airlines with 30 myself, the Department of State economic team is pursu- aircraft valued at $9.1 billion, and engines and associated ing the following initiatives to boost global economic services valued at $4.8 billion. growth and development — an approach we call “doing EEB’s Global Entrepreneurship Program promotes a well by doing good.” business “ecosystem” that nurtures and rewards innovative businesspersons and establishes links with U.S. counter- Promoting Business Advocacy parts. This not only gives U.S. companies new opportuni- and Entrepreneurship ties but also uses existing programs to spread the benefits The Bureau of Economic, Energy and Business Affairs of economic development and globalization to our trading advocates for U.S. companies large and small, all over the partners. world, in order to boost exports and create jobs for Amer- A key component of this effort is women’s economic icans. Many overseas missions have established special empowerment through ongoing programs such as the teams to help U.S. firms successfully enter or expand in Global Women’s Business Initiative, the African Women’s foreign markets. Recent beneficiaries of these efforts Entrepreneurship Program and the Asia-Pacific Economic range from Tennessee-based Jarden Zinc Products Inc., Cooperation Women’s Leadership Network. Last July the 34 AWEP participants signed a memorandum of under- Jose W.Fernandez has been assistant secretary of State for standing with the African Growth and Opportunity economic, energy and business affairs since Dec. 1, 2009. Act/African Women Entrepreneurs’ Platform, and are also Before assuming those duties, he served as a partner in the pursuing bilateral trade opportunities. In addition, State New York office of Latham & Watkins and global chair of has established a community Web site for program partic- the firm’s Latin America practice. ipants (https://alumni.state.gov), trainers and U.S. officials,

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 37 F OCUS

and held a regional training program Many overseas missions Then there is the Trans-Pacific in Abuja in December. Partnership, a regional free trade The bureau is also the home for have established special agreement under negotiation among the Award for Corporate Excellence nine Asia-Pacific states: Australia, program, which celebrates the im- teams to help U.S. firms Brunei, Chile, Malaysia, New Zea- portant role U.S. businesses play in land, Peru, Singapore, the United advancing best practices, good cor- successfully enter or expand States and Vietnam. The TPP aims porate governance and democratic for high standards concerning issues values overseas. In 2010, the winners in foreign markets. such as labor and the environment. of the ACE in the multinational cat- The protection of U.S. workers’ egory were Cisco, for its programs in rights, in particular, is at the heart of Israel enhancing connectivity, education and opportuni- our global trade enforcement effort. Last July, the United ties for women and youth; and Mars, for its work in Ghana States filed its first-ever labor case against an FTA partner, in promoting sustainability of cocoa-growing communities Guatemala, for violating its labor rights obligations under and sensitizing them against child labor. In the small-to- the Central America-Dominican Republic Free Trade medium-sized enterprise category, the winner was Deni- Agreement. matrix, for its efforts in Guatemala to reduce the The department also plays a leading role in the fight environmental impact of its textile and apparel operations against the manufacture and sale of counterfeit medicines, and to help disadvantaged youth and the homeless. (See a particularly severe public health problem in developing www.state.gov/e/eeb/ace/index.htm for more information.) countries. We work with foreign governments, interna- tional organizations and the private sector to combat the Opening Overseas Markets flow of these dangerous products through education and The Bureau of Economic, Energy and Business Affairs’ strengthening regulatory and enforcement systems. experienced negotiators are pursuing a full plate of re- For example, my bureau’s international Campaign gional, subregional and bilateral free trade agreements, in against Counterfeit Medicines is funding a series of Latin addition to conducting strategic economic dialogues with American regional workshops on the subject. The first of such key countries as India, Indonesia, Kazakhstan, Kyr- these, held in November 2010, resulted in the launch of a gyzstan, Russia, Tajikistan, Turkey, Turkmenistan and new public-private working group that will enhance Uzbekistan. Guatemala’s capacity to combat counterfeit pharmaceuti- Trade success stories in 2010 include the negotiation of cals. The working group’s first task is to develop a stream- outstanding issues related to the U.S.-Korea Free Trade lined protocol for testing suspect medicines. Agreement, led by the Office of the U.S. Trade Repre- EEB also oversees U.S. participation in the Kimberley sentative. The U.S. International Trade Commission esti- Process, a multistakeholder organization established in mates that, once passed by Congress, the tariff cuts in the 2003 to restrict the trade in “conflict diamonds” mined il- agreement would increase American exports by more than licitly by rebel movements, so that the proceeds they gen- $10 billion. Another success was the completion of the erate cannot be used to overthrow legitimate governments. U.S.-Canada Agreement on Government Procurement, which guarantees U.S. firms access to markets worth tens Supporting U.S. International of billions of dollars. Financial Goals State recently concluded the 100th “Open Skies” agree- We work closely with the Department of the Treasury, ment, increasing global opportunities for U.S. air carriers the National Security Council and other agencies to en- and bringing jobs and improved transportation links to the sure that U.S. foreign policy equities are advanced in the U.S. State also helped reopen pork markets in China, Rus- Group of 8 and the Group of 20. EEB played a direct role sia and South Korea after their closure during the 2009 in crafting the G-20 Framework for Strong, Sustainable swine flu pandemic. We are also working to liberalize ship- and Balanced Growth and is helping to draw up a devel- ping markets, through maritime agreements that eliminate opment agenda for the G-20 that includes a public finance restrictions in foreign shipping markets. initiative linked to fiscal legitimacy. This aims to boost the

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capacity of developing countries to The Global Entrepreneurship tion and the Inter-American De- collect resources internally for velopment Bank. their own development, by com- Program promotes a business Working with Central Ameri- bating corruption and improving can banks and financial institutions fiscal transparency. Progress here “ecosystem” that nurtures and already receiving workers’ remit- could reduce dependence on for- tances from the United States, eign assistance while creating rewards innovative BRIDGE enables a financial insti- room in donor budgets for new tution to issue a debt instrument development expenditures. businesspersons and establishes to raise capital, backed by the re- To ensure the proper use of mittances flowing through it. By U.S. aid, our bureau also evaluates links with U.S. counterparts. utilizing the guarantee and techni- the budget processes of all recipi- cal assistance tools of each agency, ent countries. Toward this end we it will enable access to lower-cost, are pursuing a Fiscal Transparency Enhancement Initia- longer-term investment capital. Moreover, the program tive in cooperation with other agencies and exploring op- helps ensure that capital is directed toward investment in tions for collaboration with multilateral donors and critical sectors such as infrastructure and commercial de- international financial institutions to improve the quality velopment. and accountability of public expenditures. BRIDGE is a great example of the close relationship EEB also works to relieve poor countries of unsustain- between EEB and embassies. Foreign Service officers in able debt burdens. We help ensure that countries under- San Salvador and Tegucigalpa were vital in facilitating take economic and policy reforms for prudent debt needed assessments and securing local cooperation. We management through the Paris Club, an informal group hope that these successes will be replicated elsewhere in of 19 official creditors, and through the Highly Indebted the region and globally. Poor Countries Initiative, a joint World Bank–IMF pro- gram begun in 1996 that encourages economic and finan- Safeguarding Energy and Food Supplies cial reforms aimed at creating debt sustainability. To date, Both bilaterally and through the G-20 process, State 32 countries have completed the HIPC program, includ- encourages the sharing of country data on oil demand, ing Afghanistan, Haiti and Liberia. In total, the U.S. has stocks and investment, and the elimination of economi- forgiven over $2 billion in debt owed by these countries. cally distorting fossil fuel subsidies. EEB also promotes energy diversification by assisting other countries to adopt Putting Remittances to Work. low-carbon futures, through the promotion of renewable Shortages of capital remain one of the largest hurdles to energy, sustainable biofuels and sound energy policies. sustainable economic growth in emerging economies. In For example, in April 2010 we collaborated with the U.S. 2010 alone, people from developing nations working Trade Development Agency to organize a Clean Energy abroad sent home more than $325 billion in remittances, Trade, Technology and Investment Forum in Manila. This according to the latest World Bank–IMF estimates, to sup- forum, co-sponsored by the Association for Southeast port friends and families — compared with approximately Asian Nations, promoted U.S. technology in a region that $126 billion in official development assistance in 2010, ac- is increasingly eager to adopt it. cording to the OECD. EEB is also active in implementing the U.S.-Brazil bio- Last September, we formalized partnerships with the fuels initiative, which is advancing research, development governments of El Salvador and Honduras to develop and and the use of biofuels in the hemisphere. Through this implement financing structures that channel remittance cooperation, the bureau is currently supporting activities in flows to investment. This effort, known as the Building five countries in the Caribbean and Central America, as Remittance Investment for Development, Growth and well as two countries in Africa. And at the November 2010 Entrepreneurship Initiative, is led by the State Depart- Americas Competitiveness Forum in Atlanta, I established ment in partnership with the U.S. Agency for International the U.S.–Central American Renewable Energy Forum to Development, the Overseas Private Investment Corpora- advance clean energy use in this oil import-dependent re-

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gion. EEB also plays a key role in The BRIDGE Initiative is a Aware of this great potential, the adjudicating applications for liquids department is working to help de- pipelines crossing the U.S. borders great illustration of the close veloping countries realize the ben- to and from Canada and Mexico. efits of new communications tech- In addition, EEB plays a key role relationship between EEB nologies. For instance, we recently in the Global Hunger and Food Se- completed a nine-year undersea curity Initiative to reduce poverty and embassies. fiber optic cable project that in- and hunger through agricultural cluded Micronesia and the Mar- growth and food security. The key shall Islands, and are currently aims are to accelerate inclusive agriculture sector growth leading an interagency effort to support the development through improved agricultural productivity and expanded of Iraq’s communications technology sector. markets for small holders’ produce, as well as to improve While championing an open, global Internet, we have nutrition. also consistently stressed the importance of keeping its in- We work with missions in Africa, Asia and Latin Amer- frastructure secure in dealings with such multilateral or- ica to develop country-led plans that comprehensively ad- ganizations as the ITU, the Organization for Economic dress the underlying causes of hunger and undernutrition Cooperation and Development, and the Asia-Pacific Eco- and promote longer-term, sustainable agricultural devel- nomic Cooperation forum. We are making the same pitch opment. The United States has also pledged at least $3.5 for cybersecurity to bilateral partners. With Mexico, for billion to improve food security,agricultural production and instance, we are negotiating the development of an exten- nutrition in approximately 20 countries as part of the “Feed sive cross-border communications network that will bring the Future” program. State economic officers in Wash- together federal, state, local and tribal law enforcement ington and overseas are key players in ensuring a policy en- and public safety organizations. vironment favorable for these vital assistance programs. The department’s economic team is also working to ad- The bureau is also pursuing biotechnology to promote dress critical telecommunications needs related to disas- U.S. agricultural exports and meet the needs of a growing ter response, recovery and rebuilding — particularly in global population, while mitigating the environmental chal- developing nations overwhelmed by crises — through en- lenges of climate change. Since 2002, EEB has invested gagement with private-sector technology leaders and in- between $350,000 and $500,000 a year in outreach to pro- teragency colleagues. Last July we hosted a telecommuni- mote acceptance of biotechnology. This program has low- cations industry round table on Haiti relief and recon- ered barriers to biotech grain in China, ended piracy of struction to share information about U.S. efforts and facil- biotech soybeans in Brazil, facilitated the commercializa- itate coordination among private stakeholders and with tion of biotech maize in the Philippines and Egypt, and Washington in future disaster recovery efforts. opened access for U.S. agricultural biotechnology to east- ern and southern Africa via the Common Market for East- The Importance of Economic Diplomacy ern and Southern Africa. These efforts collectively America’s leadership has long stood on a foundation of represent billions of dollars in sales of U.S. agricultural economic strength, but our dominance can no longer be products. taken for granted. More than ever before, economic and commercial issues are reshaping the global landscape and Promoting Telecommunications new, dynamic financial and population centers are driving and Cybersecurity change. Research conducted by the International Telecommu- With those trends in mind, the Bureau of Economic, nication Union indicates that a 10-percent increase in the Energy and Business Affairs seeks to be a force multiplier number of fixed telephone lines increases a country’s gross for the integrated application of the diplomatic and eco- domestic product by around 0.5 percent, while the same nomic instruments of American power. All our outreach increase in mobile phone lines increases it by 0.7 percent. is intended to preserve the United States’s role as a stew- Even more remarkably,a 10-percent increase in broadband ard of an open international system that encourages trade penetration can boost GDP by an average of 1.3 percent. and investment and promotes good governance. I

40 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 F OCUSONTHE E CONOMIC /C OMMERCIAL F UNCTION

THE TOP 14 ECONOMIC WONKISMS

WHO SAYS ECONOMICS IS A DISMAL SCIENCE? HERE IS A TONGUE-IN-CHEEK GUIDE TO HELP YOU KEEP UP WITH THE CURRENT POLICY DISCUSSION.

BY STEPHAN THURMAN

very profession has its to diminish. At that point the work force that has mi- own unique lexicon, and economics is no exception. The grated to the cities and industrial centers from the vil- use of specialist shorthand increases markedly during pe- lages will begin to have greater bargaining power to riods ofE high economic uncertainty. Economists and demand larger wage increases, and China’s labor-inten- journalists use jargon they expect their readers to know, sive competitive advantage on world markets will erode. or they fail to give context, because they imagine readers Today employment is still larger in the agricultural have been assiduously following previous explanations. sector, but current trends suggest it might be overtaken This article attempts to decode some concepts and terms by employment in the industrial sector by 2015. How- lay people encounter but seldom see defined. To quote ever, given the country’s population, it would not take the late, great Anna Russell, many of these wonkisms much of a change in demographic and social attitudes for should have the caveat, “I am not making this up.” an increase in births to postpone this turning point far 1. China hits its Lewis Turning Point when it runs into the future. out of people. A challenge facing Beijing’s medium-term 2. Developing economies fear the dreaded Trilemma growth prospects is the so-called Lewis Turning Point, Paradigm. According to the Trilemma Paradigm of which occurs when the supply of surplus rural labor starts open-economy macroeconomics, a country may face a situation where policymakers are able to select only two Stephan Thurman is the lead international macroecono- out of three choices: (1) a pegged or managed exchange mist in the Office of Economic Policy Analysis and Public rate, (2) free flows of capital and (3) independence of Diplomacy in the Bureau of Economic, Energy and Busi- monetary policy. (Some economists prefer to call the ness Affairs. Prior to coming to the State Department in Trilemma the “impossible trinity.”) It has troubled poli- 2002, he was principal analyst in the Economics Depart- cymakers for the better part of a century, and is exasper- ment of the Organization for Economic Cooperation and ating them again now. Development in Paris, and has also held positions with the Just think what several of the troubled euro area coun- U.S. Congressional Budget Office and the Federal Reserve tries could do if they had a floating exchange rate and Board of Governors, among other organizations. managed their own monetary policy. If the tensions

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caused by the trade-offs above con- Moral hazard occurs is larger (and hence better) than an- tinue to worsen, however, there is a other, and determining what eco- potential risk that policymakers when a party insulated from nomic part of the aggregate con- could become aggressive and retal- tributed most to the overall growth iatory enough to engage in yet an- risk behaves differently than rate. If the period-to-period change other option, a currency war. That is negative, economists refer to that possibility prompted one commen- it would if it were fully as negative growth because that’s tator to rename the Trilemma a how they store the numbers in their “Quadlemma.” exposed to the risk. computers. This term tends to drive 3. What/who exactly needs a dose editors and the literati at large crazy, of global rebalancing? In a global for reasons that escape economists context, countries with large and persistent current ac- (who are, by contrast, generally counted among the “nu- count surpluses and high domestic savings rates should merati” — masters at math but not so good at writing). undertake policies that rely less on foreign demand as a 6. An optimum currency area is rarely optimum. driver of their economic growth and more on ways to en- As the euro area countries are discovering, adherence to courage domestic spending as a source of growth. Con- common monetary and fiscal policies is required for a versely, countries with large and persistent current single currency regime to exist. If these policies have ill account deficits need to focus on decreasing consumer effects on one part of the proscribed currency area, or if spending overall, and encourage domestic savings to sup- policy discipline is ignored (flouted) or not enforced in port investment and, hence, long-term growth. Thus, some places, then one of the key equilibrating mecha- global rebalancing is diplo-speak for complaints about the nisms that might help an afflicted area recover, namely adverse effects of spending habits by one country on an- currency depreciation, is missing. other country. Many have forgotten episodes in relatively recent U.S. 4. The Triffin Dilemma is a conflict many would economic history — the near collapse of the aerospace wish to have. This term refers to the fundamental conflict industry in the Northwest in the 1970s or the plunge in between short-term domestic and long-term interna- oil prices in the early 1980s that depressed the South- tional economic objectives faced by a country whose na- west, to name just two — when economic policy was tional currency also serves as an international reserve being set in Washington for all 50 states, even though currency (as the U.S. dollar does today). Such a dual role some had healthy economies while others were de- leads to a tension between national monetary policy and pressed. global monetary policy. 7. Moral hazard applies only if you’re not allowed to The country issuing the global reserve currency must sink. This phenomenon occurs when a party insulated be willing to run large trade deficits in order to supply the from risk behaves differently than it would if it were fully world with enough of its currency to fulfill world demand exposed to the risk. It arises when an individual or insti- for foreign exchange. This is reflected in fundamental im- tution does not accept the full consequences of its ac- balances in the balance of payments, specifically the cur- tions, and therefore has a tendency to act less carefully rent account: some goals require an overall flow of dollars than it otherwise would. out of the United States, while others require an overall Many worry that one likely outcome of policy meas- flow of dollars into the United States. ures taken during the global financial crisis, during which While there are certainly drawbacks to reserve cur- many financial institutions and manufacturing companies rency status, many countries would not mind all that were kept afloat by government bailouts, would be that much being able to run persistent current account financial and business CEOs would take extraordinary deficits while other countries purchase their assets be- risks in their future deals in the belief that the govern- cause they want the reserve currency. ment would bail them out. Some financial institutions 5. Negative growth is an oxymoron only economists were not bailed out during the financial crisis, however, could love. Economists are fond of describing economic and didn’t have to worry about moral hazard. events in terms of growth rates, noting which growth rate 8. Fiscal consolidation as an exit strategy: when

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and how much are the questions. Global rebalancing is diplo- plus credit plus demand deposits — When governments run up large is still increased. The QE policy has fiscal deficits in relation to gross speak for complaints about now temporarily reversed the sig- domestic product, they usually do nificant change in monetary policy so in an attempt to stimulate the the adverse effects of operations that occurred in 1979, economy as it slides into recession when the Fed decided to stop at- and the automatic stabilizers of so- spending habits by one tempting to target the money sup- cial safety nets can no longer pro- ply and instead adjust its price, the tect its citizens. But once the country on another. key interest rates. recovery begins, governments need The Fed and other major central to consolidate and trim these stim- banks turned to quantitative easing ulative measures to control the growth in government to address current economic conditions, where recovery debt. from the global financial crisis is weaker than expected Fiscal consolidation is econ-speak for cutting back the or needed. Because interest rates — the major mone- stimulus. An exit strategy is a plan for when, exactly, to tary policy tool — are at or near zero and fiscal policy is do this retrenchment, how rapidly to carry it out, and in tapped out (at least from a political standpoint), QE is what magnitude. It has been a topic of considerable de- the only option left. Still, critics are concerned that, es- bate in international policy circles for several years now. pecially with some purchases of private financial instru- 9. Whether cyclically or structurally unemployed, you ments of questionable value, the quality of the central are still out of a job. Cyclical unemployment is a term bank’s balance sheet will diminish, and faith in the coun- for job loss that is tied to the frequent shifts in the busi- try’s currency will plummet. ness cycle that periodically reduce aggregate demand in 11. QE introduces a Hegelian dialectic with no syn- the economy. In this situation, the number of unem- thesis. In present-day economics, commentators de- ployed workers exceeds the number of job vacancies, so scribe the tension building between the U.S. Federal that even if full employment is attained and all open jobs Reserve’s apparent intent to engage in further quantita- are filled, some workers would still remain unemployed. tive easing and the intent of the Chinese central bank Structural unemployment occurs when a labor mar- (and others) to resist appreciation to stay competitive ket is unable to provide jobs for everyone who wants one with the dollar in Hegelian terms. The Fed has one “the- because there is a mismatch between the skills of the un- sis” of how monetary policy should proceed; China and employed workers and the skills needed for the available other governments stand by the “antithesis” of maintain- jobs. It lasts longer, and simple demand-side stimulus ing their currency values (while faced with the Trilemma will not readily abolish it. — see Wonkism #2). The trouble is that instead of a Structural unemployment may also rise due to per- “synthesis” — which can’t really happen in this case un- sistent cyclical unemployment: if an economy suffers less one thesis overpowers the other — the result tends from low aggregate demand that is long-lasting, many of to be stalemate, if not conflict. the unemployed become disheartened, their skills (in- 12. Deflation is dangerous to the health of the U.S. cluding job-searching ability) become “rusty” and obso- and global economies. Deflation describes an economy lete, and they may not fit the vacancies that are created whose growth is so depressed that the drawdown in ag- when the economy recovers. Persistence in structural gregate demand actually decreases prices and asset val- unemployment is commonly referred to as “hysteresis.” ues, prompting businesses to drop prices further in a 10. Quantitative easing is, simply, printing money. desperate attempt to get people to buy their products. When a central bank enters financial markets to buy gov- This may initially seem like a great thing for consumers, ernment and private financial instruments, it must pay except that the cause of deflation is a long-term drop in for these purchases with credit or checks drawn on its demand, which means that a recession is already under own balance sheet. Some refer to this as printing money; way — with job losses, declining wages, and an ongoing while the government printing presses may not physically decline in the value of homes and stock portfolios. produce currency, the money supply — defined as cash Like inflation, deflation is very difficult to combat

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once it becomes entrenched. The Negative growth government spending will simply most pernicious feature of the phe- be squirreled away by consumers nomenon is that monetary and fiscal is an oxymoron only and businesses, especially if they policy become nearly impotent. are in a mood to reduce debt and Any attempt to stimulate the econ- economists could love. build up reserves. omy instead encourages consumers Under the present economic and businesses to hoard the funds circumstances, U.S. fiscal policy is instead of spending or investing them. For that reason, fairly well tapped out (at least from a political will point of such measures are often described as being as futile as view), interest rates are at their zero bound, and the effi- “pushing on a string.” cacy of further and extraordinary quantitative easing by 13. The paradox of thrift is no paradox when you’re in central banks is in question precisely because of this phe- a liquidity trap. This is a twofer of related wonkisms that nomenon. are, in turn, related to conditions for deflation. The para- 14. Alphabet soup is needed to describe your recession. dox of thrift holds that collective thrift may be bad for the A double-dip recession is when an economy briefly re- economy. If everyone tries to save more money, aggregate covers only to slip back into recession again. A typical re- demand will fall — but total savings will be lower because cession, including the one just past, resembles the letter consumption and economic growth will also decrease. A “V,” with a sharp drop in growth followed by a rebound — liquidity trap exists when neither monetary policy nor fis- so far, at any rate. A double-dip recession more resembles cal policy is able to stimulate an economy, perpetuating a “W,” where growth drops sharply, returns to near nor- the paradox of thrift. The proceeds from lower interest mal rates, and then plunges again, eventually to recover. rates, increased money supply, lower taxes or stimulative Nor does the alphabet soup for describing the Great Recession just past (hopefully) stop there. Some econo- mists worried that it would turn out to be an “L” reces- sion, where growth rates drop sharply and stay depressed; Find State Department and or a “U” recession, where growth rates remain depressed AFSA Reading Lists Online at for quite a while before recovery. Neither of those shapes www.afsa.org/ads/books/ appear likely now. Some economists, however, still sus- pect that the present recession will end with a “square Buy all your travel guides, language root” recovery, so named for the mathematical symbol that books and pleasure reading would trace a sharp decline in growth rates followed by a through the AFSA bookstore. weak recovery to a flat line well below recent growth rate performance. Buy the Amazon Kindle and This list is by no means exhaustive. Moreover, it download and read first changes over time, depending on what is happening in the chapters for free before you global economy. Just when you think you’ve mastered the decide to purchase that new book. meaning of current wonkisms, some fool will invent a new one you’ve never heard of (see the ‘Quadlemma’ above). When you access Amazon.com For as long as this list is relevant, however, the reader can through our bookstore all your purchases will benefit AFSA demonstrate that he/she is among the most informed at no additional cost to you. guests at the next Georgetown cocktail party. Just imagine the admiring glances you will garner when the topic of a “V”- or “W”-shaped economic recovery is raised, and you knowingly respond that, in your opinion, it Start your purchase will no doubt be a “square root” recovery, due to the ques- on our site: tionable efficacy of the Fed’s QE2 in the face of the econ- www.afsa.org/ads/books/ omy’s liquidity trap that is likely to lead us into dangerous deflationary circumstances. I

44 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 THE GRAND SYLI’S FUNERAL

A RETIRED FSO RECALLS HIS PART IN THE CHAOTIC BURIAL OF AN AFRICAN PRESIDENT MANY YEARS AGO.

BY MARK G. WENTLING

clasped Vice President George H.W. Bush’s shoes ment following Touré’s death. tightly as we were being shoved into the dense That problem solved, we still had to get the vice presi- crowd of dignitaries in a sweltering room inside dent’s entourage to the first ceremony at the national sta- Conakry’s Grand Mosque. The day before, I had dium, where heat exhaustion became a concern as the joined White House Secret Service agents to in- temperatures and humidity both approached the 100-degree spect the mosque and verify with the grand imam mark. The scene was total disorder, with people milling that “infidels” would be allowed to enter the about in all directions. It looked like one of Africa’s big open mosque to observe the funeral of independent Guinea’s first markets. Ipresident, Ahmed Sékou Touré. One of modern Africa’s founding fathers, Sékou Touré was known to his people as A Wrong Turn the Grand Syli (Great Elephant). I was struck that nobody (except the Secret Service Everything checked out, so we thought the U.S. delega- agents) seemed to notice the pandemonium. We didn’t even tion was finally ready to participate in the daylong funeral realize the ceremonies in the stadium were over until the ceremonies planned for March 30, 1984. But as it happened, agent from the Guinean Foreign Ministry assigned to the despite our best efforts, we were still not prepared for the U.S. delegation told us we could leave. chaos that engulfed us. The Secret Service agents did their best to open a path for To start with, so many VIPs had come from around the Vice President Bush to enter his limousine but, to their hor- world that there was not enough room for all their planes at ror, he somehow got into the bus waiting for African presi- Conakry’s dilapidated, pre-independence airport. Just find- dents. This unexpected development obliged the agents to ing space for Air Force One and the cargo plane (carrying a run alongside the bus in congested streets for the couple of couple of limousines) used by Vice President Bush and his kilometers separating the stadium from the mosque. The party had been a real challenge, especially in the absence of weather and the attire of the day, black suits and ties, soon any certainty about who was in control of the host govern- took a heavy toll on them. Meanwhile, I was in my assigned position at the mosque, Mark G. Wentling spent nine years with the Peace Corps be- ready to welcome the vice president and the U.S. ambassador fore joining USAID in 1977. As an FSO, he served in Niamey, to Guinea, James Rosenthal. When they arrived, we joined Conakry, Lome, Mogadishu, Dar es Salaam and Washington, other Christian presidents and prime ministers headed for the D.C., before retiring from the Senior Foreign Service in 1996. side room that had been designated the day before as our He is currently the USAID country program manager for entry point into the mosque. The room was so small that we Burkina Faso. immediately felt like a can of sardines in a sauna.

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 45 As we stood cheek-to-jowl, with Pres. Touré will always be remem- perspiration flowing, I began to panic bered as the man who said “no” to when I became aware that all the More than a quarter- French President Charles de Gaulle’s pushing and shoving had trapped Am- 1958 offer of continued association bassador Rosenthal on the opposite century after Sékou with France, instead opting for inde- side of the room from us. At that pendence. The French promptly point, we were told to take off our Touré’s death, I am still bailed out of Guinea, even taking all shoes. I helped the vice president do the light bulbs with them. so, but when I bent over to remove waiting for Guinea But Sékou Touré will also be re- mine, I bumped heads with Benin’s membered for the ruthless bloody dic- president, Mathieu Kérékou. to find its way. tatorship he presided over until his Next, we waited for what seemed death on March 26, 1984, in a Cleve- an excruciatingly long time for the land clinic following an emergency inner doors of the mosque to open so evacuation on an ARAMCO plane we could take our places in the main from Saudi Arabia. Such a strange hall. As we waited and gasped for air, and pallbearers carried a casket to- ending to his life! I could see that the elderly and very ward the kiosk. We thought key dig- frail Félix Houphoüet-Boigny, presi- nitaries would be called at that point Portents and Hard Lessons dent of Coté d’Ivoire, was suffering to observe the burial, but that did not This story would not be complete greatly and being held up by his aides. happen. Because the Moroccans without noting that shortly before Perhaps the most remarkable im- gathered around the casket, no one Touré’s death, there had been a lunar pression from that day for me was the would see anything as it was placed in eclipse and a rare earthquake in north- way Vice President Bush stood, so the grave and quickly covered with west Guinea. For many Guineans, poised, cool and calm, without a drop concrete. these events were signs that some- of sweat on his brow. Just when we As we wondered what in the world thing important was about to happen. thought we could take no more, one of the Moroccan imams who were in And, lo and behold, within a few days the head imam’s assistants announced charge of the funeral were doing, we a rumor spread like wildfire that the that the leader had changed his mind were shocked when our Foreign Min- Grand Syli was dead. and non-Christians would not be al- istry handler told us the service was At first, nobody believed this could lowed to enter the mosque. The com- over and we could leave. be true; people thought it was just an- plaints were many and loud, but President Houphoüet-Boigny be- other ruse to maintain power and keep escaping the small room to the fresh air came indignant at this news and said everyone off balance. But after a few of the outside helped calm the group. he would not leave until he had signed days people began to believe it, and the condolence book. A book was large groups began to assemble The Burial quickly found and placed on a stand throughout the capital. Once outside, we put our shoes near the kiosk burial site. A number These groups went to work de- back on and walked around to the of other presidents also signed it as stroying the many images of the late other side of this huge mosque they briskly passed by the fresh ce- president and his much-hated politi- (Africa’s fourth-largest). There we sat ment that covered the grave of the cal party and building huge bonfires down on metal folding chairs that had Grand Syli. Then the races were on, out of Touré’s numerous books, which been placed under some trees near as all the VIPs got into their cars and had been required reading for all lit- the kiosk where Pres. Touré was to be headed for the airport at top speed. erate Guineans and the core curricu- buried. As the sun set, more chaos ensued. lum in all schools. Huge crowds gathered around us Planes that had been hovering over- The popular and spontaneous cele- and the Secret Service agents went head waiting for space to land at the bration that occurred in the streets re- bonkers as the crowds surged toward overcrowded airport blocked those al- minded me of the scene in “The us. I was called to help push people ready on the ground waiting impa- Wizard of Oz” where the death of the away. (I learned that the best way to tiently to take off. We were lucky, for wicked witch was joyously celebrated. do that is to push at waist level, not the the big planes that had brought Vice Overnight, all signs of Touré and his shoulders.) President Bush and his party were party’s 26-year rule were erased. I was Crowd control was getting very among the first to take off. It was a re- so encouraged by the turn of events dicey when the mosque doors opened lief to see him safely on his way. that I bid on a second Foreign Service

46 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 tour, thinking that, at long last, West Africa’s potentially richest country Have something would get on track. When I bent over to to say? Instead, I am sorry to say, I learned a hard lesson: once an African country remove my shoes, is driven in the wrong direction for a FSJ wants generation, the possibility of a quick I bumped heads with to know! recovery is slim. Just four days after the funeral, the military seized power Beninese President Send us your under the dictatorial leadership of Letter to the Editor Lansana Conté, who clung to power Mathieu Kérékou. until his death in 2009. Sadly, 26 years OR after Touré’s death, I am still waiting for Guinea to find its way. Perhaps the most bizarre aspect of Speak Out this chaotic funeral was the strong be- Sékou Touré’s grave site is adjacent about something lief that the casket was empty because to that of his great-grandfather, that’s on your mind! Sékou Touré’s body had been secretly Samory Touré, the famous pre-colo- spirited off to Morocco for burial. nial warrior chief who battled invad- E-mail [email protected]. Given the fact that Moroccan imams ing French troops for years before controlled the funeral from start to fin- being captured and exiled to Gabon. All submissions are edited for ish, and did not allow anyone else to But to this day, most Guineans do not grammar and punctuation, and see Touré’s corpse, this is a distinct believe their first president is buried must meet FSJ editorial guidelines. possibility. there. I

The ABCs of Education Allowances How to Choose The College By Pamela Ward That’s Right For You By Francesca Huemer Kelly Online High School Courses By Kristi Streiffert The International Baccalaureate Program: A Primer Online Education: By Francesca Huemer Kelly Unprecedented Opportunities By Kristi Streiffert Taking A Gap Year By Ingrid Ahlgren Community College: Time To Take Another Look ? FAQ: Educating Special Needs By Rebecca Grappo Children Overseas By Francesca Kelly Getting Found: Global Nomads 2.0 By Mikkela Thompson Going To College In America Dean Mitchell/iStockphoto.com By Francesca Huemer Kelly Building Resiliency in Global Nomads By Rebecca Grappo ARCHIVE OF Study Abroad: Take The Plunge By Brooke Deal Flying Solo — Going to College Articles on Education from Overseas: A Guide for Parents Lost And Found: By Rebecca Grappo Make this collection of authoritative International School Reunions Foreign Service Journal articles By Mikkela Thompson Special-Needs Kids and the Foreign Service: Dispelling the Myths the starting point for planning Applying to U.S. Colleges: By Pamela Ward your children’s education. A Primer for FS Teens By Francesca Huemer Kelly The Boarding School Option: A Tent for a Global Nomad Go to www.afsa.org/ads/school/ Dip Kids Fill Void at U.S. Colleges By Pamela Ward for a PDF of these articles. By Antje Schiffler

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 47

Peking, Rome, Quito, San Salvador and Port-au-Prince. ment’s legislative concept and plans in June, preliminary Chapin returned to Washington, D.C., in 1936 to serve work on the legislation continued at a slow pace in the sum- as assistant chief of the American Republics Division. After mer and fall. a tour in Montevideo, he was named executive secretary of There was no shortage of ideas about how to shape the the Committee on Political Planning in the Department of bill. The department had carried out several studies, in- State in 1943. Because re-establishing diplomatic relations cluding one with input from the Bureau of the Budget (the in Europe following Allied victory was a priority, this assign- precursor of today’s Office of Management and Budget). ment led directly to his 1943 assignment to Allied head- In addition, AFSA had earlier held an essay contest in the quarters in Algiers and, later, as chargé d’affaires, first in Foreign Service Journal, eliciting contributions from Algiers and then Paris. In January 1945 Chapin returned to throughout the Service that were turned over to his office. Washington as deputy director of the Office of the Foreign Chapin met regularly with the AFSA Executive Committee Service, assuming the directorship in May. and department division chiefs throughout the process. As the war wound down, it became apparent that both Perhaps most important, however, were his own con- State and the Foreign Service cepts of the structure and ad- were ill-prepared to meet the de- ministration the new act should mands of the postwar world. prescribe. These were based on Both institutions were seriously Chapin was among the first the Navy personnel system, and understaffed and lacked the pro- the Navy’s DNA remains evident fessional skills needed to meet the group of officers appointed to this day. challenges emerging from the In December 1945, the new new international order. pursuant to the Rogers Act of 1924, assistant secretary for adminis- Moreover, as wartime agencies tration, Donald S. Russell, a — e.g., the Office of War Infor- which created the modern close associate of Sec. Byrnes, in- mation, Office of Strategic Serv- structed Chapin to prepare a ices and Office for Inter-Ameri- Foreign Service. complete draft of a new Foreign can Affairs — were phased out in Service Act. Four critical deci- 1945 and 1946, many of their sions were made at this juncture. functions and personnel were The legislation would codify in transferred to State. law key elements of the system intended to: At the same time, more than 12,000 employees, mostly • Restrict political influence and patronage; serving overseas, were added to State’s rolls, posing new • Establish a Foreign Service Reserve officer element; budgetary, operational and managerial burdens. These num- • Permit limited lateral entry from the newly added per- bers dwarfed the department’s Foreign and Civil Service sonnel; and staffs. A May 1946 State Department report lists 55 chiefs • Defer to a later date the larger question of amalgamat- of mission, 818 Foreign Service officers, 640 auxiliary (tem- ing the existing Foreign and Civil Service elements into a porary) FSOs, 3,800 non-career vice consuls and other staff; single unit. and 2,500 alien employees. (Civil Service data for State at As if that task were not daunting enough, enactment that time are not available.) would be sought during the congressional session ending July Integration of these functions and personnel coincided 31, 1946, just seven months away. Chapin and his six-person with a transition in the department’s leadership. Secretary of drafting committee were under the gun. State James F. Byrnes, a Truman confidant and a former They finished a first draft of the bill on Jan. 3, 1946. After South Carolina senator, replaced Edward R. Stettinius in July review and revision within State’s Administrative Division, 1945, bringing in a new group of senior officials who joined Chapin circulated a summary of its principal features to sen- those already added to manage the new responsibilities. ior department officials. Their responses in hand, a second This, in turn, delayed a planned effort to enact new Foreign draft was completed on Feb. 1 and circulated for formal de- Service legislation during the first session of the 79th Con- partmental clearance. It established a framework consisting gress in 1945. of the following elements: • A Director General of the Foreign Service position, Creating the Foreign Service Act with enhanced authority; As director of the Office of the Foreign Service, Chapin • General executive oversight of all personnel actions rest- was charged with developing the reform legislation. Be- ing with the Board of Foreign Service Personnel, giving it cause President Harry Truman had approved the depart- greater authority and a larger State Department majority;

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 49 • An enhanced role for the Board The Administration Division stood CHANGE OF ADDRESS of FS Examiners in designing and con- firm on this issue, however, and pre- ducting entry exams; vailed with the support of Sec. Byrnes. • The FS officer corps structure, Chapin, however, negotiated several comprised of eight ranks including a compromises, including provisions re- newly established minister level, an FS garding the FSR group; the name and Moving? Reserve system, three staff officer lev- authority of the Board of Foreign els, and American and alien clerk/em- Service Personnel (which would soon ployee ranks, all with fixed salary change to the Board of the Foreign ranges (apart from alien workers); Service); and removal of the Foreign • Updated personnel practices, Service criterion for the deputy direc- adding promotion-up, selection-out tor general position. None were rules for Foreign Service officers; gamechangers, meaning that Chapin Take AFSA • Criteria for Foreign Service Re- had preserved the core of the bill. On serve officers and FS lateral entry pro- April 16, 1946, Sec. Byrnes signed and cedures; and forwarded the cleared draft to BOB, With You! • The Foreign Service Institute, to after which an initial congressional be headed by a presidential appointee hearing was set for May 6. Change your address (later amended) under the general su- online at: pervision of the director general. The House Weighs In www.afsa.org/comment.cfm When this draft was circulated to On April 8 a routine House For- all divisions (today’s bureaus) on Feb. eign Affairs Committee hearing on the 2, 1946, it ran into immediate opposi- State Department Point of Order bill Or tion, threatening Chapin’s March 15 (a housekeeping procedure designed deadline for moving the final version to reconcile certain approved appro- Send change of address to: to the Bureau of the Budget for re- priations that lacked statutory bases) AFSA Membership view. The newly arrived assistant sec- led to a larger discussion of the pro- Department retary for information and cultural posed Foreign Service Act revisions. 2101 E Street NW activities (largely inherited from war- Committee members suspected the Washington, DC 20037 time agencies), William Benton, led bill might include specific issues al- the charge. ready incorporated in the draft revi- Formerly principal partner in the sion. Benton and Bowles advertising firm, Accordingly, Committee Chairman publisher of the Encyclopedia Britan- Sol Bloom, D-N.Y., suspended its con- nica and, later, a senator from Con- sideration and directed the depart- necticut, Benton was a heavy hitter. ment to provide details of the new Two other senior officials, Assistant legislation. He also named a special Secretary for Economic Affairs William subcommittee to review the depart- L. Clayton and Special Assistant for In- ment’s proposals and report back to telligence Alfred McCormack, joined the full committee. This proved a piv- him in voicing objections. Chapin and otal point in the enactment process. Russell were taken aback by the scope Apprised of this development, and tenor of their opposition. Chapin was uncertain about the pro- Although most of their objections priety of sending draft legislation to were procedural, four issues required Congress without BOB clearance and extended negotiations to resolve. The held back, despite repeated requests most significant of these, echoed later from the subcommittee. The May 6 by the budget office, was the detailed hearing had shown that the clearance nature of the bill, which was correctly process would be protracted and seen as limiting the executive discre- problematic, almost certainly preclud- tion of the Secretary of State and the ing approval of the bill during the cur- president. rent session.

50 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 After internal discussions, Chapin tween May 9 and May 28, 1946, the decided to explain the situation to the subcommittee steadily assumed own- budget office and request its permis- Chapin not only ership of the bill. None of the many sion to forward the draft legislation to technical amendments adopted un- the Hill; unable to prevent the House developed the legislation dercut the bill’s central thrust. The action, the bureau reluctantly granted evolving situation, however, raised a his request. The draft then went to that would become the flag for Chapin and others in the de- the subcommittee. partment. How would BOB, despite Chapin anticipated that the sub- Foreign Service Act of having authorized the department to committee would share some of the deal directly with the subcommittee, BOB’s concerns. Again, he was sur- 1946 but shepherded it respond to a fait accompli? prised, this time pleasantly. The sub- committee not only supported all of through Congress. More Hurdles the department’s central positions, but In a word, poorly. Although the de- in some cases it even went further partment had kept the Bureau of the (e.g., authorizing FSOs to accept pres- Budget broadly apprised of the hear- idential appointments without losing ings, events were rapidly moving to- their Foreign Service status). source of growing concern about al- ward a collision. Having prepared a Its enthusiasm stemmed in large leged communist infiltration of the de- final draft of the bill with the subcom- part from the subcommittee’s belief partment. (Another factor in the mittee’s input, Chapin again consulted that Congress had for too long abdi- subcommittee’s support was personal his superiors. cated its authority to the executive affinity with Sec. Byrne: two subcom- It was decided to have Sec. Byrnes branch. Patronage was seen not only mittee members were close friends.) request the budget office’s approval of as corrosive to professionalism, but a In the course of eight hearings be- this draft before sending it to the sub-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 51 committee. The Secretary’s June 12, ity of the president and Secretary of 1946, request for approval was met State to manage foreign policy — a with silence. Finally, on June 26, BOB Selden Chapin legislative intrusion on executive pow- advised both the department and sub- ers. These provisions were: the crite- committee that it would oppose the went on to a ria regarding the Foreign Service bill in its currrent form. director general position; creation of Time was running out. On July 12 distinguished career, the Board of the Foreign Service; es- the House Foreign Affairs Commit- tablishment of the Board of Examin- tee, ignoring BOB, reported the bill serving as chief of mission ers; and exemption of its director from out as H.R. 6967. A rule restricting Civil Service legislation. debate followed, and it went to the in five countries. Ultimately, BOB took a somewhat floor on July 20, 1946. After minor schizophrenic position. Its Aug. 7 last-minute amendments requested by memorandum detailed its objections the departments of Commerce, Labor and cited the department’s perceived and Interior, the bill was approved lack of good faith, but concluded that unanimously. Arthur Vandenberg, R-Ohio, rise and, BOB felt “obliged to recommend ap- The next hurdle — a high one speaking for Revercomb, withdraw proval.” given the legislative clock — was the the objection. The Foreign Service The principal factor in this anom- Senate, which had not yet been di- Act then passed unanimously. alous posture was an unstated fear that rectly engaged in the process. Sec. a veto would undermine Sec. Byrnes, Byrnes again intervened. He cabled The President Disposes who was then engaged in postwar Senate Foreign Relations Committee Although Chapin and associates treaty negotiations with the Allied Chairman Tom Connally, D-Texas, thought a veto unlikely, there was still powers and the so-called “Axis satel- from Paris, urging him to expedite the uncertainty regarding the legislation’s lite” nations. But Pres. Truman did process, and phoned other committee enactment. The White House re- not seem to share this concern. After members to urge action. Connally ceived the bill on Aug. 3, 1946, and it reading the BOB memorandum and quickly convened the committee in ex- had to be signed by President Harry accompanying file, he forwarded both ecutive session, and it reported the bill Truman within 10 working days to be- to his special counsel for an opinion, out as S. 2451. come law. together with a handwritten note say- At this point the only chance of Although the BOB staff was smart- ing he was inclined to veto the bill. passing the act lay in obtaining the ing from State’s perceived duplicity (its When news of this reached the de- Senate’s unanimous consent on July initial draft identified four major ob- partment the afternoon of Aug. 9, 29, the last business day before ad- jections), the office nonetheless rec- 1946, a Friday, it galvanized Assistant journment prior to the midterm elec- ommended that the president sign the Secretary Russell and Chapin. Russell tions. But when the clerk reading the bill and instruct the Secretary to seek immediately dictated a memorandum consent calendar came to S. 2451, remedial legislation in the next session to Webb and, as it was being prepared, Senator Chapman Revercomb, R-W. to overcome the four problematic pro- went to the White House for a per- Va., objected due to the lack of debate visions. sonal meeting with him. on the bill. Senators Connally, War- Newly installed Budget Director Russell accused Webb of sabotag- ren Austin, R-Vt., William Fulbright, James E. Webb had other ideas, how- ing the legislation; in the acrimonious D-Ark., and Robert Taft, R-Ohio, all ever. Coming to BOB from a senior exchange that followed, Webb refused intervened, urging him to withdraw post at Treasury, he believed that the to withdraw or modify the BOB posi- his objection, but to no avail. S. 2451 bureau’s position had eroded during tion. The following day Russell sent a was dead. Pres. Truman’s tenure, and wished to further memo to the special counsel, Or so it seemed. reverse that situation. He leaned to- refuting in detail the assertions in Chapin and his deputy, Julian Har- ward a veto and rejected the draft BOB’s memorandum to the president. rington, were crushed. But as they memo. But Russell wasn’t done. He ca- walked away from Capitol Hill, a de- In addition to its general reserva- bled Sec. Byrnes, still in Paris, outlin- partment liaison officer told them tions about the level of detail con- ing the situation and urging that he there was still hope. Returning to the tained in the act, BOB found several intervene directly with Pres. Truman. Senate just as the clerk finished read- major mandates objectionable because Byrnes responded immediately and ing the calendar, they saw Senator they statutorily restricted the author- effectively, basing his appeal on the

52 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 embarrassment he would suffer if the security assistance programs, and se- president vetoed the bill. So on Aug. cured Iranian membership in the 13, 1946, the president duly signed All Foreign Service star-crossed Central Treaty Organiza- H.R. 6967, making the Foreign Serv- tion military alliance. ice Act of 1946 the law of the land. personnel to this day are His assignment as ambassador to Panama (1953-1955) was less dra- A Distinguished in Selden Chapin’s debt. matic, while his tenure as chief of Diplomatic Career mission in Lima (May-August 1960) In November 1946 Chapin was was cut short by personal factors. named the first director general of the Chapin retired shortly thereafter, re- Foreign Service; later that month he turning to his home (Running Point), was promoted to Career Minister, a ter in Hungary (1947-1949) while the in Seal Harbor, Maine. rank created by the act. He had been most repressive regime in Eastern Eu- Selden Chapin died on March 26, a member of the first group of FSOs rope was consolidating its power, he 1963, age 64, and was interred in Ar- hired under the Rogers Act of 1924, was declared persona non grata based lington Cemetery. His gravestone is and was now a member of the first on false accusations that he had in- inscribed simply with his naval rank: group of chiefs of mission under the spired Cardinal Jozsef Mindszenty’s lieutenant junior grade, U.S. Navy. 1946 Act. resistance. Notwithstanding Chapin’s outstand- In the 14 years that followed, At other times he played key roles ing contributions to the conduct of Chapin went on to an even more no- in critical strategic achievements. American policy over an extended ca- table career, serving as deputy com- While ambassador to The Netherlands reer, his most lasting achievement mandant of the National War College, (1949-1953), he was involved in the was the Foreign Service Act of 1946. as well as chief of mission in five coun- formation of NATO and the Euro- We are in his debt, and should tries. His overseas missions were pean Council. Later in Iran (1955- continue to honor him as the “Father sometimes difficult. Serving as minis- 1958) he oversaw large economic and of the Modern Foreign Service.” I

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 53

AFSAAmerican Foreign ServiceNE Association • February 2011WS 2010 TAX GUIDE Federal and State Tax Provisions for the Foreign Service

he annual AFSA Tax Guide is designed Federal Tax Provisions lation of the five-year period for measuring as an informational and reference tool. The Military Families Tax Relief Act of ownership is suspended during any period TAlthough we try to be accurate, many of 2003 continues to provide a significant ben- that the eligible individual or his or her the new provisions of the tax code and the im- efit for Foreign Service families who sell their spouse is serving away from the area on qual- plications of Internal Revenue Service regula- homes at a profit,but would have ified official extended duty as a tions have not been fully tested. Therefore, use been unable to avail themselves of member of the uniformed caution and consult with a tax adviser as soon the capital gains exclusion (up services,the Foreign Service or as possible if you have specific questions or an to $250,000 for an individual/ the intelligence community. unusual or complex situation. $500,000 for a couple) from the The five-year period can- Foreign Service employees most frequently sale of a principal residence be- not be extended by more than ask AFSA about home ownership, tax liability cause they did not meet the In- 10 years. In other words, For- upon sale of a residence and state of domicile. ternal Revenue Service’s “two- eign Service employees who We have devoted special sections to these is- year occupancy within the five are overseas on assignment sues. years preceding the date of sale” can extend the five-year pe-

James Yorke ([email protected]), who com- requirement due to postings out- JOSH riod up to 15 years,depending piles the tax guide, would like to thank M. side the U.S. In relation to the sale on the number of years they Bruce Hirshorn, Foreign Service tax counsel, of a principal residence after May are posted away from their for his help in its preparation. 6,1997,the 2003 law provides that the calcu- home. Note that the provision is retroactive, so that anyone who has already paid the tax on the sale of a residence that would have qualified under the new law may file an New for 2009 and 2010 amended return to get the benefit of the new ongress has extended the first-time homebuyer tax credit and added special pro- rule. There is,however,a three-year statute of visions for members of the uniformed services, members of the Foreign Service limitations on this provision,after which one Cand employees of the intelligence community. These groups have an extra year to cannot obtain a refund. buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer For 2010, the six tax rates for individuals must buy or enter into a binding contract to buy a home by April 30, 2011, and settle remain at 10, 15, 25, 28, 33 and 35 percent. on the purchase by June 30, 2011. In addition, these employees are not subject to the The 10-percent rate is for taxable income up recapture provisions if the property ceases to be their principal residence because they to $16,751 for married couples, $8,376 for have been assigned out of the area on U.S. government orders. singles. The 15-percent rate is for income up Congress has also added a limitation on the $500,000 exclusion of capital gain re- to $68,001 for married couples, $34,001 for sulting from the sale of a taxpayer’s principal residence. For properties purchased after singles. The 25-percent rate is for income up Jan. 1, 2009, and not initially occupied as a principal residence, taxpayers must reduce to $137,301 for married couples, $82,401 for the capital-gain exclusion in proportion to the rental period’s ratio to the residence pe- singles. The 28-percent rate is for income up riod. to $209,251 for married couples and up to $171,851 for singles. The 33-percent rate is

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 55 A F S A N AFSANEWSBRIEFS E W S Last Call for Dissent and mulating policy. All the winners receive a $2,500 cash prize and are Performance Award Nominations honored at a ceremony in late June each year at the State Department. It’s not too late to nominate an outstanding member of the Foreign Anyone may send in a nomination, and the nominee may be a Service for one of AFSA’s awards for constructive dissent and exem- Foreign Service employee of any of the five foreign affairs agencies. plary performance. If you have witnessed someone challenging the The final deadline for nominations is Feb. 28. system or making an extraordinary difference in the lives of others For forms and more information about these prestigious while overseas, please take a few minutes to fill out a nomination form. awards, please visit www.afsa.org/awards, or contact Perri Green, The constructive dissent awards are unique in the U.S. government, Coordinator for Special Awards and Outreach, at [email protected] as no other agency recognizes the role of dissent in changing and for- or (202) 719-9700.

Mark Your Calendars for Life in the Foreign Service Upcoming AFSA Events BY BRIAN AGGELER

AFSA’s calendar adds new events weekly, and we want to draw your attention to some upcoming ones that you might find interesting. The AFSA Road Scholar programs continue to be among our most popular and well-received. We will be offering two in the coming months: One focusing on the Western Hemi- sphere from Feb. 8-11 and another with a Middle East focus from March 27-31. Both will take place at Washington’s Savoy Suites hotel. You may learn more about these pro- grams at www.afsa.org/roadscholar. Another upcoming event to note is our May 16 program featuring Ambassador Edmund Hull discussing his new book, High-Value Target: Countering al-Qaida in Yemen. A former U.S. ambassador to Yemen, Hull is a noted expert on this increasingly important country. We hope you can join us for one or more of these events. Our calendar is available online at www.afsa.org/events.cfm and is frequently updated.

AFSA HEADQUARTERS: (202) 338-4045; Fax: (202) 338-6820 Staff: Governing Board: STATE DEPARTMENT AFSA OFFICE: (202) 647-8160; Fax: (202) 647-0265 Executive Director Ian Houston: [email protected] PRESIDENT: Susan R. Johnson Business Department USAID AFSA OFFICE: (202) 712-1941; Fax: (202) 216-3710 STATE VP: Daniel Hirsch Director of Finance Femi Oshobukola: [email protected] USAID VP: Francisco Zamora FCS AFSA OFFICE: (202) 482-9088; Fax: (202) 482-9087 Controller Kalpna Srimal: [email protected] FAS VP: Henry Schmick Assistant Controller Cory Nishi: [email protected] PRESIDENT: [email protected] Labor Management FCS VP: Keith Curtis STATE VP: [email protected] General Counsel Sharon Papp: [email protected] RETIREE VP: Robert Houdek SECRETARY: F.A. “Tex” Harris RETIREE VP: [email protected] Deputy General Counsel Zlatana Badrich: [email protected] TREASURER: Andrew Winter USAID VP: [email protected] Labor Management Specialist James Yorke: [email protected] Senior Staff Attorney Neera Parikh: [email protected] STATE REPS: Carleton Bulkin FAS VP: [email protected] Staff Attorney Michael Willats: [email protected] Ako Cromwell FCS VP: [email protected] Office Manager Christine Warren: [email protected] Mary Glantz USAID Senior Labor Management Adviser Douglas Broome: Mike Haughey AFSA News [email protected] Les Hickman Editor Amy McKeever: [email protected] USAID Staff Assistant Patrick Bradley: [email protected] Bruce Matthews (202) 338-4045, ext. 516; Fax: (202) 338-8244 Member Services Raymond Maxwell Member Services Director Janet Hedrick: [email protected] Joyce Namde Foreign Service Journal Member Services Representative Richard Buscemi: [email protected] Lynn Nelson FSJ: [email protected] Administrative Assistant and Office Manager Ana Lopez: [email protected] Sharon White Editor Steven Alan Honley: [email protected] Communications, Marketing and Outreach USAID REPS: Michael Henning Senior Editor Susan Maitra: [email protected] Retiree Counseling & Legislation Coordinator Bonnie Brown: [email protected] Glenn Rogers Director of Communications Thomas Switzer: [email protected] Associate Editor Shawn Dorman: [email protected] FCS REP: Stephen Morrison Legislative Director Casey Frary: [email protected] Ad & Circulation Manager Ed Miltenberger: [email protected] FAS REP: Melinda Sallyards Executive Assistant to the President: vacant IBB REP: Al Pessin Art Director Caryn Suko Smith: [email protected] Scholarship Director Lori Dec: [email protected] On the Web RETIREE REPS: Janice Bay Scholarship Program Assistant Jonathan Crawford: [email protected] Robert (Bill) Farrand AFSA WEB SITE: www.afsa.org Road Scholar Administrator Bernard Alter: [email protected] Mary Ellen Gilroy How to Contact Us: Marketing & Outreach Manager Asgeir Sigfusson: [email protected] FSJ: www.afsa.org/fsj and www.fsjournal.org Molly Williamson Special Awards & Outreach Coordinator Perri Green: [email protected]

56 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F for income up to $373,651 for married cou- Extension for Taxpayers Abroad may deduct them even if you are taking the S ples and singles. Annual income above Taxpayers whose tax home is outside the standard deduction. However,the deduction A $373,651 is taxed at 35 percent. Long-term U.S. on April 15 are entitled to an automatic includes only the unreimbursed costs of N capital gains are taxed at a maximum rate of extension until June 15 to file their returns. moving your possessions and yourself and E 15 percent and are reported on Schedule D. When filing the return, these taxpayers your family to the new location; it does not This rate is effective for all sales in 2010, ex- should write“Taxpayer Abroad”at the top of include meals. W cept for those people who fall within the 10- the first page and attach a statement of ex- Medical expenses (including health and S or 15-percent tax bracket: their rate is either planation. There are no late filing or late pay- long-term care insurance, but not health in- 0 or 5 percent. Long-term capital gain is de- ment penalties for returns filed and taxes surance premiums deducted from govern- fined as gain from the sale of property held paid by June 15, but the IRS does charge in- ment salaries) are subject to a threshold of for 12 months or longer. terest on any amount owed from April 15 7.5 percent of Adjusted Gross Income. This until the date it receives payment. means that to be deductible,the medical cost Personal Exemption would have to exceed $2,250 for a taxpayer For each taxpayer,spouse and dependent Standard Deduction with a $30,000 AGI. There is no reduction of the personal exemption remains at $3,650. The standard deduction is given to non- itemized deductions for higher income tax- There is no personal exemption phase-out itemizers. For couples, the deduction is now payers for 2010. for 2010. $11,400, and for singles, $5,700. Married State and local income taxes and real es- couples filing separately get a standard de- tate and personal property taxes remain fully Foreign Earned Income Exclusion duction of $5,700 each, and head-of-house- deductible for itemizers, as are charitable Many Foreign Service spouses and de- hold filers receive an $8,400 deduction. An contributions to U.S.-based charities for pendents work in the private sector overseas additional amount is allowed for taxpayers most taxpayers. Donations to the AFSA and thus are eligible for the Foreign Earned over age 65 and for those who are blind. Scholarship Fund are fully deductible as Income Exclusion. American citizens and Most unreimbursed employee business charitable contributions, as are donations to residents living and working overseas are el- expenses must be reported as miscellaneous AFSA via the Combined Federal Campaign. igible for the income exclusion, unless they itemized deductions, which are subject to a Individuals may also dispose of any profit are employees of the United States govern- threshold of 2 percent of Adjusted Gross In- from the sale of personal property abroad in ment. The first $91,500 earned overseas as come. These include professional dues and this manner. an employee or as self-employed may be ex- subscriptions to publications; employment For 2010 tax returns, any interest paid on empt from income taxes. and educational expenses; home office,legal, auto or personal loans, credit cards, depart- To receive the exemption, the taxpayer accounting, custodial and tax preparation ment stores and other personal interest will must meet one of two tests: 1) the Physical fees; home leave, representational and other not be allowed as itemized deductions. If Presence Test, which requires that the tax- employee business expenses; and contribu- such debts are consolidated, however, and payer be present in a foreign country for at tions to AFSA’s Legislative Action Fund. Un- paid with a home equity loan,interest on the least 330 full (12 midnight to 12 midnight) reimbursed moving expenses are an home equity loan is allowable. Interest on days during any 12-month period (the pe- adjustment to income,which means that you educational loans will be allowed as an ad- riod may be different from the tax year); or 2) the Bona Fide Residence Test,which requires that the taxpayer has been a bona fide resi- Foreign Earned Income — Important Note dent of a foreign country for an uninter- rupted period that includes an entire tax year. The Foreign Earned Income Exclusion allows U.S.citizens who are not United States Most Foreign Service spouses and depend- government employees and are living outside the U.S. to exclude up to $91,400 of their ents qualify under the bona fide residence 2010 foreign-source income if they meet certain requirements. test, but they must wait until they have been Beginning in 2006, the IRS changed how the excluded amount must be calculated. overseas for a full calendar year before claim- This affects the tax liability for couples with one member employed on the local econ- ing it. Keep in mind that self-employed tax- omy overseas. Previously,you subtracted your excluded income from your total income payers must still pay self-employment (Social and paid tax on the remainder. The change now requires that you take your total income Security and Medicare) tax on their income. and figure what your tax would be,then deduct the tax that you would have paid on the Only the income tax is excluded. excludable income. Note: The method for calculating the tax For example: on non-excluded income in tax returns that A Foreign Service employee earns $80,000. include both excluded and non-excluded in- Teacher spouse earns $30,000. come was changed, beginning in 2006, so as Before 2006: Tax on $110,000 minus $30,000 = tax on $80,000 = tax bill of $13,121. to result in higher tax on the non-excluded Now (2006 and later): Tax on $110,000 = $20,615; tax on $30,000 = $3,749; total tax portion. (See the box on this page for a full = $20,615 minus $3,749 = tax bill of $16,866. explanation.)

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 57 A F S justment to gross income. Mortgage interest Car rental, mileage and other unreim- matter how much the home cost, unless the A is still,for the most part,fully deductible. In- bursed travel expenses,including parking fees loan is used for home improvements. The N terest on loans intended to finance invest- and tolls,may be deducted. The rate for busi- $100,000 ceiling applies to the total of all E ments is deductible up to the amount of net ness miles driven is 51 cents per mile for home equity loans you may have. The same income from investments. Interest on loans 2010. Those who use this optional mileage generally applies to refinancing a mortgage. W intended to finance a business is 100-percent method need not keep detailed records of ac- Points paid to obtain a refinanced loan can- S deductible. Passive-investment interest on tual vehicle expenses. They must, however, not be fully deducted the same year,but must investments in which the taxpayer is an inac- keep a detailed odometer log to justify the be deducted over the life of the loan. It is ad- tive participant (i.e., a limited partnership) business use of the vehicle and track the per- visable to save the settlement sheet (HUD-1 can be deducted only from the income pro- centage of business use. This optional Form) for documentation in the event your duced by other“passive income.” Interest on mileage method applies to leased vehicles, as tax return is selected by the IRS for audit. loans that do not fall into the above cate- well. Qualified residences are defined as the gories, such as money borrowed to buy tax- taxpayer’s principal residence and one other exempt securities, is not deductible. Official Residence Expenses residence. The second home can be a house, Since Oct.1,1990,employees who receive condo, co-op, mobile home or boat, as long Home Leave Expenses official residence expenses as the structure includes Employee business expenses, such as have not been allowed to basic living accommoda- home leave and representation,may be listed reduce their reportable in- tions, including sleeping, as miscellaneous itemized deductions and come by 3.5 percent. The bathroom and cooking facil- claimed on Form 2106. In addition to the 2- IRS ruling regarding ORE ities. If the second home is a percent floor, only 50 percent for meals and states that “usual ex- vacation property that you entertainment may be claimed (100 percent penses,” defined as 3.5 rent out for fewer than 15 for unreimbursed travel and lodging). Only percent of salary, are not days during the year, the in- the employee’s (not family members’) home deductible. Therefore the come need not be reported. leave expenses are deductible. AFSA recom- only expenses that are de- Rental expenses cannot be mends maintaining a travel log and retaining ductible are those above claimed either, but all prop- a copy of home leave orders, which will help the 3.5 percent paid out of erty taxes and mortgage in- if the IRS ever questions claimed expenses. pocket. Employees should terest may be deducted. It is important to save receipts: without save receipts for any out- JOSH receipts for food,a taxpayer may deduct only of-pocket expenses associ- Rental of Home $45 to $58 a day (depending upon the fed- ated with their representa- Taxpayers who are over- eral meals-and-incidentals per diem rate at tional duties. These ex- seas and rented their homes the home leave address),no matter how large penses can be deducted as in 2010 can continue to the grocery or restaurant bill. Lodging is de- miscellaneous business expenses. deduct mortgage interest as a rental expense. ductible, as long as it is not with friends or Also deductible are property management relatives,or in one’s own home. The IRS will Home Ownership fees, condo fees, depreciation costs, taxes disallow use of per diem rates and any ex- Individuals may deduct interest on up to and all other rental expenses. Losses up to penses claimed for family members. If a $1 million of acquisition debt for loans se- $25,000 may be offset against other income, hotel bill indicates double rates, the single- cured by a first and/or second home. This as long as the Adjusted Gross Income does room rate should be claimed; and, if possi- also includes loans taken out for major home not exceed $100,000 to $150,000 and the tax- ble, the hotel’s rate sheet should be saved for improvements. On home equity loans, in- payer is actively managing the property. IRS scrutiny. terest is deductible on up to $100,000, no Note: A taxpayer who retains a property manager does not lose this benefit, as this is still considered active management of the Vehicle and Energy Provisions property. All passive losses that cannot be de- Motor Vehicle Tax ducted currently are carried forward and de- If you bought a motor vehicle in 2009 after Feb. 16, and did not pay the sales tax until ducted in the year the property is sold. 2010, you may be able to deduct state or local sales tax. Sale of a Principal Residence Credit for Energy-Saving Home Improvements Current tax laws allow an exclusion of up If you installed new windows,outside doors,insulation or other energy-saving meas- to $500,000 for couples filing jointly and up ures in your home in 2009 or 2010, you may be able to take a credit. to $250,000 for single taxpayers on the long- term gain from the sale of their principal res- For more information on these and other provisions, go to www.irs.gov. idence. One need not purchase another residence to claim this exclusion. All depre-

58 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F ciation taken after May 7,1997,will,however, amounts are subject to taxation. This exclu- to sell their property, hold the cash proceeds S be recaptured (added to income) at the time sion replaces the earlier tax-law provision in escrow, identify in writing within 45 days A of sale, and taxed at 25 percent. that allowed both the deferral of gain and a the property they intend to acquire, and set- N As we note, however, under “New for one-time exclusion of a principal residence tle on the new property within 180 days, E 2009 and 2010” on p. 55, after January 2009 sale. using the money held in escrow as part of the gain from the sale of a home can no longer be Temporary rental of the home does not payment. W excluded from gross income for periods disqualify one from claiming the exclusion. It is important to emphasize that the ex- S when it was rented out before you occupied The new tax law requires only that you have change is from one investment property to it as a principal residence. The only qualifi- occupied the house as your principal resi- another investment property — the key fac- cation for the capital-gains exclusion is that dence for the required period (two years out tor in the IRS evaluation of an exchange the house sold must have been owned and of five,extended). However,the 2009 legisla- transaction is the intent of the investor at the occupied by the taxpayer as his or her princi- tion requires that the “two years out of five time the exchange was consummated. The pal residence for at least two of the last five (extended)” cannot start until the date the IRS rules for these exchanges are complex years prior to the date of the sale. For the home is occupied as a principal residence for and specific, with a number of pitfalls that Foreign Service, the five-year period may be the first time. can nullify the transaction. An exchange extended by any period during which the Under Internal Revenue Code Section should never be attempted without assistance taxpayer has been away from the area on a 1031, taxpayers whose U.S. home may no from a tax lawyer specializing in this field. Foreign Service assignment, up to a maxi- longer qualify for the principal residence ex- mum of 15 years (including the five years). clusion may be eligible to replace the prop- Calculating Your Adjusted Basis There are some exceptions to the two-year erty through a “tax-free exchange” (the Many Foreign Service employees ask occupancy requirement,including a sale due so-called Starker Exchange). In essence, one what items can be added to the cost basis of to a “change in place of employment” (this property being rented out may be exchanged their homes when they are ready to sell. would include foreign transfers). This exclu- for another,as long as that one is also rented. Money spent on fixing up the home for sale sion is not limited to a once-in-a-lifetime sale, In exchanging the properties,capital gains tax may be added to the basis. To qualify as le- but may be taken once every two years. may be deferred. Technically,a simultaneous gitimate fixing-up costs, the following con- When a principal residence is sold, capi- trade of investments occurs. Actually, own- ditions must be met: 1) the expenses must be tal gains realized above the exclusion ers first sign a contract with an intermediary for work performed during the 90-day pe-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 59 A F S riod ending on the day on which the contract In the case of Foreign Service employees, conditions, do not tax income earned while A to sell the old residence was signed; 2) the ex- the domicile might be the state from which the taxpayer is outside of the state: Califor- N penses must be paid on or before the 30th the person joined the Service, where his or nia, Connecticut, Idaho, Minnesota, Mis- E day after sale of the house; and 3) the ex- her home leave address is, or where he or she souri, New Jersey, New York, Oregon, penses must not be capital expenditures for intends to return upon separation. Pennsylvania and West Virginia. The re- W permanent improvements or replacements For purposes of this article, the term quirements for all except California, Idaho, S (these can be added to the basis of the prop- “domicile” refers to legal residence; some Minnesota and Oregon are that the individ- erty, the original purchase price, thereby re- states also define it as permanent residence. ual not have a permanent“place of abode”in ducing the amount of profit). A new roof Residence refers to physical presence in the the state, have a permanent “place of abode” and kitchen counters are not “fix-up” items. state. Foreign Service personnel must con- outside the state, and not be physically pres- But painting the house, cleaning up the gar- tinue to pay taxes to the state of domicile (or ent for more than 30 days during the tax year. den and making minor repairs qualify. to the District of Columbia) while residing California allows up to 45 days in the state outside of the state, including during assign- during a tax year. These 10 states require the State Tax Provisions ments abroad, unless the state of residence filing of non-resident returns for all income Most Foreign Service employees have does not require it. earned from in-state sources. questions about their liability to pay state Foreign Service employees should income taxes during periods when they keep in mind that states could challenge are posted overseas or assigned to Wash- the status of government housing in the ington. future. Members of the Foreign Service are The following list gives a state-by- not treated as domiciled in their coun- state overview of the latest information tries of assignment abroad. Every active- available on tax liability, with addresses duty Foreign Service employee serving provided to get further information or abroad must maintain a state of domi- tax forms. Tax rates are provided where cile in the United States, and the tax lia- possible. For further information,please bility that the employee faces varies contact AFSA’s Labor Management Of- greatly from state to state. In addition, fice or the individual state tax authorities. there are numerous regulations con- As always, members are advised to dou- cerning the taxability of Foreign Service pen- A non-resident, according to most states’ ble-check with their state’s tax authorities. sions and annuities that vary by state. definitions, is an individual who earns in- To assist you in connecting with your This state guide briefly reviews the laws come sourced within the specific state but state tax office, we provide the Web site ad- regarding income tax and tax on annuities does not live there or is living there for only dress for each in the state-by-state guide,and and pensions as they affect Foreign Service part of the year (usually fewer than six an e-mail address or link where available. personnel. Please note that while AFSA months). Individuals are generally consid- Some states do not offer e-mail customer makes every attempt to provide the most up- ered residents, and are thus fully liable for service. The Federation of Tax Administra- to-date information, readers with specific taxes, if they are domiciled in the state or if tors’ Web site, www.taxadmin.org, also pro- questions should consult a tax expert in the they are living in the state (usually at least six vides much useful information on individual state in question at the addresses given. We months of the year) but are not domiciled state income taxes. also encourage readers to visit the state’s tax there. Web site (also listed). Foreign Service employees residing in the There are many criteria used in deter- metropolitan Washington, D.C., area are re- State Overviews mining which state is a citizen’s domicile. quired to pay income tax to the District of One of the strongest determinants is pro- Columbia,Maryland orVirginia,in addition ALABAMA: Individuals domiciled inAl- longed physical presence,a standard that For- to paying tax to the state of their domicile. abama are considered residents and are sub- eign Service personnel frequently cannot Most states allow a credit, however, so that ject to tax on their entire income regardless of meet due to overseas service. the taxpayer pays the higher tax rate of the their physical presence in the state. Alabama’s In such cases, the states will make a de- two states, with each state receiving a share. individual income tax rates range from 2 to 5 termination of the individual’s income-tax There are currently seven states with no percent on gross income over $4,000 for sin- status based on other factors, including state income tax: Alaska, Florida, Nevada, gle taxpayers or $10,500 for married filing where the individual has family ties,where he South Dakota, Texas, Washington and jointly. Write: Alabama Department of Rev- or she has been filing resident tax returns, Wyoming. In addition,New Hampshire and enue, 50 N. Ripley, Montgomery AL 36132. where he or she is registered to vote or has a Tennessee have no tax on personal income Phone: (334) 242-1170. driver’s license, where he or she owns prop- but do tax profits from the sale of bonds and E-mail: Link through the Web site,“About erty, or where the person has bank accounts property. Us” then “Contacts.” or other financial holdings. There are 10 states that, under certain Web site: www.ador.state.al.us

60 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F ALASKA: Alaska does not tax individual their physical presence in the state. The the excess over $93,532 for married filing S income or intangible or personal property. It Arkansas tax rate ranges in six brackets from jointly or $46,766 for singles. Non-resident A has no sales and use, franchise or fiduciary a minimum of 1 percent of net taxable in- domiciliaries are advised to file on Form N tax. Some municipalities levy sales,property come to a maximum of $2,623 plus 7 percent 540NR. Write: Personal Income Taxes,Fran- E and use taxes. Write: State Office Building, of net taxable income over $49,999. Write: chise Tax Board, P.O. Box 1468, Sacramento 333 West Willoughby Ave., 11th Floor, P.O. Department of Finance and Administration, CA 95812-1468. W Box 110420, Juneau AK 99811-0420. Income Tax Section, P.O. Box 3628, Little Phone: toll-free 1 (800) 852-5711 S Phone: (907) 465-2320. Rock AR 72203-3628. (inside the U.S.); (916) 845-6500 Web site: www.tax.state.ak.us Phone: (501) 682-1100. (outside the U.S.). ARIZONA: Individuals domiciled inAri- E-mail: Individual.Income@ E-mail: Link through the Web site’s zona are considered residents and are taxed dfa.arkansas.gov “Contact Us” tab. on any income that is included in the Federal Web site: www.arkansas.gov/dfa/ Web site: www.ftb.ca.gov Adjusted Gross Income, regardless of their CALIFORNIA: Foreign Service employ- COLORADO: Individuals domiciled in physical presence in the state. Arizona’s tax ees domiciled in California must establish Colorado are considered residents and are rate ranges in five brackets from a minimum non-residency to avoid liability for Califor- subject to tax on their entire income regard- of 2.59 percent to a maximum of 4.54 percent nia taxes (see FTB Publication 1031). How- less of their physical presence in the state. of taxable income over $300,000 for married ever, a“safe harbor”provision allows anyone Colorado’s tax rate is a flat 4.63 percent of filing jointly or $150,000 for single filers. who is domiciled in state but is out of the federal taxable income plus or minus allow- Write:Arizona Department of Revenue,Tax- state on an employment-related contract for able modifications. Write: Department of payer Information & Assistance, P.O. Box at least 546 consecutive days to be considered Revenue, Taxpayer Service Division, State 29086, Phoenix AZ 85038-9086. a non-resident. This applies to most FS em- Capitol Annex, 1375 Sherman St., Denver Phone: (602) 255-3381. ployees and their spouses, but members CO 80261-0005. E-mail: [email protected] domiciled in California are advised to study Phone: (303) 238-7378. Web site: www.azdor.gov FTB Publication 1031 for exceptions and ex- E-mail: Link through “Contact Us” tab on ARKANSAS: Individuals domiciled in emptions. The California tax rate for 2010 “Taxes” page, then click on “E-Mail and Arkansas are considered residents and are ranges in six brackets from 1.25 percent to a Telephone” for subject matter options. taxed on their entire income regardless of maximum of $4,351.84 plus 9.55 percent of Web site: www.colorado.gov/revenue

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 61 A F S CONNECTICUT: Connecticut domicil- $10,000 if between $10,000 and $40,000; and E-mail: [email protected] A iaries may qualify for non-resident tax treat- $2,200 plus 8.5 percent of excess over Web site: www.state.hi.us/tax N ment under either of two exceptions as $40,000. Write: Office of Tax and Revenue, IDAHO: Individuals domiciled in Idaho E follows: Group A — the domiciliary 1) did 941 N. Capitol St. NE, 1st Floor,Washington for an entire tax year are considered residents not maintain a permanent place of abode in- DC 20002. and are subject to tax on their entire income. W side Connecticut for the entire tax year; and Phone: (202) 727-4TAX (4829). Idaho’s tax rate rises in eight steps from a S 2) maintains a permanent place of abode E-mail: [email protected] minimum of 1.6 percent to a maximum of outside the state for the entire tax year; and 3) Web site: www.cfo.dc.gov/cfo $7,465 plus 7.8 percent on the amount of spends not more than 30 days in the aggre- FLORIDA: Florida does not impose per- Idaho taxable income over $100,000. How- gate in the state during the tax year. Group B sonal income, inheritance or gift taxes. Be- ever, you are considered a non-resident if: 1) — the domiciliary 1) In any period of 548 ginning in Tax Year 2007, individuals, you are an Idaho resident who lived outside consecutive days,is present in a foreign coun- married couples, personal representatives of of Idaho for at least 445 days in a 15-month try for at least 450 days; and 2) during the estates, and businesses were no longer re- period; and 2) after satisfying the 15-month 548-day period, is not present in Connecti- quired to file an annual intangible personal period,you spent fewer than 60 days in Idaho cut for more than 90 days; and 3) does not property tax return reporting their stocks, during the year; and 3) you did not have a maintain a permanent place of abode in the bonds, mutual funds, money market funds, personal residence in Idaho for yourself or state at which the domiciliary’s spouse or shares of business trusts and unsecured your family during any part of the calendar minor children are present for more than 90 notes. Write: Taxpayer Services, Florida De- year; and 4) you did not claim Idaho as your days. Connecticut’stax rate for married filing partment of Revenue, 5050 W.Tennessee St., federal tax home for deducting away-from- jointly ranges from 3 percent of income less Bldg. L, Tallahassee FL 32399-0112. home expenses on your federal return; and than $10,000, to 5 percent of income over Phone: toll-free 1 (800) 352-3671, or (850) 5) you were not employed on the staff of a $20,000, and 6.5 percent of income over $1 488-6800. U.S.senator; and 6) you did not hold an elec- million. Write: Department of Revenue E-mail: Link through Web site. Go to tive or appointive office of the U.S. govern- Services, Taxpayer Services Division, 25 “Taxes,”then “Tax Information,”then ment other than the armed forces or a career Sigourney St., Suite 2, Hartford CT 06106- “Questions?” appointment in the U.S. Foreign Service (see 5032. Web site: http://dor.myflorida.com/dor/ Idaho Code Sections 63-3013 and 63-3030). Phone: (860) 297-5962. GEORGIA: Individuals domiciled in A non-resident must file an Idaho income tax E-mail: [email protected] Georgia are considered residents and are sub- return if his or her gross income from Idaho Web site: www.ct.gov/drs ject to tax on their entire income regardless of sources is $2,500 or more. Write: Idaho State DELAWARE: Individuals domiciled in their physical presence in the state. Georgia Tax Commission, P.O. Box 36, Boise ID Delaware are considered residents and are has a graduated tax rate rising to a maximum 83722-0410. subject to tax on their entire income regard- of 6 percent of taxable income of $10,000 and Phone: toll-free 1 (800) 972-7660. less of their physical presence in the state. above for joint married filers and $7,000 for E-mail: [email protected] Delaware’sgraduated tax rate ranges from 2.2 single filers. Write: Georgia Department of Web site: www.tax.idaho.gov percent to 5.55 percent for income under Revenue, Taxpayer Services Division, 1800 ILLINOIS: Individuals domiciled in Illi- $60,000, to a maximum of $2,943.50 plus Century Blvd. NE, Atlanta GA 30345-3205. nois are considered residents and are subject 5.95 percent of any taxable income over Phone: (404) 417-4480. to tax on their entire income regardless of $60,000. Write: Division of Revenue, Tax- E-mail for questions: their physical presence in the state. It appears payers Assistance Section,State Office Build- [email protected] that under some circumstances, however, ing, 820 N. French St., Wilmington DE E-mail for forms: [email protected] domiciliaries absent from the state through- 19801. Web site: https://etax.dor.ga.gov/ out the year may not be subject to tax,so they Phone (302) 577-8200. HAWAII: Individuals domiciled in should check with the Illinois Department of E-mail: [email protected] Hawaii are considered residents and are sub- Revenue in advance. The Illinois tax rate re- Web site: www.revenue.delaware.gov/ ject to tax on their entire income regardless of mains a flat 3 percent for 2010. Write: Illinois DISTRICTOFCOLUMBIA: Individu- their physical presence in the state. For 2010, Department of Revenue, P.O. Box 19001, als domiciled in the District of Columbia are Hawaii’s tax rate ranges in eight steps from Springfield IL 62794-9001. considered residents and are subject to tax on 1.4 percent to a maximum of $16,379 plus 11 Phone: toll-free 1 (800) 732-8866, or their entire income regardless of their physi- percent of taxable income over $200,000 for (217) 782-3336. cal presence there. Individuals domiciled single filers and $32,757 plus 11 percent of E-mail: Link through “Contact Us,”then elsewhere are also considered residents for tax taxable income over $400,000 for married fil- “Taxpayer Answer Center.” purposes for the portion of any calendar year ing jointly. Write: Oahu District Office, Tax- Web site: www.revenue.state.il.us in which they are physically present in the payer Services Branch, P.O. Box 259, INDIANA: Individuals domiciled in In- District for 183 days or more. The District’s Honolulu HI 96809-0259. diana are considered residents and are sub- tax rate is 4 percent if income is less than Phone: toll-free 1 (800) 222-3229, or ject to tax on their entire income regardless of $10,000; $400 plus 6 percent of excess over (808) 587-4242. their physical presence in the state. Indiana’s

62 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F tax rate remains a flat 3.4 percent for 2010. Kansas tax rate rises from a minimum of 3.5 LOUISIANA: Individuals domiciled in S Some counties also charge a county income percent on Kansas taxable income under Louisiana are considered residents and are A tax. Write: Department of Revenue, 100 N. $15,000 to a maximum of $2,925 plus 6.45 subject to tax on their entire income regard- N Senate Ave., Indianapolis IN 46204. percent of excess over $60,000 for joint filers, less of their physical presence in the state. E Phone: (317) 232-2240. or $1,462.50 plus 6.45 percent of excess over Louisiana’s tax rate for 2010 starts at 2 per- E-mail: Link through the Web site’s $30,000 for single filers. Write: Kansas Tax- cent for the first $12,500 for single filers or W “Contact Us” tab. payer Assistance Center, Room 150, 915 SW $25,000 for joint filers, rising to 6 percent for S Web site: www.in.gov/dor Harrison, Topeka KS 66612. over $50,000 for single filers or $100,000 for IOWA: Individuals domiciled in Iowa are Phone: (785) 368-8222. joint filers. Write: Taxpayer Services Division, considered residents and are subject to tax on E-mail: Bob Clelland at Personal Income Tax Section, Louisiana De- their entire income to the extent that income [email protected] partment of Revenue, P.O. Box 201, Baton is taxable on the person’s federal income tax Web site: www.ksrevenue.org Rouge LA 70821-0201. returns. Iowa’s 2010 tax rate rises in nine KENTUCKY: Individuals domiciled in Phone: (225) 219-0102. steps from 0.36 percent to a maximum of Kentucky are considered residents and are E-mail: Link through the Web site’s $4,060.65 plus 8.98 percent of taxable income subject to tax on their entire income regard- “Contact Us” tab. over $64,260, depending on income and fil- less of their physical presence in the state. Web site: www.revenue.louisiana.gov ing status. Write: Taxpayer Services, Iowa Kentucky’s tax rate ranges from 2 percent on MAINE: Individuals domiciled in Maine Department of Revenue, P.O. Box 10457, the first $3,000 of taxable income to $4,166 are considered residents and are subject to tax Des Moines IA 50306-0457. plus 6 percent on all taxable income over on their entire income. Since Jan. 1, 2007, Phone: (515) 281-3114. $75,000. Write: Kentucky Department of however, there have been “safe harbor” pro- E-mail: [email protected] Revenue, 501 High St., Frankfort KY 40601- visions. Under the General Safe Harbor pro- Web site: www.iowa.gov/tax 2103. vision, Maine domiciliaries are treated as KANSAS: Individuals domiciled in Phone: (502) 564-4581. non-residents if they satisfy all three of the Kansas are considered residents and are sub- E-mail: Link through the Web site’s following conditions: 1) they did not main- ject to tax on their entire income regardless of “Contact Us” tab. tain a permanent place of abode in Maine their physical presence in the state. The Web site: revenue.ky.gov for the entire taxable year; 2) they main-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 63 A F S tained a permanent place of abode outside MASSACHUSETTS:Individuals domiciled MISSOURI: An individual domiciled in A Maine for the entire taxable year; and 3) they in Massachusetts are considered residents and Missouri is considered a non-resident,and is N spent no more than 30 days in the aggregate are subject to tax on their entire income re- not liable for tax on Missouri income if the E in Maine during the taxable year. Under the gardless of their physical presence in the state. individual has no permanent residence in Foreign Safe Harbor provision,Maine domi- Salaries and most interest and dividend in- Missouri, has a permanent residence else- W ciliaries are treated as non-residents if they come are taxed at a flat rate of 5.3 percent. where and is not physically present in the S are present in a foreign country for 450 days Some income (e.g., short-term capital gains) state for more than 30 days during the tax in a 548-day period and do not spend more is taxed at 12 percent. Write: Massachusetts year. Missouri calculates tax on a graduated than 90 days in Maine during that period. Department of Revenue, Taxpayer Services scale up to $9,000 of taxable income. Any Maine’s tax rate in 2010 rises in three steps Division, P.O. Box 7010, Boston MA 02204. taxable income over $9,000 is taxed at a rate from a minimum of 2 percent to a maximum Phone: (617) 887-6367. of $315 plus 6 percent of the excess over of $1,013 plus 8.5 percent of Maine taxable E-mail: Link through the Web site’s $9,000. File a return yearly with Form MO- income over $19,750 for single filers or “Contact Us” tab. NRI. Write: Individual Income Tax,P.O.Box $2,026 plus 8.5 percent over $39,550 for mar- Web site: www.dor.state.ma.us 2200, Jefferson City MO 65105-2200. ried filing jointly. Write: Maine Revenue MICHIGAN: Individuals domiciled in Phone: (573) 751-3505. Services, Income Tax Assistance, 24 State Michigan are considered residents and are E-mail: [email protected] House Station, Augusta ME 04333-0024. subject to tax on their entire income regard- Web site: www.dor.mo.gov Phone: (207) 626-8475. less of their physical presence in the state. MONTANA: Individuals domiciled in E-mail: [email protected] Michigan’s tax rate is 4.35 percent. Some Montana are considered residents and are Web site: www.maine.gov/revenue Michigan cities impose an additional 1- or 2- subject to tax on their entire income regard- MARYLAND: Individuals domiciled in percent income tax. Detroit imposes an ad- less of their physical presence in the state. Maryland are considered residents and are ditional 2.5-percent tax. Write: Michigan Montana’s tax rate for 2010 rises in six steps subject to tax on their entire income re- Department of Treasury,Lansing MI 48922. from 1 percent of taxable income under gardless of their physical presence in the Phone: toll-free (517) 636-4580. $2,600 to a maximum of 6.9 percent of tax- state. Individuals domiciled elsewhere are E-mail: [email protected] able income over $15,600. See the Web site also considered residents for tax purposes Web site: www.michigan.gov/treasury for various deductions and exemptions. for the portion of any calendar year in MINNESOTA: Individuals domiciled in Write: Montana Department of Revenue, which they are physically present in the state Minnesota are considered residents and are P.O. Box 5805, Helena MT 59604. for an aggregated total of 183 days or more. subject to tax on their entire income regard- Phone: (406) 444-6900. For Tax Years 2007, 2008 and 2009 only,U.S. less of their physical presence in the state. E-mail: Link through the Web site’s government employees can deduct up to Minnesota’s tax rate is either 5.35 percent, “Contact Us” tab at the bottom of the page. $3,500 of any income earned overseas, in- 7.05 percent, or a maximum of 7.85 percent Web site: mt.gov/revenue cluding federal pay, if physically present in a on taxable income over $74,781 for single fil- NEBRASKA: Individuals domiciled in Ne- foreign country (or countries) for 330 days ers or $132,221 for married filing jointly in braska are considered residents and are sub- in the 12-month period. Maryland’s tax 2010. Write: Minnesota Department of Rev- ject to tax on their entire income regardless rate is $90 plus 4.75 percent of taxable in- enue, 600 N. Robert St., Saint Paul MN of their physical presence in the state. The come over $3,000 up to $150,000 if filing 55101. 2010 individual income tax rates range in singly and $200,000 if filing jointly; it then Phone: (651) 296-3781. four steps from a minimum of 2.56 percent rises steeply to $52,322.50 plus 6.25 percent E-mail: [email protected] to a maximum of $1,086.91 plus 6.84 per- on taxable income over $1,000,000. In ad- Web site: www.taxes.state.mn.us cent of the excess over $27,000 for single fil- dition, Baltimore City and the 23 Maryland MISSISSIPPI: Individuals domiciled in ers, and $2,173.82 plus 6.84 percent of the counties impose a local income tax, which is Mississippi are considered residents and are excess over $54,000 for joint filers. If AGI is a percentage of the Maryland taxable in- subject to tax on their entire income regard- over $167,100 (both single and joint filers), come, using Line 31 of Form 502 or Line 9 of less of their physical presence in the state. an additional tax rate of between 0.172 and Form 503. The local factor varies from 1.25 Mississippi’s tax rate is 3 percent on the first 0.428 percent is imposed.Write: Department percent in Worcester County to 3.2 percent $5,000 of taxable income, 4 percent on the of Revenue, 301 Centennial Mall South, P.O. in Montgomery, Prince George’s and next $5,000 and 5 percent on taxable income Box 94818, Lincoln NE 68509-4818. Howard counties (see Web site for details for over $10,000 for all taxpayers, whether filing Phone: (402) 471-5729. all counties). Write: Comptroller of Mary- singly or jointly. Write: Department of Rev- E-mail: Link through the Web site land, Revenue Administration Center, Tax- enue, P.O. Box 1033, Jackson MS 39215- “Contact Us” page. payer Service Section,Annapolis MD 21411. 1033. Web site: www.revenue.state.ne.us Phone: toll-free 1 (800) MD-TAXES, or Phone: (601) 923-7089. NEVADA: Nevada does not tax personal (410) 260-7980. E-mail: Link through the Web site’s income. There is a sales-and-use tax that E-mail: [email protected] “Contact Us” tab. varies from 6.85 percent to 8.1 percent de- Web site: www.marylandtaxes.com Web site: www.dor.ms.gov pending on local jurisdiction. Additional ad

64 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F valorem personal and real property taxes are tax year. Filing a return is not required (un- 1.7 percent to a maximum of 4.9 percent on S also levied. Write: Nevada Department of less the non-resident has New Jersey-source New Mexico taxable income over $16,000 for A Taxation, 1550 College Pkwy., Suite 115, income), but it is recommended in order to single filers and $24,000 for married filing N Carson City NV 89706. preserve domicile status. Filing is required jointly. Write: New Mexico Taxation and E Phone: (775) 684-2000. on Form 1040-NR for revenue derived from Revenue Department, Tax Information and Web site: www.tax.state.nv.us in-state sources. Tax liability is calculated as Policy Office, 1100 St. Francis Dr., P.O. Box W NEWHAMPSHIRE: The state imposes a variable lump sum plus a percentage from 630, Santa Fe NM 87504-0630. S no personal income tax on earned income a minimum of 1.4 percent of taxable gross Phone: (505) 827-0908. and no general sales tax. The state does levy, income up to $20,000,to a maximum of 8.97 E-mail: Link through “E-mail Us” tab among other taxes, a 5-percent tax on inter- percent on taxable gross income over at bottom of home page. est and dividend income of more than $2,400 $500,000. Write: State of New Jersey, New Web site: www.tax.state.nm.us/ annually for single filers ($4,800 annually for Jersey Division of Taxation, Office of Infor- NEWYORK: There is no tax liability for joint filers) and an 8.5-percent tax on busi- mation and Publications, P.O. Box 281, out-of-state income if the individual has no ness profits,including sale of rental property. Trenton NJ 08695-0281. permanent residence in NewYork,has a per- The inheritance tax was repealed in 2003. Phone: (609) 292-6400. manent residence elsewhere and is not pres- Applicable taxes apply to part-year residents. E-mail: Link through the Web site’s ent in the state more than 30 days during the Write: Central Taxpayer Services, 109 Pleas- “Contact Us” page. tax year. Filing a return is not required,but it ant St., Concord NH 03301. Web site: www.state.nj.us/treasury/taxation is recommended to preserve domicile status. Phone: (603) 271-2191. NEWMEXICO: Individuals domiciled in The tax rate rises in four steps from a mini- Web site: www.nh.gov/revenue New Mexico are considered residents and are mum of 4 percent to a maximum of 6.85 NEW JERSEY: A New Jersey domiciliary subject to tax on their entire income regard- percent of taxable income over $20,000 for is considered a non-resident for New Jersey less of their physical presence in the state. single filers and $40,000 for married filing tax purposes if the individual has no perma- The basis for New Mexico’s calculation is the jointly. For the 2010 tax year, however, tax- nent residence in New Jersey, has a perma- Federal Adjusted Gross Income figure. For able income over $200,000 (singles) or nent residence elsewhere and is not physically the 2010 tax year, the state has a graduated $300,000 (joint filers) will be taxed at 7.85 in the state for more than 30 days during the rate table with seven brackets, ranging from percent; over $500,000 (single and joint fil-

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 65 A F S ers) will be taxed at 8.97 percent. In New Dept. 127, Bismarck ND 58505-0599. E-mail: [email protected] A York City the maximum rate is 3.648 percent Phone: (701) 328-1247. Web site: www.oregon.gov/DOR N over $90,000 and 3.876 percent over E-mail: [email protected] PENNSYLVANIA: Pennsylvania tax au- E $500,000. Filing is required on Form IT-203 Web site: www.nd.gov/tax thorities have ruled that Pennsylvania resi- for revenue derived from New York sources. OHIO: Individuals domiciled in Ohio are dents in the U.S. Foreign Service are not on W A 2001 opinion from the New York tax considered residents and their income is sub- federal active duty for state tax purposes,and S authorities stated that Foreign Service em- ject to tax, using the Federal Adjusted Gross thus their income is taxable compensation. ployees not domiciled in New York state but Income figure as a starting base. For 2010 For non-Foreign Service state residents,there assigned to the U.S.United Nations office for Ohio’s tax rate remains at a minimum of is no tax liability for out-of-state income if a normal tour of duty would not be consid- 0.618 percent on taxable income under the individual has no permanent residence in ered to be maintaining a permanent place of $5,000, rising in nine steps to a maximum of the state, has a permanent residence else- abode in NewYork state. Therefore,such in- $9,573.30 plus 6.24 percent on taxable in- where, and spends no more than 30 days in dividuals are not treated as resident individ- come over $200,000. Write: Ohio Depart- the state during the tax year. However,Penn- uals and are taxed as non-residents in New ment of Taxation, Taxpayer Services Center, sylvania does not consider government quar- York state. Write: New York State Depart- P.O. Box 530, Columbus OH 43216-0530. ters overseas to be a “permanent residence ment of Taxation and Finance, Personal In- Phone: toll-free 1 (800) 282-1780 or (614) elsewhere.” Filing a return is not required, come Tax Information, W.A. Harriman 387-0224. but it is recommended to preserve domicile Campus, Albany NY 12227. E-mail: Link through Web site’s status. File Form PA-40 for all income de- Phone: (518) 457-5181. “Contact Us” tab. rived from Pennsylvania sources. Pennsylva- E-Mail: Link through Web site’s Web site: www.tax.ohio.gov nia’s tax rate is a flat 3.07 percent. Write: “Answer Center” tab. OKLAHOMA: Individuals domiciled in Commonwealth of Pennsylvania, Depart- Web site: www.nystax.gov Oklahoma are considered residents and are ment of Revenue, Taxpayer Services Depart- NORTHCAROLINA: Individuals domi- subject to tax on their entire income regard- ment, Harrisburg PA 17128-1061. ciled in North Carolina are considered resi- less of their physical presence in the state. Phone: (717) 787-8201. dents and are subject to tax on their entire The 2010 tax rate rises in eight stages to a E-mail: Link through the Web site’s income regardless of their physical presence maximum of 5.5 percent on taxable income “Contact Us” tab. in the state. For 2010, the tax rate rises in over $8,700 for single filers and $15,000 for Web site: www.revenue.state.pa.us three steps from 6 percent of taxable income married filing jointly. Write: Oklahoma Tax PUERTORICO: Individuals who are up to $12,750 for single or $21,250 for joint Commission, Income Tax, P.O. Box 26800, domiciled in Puerto Rico are considered res- filers, to 7.75 percent of North Carolina tax- Oklahoma City OK 73126-0800. idents and are subject to tax on their entire able income over $60,000 for single filers and Phone: (405) 521-3160. income regardless of their physical presence over $100,000 for joint filers. In addition,for E-mail: [email protected] in the commonwealth. Normally, they may 2010, there is a surtax of 2 percent for singles Web site: www.oktax.state.ok.us claim a credit with certain limitations for in- with North Carolina taxable income over OREGON: Individuals domiciled in Ore- come taxes paid to the United States on in- $60,000 and 3 percent over $150,000; for gon are considered residents and are subject come from sources outside Puerto Rico, and joint filers it is 2 percent over $100,000 and 3 to tax on their entire income regardless of for any federal taxes paid. Taxes range from percent over $200,000. Residents must also their physical presence in the state. Under a 7 percent of taxable income up to $17,000 to report and pay a“use tax”on purchases made 1999 law,however,Oregon exempts domicil- 33 percent of the taxable income over outside the state for use in North Carolina. iaries who meet the foreign residence re- $50,000 for all taxpayers. Write: Departa- Write: Department of Revenue, P.O. Box quirement for the Foreign Earned Income mento de Hacienda, P.O. Box 9024140, San 27431, Raleigh NC 27611. Exclusion, even though they may be federal Juan PR 00902-4140. Phone: toll-free 1 (877) 252-3052. From employees. Oregon’s tax rate is 9 percent on Phone: toll-free 1 (800) 981-9236, or overseas, call 1 (252) 467-9000. taxable income over $7,600 for single filers (787) 721-2020, ext. 3611. Web site: www.dor.state.nc.us and over $15,200 for married filing jointly. E-mail: [email protected] NORTH DAKOTA: Individuals domi- For 2010, however, taxable income above Web site: www.hacienda.gobierno.pr ciled in North Dakota and serving outside $125,000 (single filers) and $250,000 (joint RHODEISLAND: Individuals domiciled the state are considered residents and are filers), is taxed at a new rate of 10.8 percent. in Rhode Island are considered residents and subject to tax on their entire income. For For taxable income above $250,000 (single are subject to tax on their entire income re- 2010 the tax rate ranges from 1.84 percent on filers) and $500,000 (joint filers),the new rate gardless of their physical presence in the state. North Dakota taxable income up to $34,000 is 11 percent. Contact the Oregon Depart- The 2010 Rhode Island tax rate ranges from for singles and $56,850 for joint filers, to ment of Revenue for up-to-date information. 3.75 percent of taxable income up to $34,000 a maximum of 4.86 percent on taxable in- Oregon has no sales tax. Write: Oregon De- for single filers and $56,800 for joint filers up come over $373,650 for singles and joint fil- partment of Revenue, 955 Center St. NE, to 9.9 percent of taxable income over ers. Write: Office of State Tax Commiss- Salem OR 97301-2555. $373,650 for all filers. A 2010 change treats ioner, State Capitol, 600 E. Boulevard Ave., Phone: (503) 378-4988. capital gains as ordinary taxable income.

66 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F Refer to the tax division’sWeb site for current justed Gross Income reported on the federal tween $5,000 and $17,000; and $720 plus S information and handy filing hints,as well as return be reported on the state return re- 5.75 percent if taxable income is over A for forms and regulations. Write: Rhode Is- gardless of the taxpayer’s physical presence in $17,000. In addition, for the 2009 and sub- N land Division of Taxation, Taxpayer Assis- the state. Utah abolished variable tax rates in sequent tax years, Virginia allows employers E tance Section, One Capitol Hill, Providence 2008 and now levies a flat tax of 5 percent on of household help to elect,using Form R-1H, RI 02908-5801. all income. Some taxpayers will be able to to pay state unemployment tax annually in- W Phone (401) 574-8829. claim either a taxpayer tax credit or a retire- stead of quarterly. Write: Virginia Depart- S E-mail: [email protected] ment tax credit, or both (see Web site for ex- ment of Taxation, Office of Customer Web site: www.tax.state.ri.us planation). Write: Utah State Tax Commiss- Services, P.O. Box 1115, Richmond, VA SOUTHCAROLINA: Individuals domi- ion, Taxpayer Services Division, 210 North 23218-1115. ciled in South Carolina are considered resi- 1950 West, Salt Lake City UT 84134. Phone: (804) 367-8031. dents and are subject to tax on their entire Phone: toll-free 1 (800) 662-4335, or E-mail: Link through the Web site’s income regardless of their physical presence (801) 297-2200. “Contact Us” tab. in the state. South Carolina imposes a grad- E-mail: Link through the Web site’s Web site: www.tax.virginia.gov uated tax rising in six steps from 3 percent on “Contact Us” tab. WASHINGTON: There is no state in- the first $5,480 to a maximum of 7 percent Web site: tax.utah.gov come tax and no tax on intangibles such as of taxable income over $13,700. Write: South VERMONT: Individuals domiciled in bank accounts, stocks and bonds. Residents Carolina Tax Commission, 301 Gervais St., Vermont are considered residents and are may deduct Washington sales tax on their P.O. Box 125, Columbia SC 29214. subject to tax on their entire income regard- federal tax returns if they itemize deductions. Phone: (803) 898-5709. less of their physical presence in the state. Write:Washington State Department of Rev- E-mail: [email protected] The 2010 tax rate ranges from 3.55 percent enue, Taxpayer Services, P.O. Box 47478, Web site: www.sctax.org on taxable income under $34,000 for singles Olympia WA 98504-7478. SOUTH DAKOTA: There is no state in- and $56,800 for joint filers to a maximum of Phone: toll-free 1 (800) 647-7706. come tax and no state inheritance tax. State 8.95 percent on taxable income over E-mail: Link through the Web site’s sales and use tax is 4 percent; municipalities $373,650 for singles and joint filers. Write: “Contact Us” tab. may add up to an additional 2 percent. Vermont Department of Taxes, Taxpayer Web site: www.dor.wa.gov Write: South Dakota Department of Rev- Services Division, 133 State St., Montpelier WESTVIRGINIA: There is no tax liabil- enue, 445 E. Capitol Ave., Pierre SD 57501- VT 05633-1401. ity for out-of-state income if the individual 3185. Phone: (802) 828-2865. has no permanent residence inWestVirginia, Phone: (605) 773-3311. E-mail: Link through the Web site’s has a permanent residence elsewhere and E-mail: Link through the Web site’s “Contact Us” tab. spends no more than 30 days of the tax year “Contact Us” tab. Web site: www.state.vt.us/tax in West Virginia. However, non-resident Web site: www.state.sd.us/drr2/ VIRGINIA: Individuals domiciled inVir- domiciliaries are required to file a return on revenue.html ginia are considered residents and are subject Form IT-140 for all income derived from TENNESSEE: Salaries and wages are not to tax on their entire income regardless of West Virginia sources. Tax rates rise in four subject to state income tax,but Tennessee im- their physical presence in the state. Individ- steps from $150 plus 4 percent of income poses a 6-percent tax on most dividends and uals domiciled elsewhere are also considered over $5,000 for single filers and $300 plus 4 interest income of more than $1,250 (single residents for tax purposes for the portion of percent of income over $10,000 for joint fil- filers) or $2,500 (joint filers) in the tax year. any calendar year in which they are physically ers, to $1,387.50 plus 6.5 percent of income Write: Tennessee Department of Revenue present in the state for 183 days or more. over $30,000 for single filers and $2,775 plus (Attention: Taxpayer Services), 500 Deader- These individuals should file using Form 760. 6.5 percent of income over $60,000 for joint ick St., Nashville TN 37242. In addition, Virginia requires non-residents filers. Write: Department of Tax and Rev- Phone: (615) 253-0600. to file Form 763 if their Virginia Adjusted enue, Taxpayer Services Division, P.O. Box E-mail: [email protected] Gross Income (which includes any federal 3784, Charleston WV 25337-3784. Web site: www.state.tn.us/revenue salary paid during time they are residing in Phone: toll-free 1 (800) 982-8297, or TEXAS: There is no state personal income Virginia) exceeds $11,650 for single filers and (304) 558-3333. tax. Write: Texas Comptroller, P.O. Box married filing separately,or $23,300 for mar- E-mail: [email protected] or through 13528, Capitol Station, Austin TX 78711- ried filing jointly in tax years 2010 and 2011. the “Contact Us” page on the Web site. 3528. (These amounts will increase to $11,950 and Web site: www.wvtax.gov Phone: toll-free 1 (877) 622-8375. $23,900 for Tax Year 2012 and beyond.) In- WISCONSIN: Individuals domiciled in E-mail: [email protected] dividual tax rates are: 2 percent if taxable in- Wisconsin are considered residents and are Web site: www.window.state.tx.us come is less than $3,000; $60 plus 3 percent of subject to tax on their entire income regard- UTAH: Individuals domiciled in Utah are excess over $3,000 if taxable income is be- less of where the income is earned. Wiscon- considered residents and are subject to Utah tween $3,000 and $5,000; $120 plus 5 percent sin’s current tax rate ranges from 4.6 percent state tax. Utah requires that all Federal Ad- of excess over $5,000 if taxable income is be- on income up to $10,020 for single filers or

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 67 A F S $13,420 for joint filers,to a maximum of 7.75 the local addition may be up to 2 percent. ice Pension System pensions qualify for this A percent on income over $221,600 for single CALIFORNIA: Fully taxable. The sales deduction. The deduction is reduced dollar N filers or $295,550 for joint filers. Write: Wis- and use tax rate varies from 7.25 percent (the for dollar by Social Security benefits. Social E consin Department of Revenue, Individual statewide rate) to 9.75 percent in some areas. Security itself is not taxed. Idaho state sales Income Tax Assistance,P.O.Box 8906,Madi- COLORADO: Up to $24,000 of pension tax is 6 percent. W son WI 53708-8906. income is exempt if individual is age 65 or ILLINOIS: Illinois does not tax U.S.gov- S Phone: (608) 266-2772. over. Up to $20,000 is exempt if age 55 to 64. ernment pensions or Social Security. Sales E-mail: [email protected] State sales tax is 2.9 percent with additions up tax is 6.25 percent to 8 percent depending on Web site: www.dor.state.wi.us to 5 percent in some jurisdictions. local jurisdiction. WYOMING: There is no state income tax CONNECTICUT: Fully taxable for resi- INDIANA: If the individual is over age and no tax on intangibles such as bank ac- dents. Social Security is exempt if Federal 62, the Adjusted Gross Income may be re- counts, stocks or bonds. Write: Wyoming Adjusted Gross Income is less than $50,000 duced by the first $2,000 of any pension, re- Department of Revenue,Herschler Building, for singles or $60,000 for joint filers. duced dollar for dollar by Social Security 122 West 25th St., Cheyenne WY 82002- Statewide sales tax is 6 percent. No local ad- benefits. There is also a $1,000 exemption if 0110. ditions. over 65, or $1,500 if Federal Adjusted Gross Phone: (307) 777-7961. DELAWARE: Pension exclusions per Income is less than $40,000. There is no pen- E-mail: [email protected] person: $2,000 is exempt under age 60; sion exclusion for survivor annuitants of fed- Web site: revenue.state.wy.us $12,500 if age 60 or over. There is an addi- eral annuities. Social Security is not taxed in tional standard deduction of $2,500 if age 65 Indiana. Both sales tax and use tax in Indiana or over if you do not itemize. Social Security are 7 percent. State Pension income is excluded from taxable income. IOWA: Generally taxable. For 2009 and Delaware does not impose a sales tax. later tax years, however, a married couple & Annuity Tax DISTRICTOFCOLUMBIA: Pension or with an income for the year of less than annuity exclusion of $3,000 is applicable if 62 $32,000 may file for exemption,if at least one The laws regarding the taxation of For- years or older. Social Security is excluded spouse or the head of household is 65 years eign Service annuities vary greatly from state from taxable income. Sales tax is 6 percent, or older on Dec. 31, and single persons who to state. In addition to those states that have with higher rates for some commodities. are 65 years or older on Dec. 31 may file for no income tax or no tax on personal income, FLORIDA: There is no personal income, an exemption if their income is $24,000 or there are several states that do not tax income inheritance or gift tax. Florida repealed the less. Over age 55, there is a pension/retire- derived from pensions and annuities. Idaho “intangibles tax” in 2007. Florida imposes a ment income exclusion of up to $6,000 for taxes Foreign Service annuities while ex- state sales tax and a use tax of 6 percent. single, head of household or qualifying wid- empting certain categories of Civil Service Counties impose further taxes from 0.5 to 2.5 ower filers and up to $12,000 for married fil- employees. Several Web sites provide more percent. ing jointly. The same income tax rates apply information on individual state taxes for re- GEORGIA: $35,000 of retirement in- to annuities as to other incomes. Iowa is tirees, but the Retirement Living Information come is excluded for those who are 62 years phasing out taxation of Social Security ben- Center at www.retirementliving.com/RL- or older, or totally disabled. Social Security efits, but a portion is still subject to tax in taxes.html is one of the more comprehensive. is excluded from taxable income. Sales tax is 2010. Statewide sales tax is 6 percent,with no ALABAMA: Social Security and federal 4 percent statewide,with additions of up to 5 more than 1 percent added in local jurisdic- pensions are not taxable. The combined percent depending on jurisdiction. tions. state, county and city sales tax rates average HAWAII: Pension and annuity distribu- KANSAS: U.S.government pensions are from 7 to 11 percent. tions from a government pension plan are not taxed. Social Security is exempt if Federal ALASKA: No personal income tax. not taxed in Hawaii. Social Security is not Adjusted Gross Income is under $75,000. Some municipalities levy sales, property taxed. Hawaii charges a general excise tax of State sales tax is 5.3 percent, with additions and/or use taxes. 4 percent instead of sales tax. of between 1 and 3 percent depending on ju- ARIZONA: Up to $2,500 of U.S. govern- IDAHO: If the individual is age 65 or risdiction. ment pension income may be excluded for older, or age 62 and disabled, Civil Service KENTUCKY: Government pension in- each taxpayer. There is also a $2,100 exemp- Retirement System and Foreign Service Re- come is exempt if retired before Jan. 1, 1998. tion for each taxpayer age 65 or over. Arizona tirement and Disability System pensions only If retired after Dec. 31, 1997, pension/annu- does not tax Social Security. Arizona state qualify for a deduction in 2010 of up to ity income up to $41,110 remains fully ex- sales and use tax is 5.6 percent with additions $27,876 for a single return and up to $41,814 cludable for 2010. Social Security is exempt. depending on county and/or city. for a joint return. Up to $27,876 may be de- Sales tax is 6 percent statewide, with no local ARKANSAS: The first $6,000 of income ducted by the unmarried survivor of the an- sales or use taxes. from any retirement plan or IRA is exempt. nuitant. The deduction is not available if LOUISIANA: Federal retirement bene- Social Security is not taxed. There is no estate married filing separately; nor do Federal Em- fits are exempt from Louisiana state income or inheritance tax. State sales tax is 6 percent; ployees’ Retirement System or Foreign Serv- tax. There is an exemption of $6,000 of other

68 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F annual retirement income received by any and non-taxable Social Security is under those who are age 62 or older or totally and S person age 65 or over. Married filing jointly $9,600. For a couple, the limits are $42,000 permanently disabled. Singles and heads of A may exclude $12,000. State sales tax is 4 per- for Adjusted Gross Income and $12,000 for households can exclude up to $15,000; those N cent with local additions. Use tax is 8 percent non-taxable Social Security. Statewide sales married filing jointly up to $20,000; those E regardless of the purchaser’s location. and use tax is 6.875 percent with additions of married filing separately up to $10,000 each. MAINE: Recipients of a government- up to 1 percent in local areas — more for These exclusions are eliminated for New Jer- W sponsored pension or annuity who are filing lodging. sey gross incomes over $100,000. Residents S singly may deduct up to $6,000 ($12,000 for MISSISSIPPI: Social Security and over 65 may be eligible for an additional married filing jointly) on income that is in- qualified retirement income from federal, $1,000 personal exemption. Social Security is cluded in their Federal Adjusted Gross In- state and private retirement systems are ex- not taxed. State sales tax is 7 percent. come, reduced by all Social Security and empt from Mississippi tax. There is an addi- NEWMEXICO: All pensions and annu- railroad benefits. For those age 65 and over, tional exemption of $1,500 on other income ities are taxed as part of Federal Adjusted there is an additional standard deduction of if over 65. Statewide sales tax is 7 percent. Gross Income. Taxpayers 65 and older may $1,400 (single),$1,100 (married filing singly) MISSOURI: $6,000 or 65 percent for exempt up to $8,000 (single) or $16,000 or $2,200 (married filing jointly). General 2010, whichever is greater, of public pension (joint) from any income source if their in- sales tax is 5 percent. income may be deducted if Missouri Ad- come is under $28,500 (individual filers) or MARYLAND: Those over 65 or perma- justed Gross Income is less than $100,000 $51,000 (married filing jointly). The exemp- nently disabled, or who have a spouse who is when married filing jointly or $85,000 for tion is reduced as income increases, disap- permanently disabled, may under certain single filers, up to a limit of the maximum pearing altogether at $51,000. New Mexico conditions be eligible for Maryland’s maxi- Social Security benefit of each spouse. This has a gross receipts tax, instead of a sales tax, mum pension exclusion of $24,500. Also, all $6,000 is reduced dollar for dollar by the of 5.375 percent; county and city taxes may individuals 65 years or older are entitled to amount the income exceeds these income raise this to 8.6875 percent in some jurisdic- an extra $1,000 personal exemption in addi- limitations. In 2010 you may also deduct 65 tions. tion to the regular $3,200 personal exemp- percent of Social Security income if over age NEWYORK: Social Security, U.S. gov- tion available to all taxpayers. Social Security 62 and Federal Adjusted Gross Income is less ernment pensions and annuities are not is exempt. See the worksheet and instruc- than the limits above. Sales tax is from 5.1 to taxed. For those over age 59½,up to $20,000 tions for Maryland Form 502. Maryland 8.8 percent, depending on location. of other annuity income (e.g., Thrift Savings sales tax is 6 percent. MONTANA: There is a $3,640 pension- Plan) may be excluded. See N.Y. Tax Publi- MASSACHUSETTS: Distributions made income exclusion if Federal Adjusted Gross cation 36 for details. Sales tax is 4 percent to a retiree from a federal employee con- Income is less than $30,320. This exclusion statewide. Other local taxes may add up to 5 tributory plan are excluded from Massachu- can be claimed by each spouse if both have percent. setts gross income. Social Security is not retirement income,and it is reduced by $2 for NORTHCAROLINA: Pursuant to the included in Massachusetts gross income. every $1 over $30,320. Those over 65 can ex- “Bailey” decision, government retirement Each taxpayer over age 65 is allowed a $700 empt an additional $800 of interest income benefits received by federal retirees who had exemption on other income. Sales tax is 6.5 for single taxpayers and $1,600 for married five years of creditable service in a federal re- percent. joint filers. Social Security is subject to tax. tirement system onAug.12,1989,are exempt MICHIGAN: Federal government pen- Montana has no general sales tax, but tax is from North Carolina income tax. Those who sions are exempt from taxation in Michigan. levied on the sale of various commodities. do not have five years of creditable service on For TaxYear 2010, pension benefits included NEBRASKA: U.S.government pensions Aug. 12, 1989, must pay North Carolina tax in Adjusted Gross Income from a private and annuities are fully taxable. State sales tax on their federal annuities. In this case, up to pension system or an IRA are deductible to a is 5.5 percent, with local additions of up to $4,000 ($8,000 if filing jointly) of any federal maximum of $45,120 for a single filer, or 1.5 percent. annuity income is exempt. For those over 65, $90,240 for joint filers. This maximum is re- NEVADA: No personal income tax. Sales an extra $750 (single) or $1,200 (couple) may duced by the deduction taken for the gov- and use tax varies from 6.85 to 8.1 percent, be deducted. Social Security is exempt. State ernment pension. Those age 65 or over may depending on local jurisdiction. sales tax is 5.75 percent; local taxes may in- also be able to deduct part of their interest, NEWHAMPSHIRE: No personal in- crease this by up to 2.5 percent. dividends or capital gains included in the come tax. The inheritance tax was repealed NORTH DAKOTA: All pensions and an- AGI up to $10,058 for single filers and to in 2003. There is a 5-percent tax on inter- nuities are fully taxed, except for the first $20,115 for joint filers for 2010. Michigan est/dividend income over $2,400 for singles $5,000,which is exempt minus any Social Se- has no city, local, or county sales tax. The ($4,800 married filing jointly). A $1,200 ex- curity payments. Sales tax is 5 percent. Local state sales tax rate is 6 percent. emption is available for those 65 or over. No jurisdictions impose up to 2 percent more. MINNESOTA: Generally all pensions are general sales tax. OHIO: Taxpayers 65 and over may take a taxable, but single taxpayers who are over 65 NEW JERSEY: Pensions and annuities $50 credit per return. In addition,Ohio gives or disabled may exclude some income if Fed- from civilian government service are subject a tax credit based on the amount of the re- eral Adjusted Gross Income is under $33,700 to state income tax, with exemptions for tirement income included in Ohio Adjusted

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 69 A F S Gross Income, reaching a maximum of $200 pensions and annuities are fully taxable. Sales taxpayers. All taxpayers over 65 receive an A for any retirement income over $8,000. So- tax is 7 percent. additional personal exemption of $800. So- N cial Security is exempt. State sales tax is 5.5 SOUTHCAROLINA: Individuals under cial Security income is exempt. The estate tax E percent. Counties and regional transit au- age 65 can claim a $3,000 deduction on qual- was repealed for all deaths after July 1, 2007. thorities may add to this, but the total must ified retirement income; those 65 years of age The general sales tax rate is 5 percent (4 per- W not exceed 8.5 percent. or over can claim a $10,000 deduction on cent state tax and 1 percent local tax). S OKLAHOMA: Individuals receiving qualified retirement income. A resident of WASHINGTON: No personal income FERS/FSPS or private pensions may exempt South Carolina who is 65 years or older may tax. State sales tax was 6.5 percent in the last up to $10,000 if the Federal Adjusted Gross claim a $15,000 deduction against any type quarter of 2009; rates are updated quarterly. Income is under $100,000 for single filers or of income ($30,000 if both spouses are over Local taxes may increase the total to 9.5 per- $200,000 for married filing jointly. Alterna- 65), but must reduce this figure by any re- cent. tively, in 2010, 80 percent of a federal pen- tirement deduction claimed. Social Security WESTVIRGINIA: $2,000 of any civil or sion paid in lieu of Social Security (i.e., is not taxed. Sales tax is 6 percent plus 2 per- state pension is exempt. Social Security in- CSRS and FSRDS — “old system” — in- cent in some counties. Seniors 85 and over come is taxable only to the extent that the in- cluding the CSRS/FSRDS portion of an an- pay 4 percent. come is includable in Federal Adjusted Gross nuity paid under both systems) is exempt. SOUTH DAKOTA: No personal income Income. Taxpayers 65 and older or surviving This figure will rise to 100 percent in 2011. tax or inheritance tax. State sales and use tax spouses of any age may exclude the first Social Security included in FAGI is exempt. is 4 percent; municipalities may add up to an $8,000 (individual filers) or $16,000 (married State sales tax is 4.5 percent. Local and other additional 2 percent. filing jointly) of any retirement income. Out- additions may bring the total up to 9.5 per- TENNESSEE: Social Security, pension of-state government pensions qualify for the cent. income and income from IRAs and TSP are $8,000 exemption. OREGON: Generally, all retirement in- not subject to personal income tax. Most in- WISCONSIN: Pensions and annuities come is subject to Oregon tax when received terest and dividend income is taxed at 6 per- are fully taxable. Those age 65 or over may by an Oregon resident. However, federal re- cent if over $1,250 (single filers) or $2,500 take two personal deductions totaling $950. tirees who retired on or before Oct. 1, 1991, (married filing jointly). However,those over Benefits received from a federal retirement may exempt their entire federal pension; 65 with total income of less than $16,200 for system account established before Dec. 31, those who worked both before and after Oct. a single filer and $27,000 for joint filers are 1963, are not taxable. Since Tax Year 2008, 1, 1991, must prorate their exemption using exempt. State sales tax is 7 percent with be- Wisconsin has not taxed Social Security ben- the instructions in the tax booklet. A tax tween 1.5 and 2.75 percent added, depend- efits included in Federal Adjusted Gross In- credit of up to 9 percent of taxable pension ing on jurisdiction. come. For tax years after 2009, those over 65 income is available to recipients of pension TEXAS: No personal income tax or in- and with an FAGI of less than $15,000 (sin- income, including most private pension in- heritance tax. State sales tax is 6.25 percent. gle filers) or $30,000 (joint filers) may take a come, whose household income was less Local options can raise the rate to 8.25 per- $5,000 deduction on income from federal re- than $22,500 (single) and $45,000 (joint), cent. tirement systems or IRAs. State sales tax is 5 and who received less than $7,500 (single)/ UTAH: In 2008, Utah instituted a flat tax percent; most counties charge an extra 0.5 $15,000 (joint) in Social Security benefits. rate of 5 percent of all income. The previous percent. The credit is the lesser of the tax liability or 9 retirement income exclusion has been re- WYOMING: No personal income tax. percent of taxable pension income. Oregon placed for taxpayers over 65, by a retirement State sales tax is 4 percent. Local taxes may does not tax Social Security benefits. Oregon tax credit of $450 for single filers and $900 increase the total to 6 percent. has no sales tax. for joint filers. This is reduced by 2.5 percent PENNSYLVANIA: Government pen- of income exceeding $25,000 for single filers sions and Social Security are not subject to and $32,000 for joint filers. See the state Web personal income tax. Pennsylvania sales tax site for details. State sales tax is 4.7 percent; is 6 percent. Other taxing entities may add local option taxes may raise the total to 7.95 The AFSA Tax Guide is up to 2 percent. percent. also available online at PUERTORICO: For 2009, the first VERMONT: U.S. government pensions www.afsa.org/news. $11,000 of income received from a federal and annuities are fully taxable. State general pension could be excluded for individuals sales tax is 6 percent; local option taxes may under 60. For those over 60 the exclusion was raise the total to 7 percent (higher on some $15,000. Figures for 2010 were not yet avail- commodities). able at press time. If the individual receives VIRGINIA: Individuals over age 65 can more than one federal pension, the exclu- take a $12,000 deduction. The $12,000 de- sion applies to each pension or annuity sep- duction is reduced by one dollar for each dol- arately. Social Security is not taxed. lar by which Adjusted Gross Income exceeds RHODEISLAND: U.S. government $50,000 for single, and $75,000 for married,

70 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 A F S AFSANEWSBRIEFS A N Donate your Diplomatic Memorabilia E to the U.S. Diplomacy Center W BY GREG NAARDEN S ’m sure you have often thought about the historical effect of the work that we do at home and abroad. State has plans to Iconstruct a U.S. Diplomacy Center, which will be a museum of diplomatic history and visitor’s center. The USDC will be lo- cated at Main State (in the form of an addition to the 21st Street entrance), and there are plans for Secretary Hillary Rodham Clinton to dedicate the site in 2012. You can find more informa- tion on the USDC at its Web site: http://diplomacy.state.gov. The Friends of the USDC, a group of current and former For- eign and Civil Service employees, is helping the USDC staff col- lect items for the museum and special exhibits. While the USDC’s holdings are extraordinary, staff members have told us that they lack a strong collection of objects from the rank-and- file that illustrate what diplomats do, where diplomats work, how diplomacy works and why diplomacy is important. The collec- tion contains plenty of gifts that have been given to the Secretary of State, but very little representing the things that we use on a daily basis. Please consider donating something that you may have accu- • Photographs of embassy activities, day-to-day or special mulated during your work. events (all photographs must have labels) Whether you are Foreign Service, Civil Service, currently em- • Anything related to foreign/humanitarian assistance, ployed at State or retired, you have something that the USDC including USAID food containers, health supplies, tools wants. This is an opportunity for us to help preserve the work and equipment we have done for posterity and to tell future generations about • Artifacts linked to family life while at post our role in American diplomatic history. An artifact may not be eye-catching on its own, but the people, places, stories and events Get in touch with the USDC attached to it will bring it to life for museum visitors. Send an e-mail to Katie Speckart at [email protected], The USDC is looking for objects of any size, shape or material. and Priscilla Linn at [email protected], with the following What makes an artifact unique is that it contains characteristics information: worthy of preservation — there is something about the object • Digital photograph of the artifact where possible that tells part of a larger story, project, person, place or event in • Specifics about the artifact(s), such as the basic who, history. The USDC is looking for the mundane, the controver- what, when, etc., information sial, and everything in between: • Your name, post and contact information • Consular services equipment like an old visa printing ma- USDC will review the image and information, and may follow chine, handheld stamps, old or canceled passports or visas, up with additional questions. Once the artifacts are approved traveler’s advisory or warning statements for acquisition, USDC will contact you to arrange shipment to • Anything related to elections or election monitoring Washington, D.C. • Flags; summit/meeting ID badges; event brochures, posters, flyers Help us tell our story to future generations • Items linked to transportation and diplomacy, including Donating your diplomatic artifacts to the USDC is a great way bicycles, skis and even diving equipment to contribute to the cause of bringing diplomacy to life for future • Items associated with diplomatic protocol or ceremonies museum visitors, generations of Civil and Foreign Service offi- (especially hats worn for presenting credentials) or with cers, and members of Congress. diplomatic security and embassy Marine guards If you’re interested in joining the Friends of the USDC, send an • Items associated with cultural/sports/educational exchange, e-mail to Greg Naarden at [email protected]. such as hats, T-shirts, school binders, communications Greg Naarden is a Foreign Service officer who has watched his share of • Articles of clothing and/or accessories associated with a “Antiques Roadshow” episodes. He has spent a lot of his free time while significant person or event, such as presenting credentials, posted in Frankfurt, Dushanbe and Kabul pointing at things around him special receptions, an evacuation or rescuing a U.S. citizen and saying, “That belongs in a museum.” He is married to another Foreign abroad Service officer who has patiently put up with all of this.

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 71 A F S TRANSITION CENTER SCHEDULE OF COURSES AFSANEWSBRIEFS A for February-March 2011 N Jan. 31-Feb. 1 MQ911 Security Overseas Seminar Feb. 2 MQ302 Transition to Washington for Foreign-Born Spouses Find AFSA Online E Feb. 4 MQ950 High-Stress Assignment Outbrief W Feb. 7-8 MQ911 Security Overseas Seminar Get the latest news, member- S Feb. 9 MQ220 Going Overseas Logistics for Adults Feb. 23 MQ117 Tax Seminar ship information, and legislative Feb. 26 MQ116 Protocol updates on the AFSA Web site, Feb. 28-March 1 MQ911 Security Overseas Seminar www.afsa.org. March 3-4 MQ104 Regulations, Allowances and Finances March 4 MQ950 High-Stress Assignment Outbrief Flip the pages of the Foreign March 5 MQ802 Communicating Across Cultures Service Journal ’s digital edition, March 7-8 MQ911 Security Overseas Seminar available at www.foreignservice March 15 MQ115 Explaining America journal-digital.com. March 16 MQ854 Legal Considerations in the Foreign Service March 21-22 MQ911 Security Overseas Seminar Become a fan of AFSA and view March 24 MQ803 Realities of Foreign Service Life pictures of our special events March 26 MQ200 Going Overseas for Singles/Couples Without Kids posted to our Facebook page at March 26 MQ210 Going Overseas for Families www.facebook.com/afsapage. March 26 MQ220 Going Overseas Logistics for Adults March 26 MQ230 Going Overseas Logistics for Kids Follow AFSA on Twitter March 30 MQ801 Maintaining Long-Distance Relationships @afsatweets for pithy news To register or for further information, e-mail the FSI Transition Center at bulletins. [email protected]. CLASSIFIEDS

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The Lansburgh, Member Christine Elsea-Mandojana, CPA, 425 8th Street, NW. 1-BR and 2-BR apart- CFP® is a Foreign Service spouse and un- ments w/fully equipped kitchens, CAC & ARLINGTON FLATS: 1-BR, 2-BR, and derstands the unique tax and financial plan- heat, high-speed Internet, digital cable TV 4-BR flats in 4-BR flats in 2 beautiful build- ning challenges faced by FS professionals w/ HBO, fitness center w/indoor pool, resi- ings 3 blks from Clarendon Metro. Newly and their families. She provides U.S. indi- dent business center, 24-hour reception renovated, completely furnished, incl. all vidual tax planning, tax preparation and in- desk, full concierge service, secure parking utilities/internet/HDTV w/DVR. Parking, dividual financial planning services tailored available, controlled-entry building, 30-day maid service, gym, rental car available. to the needs of U.S. expatriates, and offers minimum stay. Walk to Metro, FBI, DOJ, Rates start at $2,600/month. Per diem OK. e-filing for most federal and state returns. EPA, IRS, DOE, DHH, U.S. Capitol. Rates Min. 30 days. Tel: (202) 657-4875 within government per diem. Discount for Tel: (571) 235-4289. Fax: (301) 576-4415 government, diplomats. Visit our Web site E-mail: [email protected]. E-mail: [email protected] at: www.TheLansburgh.com or call the leas- See 2-BR at Web site: Web site: www.globaltaxconsult.com ing office at (888) 313-6240. www.postlets.com/rts/1908292.

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 73 A F S A N CLASSIFIEDS E W TEMPORARYHOUSING REALESTATE FRENCHLANGUAGEHELP S SERVING FOREIGN SERVICE person- SARASOTA, FL. PAUL BYRNES, FSO FRENCH LANGUAGE HELP Tutoring nel for 23 years, especially those with PETS. retired, and Loretta Friedman, Coldwell at all levels and expert translations by re- Selection of condos, townhouses and sin- Banker, offer vast real estate experience in tired native French-speaking FSO. gle-family homes accommodates most assisting diplomats. Enjoy gracious living, no Tel: (703) 237-3645, breeds and sizes. All within a short walk of state income tax, and a current “buyer’s E-mail: [email protected]. Metro stations in Arlington. Fully furnished market.” and equipped 1-4 bedrooms, within per Tel: (941) 377-8181. diem rates. E-mail: [email protected] (Paul) EXECUTIVE LODGING ALTERNATIVES. or [email protected] (Loretta). E-mail: [email protected]. AUTOPARTS MORTGAGE

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PROFESSIONAL REAL ESTATE HOMEREPAIR SERVICES provided by John Kozyn of SHOPPING Coldwell Banker in Arlington, Va. Need to NOW IS THE perfect time to get your home in NORTHERN VIRGINIA ready to oc- buy or sell? My expertise will serve your SHOP IN AN AMERICAN cupy or put on the market. Whether it’s a specific needs and timeframe. FSO refer- DRUG STORE BY MAIL! fresh coat of paint or a bathroom and/or ences gladly provided. Licensed in Va. and Morgan Pharmacy kitchen renovation, Door2Door Designs can D.C. Tel: (202) 288-6026. 3001 P St NW do the work for you while you’re away. We E-mail: [email protected] Washington, DC 20007 specialize in working with Foreign Service Web site: www.cbmove.com/johnkozyn Tel: (202) 337-4100. Fax: (202) 337-4102. and military families living abroad. For more E-mail: [email protected] information, contact Nancy Sheehy at (703) ISO: RETIRED FSO WITH 10 YEARS www.carepharmacies.com real estate experience seeks home buyers, 244-3843 or [email protected]. sellers and renters in Virginia. David Or visit us at Olinger, GRI Long and Foster, Realtors. Tel: WWW.DOOR2DOORDESIGNS.COM (703) 864-3196. CRAVING GROCERIES FROM HOME? FINANCIALAID/SCHOLARSHIP E-mail: [email protected] We ship non-perishable groceries to you AFSA FINANCIAL AID AND MERIT via the Dulles mail-sorting facility or your HORSE FARM FOR LEASE: 3-bed- SCHOLARSHIP applications for the 2011- choice of U.S. shipping facility. room, 2.5-bath house on a 10-acre horse 2012 school year are being accepted www.lowesfoodstogo.com • Choose the Reynolda Rd store in farm in Hamilton, Va. Includes a 5-stall through Feb. 6. Contact AFSA Scholarship Winston-Salem, N.C. barn, pool. Five miles to Loudoun County Director at (202) 944-5504 or 1 (800) 704- 2372, ext. 504, or [email protected]. For more • Choose Delivery commuter bus. Contact Perri Green. Avail- • Pay through PayPal able Jan. 1. information, visit www.afsa.org/scholar/. Tel: (703) 626-8939. TRANSPORTATION E-mail: [email protected] PLACE A CLASSIFIED AD: $1.40/ PET MOVING MADE EASY. Club Pet word (10-word min). First 3 words bolded FOR RENT: Furnished 2-bedroom, 1½- International is a full-service animal shipper free, additional bold text 85¢/word. bath townhouse in Palm Coast, Fla. On in- specializing in domestic and international Header or box-shading $11 each. tercoastal waterway, convenient to Flagler trips. Club Pet is the ultimate pet-care Deadline: 5 wks ahead of publication. beaches, I-95 and major highways, shop- boarding facility in the Washington, D.C. Adv. Mgr. Tel: (202) 944-5507. ping and entertainment. Short-term metropolitan area. Fax: (202) 338-8244. $900/month, long-term $750/month. Tel: (703) 471-7818 or (800) 871-2535. E-mail: [email protected]. E-mail: [email protected]. E-mail: [email protected].

74 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 IN MEMORY

Jane Cooke Brynn, 69, a retired Dar es Salaam among them) in up- 2010, in the loving care of his longtime Foreign Service specialist and the wife grading their financial services opera- companion, Beverly Evans. of retired FSO Edward Brynn, died of tions. She received numerous awards Dr. Greifer was born in New York brain cancer on Dec. 5, 2010, at her during her Foreign Service career. City on Dec. 27, 1924, and moved to home in Charlotte, N.C. An avid bridge player, Mrs. Brynn Ishpeming, Mich., in third grade. Born Jane Cooke in Brooklyn, N.Y., was also a devotee of Italian and After graduating as valedictorian of the in 1942, Mrs. Brynn was raised in the French opera. In retirement, she Ishpeming High School class of 1942, Park Slope section of Brooklyn and in served on the board of Davidson Col- he attended Harvard University, where Garden City, N.Y. She received her lege’s classical music station, WDAV, he was awarded a full scholarship. B.A. degree from Rosemont College in for seven years. In her honor, WDAV He suspended his studies at the age Philadelphia in 1964 and later earned has established a fund to promote of 19 to serve on the USS Winged advanced degrees from Stanford Uni- wider appreciation of classical music in Arrow during World War II. After the versity and the University of Denver. area schools. She was also a docent at war, he returned to Harvard to com- After marrying Edward Brynn in 1967, the Levine Museum of the New South plete his undergraduate degree in she worked in banking in Dublin while in Charlotte for several years. 1946, with a major in philosophy and a he pursued his doctoral studies there. Mrs. Brynn is survived by her hus- minor in mathematics. Starting in 1972, when her husband band, now serving as acting historian With a love of foreign languages joined the Foreign Service, Mrs. Brynn for the Department of State; five chil- and having had a taste of travel in the accompanied him to posts in Colombo, dren and their spouses, Sarah Reichert Pacific during the war, Dr. Greifer ac- Bamako, Nouakchott, Moroni (where of Louisville, Colo., Edward Cooke cepted a job in the Foreign Service they opened a new embassy) and Brynn of Okemos, Mich., Kiernan with the State Department in Berlin. Yaounde. The Brynns were twice Flynn of Burlington, Vt., Anne Brynn After a five-year stint there, he re- posted to the United States Air Force of Chicago, Ill., and Justin Oliver turned to Harvard to complete a Ph.D. Academy, where three of their five Brynn of Charlotte, N.C.; and eight in political science in 1958. This was children were born. grandchildren. followed by faculty positions at Mrs. Brynn entered the Foreign There will be commemorations of Wheaton College in Norton, Mass., Service as a financial and budget spe- Jane Brynn’s life and work in Washing- and Vassar College in Poughkeepsie, cialist in 1989, after 17 years of em- ton, D.C., and Charlotte, N.C., in the N.Y. ployment on contract or on a Part- early spring. In 1961 Dr. Greifer re-entered the Time Intermittent basis. She served in Foreign Service, serving in Argentina Conakry, Banjul, Bonn, Accra and and Ecuador. In 1967, he returned to Paris, where she was the chief of fi-
his roots in Upper Michigan, where he nancial and budget operations. She re- Elisha Greifer, 85, a retired FSO taught political science at NMU until tired on Jan. 1, 2000, and thereafter and professor emeritus of Northern his retirement in 1997. Former stu- assisted several embassies (Kinshasa, Michigan University, died at his home dents and colleagues, and friends on Asmara, Abidjan, Ouagadougou and in Marquette, Mich., on Sept. 29, the tennis courts and ski slopes and

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 77 I N M EMORY
among local chamber musicians, recall In 1962, he graduated with a history Holbrooke returned to the private sec- his intelligence and wit. degree from Brown University, where tor but continued to serve the Clinton Dr. Greifer, or “Greif,” as he was he had been editor of the Brown Daily administration as special envoy to known to many friends, was preceded Herald. According to the Washington Cyprus and the Balkans. In 1999, in death by his sister Naomi Rubin. Post, Mr. Holbrooke wanted to be a Pres. Clinton appointed him ambassa- He is survived by five children from his newspaper reporter but, after being re- dor to the United Nations. former marriage to Helen Kyndberg fused a job by the New York Times, he Amb. Holbrooke was a foreign pol- Greifer: Maggie Mosley, John Greifer, joined the Foreign Service. icy adviser to the presidential cam- Andrew Greifer, Timothy Greifer and His first assignment as an FSO in paign of Senator John Kerry, D-Mass., Nicholas Greifer; eight grandchildren: 1963 was to Vietnam, where he served in 2004, and supported Hillary Rod- Lauren and Jacqueline Mosley, Maya as a field officer for USAID in the ham Clinton’s presidential bid in 2008. and Sari Greifer, Natalie and Jacob lower Mekong Delta. He then moved After becoming Secretary of State the Greifer, and Raina and Sten Greifer. to Saigon to serve as a staff assistant to next year, Hillary Clinton turned to He was “Uncle Elisha” to Jennifer, Ambassadors Maxwell D. Taylor and him for help with the Obama adminis- Steven and Lydia Rubin of Naperville, Henry Cabot Lodge Jr. In 1966, he tration’s toughest foreign policy prob- Ill. He leaves behind his loving part- joined the Vietnam staff in the Johnson lem, naming him U.S. special envoy to ner, Beverly Jo Evans; her children White House. He was a junior mem- Afghanistan and Pakistan. Steve (Amy) Evans, Holly (Harley) ber of the U.S. delegation to the Paris Richard Holbrooke’s marriages to Wallen, and Brandon (Amie) Evans; peace talks, and he wrote a chapter of lawyer Larrine Sullivan and television and five grandchildren, Dylan, Logan, the Pentagon Papers, the government’s producer Blythe Babyak ended in di- Madison, Meredith and Zachary. secret history of the conflict. vorce. In 1995, he married author Kati Contributions in his memory may In 1970, Mr. Holbrooke joined Marton. Besides Ms. Marton, he is be made to the Adult Amateur Arts, Princeton University’s Woodrow Wil- survived by two sons from his first mar- Music & Culture Fund of The Mar- son School as a fellow, and then moved riage, David and Anthony Holbrooke; quette Community Foundation, the on to become Peace Corps country di- two stepchildren, Elizabeth and Chris Peter White Library, the Political Sci- rector in Morocco. In 1972, he helped Jennings; a brother, Andrew Hol- ence Endowment of the NMU Foun- found Foreign Policy magazine and brooke; and four grandchildren. dation (www.nmu.edu/foundation) or was its managing editor for almost five SASI in Evanston, Ill. (www.sasiath years. After serving as a campaign ad- ome.org). viser to Jimmy Carter, the 35-year-old
Holbrooke was appointed assistant William Laurence Krieg, 97, a secretary of State for East Asian and retired Foreign Service officer, died on
Pacific affairs, making him the Nov. 20, 2010, at his home in Sarasota, Richard Holbrooke, 69, a former youngest assistant secretary in history. Fla. FSO, ambassador and the U.S. special At the start of the Reagan administra- Born on Oct. 11, 1913, to Laurence envoy to Afghanistan and Pakistan, tion, he left government to become a Montgomery Krieg and Helen Crane died on Dec. 13, 2010, in Washington, senior adviser to Lehman Brothers and Krieg, in Newark, Ohio, Mr. Krieg D.C., of complications from surgery to help form the consulting firm Public graduated at the top of his class from repair a torn aorta. Strategies. Newark High School. He was inducted Mr. Holbrooke was born on April In 1993, President Bill Clinton into Phi Beta Kappa at Dartmouth Col- 24, 1941, in New York City, to Jewish named Mr. Holbrooke ambassador to lege, and went on to earn his M.A. in immigrants from Germany and Germany. He returned to Washington international relations from the Fletch- Poland. When he was 16, his father, a a year later to become assistant secre- er School of Law and Diplomacy at physician, died. The young Holbrooke tary of State for European affairs, and Tufts University. Later Mr. Krieg also was looked after by the family of Dean in that capacity brokered the 1995 completed the yearlong advanced Rusk, whose son was his friend in Dayton peace accords ending the war course at the National War College. Scarsdale, N.Y. in Bosnia. In early 1996, Ambassador After joining the Foreign Service in

78 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 I N M EMORY

1938, Mr. Krieg served as a consular neapolis, Minn., and served in the tarian Universalist Church of Arling- officer in Stuttgart, Milan, Lisbon, Army Air Forces in the Pacific during ton, Diplomats and Consular Officers, Lagos and Caracas. He was later World War II. Attending the Univer- Retired, and the Public Diplomacy deputy chief of mission in Guatemala sity of Minnesota on the GI Bill, he Alumni Association. City and Santiago, in addition to sev- graduated in 1949 with a bachelor’sde- He was also a member of AFSA, eral assignments in Washington, D.C., gree in international relations. and active in Foreign Affairs Retirees including heading the Office of Argen- Mr. Lotsberg joined the State De- of Northern Virginia. His hobbies in- tine, Paraguayan and Uruguayan Af- partment in 1950. His first overseas cluded skiing, playing guitar, singing fairs. Throughout his career, Mr. Krieg postings were to Saigon (1950-1952), and dancing. strove to bring peace through trust and Tangier (1953-1954) and Calcutta Mr. Lotsberg’s first wife, Catherine understanding between the countries (1955-1958). He also served in Paris Stough, whom he married in 1956, in which he served. twice (1958-1962 and 1972-1976), died in 1992. In 1943, his bride-to-be, Laura Cairo (1965-1967), Tehran (1968- Survivors include his wife of 11 Philinda Campbell, braved the U- 1972) and Madrid (1977-1980). years, Priscilla Griffing Lotsberg of boat–infested waters of the Atlantic to In Cairo, he was evacuated to Alexandria, Va.; a daughter from his join him in Lagos, where they were Athens with the outbreak of the 1967 first marriage, Carolyn “Lyn” Lotsberg married. Together they had three chil- Arab-Israeli War, and worked on of Madrid; his brother Allan (Jackie) dren: Laurence John Krieg, Laura refugee problems there for several Lotsberg of Minneapolis, Minn.; two Krieg Morris, and Helen Middleton months before returning to Cairo to stepchildren, Angela Locke of Freder- Krieg Came. complete the tour. He was the recipient ick, Md., and Thomas (Fawn) Krebs of After retirement, Mr. Krieg taught of a USIA Meritorious Honor Award. Livermore, Calif.; two step-grandsons; as a visiting lecturer at Georgetown Following retirement from the For- and a brother-in-law, James Griffing. University and the Foreign Service In- eign Service in 1981, Mr. Lotsberg stitute. He also produced two lengthy joined Radio Free Europe/Radio Lib- historical studies of boundary disputes erty, where he retired in 1991 as direc-
in Latin America for the Department tor of administration in Munich. Stephen Low, 82, a distinguished of State. His analysis of the 1983 U.S.- His memoir, Always a Foreigner, retired FSO and former chief of mis- led invasion of Grenada earned a com- self-published in 1998, includes many sion to Zambia and Nigeria, died of pliment from President Ronald Rea- memorable anecdotes about his For- congestive heart failure on Nov. 5, gan. eign Service career. During one of his 2010, at his home in Bethesda, Md. Mr. Krieg was a member of Faith earliest assignments, in Saigon, for in- Ambassador Low was born and Lutheran Church in Sarasota. stance, he played a role in shipping a raised in Cincinnati. He graduated Mr. Krieg’s wife of 66 years prede- baby elephant from the king of Cam- from Yale University and, after a Ful- ceased him in 2009. He is survived by bodia to President Harry S. Truman. bright fellowship in Paris, received his his three children; eight grandchildren; While awaiting shipment, Mr. Lots- M.A. and Ph.D. from the Fletcher three great-grandchildren; and a sister, berg arranged for the elephant to be School of Law and Diplomacy at Tufts Jeannette Krieg Drake, of Granville, kept in the walled garden of an em- University. He was a veteran of the Ohio. bassy colleague. He spoke French, U.S. Army. In his early career he was German and Spanish, and also studied a teacher of English in Bogotá and of Arabic, Farsi, Hindi and Vietnamese. American government at Tufts.
In retirement, Mr. Lotsberg settled He joined the Foreign Service in Roman Leo Lotsberg, 84, a re- in McLean, Va., later moving to Alexan- 1956 and served for 31 years. After tired FSO with the U.S. Information dria, Va. He served as foreign affairs early tours in Uganda and Senegal, he Agency, died of multiple organ failure course coordinator for what is now the later served as counselor in Brasilia, as on Oct. 27, 2010, at Virginia Hospital Osher Lifelong Learning Institute at country director for Brazil and, in the Center in Arlington County, Va. George Mason University from 1998 National Security Council, as special Mr. Lotsberg was born in Min- to 2004. He was a member of the Uni- assistant to the president for Latin

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American affairs. and president of the Association for Amb. Low was also a former gover- In Zambia, Amb. Low led the Diplomatic Studies and Training, an nor and trustee of DACOR and the Anglo-American Contact Group, mo- organization devoted to improving the DACOR Bacon House Foundation, bilizing neighboring African countries professional development and compe- from which he received the Foreign in the cause of independence for tence of American diplomats. Service Cup in 2004. The citation in Southern Rhodesia (Zimbabwe). He In 2000, Amb. Low created the his honor reads: was instrumental in attaining that goal. Foreign Affairs Museum Council to “For distinguished service and lead- As director of the Foreign Service In- promote a Museum of American ership as a statesman and scholar in stitute, he worked closely with Secre- Diplomacy at the Department of State. strengthening programs for American tary of State George Shultz, the He raised $1.2 million for this cause, diplomats, educating students of inter- Defense Department and Congress to enlisting the support of senior senators national affairs, and bringing to fruition secure Arlington Hall as the campus and members of Congress, and per- the museum of American diplomacy, for FSI in what became the George P. suading all living former Secretaries of which will enlighten future generations Shultz National Foreign Affairs Train- State to become honorary members of about the successful efforts of Ameri- ing Center. the FAMC Board of Directors. Space can diplomats to safeguard our nation’s After his retirement, Amb. Low has been reserved in the State Depart- interests abroad and bolster interna- served as director of the Johns Hop- ment building and, under the leader- tional institutions that promote and kins University School of Advanced In- ship of Secretary of State Hillary preserve peace. His dedication to a life ternational Studies Center in Bologna, Rodham Clinton, Amb. Low’s vision is of public service is in the finest tradi- Italy, for five years. He was founder nearing realization. tion of the Foreign Service of the United States of America. It is with great pride and appreciation that DACOR awards the Foreign Service Cup to Ambassador Stephen Low.” UESTIONS Q ? Not sure whom to contact? An enthusiastic amateur ornitholo- gist, Amb. Low also took pleasure in LETTERS TO MEMBERSHIP his hobby of cabinetmaking. A music THE EDITOR For changes of address and other Printed letters may be edited for questions about AFSA membership, lover, he constructed a harpsichord, space. E-mail to [email protected] or e-mail [email protected]. which was played at his memorial serv- mail to FSJ, 2101 E Street NW, ice, and also played the cello. He par-

FasTrax Washington DC 20037. ADVERTISING ticularly enjoyed chamber music. For details about placing either He is survived by his wife of 56 E-CLASSIFIEDS a display or classifed ad, years, Helen (Sue) of Bethesda, Md.; www.afsa.org/classifieds e-mail [email protected], their three sons, Diego of Holliston, [email protected].

FSJ Mass., Rodman of Honolulu, Hawaii, and Jesse of Cairns, Australia; and sev- COPYRIGHTS & eral grandchildren. REPRINTS (See the Appreciation by Ken To obtain permission to reproduce FSJ material, e-mail Brown on p. 39 of the January FSJ.) [email protected].

ONLINE
www.afsa.org Sam Eugene Lesher, 81, a former www.fsjournal.org Foreign Service officer, died on Oct. 18, 2010, at home in Portland, Ore., at- tended by his wife and children. Born on April 14, 1929, in Akron,

80 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 I N M EMORY

Colo., Mr. Lesher served in the U.S. attaché in Karachi and as American engagement with the German Em- Army and then joined the Foreign consul in Peshawar during a particu- bassy in Washington and its govern- Service. His postings included the larly difficult period in the Tribal Fron- ment in Bonn, in furthering American/ Netherlands (where he met his wife), tier area of Pakistan. As a political German relations” — especially on Cameroon and Canada. officer in Ottawa he reported on the telecommunication issues and, above He left the Foreign Service to join relationships between the Canadian all, in critical trade negotiations then of the Department of Housing and Parliament and the U.S. Congress. His high concern to both governments. Urban Development. There, as a sen- love of nature prompted him to take Friends and family recall Mr. ior officer, he helped create thousands the initiative on cleanup ideas for the Macuk’s commitment to serving his of homes for low-income families. In Great Lakes region, for which he was country, his devotion to his family and retirement, he succeeded in real estate commended by the ambassador. his love and pride in his children, each investment. He then served as special assistant with careers of their own that were en- Mr. Lesher is survived by his wife of to the ambassador in Bonn for narcotic riched by their parents’ distinguished 51 years, Helena “Lillan” Buisma affairs. Following this, he was the State accomplishments in public service. He Lesher; a son, Carl; a daughter, Elisa- Department representative at the took great delight in his grandchildren beth Lesher Miles; a son-in-law, David NATO Defense College in Rome. In and continued his storytelling tradition Miles; granddaughters, Laura and Nairobi, Mr. Macuk was the chief of by writing and illustrating historical fic- Claire Miles; and four siblings. mission for the United Nations Envi- tion books for them. ronmental and Habitat Program. His Mr. Macuk is survived by his wife final post, as a political officer in Ute of Bethesda, Md.; two sons, Steve
Geneva, brought him full circle, work- Macuk of Olympia, Wash., and John David Anthony Macuk, 79, a re- ing again on critical Afghan-Pakistani Macuk of Norwood, Mass.; three tired Foreign Service officer, died on issues. It was during this posting that he daughters, Carolyn Ibici of Silver Nov. 6, 2010, at his home in Bethesda, was diagnosed with multiple sclerosis. Spring, Md., Suzanne Macuk of Md., after a long illness with multiple In l983, Mr. Macuk left the Foreign Durham, N.C., and Christina Macuk sclerosis. Service to, as he put it at the time, of Los Angeles, Calif.; and six grand- Mr. Macuk was born in Paterson, “spend more time in the continental children. N.J., in 1931 to Ukrainian and German United States.” He began a new ca- immigrant parents. He was proud of reer in the U.S. Civil Service, starting his heritage and of working as “a with a year at the Federal Communi-
ditchdigger, busboy and baker” to help cations Commission. For the next Joan Louise Gross McCusker, fund his studies at New York Univer- decade, he enjoyed service with the 86, the wife of retired FSO Paul D. sity and, later, the Georgetown School National Telecommunications & In- McCusker, died on Sept. 5 in Durham, of Foreign Service, where he earned formation Administration in the De- N.C., after a brief illness. degrees in political science and eco- partment of Commerce, until the Mrs. McCusker was born on July nomics. Beginning in 1952, he served progression of his MS required his 22, 1924, in Denver, Colo. She was the in the U.S. Army in Japan and then final retirement from government youngest of three daughters of Frances joined the Foreign Service in 1956. service in 1993. Morris Gross and Eli Mann Gross, a During a 30-year career as an FSO, With a rich variety of duties and labor union organizer on behalf of Mr. Macuk served at sensitive posts in senior responsibilities throughout his coal-miners who went on to become Europe, South Asia, Canada and career, Mr. Macuk gained high-level commissioner of parks for the city and Africa. His first post was as a visa-issu- recognition within the U.S. govern- county of Denver and, later, general ing officer in Germany. There he met ment and in other countries. In May manager of Elitches Gardens amuse- and married Ute Ilg Macuk. After l991, the Federal Republic of Ger- ment park. continuing language and area training many honored him with its “Verdien- A graduate of East Denver High at the University of California, Berke- stkreuz am Bande,” an award signed by School, Mrs. McCusker attended Mills ley, he served as assistant commercial the German president, for his “tireless College in Oakland, Calif. In 1948,

FEBRUARY 2011/FOREIGN SERVICE JOURNAL 81 I N M EMORY
after three years, she graduated Phi went, participating in clubs and lan- desk officer until 1960. Beta Kappa with a degree in botany. guage circles. Her highly organized and After a year at the University of Cal- She then worked at the U.S. embassy outgoing personality enabled her to ifornia, he was assigned to Tokyo as sec- in Mexico City and in Germany. She connect with people from all walks of ond secretary in the economic section, married Paul Donald McCusker, life. serving there until 1965, when he re- whom she had met at a dance in 1944 Mrs. McCusker was predeceased turned to Washington as deputy coun- in San Francisco, in 1948. by her youngest son, Ian Francis Mc- try director for Japan. In 1969, he was After her husband obtained his first Cusker, who died on Sept. 16, 1985. assigned to Mogadishu as first secretary law degree from Cornell University, a She is survived by her husband, Paul, in charge of the economic section and Fulbright scholarship took the couple of Durham, N.C.; her daughters, Karen coordinator of USAID activities. In to Rome for his second law degree (in McCusker of Chevry,France, and Mary 1971, he was transferred to Copen- Constitutional Law) from the Univer- McLoughney of Chapel Hill, N.C.; her hagen, where he was counselor for eco- sity of Rome. There he subsequently son Paul Alexander McCusker of Ma- nomic and commercial affairs. joined the Foreign Service. This ca- connex, France; five grandchildren: From 1975 to 1979, he was State reer took them from Rome to Wash- Claire McCusker, Tessa and Rory Department liaison officer with the ington (1954-1959), to Hamburg McLoughney, and Daniel and Samuel U.S. Congress on economic and trade (1959-1964) and to a tumultuous time McCusker Alvarez; and two step-grand- legislative matters. He then served as in Jakarta (1964-1969), where Mr. Mc- children, Daragh and Niamh Mc- counselor at the U.S. Mission to the Cusker served as counselor for eco- Loughney of Dublin, Ireland. OECD in Paris from 1978 to 1982. nomic affairs and the family was His last assignment in the Foreign evacuated twice. Service was in Bangkok, where he Mrs. McCusker raised four chil-
served concurrently as counselor for dren, who were born in three different Paul K. Stahnke, 87, a retired economic affairs and U.S. permanent countries. Whenever possible, she Foreign Service officer, died on Nov. representative to the United Nations tried to become acclimated to the local 19, 2010, at Inova Fairfax Hospital, in Economic and Social Commission for environment — whether it was engag- Fairfax, Va., of respiratory failure. Asia and Pacific from 1982 to 1987. ing with household gods in Indonesia Mr. Stahnke was born in Forest Mr. Stahnke retired from the For- or “kaffee und kuchen” in Hamburg — Park, Ill. He studied at the University eign Service in April 1988 with the per- and had the children educated in local of Colorado, received his master’s de- sonal rank of minister counselor. schools. Her gift for languages stood gree in international relations at the Subsequently, he worked on special her in good stead in all of their overseas University of Chicago, and did further projects for the Department of State postings. postgraduate work in advanced eco- and as an associate with Business En- In 1969, when Mr. McCusker nomic studies at the University of Cal- vironment Risk Intelligence, a firm joined the United Nations, the family ifornia at Berkeley. He also studied at providing investment risk analyses, became long-time residents of Pelham, the University of Florence (Italy) and specializing in the United Kingdom, N.Y., their stay there interrupted only attended the U.S. Naval War College Germany and Thailand. He was also by several years in Vienna from 1973 in Newport, R.I. He served in the U.S. an associate with Global Business Ac- to 1976. In addition to being an asset Air Force during World War II, mostly cess, Ltd., a consulting group. in her husband’s career, Mrs. Mc- in the Mediterranean theater. In 2002, he retired from these activ- Cuskey also worked in real estate while In 1951, he entered the United ities and put together a daily news- in Pelham. The couple moved to States Foreign Service, assigned as vice letter. He also wrote a series of col- Durham in 1999. consul to Hamburg. From 1952 to umns on money management for For- Friends and family members recall 1954, he was political officer in resi- eign Service members that were pub- Mr. McCusker’s boundless energy and dence in Kiel. Following two brief lished in the Foreign Service Journal. charm, her extraordinary intellectual consular assignments in Palermo and Mr. Stahnke’s wife, Bruna Maria curiosity and her unending generosity Venice, he returned to Washington in Lucrezia Franceschi, died in 1988. He of spirit. She made friends wherever she 1957 where he was assistant Italian is survived by three children, Christo-

82 FOREIGN SERVICE JOURNAL/FEBRUARY 2011 I N M EMORY
pher Stahnke of McLean, Va., Eliza- Richard William Utecht, 85, a re- beth Cunningham of Watch Hill, R.I., tired FSO with USAID, died on Sept. and Barbara Franceschi of New York, 19, 2010, at his home in La Crescent, N.Y.; a brother; six grandchildren; and Minn. two great-granddaughters. Mr. Utecht was born in La Crosse, Wisc., on Sept. 21, 1924, and grew up in the Pine Creek area of La Crescent.
He worked on his father’s farm until Eric Denton Tunis, 66, a retired joining the Army at age 17, beginning Foreign Service officer, died unex- a 25-year military career that took him pectedly on Oct. 10, 2010, in Hon- to several countries. He retired from olulu, Hawaii. the military in 1965 and joined the Mr. Tunis was born May 12, 1944, Foreign Service. in Springfield, Mass., to Emily and Ed- While working with USAID in Viet- ward Tunis. After a brief residency in nam, Mr. Utecht was captured by the Longmeadow and South Egremont, Viet Cong on Feb. 4, 1968, just days Mass., he moved with his family to Cal- before his tour was scheduled to end. ifornia. He graduated from Menlo He spent the next five years as a pris- School and Middlebury College in Ver- oner of war — caged, chained and mont, majoring in geography, which under constant guard in the jungles of became a lifelong interest. In 1967 he South Vietnam. Released on Feb. 12, joined the Peace Corps, serving two 1973, he returned home with a deter- years in eastern Iran. mination to live each day to the fullest. Mr. Tunis then began his career as a Mr. Utecht continued to work for Foreign Service officer with the State the Department of State until his re- Department. His postings included tirement in 1985. Upon returning to Afghanistan, Indonesia, Cyprus, Nepal, La Crescent, he served on town and Western Samoa, India and Pakistan, township boards and as a fire marshal where he served as consul general in for 20 years. He was also a member of Lahore. He spoke French, Farsi and the American Legion, Veterans of For- Indonesian. After retiring in 1999 to eign Wars and the Masonic Lodge. Carmel Valley, Calif., he continued to Mr. Utecht’s wife, Luana, whom he do contract work for the State Depart- married in France in 1953, and several ment, mostly in Pakistan. brothers and sisters preceded him in Family members recall that Mr. death. He is survived by two sons, Tunis’s great passions were travel, gar- Gene (and his wife, Debbie) of La dening, language, humor and collect- Crescent, and Michael (and his wife, ing art. He had friends in many parts Faye) of Spring Grove, Minn.; a step- of the world. daughter, Joyce Jorstad-Johnson (and He is survived by a sister, Leila Hall, her husband, Sam) of California; a and brother-in-law Samuel Hall, of Los brother, Erich Utecht of Minneapolis; Ranchos, N.M.; two nephews, Douglas a special cousin, Peggy Wansley (and Van Cott Niven (and wife Saowalak) of her husband, Bubba); and his best Santa Cruz, Calif., and Edward Brad- friend, “Pierre.” I ford Niven of Oakland, Calif.; and a Send your In Memory submission niece, Laura Niven of Leipzig, Ger- to [email protected] many.

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FEBRUARY 2011/FOREIGN SERVICE JOURNAL 87 REFLECTIONS

The Russians Are Coming

BY GINNY YOUNG

hen news of the 1984 U.S. There being nothing either of us invasion of Grenada came “War is war, but could add at this point, we turned away. Wout, I was on a pouch run in peace is peace.” The aide motioned me to a seat of Mexico City. I was principal officer in honor where folding chairs had been Merida, our smallest consulate in Mex- hurriedly set up. Television cameras ico, and had stopped at the commissary
whirred as the governor and then the to pick up butter and other items not ambassador said a few words. Aeroflot available there. I heard only snatches high-level Mexican diplomat who was, arrived and took on its passengers. of information before rushing to the he said, the secretary for Soviet affairs When I got back into town, I called communications section, grabbing the in the Mexican Foreign Ministry and the embassy and recounted what had orange canvas bag (full of secrets) and his country’s designated observer. The happened. That afternoon we received heading for the airport. Soviet ambassador to Mexico had also an unclassified cable sent worldwide Shortly after 5:00 a.m. the next come. The governor was due shortly. from Mexico City on the events. morning, a cryptic call from the em- Journalists and photographers from Thrilled to have been where the action bassy ordered me to proceed immedi- Merida’s two daily newspapers and all was for a couple of cable pages, I was ately to Merida’s airport. An Air Force seven of the local television stations disappointed to be identified only as plane was due to arrive within the hour. were there. “Merida consul” for my small but cru- The caller couldn’t say anything more The governor’s aide asked if I’d like cial part in the Cold War. on an open line, but the pilot would fill to meet the Soviet ambassador. Star- Merida’s two major papers did cite me in. An American plane was taking tled, I said, “Sure.” Followed by re- my name, though, and the Diario de off as I arrived. porters and cameras, he walked me Yucatan reported the brusqueness of Inside the airport, an aide to Yu- over to the Russian envoy. the Soviet ambassador’sremarks on the catan Governor Graciano Alpuche Pin- The ambassador was not at all inter- front page. It commended U.S. Consul zon explained that because U.S. forces ested in talking to me — but with the Ginny Carson de Young for her “diplo- were now in full control of Grenada, it press surrounding us, he could not just matic cool.” was imperative to get non-combatant brush me off. I filed away this experience for fu- foreigners, largely from Eastern Eu- Pointing a finger directly into my ture reference. On occasion, “diplo- rope, out of the country. American face, he said, “ War is war, but peace is matic cool” just means keeping your planes were allowed to pick them up in peace.” No dispute there, I thought, mouth shut — especially when you St. George’s, but only Aeroflot could and nodded. don’t know what is going on. I travel to Moscow via Cuba. Accord- His voice shaking, he said the ingly, a neutral location was required United States had no right to treat his Ginny Young joined the Foreign for the transfer of passengers: Merida. diplomats despicably. The U.S. ought Service in 1974, serving in India, Passengers from the now-departed to be ashamed. He glared at me. I had Hong Kong, Mexico and Romania be- American plane crowded the airport — no idea what we had done to his citi- fore retiring in 1992. Her memoir, Cubans, North Koreans, Russians, East zens or anyone else in Grenada. Peregrina: Adventures of an Ameri- Germans and Bulgarians. Aeroflot had “Entiende?” he asked, finally. Did I can Consul, will be published by the not yet arrived. understand? Association for Diplomatic Studies The governor’s aide pointed to a “Si, entiendo.” and Training this year.

88 FOREIGN SERVICE JOURNAL/FEBRUARY 2011