Economic Calendar

Sunday, April 1, 2012

Obama Enlists Donations Stressing 2012 More Important Than 2008

By Kate Andersen Brower - Mar 31, 2012 11:01 AM GMT+0700

President Barack Obama, seeking to raise $2 million in campaign funds in Vermont and Maine, told supporters that there may be more at stake in the U.S. election this year than in his victorious run to the White House in 2008.

“In 2008 I was running against a candidate who believed in climate change, believed in immigration, believed in the notion of reducing deficits in a balanced way,” the president said to about 100 contributors at a luncheon in Burlington, Vermont, the first of four events yesterday in two states he won by wide margins in 2008.

“We had some profound disagreements, but the Republican candidate for president understood that some of these challenges required compromise,” Obama said, referring to Senator John McCain. Now, he said, Republicans have a “fundamentally different vision of America.”

Obama has been increasing his fundraising and campaign appearances as he turns more directly to his re-election campaign and as the Republican nomination race enters its final stages. Obama is running with the nation’s unemployment rate stuck at about 8 percent or higher since he took office and the threat of higher oil prices stifling the recovery.

Obama raised $45 million for his campaign in February compared with $11.5 million for Republican front-runner Mitt Romney.

Agenda for Term

In seeking to rev up enthusiasm among his supporters, Obama cited victories during his first term, including passage of the health-care law that was the focus of Supreme Court arguments this week. The remarks on the health-care overhaul marked the president’s first on the issue this week.

Obama also outlined his future agenda, citing a push for a minimum tax on individuals who make $1 million or more annually, an initiative named for billionaire investor Warren Buffett.

The Senate is due to vote on the Buffett rule in two weeks. It would require a minimum 30 percent tax rate for the highest U.S. earners. The congressional Joint Committee on Taxation projects it would raise $47 billion over the next decade. Republicans, who have enough votes to block the legislation, have said they oppose it.

Obama linked the tax to his re-election campaign theme that the U.S. must cut its budget deficit without jeopardizing education and research programs.

‘Basic Math’

“If you make more than a million dollars a year, I don’t mean that you have a million dollars; I mean every year they’re making more than a million dollars, you should not pay a tax rate that’s lower than your secretary,” he told approximately 1,800 people at Southern Maine Community College. “This is not class warfare, this is not class envy, this is just basic math.”

Obama also jabbed at the Republicans running for president while at the University of Vermont in Burlington. He cited the debate in the primary battle among Romney, former Senator Rick Santorum and former House Speaker Newt Gingrich, and said Abraham Lincoln “couldn’t win the nomination.”

Obama was making his first trip to Vermont since taking office. He won the state by 37 percentage points in the 2008 election. Yesterday marked his third visit to Maine, which he won by 18 percentage points in 2008.

Vermont residents have made more per-capita contributions to Obama’s re-election campaign than residents in any other state, even his home state of Illinois, according to a review by the Burlington Free Press.

State Visits

The president’s stop in Vermont reduces to seven the number of U.S. states that Obama has yet to visit since taking office: North Dakota, South Dakota, Nebraska, Idaho, Utah, Arkansas and South Carolina. None of these states voted for Obama in his 2008 presidential race against McCain.

Obama has made two trips to Maine since taking office, including a July 2010 family vacation to Acadia National Park.

Tickets for the first event started at $7,500 per person and went for as much as $35,800, according to the campaign. In Portland, Obama spoke to approximately 1,800 people at Southern Maine Community College. Tickets for those events went for $44 to $100.

At a dinner at the Portland Museum of Art, Obama told about 130 supporters seated around square tables adjacent to an Edgar Degas exhibition that, while the economy is improving, more must be done to invest in research, education and energy independence.

“The task before us still looms large and the other side doesn’t have answers to these questions,” he said at the final fundraiser of the day. “You don’t see them debating how we improve our education system; you don’t see them engaging, in any serious way, about how we’re going to retrain our workers. There’s not a conversation about how we restore manufacturing in this country.”

Obama said Republican presidential candidates have “one message,” which is cutting taxes “so that by every objective measure our deficit is worse.” Ticket prices started at $5,000 per person.

To contact the reporter on this story: Kate Andersen Brower in Portland, Maine at

To contact the editor responsible for this story: Steven Komarow at


Switzerland Wants German Investigators Arrested on Espionage

By Richard Weiss and Leigh Baldwin - Mar 31, 2012 8:13 PM GMT+0700

Switzerland is seeking to arrest three German tax investigators who negotiated the purchase of data on Credit Suisse Group AG (CSGN) clients for economic espionage, a German government spokeswoman said.

The tax investigators from the state of North Rhine- Westphalia negotiated the 2.5 million-euro ($3.3 million) purchase of personal information of clients of Credit Suisse who may have evaded taxes in Germany in 2010. Ingrid Herden, the spokeswoman for the state’s finance ministry, said she couldn’t confirm more details.

The two countries have been trying to agree on a proposal for a withholding tax that would legalize undeclared assets by Germans held in Switzerland by imposing a retroactive income tax. German political parties have been fighting over the proposed tax rate.

German Finance Minister Wolfgang Schaeuble said the warrant won’t affect efforts by the two countries to reach such an accord.

“Switzerland has its legal system and we have our legal system,” Schaeuble told reporters today in Copenhagen after meeting with European finance counterparts. “The justice system in Switzerland is just as independent as it is in Germany.”

Switzerland’s public prosecution service confirmed it asked for administrative assistance from Germany in an investigation into the theft of tax data from Credit Suisse.

There is “concrete suspicion” that people inside Germany gave instructions to “spy on Credit Suisse” to gather the data, Jeannette Balmer, a Swiss prosecution spokeswoman, said in an e-mail today, without giving further detail.

To contact the reporters on this story: Richard Weiss in Frankfurt at; Leigh Baldwin in Zurich at

To contact the editor responsible for this story: Benedikt Kammel at


Facebook Valued at $102.8 Billion in Final Auction on SharesPost

By Brian Womack - Mar 31, 2012 11:01 AM GMT+0700

Facebook Inc. (FB)’s implied valued rose 8.9 percent to $102.8 billion yesterday in what was expected to be the last auction of its stock on SharesPost Inc.’s exchange before the social-networking company’s initial public offering.

SharesPost completed the auction at a price of $44.10 for 150,000 units, the firm said in an e-mailed statement. That’s up from an auction earlier this month with a price of $40.50 a share, valuing the company at $94.4 billion, based on a share count of 2.33 billion.

Facebook (FB), the world’s most popular social-networking service, filed for an IPO last month that could value the business at between $75 billion and $100 billion, people familiar with the matter have said. The Menlo Park, California- based company, which has more than 845 million users, is seeking $5 billion in what would be the largest Internet IPO on record.

The company decided to halt the trading of its shares on secondary markets at the end of this week as it prepares for the IPO, two people with knowledge of the matter said. Facebook aims to hold the offering in early May, one person said. SharesPost moved up the date of the Facebook auction to yesterday from April 2 to meet the deadline.

Earlier this month, the U.S. Securities and Exchange Commission settled with SharesPost to resolve claims that the online marketplace acted as an unregistered broker of shares. It was the first action in a broad probe of trades involving nonpublic startups.

To contact the reporter on this story: Brian Womack in San Francisco at

To contact the editor responsible for this story: Tom Giles at


Treasuries Drop on Outlook in Worst Quarter Since 2010

By Daniel Kruger - Mar 31, 2012 11:00 AM GMT+0700

Treasuries had their worst quarter since the last three months of 2010 while corporate bonds surged as the world’s largest economy showed signs of improvement.

U.S. government securities lost 1 percent from the start of the year to March 29, Bank of America Merrill Lynch indexes show. An index of investment-grade and high-yield corporate bonds returned 3.2 percent, the most since the third quarter of 2010. Treasuries also trailed German debt, while stocks surged. U.S. payrolls added more than 200,000 jobs for a fourth month in March, the longest such run since 2000, data next week may show.

“Our economy is gaining traction,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “If you think things are getting better, you’re not supposed to buy 10-year notes with 2 percent yields.”

Benchmark 10-year note yields climbed 33 basis points, or 0.33 percentage point, from the end of 2011 to 2.21 percent yesterday in New York, according to Bloomberg Bond Trader prices. They reached 2.40 percent on March 20, the highest level since Oct. 28, a week after the Federal Reserve upgraded its assessment of the U.S. economy. They had touched a record low 1.67 percent in September. The average over the past decade is 3.86 percent.

Ten-year yields will increase to 2.54 percent by year-end, according to the average forecast in a Bloomberg News survey of 77 financial companies, with the most recent projections given the heaviest weightings.

Thirty-year bond yields rose 44 basis points from January through March to 3.34 percent.

Risk Appetite

Stocks rallied as data showing U.S. economic improvement fueled risk appetite. The Standard & Poor’s 500 Index had its biggest first-quarter advance since 1998, gaining 12 percent.

The U.S. economy grew at a 3 percent annual rate in the last three months of 2011, the same as previously estimated, revised figures from the Commerce Department showed on March 29. It gained at a 1.8 percent pace in the prior quarter. Consumer spending rose by 0.8 percent in February, the most in seven months, Commerce Department data showed yesterday.

“The U.S. has got some legs, at least for the next couple of quarters,” Jim O’Neill, chairman of Goldman Sachs Asset Management, said yesterday in an interview on Bloomberg Television in Italy. “There remain all sorts of issues, but I think the U.S. is going to continue to positively surprise.”

Employment Report

Employers in the U.S. added 205,000 jobs in March, economists in a Bloomberg News survey forecast before the Labor Department reports the data on April 6. The monthly increase was last below 200,000 in November. It would be the longest stretch above that figure since the five months ended in January 2000.

Treasuries (YCGT0025) fell this month as Greece pushed through the biggest sovereign restructuring in history after getting private investors to forgive more than 100 billion euros ($132 billion) of debt. The move opened the way for a 130 billion-euro bailout package designed to prevent a collapse of the economy.

“Part of the reason yields went up was the better economic numbers,” Maury Harris, chief economist at UBS AG in New York, one of the 21 primary dealers that trade directly with the Fed, said March 28. “But an important part of that was” a decline in the “risk coming out of Europe with the progress that you’ve seen there.”

German (GDBR10) 10-year bunds were little changed this quarter as their haven appeal waned, with yields falling four basis points to 1.79 percent. Treasuries still lagged behind German sovereign debt, which returned 0.2 percent from January through March.

Real Yield

The increase in U.S. yields this year has brought them closer to the annual rate of inflation. Ten-year notes have a so-called real yield of minus 66 basis points, compared with minus 152 basis points at the end of 2011.

The five-year, five-year forward break-even rate, which projects the pace of consumer-price increases starting in 2017, was 2.66 percent on March 28 after reaching 2.78 percent on March 19, the highest level since August.

While the measure, which the Fed prefers to look at in determining inflation expectations and monetary policy, is up from this year’s low of 2.37 percent on March 5, it’s below the 2.72 percent average over the past decade.

Fed Chairman Ben S. Bernanke said this week the economic recovery isn’t assured. Policy makers don’t rule out further options to support growth, he said on March 27, according to a transcript of an ABC News interview provided by the network.

Quantitative Easing

The central bank bought $2.3 trillion of debt under two rounds of quantitative easing from December 2008 to June 2011 to support the economy. It also has kept the benchmark interest rate for overnight loans between banks at zero to 0.25 percent since December 2008 and has pledged to keep it there through most of 2014.

Philadelphia Fed President Charles Plosser said March 29 the central bank may need to raise interest rates before late 2014 and additional stimulus isn’t necessary as the U.S. economy shows signs of strength.

“A lot of people were quick to embrace” the changes suggested by U.S. yields’ climb from March 13 through March 20, Scott Sherman, an interest-rate strategist at the primary dealer Credit Suisse Group AG in New York, said yesterday. “They priced out expectations for additional asset purchases. They also priced forward earlier rate increases.”

To contact the reporters on this story: Daniel Kruger in New York at

To contact the editor responsible for this story: Dave Liedtka at


Clinton Says Will Soon Be Clear If Iran Serious About Talks

By Nicole Gaouette - Mar 31, 2012 9:07 PM GMT+0700

Secretary of State Hillary Clinton said it will soon be clear whether Iran is serious about talks on its nuclear program, and warned that the window to engage “will not remain open forever.”

Negotiations between Iran, the five permanent members of the United Nations Security Council and Germany are set to be held April 13 and 14 in Istanbul, Clinton said, even as the U.S. and its allies pursue a range of sanctions against the Islamic republic. While the U.S. says Iran must allay concerns that it’s pursuing nuclear weapons, Iran says its program is for peaceful purposes, including medical research.

“It soon will be clear whether Iran’s leaders are prepared to have a serious, credible discussion about their nuclear program,” Clinton said today in Riyadh, Saudi Arabia’s capital. “It is up to Iran’s leaders to make the right choice. So far they have given little reason for confidence. What is certain is that Iran’s window to seek and obtain a peaceful resolution will not remain open forever.”

Clinton is in Riyadh for the inaugural meeting of a Gulf Cooperation Council strategic group to discuss the creation of a missile defense system. She goes to Istanbul this evening for an April 1 ‘Friends of Syria’ meeting, bringing together Syrian opposition groups and their international backers.

Syria has said it accepts a six-point UN peace plan put forward by Kofi Annan, the former UN chief who is acting as the international body’s envoy to Syria. It calls for President Bashar al-Assad’s government to pull back its forces, allow humanitarian aid workers and international monitors to enter, and permit peaceful protests to take place.

Clinton warned that verbal acceptance of the proposal is not enough.

“The world will judge Assad’s sincerity by what he does, not by what he says,” Clinton said. “As of today, regime forces continue to shell civilians, lay siege to neighborhoods, and even target places of worship.”

At least 25 people were killed by security forces in Syria today, the U.K.-based Syrian Observatory for Human Rights said in an e-mail.

Clinton said Annan should set a deadline for Syria to meet its commitment to implement the peace plan. The GCC, in a closing statement for today’s meeting, urged the envoy “to determine a timeline for next steps if the killing continues.”

To contact the reporter on this story: Nicole Gaouette in Riyadh at

To contact the editor responsible for this story: John Walcott at


Obama Plans Overhaul of Student-Loan Debt Collector Practices

By John Hechinger - Mar 31, 2012 11:00 AM GMT+0700

The Obama administration proposed requiring that debt collectors let student-loan borrowers make payments based on what they can afford, rather than on the size of their debt.

The U.S. Education Department, which hires private collectors, said yesterday it would mandate that the companies use a standard form to gather debtors’ income and expenses. If borrowers protest, they would be offered an income-based formula, which can result in payments as low as $50 a month for an unmarried person with $20,000 in income and $20,000 in loans.

A "Bail Out Schools, Not Banks" protest as President Barack Obama spoke about college affordability at Colorado University in Denver on October 26, 2011. Photographer: Jewel Samad/AFP/Getty Images

The collection companies -- which receive commissions of as much as 20 percent of recoveries -- are facing complaints that they insist on stiff payments from defaulted borrowers even though the Obama administration and Congress have approved more- lenient plans, Bloomberg News reported March 26. The education department is also reviewing the commissions it pays collectors.

“We definitely feel a sense of urgency to make sure we are doing everything we can to serve the interests of taxpayers and students,” Justin Hamilton, an Education Department spokesman, said in a telephone interview.

The agency first proposed changing the rule governing the treatment of defaulted borrowers a year ago, Hamilton said. After a public comment period, the regulation may take effect as soon as July 2013.

More Favorable

The final proposal, worked out yesterday in discussions with negotiators representing the government, industry and borrowers, was more favorable to the debtors than what the agency originally suggested, according to Deanne Loonin, an attorney with the National Consumer Law Center in Boston.

In particular, for students seeking to “rehabilitate” their loans in default, the proposed rule prohibits basing payments on a borrower’s loan amount, which has been standard practice for collectors, Loonin said in a telephone interview. Current government contracts provide what are among the biggest incentives to debt collectors that extract minimum payments based on loan amounts.

“This regulation is a really important step toward treating very vulnerable borrowers consistently and fairly and giving them the second chance they are entitled to by law,” said Loonin, who represented borrowers in the negotiations.

‘Best Information’

Along with examining incentive payments in borrower contracts, the department is looking at collector scripts and “making sure they’re giving people the best information available,” Secretary of Education Arne Duncan said in an interview on March 28, after testifying about the agency’s budget before a House panel.

With $67 billion of student loans in default, the Education Department hires 23 private debt-collection companies to chase borrowers. The contractors include Pioneer Credit Recovery, a unit of SLM Corp. (SLM), the largest student-loan company, known as Sallie Mae.

Companies that collect student loans directly for the department and through state agencies received about $1 billion in commissions last year, according to a review of contracts and agency data.

Sallie Mae, based in Newark, Delaware, will abide by any changes from the Education Department, said Patricia Nash Christel, a spokeswoman.

“We’re proud to offer programs that give consumers the opportunity to improve their credit and provide cost savings for the American taxpayer,” Christel said in an e-mail.

In 2009, Congress expanded a program that lets lower-income borrowers tie payments to their incomes. Debtors pay on a sliding scale tied to their debt, salaries and family obligations.

In October, Obama proposed making payments even lower and forgiving loans after two decades for some borrowers, a change that could take effect as soon as this year.

To contact the reporter on this story: John Hechinger in Boston at

To contact the editor responsible for this story: Lisa Wolfson at


Groupon Reports ‘Material Weakness,’ Restates Quarterly Revenue

By Ari Levy - Mar 31, 2012 11:01 AM GMT+0700

Groupon Inc. (GRPN), the largest provider of daily deals online, reported a “material weakness” in its financial controls and said fourth-quarter results were worse than previously stated because of higher refunds to merchants.

The revisions reduced revenue in the period by $14.3 million to $492.2 million, the Chicago-based company said yesterday in a regulatory filing. Groupon had reported $506.5 million last month.

Andrew Mason, chief executive officer of Groupon Inc., in New York. Photographer: Stephen Yang/Bloomberg

March 30 (Bloomberg) -- Paul Kedrosky, author of the Infectious Greed Blog and a Bloomberg contributing editor, talks about Groupon Inc.'s revision of its fourth-quarter results. The largest provider of daily deals online reported a "material weakness" in its financial controls and said results were worse than previously stated. Kedrosky speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

March 30 (Bloomberg) -- Groupon Inc., the largest provider of daily deals online, reported a "material weakness" in its financial controls and said fourth-quarter results were worse than previously stated because of higher refunds to merchants. Trish Regan reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Groupon's international company headquarters, launched in Chicago in November 2008, now markets products and services in 43 countries around the world. Photographer: Scott Olson/Getty Images

The announcement marks another setback for Groupon, which has struggled to get its financial statements in order since filing for an initial public offering in June. Two months after its prospectus, the company abandoned a controversial accounting method for operating income after a review by the Securities and Exchange Commission. Groupon then restated 2010 results in September because it had counted the total amount of its daily- deal sales as revenue, including fees paid to merchants.

“This feeds some of the negative sentiment around their disclosure,” said Ken Sena, an analyst at Evercore Partners Inc. in New York, who has an equalweight rating on Groupon shares.

Groupon shares fell 5.9 percent to $17.29 in extended trading yesterday after the announcement. The stock, down 8.1 percent since the IPO in November, had climbed 3.8 percent earlier in the day.

‘Wildly Profitable’

Groupon also stumbled ahead of its IPO when Chairman Eric Lefkofsky said the company is “going to be wildly profitable” in an interview with Bloomberg News. In July, the company updated its IPO filing, asking investors to disregard those comments because they didn’t accurately or completely reflect his views.

The changes announced yesterday are “are primarily related to an increase to the company’s refund reserve accrual,” leading to higher reimbursement rates, Groupon said. In response to the conclusion that the company’s internal controls contained a material weakness, Groupon said it’s been working for several months with an accounting firm and will report on the effectiveness of those controls by the end of the year. While Groupon’s independent auditor is Ernst & Young LLP, the company said it’s working with a different accounting firm.

The auditors are at fault for not identifying problems with the financial controls earlier, said Herman Leung, an analyst at Susquehanna Financial Group in San Francisco.

Lack of Controls?

“This should have been highlighted by the auditors,” said Leung, who has a neutral rating on shares of Groupon and doesn’t own the stock. “The business is growing so fast that it sounds like they don’t have the proper financial controls to deal with the growth.”

Charlie Perkins, a spokesman for New York-based Ernst & Young, declined to comment on the earnings restatement.

Groupon said the revision accounts for an increase in higher-priced deals, which are more likely to be refunded by customers. Last year the company began Groupon Reserve, a service for upscale deals such as a five-course meal at Santa Monica, California-based restaurant Whist for $99.

The higher refunds widened Groupon’s net loss by $22.6 million, or 4 cents a share.

Groupon pioneered the daily-deal market, where consumers buy discounts on restaurant meals, nail-salon packages and other services. Groupon (GRPN) splits the revenue from the offers with merchants.

To contact the reporter on this story: Ari Levy in San Francisco at

To contact the editor responsible for this story: Tom Giles at


Brzezinski Says Romney Lacks ‘Grasp’ of Foreign Policy

By Viola Gienger - Mar 31, 2012 11:01 AM GMT+0700

A former Democratic national security adviser assailed Republican presidential front-runner Mitt Romney for lacking a grasp of foreign policy and said the former Massachusetts governor would return the U.S. to the policies of George W. Bush.

“If we take seriously what he has been saying in the course of the campaign, we have every reason to be very worried,” former U.S. National Security Adviser Zbigniew Brzezinski said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend. “He probably subscribes to the notions articulated by his Republican predecessor,” George W. Bush, Brzezinski said.

Massachusetts Gov. Mitt Romney greeted by Maj. Gen. Kelley, deputy commander land component forces, Camp Arifjan, Kuwait, on May 23, 2006. Photographer: Lt. Col. Martin Moerschell/United States Air Force/AP Photo

March 30 (Bloomberg) -- Former U.S. National Security Adviser Zbigniew Brzezinski talks with Bloomberg's Al Hunt about Republican presidential candidate Mitt Romney's foreign policy stance. Former CBS Sports college basketball analyst Billy Packer talks about this weekend's NCAA men's basketball tournament semifinals. Bloomberg's Greg Stohr and commentators Kate O'Beirne and Margaret Carlson speak about the Supreme Court's review of President Obama's health-care law. (Source: Bloomberg)

Romney is surrounding himself with advisers from the Bush administration, and he doesn’t display a “broad grasp of what is unique about this century, how it differs from the preceding one,” said Brzezinski, who was President Jimmy Carter’s national security adviser.

In Brzezinski’s view, the best candidate to succeed Secretary of State Hillary Clinton in a second term for Obama would be Senate Foreign Relations Committee Chairman John Kerry, a Massachusetts Democrat and former presidential nominee. Chuck Hagel, a former Senate Republican from Nebraska, also would be “awfully good,” he said.

Romney has faced criticism from Republican rivals as well as Democrats for comments such as his description this week of Russia as “without question, our number-one geopolitical foe.”

Campaign Advisers

His campaign advisers have included Robert Joseph, a former White House and State Department official under Bush who helped coordinate a white paper on what the Bush administration said was Saddam Hussein’s “quest for nuclear weapons.” No evidence of an Iraqi nuclear weapons program was found after the U.S. invaded Iraq in 2003.

Romney’s comments on Iran, Brzezinski said, “are just so casual, and at the same time so militant, that one has to wonder whether he’ll feel bound by what he said in the course of the campaign.”

Brzezinski, an early supporter of then-candidate Barack Obama, also said he’s been disappointed by what he said is the president’s failure to capitalize on his understanding of foreign policy.

Brzezinski, author of the book “Strategic Vision: America and the Crisis of Global Power,” published in January, said the U.S. in recent decades has missed opportunities to generate the political will and make the necessary sacrifices to avoid a slide into what he says would be a chaotic world marred by sporadic violence.

Sermons, Strategy

Obama hasn’t been able “to set a firm course of action and to, in effect, combine his tendency to sermonize with his capacity to strategize,” Brzezinski, who now serves as a counselor and trustee for the Center for Strategic and International Studies, a Washington policy research organization, said in the interview.

Iran’s nuclear program is one area in which Obama is being backed into a corner, Brzezinski said.

Israeli officials have said time is running out for diplomacy or financial sanctions before it’s too late to use a military strike that might prevent Iran from developing the ability to build a nuclear weapon. Iran says it’s pursuing nuclear power solely to generate electricity and for medical research.

Israeli Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak appear to be trying to “maneuver us into a situation in which we feel we have to support them,” risking Iranian retaliation against U.S. forces in the Persian Gulf region, Brzezinski said.

Patience on Iran

The U.S. should “be patient in pursuing” an agreement with Iran, while extending its nuclear deterrence pledge to Israel and Persian Gulf nations, the former national security adviser said.

“We have done that successfully in protecting South Korea and Japan from North Korea,” he said. “We did the same thing for decades in Europe against the Soviet Union. We have deterred the would-be nuclear threats, but we didn’t preempt and go to war in a preventive attack.”

A pre-emptive attack on Iran to stop its nuclear program “will produce disasters now,” he said.

To contact the reporter on this story: Viola Gienger in Washington at

To contact the editor responsible for this story: John Walcott at