Stanford, Calif. - The visit this week of South Korea's new president, Lee Myung Bak, offers a rare opportunity to put the American-Korean relationship back on a more solid footing. President Lee, who won a decisive victory in last December's election, has expressed views on the security alliance, a bilateral free trade agreement, and policy toward North Korea that are thoroughly compatible with US interests. And Mr. Lee's authority was bolstered by his party's substantial victory in legislative elections April 9.

The question is whether Washington is poised to take advantage of this convergence of views.

For the past eight years, a major perception gap between Seoul and Washington has been painfully evident. Our governments often worked at cross-purposes in the six-party talks to denuclearize North Korea. Progressive governments in South Korea encouraged peaceful coexistence with the North through a pattern of unreciprocated engagement. For much of that time, the Bush administration sought to isolate and pressure Pyongyang into relinquishing its nuclear ambitions, and it made little effort to conceal its hopes for a regime change in Pyongyang.

When Washington decided to move its military headquarters out of Seoul in 2003, many Korean officials suspected that the Americans were just eager to get troops out of North Korean artillery range. President Roh Moo Hyun at times seemed interested in carving out a role as a balance wheel between the major powers in Northeast Asia. Meanwhile, the US was preoccupied by problems in the Middle East, and some American officials wondered if the US-Republic of Korea (ROK) alliance could long survive when one party dismissed the North Korean threat while the other viewed it as increasingly menacing.

Now comes Lee, a former mayor of Seoul and Hyundai construction executive with a reputation for tough-minded, pragmatic conservatism, eager to correct what he described as the misguided priorities of past ROK administrations. In a recent meeting with New Beginnings, a group of American policy experts on Korea, Lee appeared determined to accord priority to the alliance with the United States, exact a measure of reciprocity from the North, forestall major economic concessions to the North until it abandons its nuclear activities, and design a more ambitious global role for his country.

Surely Washington welcomes Lee's priorities. The tougher question is whether it can work effectively with him to translate shared aims into concrete results. This will pose three particular challenges.

First, on the nuclear issue, undeniably, bilateral talks with Pyongyang can facilitate diplomatic progress. There are dangers as well. Disconnects with the Japanese have deepened, and their officials occasionally complain about American "betrayals" in the discussions with Pyongyang. The North has consistently sought to use the negotiations to split the US and its allies. Success in the talks requires coordinated diplomacy between the US and the North's neighbors – especially with South Korea. In the past it often appeared that South Korean presidents worried less about Pyongyang's nuclear activities than Washington's possible reactions to them.

Today, there is the danger that South Korean conservatives may fear that Washington will ultimately acquiesce in North Korea's nascent nuclear status. No attempt to contain, let alone eliminate, the North Korean nuclear program can succeed unless the US and ROK governments work closely together. This will require a higher standard of candor and mutual trust in bilateral consultations than has been typical in recent years.

Second, the ratification of the Korea-US free-trade agreement (FTA) is a vital piece of unfinished business. Lee appears prepared to resume imports of US beef (halted due to mad cow disease concerns), essential to moving the FTA forward in Congress. Unfortunately, the Democratic presidential contenders are pandering to special interests on trade issues in a way they will probably later regret. Both sides have strategic and commercial interests at stake. The US stands to gain much more in increased exports from the FTA, while the Koreans hope that liberalizing foreign access to their economy will make them more competitive. So there is much to gain by nailing down this deal. A failure to complete it would be a significant strategic setback for our partnership.

Third, there is the question as to whether our political cycles will again diverge. For the past eight years, the US has been led by one of its most conservative administrations, while South Korea was headed by its most liberal president. Missteps were, perhaps, inevitable. And they have persisted, even though some effective work was done behind the scenes to forge cooperative arrangements on trade and force-deployment issues.

Lee's election signifies a conservative swing in South Korea's politics, while polls suggest the US may be moving in the opposite direction. Thus, a felicitous convergence of US and ROK official perspectives could prove fleeting. Yet the interests we share in expanded commerce, in modernizing our alliance, and in approaching the North with a joint strategy for "denuclearization" are compelling. They transcend partisan politics. They serve our respective national interests. The time to capitalize on them is now.

PESD has just released an 87-page case study of Petróleos Mexicanos (Pemex), Mexico's national oil company. In "The Void of Governance: An Assessment of Pemex's Performance and Strategy," researcher Ognen Stojanovski examines how the state-owned company functions and details some of the profound challenges faced by reformers.

Mexico's Petróleos Mexicanos, or Pemex, is the world's third-ranked company by oil production. Almost 40% of the Mexican government budget is derived from Pemex revenues, leaving the country highly exposed to a drop in oil prices and the company itself strapped for cash to support much-needed investment. At the same time, the company has been progressively de-skilled over the decades by an exclusive focus on financial returns for the government, constitutional restrictions on foreign participation in the oil sector, and suffocating interference by diverse government agencies and the powerful workers' union.

After the exhausting and dispiriting testimony of General David Petraeus and Ambassador Ryan Crocker to Congress this week, it is now even more starkly apparent that we are stuck in Iraq with no exit strategy. The plan of the Bush administration, and of these military and diplomatic leaders, is still to "stay the course" and hope things will finally take hold in Iraq: hope that the competing Iraqi parties and factions will finally settle their biggest political differences; hope that the Iraqi Army will finally show the ability to face down threats to security and hold the country together; hope that "strategic patience" will eventually allow us to draw down our forces to a level that will not stretch the U.S. Army to the breaking point. But as a group of mid-level American military officers who served in Iraq observed in a devastating edited volume of this name, "Hope is Not a Plan."

To be fair, the U.S. military surge in Iraq (and its attendant shift in strategy on the ground), has achieved many positive things. Iraqi and American casualties have fallen sharply (by more than two-thirds on some measures) from their peak levels in 2006 and early 2007. The Iraqi army and police have grown by roughly 100,000, in addition to some 80,000 local community militia forces ("concerned local citizens") armed and paid by the U.S. As a result of increased force levels and a dramatic change in strategy toward engaging the Sunni Arab communities (including forces once active in the resistance), Al Qaeda has been driven out of most Sunni Arab communities, particularly in Anbar province, and its fearful grip on that section of the country has been broken. This has been the most important achievement of the surge. In many Iraqi urban neighborhoods, both in Baghdad and in other cities, particularly in the once lawless Anbar province, Iraqis have been able to return to the streets and to something approaching normal commercial and social life.

One of the biggest blunders has been the analytical failure to see that the Shiite Islamist political party's political triumph in Iraq would bring a strategic bonanza to Iran--effective control of at least the southern half of Iraq. These are not small achievements. Unfortunately, in the absence of a larger and more tough-minded strategy, they are also not sustainable ones.

John McCain may have been right for the moment when he declared to the Kansas Veterans of Foreign Wars on April 7, "We are no longer staring into the abyss of defeat." Unfortunately, in the context of continued political stalemate in Baghdad and the absence of a viable political strategy for stabilizing Iraq, the second part of his sentence simply does not follow: "... and we can now look ahead to the genuine prospect of success." Rather, as Petraeus and Crocker unwittingly made clear, what we can look forward to is the indefinite commitment of 130,000 to 140,000 American troops, holding together a country that would otherwise shatter into much wider bloodshed. Hope is not a formula for success.

The truth is, we remain trapped in an awful quagmire. No less staunch a Republican than Senator Richard Lugar observed in the Senate hearings this week, "Simply appealing for more time to make progress is insufficient." Senator McCain lacks the candor or clarity of mind to recognize that absent a new political strategy, we are stuck in a holding pattern, propping up a badly divided and corrupt political class in Baghdad. At least he has had the candor, however, to acknowledge that, under these circumstances, American troops might have to be in Iraq for another 10, 20, or 100 years.

Senators Clinton and Obama, in turn, recognize that the United States cannot maintain large numbers of American troops in Iraq for anything like that long. Not only will Iraqi resistance forces rise up against it again, but these commitments are draining our fiscal and military vitality.

Even if we were to leave Iraq tomorrow, it would take years to rebuild, re-equip, and reset the American armed forces to their pre-war levels of capacity and readiness. In a survey of American military officers by the Center for a New American Security, 88 percent thought the war had stretched the US military dangerously thin. And then there is the question of what kind of Army we will be left with as we have to lower standards further and further to find the "recruits" to sustain this military quagmire. CNN reported on April 7 that one out of every eight new recruits requires a waiver because of past criminal behavior or other prior misconduct. The percentage of high school graduates among recruits has declined to 79%. Retired General Barry McCaffrey said recently that ten percent of Army recruits "should not be in uniform." And when the Vice-Chief of Staff of the Army testifies (as General Richard Cody did last week) that repeated deployments are placing "incredible stress on our soldiers and their families" and that "our readiness is being consumed as fast as we can build it," you know we have a serious problem.

Yet Clinton and Obama don't see the other side of this awful reality: that a swift, unconditional timetable for withdrawal of the kind they propose (on the order of one to two combat brigades per month) would likely see Iraq slip back into all-out civil war -- unless something dramatic changes in the political landscape there.

We urgently need an exit strategy from Iraq, but it cannot simply be to declare we are leaving by some fixed, early date -- and goodbye and good luck. Without the prospect of a substantial American military drawdown on the near horizon, Iraq's political factions will lack the incentive to make the hard choices for a sustainable compromise that might hold the country together. But in the absence of an intense diplomatic effort to broker this compromise, the prospect of imminent American withdrawal will not induce compromise, but rather rigidity and the psychology of preparing for an imminent civil war.

So what needs to be done?

To begin with, we need a more hard-headed analysis of our real interests. For years now, the Bush administration has leaned toward the Shiite Islamist political party, ISCI (the Islamic Supreme Council of Iraq, formerly the Supreme Council for the Islamic Revolution in Iraq, or SCIRI). ISCI and its militia, the Badr Organization, which has heavily penetrated the Iraqi army and police, were formed in exile in Iran in the 1980s and grew up under the heavy influence there of the Iranian Revolutionary Guards. They subscribe to the hard-core Khomeini of system "velayat al faqih" -- rule by the Islamic jurist. And they have welcomed numerous Iranian agents into Iraq to help them establish that system.

Of the many grand blunders of the Bush administration in Iraq, one of the biggest has been the analytical failure to see that ISCI"s political triumph in Iraq would bring a strategic bonanza to Iran -- effective control of at least the southern half of Iraq. To pave the way for this, ISCI and its leader, the ailing Islamist cleric, Abdul Aziz al-Hakim, have long sought to gather all nine provinces in the Shiite southern half of the country into a single super-region, which would enable ISCI to establish political hegemony over the entire Shiite region, control most of the country's oil resources (based mainly in the Basra area of the far south), and dominate the politics of the center.

Prime Minister Nuri al-Maliki's recent ill-fated crackdown on the Mahdi Army militia of Muqtada al-Sadr was not just about establishing order in the south. A more important subterranean motive (for which the United States allowed itself to be used) was to remove the chief obstacle to ISCI's bid for hegemony in the south. Sadr and his disparate political and militia forces oppose the creation of a Shiite super-region, and constitute the most significant political rival to ISCI (and its junior partner in Shiite politics, Nuri al-Maliki's Dawa party). ISCI's calculation has been that if Sadr could be neutralized, its path to victory in the coming provincial elections in October could be cleared, and then it could press forward with its aim of gathering all nine southern provinces into one.

We should have no illusions: Sadr is a nasty, deeply illiberal character. His militia forces, or those who swagger around, draped in weapons, seizing territory and imposing Islamic order in his name, often approximate the Taliban in their level of commitment to human rights, women's rights, religious freedom, and the rule of law. But Sadr's political movement is a broad tent that also includes more nationalist Shiite elements who share with one another (and with many Sunni Arab factions with whom they have been in contact) a determined resistance to ISCI's and Iran's bid to control southern Iraq, and through that region, the country as a whole. In other words, the participation of the Sadrist movement in electoral politics at least preserves political fluidity and pluralism. Its elimination, while leaving ISCI and its tightly knit militia network in control of much of the security apparatus and of existing provincial governments in the south, paves the way for Iranian domination.

One of the greatest and most bitter ironies of the Bush administration's posture in Iraq has been its persistent failure to see how it was handing the greatest threat to security in the region -- the Islamic Republic of Iran -- a grand strategic prize. So far, the Iranian regime has largely succeeded in its goals of bogging the U.S. down in a bleeding insurgency, draining its military and its treasure and sapping its will, until the point that Iraq (so they think) will fall into their hands like a ripe apple. No wonder the Iranian ruling elite so often seems to be smiling like a mafia gang on its way to eliminating its rivals. As one Iraqi recently observed to me, "The Iranians are more intellectual, more strategic, and more patient than the U.S. The Bush administration's approach in Iraq has been purely tactical. When the U.S. spends a billion dollars in Iraq, Iran spends $50 million and gets more."

It is not clear that this strategic victory for Iran in Iraq can be prevented at this point. Certainly it will not come from the Kurds, who have long since struck a cynical bargain with ISCI: they can have their Shiite super-region, and in return the Kurds want to absorb into their Kurdistan region the city and province of Kirkuk, whose vast oil resources would make eventual Kurdish independence a much more viable proposition.

It does not take much facility in political arithmetic to figure out who are the big losers in all of this: first of all the Sunni Arabs (about twenty percent of Iraq's population), who have no major oil producing assets in the provinces where they predominate, and who believe the creation of a Shiite super-region would be a formula for their own permanent marginalization and impoverishment. The other big loser would be all those Iraqis (surprisingly, a majority) who continue to believe in the idea of a united Iraq, and who are adamantly opposed to Iranian domination.

For this reason, the bargain between ISCI and the Kurds (codified in the 2005 constitution) cannot be the basis of a stable and democratic Iraq. It leaves out two crucial sections of the population: first, the Sunni Arabs, and second, a majority of Iraq's Shia as well, who fought Iran in a bloody eight-year war in the 1980s and do not want their territory to become a satellite of Iran's Islamic Republic. If the United States were to withdraw from an Iraq configured along these lines, civil war would almost certainly follow. It would pit an ISCI-dominated government in the south and in Baghdad, backed by Iran, against a loose coalition of Sunni Arab and Shiite nationalist resistance, backed by Jordan, Saudi Arabia, and other Sunni Arab states in the region alarmed by Iran's expanding power (which also includes a determined drive to acquire a nuclear weapons capacity). And in the chaos, there would also be a welter of more local-level fights for dominance.

The only way out of this nightmare scenario is a coherent, well-prepared, vigorous effort to broker a constitutional compromise before it is too late. The parameters of the necessary bargain have been clear for many years. ISCI would need to give up its ambition of a single, nine-province super-region, but could be granted a federal system with the eventual ability to lobby for creation of smaller regions (of up to three provinces each, as the interim Iraqi constitution had allowed for). The Kurds would get to keep their own region as part of a federal system, but the development of new oil fields would remain a prerogative mainly of the central government, not, as the Kurds and ISCI wish, regional governments. The Sunnis would have to reconcile themselves to being a minority political force in Iraq, but their provinces would be assured a fair and automatic distribution of the oil revenue, more or less in proportion to each province's share of the population.

There are a number of other issues to be worked out as well (including the reintegration of former Baathists below the top level into government, and the pruning of ISCI loyalists from the commanding ranks of the security forces, especially the police). But the pivotal elements of a deal involve the structure of the federal system and the control of oil production and distribution of its revenue.

The constitutional deal that is needed cannot be brokered by the United States alone. A "diplomatic surge" is urgently needed, in which the U.S. would partner with the UN and the European Union. For an administration that has been loathe to surrender control in Iraq, this is a difficult step, but without it, there will be no political breakthrough, and thus no exit from the quagmire.

In the context of such a grand bargain, the United States could draw down somewhat more gradually than Clinton and Obama now envision, perhaps getting down over the course of about three years to a small residual security force to protect American civilian operations in Iraq. If the provincial elections scheduled for this October can come off without massive intimidation and bloodshed, that will help, as it will likely deliver setbacks tin the south to ISCI and Dawa (who have governed poorly) and generate a more pluralistic political terrain, in which power in the Shiite south is shared by a more diverse set of actors.

It is far from clear that Iran, so close to winning its prize, would not sabotage such an outcome. Direct and intensive engagement with the Iranian regime would also be needed. This could offer the Iranians other incentives as part of a larger deal that would include verifiable suspension of their nuclear program. It could also play on the prospect of what they could themselves could face in an Iraq without the United States: a divided Shiite community, part of which is rising up in resistance to their dominance, allied with a united Sunni community with the broad backing of other Arab states in the region. And all of this before they had acquired the nuclear weapon they think will give a huge boost to their regional power.

A certain amount of brinksmanship would be needed to demonstrate to Iran that the alternative to compromise in Iraq is that they could wind up trading places with us, being bled and drained in an insurgent war while their enemies score opportunistic gains. In that case, the strategic prize could become an albatross around the neck of a regime that faces huge economic and political problems within Iran itself.

The above offers no sure path out of Iraq. Should diplomacy fail, we would be left with little choice but to prepare to withdraw, perhaps rapidly and in extremis, letting the regional actors and the Iraqis themselves pick up the pieces. It would be an ugly and costly scenario. But the credible threat of it might be the one thing that tips Iraq's polarized parties toward accommodation. And bad as it would be for a time, it could hardly be worse than having the United States bogged down in Iraq, desperately holding our military fingers in the dike for the decades that Senator McCain seems prepared to envision, while both our military capacity and our soft power drain away.