10/11/2011 |PAUL V. KANE | The New York Times
To Save Our Economy, Ditch Taiwan
10/11/2011 |PAUL V. KANE | The New York Times
WITH a single bold act, President Obama could correct the country’s course, help assure his re-election, and preserve our children’s future.
He needs to redefine America’s mindset about national security away from the old defense mentality that American power derives predominantly from our military might, rather than from the strength, agility and competitiveness of our economy. He should make it clear that today American jobs and wealth matter more than military prowess.
As Adm. Mike Mullen, then chairman of the Joint Chiefs of Staff, declared last year, “The most significant threat to our national security is our debt.”
There are dozens of initiatives President Obama could undertake to strengthen our economic security. Here is one: He should enter into closed-door negotiations with Chinese leaders to write off the $1.14 trillion of American debt currently held by China in exchange for a deal to end American military assistance and arms sales to Taiwan and terminate the current United States-Taiwan defense arrangement by 2015.
This would be a most precious prize to the cautious men in Beijing, one they would give dearly to achieve. After all, our relationship with Taiwan, as revised in 1979, is a vestige of the cold war.
Today, America has little strategic interest in Taiwan, which is gradually integrating with China economically by investing in and forming joint ventures with mainland Chinese firms. The island’s absorption into mainland China is inevitable.
But the status quo is dangerous; if Taiwanese nationalist politicians decided to declare independence or if Beijing’s hawks tired of waiting for integration and moved to take Taiwan by force, America could suddenly be drawn into a multitrillion-dollar war.
There will be “China hawks” who denounce any deal on Taiwan as American capitulation, but their fear of a Red China menacing Asia is anachronistic. Portraying the United States as a democratic Athens threatened by China’s autocratic Sparta makes for sensational imagery, but nothing could be further from reality.
The battle today is between competing balance sheets, and it is fought in board rooms; it is not a geopolitical struggle to militarily or ideologically “dominate” the Pacific.
In fact, China and the United States have interlocking economic interests. China’s greatest military asset is actually the United States Navy, which keeps the sea lanes safe for China’s resources and products to flow freely.
China would want a deal on Taiwan for several reasons. First, Taiwan is Beijing’s unspoken but hard-to-hide top priority for symbolic and strategic reasons; only access to water and energy mean more to Chinese leaders.
Second, a deal would open a clearer path for the gradual, orderly integration of Taiwan into China.
Third, it would undermine hard-line militarists who use the Taiwan issue to stoke nationalist flames, sideline pro-Western technocrats and extract larger military budgets. And finally, it would save China the considerable sums it has been spending on a vast military buildup.
Jeffrey Lewis, an East Asia expert at the Monterey Institute of International Studies, estimated that one-fourth to one-third of China’s defense spending goes to forces in the vicinity of Taiwan — at a cost of $30 billion to $50 billion a year. A deal for the resolution of Taiwan’s status could save China $500 billion in defense spending by 2020 and allow Beijing to break even by 2030, while reducing America’s debt and serving our broader economic interests.
The Chinese leadership would be startled — for a change — if the United States were to adopt such a savvy negotiating posture. Beyond reducing our debt, a Taiwan deal could pressure Beijing to end its political and economic support for pariah states like Iran, North Korea and Syria and to exert a moderating influence over an unstable Pakistan. It would be a game changer.
The deal would eliminate almost 10 percent of our national debt without raising taxes or cutting spending; it would redirect American foreign policy away from dated cold-war-era entanglements and toward our contemporary economic and strategic interests; and it would eliminate the risk of involvement in a costly war with China.
Critics will call this proposal impractical, even absurd. They will say it doesn’t have a prayer of passing Congress, and doesn’t acknowledge political realities. They might be right — today.
But by pursuing this agenda, Mr. Obama would change the calculus and political reality. And Congress should see a deal with China as an opportunity to make itself credible again.
Debt is not in itself bad, when managed, but today’s unsustainable debt will suffocate our economy, our democracy and our children’s futures.
By tackling the issue of Taiwan, Mr. Obama could address much of what ails him today, sending a message of bold foreign policy thinking and fiscal responsibility that would benefit every citizen and be understood by every voter.
Realpolitik and Spinning the U.S.-China Summit
01/02/2005 |THOMAS P.M. BARNETT | Esquire.com
According to a Chinese article widely circulated on the Internet, the Obama-Xi summit meeting last weekend has made Prime Minister Shinzo Abe of Japan jealous. Published in People’s Daily, the mouthpiece of the Communist Party, the article crows that President Xi Jinping got a two-day informal meeting with President Obama, while Abe’s visit to Washington in February resulted in only a “lunch reception.”
The People’s Daily is not the only Chinese media outlet to play up the angle of Japan losing ground after the summit. Du Ping, a prominent Chinese commentator, told Phoenix TV of Hong Kong that the meeting in California made Japan worried that Obama and Xi “would reach a secret” agreement on the fate of the disputed islands in the East China Sea that Japan administers but Beijing claims as Chinese territory. An article on the Chinese news Web site The Observer was even blunter: “Japan worries the United States will betray it,” and change its stance on the islands, which China calls the Diaoyu and Japan calls the Senkaku.
Of course, Chinese media commentary needs to be taken with a big dose of skepticism. Nevertheless, behind the speculation about Tokyo’s miffed feelings over American-Chinese relations lie the realities of diplomatic horse-trading and the evolving demands of realpolitik. Japan has reason to be concerned that the Obama-Xi summit weakened the U.S. commitment to defending Japan, especially over the tiny islets.
In recent years, China has become increasingly aggressive in the waters to its south and east, areas that are outside of what has traditionally been its territory. Beijing has claimed ownership over a wide area of the South China Sea, including maritime and island territories claimed by five Southeast Asian nations and Taiwan. Chinese military ships have come dangerously close to firing on a Japanese naval vessel in waters near the Senkaku. The U.S. pivot to Asia, announced in late 2011, reassured many of China’s neighbors of America’s dedication to the region, yet China seems unwilling to back down on its territorial claims.
The summit meeting raised many questions about whether Washington’s support for Japan trumps other regional interests. Will the United States continue to support Japan in its battle over a small group of islands in the East China Sea?
After the summit, the outgoing U.S. national security adviser, Thomas Donilon, told reporters that Obama pushed Xi to de-escalate tensions in the East China Sea, stating that “the parties should seek to have conversations about this through diplomatic channels and not through actions.” That’s far less encouraging than reiterating that the islands fall under the U.S.-Japan security treaty obligations, as Defense Secretary Chuck Hagel did in April. (Hagel also repeated that the United States “does not take a position on the ultimate sovereignty of the islands.”)
Perhaps more importantly, would the United States trade its unfettered support of Japan for support from China on dealing with North Korea? The idea is not as outlandish as it may sound. Obama appeared to further convince Xi on the need to rein in Pyongyang. Is protecting a group of small islands in the East China Sea more important than preventing North Korea from being able to shoot missiles at the United States?
The Chinese media, like the American press, used this summit as a chance to reminisce on the short list of past breakthrough meetings between the two countries — Richard Nixon’s historic visit to China in 1972, for example, and Deng Xiaoping’s goodwill visit to the United States in 1979. The People’s Daily article, however, focused on how these summits lessened American support for Japan.
Such “alliance predicaments,” as the article calls them, are not limited to Japan. Nixon’s rapprochement with China, for example, set off an intense and eventually unsuccessful call for Washington to stand by its Cold War ally Taiwan instead of recognizing China.
If China does seize the Diaoyu islands, it wouldn’t be the first time in recent history that it seized the territory of a U.S. ally. China already de facto administers the Scarborough Shoal, roughly 200 miles from Manila, which until 2012 belonged to the Philippines. After a two-month standoff, Washington brokered a deal for both sides to withdraw — but the Chinese didn’t honor it.
In a German Marshall Fund conference last weekend in Tokyo attended by high-ranking current and former Japan government officials, the consensus was that America would not go to war with China over the Philippines. And according to a January Congressional Research Service report, the United States is obligated to defend the Senkaku islands because they are administered by Japan. At the conference Satoshi Morimoto, Japan’s defense minister from July to December 2012, told me that he fears Chinese sailors will land on the island and plant a Chinese flag, staking claim to the territory.
In an interview last year, I asked a former high-ranking administration official if the United States would defend Taiwan in the face of a Chinese attack. “That’s what it’s useful for them to believe,” he told me, adding that it was “profoundly important” that the United States manage the relationship to not allow it to reach that point. His answer holds true for the Senkaku as well.
If China does seize the islands and puts them under de facto Chinese control, would the United States risk a war to take them back?
Isaac Stone Fish is an associate editor at Foreign Policy Magazine.
Mr. President, Here's How to Make Sense of Your Second Term...
01/02/2005 |THOMAS P.M. BARNETT | Esquire.com
So you say you have no concern for your legacy. That some historian eighty years from now will figure out if you were a good president or not. Fair enough, but let's review so far. Your big-bang strategy to reform the Middle East took down Saddam, which was good; you've completely screwed up the Iraq occupation, which is bad; and now you don't seem to know exactly where you're going, which is not so great. This brings me to the bad news. The two players with the greatest potential for hog-tying your second term and derailing your big-bang strategy don't even live in the Middle East. Instead, they're located on little islands of unreality much like Washington, D. C.: Taiwan and North Korea. When either Taipei or Pyongyang decide to sneeze, it's gonna be your legacy that catches a cold, and here's why: Either country can effectively pull all your attention away from the Middle East while simultaneously torpedoing the most important strategic relationship America has right now. Yeah, I'm talking about China, a country your old man knows a thing or two about (hint, hint), even if the neocons don't have a clue. Your posse rode into town four years ago convinced that China was the rising military threat to America, only to be proven wrong by bin Laden on 9/11. Enough said.
3 SIMPLE STEPS: Iran, you can have the bomb, but you must recognize Israel. Next, China. Let's be partners. Sorry, Taiwan, the defense guarantee's got to go. We've got bigger fish to fry. Namely, Kim Jong Il.
What I'm here to tell you is this: You can achieve the fabled Middle East peace, but only if you lay down an effective fire wall between that region and the two potential flash points that can still ignite East Asia and send this whole global economy up in flames in a heartbeat. China is the baby you can't throw out with the bathwater you've dubbed the "global war on terrorism." You lose China, you might just kill globalization, and if that happens, it won't be just a matter of what historians write eighty years from now; you'll spend the rest of your days wondering why the world thinks you personally destroyed the planet's best hope for ending war as we know it.
So here's the package you need to pursue: Co-opt Iran, lock in China, and take down North Korea. Let's get started, shall we?
Nixon Goes to Tehran
WORK WITH ME ON THIS ONE. Iran getting the bomb could be the best thing that's ever happened to the Middle East peace process.
Whoa! Don't put down the magazine before I've had a chance to explain.
Iran is the one country standing between you and peace in the Middle East. You can't solve the Israeli-Palestinian conflict without its say-so, because the mullahs are the biggest potential spoilers in the region. They fund the terrorist groups that can effectively veto peace efforts in both Jerusalem and Baghdad. Iran is the one regional power that can still menace the Gulf militarily. Everyone else there operates in Tehran's shadow.
You and I both know Nixon would have inevitably headed to Tehran by now, absent 9/11 and your subsequent Axis of Evil speech. The Shiite revolution is a spent force in that country, whose sullen majority pretends to obey the mullahs while they pretend to rule over a very young population that's frighteningly ambitious for a better life. We're looking at a very late-Brezhnev-type situation here, with the Gorby already on the scene in the person of reformist president Mohammad Khatami. His version of perestroika took one step forward and then ten steps back once we lumped him in with Saddam and Kim, but even though his preferred course of treatment is on hiatus, the political diagnosis remains the same for Iran.
I know, I know. If the mullahs are so weak and scared, then why do they reach so obviously for the bomb?
Look at it from their perspective, Mr. President. Those scary neocons just toppled regimes to Iran's right (Afghanistan) and left (Iraq), and our military pulled off both takedowns with ease. Moreover, your administration has demonstrated beyond all doubt that you don't fear leaving behind a god-awful mess in your war machine's wake. Frankly, you're as scary as Nixon was in his spookiest White House moments on Vietnam. All I'm saying is now's the time to cash in on that reputation with Iran.
And don't tell me we can't do that rapprochement thing with a hostile regime that supports international terrorism. If we could do it with the Evil Empire back in 1973, we can do it with the Axis of Evil's number two today.
Our offer should be both simple and bold. I would send James Baker, our last good secretary of state, to Tehran as your special envoy with the following message: "We know you're getting the bomb, and we know there isn't much we can do about it right now unless we're willing to go up-tempo right up the gut. But frankly, there's other fish we want to fry, so here's the deal: You can have the bomb, and we'll take you off the Axis of Evil list, plus we'll re-establish diplomatic ties and open up trade. But in exchange, not only will you bail us out on Iraq first and foremost by ending your support of the insurgency, you'll also cut off your sponsorship of Hezbollah and other anti-Israeli terrorist groups, help us bully Syria out of Lebanon, finally recognize Israel, and join us in guaranteeing the deal on a permanent Palestinian state. You want to be recognized as the regional player of note. We're prepared to do that. But that's the price tag. Pay it now or get ready to rumble."
This is a win-win for everybody. The ruling mullahs desire survival most of all, and once Iran opens up economically, its people will stop blaming them for all that's wrong with the country because they'll be too busy taking advantage of all that opportunity. Israel wins because Tel Aviv finally gets someone on the Muslim side who is big enough and scary enough to sit down with the "Little Devil" as a real nuclear equal but still willing to guarantee Israel's existence. I know, it might seem insane to Israel (especially the Likud party), but mutually assured destruction really works and, frankly, Mr. President, now's the time to use some of that political capital you've built up with Ariel Sharon.
No doubt some neocons will try to sell you on a military option in Iran, but don't pull that thread under any circumstances, because if you do, you'll find yourself having to go medieval across an "arc of crisis" stretching from Riyadh to Islamabad, and nobody's got cojones that big. Trust me, Afghanistan and Iraq alone are enough to tap Central Command and Special Operations Command.
I'm also aware that there are plenty of regional experts who'll tell you we've got to do this or that with Egypt or Saudi Arabia, but, frankly, neither of those regimes has shown the ability to do squat when it comes to forging a lasting Middle East peace. Iran's the key. Squeeze it now while it's scared--and while Arafat's still dead. America has played bad cop long enough with Iran. For crying out loud, Iranians are the only people in the Middle East who actually like us!
What's more, Iran is the gateway for bringing both India and China into the mix. Both countries have recently cut huge oil and gas deals with Tehran. You know you want India and China to feel secure about their energy flow, and you know Iran's simply too big a player on both counts for either country to pass up. Plus, India considers itself both a major Gulf security player and Iran's natural mentor, while China's emerging alliance with Tehran (not to mention its ties with Pakistan) should be exploited for all it's worth. New Dehli and Beijing want to stabilize the Islamic arc of crisis as much as you do.
If détente with Iran secures Iraq to the south, then it's clear whomwe need to romance in the north on the issue of the Kurds--Tur-key. Yes, the role of the Kurds in Turkey is a long and complex tale, but who the hell else is going to step up to the plate on that one?
The price tag is not hard to dream up. You twist some arms in the European Union until they either fall off or Turkey's admission gets fast-tracked. If NATO won't come to our rescue in the Sunni triangle, it's the least Old Europe can do.
Speaking of the triangle, that stinker's going to remain ours for the long term, but with Israel and Palestine off the table and real cooperation from both Iran and Syria in clamping down on all those jihadists with a one-way ticket to paradise, we'll extinguish the dream of the Saddam Baathists who are still fighting hard by effectively killing Iraq as a unitary state. Eventually, Iraq's Sunni population will realize that it can either become the recognized master of the triangle and nothing else (the same narrowing solution we forced on the Serbs in the Balkans), or it can choose to live in the region's new West Bank, surviving on intifada for the rest of its days.
Lock in China at Today's Prices
TO UNDERSTAND CHINA TODAY, you have to remember what it was like for the United States back in the early years of the twentieth century. Here we were, this burgeoning economic powerhouse with a rising yet still relatively small military package, and all the old-school powers worried about us as an up-and-coming threat. While the European form of globalization predominated at that time, our upstart version ("We don't need no stinkin' empire!") would come to dominate the landscape by the century's midpoint, primarily because Europe decided to self-destruct all its empires via two "world" wars that in retrospect look like the European Union's versions of the American Civil War.
China is the United States of the early twenty-first century: rising like crazy, but not really a threat to anyone except small island nations off its coast. (God, I miss T. R. and the Rough Riders.) Hu Jintao, China's current president and party boss of the country's fourth generation of leaders, has tried to calm global fears by proposing his theory of Peacefully Rising China, a tune that, frankly, none of the Pentagon's hardcore neocons can carry.
Why? The far Right is still gunning for China, and precious Taiwan is its San Juan Hill. Nixon burned Taiwan's ass back in the early seventies when he effectively switched official recognition from Taipei to the mainland, so the price it demanded was the continued "defense guarantee" that said we'd always arm Taiwan to the teeth and rush to its rescue whenever China unleashed its million-man swim of an invasion.
That promise is still on the books, like some blue law from a bygone era. Does anyone seriously think we'd sacrifice tens of thousands of American troops to stop China from reabsorbing Taiwan?
I know, I know. China's still "communist" (like I still have a full head of hair if the lighting's just so), whereas Taiwan is a lonely bastion of democracy in an otherwise . . . uh . . . increasingly democratic Asia. So even though the rest of Asia, including Japan, is being rapidly sucked into China's economic undertow (as "running dogs of capitalism" go, China's a greyhound), somehow the sacredness of Taiwan's self-perceived "independence" from China is worth torching the global economy over? Does that strike anybody as slightly nuts?
Here's the weirdest part: China's been clearly signaling for years that it's perfectly willing to accept the status quo, basically guaranteeing Taiwan's continued existence, so long as Taipei's government maintains the appearance of remaining open to the possibility of rejoining the mainland someday.
Now I know people say you don't read books, Mr. President, but being a Southerner, you know something about the Civil War. Imagine if Jefferson Davis and the leftovers of the Confederacy had slipped away to Cuba in 1865 to set up their alternative, nose-thumbing version of America on that island. Then fast-forward to, say, 1905 and imagine how much the U. S. would have tolerated some distant, imperial power like England telling us what we could or could not do vis-à-vis this loser sitting just off our shore. Imagine where old Teddy Roosevelt would have told the Brits they could shove their defense guarantee.
My point is this: In a generation's time, China will dominate the global economy just as much as the United States does today. (Don't worry, we'll be co-dominatrices.) The only way to stop that is to kill this era's version of globalization--something I worry about those neocons actually being stupid enough to do as part of their fanciful pursuit of global "hegemony." That nasty, far poorer future is not the one I want to leave behind for my kids, and I expect you feel the same about yours. China won't go down alone; it'll take most of the advanced global economy with it. So on this one, let's go with those vaunted American interests I keep hearing about and look out for number one.
This may seem a back-burner issue, but there's credible talk of Taipei doing something provocative like adding the word Taiwan in parentheses behind its official name, the Republic of China. That may not seem like much to us, but Beijing's reluctant hand may be forced by this act. Seems crazy, doesn't it?
Again, how much of the global economy--how many American lives--are you prepared to sacrifice on your watch just so Taiwan can rejoice in this moment of self-actualization?
I vote for zero. Zip. Nada.
Take America's defense guarantee to Taiwan off the table and do it now, before some irrational politician in Taipei decides he's ready to start a war between two nuclear powers. Trust me, you'd be doing Taiwan a favor, because it's my guess that our defense guarantee would evaporate the moment any Taiwan Straits crisis actually boiled over, leaving Taipei severely embarrassed and Beijing feeling excessively emboldened.
Let's lock in a strategic alliance with rising China at today's prices, because it's got nowhere to go but up over the coming years. Buying into this relationship now is like stealing Alaska from the czars for pennies on the dollar; it'll never be this cheap again.
More to the point, preemptively declaring a permanent truce in the Taiwan Straits is the quid we offer for Beijing's quo in the solution set that really matters in East Asia today: the reunification of Korea following Kim Jong Il's removal from power.
Kill Kim: Volumes 1, 2 & 3
NOW WE GET TO THE GOOD PART. The Koreas issue is the tailbone of the cold war: completely useless, but it can still plunge you into a world of pain if middle-aged Asia slips and falls on it. North Korea is the evil twin, separated at birth, and yet, because it's still joined at the hip with its sibling, its better half grows ever more irrationally distraught as time passes, contemplating the inevitable invasive surgery that lies ahead.
So while it might seem at first glance like a job for Team America: World Police, you'll want something less South Park in its comic simplicity and a little more
Tarantinoesque in its B-movie grandeur. That's right, we need a Deadly Viper Assassination Squad to make Kim an offer he can't refuse.
Kim Jong Il's checked all the boxes: He'll sell or buy any weapons of mass destruction he can get his hands on, he's engaged in bizarre acts of terrorism against South Korea, and he maintains his amazingly cruel regime through the wholesale export of both narcotics and counterfeit American currency. Is he crazy? He once kidnapped two of South Korea's biggest movie stars and held them hostage in his own personal DreamWorks studio. But if that doesn't do it for you, then try this one on for size: The Kim-induced famine of the late 1990s killed as many as two million North Koreans. If that doesn't get you a war-crimes trial in this day and age, then what the hell will?
Here's the squad we need to assemble: China, Japan, South Korea, Australia, and New Zealand, plus Russia.
You just shook hands with China over Taiwan. Japan's there because both China and America are on the team and because it's got the most cash to finance the reconstruction. The Aussies and Kiwis are invited out of respect for their longtime security role in Asia, and the Russians are in because they might just run a pipeline to Japan through the Korean peninsula when it's all said and done. As for the wobbly South Koreans, just smack 'em upside the head and tell them it's strictly business--nothing personal.
Those are the Seven Samurai that walk into Kim Jong Il's palace and offer him three possible endings to this thriller: the Good, the Bad, and the Ugly.
Version #1 (Good) is the Baby Doc Duvalier package. Keep your money, keep your women, keep your entourage, keep it all . . . just somewhere else. China can offer Kim a fabulous forbidden city somewhere in Inner Mongolia. Hell, promise this Cecil B. Demented a five-picture deal and tell him Steven Spielberg wants to do lunch.
If he doesn't bite on that one, then show Kim Version #2 (Bad). He goes on trial in the Hague for years on end, paraded around like the freak job he is, and once he's thoroughly stripped of what passes for his "majesty," we'll let him rot in a jail cell for the rest of his days.
Version #3 (Ugly) is delivered sotto voce. Just have Paul Wolfowitz show Kim the "six-month reconstruction plan" the Pentagon neocons drew up for the postwar occupation. If he thinks you're bluffing, then instruct Wolfie to slip him some of those morgue shots of Uday and Qusay looking all stitched up like a pair of Frankensteins. Kim'll get the hint. Your administration has proven that you're willing to wage war with almost no concern for the resulting VIP body count, the subsequently incompetent occupation, or the inevitable political uproar back home. I say when you've got it, flaunt it.
If it comes to trigger-pulling, can we pull it off? You know we can, and even here we've got a choice between the stripped-down package (i.e., just kill Kim) and the tricked-up models (e.g., smash-and-grab WMD, decapitating command-and-control, pounding ground forces). North Korea's military will prove less brittle than Saddam's Republican Guard but hardly invulnerable. Plus, on this one the local players will provide plenty of boots on the ground (South Korea, China) and humanitarian aid (Japan) just to prevent refugees from flooding across their borders. Moreover, Kim's slim power base sits atop a Mafia-like criminal empire that features the usual "honor" among thieves, so bribing his fellow kleptocrats with golden parachutes is quite feasible. Finally, the postconflict investment flow will be heavy on this one, because there will be no insurgency, no jihad, no nothing, just a gulag's worth of political prisoners to set free.
But the truth is, it probably won't come to that simply because both you and the neocons have such a scary reputation that you can likely stare down Lil' Kim, so long as you've got China glaring at him disapprovingly over your shoulder. You know China would just as soon jettison Kim because he's a genuine nut and he's terrible for property values. So what you really need to offer the Chinese on the far side is something truly useful, and that something is an Asian NATO. That's right: Kim's tombstone should mark the spot where a NATO-like security alliance for East Asia is born.
If you terminate Taiwan's defense guarantee in order to bring Beijing to Kim's table, then you offer to kill all your plans for missile defense to get the Chinese to pull the chair out from under him. Star Wars has been the single worst boondoggle in the history of the Pentagon--nearly $100 billion wasted and not even Tang to show for it. By securing America's military alliance with China, Japan, and Korea, you not only kill the concept of great-power war in Asia for good, you've just ended Osama bin Laden's bid to pit East against West.
That's it. And you've got about ten months to get it all rolling, with maybe another twenty months to wrap most of it up. By the summer of 2007, your presidency and all the power you wield right now will begin to be severely discounted by politicians both at home and abroad.
Mr. President, I know you're committed to following through on what you've set in motion in the Middle East, and I know you're hell-bent to prove all the eggheads wrong about the possibility of democracy taking root there--and I like your certitude on both points. You're the just-do-it president. You react from your gut more than either your heart or your brains, and you know what? You're as big a gift from history as 9/11's wake-up call turned out to be--and almost equally hard for many Americans to swallow.
You believe that America will defeat global terrorism only if it is willing to transform the Middle East in the process, and I agree. But just as we had to make peace with the Soviets before we could "tear down that wall," your administration will have to make peace with Iran's mullahs before we can begin dismantling the many walls that still isolate that insular region from the global economy and the mutually assured dependence that defines its long-term stability and peace. The road to lasting security in both Jerusalem and Baghdad starts in Tehran, and ultimately it must run through Beijing as well.
You lock down Asia by putting a leash on Taiwan, inviting China into the copilot seat and shoving Kim underground, and you'll not only free up America's military resources for more-urgent tasks in the Middle East, you'll create a sense of strategic despair in the minds of bin Laden and Zarqawi that they'll never be able to overcome. Their dream is to split up the advancing core of globalization and stop its creeping embrace of their idealized Islamic world, which they know will be forever altered by that integration process. Their best strategic hope in this conflict is that some hostile great power will rise in the East to challenge the American-led West. You lock in China today, Mr. President, and you will corner and kill transnational terrorism tomorrow.
And not that you care, Mr. President, but there's your legacy.
PRESENTING: The Worst Idea Ever For Dealing With Our National Debt
11/11/2011 |JOE WEISENTHAL |businessinsider.com
The huge size of the U.S. national debt has prompted a lot of crazy thinking and crazy action. An irrational fear of the debt nearly caused the U.S. to default this past summer during the debt ceiling fight. A misunderstanding of the national debt caused a lot of investors to mistakenly bet against Treasuries earlier this year.
So we've described misunderstanding the debt as the Costliest Mistake In All Of Economics.
But nothing we've heard so far can compare to this.
National security expert Paul Kane has an op-ed in the NYT which argues (get ready for this) that the solution for the economy is for Obama to go to China and tell the Chinese government that if they rip up our trillions in debt, we'll sell out the Taiwanese.
Kane writes:
The Chinese leadership would be startled — for a change — if the United States were to adopt such a savvy negotiating posture. Beyond reducing our debt, a Taiwan deal could pressure Beijing to end its political and economic support for pariah states like Iran, North Korea and Syria and to exert a moderating influence over an unstable Pakistan. It would be a game changer. The deal would eliminate almost 10 percent of our national debt without raising taxes or cutting spending; it would redirect American foreign policy away from dated cold-war-era entanglements and toward our contemporary economic and strategic interests; and it would eliminate the risk of involvement in a costly war with China. Critics will call this proposal impractical, even absurd. They will say it doesn’t have a prayer of passing Congress, and doesn’t acknowledge political realities. They might be right — today.
But this idea isn't simply far-fetched, it's just ludicrous.
Let's just pick it apart point by point.
First, the debt isn't that big of a deal or a threat. The amount of money we're paying to service the debt, as a percentage of GDP has actually fallen over the last couple of decades. Nothing is being crowded out. Taxes are not about to surge to some suffocating, a-historical level. Interest rates aren't going to shoot up. We're not about to become Greece.
Two, and this is more important, China doesn't hold a sword over our heads. There are all kinds of reasons why we have to take China seriously, but their debt holdings aren't one of them. They can't dump our debt even if they wanted to, and as long as they wanted to trade with us (which will be forever) they won't be dumping our debt. People think the Chinese own our debt because they're our lenders. This isn't the case. The Chinese own our debt because they run a trade surplus with the U.S., and that surplus cash gets recycled into Treasuries. That's it.
So China doesn't have any influence over us... but if Obama did pursue something this hare-brained, then he would be telling them that they do have geopolitical control over us. And what's more, he'd be signaling to the world that anyone who accumulated enough Treasuries had some de facto control over our policy on our most important areas — national security.
Furthermore, China would never make this trade, as Patrick Chovanec explains:
A Chinese decision to ”forgive” the U.S. Treasuries it holds as part of its FX reserves, in exchange for the U.S. abandoning its defense commitments to Taiwan, would render the PBOC hopelessly bankrupt. The central bank would lose RMB 7.2 trillion worth of assets, against only RMB 22 billion in capital, leaving a massive hole in its balance sheet. That, in turn, would hopelessly bankrupt the entire Chinese banking system, wiping out nearly half of the RMB 16 trillion cash reserve deposits they hold at the central bank (which are essentially claims on its FX reserve assets), against just RMB 2.8 trillion in paid-in capital standing behind the entire system.
The only way to avoid such a cataclysm would be for the Chinese government to write a fiscal check for RMB 7.2 trillion (the entire $1.14 trillion price of the transaction) to make them all whole, which would have to be funded by tax revenue or government borrowing. (That, by the way, is exactly how the U.S. government paid for the Louisiana Purchase. The British investment bank Barings syndicated a loan to European investors). The total bill would be roughly equivalent to China’s entire government revenue and expenditure — central and local — in 2010 and would single-handedly boost the country’s debt-to-GDP ratio by nearly 20%.
So in short, what Kane is advocating is an abdication of our strategic self-direction in exchange for extinguishing a threat (Chinese holdings of U.S. debt) that doesn't exist.
What's scary is not that this will ever happen — it won't — but that the size of the debt is causing people to think loonier and loonier things. Eventually we might do something really dumb.
Forget Grand Bargains with China
05/07/2013|Taylor Washburn |the diplomat.
As the United States seeks to navigate China’s rise, analysts have suggested several grand swaps between Washington and Beijing — sweeping deals, either tacit or explicit, in which the U.S. would back away from one of its long-standing Asian commitments in exchange for Chinese assistance on a separate matter of strategic importance.
The superficial appeal of such trades is obvious. Although the world’s two premier powers share more interests than is sometimes supposed, they remain at odds on a range of important security questions. Why not look for a swap that might eliminate two major points of contention at once?
Following last month’s Sunnylands summit between President Obama and Chinese President Xi Jinping, Isaac Stone Fish, writing in the New York Times, considered one such hypothetical deal circulating in the Chinese press. In light of Beijing’s dispute with Tokyo over the Senkaku Islands, in the East China Sea, “would the United States trade its unfettered support of Japan for support from China on dealing with North Korea?”
The answer to this question is, or ought to be, an emphatic “No”. But before I elaborate, let me return to two other grand U.S.-China swaps proposed in the last decade, each of which helps illustrate why an exchange of important and incommensurable concessions is unlikely to resolve any of the core issues dividing Washington and Beijing.
Back in 2005, the strategist Thomas P.M. Barnett proposed that Washington should unilaterally drop its security assurances and arms sales to Taiwan to secure Chinese help in ousting the government of North Korea. “Preemptively declaring a permanent truce in the Taiwan Straits is the quid we offer for Beijing's quo in the solution set that really matters in East Asia today,” Barnett wrote — namely, “the reunification of Korea following Kim Jong-il's removal from power.”
Then, in 2011, Paul Kane took to the New York Times op-ed page to recommend that the United States abandon Taiwan for something simpler: cold hard cash. The White House “should enter into closed-door negotiations with Chinese leaders to write off the $1.14 trillion of American debt currently held by China,” Kane argued, placing on the table the U.S. defense arrangement with Taipei and all military assistance to the island.
As a host of critics were quick to note, Kane’s idea was based on mistaken assumptions about the danger posed by the national debt as well as the capacity of the People’s Bank of China to forgive 7 trillion RMB in U.S. Treasuries. But considered alongside Barnett’s proposition, it also points to a broader set of problems likely to beset any deal to rearrange longstanding Asian security relationships.
One limitation of such grand bargains — that is, bilateral trades involving mutual concessions on separate issues of great strategic importance — is that they are less likely than narrower deals to constrain the participants when circumstances change.
Parties to any agreement have an incentive to defect when the cost of doing so sinks below that of continued adherence. (Legal scholars refer to such calculated defections as “efficient breach.”) One price of abandoning any deal is reputational, while another is the risk that your counterpart will similarly walk away from its obligations. Where a trade involves core matters of national security, however, such costs are liable to be trumped as soon as a changing regional environment gives rise to new political imperatives.
If this sounds abstract, consider a rhetorical question: how much weight would either Beijing or Washington accord a promise to the other in the event of a looming crisis in Korea or the Taiwan Strait?
Second, no grand swap can succeed if it treats secondary powers as pawns of their patrons. Washington cannot deliver Taiwan to Beijing any more than the Chinese can hand a unified Korea to the United States. Repeal of the Taiwan Relations Act might remove one obstacle to the mainland’s absorption of the island, but Beijing would still need to charm or, more likely, coerce a population of 23 million that has shownvirtually no interest in reunification. North Korea is an even tougher nut to crack: mercurial, armed to the teeth, and hardly a Chinese pet.
Finally, East Asia’s entrenched security relationships cannot be severed or circumscribed without sending waves across the region, introducing new complexity and unpredictability to an environment already rich with both. How would other U.S. allies and partners react if Washington sold one of their number out to Beijing? How would China respond if applying real pressure to Pyongyang led to the Kim regime’s collapse?
Without answers to these questions, and others like them, we cannot know if a grand swap designed to reduce Sino-American tension might instead throw the contest for regional supremacy into sharper relief.
Unfortunately, while it is alluring to imagine that the U.S. could extricate itself from the Senkaku spat and eliminate the North Korean missile threat in one fell swoop, each of the “grand bargain” problems I’ve identified would also attend any Sino-American deal involving the islets and Pyongyang.
In his editorial on the Sunnylands summit, Fish describes the quandary facing Washington as follows: “Is protecting a group of small islands in the East China Sea more important than preventing North Korea from being able to shoot missiles at the United States?” But this formulation does not fully capture the terms of the deal that he describes, nor does it hint at the peril that might accompany it.
Beijing’s unique leverage over the Pyongyang does not mean it can dictate terms to its pugnacious ally – not, at any rate, without risking its paramount priorities of peace and stability. Xi has already called for a denuclearized Korea (most recently, at a summit with South Korean President Park Geun-hye), but the North runs on an ultra-nationalist ideology that fetishizes military power, and Beijing has a rational concern that coercive measures tough enough to bring the regime to heel could also lead to its collapse.
Exclusion of the Senkakus from the scope of the U.S.-Japan Security Treaty, meanwhile, would do nothing to mitigate the underlying territorial dispute, on which the U.S. is already neutral – and could indeed have the opposite effect, emboldening Beijing while heightening defensive anxiety in Tokyo. Japan and China are closely matched at sea, meaning the many thousands of U.S. Marines in nearby Okinawa would be hard-pressed to remain aloof if China attempted to seize the islets and Japan responded with force.
By agreeing to limit the alliance in exchange for a promise of Chinese assistance on North Korea, Washington would thus hand China a much-desired rift between its two great strategic rivals and obtain little tangible in return. Indeed, the fantasy that the U.S. and China can settle both issues by consensus is as likely to produce conflict as limit it, ignoring as it does the agency of Tokyo and Pyongyang.
To be sure, those working on both sides of the Sino-American relationship are wise to seek out opportunities for compromise, as well as structural safeguards that could reduce the risk of military conflict. Indeed, there may even be times when this involves placing pressure on allies – as appears to havetaken place in May, when China cut ties with North Korea’s Foreign Trade Bank while the U.S. pushed back against self-destructive Japanese historical revisionism.
Rather than grand swaps, however, Washington and Beijing should focus on making deals that can succeed regardless of the calculations of other autonomous regional players. To the extent that divisive issues like the U.S.-Japan alliance, North Korea or the status of Taiwan are to be linked, any concessions should be bounded and take effect quickly, so that neither of the great powers entertains illusions as to how the other might respond to an unforeseen crisis.
Pragmatic cooperation of this kind will not erase any of the fault lines in the region overnight, nor will it eliminate the possibility that American commitments could someday draw the U.S. into conflict with China. Yet by embracing a more realistic understanding of state action and East Asia’s power dynamics, Washington is more likely to realize the kinds of modest gains it can actually hold.
Taylor Washburn is a lawyer studying at the Johns Hopkins School of Advanced International Studies, and was previously a visiting professor at the Korea Advanced Institute of Science and Technology. He can be followed on Twitter @washburnt.
