May 2008

merican Foreign Polic Y A May 2008

The Battle for Southeast Asia

Freedom, Free Markets, and Democracy Princeton Student Editorials on America and its Place in the World

From the Editor

Staff

P

erceptions can be dangerous, especially in East Asia. In a region that is increasingly heavily armed, tensions between China and Japan could yield devastating consequences if allowed to spiral out of control. As East Asian trade now forms a sizeable portion of global trade, the U.S. has a clear interest in managing the potential conflict.

Competition is already under way, and our cover story explores the present Sino-Japanese diplomatic rivalry in Asia. This duel, however, has also polarized the populations of each nation, which now increasingly view each other with resentment. Only twenty-five years ago, Japan looked to be the region’s undisputed leader. An ascendant China, however, has dashed those hopes and generated a wave of anti-Chinese nationalism in Japan. Likewise, a similar wave has broken across China, with governing elites stoking anti-Japanese sentiments in an attempt to secure their political power. Statistical studies accurately capture this climate. Roughly seventy percent of Japanese view the Chinese as a threat while an equivalent number of Chinese harbor the same views towards the Japanese.

If these perceptions exert too much influence on each nation’s foreign policy, the current competition could easily escalate. According to power transfer theory, a rising power tends to come into conflict with a falling one when their capacities equalize—a point Japan and China may reach within the next decade. But even if violence is unlikely, each nation may nevertheless seek to construct its own opposing military alliances in East Asia. A divided East Asia is not only harmful for global trade, it also leaves the region dangerously unstable. The resulting zero-sum view of Asia would leave little room for cooperation on issues like North Korea, Taiwan, regionalism and non-traditional security issues. And of course, a region dominated by aggressive great power competition between China and Japan leaves less room for the U.S. to achieve its interests in the region.

Asia currently lacks a framework through which Sino-Japanese differences can be effectively addressed. In the absence of such a regional forum, U.S. mitigation of tensions is essential. Both China and Japan have better relations with the U.S. than they do with each other, creating a window for America to act as a pivot and steer both countries towards cooperation. It is therefore essential for the U.S. to prevent a threatened Japan from embarking on an independent security role in Asia which would aggravate China. Instrumental to this goal is increased U.S. participation in Asia’s regional forums to reduce Japan’s fear of a China-centric Asia. It is likewise essential for the U.S. to discourage China’s military build-up by assuring China that the U.S./Japan alliance is not part of a containment mechanism designed to constrain China diplomatically or hinder its economic growth.

Optimists note that trade between China and Japan has now risen well over $200 billion. On the assumption that economic interdependence raises the costs of war, they argue that the likelihood of military conflict will diminish. Although this theory may be true, if these antagonistic perceptions continue to strengthen, China and Japan may come to believe that their security can only be assured through war, no matter the costs. The U.S. should take measures now to help alter these perceptions and prevent a future conflict with potentially disastrous consequences.

Rush Doshi ‘11, Editor-in-Chief

American Foreign Policy is a student-written, student-run publication based at Princeton University. It was founded in the wake of September 11th to provide Princeton students with a forum to discuss the difficult problems and choices facing the United States and the world. American Foreign Policy magazine is sponsored by the Woodrow Wilson School of Public and International Affairs, the Princeton Institute for International and Regional Studies, and the James Madison Program in American Ideals and Institutions.

No part of this publication should be construed to promote any pending legislation or to support any candidate for office. The opinions expressed herein are those of the authors and not necessarily those of the Woodrow Wilson School, the Princeton Institute for International and Regional Studies, the James Madison Program, Princeton University, or American Foreign Policy. AFP gladly accepts letters to the editor, article proposals, and donations, which are fully tax-deductible.

Editor-in-Chief Rush Doshi ‘11 Publisher Manav Lalwani ‘09 Managing Editors Zhenling Lai ‘09 Adam Harris ‘10 Editors Cole Bunzel Owen Fletcher Kent Kuran Carlos Hanco Emily Norris Jessica Sheehan Zvi Smith Ahson Azmat Jon Bradshaw

Hee Jin Cho Jon Extein Jonathan Giuffrida Brandon McGinley Catalina Valencia Brendan Carroll Ellen Choi Addie Lerner Eric Stern

‘10 ‘10 ‘10 ‘10 ‘10 ‘11 ‘11 ‘11 ‘11

Layout

Jonathan Giuffrida ‘10, Production Manager Kelly Lack ‘10 Ellen Choi ‘11 Peck Yang ‘11

Business Staff Rebecca Kaufman ‘11 Patricia Sever ‘11 Peck Yang ‘11

Peter McCall Ellen Choi Shaina Li

‘10 ‘11 ‘11

Editor-in-Chief Emeritus Zvi Smith ‘09 Publisher Emeritus Joel Alicea ‘10

AFP Advisory Board

Anne-Marie Slaughter: Dean, Woodrow Wilson School Nolan McCarty: Acting Dean, Woodrow Wilson School Katherine Newman: Director, Princeton Institute for International and Regional Studies Robert P. George: Director, James Madison Program G. John Ikenberry: Albert G. Milbank Professor of Politics and International Affairs Bernard A. Haykel: Director, Institute for Transregional Study of the Contemporary Middle East

All correspondence may be directed to: American Foreign Policy, 5406 Frist Center, Princeton, NJ 08544 afp@princeton.edu www.princeton.edu/~afp

2

‘08 ‘08 ‘08 ‘09 ‘09 ‘09 ‘09 ‘10 ‘10

American Foreign Policy

American Foreign Policy May 2008 Volume VII, Issue 7

CONTENTS Cover Story

The Battle for Southeast Asia

Asia Drinking Alone

A Renewed Sino-Japanese Rivalry Owen Fletcher ‘08

Eyed by the Tiger

The Necessity of Indo-American Partnership Lucas Issacharoff ‘10

In Context

Global Update

6

8 Tara Lewis ‘11

Europe Sandwiched Between the Powers

4

NATO’s Mixed Messages

Ambivalence Toward Eastward Expansion Dan May ‘11

Peace on My Terms

10

Vishal Chanani ‘11

9

Domestic Disaster 13

Russia’s Shaky Foundation

Matthew Drecun ‘10

AFP Quiz

Middle East

Paradoxes and Peace

Dealing With Hamas

14 Franco Lopez ‘11 15 Duncan Fritz ‘08

U.S. Foreign Policy

Rise of the Populists Shifts in American Trade Policy Laura Kergosien ‘10

17

By the Numbers

19

President Carter, Your Four O’clock

Mohit Agrawal ‘11

Photo Sources: Oded Balilty, Misha Japaridze, Mikhail Metzel, Jerome Delay/AP

May 2008

Cover Photo: iStockPhoto

3

Cover Story

Wong Maye-E/AP

The Battle for Southeast Asia A Renewed Sino-Japanese Rivalry

T

here is no precedent for the competition occurring in East Asia. Until the onset of European imperialism in the 19th century, China was East Asia’s unchallenged hegemon. China considered itself the cultural center of the world, and required its neighbors and trading partners to offer formal tribute.

During the 20th century, however, China’s weakness allowed Japan to become the dominant regional power. In the 1990s, Japanese bureaucrats spoke of establishing an East Asian hierarchy based on the “flying geese” model, in which Japan, East Asia’s largest economy, would naturally assume its rightful role as the “lead goose.” Other Asian countries would be willing followers, falling into position behind Japan.

Now, Japan is losing its lead as China’s monstrous economic growth rates

4

Owen Fletcher ‘08 narrow the gap between the two nations’ economic capabilities. If this pattern of growth continues, Beijing will catch up to Japan—and possibly even the U.S.— within a few decades.

This prospect is fueling efforts in China and Japan to prevent the other from achieving regional domination, and their contest for leadership and influence is particularly heated in Southeast Asia.

Though Sino-Japanese competition remains confined largely to the economic realm, it could intensify as China’s rise and Japan’s efforts to counterbalance it reinforce mutual threat perceptions.

Visions for regional cooperation That China and Japan hold opposing visions for East Asian regional cooperation is clear from their policies toward the two regional multilateral organizations created to facilitate regional “commu-

American Foreign Policy

From left: Wen Jiabao, Yasuo Fukuda, and Wong Maye-E/AP Singapore Prime Minister Lee Hsien Loong, meeting at the 10th anniversary of ASEAN+3.

nity building”: the Chinese-supported ASEAN Plus Three and the Japanesesupported East Asia Summit.

At first glance, there seems to be little difference between the two groupings. The ASEAN Plus Three comprises China, Japan, South Korea, and the ten members of the Association of Southeast Asian Nations—Brunei, Burma/Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Meanwhile, the East Asia Summit consists of the 13 nations of the ASEAN Plus Three, as well as India, Australia, and New Zealand.

Optimists say these forums could lead to European Union-style integration, but they have in fact produced little substantive cooperation, largely because Japan and China are split over which forum to support.

One of the considerations driving this split is certainly Sino-Japanese economic rivalry. China argues that the ASEAN Plus Three forum, created in 1997 amidst a regional financial crisis, is the most appropriate vehicle for regional cooperation because it is exclusively East Asian. Japan, however, has been reluctant to deep-

Cover Story en commitments to ASEAN Plus Three because it fears China’s economic ascendancy will allow it to dominate the forum. Indeed, the International Monetary Fund reports that China-ASEAN trade, which quadrupled from 2001 to 2006, has already surpassed Japan-ASEAN trade— in 2006, the totals were $160.9 billion and $156.6 billion, respectively. While Japan remains the forum’s largest economic power, it recognizes that China will eventually usurp this position.

The other consideration is purely geopolitical, and reflects both parties’ conflicting views about U.S. involvement in the Asian region. This Sino-Japanese split was evident in the disagreement over the composition of the East Asia Summit in 2004. China initially expressed strong support for Malaysia’s first proposal, which would limit the summit members to the ASEAN Plus Three nations, as it wished to establish regional cooperation in an exclusively East Asian framework. This would allow China to emerge as the premier power in a unified East Asia while simultaneously weakening U.S. influence in the region. A region oriented around China, Beijing calculates, would constitute a buffer against U.S. involvement in Chinese “internal affairs,” like the political status of Taiwan. In contrast, Japan’s preferred extra-regional framework is meant to reinforce U.S. dominance and dilute China’s regional influence. Hence, it proposed that the summit include democratic nations (and U.S. allies) such as India, Australia, and New Zealand, and supports the participation of the United States itself in the long run. When Japan’s proposal won out, China stopped supporting a role for the East Asia Summit in regional community formation. Japan, meanwhile, has proposed to strengthen economic cooperation by creating a free trade area among all 16 of the forum’s member countries.

free trade pacts with Southeast Asian countries. Beijing’s proposal in 2000 for a free trade area including China and all of ASEAN sounded the start of the race.

Japan’s then-Prime Minister Junichiro Koizumi responded by visiting Indonesia, Malaysia, the Philippines, Thailand, and Singapore in 2002, several months before the signing of the China-ASEAN free trade agreement. Japan has since completed negotiations on bilateral free trade arrangements with six individual ASEAN countries and with ASEAN as a whole.

China, however, remains the clear leader in efforts toward regional economic integration. Not only has China been quicker to initiate trade liberalization with ASEAN, but it has also done so

impeded efforts to keep pace with China.

Development aid is another bilateral tool China and Japan are using competitively to increase their inroads to Southeast Asia. Japan remains by far the largest aid donor to the region, but its aid budget has steadily declined since 2000 as a result of its decade-long economic slump in the 1990s. China, meanwhile, is aggressively expanding its own aid distribution.

In 2006, China offered the Philippines loans worth $2 billion each year for the next three years, doubling Japan’s offer of a $1 billion loan, which it promptly nixed in favor of China’s offer. By wooing the Philippines, a U.S. ally and the third-highest destination for Japanese aid in Southeast Asia, Beijing hopes to tilt the country’s strategic alignment toward China.

Japan and China are also using development aid to fund opposing infrastructure projects in continental Southeast Asia. China is funding construction of the “north-south corridor” highway running from southwestern China to Bangkok, which will enhance China’s overland access to the western coasts of Thailand and Burma.

Japan chose to subsidize two “east-west corridor” roads starting in Vietnam, which will increase its access to the Burmese coast. Both China and Japan hope to diversify their access routes to energy imports from the Middle East and reduce their reliance on energy shipments

“China’s economic rise, if it continues, could push Japan toward military assertiveness to defend its shrinking regional role relative to that of China.”

China and Japan are trying to expand their influence over regional cooperation through bilateral as well as multilateral channels. This often takes the form of a Sino-Japanese race to secure bilateral

China-ASEAN and Japan-ASEAN Trade 200 160 Billions of USD

The economic tools of competition

more comprehensively. For instance, it began eliminating tariffs on 600 agricultural imports from ASEAN ahead of schedule in 2004, which was seen as a major unilateral concession benefiting ASEAN. In contrast, Japan’s powerful agricultural lobby prevents any similar concessions.

Although Japan is a top destination for ASEAN’s agricultural exports, the liberalization agenda of the Japan-ASEAN free trade agreement excludes beef, rice, and some dairy products. Japan’s inability to liberalize agriculture has seriously

120 80 40 0

1994

1997 Japan-ASEAN trade

May 2008

2000

2003

2006

China-ASEAN trade

5

Asia through the Malacca Strait. Currently, ninety percent of Japan’s annual energy imports and 80 percent of China’s oil imports pass through this strait, which is highly vulnerable to maritime piracy.

Rivalry meets interdependence Competition between China and Japan in Southeast Asia is a manifestation of their deep strategic rivalry. But paradoxically, it is fueling the growth of regional interdependence, a force that has increased the two rivals’ shared interests in maintaining a stable and peaceful region. It would harm both Chinese and Japanese business interests in Southeast Asia if rivalry between countries were to escalate into a scramble for deeper strategic partnerships or military cooperation with regional countries.

Interdependence acts as a brake on Sino-Japanese rivalry, but cannot bring it entirely to a halt. This rivalry is deeply rooted in issues such as territorial disputes, nationalist sentiments, and different conceptions of America’s long-term military role in East Asia. It will probably be decades before shared economic inter-

ests become strong enough to engender strategic reconciliation between China and Japan.

In the meantime, competition between China and Japan in Southeast Asia does have the potential to spiral out of control if either country seeks an explicit security role in the region. China is already suspicious that the slowly expanding capabilities of Japan’s Self-Defense Forces portend greater Japanese military assertiveness. Japan harbors similar suspicions about China’s opaque military buildup. Both counties may be driven to seek military cooperation with Southeast Asian countries for fear the other will do so as well. China’s economic rise, if it continues, could also push Japan toward military assertiveness to defend its shrinking regional role relative to that of China.

The United States can help reduce the likelihood of a spiral in Sino-Japanese competition in Southeast Asia. It should discourage Japan from seeking an independent security role in the region by continuing to maintain and strengthen its own alliances with the Philippines and Thailand, and its alliance-like ties with Singapore. This will reassure Japan of its

Eyed by the Tiger

The Necessity of Indo-American Partnership

I

n 1943, India suffered one of the worst famines in modern history, with at least two million people dying of starvation. At that time, India was thought to be trapped in a classic Malthusian cycle in which its population outgrew its food supply, leading to endemic poverty and starvation. By 1984, however, India’s food production had more than tripled from its 1950 levels; India could not only feed itself, but also lay the foundations for its current breakneck economic growth, which has exceeded 7% in the last decade. India’s economic rise has

6

Lucas Issacharoff ‘10 also been matched by the growth of its military power, as demonstrated by its nuclear weapons tests in 1998. Though the West has been preoccupied with China’s meteoric ascent, India is now commanding considerable interest of its own. While India’s history engenders a lingering mistrust of Western powers, such concerns will ultimately be overcome by the abundance of issues on which American and Indian interests coincide. A realist foreign outlook on oil security, Afghanistan, terrorism, and China, combined with India’s drive to expand its naval power and influ-

American Foreign Policy

security in the shadow of a rising China, keeping competition between China and Japan confined to economics, diplomacy, and leadership in “non-traditional security” areas like combating maritime piracy and preventing the spread of regional epidemics. The United States should actively encourage Japan to seek a role in such non-traditional security areas, where a growing role could satisfy Japanese ambitions for regional leadership without appearing overly threatening to China.

There is little risk in the near future of a Sino-Japanese conflict or arms race, as the real security competition is occurring between China and the United States. Still, rivalry between China and Japan may intensify as China rises. As the most militarily powerful country involved in East Asia, the United States has an interest and a responsibility in ensuring regional stability by helping contain this rivalry. Afp

Owen may be reached at ofletche@princeton.edu

ence, will push India into a close partnership with the United States.

Historically speaking, India has been burned before. The long British rule over India left deep scars on the national psyche and a lingering fear of foreign domination. This led its first Prime Minister, Jawaharlal Nehru, to found the ill-fated Non-Aligned Movement (NAM), which sought to establish a neutral space for developing nations, free from interference or domination by either of the Cold War powers. The NAM failed rather spectacularly when its largest member, China, invaded India in 1962, consequently driving India into the arms of the Soviet Union.

The sudden collapse of the Soviet Union and India’s resulting isolation have left it wary of becoming dependent on any one ally.

While the historical inheritance of colonialism and past Soviet ties has created an anti-Western bent in Indian poliGreg Baker/AP tics, as evidenced by the Maoist’s successful opposition to a nuclear deal with the

Asia

Biswaranjan Rout/AP

India’s blue-water navy provides the U.S. with an ally capable of securing the Strait of Melaka.

U.S., India’s democratic inheritance, now deeply ingrained in its culture, should not be lightly cast aside. Though India does deal with some unsavory regimes, most notably Iran and Burma, one of the features of Indian foreign policy has been its discernable commitment to human rights and consistent contributions to UN peacekeeping missions around the world. India was a global leader in condemning South Africa’s apartheid regime, and has taken the lead in attempting to resolve internal conflict in nearby Sri Lanka and Nepal.

While India’s foreign policy remains underdeveloped, it seems clear that its ideological focus has more in common with America’s (admittedly inconsistent) commitment to democracy than with China’s breathlessly amoral courting of the world’s dictators.

On the other hand, America’s historical support for Pakistan has hindered its efforts to build a relationship with India.

America’s ties with Pakistan were built during the Cold War, when the U.S. channeled aid to Pakistan’s intelligence service in support of the anti-Soviet insurgency in Afghanistan. This aid has picked up again since September 11th, though much of it has been misdirected toward improving Pakistan’s military vis-à-vis India rather than the Taliban. There does, however, seem to be a growing recognition among American policymakers, particularly the

ascendant Democrats, that the tacit support for Pakistan over India since the partition (and particularly the cozy relations since the 1980s) has been a mistake. Pakistan’s recent political turmoil and continued failure to take effective action against insurgents operating from its tribal regions have already begun to push the United States toward India, which promises to be a far more effective ally in establishing a moderate government in Afghanistan.

Although historical issues may some-

nerable to piracy and terrorism. India relies heavily on oil imports via the pipeline through Pakistan or via oil tankers traveling through the Strait of Hormuz and the Mandab Strait (Red Sea-Indian Ocean).

The United States also cares deeply about the security of the global oil supply, and the two also share an interest in the security of the Strait of Malacca, through which a massive share of the world’s trade flows.

India has made no secret of its desire to develop a blue-water navy. This interest stems partly from a desire to protect the vulnerable trade routes mentioned above, but also from self-aggrandizing motives. India naturally sees itself as the regional center of gravity in the Indian Ocean due to its size and prominent position and seeks a navy that confirms and enhances this status. This navy will give India the ability to Gautam Singh/AP protect trade, particularly oil imports, and protect its physical security, giving it both diplomatic and potential military influence over the nations on the periphery of the Indian Ocean. While India does not require U.S. aid to expand its naval capabilities, it will need certainly require U.S. assistance to avoid lagging dangerously behind China. In turn, American support for India’s naval objectives would not undermine its goal of maintaining global naval superiority, but instead provide it with an ally to balance against China’s growing regional strength.

Indeed, this particular necessity will strengthen ties between the U.S. and India in the coming decades. As India looks at the world, it faces two major options for alignment: China orKyodo/AP the United States. Though India would avoid complete subservience in either relationship, it would nevertheless be unable to become more than a junior partner for the foreseeable future. China’s economy is roughly three times the size of India’s, and thought by many to have greater short-term growth potential. The Chinese military is also vastly superior, and its burgeoning defense budget seems to indicate that this Sino-Indian disparity will only increase.

While the United States also enjoys both economic and military superiority over India, America is only a remote threat, wielding regional influence more as a de-

“American support for India’s naval objectives would provide it with an ally to balance against China’s growing regional strength.” times push India away from the United States, the greatest determinant of Indian foreign policy will be a realist assessment of its strategic position—and this assessment should drive the two nations closer together. Indian and American interests dovetail on a number of international issues. In Afghanistan and the broader struggle against radical Islamic terrorism, India cannot help but support the United States; it was, after all, Mujahideen from Afghanistan who, fresh off victory over the USSR, first brought insurgency to Kashmir with Pakistani support.

Furthermore, India and the United States share a dependency on three Indian Ocean waterways that are extremely vul-

May 2008

7

Asia fensive tool than as a precursor to direct or indirect domination. China’s strategic hinterland, on the other hand, is precisely the same as India’s: Southeast Asia and Central Asia. Competing economic interests aside, the United States and India can look forward to increasingly harmonized interests while China and India instead remain locked in a zero-sum game over the same prize. Furthermore, unlike areas such as oil security or terrorism, in

which the U.S. supports specific Indian objectives, the Chinese threat demands a basic enhancement of Indian power: economic, diplomatic, and most importantly military.

Though Indian history leads it to be wary of close entanglement with a superpower, it cannot remain aloof. The growth of China’s influence in Southeast Asia, Central Asia and increasingly South Asia will force India to seek a balancing

alliance with the U.S., or risk being frozen out of the surrounding regions altogether. Ultimately, the common cultural and strategic interests of India and the United States will lead both countries to increase their military and political ties in the coming years, no matter the fate of the nuclear fuel deal. Afp

Lucas may be reached at lissacha@princeton.edu

In Context

Compiled by Tara Lewis ‘11 “The whole world has a headache from your hypocrisy.”

Ibrahim Ahmen Mahmound Al Qosi, a Guantanamo Bay prisoner, commenting on the U.S.’s push for international human rights “I have always reacted negatively to those who with their snotty noses and erotic fantasies prowl into others’ lives.”

Putin denying allegations that he divorced his wife in order to marry Olympic gymnast Alina Kabayeva “The solution to the problem of Zimbabwe lies in the hands of the people of Zimbabwe.”

South African president Thabo Mbeki asserting that Zimbabwe is not suffering from a crisis

“Thank you, Your Holiness, awesome speech.”

President Bush addressing Pope Benedict XVI after the Vatican leader’s speech in Washington “We haven’t turned any corners. We haven’t seen any lights at the end of the tunnel.”

American Commanding General David H. Petraeus commenting on the progress of the Iraq war “There is no war between us and our Iraqi brothers — no matter what their nationality, race or sect. The blood of Gerald Herbert /AP Iraqis are forbidden on you.”

Infamous Shiite cleric Muqtada al-Sadr threatening war against American troops “When millions of people are going hungry, it’s a crime against humanity that food should be diverted to biofuels.”

Indian Finance Minister Palaniappan Chidambaram assessing the drastic increases in global food prices “His actions reward terrorists, lend support, and provide legitimacy to their belief that violence will eventually get them what they want.”

Rep. Sue Myrick criticizing Jimmy Carter for meeting with Hamas leader Khaled Meshaal in Syria “Iraq cannot be the new Somalia.”

Iraqi Prime Minister Nouriki Al-Maliki, on Iraq’s violent militias

8

American Foreign Policy

Europe

NATO’s Mixed Messages

Ambivalence Toward Eastward Expansion

L

Dan May ‘11

ast month, NATO leaders held their annual summit in Bucharest, Romania, in an affair characterized by grand rhetoric, half-measures and indecision. In Afghanistan, member nations offered only marginally increased military commitments, far short of the troop presence necessary to defeat entrenched Taliban forces. On the issue of missile defense, the United States and the Czech Republic finally agreed to a deal that allows American tracking radar to be based on Czech soil despite fierce Russian opposition.

As for NATO expansion, on the other hand, the alliance bowed to Russian pressure, rejecting an American proposal to extend Membership Action Plans (MAPs) to the strategically important states of Georgia and Ukraine.

Instead, NATO leaders offered only a

weakly worded communiqué, reaffirming that these countries will be NATO members at some unspecified future date. This noncommittal announcement is the worst of all possible alternatives for the future of relations between NATO and Russia. In the short term, Russia will see the rejection of the Bush expansion plan as a victory, a reward for its bad behavior and increasingly bellicose rhetoric. Yet the policy falls short of a true engagement strategy, offering no hope for a long-term thaw in relations with Russia because it includes support for eventual enlargement as well as European missile defense. The summit represents the failure of politics by consensus. Its policies were written to please every NATO constituency rather than to achieve real progress on the problem of Russian relations. NATO needs a true

strategy of engagement toward Russia rather than this sort of shortsighted political calculation.

Russia has very legitimate reasons to fear NATO expansion. From the Russian perspective, NATO is a hostile military alliance originally designed to contain the Soviet Union and now determined to encroach on Russia’s sphere of influence. NATO’s most recent round of expansion in 2004 included the Baltic states of Latvia, Lithuania, and Estonia, former Soviet territories, and traditional Russian buffer states. Such expansion plays into Russia’s ancient and deeply held fear of western encroachment.

Russia’s traditional response has been a defense-in-depth strategy, using the sheer expanse of its Eastern European territories as a buffer against the west.

While previous NATO expansions have chipped away at Russia’s western frontier, this would be more significant.

Ukraine has already fallen out of favor with the Kremlin after the 2004 Orange Revolution that replaced Russian-endorsed leader Viktor Yanukovych with the more pro-Western Viktor Yushchenko, who still serves as president. Ukrainian membership in the NATO alliance

Vadim Ghirda/AP

At their annual summit in Bucharest, NATO allies agreed to postpone offering membership to Georgia and Ukraine.

May 2008

9

GLOBAL UNITED STATES Secretary of Housing and Urban Development Alphonso Jackson resigns. The announcement comes amid investigations of favoritism in selecting contractors for government projects in New Orleans and Philadelphia, among other cities.

The UNITED STATES Senate approves a housing relief bill intended to prevent foreclosure by offering tax breaks to homebuyers as well as to home builders. Many Democrats say the bill does not go far enough in providing relief, while the White House proposes alternative measures dealing with mortgage refinancing.

CROATIA and ALBANIA are invited to join NATO following heated discussions among leaders of the organization. Macedonia, Ukraine and Georgia have all been denied membership much to the dismay of American lobbyists pressing for the inclusion of Ukraine and Georgia. The revamped organization will contain 28 members.

The Prime Minister of IRELAND, Bertie Ahern, resigns as controversy arises over corruption charges early in his political career. Ahern had maintained office for over ten years, and his career was noted for progress on peace agreements with Northern Ireland, among other things.

The Olympic torch is greeted by human rights protestors in Paris, FRANCE as it progresses toward Beijing. The torch itself is extinguished many times for security reasons, and its route is significantly shortened.

Presidential elections in PARAGUAY come to a close with the election of Fernando Lugo, a former bishop. His win marks an end to Colorado Party’s 61-year rule and is indicative of South America’s political shift leftward.

10

American Foreign Policy

Silvio Berlusconi’s center-right coalition regains power over both houses in ITALY following parliamentary elections. This is likely to result in Berlusconi’s return to the office of Prime Minister for a third time.

UPDATE Collected by Vishal Chanani ‘11

In IRAQ, the death toll for American soldiers surpasses the 4,000 mark, further fueling the Democratic Party’s opposition to the war. In response, President Bush claims that “those lives were not lost in vain.”

Also in IRAQ, American forces launch an invasion on the forces of Moktada al-Sadr in Basra. The poorly executed operation only comes to a stop after U.S. forces agree to grant amnesty to al-Sadr’s supporters. 1,300 Iraqi soldiers who failed to fight in the operation are dismissed from the army. Al-Sadr’s militia, however, refuses to disband.

President Mahmoud Ahmadinejad of IRAN announces plans to expand its uranium enrichment facilities by adding 6,000 centrifuges to the pre-existing stock. Meanwhile, the UN Security Council continues to demand complete disarmament and cessation of nuclear programs.

The leader of the nationalist Kuomintang party, Ma Ying-Jeou, is elected president of TAIWAN by an overwhelming majority.

Ma expressed hopes of improving relations with Mainland China, marking a break Unexpectedly, elections in NEPAL show a with the isolationist government policies of clear victory for the Maoist party, consisting his predecessor, Chen Shui-bian. of former guerrilla rebels who only recently signed peace negotiations. Such results agETHIOPIA breaks off diplomatic relations grieve neighboring INDIA as well as the with QATAR, accusing the country of pro- United States. moting instability in the region by supporting violent armed oppositions. Ethiopia is also angered by Qatar’s close ties to ERITREA. Jose Ramos-Horta, Nobel Laureate and President of EAST TIMOR, returned to the country after two months of hospitalization in Australia. He had been ambushed and shot by rebels outside of his personal residence.

Following an apparent parliamentary victory for the opposition Movement for Democratic Change in ZIMBABWE, partial recounts are ordered. The results of the recount remain unreleased, and it is believed they will be used to delegitimize the opposition victory. Human rights groups suggest that Mugabe’s party has once again begun torturing opposition leaders.

May 2008

11

Europe would cement Ukraine’s turn toward the west, replacing a friendly buffer state with another western military base.

NATO expansion and missile defense are particularly problematic given former Russian President Vladimir Putin’s recent attempt to reestablish his nation as a world power and a regional hegemon in Eastern Europe. Over the past couple of years Russia has aggressively intervened in Georgian and Ukrainian internal affairs to pull the countries back into the Kremlin’s sphere of influence.

In Georgia, the Russian government continues to fund secessionist movements in South Ossetia and Abkhazia.

In Ukraine, the Kremlin used its massive natural gas reserves as a weapon, shutting off gas supplies completely in early 2006 because the Yushchenko government refused to accept massive price increases for domestic consumers. NATO expansion would weaken the Kremlin’s bid for regional hegemony, while an effective missile defense system might undermine its nuclear deterrent. Despite Western claims that the proposed missile defense system would be worthless against Russia’s enormous nuclear arsenal, Putin has declared that missile defense is a “red line” issue, a strategic concession that his government simply cannot accept. Particularly given Russia’s long history of insecurity and invasion, the Kremlin’s opposition to this further NATO expansion as well as Eastern European missile defense is quite natural.

Clearly, NATO faces a complicated problem. The alliance must display resolve in the face of Russia’s increasingly aggressive behavior without provoking the emerging power to greater hostility. NATO responded to this difficult policy dilemma neither with a conciliatory attempt to assuage the Kremlin’s concerns nor with a firm condemnation of Russian meddling in Eastern Europe. Instead, NATO’s negotiations at Bucharest sent weak and mixed signals to Russia, which only highlighted the competing interests among members of the alliance. Eastern European NATO members, wary of the Kremlin’s aggressive posture, generally support NATO expansion as a firm signal of resolve. In

line with the Eastern-European perspective, the Bush Administration aggressively championed a MAP for Georgia and Ukraine. The United States sees NATO membership as the best way to protect and consolidate recent pro-Western revolutions in the two countries, advancing the cause of democracy in a historically chaotic region of the world. The Bush administration has also been the leading advocate for European missile defense, couching the system as a defensive measure against an increasingly dangerous Iran.

On the other side of the continent, Western European members of NATO have a strong economic incentive not to antagonize the Russian government.

Western Europe relies on Russia for more than 25% of its natural gas, which will only increase as Russia opens new gas fields in the Arctic and completes its $15 billion South Stream pipeline project to bring gas through the Balkans to southern Europe. At Bucharest, this disunity within the NATO alliance led to

ers must recognize America’s limited capability to influence a nuclear armed, oil rich superpower an ocean and a continent away. Rather than resist Russian aggression with military force or raw power, the Atlantic coalition should pursue a policy of compromise and engagement, acknowledging Russian supremacy in parts of Eastern Europe while doing its best to insulate the Ukraine and Georgia from outside pressure.

This strategy will require painful concessions. On missile defense, for example, the United States should bow to Russian demands and allow military observers into its new Polish and Czech radar sites. Given their history with the Soviet Union, these countries will not willingly accept Russian military personnel onto their soil, but the United States must pressure its allies to allow the observers, as they are crucial to assuaging Russian fears about American hostility. Moreover, NATO must permanently shelve Georgia and Ukraine’s bid for alliance membership. While the United States and its regional partners would like to protect these nascent democracies from outside influence, they will only provoke Russia by integrating them into the western military alliance. America need not abandon the two countries, but should seek to support them through more subtle economic means.

Combining these two policy concessions with constructive negotiations, the United States and NATO can engage Russia on important regional issues like energy security and ethnic nationalism without continuing the current trend toward hostility. These soft line proposals will not please conservatives within the administration, but they reflect a realistic assessment of American capabilities.

Certainly, they would represent an improvement over the incoherent patchwork put together at Bucharest. Afp

“NATO’s negotiations at Bucharest sent mixed signals to Russia, which only highlighted the competing interests among members of the alliance.”

12

truly incoherent policy positions. Western Europe led by Germany and France managed to stymie the proposed MAP extension, but they acceded to Washington’s more aggressive stance on the issue of missile defense. Furthermore, the parties affirmed in the alliance’s communiqué that Ukraine and Georgia would at some point become NATO members. Thus, the alliance managed neither to ease Russian concerns about Western aggression nor to send a strong short-term signal that NATO would stand firm against further meddling in Eastern Europe. Instead, it followed an awkward and inconsistent middle road that antagonized Russia while leaving Georgia and the Ukraine vulnerable to continued pressure.

How should NATO pursue its relations with Russia going forward? As much as the United States would like to resist Russia’s anti-democratic interference, even the most aggressive hardlin-

American Foreign Policy

Dan may be reached at dbmay@princeton.edu

Europe

Domestic Disaster

Russia’s Shaky Foundation

O

n March 2, Dmitri Medvedev was elected to the presidency of the Russian Federation, succeeding incumbent President Vladimir Putin, who has held the seat for the past eight years. Considering Medvedev has never held an elected position prior to his endorsement by Putin in 2008, Western analysts have speculated that the new President will be only a figurehead, while Putin continues to dominate the government as Prime Minister.

Such predictions, however, are problematic.

One must remember that Putin occupied a strikingly similar situation in 2000. A virtual unknown to the Russian public, he had been endorsed by President Yeltsin only months before the coming election, and most analysts dismissed Putin as a tool of Yeltsin and his inner circle. Contrary to those expectations, he worked quickly to push out Yeltsin and his associates, corralling Russia’s oligarchs who had stiffly resisted government influence and asserting himself as the dominant force in Russian politics. It certainly remains possible that Medvedev will only be a placeholder and figurehead. Given the example of Putin’s unexpected rise to power and the historic inaccuracy of Western predictions in general—recall how many experts were caught unawares by the collapse of the Soviet Union—such forecasts cannot be accepted on faith.

In any event, predictions about whether Putin will overshadow Medvedev or vice versa will become irrelevant if the government as a whole fails to maintain its hold on power. Numerous problems loom ominously ahead for the new Russian government. Two among them are particularly significant: first, the uncertain future of Russia’s energy industry, and second, a significant population decline. Left unsolved, these problems threaten the success of the govern-

Matthew Drecun ‘10 ment and of the country as a whole.

The oil and gas industry has fueled both Russia’s recent economic development and the rise in Putin’s personal popularity. Maintaining the current growth of the energy sector is crucial to the continued health of both. Russia’s corporations must continue to explore and develop new domestic oil and gas fields in order to secure the future of its energy sector, as the oil or gas contained in any one field is finite. Most energy companies around the world are naturally driven by the desire to improve profit margins by exploring and developing new fields.

But Russian energy companies have remained curiously passive. Take for example Gazprom, the company that controls nearly all the natural gas production in Russia, which in turn produces the most natural gas in the world. Gazprom’s reserves have apparently grown over the last few years, but this has not happened as a result of new domestic

exploration. Though it has had new ventures in Bolivia and Egypt, the company has limited its domestic efforts to revisiting mature fields in Russia. Gazprom’s only domestic growth has come at the expense of its competitors, through the acquisition of smaller companies and the government-assisted elimination of major rivals such as Yukos. Though individual corporations like Gazprom might benefit greatly from such a rearrangement of Russia’s resources and through the development of other countries’ reserves, the Russian economy as a whole will not. The energy sector remains the foundation of Russian prosperity, comprising between 20 percent and 30 percent of the GDP, and a failure to sustain domestic energy production will threaten the stability of the entire economy.

The other significant challenge the new government faces is Russia’s staggering population decline. The United Nations has warned that the current population of 141 million people could decrease by as much as one-third by 2050. The causes of Russia’s population woes are myriad. Some are historical, like the aftershocks of the gigantic death toll from World War I to World War II. Most, however, are current: an unusually high murder rate that averages around 30,000 a year, driven up by crime and corruption; endemic al-

Pool/AP

The new Putin-Medvedev administration must find a way to sustain Russia’s energy industry while addressing its population decline.

May 2008

13

Europe

AFP Quiz

Multiple Choice Monthly Franco Lopez ‘10 1. Which country recently elected a former Roman Catholic bishop as President, ending 61 years of one-party rule? a) Panama b) Portugal c) Paraguay d) Poland e) Pakistan 2. Which country’s troops are fighting Islamic militants in Mogadishu, resulting in the highest level of violence in Mogadishu’s capital since 1991? a) Ethiopia b) Somaliland c) Kenya d) United States e) Kosovo 3. Which nation is rife with violence in the wake of disputed elections that allegedly led to the defeat of its only leader since independence? a) Georgia b) East Timor c) Belarus d) Zimbabwe e) North Korea 4. Which former American statesperson recently held several controversial meetings with Hamas officials despite opposition from the Bush administration? a) Madeline Albright b) Bill Clinton c) Colin Powell d) Jimmy Carter e) George H. W. Bush 5. Which country recently accused Russia of illegally shooting down its unmanned spy plane over the region of Abkhazia? a) China b) Georgia c) Ukraine d) Monaco e) Armenia

Answers on p. 18

14

coholism among the male population, such that the life expectancy of males is over a decade shorter than that of females; a staggering rate of 13 abortions for every ten births; and a failing healthcare system, crumbling from inadequate and uneven funding. Worse still, many of these problems interact and build on each other. Poor healthcare, for example, has led to poor quality abortions which rendered millions of Russian women infertile.

This population decline has significant economic consequences. As each generation becomes smaller than the preceding one, there are fewer workers available to bear the older generation’s pension burden. A smaller domestic labor force also necessitates an increased reliance on immigrant workers, causing jobs to be filled by often illiterate and undocumented Central Asian immigrants.

Many of the problems contributing to the population decline are fixable. The healthcare infrastructure, for instance, suffers from a lack of funding, which should not be a problem for the currently cash-flush Moscow government. The government is also in a much stronger position to crack down on crime and corruption than it was a decade ago.

The Russian government has not only failed to address these societal problems, but it has also hurt, rather than helped, the energy sector. Freemarket competition once helped to invigorate the Russian economy, but over the last few years, the government has been asserting increased state control over many companies, most notably Gazprom, and then proceeded to help its corporations establish dominant market positions. The growing convergence of business and government interests has thus shifted the focus of Russia’s highest officials away from national concerns. Not only has the government failed to prioritize the distribution of its resources, it has also neglected a number of other responsibilities, like maintaining the country’s social and transportation infrastructure, or developing its banking sector and reforming its legal system. Public complacency has largely allowed Putin’s government to get away with its failure to address these ills, as the economic boom and

American Foreign Policy

general improvement in quality of life are still fresh in the memories of most citizens. Putin’s perceived competence grants him performance-based legitimacy, which has allowed him to secure both the election of his chosen successor, Medvedev, and his own position as the new Prime Minister.

This performance legitimacy, however, hinges on the ability of the PutinMedvedev administration to continue delivering economic success, quality of life improvements, and standard government services to the Russian people. Economic success is what Russians believe in, and if the government fails to deliver on Putin’s broad promises of improved well-being, widespread disillusionment will result.

Over the next few years, Medvedev may manage to assert his independence as Putin did eight years ago. On the other hand, Putin may maintain his control over the government. At this point, we are unable to meaningfully predict what will happen. We do know, however, that the prosperity of Russia’s energy sector, the health of its population, and the stability of its public infrastructure are relatively fragile.

It is precisely this fragility which makes Moscow’s current diplomatic plays untenable in the long-term. The resurgence of Russian power has allowed Putin to adopt an increasingly assertive, antiWestern foreign policy, creating difficulties for the United States on dealing with Iran and establishing a European Missile Defense shield. Nevertheless, it is conceivable that population woes or a drop in the price of oil will force Russia to adopt a less belligerent tone towards the U.S. After all, it was Russia’s economic frailty in the 1990s which led Boris Yeltsin to open it up to influence and investment from the West.

While the economic prosperity created by the energy sector has enabled Putin’s administration to stay in power; if it wishes to remain, finding solutions to these problems ought to be at the top of its list. Afp

Matthew may be reached at mdrecun@princeton.edu

Middle East

Yousef Allan/AP

For progess to be made in resolving the Israeli-Palestinean conflict, these Hamas leaders must be brought to the negotiating table.

Paradoxes and Peace Dealing with Hamas

A

s part of the Bush administration’s push to democratize the Middle East, the January 2006 Palestinian legislative elections were intended to be a shining example of free, transparent, and democratic elections to the Arab world. Instead, the unexpected victory of Hamas stunned international observers and sent shockwaves reverberating throughout the region. By ending Fatah’s decadeslong dominance of Palestinian politics, Hamas’s victory ushered into power an Islamist group whose raison d’être is the destruction of Israel and its replacement with an Islamic state. The Israelis and Palestinians seemed to be as far away from a negotiated two-state settlement as ever before.

The international community has struggled with how to respond to Hamas’s ascension to power, as the lat-

Duncan Fitz ‘08 ter’s continued refusal to adhere to past Palestinian Authority-brokered agreements, recognize Israel’s right to exist, or renounce violence has placed Israeli and Fatah leaders in a difficult bind. The Annapolis Conference, which the U.S. hosted in November 2007, was one such attempt to achieve an expedited final-status agreement between Israel and Palestine.

Although the conference successfully managed to obtain broad Arab support for a two-state solution, the implementation of the agreement has been fraught with difficulties. Continued rocket fire by Hamas and Islamic Jihad militants into southern Israel, combined with ineffectual American monitoring mechanisms and the weakness of Israeli and Fatah leaders, has prevented both sides from making further progress towards a final settlement.

Current American and Israeli policy

May 2008

is to conduct direct negotiations for a two-state settlement with Fatah leaders, deliberately excluding Hamas from any agreement. The U.S. and Israel hope that by isolating Hamas, they will encourage the Palestinian people to reject radical Islam and instead support moderates like Prime Minister Mahmoud Abbas in his quest for peace.

This strategy, however, is unlikely to succeed. As long as there is fighting in Gaza, it will be virtually impossible for Israel to successfully conduct peace negotiations with Fatah. Hamas may choose to escalate the level of violence, thereby breaking any agreement that would exclude them from government, or deliberately stir up a wave of popular anger against Israel which would force Abbas to suspend negotiations—as he did in March 2008 after an Israeli offensive.

Hamas, in other words, still retains the ability and the willingness to disrupt the talks before Israel and Fatah can reach a final settlement.

AP Numerous Israeli experts, including former Foreign Minister Shlomo

15

Middle East Ben-Ami and Efraim Halevy, the former Mossad Chief and Head of the Israeli National Security Council, have made the case that only engagement can dilute the power and extremism of Hamas.

Halevy, for instance, argues that Fatah is far too weak militarily, politically, and socially to make the necessary sacrifices on behalf of peace. “I have no sympathy whatsoever for Hamas,” he clarifies. “I think they are a ghastly crowd . . . but I have not seen anybody who says the Abbas-Fayad tandem is going to do the job.”

As the hopes raised by the Annapolis Conference dwindle in the face of the continued violence in Gaza, it is becoming apparent that no serious peace deal can be successfully implemented without Hamas’s consent. For peace to succeed, Hamas must be given a stake in the negotiations.

Otherwise, rockets will continue terrorizing innocent Israeli civilians in the western Negev and peace agreements with Abbas will inevitably falter. On Israel’s part, it must reject is the use of military force, as buffer zones and small- or large-scale invasions are but temporary solutions, and are unlikely to put a permanent stop to the violence on the ground.

Once the military option is ruled out, the critical question then becomes whether or not Hamas can play a constructive role and live up to its obligations in a new type of negotiated peace settlement. Although it has remained steadfast in its opposition to Israel’s right to exist, many of Hamas’s leaders have in fact been gradually—if grudgingly— moving toward consensual international positions regarding a two-state solution.

Most recently, Khalid Mishal told the Palestinian newspaper Al-Ayam in April 2008 that Hamas supported an independent state based in the 1967 boundaries and promised to coexist peacefully alongside Israel. He declared that “all organizations [including Hamas] say they agree to a state in the 1967 borders” and repeated Hamas’s support for a mutual cessation of violence throughout the Occupied Territories. This is a landmark occasion, as he is the first senior Hamas leader to express a willingness to coexist peacefully with the Israeli state as part of a Palestinian Authority which recognizes

Israel’s legitimacy. This rhetorical hedging from one of Hamas’s more radical leaders is reminiscent of steps taken by the ANC, IRA, and PLO leadership on their paths to peace, and suggests the potential for a continued evolution towards a negotiated compromise.

The best course of action for America is to implement a short-term ceasefire, reform the Palestinian National Unity government, and establish a two-state solution between Israel and this new National Unity government which explicitly recognizes Israel’s right to exist without requiring Hamas to do so independently of the Palestinian Authority. Such an agreement, sold as a binding but renewable hudna (cease-fire) to the Hamas rank-and-file, gives Hamas a stake in the new Palestinian National Unity govern-

government. Both Ben-Ami and Halevy argue that if Hamas can clamp down on all militants operating in the Gaza Strip and support an Israeli-Palestinian Authority agreement which recognizes the Israel’s right to exist, insisting upon Hamas’s formal recognition of Israel as a precursor to dialogue is detrimental to Israeli security interests. In support of this claim, they point to the armistice agreements signed between Israel and four of its neighbors in 1949, which did not provide for formal recognition but still dramatically enhanced Israeli security by encouraging moderation from its enemies. Similarly, Hamas leaders may very well find themselves trapped between upholding an agreement which steadily erodes their power or violating their own proposal and exposing themselves as inherently hostile to peace.

Such a settlement, therefore, is likely to neutralize radical elements within Hamas over time.

The current attempts at peace have taken on a renewed importance for the future of the Israeli-Palestinian conflict. The policies advocated here seek to build on Hamas’s gradual evolution and empower Palestinian moderates of all parties in an effort to reverse the radicalization of Palestinian society. It is imperative that the United States help bring about a negotiated settlement that has the ability to usher in a lasting peace for all Israelis and Palestinians alike. Otherwise, in the words of former National Security Advisors Zbigniew Brzezinski and Brent Scowcroft, “failure risks devastating consequences” for the United States, Israel, and the entire Middle East. The stakes have never been higher. As former Israeli Prime Minister Yitzhak Rabin once observed, “we must think differently, look at things in a different way . . . peace requires a world of new concepts, new definitions.”

Taken together, these policy recommendations will enable the United States and Israel to rise to the occasion. Afp

“Though Hamas’s inclusion does not guarantee an Israeli-Palestinian peace, it at least makes such an outcome possible.”

16

ment—as opposed to continued isolation—and offers the best chance to give hope to the Palestinian people, improve Israeli security, and bring peace to the region. Though Hamas’s inclusion does not guarantee an Israeli-Palestinian peace, it at least makes such an outcome possible, as it will now have a vested interest in cooperating with Israel to achieve a twostate solution.

Our first priority must be working towards the establishment of a Palestinian state, as it would ease the way to Palestinian recognition of Israel and give the Palestinian Authority an incentive to clamp down on violent extremists and encourage integration into the international community. Moreover, Palestinian statehood would empower moderates within both Hamas and Fatah, and reduce ordinary Palestinian’s resentment of Israel.

Indeed, once they perceive that an agreement between Israel and a Palestinian National Unity government is possible, the appeal of radical Islam will quickly decline, as people now have an alternative to violence and hatred. This would take the form of a negotiated two-state solution, albeit one sold by Hamas leaders as “temporary” to their rank-and-file, but which forces them to implicitly recognize Israel as part of the newly-formed Unity

American Foreign Policy

Duncan may be reached at djfitz@princeton.edu

U.S. Foreign Policy

Rise of the Populists

Shifts in American Trade Policy

P

Laura Kergosien ‘10

olitical support for free trade has been on the rise since the Reagan era, most notably under President Clinton, who argued that the economy could only achieve sustained growth if global markets were allowed to operate without restraint. This free market approach coincided with a period of economic prosperity, low unemployment, and falling trade deficits. As these conditions have begun to reverse, however, the populist approach is now gaining influence.

Populist arguments contrast the interests of the masses and the elites, noting how economic benefits have flowed disproportionately into the hands of corporate leaders and America’s wealthiest families. This imbalance has only worsened in recent years. Proponents of populism want to reevaluate

America’s role in the global economy and regulate markets. For example, they would refuse any trade agreements without protectionist clauses that would try to limit layoffs and shield incomes. The rise of populist economics among political leaders threatens to reverse the trend towards free trade that has characterized

maximize their comparative advantage by specializing in the goods and services they make best, and improves production efficiency of all industries. This creates cheaper goods and therefore higher living standards, thus benefiting all parties involved. According to a 2004 report from the Cato Institute, the per capita GDP in the quintile of countries with the most restrictive trading policies was only $1,883 in 2002, while the per capita GDP for the same year in the quintile of countries with the most liberal trading policies was $23,938. Moreover, free trade is also one of the strongest factors in promoting development. As Colombia University economist Arvind Panagariya observes, “on the poverty front, there is overwhelming evidence that trade openness is a more trustworthy friend of the poor than protectionism. Few countries have grown rapidly without a simultaneous rapid expansion of trade. In turn, rapid growth has almost always led to reduction in poverty.”

Though economists present persuasive data that free trade creates jobs, benefits consumers with lower prices, and boosts overall economic growth, today’s public is still unconvinced. Opinion polls

“Politicians would do well to reverse the trend toward populism by ameliorating American concerns with free trade.”

American policy for the past three decades.

These politicians seem to have forgotten the vast benefits that trade liberalization has brought to America and its trading partners. Free trade improves global resource allocation, allows countries to

Charlie Neibergall/AP

J. Scott Applewhite/AP

Courting the little guy?

May 2008

17

U.S. Foreign Policy

David Kohl/AP

This may be a long lunch break, guys.

show most Americans believe free trade destroys American jobs and its benefits largely accrue to large corporations. This skepticism is based upon legitimate concerns, as income inequality has continued to increase despite the past few years of relatively strong GDP growth, manageable inflation, and a healthy stock market. Adjusted for inflation, the average income of the bottom 90% of Americans decreased by 12% between 1973 and 2005, despite the fact that real per-capita income increased by 68% between 1980 and 2006. After several decades of promoting free trade, we’ve seen its largest gains realized by the rich, and its job losses through outsourced industries concentrated in the lower and middle classes.

Many Americans resent this unfair allocation and want to see capitalism regulated with a social conscience in order to minimize inequality, provide a safety net to victims of outsourcing and protect the environment. Populism addresses these moral concerns and promises to protect workers from the dangers of global trade, albeit at the cost of some economic prosperity.

This, however, is not a small cost.

Protectionist subsidies, as well as labor and environmental clauses, infuriate our trading partners and damage our reputation throughout the world. For instance, countries with lower living standards and cheaper labor have a comparative advantage in low skill manufacturing, and consider it unfair that wealthy nations, which had their chance to develop without environmental and labor restrictions, are now placing such limitations upon

18

today’s developing economies. These countries will turn from the U.S. towards China and other countries which provide market opportunities without such impositions. Many will take their business elsewhere.

Evidence suggests that changes in international opinion towards the U.S. as a trading partner are already occurring. As Democratic presidential candidates vow to repeal or seriously rework NAFTA, Colombian and Canadian foreign ministers have complained that America is not a reliable trading partner. Deals with South Korea meant to solidify our alliance are falling through in both countries; the recent Doha Round of trade talks failed largely because the rest of the world has had enough of exorbitant American and European agricultural protectionism. A Mexican trade minister, working in Washington for the past two decades, noted that he found on his recent visit to Congress “an almost xenophobic mood of a kind that he had never before encountered.” As populism gains traction in America, the U.S.’s reputation as a worthwhile trading partner will continue to wither.

Politicians with an interest in improving or even in maintaining America’s economy would do well to try to reverse the trend towards populism by ameliorating American concerns with free trade. Wage insurance and education programs for laid off workers could alleviate much of the harm caused by trade liberalization in some of America’s increasingly obsolete industries. Progressive income tax will help ensure that

American Foreign Policy

income gains are redistributed and that lower and middle class Americans will have the resources necessary to succeed in a liberalized trade system. The American public can demand social security networks that protect people who cannot earn a living wage, as well as policies that work to ensure that the poor do not remained trapped in a cycle of poverty.

These were goals that America pursued when competition was limited to American businesses, and they are goals that we can pursue in the modern world of global competition. Indeed, they are goals we must pursue to ensure that free trade, which has brought unsurpassed wealth to our country, is sustainable in the long run. Furthermore, such pursuit is essential for reassuring our trading partners that our markets are desirable and reliable.

Issues surrounding free trade, protectionism, and economic populism are likely to remain important in the upcoming elections. The whole debate may best be summed up in a report released in November 2007 by the centrist Democratic group Third Way. “Fair traders fight with values; free traders fight with data. This is like bringing a knife to a gunfight. As a consequence, our arguments are elitist, our numbers are unconvincing, and Americans don’t think the economic benefits of trade are worth the moral and social costs.” As Hilary Clinton and Barack Obama continually try to outdo each other in blaming the troubles of the American middle class on NAFTA, free traders have no choice but to expand their arguments to show America both that free trade works and that social justice can be a part of the resulting economic prosperity. Unless that happens, free trade, along with America’s economic preeminence, may soon become extinct. Afp

Laura may be reached at lkergosi@princeton.edu

Answers for the quiz on page 14: 1) c 4) d 2) a 5) b 3) d

By the Numbers

BRIC-A-BRAC

2.82%

The Perils in Store for These Rising Stars

of GDP spent on education in China. India spends nearly 4% while the U.S. 6%. From 2000-05, illiteracy grew in China by over 30 million people. Illiteracy is hampering China’s economic growth.

Mohit Agrawal ‘11

T

he last few years have ushered in the rise of the BRIC states: Brazil, Russia, India, and China. Together, these behemoth have a population of 2.803 BILLION, or fully 42% of the world population. The economic growth of these nations has increased their political clout: Brazil serves to counter Venezuela, Russia is successfully blocking American policies in Eastern Europe and Cen-

tral Asia, India is bidding for a seat on the Security Council, and China is poised to host the 2008 Olympics.

In spite of these successes, however, each country faces critical issues.

From the environment to population growth to infrastructure needs and education, these are only some of the problems which could bring down the rising stars. Will these rising stars overcome or flame out?

45 THOUSAND people who were injured daily on roads in China (2004). On average, 600 people were killed daily, or about 220,000 annually. That’s roughly the population of Orlando, Florida.

-14 MILLION expected population change in Russia over the next 20 years. The Russia population is quickly aging, indicating that economic growth could quickly come to a standstill.

#143 rank of Russia in the Corruption Preception Index (Transparency International), out of 179 countries. Brazil, India, and China are all tied at #72, while the United States is at #20.

3 DAYS

300 THOUSAND

time it takes to unload and reload a cargo ship in the port of Mumbai. In Shanghai, the statistic is 8 hours.

The lack of efficient transportation in India is a bottleneck on its economic growth.

people who suffer acute pesticide poisoning in Brazil each year. Due to the rise of export-based agribusiness, pesticide use is skyrocketing, hurting both people and the environment.

5 CENTS

5.5 PEOPLE

for each rat killed in the Indian state of Mizoram this year. Due to a once-in-49-years flowering of bamboo in the state, the population of rats has rapidly multiplied, decimating the local rice crop.

per square meter in a jail in Rio state. The rate of incarceration in Brazil rapidly doubled from 1995 to 2003, causing mass prison overcrowding. Riots and mass breakouts have become common in Brazil.

May 2008

19

Excited?

Tsvangirayi Mukwazhi /AP

Get more AFP at

www.princeton.edu/~afp