Heartland 2005/01

CHINA-AMERICA THE GREAT GAME

1 •2005

contents no. 1/2005 2

Editorial AN EMPIRE IN MAKING

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Interview with Lieutenant General Liu Yazhou of the Air Force of the People’s Liberation Army

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Francesco SISCI - China is an Enigma

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Zhang WENMU - Sino-American Relations and the Question of Taiwan

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Yu XILAI - Made in the USA: The Future of International Justice and the World Order

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Wang SIRUI - Sino-Russian relations: Where do we go from here?

ANOTHER AMERICAN CENTURY?

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Martino DOLFINI - Debt and Empire

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Margherita PAOLINI – Crude Awakenings

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Lucio CARACCIOLO - The Empire on Credit

108 John C. HULSMAN - A View from the Truman Balcony: The Second Term of George W. Bush

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David POLANSKY - Living Without Europe

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Alexis DEBAT - Return to Reality: Iran seen from Washington

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David DONADIO - Why We Back Israel

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Charles D. FERGUSON - Dirty Bombs, Suitcase Nukes, and Cruise Missiles: A Technological and Geographical Assessment

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AUTHORS

CHINA-AMERICA THE GREAT GAME

EDITORIAL

Which Game?

I

n a recent exposition on the emerging geopolitical situation around the globe,

Henry Kissinger remarked on the diplomatic significance of the difference between America’s and China’s intellectual games: chess and go, respectively.

Chess has only two outcomes: draw and checkmate. The objective of the game is absolute advantage—that is to say, its outcome is total victory or defeat—and the battle is conducted head-on, in the center of the board. The aim of go is relative advantage; the game is played all over the board, and the objective is to increase one’s options and reduce those of the adversary. The goal is less victory than persistent strategic progress.1

The September 11th attacks and the subsequent war on terror managed to partially obscure the significance of the China-America relationship. Yet no single game—not even the war on terror—has such vast geopolitical implications, even if it remains unclear what exactly is being played.

Herewith two paradoxes that help define the distance between the two powers and which may determine the nature of the game The United States has a grand strategy, confidently encompassing the entire globe, yet its nature is curiously abstract, and it does not always amount to a recipe for action. More still, and ironically for a country that has always jealously guarded its sovereignty, the US is increasingly placing the reigns of its power in foreign hands; geopolitically, with its call for democratic revolution, and economically with its reliance on depleting oil reserves and a weak dollar bought up primarily by the Chinese and Japanese. China, meanwhile (to mix metaphors slightly), holds its cards much closer, carefully husbanding its power and influence in Burma, central Asia and the Spratlys islands.

Winston Churchill remarked of Russia that it was a riddle inside a mystery wrapped in an enigma; the same may be said for China. Certainly many in the West have long found China’s size and implacability ominous. Yet it is not only Westerners who remain unsure of what China wants.

It is often forgotten that China, with the world’s largest population, growing economy and vast territory and resources, has no experience as a global power. It was 1

Henry A. Kissinger, “America’s Assignment”, Newsweek, November 8, 2004.

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not a factor in the Great Wars that reordered the world in the first half of the twentieth century, Franklin Delano Roosevelt’s hope that it would fulfill its role as one of the world’s Four Policeman, notwithstanding. Its recognition as a power independent of Soviet control affected the greatest geopolitical revolution of the Cold War, yet even then China’s greatest significance was a function of the bipolar struggle between the US and Soviet superpowers. It has never before been a mainstay of the global equilibrium.

Since Mao’s revolutionary spirit was implicitly repudiated under Deng Xiaoping, China has lacked a grand strategy, which is to say a vision that unifies the character of its internal system with its interests and goals in the world. With the collapse of the Soviet model, and no clear parallels among its own past glories, whose character was largely insular, many Chinese (such as the contributors to this issue) have looked to the only remaining alternative—ironically their greatest potential rival—the United States, to spur their imagination.

And so the Great Game begins. But which one?

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AN EMPIRE IN MAKING

CHINA-AMERICA THE GREAT GAME

INTERVIEW WITH LT. GEN. LIU YAZHOU

INTERVIEW WITH Lieutenant General Liu Yazhou OF THE AIR FORCE OF THE PEOPLE’S LIBERATION ARMY The war in Iraq unmistakably signaled America’s preeminence. Rumsfeld’s victories within the bureaucracy and on the battlefield. Air power as the basis of American hegemony. The meaning of strategy. What China can learn from America. Recognizing the future of warfare.

T

he Iraqi War, which caught the attention

of the whole world, was over. Dai Xu, a reporter in the editorial department with Military Science in the Air Force conducted an interview with Lieutenant General Liu Yazhou, Air Force Political Commissioner at the Chengdu Military District of China.

Part I.

War Result: A Regional War that Rocked the World

REPORTER The Iraqi War formally broke out on March 20, 2003. By April 11, the U. S. troops had seized Baghdad. The offenders, with little more than 100,000 soldiers, completely conquered a medium-sized country within a score of days. There was scarcely any combat worth mentioning; many people felt that the Iraqi War was more like a game than a war.

LT. GEN. LIU Dramatic as the war seemed, it was real. The score of days in the spring of 2003 was thought-provoking. This war seemed to be over, but it was only another starting point.

REPORTER What do you mean by “another starting point”?

LT. GEN. LIU Regional war though it was, the Iraqi War rocked the world. It changed the structure of the world tremendously. It might even be said that the national boundaries of many countries were unnoticeably redrawn by this war; redrawn at least in the minds of the senior leaders of the United States. This war changed history, and continues to do so. The world as it was before the Iraqi War will never return. When Tony Blair said in the House of Commons that “this war will determine the international political structure in coming decades”, he got the point.

Let me talk about my understanding on this war from two aspects: a political perspective and a military one. Soon after China won its war of self-defense against

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India in 1962, Chairman Mao Tse-tung said that we had “fought a political war by military means, or a military war by political means”. The Iraqi War, likewise, had a dual connotation, both political and military. This war had three meanings from the political perspective: 1.

It served as the watershed between the new international order and old ones.

Prof. Jin Yinan pointed out that “War decides order.” The United States has been pursuing some kind of “New Empire” since the end of the Cold War. This means that the U.S. dominated the world with its political, military, cultural, and religious power.

When a nation grows strong enough, it practices hegemony. The sole purpose of power is to pursue even greater power. The last cornerstone of the 20th century international system had been the global collective security mechanism and international law as represented by the United Nations, an arrangement mainly initiated and established by the United States. The US crushed this cornerstone through the war. It was the first war of the United States in “the New Empire Order” and had great historical significance.

This war marked the end of an old period and indicated the beginning of a new one.

2.

Civilizational conflicts. Civilizational conflicts are religious conflicts in nature.

The confrontations between the Arab nations and Israel were only part of it. You might deny the existence of civilizational conflicts, but could you deny the existence of religious ones? George W. Bush once described the Iraqi War as a “Crusade”, a remark which he later refereed to as a “slip of the tongue ”. How could it be “a slip of the tongue”? After the end of the Cold War, another warfare under a new rule commenced, which was civilizational in nature, featured by the conflicts between Western Christian and Islamic civilizations. The United States not only wants to “reform” the Islamic world, as it declared. Its ultimate goal is to rout the entire Islamic community. From time immemorial, civilization has been transplanted by wars. The US confronted the world by military means, and the significance of the Iraqi War can be found in the words of US politicians. James Woolsey, a significant figure for US conservatives once said, “The Iraqi War could be seen as the first war preceding the Fourth World War. The world has witnessed two hot wars and a Cold War, of which Europe was at the forefront. The Fourth World War is now taking place in the Middle East.”

REPORTER Because of the US’ disproportionate military strength, there is an approach to war that resembles a mania among its hawkish politicians. The balance in international politics is tipping rapidly. Some Western scholars have compared the United States to a chariot hurtling down a hill.

LT. GEN. LIU The Iraqi War is now history, but people around the world began to sense the chill of the new century in the spring of 2003. The Belgian Prime Minister Guy Verhofstadt recently referred to the US as a “very dangerous superpower”. The world became dangerous because of the US threat. That leads up to the third meaning I wanted to discuss: geopolitics. Geography is destiny. That has been a constant truth since ancient times. Generally when a powerful country begins to rise, it should first

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set itself in an invincible position. An invincible position in geography means a region which should be kept under geopolitical control and today’s Middle East is such a region. It has been said that oil was both treasure and curse for the Middle East, and that all US strategies for the Middle East since World War II had been made in view of oil. That speculation, however, was only half right. Oil was a reason for the US to control the Middle East, but it was not all it desired. The Middle East was not only an energy base in history, but also a well-known transportation hub for the world.

Napoleon was aware of the importance of controlling this key transportation hub.

When the United States controlled the Middle East, different world forces would then begin a new round of integration, which would result in enormous changes in world history. The US severed the land between the three continent of Asia, Africa and Europe.

REPORTER What about the influence in the military field?

LT. GEN. LIU There were two big military blocs in the world in the last century: the former Soviet Union and the United States. They developed two kinds of military philosophies, which were completely different from each other. Armed forces all around the world could be divided into two categories according to these two military philosophies. All the (hot) wars since the end of the Cold War were actually wars between these two military blocs and were wars over different kind of military philosophies between the two blocs. Now I can say that the U.S.-led military bloc defeated the one headed by the (former) Soviet Union.

The meaning of the Iraqi War to the world was that it demonstrated completely the crisis of the Soviet military approach. Beholding the ruins left over by the Iraqi War, visions flooded my mind: the Bekaa Valley in Lebanon, the Libyan capital, former Yugoslavia, Afghanistan…I found that there were astonishing similarities between these battlefields and war ruins—that they had all been allies of the former Soviet Union or places in which the Soviet Union had put its foot; that they all mainly employed the Soviet weapon system and had Soviet military ideas; that they had been either fragmented or disbanded after the US air-strikes. What were the reasons?

The two wars in the Gulf highlighted a shocking fact: Iraq was a country whose army, navy and air forces were all armed with Soviet weapons, and possessed Scud missiles, MIG warplanes and tanks—all Soviet-made. These armaments were both enormous in quantity and advanced in technology and had been introduced into Iraq systematically. In addition to all the armaments, its operational system and guiding philosophy had also been transplanted from the Soviet Union.

REPORTER In order to achieve the aim of conquering and occupying a middle-sized country, the US employed about 500,000 troops for three years in the Korean War, only to be forced to retreat without a victory; while in Vietnam, the U. S. used another 500,000 troops and fought for about 12 years, only to be forced to retreat likewise in

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the end. How come the Iraqi War turned out as it did?

LT. GEN. LIU I want to answer this question by referring to the outcomes of two other wars. Both the Soviet Union and the United States were superpowers, and when they fought wars with the same opponent, the results were totally different. The Soviet Union successively employed 1,500,000 troops in its war on Afghanistan, fighting mainly ground battles with that country for a decade, only to be defeated in the end, resulting in more than 50,000 casualties on the Soviet side. What was more, the power of the Soviet Union never recovered. While in the case of the recent war in Afghanistan, the US only employed a special force of 1000 some-odd troops—accompanied mainly by its air forces—and dismantled the Taliban forces in just 61 days, with only 16 deaths among the US troops (of whom none were killed in action).

REPORTER What do you think were the main gaps between the Russian and the US Armed Forces?

LT. GEN. LIU The gaps lay mainly in two factors: their military technology and their war philosophies. Let me talk about military technology first. Science and technology were developing at a tremendous pace and precision-guided technology took the war into a “precision warrior” era. The US could deploy its most threatening weapons to where it thought to be the most needful places in the shortest possible time. The US dropped more bombs within a single day during the Kosovo War than all the missiles we Chinese have deployed along the Southeast coast of our mainland. During the war in Afghanistan, the US quickly developed a new kind of “thermobaric bomb” for use in that country’s mountainous regions that were filled with all sorts of caves.

Thermobaric bomb could destroy caves, underground bunkers and everything in a building—without doing damage to the building itself. It was something like a neutron bomb. Developing and manufacturing new types of armaments quickly according to different battlefield circumstances was a weapon in and of itself. In addition to that, it could develop and provide new armaments promptly according to the needs on the battlefields, which was of great importance. In comparison, we used the bangalore torpedoes, explosive packages and walkie-talkies during the Korean War, and still used them during the self-defense war against Vietnam.

“Industrial foundation” certainly was a reason for our disadvantage, but what mattered most was whether we had a future-oriented philosophy for war and whether our national defense industry was capable of coping with contingency or not. We could not begin to think about these questions when a war was about to break out immediately. We should begin thinking of them from this moment on. The expense for each minute’s delay today will be more bloodshed in the future.

As there was a gap of nearly one century in their relevant developments, what we saw between the U. S. and the Taliban in the War in Afghanistan was not one

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between soldiers. Nor was it one between cannon-shots. It was a war between missiles and bulletins, satellites and rifle posts.

In comparison with the US, Russian technology was only manifested in its weaponry, and it was not systemized. When Russia was fighting the Chechnya War, they were basically fighting with conventional weapons, and information interflow was never in place between its operational platforms or between its operational platforms and command systems. Technology levels determine war tactics. There was no “generation gap” between Russian and Chechen forces, so it was impossible for them to fight a asymmetric war against their opponents, or make the best use of an absolute technological advantage as the United States did.

Mobility is the only way out when faced with an overwhelming air force and firepower disadvantages. Only when a force has mobility can it avoid being attacked all the time without attacking its enemy. And only when a force has mobility in a war can the war continue in a way that both sides launch their attacks. Lack of mobility led to defeat for the Iraqis and the Taliban forces in the two Gulf Wars and the War in Afghanistan, respectively. The fundamental objective for the US to develop different systems was to deprive its enemies of battlefield mobility. Its enemies should pay special attention to this as without mobility there is no survival.

REPORTER How did the US control their enemies’ mobility?

LT. GEN. LIU The US approach was to capture all kinds of information, while blinding and deafening its enemies. When we say that the US Armed Forces were mighty, it was because they had apt battlefield sensibility. Let’s take a look at the following data.

In battle, a period of time was needed to complete the so-called attack chain, from discovering a target to conducting a precise attack on that particular target. And that process would have included the following steps: discovering, locating, targeting, attacking and operation evaluation. In the first Gulf War, the operation of such a “chain” took 100 minutes, while in the wars in Kosovo and Afghanistan, it took 40 and 20 minutes respectively. In the Iraqi War, it took just 10 minutes, thus nearly realizing the goal of “discovering means destroying”. In such circumstances, its enemy would not have enough time to be mobilized. For instance, in November 2001, a US scout discovered that a motorcade was retreating from the Afghanistan capital of Kabul. The scout immediately transmitted the message to the US Central Command through satellites. After the Pentagon gave the attack order, three fighters quickly flew to the motorcade and fired three missiles from overhead. At the same time, an unmanned aerial vehicle also fired missiles—making it the first unmanned fighter in the world. It was later found out that nearly 100 Taliban followers were killed in this air strike, including Atef Mohammed, aide of Osama Bin Laden. This air strike was an epitome of US operations in the war in Afghanistan, and in time would become the usual approach for their tactical attacks.

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In the Iraqi War, the Iraqis were first deafened and blinded. That being the case, they simply could not bring their forces into play, leaving aside the fact that those forces were not strong to begin with. When commenting on the 1991 Gulf War in his book, Surpassing the Nuclear War, В.И. Sripcinko, the Russian military strategist, wrote, “Iraq had made preparation very earnestly—but for an outdated war.” A dozen years ago, Iraq still had tank divisions, air service and a Saddam Defense Line. And only rifles and human bombs were left available on the eve of the Iraqi War. Generally speaking, the Iraqi War was one with a gigantic “Gap of Generations”. If we say that the wars in which the United States participated since the 1980’s were constantly changing, moving from Mechanized Wars to Information Wars, then the Iraqi war was a qualitative change in that direction. It was a symbol that the US military revolution, which had commenced after the end of the war in Vietnam, was almost completed. This was a significant event in world military history. In that sense, the failure of the Iraqis was inevitable, though the US victory was exaggerated due to Iraq’s nonresistance or failure to resist. Faced with such a desperate situation, the Iraqi government could not fight even if it wanted to. As for the Iraqi people, they simply did not want to fight the war. That being the case, while the government was killed, its nation survived.

Due to the poor performance of the Iraqi forces, the real war capacity of the US force was not fully manifested in the Iraqi War. The strongest points of the US army included their capacity in electronic warfare, in New Concept Weaponry System and Sky Forces, and only a small fraction of those capacities were mobilized. The US was listed 1st in the following three realms in today’s world. First, it was the forerunner in the new military revolution. If we compared the revolution with a long-distance race, the United States would not only take it for granted that it be the one leading all other players, but it would remain 1000 meters ahead of its immediate pursuers—and, if it felt that the distance between it and the second runner might shorten to 900 meters, it would feel threatened. Second, its defense expenditure was the highest in the world— the amount equaling that of the following 12 countries. Thirdly, its military power is incomparable in the world. What was more upsetting was that the US Armed Forces were still expanding rapidly. A new war system covering the whole globe would come into being once its global missile defense system are ready. The last resort by which its enemy might threaten the U. S.—nuclear weapons—would by then be useless. By that time, a unipolar political system backed by an absolute military power—a global empire system with the United States at the core—would then be in place. Just as the mechanized blitz expedited the “Third Reich ” of Adolf Hitler, the information war is now laying the foundation of the world’s new empire. The long-term outcome of this war is terrifying. And though that particular day had not arrived yet, we are fast approaching it.

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Part II.

INTERVIEW WITH LT. GEN. LIU YAZHOU

Air Power, or Ground Force?

REPORTER Lt. Gen. Liu, Could you talk about the features of this war? What kind of war did you think the Iraqi War was?

LT. GEN. LIU In a word, it was an air war. I believe that air power was the decisive force for the Iraqi War, though the US sent massive ground forces as well. The US had global interests, and hence broad war areas. It had to adopt a global strategy. That made it essential for its armed forces to fight long-distance wars, to be able to be deployed promptly, strike precisely and maintain absolute mastery of the sky. Among all parts of the US armed forces, only its air power could match those requirements.

After the war in Grenada, it was determined that it was better to have a battalion of troops ready in 24 hours than to have an army in 3 months. Air power has played a decisive role in all America’s recent wars: the first Gulf War, the Kosovo War, the war in Afghanistan and the Iraqi War. REPORTER Why did the United States, then, send ground troops to Iraq from the very beginning?

LT. GEN. LIU First, whether and how to use ground forces in a war depends on ones goals.

The goals of the US in this War were to “topple Saddam’s regime” and to “liberate the Iraqi people”. Such extreme war goals meant that the US would have to send its ground troops soon after the war began. Without the use of ground forces, it was impossible to “topple Saddam” or to “liberate the Iraqi People”. The US was then sending an unequivocal signal by sending its ground forces to Iraq: that the US would continue to stay and would not move out soon.

REPORTER That is to say the United States’ decision to sent its ground forces to Iraq was a political one rather then a military one.

LT. GEN. LIU That’s right. In order to achieve that goal, the US army began its show immediately after the start of the war. You must have noticed that the United States invited lots of journalists from all over the world, including those from China, to report on the war with the coalition army. Why? To put on a show for the world. When the United States fought the Iraqi War, it was trying to punish Iraq as a warning to others.

What was more, it had a plan for the reformation of a Greater Middle East—all would need a ground force in place.

The show put on by the United States really had some effect. A number of countries, especially Arab ones, were terrified—part of the political effect of using ground forces. Those who thought that the United States was again stressing the role of ground forces did not see the meaning of that approach, they only saw the superficial phenomena. Military means were always one way to achieve political goals. That

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could be seen both from the military objectives and, sometimes, from the course of a military undertaking.

REPORTER Was there any military reason that the US used its ground forces?

LT. GEN. LIU US air power had long been the major player from the Gulf War to the Kosovo War to the war in Afghanistan; a debate must have taken place between the different divisions of the US Armed Forces. The core of the debate could have been be that the navy and army did not want to play a supportive role only, they did not want to be marginalized. The army in particular had that sense of crisis.

We knew that there was a debate after the war came to an end, as one might have expected. The debate did not take place within the Armed Forces but between Colin Powell, the Secretary of State, and Donald Rumsfeld, the Secretary of Defense.

It is interesting to note that the debate was not between armed services, but rather, between civilian officials and senior officers in the army. They had common objects, varying only in the means of operation. Rumsfeld proposed a novel war concept of “precision blitz”, called Rumsfeld’s Theory. “Precision” referred to the high intellectualization of a war. And the soul of Rumsfeld’s Theory was that the army should be reformed into combat groups that were smaller in size but easier to deploy.

Its effectiveness would resemble that of the Special Forces. Concerted with air strikes, its tasks were to help precision-guided weapons attack important targets, so that combat requirements were completed quickly. On the other side, the essence of Powell’s Theory was that massive ground forces should be employed, and they should act according to the operations carried out by the Heavy Divisions of the army.

As the war started, what we saw was a compromise of the two theories: both Rumsfeld’s and Powell’s theories were applied—but quite insufficiently. Many of the senior army officers believed that the ground force used this time should have reached the scale of the 1991 Gulf War, which was 10 army division, but the US only employed 2 divisions. The scale of the ground troops used this time was much smaller than those used in the “Desert Storm”, while they achieved a much greater victory. I believed that the difference between the Powell Theory on war and the Rumsfeld one lay in the following: while the former emphasized destroying the effectiveness of an enemy on a large scale, the latter no longer stressed the importance of destroying the troops and arsenals of the enemy, but rather, shifted the focus to destroying its fighting will. The results proved the rightness of the latter.

REPORTER How should we view the fruits of the US army’s “exercise”, as you put it?

LT. GEN. LIU First of all, this exercise was undertaken at a point when the U. S. had an absolute advantage. The US army was advancing fairly quickly. The 3rd Mechanized Division left Nasiriyah and Najaf, where fierce fighting was under way, and conducted a long-range raid hundreds of kilometers away (in Baghdad), and set a new in-depth

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raiding record in war history. The advancing speed of the US troops equaled or bettered that of the German army when it blitzed the Soviet Union.

But the US troops’ advancement would have been unimaginable without support from its advantageous air power. In that sense, I would say that the Iraqi War was not a short war, at least from the viewpoint of air conflicts. From that view, the war did not last four weeks, but the past twelve years. The war that started on March 20, 2003 was merely a continuation of a war that had lasted for the preceding 12 years.

For the past 12 years, the United States had been occupying the Iraqi air space, and strangling the Iraq’s air power. When I mentioned earlier that “the soul of the Iraqi troops have been stolen” what I referred to was the absence of its air power.

Secondly, 12 years of No-Fly zones, bombing and reconnaissance had ravaged the spirit of the entire country and its troops. The will of the Iraqi people was already on the brink of dying. Like a cabin tottering in rains and winds, Iraq would collapse at the lightest push. It was against such a backdrop that the United States conducted the “exercise”.

At the same time, the 3rd Mechanized Infantry Division, which was the main force of US troops, never fought any substantial battles—and its high speed advancement was made possible when the US had absolute mastery of the sky and the air forces had completely swept away all obstacles. Did you notice that the US ground troops would always stop once they encountered any resistance efforts or it would simply leave? The army did not seize any city in the war. Well, yes. Baghdad was taken. But was it seized by the ground troops? It was reported that the US had greased the palms of the senior officers of the Republican Guard so that they would give up their resistance. Some Westerners said that the air power of the coalition contributed 99 percent to this war, while the ground troops of the coalition contributed only 1 percent. There was some overstatement in that comment, but it told the truth.

REPORTER Different armed services carry out basic battle functions in different dimensions and fields. Generally speaking, air power is mainly an offensive one or a destructive power. It would be difficult for air power to shoulder the responsibilities of defense, occupation and protection.

LT. GEN. LIU Let me make an analogy. Air power was both arms of a person; you can use it to wreck other peoples’ windows or door planks. But if you want to occupy their houses and protect the property from further seizure, you’ll have to use your feet—ground forces—to enter the house. So it would be meaningless to compare the role of the ground forces and air forces without looking at the objectives of the war and the nature and characteristics of both forces. In general, the army and navy were more restricted by the natural mode of operational spaces, while air power would be able to fight in all spaces and all fields. The navy could only fight on the seas and the army only on land, while air power could fight everywhere.

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INTERVIEW WITH LT. GEN. LIU YAZHOU

The U.S. had to resort to the use of ground forces for those particular objectives of the war. However, as a result, the US had abandoned its own strong points and lowered itself to a level where the Iraqis could possibly confront it. The results of the war proved Rumsfeld’s Theory to be right. Never in US history had there been any president-appointed civil officials who exerted such a profound influence on the war plans of the US military. What happened later on told us in a more unequivocal way that the biggest winner of the Iraqi War was Rumsfeld and those under him. The biggest loser was the US army. On April 26, 2003, Rumsfeld went to the Gulf to inspect the troops there.

When Rumsfeld arrived, warm applause and cheers greeted him. Rumsfeld’s victory was not just over the US army, but also over Russian military theory. Facts proved that a more flexible military, though smaller in size, would absolutely defeat a huge army bugged by outdated concepts. The Iraqi army was a huge army. And according to the theory on large-scale front line operation of the Soviet Union, Iraq had amassed large quantities of armored units and artillery units, with their commander offices highly concentrated. But the line of defense of such a fearsome army was routed by a few U. S. troops in a matter of days. Military observers in Russia exclaimed, “The military paradigm has been rewritten. Other countries had better notice that the US has rewritten the military textbook.”

REPORTER Could you be more specific in describing the characteristics of the performance by US air power in this war?

LT. GEN. LIU I wrote in my A Century for the Air Force that, before the 1980’s, the world named it the “air force” because it was an army in the air. After that, however, it could no longer simply be seen as one of the armed services, though its designation remained the same. Revolutionary changes in weaponry had brought a revolutionary change to the strategy and tactics of air force. And the air force shifted its role from merely supporting the army and navy operations to one that received supports from the other two armed services in its operation till it could independently carry out war tasks today.

The air force has always undergone qualitative changes. In the 1999 Kosovo War, we saw that the air force was used not only militarily, but also played as a diplomatic ace card. The air strikes not only targeted the enemy’s military targets, but also its national strategic targets. The use of air power was strategic in nature. The way that the US employed its air power in the Iraqi War was exactly the same as it did in previous wars: air power was used as a initiative and full-time strategic force for the war. What was different was that its role was more direct, more prominent and more evident. The US fought 5 wars in the past 10 years: the Gulf War, NATO’s air strikes on Bosnia and Herzegovina, air attacks on Iraq, the Kosovo War and the War in Afghanistan. And the Iraqi War today was its sixth one.

The U. S. had fought each and every one of the six wars by exactly the same pattern: it first launched a global campaign for the war, coercing the target nation with its naval and air power. It would then besiege them in all directions, till it could win

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the war with little or no fighting at all. A global sky-oriented besiegement was now the basic characteristic for the US when preparing for modern wars. If one wanted to predict whether the US planned to launch the war, and how big a war it wished to fight, one could simply review the deployment of its air power.

REPORTER What do you think was the guiding thought behind the US air strikes?

LT. GEN. LIU Paralyzation, and paralyzation only. War of Paralyzation has been a consistent operation for the US for the past two decades. A review of the century of history since the birth of the air force would find that the strategy of the air forces of world powers has hovered between striking military targets and civilian ones, between strategic bombing and air support. During World War II, the US and Britain stressed strategic bombing, while Germany and the Soviet Union emphasized battlefield assistance, and both scored enormous successes. Before the war in Vietnam, air forces in general would usually undertake indirect air strikes as it was judged that victory was determined by the outcome of ground battles. However, paralyzation mainstreamed after the war in Vietnam, and especially after the Gulf War.

Moving on from the military field, US diplomatic policy was a paralyzing one, especially when it was applied to China. What was the bottom line of US diplomatic policy on China? Did it really mean to dismember China? I am afraid not. Were they afraid that China should rise? I am afraid not completely. I believe that it just wanted to paralyze China. It was the political use of the military operation: so that China would neither prosper not collapse, so that China would never develop soundly. The US did not want China to collapse completely. The reason was that once China collapsed, Japan, India and Russia would all then rise to break the balance of the Asian Continent, forcing the US to fill the vacuum of power. The United States would not let China collapse. Once China collapsed completely, Japan would then rise.

When observing how the US military fights its wars, we should consider a consistent philosophy, rather than just look at each war separately. While military technology grew more and more advanced, US strategy tends to become more and more simple. Victory as soon as possible is its doctrine. And it would resort to extreme measures so long as political circumstance allows. Towards the end of World War II, the United States could defeat Japan by various means—but why did they use atomic bombs? The US could well debark on Japan, without taking care of troop casualties.

US ground forces could have won the war, but that was not the best way. Giulio Douhet thought that once an army gained mastery of the sky, it must use it to destroy the material and spiritual resistance of the enemy. If ill-used, mastery of sky on the one side would mean that both sides shared mastery of the sky. What then, does controlling the sky mean?

The most basic characteristics of the United States military was that it stressed the use of its air power since the naissance of airplanes a hundred ago—since World

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War I, to be exact. If one wishes to understand the outlook of the Iraqi War, one must first review US war history over the past hundred years. The US military has made the most direct interpretation of the status and role of air power in the past century. Since World War II, it began to mainly use its air power in different wars. The US participated in all large-scale wars in the world during the past century, and it never suffered more casualties than its enemies. What’s more, its casualties in wars have been decreasing, until zero casualty was recorded. The reason is that the US has followed the trends of the military revolution closely, and was very careful in keeping up the pace. History would tell us that what one country did within the military revolution would have a tremendous influence on the rise and fall of that nation.

REPORTER Ronald Reagan’s “Star War” Initiative, Bill Clinton’s and George W. Bush’s NMD and TMD plans, all belong to the category of air force strategy. These strategy have already been elevated from “the sky” to “the space”. You said that someday space will become a battlefield. But before that, the battlefields in the sky will remain dominant.

LT. GEN. LIU If you look at what the United States have done in the past, you’ll see what it will do in the future. It will not leave the sky alone as long as it remains. As the United States occupy a commanding place, every important event taking place in the world is consolidating its status. It was not that the United States would not resort to its ground forces. North Korea and Vietnam were the two places where the US had deployed the most ground troops. What were the results, after all? Nothing but wretched defeats. From then on, using its ground forces became taboo. Why should they be afraid of using the army? It is not that US troops are fearful of death, it is that they fear defeat. This was determined by the natural flaw of the army and the mentality of the US. We have three criteria to weigh fighting strength: attacking distance, advancement speed and destroying power. But obviously, compared with air power, the army lags behind in those three aspects; it is usually large in scale and inflexible in action. And it is easy to be caught in the trap of a lasting war with its enemy.

REPORTER Your belief that the outcome of the Iraqi War had been decided in the sky was unique. How would you describe it?

LT. GEN. LIU Giulio Douhet said that future wars would begin from the sky. The party that first used air power would of course manage a quick and decisive outcome on the battlefield. Those who are not prepared for future wars will find out that it is simply too late for them to get ready once the war breaks out—they will not even be able to see the trends of the war development. And because of the important change on the nature of the war, it would not take long to determine the winner.

Giulio Douhet also concluded that air force could achieve victory before all other armed services. Because air force could, at lightning speed, launch a lethal strike on the enemy’s heartland…the party which acquired an air advantage first would have a

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decisive advantage over the war. A country that lose its mastery of the sky would then suffer enormous damage. So, “Mastery of the sky means victory. Countries that fail to acquire the mastery of the sky are doomed to be defeated and to accept every condition that the winner cares to impose.”

REPORTER Do you think that the army—broadly speaking, the ground forces—will exit from the arena of history, just as Major Sripocinko, Academician in the Russian Military Science Institute, had said?

LT. GEN. LIU The revolution has already taken place. Many nations have successively discarded the traditional doctrine of “winning by quantity”. They all took measures to trim down their troops—to an appropriate degree. The US armed forces were trimmed from over 2 millions troops to over 1 million, while the French armed forces were trimmed from 560,000 to 400,000. Statistics from the National Strategy Institute in London showed that in 1985 the total number of world troops was nearly 30 million, and the figure declined to a little more than 20 million. And the US always led the world.

There was a very heavy smoke screen in the Iraq War. It seemed as if traditional army and ground battles had revived. But people who believed that were fooled by the United States. I had two points which I would like to emphasize again.

First, though the Mechanized Infantry Division of the United States were very advanced, without guarantee from the air power advantage, it would still proceed with difficulty. If one says that the traditional army still has any function in the future, one should never forget that it is guaranteed by a mastery of the sky. Secondly, the Armored Division and the Infantry Division of the Iraqi troops were both defending forces, which of them then had functioned as an army division? Offending and defending cases combined together, it would be then the basic positioning for the future traditional army.

The traditional army has a history of thousands of years. It is now approaching its end today. Mankind has entered the information age. Troops today should of course be different from the troops in the mechanized ages. It was a historical rule to discard the old ways of life in favor of the new ones and to advance with the age. We did not either continue to use the long-handled sword of Guan Yu, did we?

REPORTER Many people would declare the arrival of an “air force’s epoch” on seeing the “zero casualty” record of the offenders in the Kosovo War. They would declare that the “army has revived” and that “contact wars are still in fashion” when they again saw that large-scale of ground troops were used in the Iraqi War. The United States fought each war differently.

LT. GEN. LIU Such mistakes are simply inevitable if one sees only a part of a whole thing.

Nothing can stand in the way of the development trends in the military fields. We

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should see that in a historic perspective; we do not have to view a longer history, a hundred year might have revealed the trends in the military fields. And that is, the battlefield of wars are constantly elevating, and the distance between the warring sides are growing farther and farther. In 1900, the Qing Dynasty troops still used long-handled swords and long pikes in wars, killing or being killed within meters. But the rifles of the Eight-Power Allied Forces widened that distance to further than 100 meters. Afterwards it was cannons, widening the distance to kilometers or dozens of kilometers. Still later on, tanks and airplanes widened the distance to hundreds of kilometers. Still further, it was missiles. Finally, now that all five aspects of the sky, space, ground, marine, and electronic elements are combined together, and here came the non-contact era. The next war might be an unmanned one.

In 2000, the United States launched a strategy for “global warning line, global arrival and global power” in which its space operation aircraft would be able to enter space and attack a target on the earth in less than an hour. By 2020, the United States air forces would have four platforms: the B-2 platform, the F-22 platform, the joint attack aircraft platform and the unmanned fighters platform, all of which are characterized by the stealth feature. Many of the US principles for future war have in fact been carried out in this Iraqi War. For instance, large scale usage of stealth strategic bombers and unmanned aircrafts. The age of unmanned warfare is approaching. Guided missiles and bombers would fall as if hailstones were falling from the sky. Even a fighter must be a stealth plane, even if it is an unmanned one. The United States army ceased fighting with their enemy face to face some four decades ago. It was well ahead of its rivals. Technically speaking, we might not be able to catch up with the US for the time being, but we should catch up with them in terms of its thoughts, at least we should not be left too far behind.

REPORTER What kind of role does air power play on the level of US national strategy?

LT. GEN. LIU One can say air power has already become a sharp lance for the United States to materialize its national ambition. The US could look down upon the rest of the world proudly with the help of this “lance”. Two decades ago it was called the “global police”; now it is called a “world empire”.

REPORTER Some Western historian said that in human history, there has never been an empire which had such global control and interfering capability as the United States does.

LT. GEN. LIU Two decades ago, the United States was still sometimes badly defeated by weaker and smaller opponents. Two decades later, however, the US now does not have any rival in the real sense to challenge it, and it becomes proud.

This was because the way that people fought wars had changed. As a result, the rules of the game for international politics also changed. Just as the armored infantry

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ascertained the status of the Roman Empire, the British Navy ascertained the status of the British Empire, the United States wants to ascertain its status as the only superpower in the world with the help of its air force. The US air force has planed to turn itself into an unrivaled air force which could be everywhere in the world at any time, in the coming one to three decades.

Part III.

Nature of the Iraqi War: Informatization

REPORTER You talked about the outcome and characteristics of the Iraqi War just now.

Would you talk about the nature of this war?

LT. GEN. LIU In a word, the nature of the war was informatization, of which President Jiang took notice during the 1991 Gulf War. In the past dozen years, he often spoke about the informatization issue—almost every time he received representatives from the armed forces. President Jiang really was far-sighted on that point.

What were behind previous wars? Comprehensive national strength. What about modern wars? Science and technology. All major scientific invention and creation should first, and must be used in wars, perhaps by way of coercion. History has time again proved that. Vice versa, if the science and technology of a country or a nation hangs behind, it would be its armed forces who would feel that most deeply and suffered the most. The weapons that the United States employed in the Iraqi War had made use of top-level scientific inventions and knowledge. Those included Newton Mechanics, Dynamics, Quantum Mechanics, Electrodynamics, Narrow and Broad Theory of Relativity, Organism and Inorganic Chemistry, Computer Network. Such a listing would extend to dozens of pages.

This is really a brand-new and epoch-making military revolution. It changed from ground wars featuring large-scale assembling of ground forces, to wars which depend on air control force powered by high-tech electronic systems, and which complete strategic objectives by air operations.

REPORTER Does Informatization mean an unprecedented exaltation of digitalized armaments?

LT. GEN. LIU I think there were 3 levels of informatization: the electronic weapon platform; networking of operation systems; the change of strategic attacks to psychological warfare.

Thomson once said that “Information was not just a weapon, it was also a new technology that changed war culture and psychological tendencies. It could change everything. The changes it brought about were stronger than any other, perhaps stronger than the changes brought by tanks, submarines and even atomic bombs.”

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There was a common point in all the wars in which the United States participated in the last two decades: no troops ever made any achievements in their wars against the US. The main reason was, the confrontation and suppression between systems of the two sides had made it impossible to fight a platform vs. platform war against US troops. In the 1999 Kosovo War, the commander of the air force of the Federal Republic of Yugoslavia piloted a MIG fighter, trying to fight a battle with NATO fighters. But, the Yugoslavian radar was disturbed, and the correspondence to and from the MIG fighter was interrupted. The commander could not see where his enemy was. What was worse, he was strictly locked by his enemy. So the MIG fighter was shot and crushed by a Netherlander fighter soon after it took off. Another five MIG fighters were also downed 5 minutes after taking off. Even most anti-air missiles would have less than 5 minutes of survival time.

REPORTER During the Iraqi War, people did not see any air battle between fighters, nor any battles between tanks. When there was a sandstorm, the Iraqi Republican Guard tried to make the best of it and sent out a thousand-odd tanks to conduct a counter-attack against US troops. But as soon as they moved, they were discovered by reconnaissance planes and satellites. As a result, they were suppressed and killed by coalition attackers and armed helicopters. Their dream of fighting a decisive tank battle in Kirks vanished in the overwhelming bombings.

LT. GEN. LIU Such a picture of the war inevitably points to the 3rd level of the information war: psychological warfare. It should be said that psychological warfare was the most striking feature of the Iraq War.

I have always thought that psychological warfare belong to the category of information war. There has been psychological warfare as long as there was war. It was one of the various forms of war, and a contest beyond physical spaces. Art of War

by Sun Tzu speculated that psychological assaults came first among all tactics, and considered it the highest state in war if one side could conquer its enemy without fighting a battle. The no-battle situation of Sun Tzu could be achieved only after violent psychological confrontations.

The psychological warfare that the US carried out against Iraq had been carefully planned. It unfolded according to the well-sketched sequence of strategy-campaign-tactics, which were different from all previous wars that the US had participated in. It marked that as an independent war form, psychological warfare had made its debut on the stage of war.

REPORTER How can we comprehend psychological warfare on various levels?

LT. GEN. LIU Let’s take the Iraqi War as an example. Psychological warfare on the strategic level referred to the efforts forcing the other party to accept one’s terms in the diplomatic field. It involved a comprehensive use of a country’s strengths and would

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resort to political, economic and diplomatic means or military deterrence. For example, the United States sent an ultimatum to the Iraqis through the United Nations at the very start. It also announced that the only way to avoid war was for Saddam to be exiled. At the same time, the US also began a large-scale military deployment in the Gulf region. By the way, the fact that the United States acted willfully to start the Iraqi War was in itself a form of psychological warfare against the whole world, which was connected to the fundamental purpose behind the Iraq War. You would notice that the world became more malleable after the Iraqi War, if you were careful enough in your observation. Tension on the North Korea nuclear issue was not as rigid as before.

Some possibility for a pacific settlement of the Israeli and Pakistani conflicts also emerged.

REPORTER In this war, it seemed that the Iraqi people did not support Saddam’s political power at all.

LT. GEN. LIU Not at all. No roads were broken, no bridges were bombed, no mines were buried. In some places, people even welcomed the arrival of US troops. Some of our military experts had been expecting that there be a people’s war in Iraq. Pleasing as the phrase “the people’s war” might have sounded, the premise of such a war should be one in which the people were willing to sacrifice.

It was hard to say how many Iraqis would fight or die to defend Saddam. The people’s war refers to morale; it was more a political concept (than anything else).

Only those who gain the favor of the people could wage a people’s war. Those who go against their own people, would have to fight individually. The wars that Saddam fought were individual wars. It was so in the Iraq-Iran War, the Iraqi War against Kuwait, the Gulf War and the Iraq War. The Opium War and the Iraq War told us, “All autarchies and corrupt governments were the same in that they are experts in civil wars and lie to people in wars with foreign forces. When the people were poorly informed, the morale of the people and the troops could still exist. Once the people know the inside story, plus the invasion of foreign troops, such governments are doomed to collapse.” In waging psychological warfare, the United States allowed the Iraqi people to understand what kind of person Saddam had been, and what kind of party the Baath Party had been.

Corrupt officials would surely arouse the complaints of its people. In that case, the most important mission for a corrupt government was to suppress domestic resistance, thus disabling them in their fight against foreign forces. A corrupt government never won in a war with foreign forces, as history has shown. I had a saying which I hope you’ll remember: if a government does not take care of its people, then its people would not take care of the government.

REPORTER Did what you have been talking about just now fall into the category of psychological warfare?

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LT. GEN. LIU It belong to the highest state of psychological warfare. History has shown us that psychological warfare supersedes all other forms. For thousands of years mankind has been pursuing a war in which a country can win with little or no battles at all. But it is in the information age that the possibility appears for the first time. That was the biggest revelation that this war left to the world and to the future.

REPORTER The April 18, 2004 edition of the New York Times ran an article entitled Saddam’s Chinese Advisors, in which it said that those experts still stubbornly held out such an obsolete mentality as the people’s war. It went on to say that if there were such military experts in the PLA, then the PLA should not be so threatening as people have imagined.

LT. GEN. LIU That was only a point from the western political and military circle and could not be taken as evidence of anything. Chairman Jiang Zemin of the Central Military Commission of China demanded that we march with time and boldly take the initiative. How could we do so if we have yet to catch up with time? We had many constraints in our efforts for military modernization, among which conceptual ones were the biggest restriction.

It was both our misfortune and fortune to historically coexist with the US military. We are unfortunate because the US is so powerful, and we are fortunate because of the very same reason: because we have a potential rival. Having a rival means that we have an object of reference, and that we have an aim in our march forward, which in turn will give us momentum.

There are only two kind of status in the world: the best and the worst. None between are worth mentioning. And remember, if you want to quarrel, quarrel with those who are superior to you. The US military is somewhat unfortunate compared to us. I believe that the US air force has a major flaw: while its planes are becoming more and more advanced in technology, its warring tactics are becoming more and more rigid. Why did I say so? That is because, for a fairly long time, the US air force will not have any rival in the real sense to help them find out how powerful their planes are, not to say to raise competition on a tactical level. Therefore, the current development of the US actually follows the tactics of “crossing a river by feeling the stones in it”.

Once I made a visit to Stanford University as a scholar, and I stayed there for quite a long time. They did not talk about “mind emancipation” all day, yet they always kept their minds open. It had been 130 years since the United States had a war in 1865 on its mainland and it was a country free from foreign invasions. Yet everyday military newspapers would focus on hot spots of all international conflicts. A glance at those headlines would make one think that someone must be crossing its border to invade it, or that it was on the brink of a war. On the other side, only the US has been fighting wars continuously throughout the world, and its warring tactics have reach a level of perfection. It boasted itself as “invincible in the world”. The US military is not

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only an army to the world, rather, it is a kind of symbol representing a value system. It initiates, but it never pretends to be a teacher.

The reason that I said that it did not pretend to a teacher is that the US continues to innovate. In recent years we had a well-known phrase in the military field, which was “new military evolution of the world, new military revolution of the world”. In our military textbooks, it was if such a new military evolution were taking place or had taken place in the world. But as a matter of fact, there was no such movement. The US military did not mention anything like that, though such kinds of reference were available in the works of some western experts, which was actually exaggerated.

There has been no such movement, but that does not mean there was no such revolution. There has really been military revolution. The US armed forces did not emphasize the evolution, because it was transforming every day. The United States did not need a reason to start a war, and did not need any rule in a war. There was a saying which goes, “while young men know rules, older ones know exceptions.” We might mimic that by saying that “while we know the rules, the US military knows exceptions.” The most embarrassing game of all is one which its rules change when you are in. It is that way in life, and so is it with war.

Why have those military commentators made wrong judgments? One of the important reasons was that their ideas had grown out of their time. They live in today’s world, but their thoughts remained in yesterday’s world, or that of the day before yesterday. It was true that tradition did not necessarily represent outdated things, and modern concepts were not necessarily advanced thoughts. But the world was changing at such a great pace that once you failed to see it, you would be late in catching every step it made. For instance, some of our experts might talk about “luring the enemy into a trap” or “emptied city” tactics. But the US would simply not play that game. In a world where high-tech was being updated every month or even every day, the side with the upper hand was fully aware of the position of its enemy and themselves.

However, I wanted to point out that the basic ideas of our military commentators did not belong to themselves alone, it was an offspring from the theory of that time.

Our gaps with the US lie mainly in our military quality and ideology. I worked in the west and had studied the west. My general comment on the west was that it lacked ideas, though it was always full of vigor. We could perhaps apply this saying to the general situation of the PLA. The second lesson we learned from the Iraq War was that we should emphasize strategy by all means. The strategy I mentioned here refers to the strategy of the development of the armed forces. Military strategy is another form of national strategy.

The development of military strategies in the world is becoming more and more complicated nowadays, and the pace for that change is also picking up speed. In the Cold War, US military strategy changed approximately every decade, while it has

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changed every two to three years since the end of the Cold War. At a time when our rival has been constantly changing, it would not do if we do not seek change. It is my belief there is only a question of strategic transformation, and none of tactical transformation—at least for the moment. And for the transformation, capacity is not a question, determination is the only thing that matters. We’ll have to prepare ourselves, when we are facing such aggressive US forces. We are all talking about the US’ next possible target. Whoever it will be, what matters most is whether it will attack China. Precaution averts peril. Opportunity is always saved for those who are well prepared.

REPORTER What is the most important problem in the establishment of strategy?

LT. GEN. LIU Avoid mistakes. Strategic poverty is a major restriction on the development of a country, and on the development of its armed forces. There is a slogan which says, “we should develop our education however poor we are”. We could bear poverty in every field but strategic poverty. After the Iraq war ended, Gao Jin said: “the importance of warfare has waned, while the importance for strategy, waxed.” By that, he has touched the essence of the issue with his sagacious wisdom. For more than a decade, he has been trying very hard to transform the University of National Defense from a campaign university to a strategy one. His thoughts and conduct were those of a prophet.

The main strategic issue for our army is war preparation, but there is a kind of phenomenon which is quite thought-provoking: We would either ponder the issue of military philosophy, when we would go to extremely abstract notions; or we would think about military conflicts, when we would go to extremely specific things. Gao Jin pointed out that “We should not always hover in the sky of military philosophy and not land on the ground; neither should we wallow in the lower layer of concrete war methods and never think of something superior”. I have always remembered a quotation from Mao Tse-tung: “in planning a battle, one should grasp the strategically vital points, while in planning the action tactics, one should grasp the vital points of a battle.”

Mao Tse-tung once asked, “where do the right ideas come from?” But I’ll ask the question in reverse: “where does the wrong mentality come from?” Like right thoughts, the wrong mentality of a person also came from practice. Sometimes, it was falsehood that was leading the way, and the truth just followed. As a result, sometimes it was different kinds of falsehood, rather than the truth, that was leading our way forward.

Zhu Sujin also said, “A more painful fact hidden in the whole history of war was as such: from the angle of the pure military art, most epoch-making military thoughts and strategies were created by invaders, which was later digested and

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absorbed by the invaded ones, who in turn would defeat those invaders in the end.”

Caesar, Napoleon and Hitler, they were all masters of unjust wars and outstanding inaugurators of military arts. And though they would be exterminated ultimately, a price would have to be paid—be it flesh or blood—ten times greater than they had paid to achieve that, among which nine tenth serve as the price paid for their military arts. After that, we would inherit their military thoughts and arts, as if they live within our bodies and our weapons.

The third revelation we got from the Iraq war was that the Chinese armed forces should do nothing but to take their own road. The US was not afraid of the military modernization of China, for China could hardly catch up with it. What the U. S. army feared was the Maoization of the Chinese military. Maoization was also called revolutionizing or politicization, but those were just part of it. The farther away the Chinese armed forces were from Maoization, the greater chance that the US would win.

Mao Tse-tung was an unparalleled military genius in human history at fighting and defeating stronger enemies.

REPORTER Do you think, then, our enemy will invade us in the future like it invaded Iraq?

LT. GEN. LIU We should not make simple analogies between different wars like that. It would be a manifestation of weak wisdom if one treats us Chinese as the Iraqis and imagines the US as future invaders of China.

Let’s talk about the people’s war. It was an open system of military thoughts and was not a stereotype. We could not apply the notion of the peoples’ war by simply replacing some sayings with newer phrases of today, or simply replacing the rifles the peoples have with portable missiles, as if in this way, traditional warfare would turn to a people’s war under high-tech conditions. But they were two totally different concepts. For example, one of the premises for the traditional people’s war is luring the enemy into a trap. Can it be applied now? The traditional people’s war emphasized the notion of winning time by space, so that the enemy could be trapped into the vast ocean of the people. I dare to say that in the future, our enemies will not send any troops to our soil. Instead, they will fire numerous bombs, missiles to our capital, reservoirs, and nuclear power stations, etc.

What’s more, even if you want to fight the war that way, and want to lure the enemy in, will they come? War is a matter of two sides. Dennis C. Blair, former Commander in Chief of the US Pacific Command, once said, “We respect the authority of the People's Liberation Army in their mainland. Yet we must make them understand that the ocean and sky is ours.”

The kernel of military thoughts in all nations and ages was their operational thoughts, whose core contents was also called General Battling Tactics. Information

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battle is the most fashionable military term today. It is firstly a battle thoughts before it is any battle method. The U. S. troops always emphasizes to fight dissymmetric wars.

In fact, the guiding thoughts of the people’ war is exactly fighting dissymmetric battles, and we alone are the old ancestors of dissymmetric war.

The more solid and credible our strategy deterrence becomes to the United States, the more careful it would be in considering forceful intervention.

We need to study how the people’s war could be fought in current situations. If we still take the people’s war which focused on defending our land as a fundamental strategic guide, it would mean that our enemy would achieve their purposes without even firing a shot—as that way they would have strictly suppressed China to her own soil.

I have been studying the United States and found that it had a great strategy. It would always try to create a situation in which its enemy would feel that its land was threatened. When that worked, the enemy would deliver all its manpower and material resources to the land, ceding the sea way or a sky thoroughfare to the US. The US would by no means get to its enemy by way of land: it would land from the sky. You see, basically we do not have any problems on our land, while our ocean territory has been invaded severely. We can not limit our war concepts on the ground any longer.

The frontiers of our national interests are expanding. Our military strategy should embody characteristics of the time.

REPORTER From the live comments on Iraq war to analysis and debates after the war, we found that quite a few people in our army hold that ground battles remain the foundation of future wars.

LT. GEN. LIU We should use the experience of the US armed forces for reference. The biggest lesson that the US learned from the Korean War and the Vietnam War was that ground campaign by large-scale mechanized corps had too many disadvantages. After those two wars, the United States began to reflect in agony and transformed itself thoroughly, from inside theory to outside practice. It no longer mobilized large quantities of ground troops to proceed with large-scale battles. Instead, it would first think of using its air power and the special forces, which concentrated in intelligence collection and target designation, played a leading role on the ground. Its main strategic targets were all realized through air attacks. Entangled ground battles and mechanical warfare were forbidden.

The military development tides in the world shows that future wars will tend to be more human (only from the military meaning, of course.) High-tech not only changes the war manners, it also changes war ethics. In precision-war times, massive killings resulting from non-guided weapons will no longer exist. We will not only emphasize small casualties or even zero casualty from our party, we will also try to kill

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as few enemies as possible—after all, killing itself is not the purpose of a war. In that sense, it is worth studying when the United States greases senior Iraqi officers or uses its air power to “behead” or frighten them. Whereas using the army in both cases or storming heavily fortified positions, which resorted mainly to manpower confronts rather than technical and intellectual confronts, would do nothing good but take more lives, which is against the rule of military development and the nature of wars.

I don’t believe that cruelty should be the essence of war. Rather, its essence should be a contest in intelligence and technology. The more advanced technology becomes and the more civilized society become, the more human wars will become.

Why would the Chinese hate the Japanese so much at the mere mentioning of the latter?

And why is it always so difficult for both countries and nations to truly trust each other?

It is because too many Chinese were killed by the Japanese then. It will forever be a shame to China, and a stain for the Japanese.

But if you take a look at the wars that the United States participated in, you would find that the peoples in those countries did not have deep hatred for US after the wars concluded—only those overthrown governments might have that hatred. The ancient Chinese also expressed similar ideas: so long as the purpose of a war is achieved, one should not try to kill any more people. We would do better not to kill anyone. And if we have to, we should kill as few as possible. We should try to lower our deaths in fighting a war, which was the most important thing. It is true that we should not be afraid of sacrifice; but if we don’t have to sacrifice, that’s still better.

Certainly it is somewhat too ideal, and yet it is a notion that we must have in mind.

Once it was impossible to fight a war without employing a great deal of manpower, as technology then was at a low level. Modern technology, however, has made it possible (that we use smaller manpower in wars). We should understand that the fundamental value in technology development and its application in the military field is that it could help lower the cost for victory.

REPORTER It seems that the US pays much attention to cost.

LT. GEN. LIU Everyone should pay attention to that. The United States has set a good example for us, and it is the only nation in the world which earns money by fighting wars. The US began to make money from wars after the end of the Vietnam War. It treated war as some kind of business and would not fight for sheer politics or ideology.

It not only makes money, but also tries to reduce its cost as much as possible, particularly in lives. Therefore, we’ll be able to predict how it fights wars: it is certain that it will fight a war with the most economic and simple means, so that war dividends could be maximized. Victory is not the only objective and standard. What the US pursues is a victory at the minimal price. It not only asks other countries to share the war expenses before the war and captures the resources of the defeated countries in the war, it also sells weapons in large scales afterwards.

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In a word, it has entered into a “benign circulate “ of wars. The more it fights wars, the richer it becomes, and vice versa, the richer it becomes, the more it’ll fight.

Certainly, it is very dangerous—as dangerous as drug addiction. But it is advanced in terms of war concepts, otherwise, it would have stopped fight one war after another.

In the past two decades the United States has already fought from Latin America to Europe, from Africa to Asia—and in Asia it has already come twice. It is not completely because of the might of the United States. What is fundamental is its method of fighting, and the fact that it becomes increasingly strong in fighting wars.

Certainly, we should condemn the hegemony that the United States practices. But we should learn from its concept of war. I have contemplated the concept of war for a long time. I always feel that renewing war conceptions is more important than weapon renewal. The overall national power of China in Qing Dynasty during Jiawu War was stronger than that of Japan. Although at that time the most advanced weapon had been introduced into China, we still could not even sustain a war because no advanced notion of war had been introduced to China then. Iraq War showed us again the fearful consequence of a conceptual lag.

REPORTER General, what do you think are the key points in the future development of our military?

LT. GEN. LIU I think the key issues should include the following points: First of all, we should by all means possess a spirit of “Overwhelming Victory”. Peter F. Drucker, a management master, said, “It is not a technical revolution undertaking in the current society, nor is it a software or speed revolution. It is a concept revolution.

REPORTER What are the core and connotation of an “Overwhelming Victory”?

LT. GEN. LIU In the face of new wars in a new age, we should cultivate and establish a kind of offensive consciousness. That is to say, under the premise of a general defensive strategy, we should first possess a powerful counterattack capability rather than a defensive capability. We’ll only stop war by way of conducting counterattacks.

In the Mechanization Age we were defending linearly. We could station troops along the borders, or to increase the depth of resistance, so that resistance would continue one after another.

Now we should defend the whole territory. How to defend? Just impossible.

Just as a soldier with only a shield could not win any fights, neither could an army which heeds only its defense. It could neither win the war nor ensure its security. The history of military affairs is a history of the offensive. The reason why China's nuclear weapons has deterrent power is that they can be launched. If they were anti-air missiles, the deterrent power would not be so strong .

REPORTER As far as defense is concerned, I think it is not a military notion any more for

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many people in the Chinese army. We have, in our mind, inherited the genes from our ancestors who emphasized defense rather than offense.

LT. GEN LIU That is true. Defense and resistance have been our military thoughts for the past thousands of years. It is China's topography that high mountains stand erect in the southwest and northwest parts and several seas lie to its east and south parts, which constitute a natural barrier in the cold weather times. Only the northern part could serve as passage, when our ancestors built the Ten-Thousand-Li Great Wall, which had stopped no one else but ourselves. I have been thinking about it for long. It was not that the Great Wall was not high and solid enough, but that our concepts on war had become too conservative. Emperor Qin-Shihuang invaded six kingdoms from an elevated place. What a spectacle it must have been when he swept away all his enemy’s troops! Yet he went on to order a “yard wall” be built to fend off northern nomad tribes. As a consequence, the wall was built and rebuilt, guarded and defended generation after generation—and never worked.

As time passed to the later period of the Qing Dynasty, the ocean no longer served as a barrier, but as a royal road. It was a pity that the Qing Court did not try to change accordingly, and still resorted to defense by erecting emplacement along the seaside. There were lots of emplacements along the coast, from Humen Fort to Wu Songkou Fort, Dagu Fort and to Lushunkou Fort, which could well be dubbed the Great Wall in the Sea. What happened? It left historical debts to us—until now.

It is the age of air power today, and all of the geological advantages we have would not help any longer. We can not defend ourselves from an invasion even if we wish to. But some of us have inherited the genes of the conservativeness of our ancestors, they would resort to nothing else but defense.

REPORTER Several years ago, the United States fabricated the “China Threat Theory” and we tried to make explanations right away. When did the U. S. ever feel unsafe? It was always assured and bold. It could be said that in terms of military affairs, there would be no real security unless one has an offensive spirit.

LT. GEN. LIU We must be strong. A strongman respected by the west would include three aspects. Firstly, you must have your strength. Secondly, you must show it. Thirdly, you must make other people understand that you have the courage and determination to exert your strength whenever necessary. The absence of any of the three aspects would have disqualified a strongman.

Just now I talked about an “Overwhelming Victory”. Now let’s turn to the second point: human-oriented. Many Chinese entrepreneurs would like to bring up the fashionable slogan of “human-oriented”. Our army needs that too. There were also three meanings here.

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1.

The Spirit to Respect others. Let me again take the cases of Chinese entrepreneurs as an example. There were always lots of intelligent and capable peoples among them, but most of them had a common weakness: there was a lack of modern spirit and humanity in their mentality. When such limitation were, intentionally or unintentionally, brought to enterprise management, it would be magnified, and it would hurt lots of people. Once I spoke to some entrepreneurs, I said, “I would know you are not a big figure simply by judging from your ways of imitating a big shot’s manners.” They always held money as a priority and humanity, something of the least importance, which would ultimately lead to their loss both in money and people. They usually won at the beginning, and lost as an end was approaching. That was the fundamental reason why Chinese business enterprises never succeeded in making themselves flourish for long. There was something similar inside the army.

2.

Talent Strategy. The strategy to conquer the world was a strategy that stressed the use of talented people. For thousands of years, mobilizing the masses to fight wars has been the Chinese way, and the outcome of wars depended on the scale of people that each side had mobilized. When the Qing Troops fought to suppress the Taiping Rebellion, both parties used human-sea tactics. That was an offspring of the agricultural civilization.

Future wars would take on a brand-new look. Rumsfeld’s Theory was to win by small yet quick and elite troops, which demanded large quantities of professionalized talents in the troops. In Chinese history, it was always the case that poorer-cultivated groups defeated better-educated ones, while it was just the opposite in world history; it was especially so for today’s world.

You might feel surprised by my mentioning of educational level here, but it was in fact a serious reality in our army. The educational level of the senior and middle officers in our army had a wide gap with even local officials, let alone with US military officials. Let me take the case of some big Military District as an instance.

There were five group armies in that particular Military District, and for all 36 officers holding army commanders and higher ranks, only 3 had received higher education, while all 8 governor or vice governors of the stationing province had received high education. As for the 18 division-levels officers in that Military District, none had received higher education. Many experts and scholars did not do well in predicting the Iraqi War. It was just because they had not been familiar with the epistemology and methodology which should be implemented in studying modern wars.

There are no two identical wars in the world. Compared with other fields of society, warfare has more chance and uncertainty and it was impossible to predict precisely every part and every stage of the war. But “war is nothing mysterious but a kind of inevitable movement”. It was possible to “have a general idea of war and its key points.” Mastering scientific epistemology and methodology was the key to that goal. Otherwise, one would tend to take the characteristics of the last war as rules, and

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apply them when predicting a next war; or take special rules in a particular war as general rules, and repeat the experiences from foreign countries.

Talent is very important—a rare resource. It is particularly important when our army is currently faced with the task of reduction and reorganization. We should have the same spirit of respecting and cherishing the talents as comrade Deng Xiaoping did.

Let me give you an example: Why did our military grow stronger rather than weaker in 1985 when we trimmed down our military force by the millions? Why was there no such things as talent shortage? That was because Comrade Deng Xiaoping, being far-sighted, had perceived problems long before others ever thought about it. As early as in 1983, he had begun to select and promote, in large scale, young and talented cadres with moral integrity to key positions in various levels. Nowadays most cadres above the rank of army commander had been promoted then and it was two year later that large-scale military strengths reduction commenced.

3.

The spirit to tolerate different thoughts. Trying to assimilate the thoughts of others was another manifestation of our cadre’s disrespect to others. Such a psychology would cause us to have a preference for seemingly obedient and so-called honest persons in time of need. Zhou Wei, Board Chairman and Chief Executive Officer of IBM in Greater China Zone once said, “As a high managing director, if you could not tolerate others and would not promote anyone but those who have the same ideas and manner of doing things with you, you’ll assemble a group of people whose mentality is similar to yours and you’ll be in danger. The reason is, when you come to the end of your wits, they will not be able to help you, as their mentality and conducting style are almost of the same pattern as your.”

A professor with the Central Party School also said, “If we do not encourage people to think freely and bring on new opinions, our society will in fact stall completely, though it might seem to be calm and tranquil.” These words are best suited to the situation of our Armed Forces. A western philosopher said, “We should be grateful to variety; it is variety that helps mankind survive.”

Just now I mentioned that genius was rare. But the soil where genius could survive and thrive was something even rarer. One of the basic characteristics of traditional Chinese culture was its social tropism, namely that individuals should obey the collective will and should be overwhelmed by the collective, and a lot of talented people were thus strangled relentlessly. If a person wanted to be just so-so, few people would stand in the way. If a person wanted to excel, he would then be checked. And while tricks like to be covered, truth loved to be naked. Those who were willing to vend their own opinion were courageous and unselfish ones. This was my reflection, my agony. My agony made me reflect, and my reflection in turn brought me agony.

The most profound agony was that the agony was totally inevitable. The foregoing words could also be considered as criticism. The sharper the criticism was, the more profound the reflection.

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REPORTER The 16th National Congress of the Communist Party of China put forward the issues of Theory Innovation and Striding Development. What do you think about them?

LT. GEN. LIU The PLA is a glorious and invincible army. We have won over numerous enemies and all kinds of hardship, dangers and difficulties. When we face the challenges in new military revolution, we must have a clear-headed understanding on ourselves, on the time and on our rivalries. We should have grand conceptions and vast accommodation. We need innovation, which is the soul of all theories, which in turn serve as the roof design of highest level for military development.

We should consider the innovation concept in the military theory from the height of life and death, survival and perdition of our country and nation. The real value of research in military theory can be tested only in armed clashes.

We have to realize that, compared with the reforms in other fields, the reforming pace in the military is not quick enough, and our ideas are not bold enough.

The fact that military reform lagged behind the overall national reform was a result of the history. If falling behind a little could still be accepted, then falling too much behind would be a serious problem. Modernization of the national defense is the pillar of our national modernization.

A military expert of the United States once said, that when facing future wars, we should be prepared neck and above, not neck and below—if we had no choice by to fight.

Less than 4 years into the 21st Century, mankind has already experienced two large-scale wars. Both wars proved that air power had reached the climax of warfare. It was not a terminal point; it was a new starting point. Today marks the earlier stage of the air force of the space age, which has foreshadowed such a trend: it would first transition from air power to sky-space power (space as a supporting element), and continue to space-sky power (space as a dominating element). Just as air battlefields were an expansion of ground battlefields, space battlefields would inevitably be an expansion of air battlefields. The Pentagon said, “We have to stop thinking about tomorrow and think about the day after tomorrow”. I am beginning to wonder what kind of war the day after tomorrow will have.

As Giulio Douhet remarked about one hundred years ago, “Victory always smiles upon those who have foreseen the changes in the modes of war”. Let’s then consider the following question: as we are heading into the 21st Century, with its wars, can we see the smiles that Giulio Douhet has seen?

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CHINA IS AN ENIGMA

CHINA IS AN ENIGMA

by Francesco SISCI

Only the Chinese seem able to prevent this from becoming another American century.

But if before September 11th Beijing was in Bush’s sights, the war on terrorism has changed his priorities. The challenge is postponed. Until when?

A

t the beginning of 2001, the first Bush

administration had marked China as the future strategic threat, in place of the defunct Soviet Union. September 11th changed the order of American priorities: first place was given to the struggle against Islamic terrorism and its sponsors. But in the background China continues to represent a geopolitical, economic and ideological challenge. The point is not if, but when and how Beijing will return to first place on Washington’s strategic agenda.

Under the geopolitical profile, China is disconcerting first and foremost for its demographic and territorial dimensions and for its position. The Middle Kingdom in fact has the largest population in the world and is the second largest country in Eurasia, placed in a strategic position between Indian, Russia and Japan. Its strengthening or destabilization therefore decisively effect the United States’ role in Asia. Beijing possesses nuclear weapons, but its doctrine in that regard is geopolitically more astute than Moscow’s. The Chinese leadership considers the threat of a Chinese atomic bomb capable of striking an American city a sufficient deterrent. Thousand of costly intercontinental ballistic missiles are not necessary: in all, the Chinese military has about twenty of them. But the effect of deterrence was a remains similar to that of the much vaster Russian arsenal.

The economic challenge is all too evident. A country of 1.3 billion inhabitants, growing at the rate of 10% a year may surpass in volume the American economy between 2020 and 2040. Bush knows well that the Chinese leaders are determined to avoid a conflict with the United States, convinced that time will work to affirm their country as primary economic power (and not only that) on a global scale.

Lastly, the ideological factor. China remains the last great power to define itself as communist and continues to oppress its people with systematic human rights violations. After the bloody repression in Tiananmen Square, Beijing continues to curtail freedom of religion and expression, American values par excellence. Since time out of mind, the US has been inclined to view friends and enemies through the prism of these principles. The repression of freedom of religion in particular, is considered intolerable by the Americans, even more than the inability to express alternative political ideas.

Before September 11th, the combination of these three elements had produced in America the sensation of a lethal mixture, theoretically even worse than the Cold War

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threat, given that 21st-century China combines the economic challenge (of Japan in the 1980’s) with the military one (USSR).

2.

From this perspective, the determination to oppose China displayed by the Bush administration in the first months of 2001 did not appear to be a sudden decision, but a policy matured over time. Clinton was in fact already lined up to support the project of National Missile Defense (NMD) and the system of Theatre Missile Defense (TMD).

By the end of the 90’s the Chinese had given up their opposition both defense systems—as they would have provoked a new arms race—focusing only on TMD, which would have protected the island of Taiwan, which even the US considers part of the Chinese territory. Such a change of direction was an attempt at conciliation with Washington: China recognized the United States’ legitimate defense concerns (NMD), but refuted its encompassing one part of Chinese land—Taiwan—to the detriment of another—Beijing. In any case, once installed either NMD or TMD would have rendered innocuous the threat of Chinese ballistic missiles. It then would have been easy for Washington to pressure a China virtually deprived of its potential for nuclear deterrence.

The beginning of Bush’s first term was marked by a wave of accusations towards Beijing for the presumed sale of weapons to Iraq. The reality was ambiguous: the optic fibers China sent Saddam could be used for telecommunications as well as for military aims. The incident however demonstrated the American willingness to challenge its Asian rival. Moreover, the government announced an enormous arms contract with Taiwan. Finally, the episode of the American spy plane Ep3, shot down over the Chinese island of Hainan on April 1, 2001, marked the acme of tensions between the two countries.

So, on the eve of September 11th, the People’s Republic of China seemed to be encircled: over the sea lay Japan and South Korea, American allies; to the north, Russia, closer to Washington than Beijing; to the southwest, India, with which Clinton had forged new relations after its nuclear experiments in 1998; and to the southeast, the ASEAN nations, whose relations with the Chinese remained rather ambiguous.

Thus emerged the typical profile of the American policy of containment and engagement. The containment was geopolitical, while the engagement was the fruit of the penetration of American firms deeper into the Chinese market. In this vision, China would not have been pushed to collapse, like the USSR, but would have been changed from the inside, preventing geopolitical and economic expansion in Asia and beyond.

The advantage of this doctrine was the “congealment” of the Eurasian continent into a geopolitical puzzle of blocs able to act as counterweights to one another. In this space the security of the commercial routes passed over the sea, under the control of the imposing American naval presence, whereas continental routes were rendered insecure by geopolitical fragmentation.

China was forced to watch over the sea, its formidable economic development being centered on the coastal regions. But also because Taiwan remained the great, unresolved national question, and because its growing thirst for energy demanded resources from Middle Eastern oil wells, even more than Russian or central Asian ones.

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Once constrained and exposed on the seas, China was strategically in American hands.

And so little option remained other than to submit to the will of Washington.

3.

On September 11, 2001, the attacks on New York and Washington demonstrated on live television that the true enemy of the US was not China but Islamic terrorism.

In the face of the tragedy, Bush had to reorder strategic priorities. Even if the Chinese challenge was real, it was necessary to put it aside to confront a much more determined and unscrupulous enemy, which had declared war on the United States.

On the other front, it offered China the possibility of proving that it was not a strategic nemesis of the US. As al-Qa’eda had its geopolitical base in the black hole of Afghanistan, Beijing could contribute to the American war. First, during the long Afghan war involving Moscow, the Chinese had passed arms to the anti-Soviet guerillas. Besides this, they possessed a network of informers and a legacy of intelligence accumulated in the years of tension with the Uyghur separatists of Xinjiang, supported by the Taliban. Jiang Zemin placed those dossiers at Bush’s disposal. His spirit of collaboration surprised the White House. China also took to actively collaborating with the United States to hold Pakistan, its historical friend, under control, opening itself simultaneously to Indian, against which it had fought a brief but violent border war in 1962.

On the military level, al-Qa’eda’s attack on the heart of America, with one blow set the architecture of NMD and TMD at zero, confirming the thesis of two Chinese colonels, Qiao Liang and Wang Xiangsui, published in 1999: technological superiority, however absolute, cannot substitute for strategy.1 It was therefore not worth the struggle of pursuing the US in an arms race; better to concentrate on strategic elaboration.

It was necessary to reconsider Chinese military spending. Modernization of the armed forces did not have to become an impossible technological competition with the US, but rather the specific adaptation of means to strategic ends. Suddenly, the Chinese military horizon became simplified. While the United States had to strike any menace across the whole world—an impossible task, since he who defends all defends nothing—China could chose what to protect and how.

Lastly, on the ideological level, the clash with Islamic extremists revealed the risk of the making the entire Muslim universe an enemy, unleashing the religious war desired by al-Qa’eda. Therefore, in November 2001 Bush elaborated to Shanghai a theory on nations that had accepted the marked as the motor of economy and those opposed it. It was a much broader definition than the classic “democracy: yes or no” (with its delicate cultural implications). The objective was to include China in the circle of friendly or at least useful states, confirming on the other hand the exclusion of countries like Cuba and North Korea—this last relegated to the Axis of Evil with Iraq and Iran. Ideological friction between China and the US was thus limited. The question of democracy, which until that moment divided the two countries, was placed aside for the time being. In the American strategy the confrontation with China was not 1

Cfr. Q. Liang, W. Xiangsui, Guerra senza limiti, edited by F. Mini, Editrice Goriziana, Gorizia 2001.

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eliminated, only postponed for when the US had regained control over the Middle East.

The Sino-American cooperation on Afghanistan also had a precise domestic motivation for Beijing: the liquidation of the bases of logistical support for the separatists of Xinjiang.

Today Chinese development involves 300 million people, who produce more than 70% of the GDP and live mainly near the coast. The remaining billion, from which comes just 30% of the GDP, reside further inland. The transfer of millions of people from China’s heartland to its coast is already underway, but it is not realistic to imagine that a billion Chinese can move to already wealthy regions to realize their dreams of the good life. It is the good life that must come to them. Once Afghanistan (and Pakistan) is pacified and stabilized, goods to and from east Asia could reach the Mediterranean along the ancient central Asian Silk Route, contributing to the development of China’s heartland and saving a vast degree of time and money.

4.

But first it is necessary to confront and resolve four strategic nodes, all crucial for China’s development and for Sino-American relations: Korea, Japan, India and Pakistan.

Korea.

For the North Korean regime, on the verge of economic collapse, the threat comes not so much from the American military as from the economies of China, Japan and South Korea, which threaten to crush it. Moreover, the end of Kim Jong-il’s dictatorship is not in the interests of Russia, its other great neighbor. If Nippon-Korean wares pass overland through the Chinese Northeast, and from there flow towards Europe running across central Asia, they would avoid Siberia, cutting the Russian Federation out of a vital traffic of exchange.

At the beginning of 2003 North Korea alarmed the world, announcing its ability to launch nuclear missiles against South Korea and Japan. Kim Jong-il does not want war, but uses atomic blackmail to obtain financial assistance without losing face. He needs to save himself from economic collapse and for this he seeks a dialogue with the US while threatening to develop his atomic program. But this reasoning is misguided because it rests on premises derived from the Cold War. North Korea was once important insofar as it enjoyed the support of China and the Soviet Union. But today China and South Korea, which fought for control of North Korea a half century ago, are both interested in a peaceful solution to the North Korean question. As far as the US is concerned, once it might have been concerned that the opening of ways of land traffic allowed others to avoid the maritime passages under its control; but after the war in Afghanistan the situation has changed. The Americans are present in force in central Asia, so they now watch over both their nautical and their land-bound routes. In sum, if Pyongyang’s strategic importance is considerably diminished, from the military point of view is continues to represent a threat for South Korean and Japan.

The possession of nuclear weapons on the part of the North Korean regime may besides change the character of relations between the two Koreas. South Korean

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public opinion remains interested in dialogue, but under the nuclear threat it could have a worrisome reaction. China knows this well and consequently aims at the denuclearization of the Korean peninsula. But how can it force Kim Jong-il to renounce the atomic bomb without further damaging its relations with North Korea, with which it has until now managed to maintain a fairly good rapport?

In 1950 Mao Zedong made a historical decision for his country and for the world, deciding that it was better to fight the Americans in Korea rather than re-conquer Taiwan, last refuge of the Kuomintang nationalists. If half a century ago Korea was the cause of war between the United States and China, now it offers a chance at cooperation, which to a certain extent is already underway. Both Washington and Beijing are concerned about Pyongyang’s nuclear program, but both fear the possibility of a North Korean collapse. Both countries agree that the threat to regional stability derives less from the most improbable risk of a North Korean nuclear attack on a neighboring country than from the rather certain eventuality of North Korea’s economic collapse. It would produce enormous tensions in South Korea by forcing it to absorb its brothers from the North and attend to nearly 22 million indigents.

Inevitably, part of the burden would end up on the shoulders of China and Japan as well.

Nonetheless, China has tools at its disposal to pressure North Korea. Until now, most of North Korea’s economic aid comes from Beijing, and nearly all that of other countries passes through China. Moreover, hundreds of thousands of North Korean refugees have found sanctuary there. Potentially, China could put up many more or even open its borders, thus ordaining the end of Pyongyang’s regime. It is highly unlikely that Beijing will use these means, but the sole fact of possessing them renders it the only state able to profoundly influence Kim Jong-il’s choices.

In the wake of the war on terrorism, the containment of North Korea has therefore created a geopolitical accord between Washing and Beijing. One could imagine that such ties could save the Chinese from the necessity of democratic and liberal political reforms. Hardly: some reforms are inevitable and will be brought forward, gradually and under the government’s control, independent of any external pressure.

Japan.

If Beijing and Washington don’t manage to untie the North Korean knot, Tokyo could attempt to do so directly. This question then is very delicate. China should find a way to guarantee Japan’s security, blocking North Koreas nuclear programs and geopolitical ambitions. Otherwise the US would have to reinforce their strategic position to prevent Japan’s rearming—a scenario with unpredictable consequences for Asia and for the world. In this sense the North Korean nuclear program is a knife to China’s throat. Pyongyang’s bombs are a true threat only to Japan, and this complicates the Chinese game. Beijing must commit itself to bringing the North Korean regime under control, and quickly.

Beyond this, in the last few years, distance has grown between Japan and the United States. Increasingly, Tokyo doubts the Americans military guarantee. Bush’s choice to give precedence to the Iraqi campaign over the necessity of blocking North

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Korea’s atomic programs—Japan’s priority—has further widened the gap in the geostrategic perceptions of the two allies. Thus, the growing Japanese international activism , the willingness to send troops abroad, if only for missions declared as peaceful and humanitarian, and the inclination to reinforce its military potential beyond the constitutional limits imposed by the US after the Second World War. This prospect does not seem to bother Beijing. In an optimistic vision, one could therefore imagine the possibility of a trilateral United States-China-Japan cooperation for the stability and development of the Far East.

India.

Any scenario of collaboration between the United States and the great Asian powers cannot exclude India. One therefore poses the question of historically tempestuous Sino-Indian relations. Some cracks have opened however in the last two years.

On April 20, 2003, the Indian Minister of Defense, George Fernandes, main supporter of the theory of the “Chinese menace” and the one who led the way in 1998 to the first Indian nuclear tests, spent a week in Beijing for colloquy. Some days later, delegations from Pyongyang and Washington started multilateral talks with the Chinese to move past the stall on the North Korean crisis.

The Indian mission was very important because it put in front of Beijing a variety of open questions: Chinese support for Pakistan, (atomic) archenemy of India, the presumed Chinese observation posts in the Gulf of Bengal, not to mention the dispute over 4 thousand kilometers of border between India and China. While not producing immediate concrete results, the summit signaled the beginning of a thaw which appears promising for the future of relations between China and India, the two most populous countries in the world. That in turn could help to resolve the Indo-Pakistan dispute over Kashmir and reduce tensions in certain unquiet areas of Pakistan, where the activity of Islamic fundamentalism appears outside control.

Once again, the war on terrorism can create common ground between powers that until yesterday were fiercely at odds.

Pakistan.

The war on Islamic terrorism has cooled traditionally good Sino-Pakistani relations. China sees in Pakistan a neighbor increasingly unstable and increasingly less reliable in suppressing the Islamic terrorism which aids Xinjiang’s secessionism. Before September 11th, Islamabad played an ambiguous game towards the Chinese “Taliban” active in Xinjiang, partly keeping them under control and partly allowing them to act freely. This ambiguity gave Pakistan strength and influence in its relations with China and with the Afghan Taliban.

Since the Autumn of 2001, the Pakistani leader Musharraf has made his choice owing to American pressure; in some sectors of the Pakistani armed force, concern grew over Chinese repression in its conflict with the separatists of Xinjiang, now recompressed in the vest cornice of the war on Islamic terrorism blessed by Washington. Further tension derives from the influence of Chinese technicians in Pakistan, despised by a good part of Islamabad’s military establishment.

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5.

The war on terrorism has therefore opened a large window of opportunity to better Sino-American relations. The growing interdependence between the two economies should in time consolidate this potential partnership, provided that in Washington as in Beijing, the forces that continue to believe in the inevitability of a clash between the two powers do not prevail. For now, Bush has opted for competition/collaboration with the Asian giant, at least until the game against Osama bin Laden and his associates ends. As far as China is concerned, it seems to have made a strategic choice: at least for the next 20-30 years it absolutely wants to avoid a settling of accounts with the United States given its evident inferiority. Then they will see.

When an American missile hit the Chinese embassy in Belgrade during the war in Kosovo in 1999, Jiang Zemin got the message and decided to never again expose his country to US reprisals. That line remains valid under the leadership of Hu Jintao.

Today Beijing considers itself a regional power, not yet a global one, even if its need for energy provisions projects it onto the international scene, from Venezuela to Africa and the Middle East. It thus attempts to consolidate the economy reducing the gap between rich and poor regions, to cautiously move forward with political reforms and to extend its sphere of economic-political-cultural influence in Asia.

Underneath it all, naturally, lies the territorial integrity of the People’s Republic of China. Taiwan remains the most immediate risk of a clash between China and America. The defeat of the pro-independence president, Chen Shuibian in the 2004 parliamentary elections is a reassuring sign for Beijing. But the game is hardly over.

The Taiwanese lobby in the United States remains very influential and active in contesting the official policy of “One China”, which is to say of the sovereignty of Beijing over all its provinces, including the “rebel” Taiwan.

Besides this, Tokyo contributes to inflaming the atmosphere in the Strait of Formosa, flirting with Taiwanese separatists to insult Beijing and involve Washington: if in fact Taiwan had to rejoin the mother country, it would eliminate the principal reason for tension between China and America, leaving Japan isolated in Asia, in a geostrategic position analogous to that of the Second World War. For this reason, and not only this, the quality of Sino-American relations will always be influenced by the quality of their respective relations with Japan. The Washington-Beijing-Tokyo strategic triangle remains decisive for equilibrium in the Far East.

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SINO-AMERICAN RELATIONS AND THE QUESTION OF TAIWAN

SINO-AMERICAN RELATIONS AND THE QUESTION OF TAIWAN

by Zhang WENMU

America’s role in the East Asian equilibrium. Taiwan as a matter of honor and geopolitics. Its significance for China’s future. What China can learn from America’s history to assure its expansion as a great power.

Asia-Pacific geopolitics and Sino-American relations

T

he Pacific region involves relations between four major countries: China,

the United States, Japan and Russia. For China, the most important are Sino-American relations. Now China and America appear to be opponents, but from a strategic point of view, they should be friends. What should be noted is, America only treats those that cannot be defeated as friends; those who obey it blindly will inevitably be discarded, as can be seen from the experiences of Ngo Dinh Diem, Jiang Jieshi, Dalai, Yeltsin, Saddam Hussein as well as the Georgian president, Shevardnadze, who stepped down recently. Japan will be discarded sooner or later. It lacks the competence to operate independently but does not know whom it should follow. Li Denghui would like to offer Taiwan to Japan, who would like to take it, but dares not. Li Denghui desires in his heart to be Japanese, but this dream cannot be realized any time soon.

China and America are far from each other. In the future the two countries will conflict with one another. From the last century, we can see that nearly all major political disasters have been solved under the cooperation of the two countries.

In the early 20th century, some European countries wanted to divide China into several pieces. America was firmly against this. For the future it is also unwilling to see a completely disintegrated China and will ensure the existence of China as a whole.

If China fell, a huge black hole would appear in Asia. India and Japan would rise, and Russian power would extend southward. The situation would be difficult for America to deal with. It has long been Japan’s strategy to dismember China, and now for Li Denghui and his diehard followers as well. One of the important views in The Voice of Taiwan, a book by Li Denghui, is to destroy the Chinese nation and dismember China.

For he knows all too well that in the Asia-Pacific region, if China and Russia do not fall, it will be impossible for Japan to have its old dream of “great East Asia.” And if Japan does not rise, “Taiwan’s independence” remains out of the question.

Recently there has been a prevalent idea that Japan will inevitably become stronger. This statement is one without a precedent. For, competition between powers

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is not only measured by economic aggregates and GNP per capita. If that were the case, Switzerland would also be called a power.

Meanwhile, if there are military forces but no geographical space, the forces would be at a disadvantage because of small territory. The so-called international structure is in essence what remains after distributing security spaces among powers.

The existence of a power must have a tolerable peripheral area for security. Both the Vienna System after Napoleon war and the Yalta System after World War II were centered on victorious nations, particularly on how the extended security spaces were distributed. If two people stand too close to one another, they will feel uncomfortable.

It is the same for nations, especially big ones,. There are more small nations between big powers, which act as buffers for them.

Japan’s geopolitical situation is very weak, impeded on four sides. In the north, Russians are stepping on its tail, holding the “four islands”. In the south, America is holding the bridle on Okinawa. Since America has been so kind to Japan, why does it not support Japan’s taking back the four islands in the north? On this issue Americans have never said anything, let alone done anything. On the other hand, China supported Japan in the 1960’s and 1970’s.

Japan has been hankering for China’s Taiwan. But America would not allow Japan to conquer Taiwan. In the early years, just because of Japan’s seizure of Taiwan after the Sino-Japanese War of 1894, Japan quickly grew strong and attacked Pearl Harbor. Such a small country as Japan lives in the crevice between China, America and Russia, and even the Southeast Asian countries show no respect for it. Hence, it has no geopolitical space, let alone an extended security space.

Drawing lessons from Japan’s history, we can see its possible future. From the th 18 century to the early 19th century, China had been a power in the world and Japan had never thought to challenge it. In the 1840’s and 1850’s, China was defeated in the two Opium Wars. In 1854, America forced Japan to open itself to foreign countries and Japan had to sign a series of unequal pacts with America, Britain, Holland, Russia, France and others. Rather than being timid through the national crisis, however, Japanese enthusiastically made reforms and progress. With the Meiji Reforms, begun in 1866, a series of policies to develop national capitalism had been formulated. In military affairs, its navy imitated Britain and army imitated France and Germany. Thus, in just over 20 years, the tide was turned. In the sea battle of 1895, Japan defeated China, and in 1905 defeated Russia. After China and Russia’s retreat from northeast Asia, Japan quickly flourished in Asia and its extended security space rapidly enlarged.

In 1910, Japan imposed the Japan and Korea Coalition Pact on Korea and officially annexed Korea. In 1927, Japan held the “Eastern Conference” and decided to invade China. Subsequently, Japanese policies became rapidly militarized, and from the 1930’s on, Japan began to encroach on China by supporting the puppet regime. In October 1941, Hideki Tojo came to power, broke the limited expansion policy of the Konoe government, further expanded the scope of the war into Britain’s and America’s sphere of influence in Southeast Asia and attacked the Pearl Harbor, which caused America’s entry into the war and made it allies with China. After its defeat in 1945,

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Japan’s geopolitical interests retreated to that of the state prior to the Meiji Reforms, one hundred years before.

Some say trade can bring peace. According to the data provided by Warren I. Cohen, an American scholar, exports from America to China and Japan, prior to the war accounted for 1.9% and 5.6%, respectively, of the total. But with the increase of trade between Japan and America, political friction also increased. When the political differences were impossible to reconcile, they had to be settled by military force. In the early 1940’s, Japan’s forces crossed the 30° North latitude, and broke into the sphere of British and American interests. During the same period, though the trade volume between China and America was small, China and America became allies.

America also dragged China to the Cairo Conference, where Chiang Kai-shek instantly became a political star. At that time, what Americans needed was Chinese assistance against Japan. China and America jointly solved the question of Japan, and the Yalta system pushed Japan back to the starting point of the Meiji Reforms in the Fareast area.

Next came the Soviet Union. In the 1970’s and 80’s, Soviet offensives forced the United States to retreat step by step, causing a decline in the American economy. In 1960, the American GDP accounted for 25.9% of the world total; by 1970, it decreased to 23%, and by 1980 to 21.5%. At the same time, Japan’s and China’s proportions had been quickly rising. From 1960 to 1980, Japan’s GDP rose from 4.5% to 9%, and China’s from 3.1% to 4.5%. Fortunately, the Nixon administration adjusted its foreign policy and made an alliance with China, and the expansion of the Soviet Union in the Asia-Pacific region and the recession of the United States were effectively halted. It can be concluded that America alone would be incapable of solving the Asia-Pacific problem.

The present conflict between China and America is similar to that between American and Britain in the 19th century. Superficially, their are geopolitical differences. On a deeper level, there is conflict due to the quota of world resources.

After over 20 years’ resource exploitation and development, the domestic resources that have supported China’s economy have been nearly exhausted. China cannot continue its large scale exploitation. Otherwise, the sand in the northwest will drift over Beijing, then over Hangzhou and Guangzhou. Nature itself is rebelling. Take a look at the geomorphologic map by satellites. Most of China is yellow rather than green. Hence, China is now participating in the distribution of the world’s resources.

Without resources, the goal to “construct the overall society with a happy life” would lose material support. Many years ago in anti-hegemonic struggle, Americans successfully participated and shared international resources with other hegemonic states; for China today, there would be no better option.

From a long term strategic perspective, China and American should be friends.

The only thing China has to remember in dealing with America is, when America beats you, even if you do not fight back, at least make the victory a painful one. In the Asia-Pacific region China has important security interests, and the sovereignty of Taiwan is a matter of life-and-death for China’s national interests. China, as a big

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power, cannot compromise on this. The present problem is, America is trying to repeat what Britain did to limit America two hundred years ago, pushing aside China’s marine interests. The question of Taiwan is the bottom line of China’s security interests, but this is not even the bottom line that America seeks from China. In the face of such excessive demands, standing in China’s shoes, Americans would not themselves acquiesce, but would surely rise and fight back.

The question of Taiwan determines the Asia-Pacific strategic structure For the Asia-Pacific powers, the question of Taiwan involves the entire regional structure, of which Diaoyu Island is the key. The question of Diaoyu Island is not in whose territory it has been since “ancient times,” but in its being the geopolitical “death point” of a possible Tai-Japan alliance. Realizing Chinese sovereignty of Diaoyu Island is the key to breaking a Tai-Japan alliance. If “Taiwanese independence” succeeded, Taiwan and Japan would inevitably unite as allies. This is the underlying cause of Li Denghui’s denial of Chinese sovereignty of Diaoyu Island.

Li Denghui knows all too well that the one who badly needs Taiwanese independence is not America, but Japan’s right-wingers. Historically, Japan has hungered for Taiwan, and a future independent Taiwan needs a Japan with a right-wing government. Hence, the question of Diaoyu Island is not purely an academic question, but a geopolitical one, concerning the overall structure of Asia-Pacific region.

The question of Japan is in essence the question of the Fareast Yalta system.

Therefore, it is a question concerning the relations between the three powers—China, America and Russia—and Japan. The question of Taiwan, however, is in essence the remaining question of China’s civil war. Since the Korean War began in the 1950’s and the America’s 7th Fleet sailed into the Taiwan Strait, the question of Taiwan was again involved in the Cold War structure of the Yalta system. The great changes brought by the Soviet Union’s disintegration were the disruption of the Yalta system along with the disruption of the Warsaw Pact Organization, the Kosovo War and NATO’s eastward expansion. But in the Fareast, the system has been nearly kept intact. If it is said that it was the “independence movement” of Albanians in Kosovo that caused the end of the Yalta system in Europe, then the catalyst for the overthrow of the Yalta system in the Fareast would be the activities of Taiwan Independentists headed by Li Denghui. From this perspective, a Taiwan that was forced into what remains of the Yalta system would influence the relations of great powers in the Fareast. This is why America and Russia unanimously oppose Taiwan’s “independence.”

On the schedule of Taiwan’s reunification, the Chen Shuibian administration in Taiwan is engaging in a chronological contest with the central government. The central government of China hopes that a long period of waiting will make most of the people of Taiwan realize the danger of “Taiwanese Independence” and, together with the central government, check this tendency and ultimately the goal of reunification will be reached. Taiwan’s administration, since Li Denghui, has been quickening their steps

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for independence. On November 11, 2003, Chen Shuibian expressed his wish that on December 10, 2006, the Day of Human Rights, a general vote would help to determine the contents of the new “constitution”.

Meanwhile, Japanese Prime Minister, Junichiro Koizum, again stated (on November 4) that Article Nine of the peace constitution would have to be revised to make their Self-Defense Forces into “forces worthy of the name.” Japan’s present constitution explicitly stipulates that “the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” On December 12, 2003, the anniversary of the Japanese conquest of Nanjing, the Taibei Office of the Japan Interchange Association held a party for the Emperor’s birthday and invited the “Foreign Minister,” the “Secretary-General of the President’s Office” of Taiwan and others in spite of China’s opposition. These messages, one after another, reveal that in the years ahead the interaction of Japan and Taiwan would loom over the East Sea and tighten the geopolitical structure in the Asia-Pacific region. Japan will evidently intervene, which is a new change that deserves China’s close attention.

The question of Taiwan concerns China’s overall modernization The core of China’s Asia-Pacific geopolitics is the question of Taiwan, which concerns not only China’s sovereignty, but also China’s sea power, as well as its overall modernization.

Taiwan represents China’s forward base into the Pacific Ocean and a means of realizing its sea power interests. If Taiwan were reunified, China would completely break the island chains that America constructed to block China in the West Pacific, which has an even greater significance than America’s seizure of Hawaii. If Taiwan were reunified, China could check Japan’s designs on its northeast portion. In the south a forcipate protection of the islands in the South Sea can be formed together with Hainan Island and provide an effective guarantee to China’s ships passing through the Malacca Strait. In the west, the southeast security space of China can be expanded and form a front guard for the southeast golden economic belt.

In addition, China’s reunification progress coincides with the progress of realizing China’s sea power, for which reunification of Taiwan particularly crucial.

Without Taiwan, the Nansha islands can not be protected. If it is said that the geopolitical key to the South China Sea is the Malacca Strait, then the islands of Nansha within China’s sovereign sphere are the key for China to realize its sea power interests in the South China Sea. As a big power, China will inevitably have its own sea base. If Diaoyu Island and Taiwan come back to China, the security interests of China in northeast Asia and Southeast Asia will be guaranteed. Unlike in 1894, Japan’s modern aircraft carriers cannot dominate in the East Sea in an age of satellite guidance.

Historically, the prerequisite for Japan’s rise in northeast Asia was the decline of Russia and China, and the prerequisite for its rise in the Pacific region is the decline of

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China, America and Russia. In the 1990’s, the Soviet Union disintegrated, but Russia remains standing. As long as China does not fall, Japan has no chance of becoming a power: Russia steps on its tail, America holds its bridle, and in the middle, the Asian countries are a thorn in the side of Japan’s right-wingers.

The question of Taiwan should be seen as an organic part of China’s modernization. It is not only a question of China’s sovereignty, but a question of realizing China’s development rights. In the 1860’s, Germany was divided into several hundred city-states, which gravely influenced the economic development of Germany.

Bismarck carried out his policy of blood and iron for about eight years and unified Germany, while China has discussed this for over half a century. The question of sovereignty can never be raised. To China, the question of Taiwan is a question of its navy. To develop a navy on a large scale is the key to solving “Taiwanese Independence.” Li Denghui and his rock-headed followers should be dragged to China’s naval post rather than to discussions of “international situations”. “Peaceful reunification” is possible only when Taiwan is closely held in the arms of China’s navy.

The reason that the question of Taiwan cannot be ignored is that it involves China’s overall situation of modernization. Taiwan is the frontal protective barrier of China’s economic golden belt in the southeast. If Taiwan was lost, threats from the sea would directly endanger the golden belt that produces large quantities of high-tech goods.

Taiwan involves China’s overall situation of modernization also because the success of “Taiwanese Independence” would trigger a chain reaction, causing China’s coastal areas in the southeast to decentralize. If not confined by the country, the rich would always be reluctant to stay with the poor. The disintegration of primitive society was due to the fact that the growth of productive forces in the tribes created larger economic differences . If our economic growth caused China’s disintegration, it would be contrary to our aim of developing the overall economy.

Taiwan is where China’s sovereign interests lie, and a “blood and iron” determination is needed to deal with it. The reunification of Taiwan is China’s vow to the world and also a sign of China’s standing. However, China’s vow in solving the question of Taiwan does not lie in the reunification of Taiwan itself, but in that, after the reunification of Taiwan, China would follow Bismarck’s path, making friends with other powers instead of creating conflict, being strong but not showing off its strength, and having the courage to use force without abusing it. In the future, China should try to develop the necessary forces for national defense, but be cautious about employing them.

In the reunification of Taiwan, we should also learn from Lincoln, for his courage in confronting hegemony and spirit to fight. After the American War of Independence, Britain was not reconciled to its failure and invaded America in 1812.

In 1814, it even sent troops into Washington, trying to dismember America again. But it was defeated and had to retreat to Europe. During the Civil War, Britain supported the South to separate the country, but finally, under Lincoln’s firm will, it failed once

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again. Since then, the United States has enjoyed national sovereignty and national markets in the real sense, which underlay America’s rapid economic development. By the middle of the 1880’s, America had become a major industrial power in the world.

By the end of the 19th century and the early 20th century, America’s domestic economic development widened the gap between the poor and the rich, which caused social disruption, demanding that America pay attention to foreign markets. Therefore, America had to break the power of Britain and other maritime hegemonies.

Immediately, America conquered Hawaii, Cuba and the Philippines in 1898. Since then, America’s marine frontier was extended to the Fareast.

“Time and tide wait for no man.” Americans broke Britain’s hegemony in a year and realized the geopolitical interests necessary for an industrial country. What a contrast! The slogan of reunifying Taiwan has been shouted for over 50 years, but Taiwan is drifting further and further away. Therefore in the question of national reunification, China should have Bismarck’s determination and Lincoln’s courage to confront hegemony in keeping the nation united. Some say we should first properly deal with domestic affairs. Have a look at history: in the 1880’s Americans had more social problems than China. By the early 20th century, America broke the “Western” blockage on the sea, a large amount of overseas profits flew back to America, which came to the front row of the welfare states, and within the country they began to create policies to protect consumers, increase investment in education and deal with other social issues. Why? They had money. From where? From the overseas high profits flowing back to America.

China proposes the goal of “constructing the overall society with a happy life,” under which tradition, small agriculture is disintegrating, nearly a billion farmers have increasingly less income and the resource environment is exhausted. National modern agriculture instead of that affiliated with international capital and rich resources are the bases of modern national industrialization. America’s agriculture has been industrialized and adopted the market principle, and America also has resource supplies from around the world, hence its huge productive development is sustainable.

China’s agriculture has not undergone industrialization and market reform. What is worse, it is now in danger of falling into the Latin American trap while losing its nationality. This will drastically restrict the sustainable development of China’s industry. The agricultural bankruptcy will result in farmers swarming into cities. The number will be disastrous for China’s cities with limited capacity. Now China is undergoing the same course experienced by America over one hundred years ago. If China wants to realize its goal to rise in the world, it probably has to learn from America: to strengthen national sovereignty in confronting hegemony, to unify the national market in confronting hegemony, and maintain with force the right to equally share the world resources to which all sovereign nations are entitled.

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MADE IN THE USA: THE FUTURE OF INT. JUSTICE AND THE WORLD ORDER

MADE IN THE USA: THE FUTURE OF INTERNATIONAL

by Yu XILAI JUSTICE AND THE WORLD ORDER The evolution of international justice in the 20th century. The legacy of Wilson and Roosevelt. Contradictory ideas of human rights. The dilemma that American isolationism poses for a stable world order. Why China (and the world) should accept global constitutionalism as the means for securing peace.

The Evolution of the Idea of International Justice

L

ike the notion of justice proper, the notion of international justice develops

and changes with history. Widely acknowledged notions of international justice (such as national self-determination, sovereign equality, and nonintervention in internal affairs), were formed much later than domestic notions of justice. In the formation of the notion of international justice in the 20th century, Americans made the largest contribution. Hence Wilsonianism and Rooseveltism became milestones of the notion of international justice in the 20th century. If Jeffersonianism and Monroeism were declarations of self-determination and autonomy on the American Continent, Wilsonism and Rooseveltism were appeals for national self-determination and national autonomy for the whole world.

After entering World War I, President Wilson delivered an address to Congress on January 8, 1918, in which he put forth the famous “Fourteen Points.” In the fourteen points, which he called the “program of world’s peace,” Wilson said, “What we demand in this war, therefore, is nothing peculiar to ourselves. It is that the world be made fit and safe to live in; and particularly that it be made safe for every peace-loving nation which, like our own, wishes to live its own life, determine its own institutions, be assured of justice and fair dealing by the other peoples of the world as against force and selfish aggression.” As the outcome of the war was determined by the preponderant strength of the United States, the fourteen point program naturally became the guideline for the postwar settlements, which had received wide international acclaim, particularly among small nations and the defeated nations.

On August 14, 1941, US President Roosevelt and British Prime Minister Churchill signed the Atlantic Charter on the US cruise ship, Augusta. In light of the fundamental principles of the Charter, the four major signatories, the United States, the

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Soviet Union, the United Kingdom and China, formulated the draft of the United Nations Charter in the fall of 1944 in Dumbarton Oaks in the suburb of Washington.

The Atlantic Charter and the United Nations Charter are the embryo of widely acknowledged contemporary notions of international justice. The “Four Freedoms” illustrate the essence of Rooseveltism: freedom of speech and expression, the freedom of every person to worship God in his own way, freedom from want and freedom from fear.

In the fourteen points, Wilson expressed his longing for a world that “be made fit and safe to live in,” and the means to attain the goal was that all nations would, “like our own”, be able to “live its own life, determine its own institutions, be assured of justice.” However, when Wilsonians brought the concepts of self-determination, autonomy and democracy to the world, they had not clearly realized that some fundamental differences existed between the domestic community and the international community. The subject of the domestic community is the individual.

Meanwhile it is sometimes hard to determine who the subjects of the international community are. If they are nation-states, then the majority nowadays are not single-nationality states. Between Yugoslavia, Serbia and Kosovo, which is the most qualified to be a subject of the international community?

Since it was proposed, the theory of a right to self-determination has encountered increasing difficulties in practice. When proposed by Wilson, it was meant to solve the national problems of the Austro-Hungarian and Ottoman Empires.

However, the Republic of Czechoslovakia, established out of the rubble of the Austro-Hungarian Empire, had a new national problem: the issue of German-majority Sudetenland, which later became one of the prime causes of World War II. Wilson’s Fourteen Points, Kissinger observed, accepted the principle of national self-determination indiscriminately, without taking into consideration power relations as well as the various ethnic groups who attempted to settle their accumulated feuds by all means.

Theoretically it is possible to maintain that all states, small or large, are equal in sovereignty, but practically it is infeasible. The extant international organizations may be classified into three types. In the first, sovereignty is equal, as in the United Nations General Assembly, United Nations Educational, Scientific and Cultural Organization, United Nations High Commissioner for Human Rights and others. In the second, the rights of sovereign members are unequal, such as the UN Security Council, the International Monetary Fund and the World Bank. In the third, member countries share equal rights, but the conditions to join are extremely rigorous, such as the G8, APEC, WTO and others. In fact, sovereign equality is maintained at the expense of equal human rights. Is it fair that that China, with a population of 1.3 billion, possesses the same right in the international community as an island state with a population of no more than several thousand? In a free and democratic domestic community, only

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citizens enjoy equal political rights. A corresponding theory and practice have not yet been well established in the international community. Just as the population explosion in many developing countries led to the increase of youths in the demographic structure, the “population explosion” of the international community in the second half of the 20th century led to the domination of the United Nations by newly risen, immature nations. If an international organization makes no distinction between mature and infantile nations, a farce will result, in which children in a kindergarten elect the master and determine the rules.

The principle of non-intervention in internal affairs implies that governments possess the ultimate sovereignty within the realm of a state. Sovereignty in the international community corresponds to individual freedom in the domestic community. Wilsonians conceived that those nations that had acquired national self-determination would practice autonomy and construct a community “safe to live in…like our own.” As the 20th century shows, however, the majority of new states have not spontaneously followed the developing route as taken by the United States after independence. “Rational governments” are rare, and governmental leaders like Mobutu Sese Seko, Idi Amin, Marcos, and Suharto by far outnumbered those like Gandhi and Nehru. Thus, since the 1990’s, the theory and practice of “human rights over sovereignty” have loomed into view.

Recently, the “International Commission on Intervention and State Sovereignty” reconsidered the meaning of state sovereignty in terms of the new perspective. The report of the commission adds a new meaning – “sovereignty as responsibility” to the long-held “sovereignty as a right”. Essentially, the report states that if some states face dislocation or behave irresponsibly and endanger their people, it is the responsibility of the international community to intervene.

In accordance with the principle of “human rights over sovereignty,” the United Nations have imposed sanctions against, or taken military peacekeeping operations in, South Africa, Iraq, Cambodia, East Timor, and Afghanistan, and NATO exercised “humanitarian intervention” in Bosnia-Herzegovina and Yugoslavia. Similar acts would be the intervention of the Organization of American States in Haiti, the interventions of the African Union in Sierra Leone, Liberia, Burundi and elsewhere, and the invasion of Iraq by the United States and its “reluctant allies”. Due to the existence of dissent of the international community to “human rights over sovereignty,” the means and legalities of “humanitarian intervention” vary. Kofi Annan proclaims, “Neither of these precedents is satisfactory as a model for the new millennium. Just as we have learnt that the world cannot stand aside when gross and systematic violations of human rights are taking place, we have also learnt that, if it is to enjoy the sustained support of the world’s peoples, intervention must be based on legitimate and universal principles. We need to better adapt our international system to a world with new actors, new responsibilities, and new possibilities for peace and

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progress.” This requires the renewal of the notions of international justice and the reform of the international law system.

The realization of international justice: system and strength The realization of justice requires the guarantee of the system; the implementation of the system requires strength to back it up. A government following the constitution and legal system is the institutional guarantee of domestic justice, and an international organization acting as government of the world is the institutional guarantee of international justice. When proposing new conceptions of international justice, both Wilson and Roosevelt formulated new international systems and new world orders, which were not fully carried out due to various reasons, among which, the faultiness of the system itself, and the absence of powerful backing behind the system and the political determination to put this strength to use.

In “The Fourteen Points,” Wilson proposed that, “A general association of nations must be formed under specific covenants for the purpose of affording mutual guarantees of political independence and territorial integrity to great and small states alike.” Due to the refusal of the Senate to ratify Peace Treaty of Versailles, the initiator and designer of the League of Nations failed to become one of its members. Brierley among others observed, the weakness of the League of Nations did not lie in any legal defects of the covenant, but that once a challenge occurred, doubts over whether the big powers of the League would fight the invader with military force. Or, whether they were capable of doing so without the involvement of the United States. And an effective system of security relied on the absolute advantage of the military forces.

Due to the absence of the United States, the League of Nations was incapable of stopping the crimes of, first, Japan, and then, Italy and Germany, which caused the outbreak of the Second World War. “United Nations” was a term conceived by President Roosevelt. On January 1, 1942, representatives from the United States, the Soviet Union, Great Britain, China, and others signed the United Nations Declaration in Washington, proclaiming to take the principles of the Atlantic Charter as the common guideline of the allies. At the conference in San Francisco from April to June 1945, representatives from 50 states, based on the Dumbarton Oaks draft formulated by the United States, Great Britain, the Soviet Union and China, worked out and signed the United Nations Charter. Like the League of Nations, the establishment of the United Nations was to accomplish two major tasks: to maintain peace and security, and properly deal with international problems.

The fall of the Berlin Wall marked the ultimate victory of the United States. The Charter of Paris for a New Europe signed at the Summit Conference on Security and

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Cooperation in Europe in 1990 claimed that, freedom, democracy, multiparty systems, private ownership and others must be adopted as universal principles, and a “whole free new Europe” would be a “model” for the new world order. In September of the same year, President Bush proposed to establish a new world order. He said: “it is a big idea - a new world order, where diverse nations are drawn together in common cause to achieve the universal aspirations of mankind: peace and security, freedom, and the rule of law.” With the end of the 100-hour ground battle in the Persian War, however, the progression in establishing a new world came to a sudden halt. Saddam Hussein, who started the invasion, had not received the deserved punishment, while Bush became his target of assassination. The end of the Cold War left a political vacuum in the world, which bin Laden and his comrades would steal into to create the “new world order” when the United States and its allies were too slack to shape the new world order of freedom and democracy. They undertook worldwide recruiting and unscrupulously extended evil’s talons into New York, Moscow, New Delhi and Bali Island.

Once I pointed out that, as the sole super power, whether the United States succeeds in the war against terrorism and beyond to create a new world order, the main barriers are not the insidious and cruel terrorists, nor the Janus-faced allies, but rather the deeply rooted isolationism and unilateralism in the United States. Now, governments of other nations have to make a choice: is global governance of the new world order desirable or not. Do the advantages outweigh the disadvantages? Should Americans be encouraged to shake off their isolationist tendency and assume the important task of global governance by offering money and power, or should we set up barriers to make Americans become impatient and retreat from cosmopolitanism into Americanism? In the worldwide debate over the Iraq crisis, those nations that have held long-term special partnerships with the United States, like Great Britain and Australia; those Western European nations where center and right-wing political parties were then in power, Spain, Italy, Portugal, Denmark and others; those Eastern European nations recently unshackled from despotism, like Poland, the Czech Republic, Hungary, Albania and others; and American allies around China, like Japan, South Korea, Philippine, Singapore as well as the Taiwan authority adopted the former stance. They supported the United States’ playing the leading role in the establishment of the new world order, and as for themselves, they would like to do as they could, willing to give what help their capabilities allowed them. Meanwhile France, Germany and Russia adopted the latter stance, desiring to offset and weaken US hegemony to enable themselves to stand on an equal footing. In the media argument prior to the breakout of the Iraqi War, the latter seemed to have gained the upper hand and the US and its British Allies did not gain the authorization of the Security Council of the United Nations. When the Iraq War was coming to an end, seeing that Iraqis were welcoming the overthrow of Saddam’s regime, the party of France, Germany and Russia seemed to have been thrown on the disadvantage and the media and statesmen are seriously reconsidering their attitudes and positions.

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United States military expenditures are tantamount to the sum of that of all other great powers. It alone possesses super aircraft carriers, stealth aircraft, the capability of global bombardment and force projection, and means of network-centric warfare. What France, Germany and Russia did could but lead to the following three possibilities: first, a new ideological cold war would be launched, resulting in tumults, dislocation and reorganization of the world structure. Second, the old world order would be maintained, with each state clamoring for human rights, peace and development, but in fact each would go his own way and do as it pleased; the international community did nothing about the genocides and atrocities taking place in Rwanda and Indonesia. Third, the wishful thinking of France, Germany and Russia amounts to wanting to make free decisions, with the US carrying the load. Germany did this with the Yugoslavia issue, recognizing Slovenia before others and igniting the fuse of the Balkan Peninsula, while the United States had to come to clear up the mess.

Americans may do so once or twice, but it will not do to make it routine, unless all Americans are fools. The ultimate consequence is that the United States retreats into the shell of isolationism and unilateralism, and the prospect of a new world order becomes nothing but a dream.

China, standing between United States-Great Britain-Japan and France-Germany- Russia, wisely played it safe. From a long-range perspective, only China can challenge US leadership in the world. Within 50 to 80 years, China’s national strength is likely to grow to that of the United States. At that time, will China act as a substitute for the United States and become the main contributor to global governance, or bandwagon on the US-dominated international system? Historically, the United States became the largest economic country at the end of the 19th century.

In the subsequent half-century, however, it went on hitchhiking in the Britain-dominated international system and had little interest in assuming the heavy load of leading the world. By the second half of the 21st century, China will be different from the United States in the first half of the 20th century. Even if China’s national income and financial revenue exceed that of the United States, the share of each person is still less than one fifth of that of an American. If it is said that China has generally completed the transformation of its international role—from rebel and revolutionist to participator and reformer—the Chinese should also be clearly aware that, all through the 20th century, China did not possess the strength to dominate the international system, let alone to kick off the United States and its global allies and act as the “lone ranger” to maintain international justice.

The world order and international democracy The world order and international system contain three levels: the first is international peace and security, the second international freedom and the third international democracy.

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Peace and security are the essential conditions of any world order, if it is to be an order. The maintenance of historical empires was due to a certain degree to their satisfaction of peoples’ demands for security; this, however, was a security at the cost of dignity and equality. During the Cold War, among the nuclear powers, peace and security in confrontation had also been maintained—a temporary peace under the threat of nuclear destruction. The peace in the new world order is a peace of justice, with dignity and not fear; it is a universal peace, with neither nuclear war nor partial war, with peace among big powers as well as among small states, with both international and domestic peace. It is an eternal peace instead of the temporary serenity between wars. It is a peace with low cost, and each state may reduce its forces and arms to the minimum, until an international police force alone is left.

Peace can be realized under the circumstance of self-seclusion, and also through mutual exchanges of each other’s needs and free communications. The latter obviously is a higher level of world order. The central goal of the United States in diplomatic policy since its founding had been to guarantee the freedom of navigation on the open seas. The freedom that the new world order requires is much broader, including freedom of trade, capital flow, information and finally the freedom of international migration. This freedom is an equal and mutually beneficial freedom to both big powers and small states, strong nations and weak ones.

International democracy is the supreme ambit of the world order. An international- wide constitutionalism first should be demonstrated by its respect and implementation to the letter of the UN Charter, Universal Declaration of Human Rights and other human rights pacts. A regime that does not respect its own citizens is not at all qualified to be a member of the international family, and much less qualified to talk about international democracy. Fundamental human rights and citizens’ freedoms are not only the basis of domestic democracy, but also the prerequisite of global democracy. The subject of global democracy is the citizen of the world rather than the government of each nation. The international legal system requires not only a further improvement of the present system of international laws and the establishment of a just international judicial institution, but also an effective mechanism to enforce the laws. Due to the serious impediment of the voting mechanism of the UN Security Council in the implementation of “collective sanctions”, the present world structure is far from the realization of the international legal system.

It is quite natural that the United Nations as well as the Security Council is to guarantee international justice and carry out international democracy, which is also the most favorable institutional arrangement for China. The present mechanism of the United Nations is likely to become another League of Nations due to its incapacity of effective operation. “Two strategic alternatives are before the developed nations to realize the integration of the world. The idealist approach is to reform the United Nations and advance the synchronous progress of integration in the global range; a

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more realistic approach is to accelerate the progress of integration in a small range, around which forms the close core of the prospective world community, and then to absorb the reluctant developing nations into it. Due to developing countries’ worries and lukewarm attitudes to global integration, the second approach is gaining the upper hand in the developed countries.” For example, the G8 is to be expanded to replace the functions of the United Nations. The divergent opinions of the developed countries before the Iraqi War led the United States’ organization of the “reluctant allies,” which had further nudged the United Nations to the periphery. To rally the forces and become the carrier of the international democracy, the United Nations has two roads in front of it: either to restore the principle of unanimous powers as the founders had expected, or reform the Security Council.

For big powers to be unanimous, a change in their conceptions is needed, while the reform of the Security Council is an organizational reform. Comparatively, the former is easier than the latter. At the same time, great power unanimity is also the necessary prerequisite to reforming the Security Council. In terms of China’s national interests, the conceptive change should be the top priority. Since the time of Mao Zedong, China’s diplomatic conception has been changing, orienting towards globalization, and now a few more final steps should be taken towards the decided direction. A series of new moves that China has taken since the end of the Iraqi War, such as the change of attitude toward joining the G8 and adjustment in position to solve the issue of North Korea, clearly shows changes in China’s diplomatic conception and even the tendency of “diplomatic revolution,” as Yin Shihong stated.

If the voting right of each UN member is determined in light of the weight based on population and contribution, the UN General Assembly will be changed from an international forum to a quasi-parliamentary organization with functions of fund raising and legislature. If, following the model of the Council of Europe, the voting right is determined entirely in light of population (in the early stage it may not be equal for every one, but the voting right decreases proportionally with the increase of population), the UN General Assembly, then, will become a “world congress,” as Li Dazhao called it. As the country with the largest population, China’s contribution to the United Nations will increase, corresponding with the enhancement of its national strength. So, China has the least reason to doubt and oppose this developing tendency, but rather, should actively promote and support reform.

The United Nations holds that China should fully accept the authority of the International Court of Justice. China has never accepted its compulsory jurisdiction before, nor submitted any dispute to it, and taken a conservative attitude to choosing it as a dispute-settling organization in multilateral international pacts. In the Chemical Weapons Convention that China recently entered, however, it agreed to the article in the convention that the International Court of Justice is chosen as the organization to settle international disputes.

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This is the turning point from suspicion and resistance to trust and acceptance.

The reform of the International Court of Justice is endowing it with universal and compulsory jurisdiction. Once the reform has completed, the Kashmir dispute between India and Pakistan, the Diaoyu Island dispute between China and Japan and others can all be settled through judicial means.

In July of 1998 the “United Nations Diplomatic Conference of Plenipotentiaries on the Establishment of an International Criminal Court” held in Rome passed the Statute of the International Criminal Court. It is of the utmost importance to perfect the system of the International Criminal Court, and that the United States and China, the two world powers on the 21st century, sign and ratify it. The litigants of the International Criminal Court are limited to sovereign states, and the lawsuit objects are only limited to individuals. To fill the gaps in the international legal system, the United Nations should establish the international human rights court that allows natural persons to bring an accusation against sovereign states.

The founders of the United Nations had expected that the Security Council should act as the “international police.” On the founding of the United Nations, the Cold War between powers began, and thus, the military staff committee had not been established. It is an ardent hope that through great power unanimity, the Military Staff Committee consisting of the Chiefs of Staff of the permanent members of the Security Council or their representatives will be established as soon as possible. In the early stage, the military staff committee should be strategically in charge of the united forces’ “contingents for combined international enforcement action”. The next step is to establish a permanent international police force and permanent headquarters to command this force.

The precondition to establishing the “administrative institution of the world” is the establishment of worldwide public finance. To develop towards the “united government of the world,” the United Nations must establish financial budgets of its own just as the European Union has. To become the “government of the world” through the establishment of public finance, the United Nations first has to reform the UN General Assembly into “the congress of the world.”

Two possibilities lie in the developing trend of world structure after the Iraqi War. One is more intense struggle: unilateralism confronts multi-polarity, and the northern countries stand against the southern countries. The other is the reinforcement of cooperation. Great Power unanimity is reached and global governance begins. In my idea, the latter will eventually gain the upper hand. For this is the need of the world and the increasingly deepening integration of the global economy demands the coordination and guarantee of the integration of global politics.

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SINO-RUSSIAN RELATIONS: WHERE DO WE GO FROM HERE?

by Wang SIRUI

The ambiguous legacy of the Cold War. Does the present geopolitical situation suggest possibilities for conflict or a converging of interests? The necessary conditions for a solid economic partnership. Great power cooperation as the key to the new world order.

R

elations between China and Russia are very

unusual. China had signed treaties with regard to commerce and religion well before it established official relations with European and American powers overseas. When Tsarist Russia was looting a burning house to seize vast stretches of territory in Northeast and Northwest China, the Qing royal government even invited the wolf into its house to compete with Japan. When Soviet Russia occupied Mongolia, it captured Chinese intellectuals’ minds through a vain promise to abolish unequal treaties, becoming the supporter and the true master of Kuomintang (KMT) and the Communist Party of China (CPC).

After China abolished all unequal treaties with Western great powers during the Second World War and became one of the “four great powers” in the world, it twice signed new unequal treaties with the Soviet Union. Even the proud and arrogant Mao Zedong had to accept the secret Supplement Agreement of Sino-Soviet Treaty of Friendship, Alliance and Mutual Assistance. Among other things, it provided that in Northeast China and Xinjiang, “China should not give any foreigners the right of concession, and would not allow the capitals or citizens of third parties to take part in the activities of industry, finance, commerce and other enterprises, departments, societies or organizations in direct or indirect forms”.1 Namely, China acknowledged that the above areas were the orbits of the Soviet Union. While Soviet threats to perform “surgical operations” on China with nuclear weapons were still fresh in their compatriots’ memories, many in power still felt bitter about the breakup of their powerful neighbor. When Chinese diplomatic authorities were frequently protesting on account of Sino-Japan’s Diaoyu Island disputes and Sino-Vietnam’s South China Sea Islands’ disputes, nevertheless, they said nothing of the fact that the local government 1

Ref: Pei Jianzhang, editor in chief: Diplomatic History of the PRC (1949-1956), Beijing, World Knowledge Press, 1994 version, pp25.

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of the far East region of Russia refused to implement the Agreement on the East Section of Sino-Soviet National Boundaries. In the face of the odd facts in the history of Sino-Russian relationships, naturally it is difficult to have any certainty of the future of relations between the two countries. Could the two biggest countries in Eurasia reproduce their good old days?

1.

The 1950’s were the honeymoon period of Sino-Russian (Sino-Soviet) relations.

The Soviet Union was both the bridegroom and protector, with China the bride and protégé. There was once an omni bearing relation between the two sides: both the comrade relation in the ideological sphere and the comrade-in-arms relation of military alliance as well as the cooperative partner relations in the economic community.

The CPC was once a branch of the Third International. At the same time, the leader of the Third International was also a principal of a functional department of the Soviet party and government system. According to the research of Yang Kuisong, from the founding of the CPC to the early 1930s, the funds mainly depended upon the Third International. The appropriate funds continued until the declaration to disband the Third International.2 In this instance, the CPC ideologically followed in the footsteps of the Soviet Communist Party (CPSU). In his own works, Mao Zedong often quoted the words of Lenin and Stalin. When making major policies, he would send telegraphs to Stalin for approval. In July of 1949, Liu Shaoqi led a delegation of the Central Committee of the CPC to visit Moscow, making clear their will to side with the socialist camp and the Soviet Union. After the founding of the CPC political power, the diplomatic head Zhou Enlai said upon assuming office that it was first necessary to divide camps and distinguish friend from foe in order to open up a diplomatic battlefront. “In our camp, …the commander in chief is the Soviet Union”. After the death of Stalin, Mao Zedong still insisted at the Moscow conference of 1957 that the Soviet Communist Party should head the international communist movement and the socialist camp The Sino-Soviet Treaty of Friendship, Alliance and Mutual Assistance, signed in 1950, was above all a treaty of military alliance. There were three major joint military operations between China and the Soviet Union in the early 1950’s. The first was in Xinjiang, the second in East China and the third in Korea.

On Aug. 26, 1949, the first Field Army (YIYE) of the PLA led by Peng Dehuai liberated Lanzhou. But Lanzhou is nearly 2000 km away from Urumchi. YIYE lacked necessary transportation when marching toward Xinjiang in winter. At the request of Mao Zedong, Stalin decided to send transport planes to carry the units of YIYE to Xinjiang. The specific plan was as follows: firstly, the units set out toward Jiuquan while at the same time, 45 Li-2’s of the Soviet Aviation Company hired by the Chinese 2

Yang Kuisong: Review of Finance Assistance Supplied to the CPC by Comintern, published in Shijiazhuang: Social Science Tribune, No.4 (A) of 2004.

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side transported these units from Jiuquan airfield to Hami and Urumchi. From Nov. 4, 1949, these planes flew a total of 1,033 sorties and transported 12,446 officers and soldiers as well as their weapons and equipments. This airlift was unprecedented in the history of the Chinese army and also the only one in the history of Sino-Soviet military relations.

The second Sino-Soviet military cooperation began in East China at the beginning of 1950. As the PLA was unable to defend against the KMT AF bombing of the southeast coastal cities, especially Shanghai, the CPC demanded the Soviet Union to give a hand. On March 13, a combined air group led by Lt. Gen Bachitschi entered and was stationed in the airfields of Shanghai, Xuzhou and others in East China. This air defense unit consisted of 2 pursuit airplane regiments, 1 mixed aviation regiment, 1 searchlight regiment and 1 radar battalion, including 120 fighters, 12 radars and 72 searchlights. From March 20 to May 11, the Soviet Mig-15 fighters based in Xuzhou Airfield took off 4 times to intercept the KMT Air Force, shooting down 6 bombers, relieving the threat of air strike upon Shanghai at one fell swoop. The second batch of the Soviet AF, Belov Division, was deployed in Northeast China in Aug 1950 to undertake the task of air defense. Later the equipments of this unit were transferred to the Chinese AF, including 122 Mig-12 jet fighters, 16 trainers and communication airplanes, totaling 139 planes. From Oct to Dec of the same year, another 13 Soviet aviation divisions, including 9 Mig-15 and Mig-9 jet fighter plane divisions, 1 La-9 fighter plane division, 2 Il-10 attack airplane divisions and 1 Tu-2 bomber division arrived separately in the regions of Northeast China, North China, East China and Middle South China to assist and undertake the air defense tasks in the above regions and were responsible for the training of the Chinese AF units. From July of 1951, these Soviet AF units began to return home in succession. At that time, the Chinese AF took over the equipment of 12 divisions of these units.

The third military cooperation between China and the Soviet Union was during the Korean War. On Nov 1, 1950, Soviet airplanes appeared over Korea for the first time. The air battles of the Korean War were mostly undertaken by the Soviet AF. Lt Gen Lobov was appointed the commander of the 64th Air Group Army in command of all Soviet AF units in the Korean War. During the whole period of the Korean War, 12 Soviet air divisions were successively thrown into air battles. The total number of the rotating Soviet AF was 72,000. In 1952, the number of AF personnel reached 25,000-26,000. The fighters of the Soviet AF shot down 1,097 enemy planes altogether.

Anti-aircraft artillery units brought down 212 enemy planes. According to statistics from the files of the General Staff of the Russian Federation Armed Forces, the Soviet AF lost 335 planes and 120 pilots in Korea. During this war, the Soviets lost 299 servicemen in all.3 During the whole of the 1950’s, the Soviet Union supplied large quantities of 3

Recalled by Wang Yazhi, Edit by Shen Zhihua and Li Dan: Review and Consideration of Some Problems in 1950s’ Sino-Soviet Military Relations.

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weapons and equipment to the CPC, partly paid and partly gratis. After Mao Zedong told Khrushchev that “we are interested in atomic energy and nuclear weapons” during their meeting of Oct 3, 1954, both countries signed agreements of cooperative exploitation of uranium mines and for Soviet assistance in helping China construct its nuclear industry, in succession. In 1957, China and the Soviet Union signed a new defense technology agreement. The Soviet side agreed to provide China with the data and models to produce nuclear weapons and the means of delivery. It also provided 2 short range surface to surface missiles as samples.

Although China was not an official member of the Council of Mutual Economic Assistance (CMEA), it had merged into the international economic division system with the Soviet Union at the core in the 1950’s. At that time, most of China’s foreign trade was done with countries in the socialist camp. During China’s first “five-year plan”, 156 key projects aided by the Soviet Union (and Eastern European countries) constituted the framework of the basic construction of China’s modern industries, including nuclear, airplane manufacture, automobile manufacture, heavy machinery manufacture, electronics, petroleum chemical, etc. The Soviet Union sent its expert counselors to all industry departments and institutions of China. They helped to introduce, design and constitute a whole economic structure and policies as well as laws and regulations. Although Mao Zedong had the intention of working out China’s own system (for example, replacing the “Charter of Magang” with the “Charter of the Anshan Iron and Steel Company.”), China’s economic system was still patterned after that of the Soviet Union until its collapse.

From the 1960’s booklet “Long Live Leninism” to the “nine comments” in 1963 and 1964, Mao Zedong thoroughly broke with the official ideology of the Soviet Communist Party represented by Khrushchev and Brezhnev through the international anti-revisionist struggle. After Mao Zedong refused the proposals of co-establishing long wave radios and a joint fleet with the Soviets and Khrushchev called the shelling of Jinmen military adventurism in the thermonuclear age and refused to provide sample atomic bombs, the Sino-Soviet military alliance and military cooperation were terminated. A few years later, relations between the two sides deteriorated so badly that both deployed millions of troops along the border and were even at war with each other at some sections of the border. After Soviet experts withdrew from China, China began to turn to West Europe and Japan to seek new trade and economic cooperation partners. If China and Russia want to reproduce their good old days to resume the relations of 1950’s, are there possibilities under new historic conditions?

2.

After the 12th National Congress of the CPC, China has gradually changed the “one-line” strategy from Mao Zedong’s late years, “which is to make a cross line, that is, America, Japan, China, Pakistan, Iran, Turkey and Europe” should unite against the Soviet Union and its allies. In May of 1989, Gorbachev visited China and held a summit meeting with Deng Xiaoping. The two parties of China and the Soviet Union declared their intention to “end the past and open up the future”. This should have been the symbol that the parties in power of the two big communist countries had

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begun to restore ideological relations. However, the students that were fasting in Tian’anmen Square obstructed the planned official welcoming ceremony, symbolizing the coming of the new times of “post-communism”.

In August of 1991, Russian Foreign Minister Andri Kechilev made clear the new official Russian stance, at a gathering celebrating the frustration of the coup in Moscow, that democratic Russia, America and other western democratic countries were natural allies just as they were the natural enemies of totalitarian USSR. He explained that based on this political idea, the actual diplomatic policy of Russia was to set up friendly relations with “civilization including NATO, UN and other international organizations”.4 After the short honeymoon with western countries, Russia started to reemploy its “double-headed eagle” diplomatic strategy. Sino-Russian relations advanced once more. On Jan 17, 1994, the famous pro-Western Foreign Minister Kechilev made a speech at the Chinese People’s Institute of Foreign Affairs that “we are starting once more to explore the development of relations with all Asian countries in many ways.

This is related to our great Oriental neighbor China. After suffering from the ideological friendship filled with frustrations to the unreasonable painful setbacks with hostilities without leaving leeway, Russia and China, the two large civilized ‘continents’, are firmly stepping on the road towards good relations of neighborhood and cooperation. In setting forth Russian diplomatic polices, we believe that the good-neighborly relations with the People’s Republic of China have strategic significance”.5 In April 1997, the heads of the two states, China and Russia, signed the Joint Statement on World Multi-polarization and Setting-up New International Order, emphasizing the principles that each state selects on its own the road of development, the principles of opposing those seeking hegemony and power politics, and the principles of opposing the abuse of economic sanctions, and making clear the goal of mutual cooperation and the endeavor of both sides to promote the development world multi-polarization and the establishment of the new, fair and rational international order.” Opposing hegemony and the tendency of uni-polarization is of course a frequent mode of expressing anti-Americanism in the diplomatic field. Will anti-Americanism become the foundation of a new ideological comradeship between China and Russia? It is quite unlikely, due to both internal and external factors.

Both Chechen nationalists and Russian nationalists are anti-American. But this did not stop the outbreak of bloody wars between them. Both Pan-Turkism and Great-Hanism are also anti-American. But this did not prevent terrorism of the East Turkists against the Hans.

Furthermore, there are forces strongly against anti-Americanism and 4

Andri Kechilev, Preobrazhenie, Moscow: International Relations Press, 1995.

Andri Kechilev, To Asian Security System through “Asian” Road, published in Moscow: Segdnia, Feb 4, 1994.

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ultra-nationalism inside both China and Russia. In Russia, ever since Peter the Great, Europeanism (Westernism and Cosmopolitism) and Eurasianism (Orientism and Slavism) have been the principal axis in the tussles of ideologies and the contests of politics. In China, the recent brick sales of the idea of “peaceful rise” is a sign that the anti-Americanism consciously promoted by the government has begun to ebb. From the long-term point of view, whether in China or in Russia, democratization has more potential and stamina than Anti-Americanism and Social Darwinism. Now the two countries are approaching the mainstream of world civilization. We cannot tell whether any anti-mainstream ideology will become the ideological tie linking the two countries.

3.

In general, since 1992, political relations between China and Russia have gone through three development phases: “regarding each other as friendly countries”; “constructive partnership”; and “strategic cooperative partnership”. In July 2001, both countries signed the Treaty of Good-Neighborliness and Friendly Cooperation Between the People's Republic of China and the Russian Federation for a period of 20 years. The treaty advocated that “ever-lasting peace and friendship prevail” on both sides. But the treaty once again emphasized that it was “non-aligned and not directed at third countries” declared in the series of documents signed by the state heads of China and Russia. The treaty did not constitute a formal alliance. Neither party has any obligation to defend the other party, as was declared in the Treaty of Sino-Soviet Friendship and Alliance signed by the Jiang Kaishik government and the Kremlin or the Soviet-China Friendship, Alliance and Mutual Assistance Treaty signed by the CPC and Moscow in 1950.

The precondition to establishing a military alliance is that both sides have common strong enemies or opponents, but China and Russia do not. The primary opponents of China are the Taiwan authorities and its potential supporters America and Japan. Secondary are the “East Turks” and their radical Islamic forces. Third are India, Vietnam and other ASEAN countries that have territory disputes to be resolved. The primary opponents of Russia are Chechen separatist powers and their radical Islamic forces. Secondary is a US-led NATO that is continuously expanding eastward. Third are Japan and China, which have both potential and actual territorial disputes.

The visible common foes of both countries are the radical forces of Islamic fundamentalism in the “arc terrain”. The military cooperation system of the Shanghai Cooperation Organization is firstly directed at this foe. But after 9-11, American military forces quickly came into Middle Asia and the Caucasus regions. The Shanghai Cooperation Organization was part of the global anti-terrorism alliance headed by USA and did not have the option of evolving into a paramilitary alliance focusing on America as the imaginary enemy.

Although Russia and America are still possess strategic nuclear weapons, the possibility that Russia and America would engage in military confrontation is slim to nonexistent. On November 13, 2001, the joint statement of the state heads of Russia and America announced that “Russia and America have overcome the remains of the

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cold war. Neither party will regard the other as an enemy or the source of threats.”6 Russia and China made an alliance against America for the same reason that China and America did against the Soviet Union. It will play the China card to take the advantages of its relatively favorable status in the triangle of America, China and Russia. Yeltsin made it very clear that “from the point of view of global politics, our relations with China are very important. We can have dealings with the West on the strength of China so the West can respect Russia a bit.”7 Playing the China card can improve Russia’s status as a big power as well as granting it access to larger markets for arms and other products in China. Why not go ahead with it? As there are unity and independence problems in Taiwan, there is a much greater possibility that China and America will shape the military confrontation while Russia does not have any actual interests there. Even while the two countries were still allies, Mao Zedong could not persuade Khrushchev to support his attacking Jinmen. We would thank God if now we could stop Russia from selling weapons to Taiwan.

India and Vietnam are long-term allies of Russia. Obviously in their territorial disputes with China, Russia could not give up its old allies and is partial to China. In fact, although China and India ranked as the top two buyers of military equipment from Russia, the types and performance of the weapons and equipment Russia exported to India exceeded that sent to China.

China no longer regards Russia as its potential opponent, but China remains on the list of potential opponents of Russia. “The idea of China Threat” and “the Theory of China expansion” found a considerable market in Russian civil and military circles and the media. Professor Dukin of Military University of Russian General Chief of Staff of the Armed Forces published a book called “Basic Geopolitics”. Talking of Russia-China relations, Dukin believed that at present both sides still had the value of mutual use. But China is always the potential enemy of Russia. The modernization of the Chinese army will pose the largest and most direct threat to Russia during the mid and long term (five to 10 years). Therefore, Russia must maintain military superiority of about a 10-year period over China. This means that Russia will never send the best equipment to China. The former Defense Minister of Russia, Grachov, stated that “China threatens the safety of the far East areas”.8 Another former Defense Minister, Lochionov, called China “the main potential enemy of Russia” many times.9 At present, one of the main goals of the CPC in maintaining friendly relations with Russia is to obtain modern weaponry for tackling the Taiwan problem. But the 6

Russian Tass, Washington, English news, Nov 13, 2001.

Quoted in Russia-China Relations at the moment, E. P. Bachanov, published in the Actual Problems in the Research of International Relations edited by the author, Vol.2, Moscow: Science Press, 2002 version, p. 419.

8 Lionid Shrirono, etc: Behind the weapons Russia sold to China, published in 3-9 military net.

9 Igel Kolouchinko: Igel Lachionov proposed to establish independent nations defense alliance treaty, published in Moscow: Neavisimaia gazeta, Dec 26, 1996.

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advantages of Russian weapons have fallen far behind that of America and the EU. The models of the next generation of naval and air force equipment from the US have been finalized in succession and put into batch production while Russia has not accomplished the model selection and design of relevant weapons. It is even beyond its ability to keep the existing equipment in good condition. Depending on Russian arms, even the Chinese military has no idea of what to do to in launching an arms race with Taiwan and its American backer. Therefore, the CPC is actively seeking to break through the bans on EU military sales to China after June 4.

Since the 1990’s, China and Russia have united to oppose America on several issues: opposing NATO’s eastward expansion; opposing American unilateral abolishment of the Anti-Ballistic Missile Treaty and deployment of NMD and TMD; opposing NATO’s military intervention in Kosovo and opposing the invasion of Iraq

by US-led coalition forces. These did not have the expected effects of containment. In light of this, it must be asked, even if China and Russia form a new alliance, will it really exert power in the world effectively?

4.

Creating a cooperative economic partnership or community requires that two basic conditions be met: trade in the economic community must account for more than half of the partners’ foreign trade, and a economic division system must shape the community. The “socialist camp” of the 1950’s and the pattern of “geese’s order” in the 1970’s and 1980’s, Japan, Taiwan, South Korea and Southeast Asian countries formed a virtual economic community (relative to the EC or the members of North America Free Trade Agreement).

During the “honeymoon period” of Sino-Soviet relations, China’s trade with the USSR (and East European countries) accounted for the majority of its foreign trade.

But now Sino-Russian trade is less than 2% of the total value of China’s foreign trade.

While Chinese foreign trade has seen sustained, stable growth in successive years, the development of Sino-Russian trade is relatively slow and even broke down and fell back for a time. And it has not yet approached the expectations of politicians of both countries. Because most Chinese exports to European and American countries and Japan are products made of materials supplied by foreign firms or the interior links of the production process of the transnational corporations, their brands and quality are sufficiently guaranteed. But the products China export to Russia mostly come from “only one trade” of medium or small companies, or come from nonstandard border trade. “Counterfeit and poor” products account for considerable proportions.

The Soviet Union of the 1950’s was the finished products exporter to China, and also the capital and technology exporter while China was mainly an agricultural and mine products exporter. Besides exporting weapons and equipment to China, Russia has now become a raw material exporter. Meanwhile, China has become a finished products exporter. China expected that Russia could become a stable source of petroleum, natural gas, timber and other industrial raw materials. But Russia has not given this promise yet. The recent struggles among China, Japan and Russia over a Fareast petroleum pipeline showed that Russia and China have not become reliable

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economic cooperative partners. Now China has the strength of capital output. But in Russia, it lacked a proper legal environment and essential guarantee of order. So this made it difficult to become the principal location for Chinese investors.

The ability to admit a large number of high quality human resources from all countries in the world is a major guarantee of the sustained development of American economy. It is an absolutely necessary condition to retain the positive increase of Western European economy in which their population is in negative growth to bring in young and mature workers from North Africa and Middle Eastern countries. Russia has vast territory and abundant resources and has low population density. Its population has now reached negative growth like Western European countries. It is a perfect match and a wholly natural economic move to import labor forces from China, which has an enormous population, scarce resources per capita. Nevertheless, the “idea of a China threat” prevailing in Russia impedes the development of this cooperation.

This idea mainly has two origins. One is that China’s economy is quickly overtaking Japan’s, and will rank second in the world while Russia’s economy has fallen behind South Korea, ranking about 20th in the world. China’s goal is to seek the dominant position in Pacific Asia. Russia-China economic cooperation will speed up the realization of that goal. In the new situation, Russia would only play the role of “younger brother” of China. This would make the former “elder brother” somewhat dissatisfied.

The second origin is the prevailing view that “Chinese immigrants will peacefully occupy the far East regions of Russia” (i.e. Chinese invasion). According to “the anarchic rules of international competition” of the realist school, a rising big power will naturally strive for more space in the markets, energy sources and population growth regions. The weak far East region of Russia will be a primary object of selection. Given that the far East regions of Russia was historically a dependency of China, and considering that economic prosperity will stimulate Chinese nationalist sentiments, the Russians feel that they have reason to be concerned about the future of the far East regions. The Russian Minister of Construction, E. Basin, once wrote in an official newspaper, talking of the natural precious deposits in Russia’s far East regions: “after the exploitation of this land, the far East regions will become very wealthy. The Chinese and Koreans quickly understood this and have occupied our far East on the ground. It seems that they will soon announce that it will be the republic of small-eyed people with sovereignty.”10 Though what he said is not true, the Russian anxiety that he expressed is the reality that the Chinese have to face squarely.

5.

For both China and Russia, bilateral relations between one another are not the most important. The order of bilateral relations for China is Sino-American, Sino-Nipponese, Sino-Russian, Sino-European and Sino-Indian. But in future years, the importance of Sino-European and Sino-Indian relations will rank ahead of 10

E. Basin: Space and time of unified Russia, published in Moscow: Rossiiskaiagazeta, Jan 1, 1995.

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Sino-Russian relations.

The order of bilateral relations for Russia is Russian-American, Russian-European, Russian-Chinese, Russian-Japanese and Russian-Indian. But the latter 3 bilateral relations are approximately on the same grade.

In terms of several groups of triangular relations that may form the new axis in Asia-Pacific areas (China-Japan-South Korea, China-Japan-ASEAN, China-India-ASEAN, China-Japan-India, China-Japan-Russia, China-Russia-India), the importance of those involving China and Russia is far behind. Some in Russia and India have strongly called for the creation of a Russia-India-China axis, but China remains uninterested. In history, a “Chinese character cultural circle” has been formed for a long time. First of all, to resume the deep intercommunion and close cooperation in the circle is the common wish of the coteries. Most countries of Southeast Asia lie within the Sino-Indian Peninsula. It satisfies the “favorable climatic, geographical and human conditions” to reconstruct the southern Silk Road among China-India-ASEAN countries. Among China, Japan and India, at the moment, there have been no signs showing such cooperation. In terms of China, Japan and Russia, they maintain very complicated relations at all times. During the Russo-Japanese War, China remained neutral (even though most of the fighting took place on Chinese territory). During the China-Nippon war, Russia sat on the fence (in the end, it send troops to seize the fruits of victory). China and Russia once made an alliance to oppose the Japanese-US Security Treaty. On the other hand, China backed Japan to ask for the return of the northern four islands from Russia. Now, China and Japan are involved in Russia in guaranteeing the supply of energy sources.

The treaties signed by the Chinese and Russian governments often emphasize two issues. One is “to promote the development of multi-polarization in the world”, and to set up a “new multipolar international order”. The other is “to strength the UN system” and “set up a common system with the UN as the core to respond to new challenges and threats, to safeguard international stability, security and expectable development”.11 The politicians and diplomatic envoys of both countries did not seem to understand that establishing a multipolar international order and strengthening the UN system are mutually exclusive goals.

During the Cold War period of bipolar confrontation, the UNSC was basically paralyzed. The UN General Assembly became a place of collision and performance of two ideologies. A Russia scholar once said that the UN must be regrouped, and must resume being a “consensus of big powers” just as expected by the founders of the UN. Great power consensus is not only established on the basis of common interests, but also on the basis of common values and politics or cultures. Political systems can form solidarity and maintain it just as its members generally observe some common rules and approve their system structures. The foundation of the system is the consensus of

11

Joint Statement of PRC and Russian Federation, published in Xinhuanet, May 28, 2003

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procedure and the consensus of substance.12 World multi-polarization means that great powers can not reach consensus on basic values and basic procedures of adopting common action. In this case, the effective operation of UN system is unimaginable.

Ye Zicheng pointed out that historically-speaking, a multipolar system may sometimes maintain world peace and stability for a considerable period of time. But in quite a few cases, it has become the main cause of large scale wars. In the past, Russia, like China, took an optimistic and active attitude towards multipolar development.

Now some Russian scholars have reexamined it and considered that there is no natural link between multipolarity and Russian interests. As in their view, “most of the potential key points in a multipolar world lie in the neighborhood of Russia or in places not far from it. Almost every pole greatly overran Russia in many aspects, such as in economic development, development speed or political enthusiasm. Every geopolitical pole has its own political or economic gravitational fields. All these fields will have negative effects on the stability of the Russian constitution because there are so many economic problems in Russia that they have not reached a common understanding. In this case, strictly according to the principles of mechanics and political logic, Russia may be carved up by the poles that are more active in its neighborhood. Therefore, the concept of multipolarity is very dangerous”.

It is necessary that China examine what multipolarity means for it as well. Does it has more advantages or disadvantages? What are the positive and negative factors?

Ye Zicheng’s conclusion is that there is no need for China to insist on a strategy of multipolarity, and should surpass the thinking of “polarization” and turn its sights to great power cooperation. We should say that great powers cooperation has its objective foundations. After 9-11, great power relations were further changed and the possibility of great power cooperation appeared. Though the Iraq War launched by the US destroyed this nascent process, there is the possibility that American policies will be adjusted and the US will come back to great power cooperation. The post-war reconstruction and the handling of the North Korean nuclear problem showed that great power cooperation might still be realized. Therefore, the strategy of promoting great power cooperation is more beneficial to the safeguarding of world peace and stability than the strategy of promoting multipolar development. And it is also more beneficial to the safeguarding of China’s national interests.13 To sum up, writer’s basic view of Sino-Russian relations is: in the general trend of global economic and political integration, the two countries should not be “friends only on the surface” in order to promote world multi-polarization. On the contrary, both sides should be permanent partners and mainstays of the UN system which is effectively operated on the basis of great power consensus and cooperation.

12

Yu Xilai: International Justice and Democracy – on the world order after Iraq War, published in Beijing: Strategy and Management, No.5, 2003.

13 Ye Zicheng: Self-examination of the history and theory of China’s multi-polarization strategy.

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ANOTHER AMERICAN CENTURY?

CHINA-AMERICA THE GREAT GAME

DEBT AND EMPIRE

DEBT AND EMPIRE

by Martino DOLFINI

The funding of the superpower, its crisis and the possible ways of emerging from it. A growth model based on the absorption of external resources to sustain internal demand. The paradoxes of the superpower. The role of China and Japan and the challenge posed by Putin.

F

or the third time in little more than forty

years, the United States have been undergoing a period of fiscal expansion, carried out aggressively by boosting military spending while at the same time lowering taxes. The federal budget went from a surplus of approximately 235 billion dollars in 2000 to a deficit of 413 billion dollars for financial year 2004; in terms of percentage of GDP – which makes it easier to perceive the change of trend – it fell from approximately +2.4% to almost –4%. As also happened during the Kennedy and Reagan presidencies, fiscal expansion has been accompanied by a parallel worsening of the current balance of payments deficit (BOP). In fact during the same period the balance fell from –425 to -660 billion dollars approximately, and this took place in spite of the fact that the two years 2000 and 2001 were affected by a net slowdown of the economy, a typical phase during which, according to economic theory, one should expect to see an improvement in the current account balance: on the one hand lower growth in domestic demand acts as a spontaneous brake on the demand for imports, while on the other hand net exports improve thanks to the progressive depreciation of the exchange rate as a result of expansionary monetary policy. A consequence of this process is the evolution of the net investment position with foreign countries, i.e. the difference between the assets held by American operators abroad and the assets held by foreign operators in the United States: this balance, which has been negative since the mid nineteen-eighties (because foreign liabilities have been growing more and at a higher rate than assets), at the close of 2004 was in all probability in excess of 3 thousand billion dollars and only slightly less than 30% of GDP. The two periods mentioned have in common two other aspects, which at least at first sight may seem paradoxical. The first is that, despite the obvious worsening of both the public sector and the external deficits – phenomena which both require the capacity to attract capital – interest rates actually declined. The second factor is that, in spite of the first factor, there were copious inflows of capital from overseas and, in recent years, more capital came in than was necessary simply to finance the BOP: in fact the United States imports capital at a rate of over 3 billion dollars a day, only half of which are needed to finance the trade deficit and the so-called “foreign aid” programs.

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1. The financial balances of the principal sectors of the American economy (1960 – 2004) (figures expressed in % of GDP) T h e g ra p h s h o w s th e F e d e ral G o v e rn m e n t d e ficit ( P S B R lin e ) a n d th e C u rre n t A c co u n t B a la n c e .

T h e tw o lin e s m o v e o n e a s a m irro r im a g e o f th e o th e r: w h e n th e p u b lic s e cto r d e ficit ris e s , th e b ala n ce o f p a y m e n ts w o rse n s . T h e s e c o n d h alf o f th e N in etie s is th e e x ce p tio n b e c a u se in th is c a s e it w a s e x ce s s s p e n d in g in th e p riv a te s e c to r th a t c a u s e d th e e x te rn al b ala n c e to w o rs e n .

Sourced from: W. Godley, A. Izurieta, G. Zezza, “Prospects and Policies for the U.S. Economy: Why Net Exports Must Now Be the Motor for U.S. Growth”, Strategic Analysis August 2004, The Levy Economic Institute.

From this brief overview we can see emerging a growth model based on the absorption of external resources (goods and capital, commodities and sources of energy) which serve to finance domestic demand (consumption and public spending, especially military spending). More specifically, it seems that we can conclude that America is financing its public spending with foreign capital, which – surprisingly – once invested in dollar-denominated assets has not only an extremely low rate of return but a return that is lower than that which could be obtained from most foreign markets. This miraculous financial mechanism appears to be the defining feature of the exercise of imperial power by America. And there is nothing new about this: at the end of the nineteen-eighties a Soviet diplomat at the embassy in Washington confessed to an American economist that, rather than the deployment of missiles in Europe and the military interventionism of the Reagan presidency around the world, what actually caused morale to plummet in Moscow was precisely the fact that, despite the rise in military spending and the growth of the public sector deficit, interest rates had actually fallen, enabling America to finance itself without any problem. To this observation I would add that the reduction of fiscal pressure (enacted by Bush, as by Reagan and Kennedy before him) is also a characteristic of the exercise of imperial power: at the very moment when there is the maximum need to finance the public sector deficit, the domestic channel of taxation is actually used in reverse, with the result that the burden of financing the American public sector deficit is shifted more and more on to other countries (with the obvious advantage that, as long as public spending and military ventures do not affect the income and wealth of the people, they do not even become the

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subject of discussion let alone of protest that politicians show a greater sense of responsibility). Graphs 1, 2, and 3 show the key features of these trends.

2. The net position with foreign countries of the United States (1982 – 2008) (historical data and forecasts based on the Levi Institute unchanged economic policies, in % of GDP) The net position with foreign countries (the Net Overseas Assets line) represents the cumulative effect over time of current account balances and, in the case of America, it substantially coincides with the stock of net financial capital from foreign countries (the Net Financial Assets graph) This position turned negative in the mid Eighties and is continuing to worsen. Forecasts indicate that

The distinctive features of the model

there will be a further acceleration of this trend.

Sourced from: W. Godley, A. Izurieta, G. Zezza, “Prospects and Policies for the U.S. Economy: Why Net Exports Must Now Be the Motor for U.S. Growth”, Strategic Analysis August 2004, The Levy Economic Institute.

3. Return on investments (1982 – 2008) (historical data and forecasts based on on the Levi Institute unchanged economic policies) In the phase of the gradual worsening position

of with

the

net

foreign

countries, interest rates on the public sector debt (the Treasury Bill Rate line) and the cost of the foreign debt (the Quasi-rate on Financial Liabilities line) have been continually falling, although there is expected to be a certain degree of recovery over the next few years.

Sourced from: W. Godley, A. Izurieta, G. Zezza, “Prospects and Policies for the U.S. Economy: Why Net Exports Must Now Be the Motor for U.S. Growth”, Strategic Analysis August 2004, The Levy Economic Institute.

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The distinctive features of the model If the paradox of high public spending financed by low-cost foreign funding is the feature which best characterizes and distinguishes the American imperial model in international relations, it is important to examine all the distinctive features of this model and the means utilized to sustain it in order to understand how the current situation came about and how sustainable it may be. There are three main features: 1.

A strong concentration of power and of the utilization of resources at government level – the so-called “Big Government”, the object of much contempt by American rhetoric; 2.

A strong concentration of economic power, mainly in the form of oligopolies, with the resulting adoption of the double standard of protectionism for the domestic market and the imposition of the free trade model for foreign markets; 3.

A progressive “financialization” of the global economy, through the so-called “dollarization” – an ugly but effective term – meaning the abandonment of any kind of reference anchor for the value of the dollar and the consequent adoption of a double standard of financial relations: as creditor towards developing countries (some of which will never become developed) and as debtor towards developed countries. This is the key point for explaining the paradox of imperial finance, a phenomenon known as the “Washington Consensus”.

These three characteristics – which emerged at different times starting from the beginning of the twentieth century – are linked: economic concentration and expansion in foreign markets are not feasible without Big Government (in other words, military spending is at the same time a means and an end); in the same way the enforced acceptance of the dollar as an international means of payment not linked to any measure of value (gold) would be out of the question without the expansion of the public sector debt; at the same time Big Government consolidates because it appears to be more responsible to those who finance it, in disregard of those who voted it in.

1.

Big Government is perhaps the most distinctive feature: it is the first to have developed over time, it is in clear conflict with the republican ideal on which America was founded and it is the element which distinguishes it quite clearly from the British imperial model. During the First World War, America was the main provider of finance for European countries. At the end of the war Wilson was quick to seize his opportunity and instead of following the traditional policy of cancelling the war debts of allied countries, he consolidated the loans into a financial credit position towards the foreign governments (not private entities or individuals) and insisted that these debts be repaid directly by France and Britain (who were in their turn in a credit position with Germany). Behind this position there is obviously the idea of forcing the European empires to rein in their military spending in order to pay off their war debt, leading them to downsize their operations to the advantage of America. This credit

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position would be used in a firm but blind way: as well as refusing the debt triangle including Germany, America imposed domestic tariffs on imports from Europe, thus in practice preventing Europe from generating the dollars needed to repay its debts, and forcing a process of deflation the result of which soon became obvious. (It is likely that the America of the nineteen-sixties was well aware of this mistake, and that this may have been one of the “strong” reasons which, as we shall see later, will push the country into forcing the system).

It is in this context of financial strength at international level that military engagement gradually enters the scene, at first in the Second World War and then subsequently on the various cold-war fronts. Again it was Wilson who, although elected on a non-interventionist platform, decided to enter the Great War because "the world must be made a safe place for democracy" and launched the first measures restricting civil liberties, which were aimed at controlling public opinion (the Espionage Act). This domestic front of Big Government was extended by Roosevelt in the nineteen-thirties with his protectionist policies (for example in the agricultural sector) and his boost to public spending on infrastructure (such as the Tennessee Valley Authority), to continue during the Sixties with Johnson’s social spending programs.

4. The highest increases in real “discretionary” items of public spending in the last 40 years (financial years)

In the last forty years, the total items of real “discretionary” public spending have risen by an average annual rate of 1.7%.

However in the last three financial years (2002-2004), the average annual rise in these same items has been around 9%, lower only than the growth recorded in the peak years of the Vietnam war.

Sourced from: : “Bush Budget Charts” – Cato Institute, 2004

The combination of Big Government on the domestic front and on the international front led over time to a substantial rise in public spending, a widening of the federal deficit and a much higher level of public sector debt. On this last point it is worth looking in greater depth at “accounting” issues, which are valid for all countries but are even more so for the country that is home to the concept of accountability, where magistrates and Congressmen never miss an opportunity to denounce the malpractice of false accounting. The public sector debt normally given in domestic

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accounts contains an accounting flaw: it is calculated using the “cash” method and not the “actuarial” method. In the accounts of America, a correct accounting treatment of sums already committed to public employees (and of these, sums relating to war veterans are an important part) and to healthcare and pension programs spanning several years would bring public sector debt up to a level equivalent to approximately five times GDP. According to calculations made by the Congressional Budget Office (CBO), 4,500 billion dollars are pledged to the first of these causes, 38,000 represent the present value of healthcare commitments while 7,000 billion refer to pension programs1. The CBO has even carried out a simulation in order to estimate the resources needed to cover the total of these liabilities: on the hypothesis of an annual growth rate of 3% of GDP from 2005 onwards, tax pressure would have to be increased by 6.5% of GDP on a permanent basis. It is within such a framework that the newly confirmed Bush administration has pledged to make permanent the tax cuts enacted in the last three years while it is at the same time aiming to halve the fiscal deficit by 2009 without making any specific commitments for healthcare, and is proposing a plan for privatizing the pension system which will involve transition costs estimated at between 1,000 and 2,000 billion dollars.

5. Trend of real “discretionary” items of public spending: defense sector and other sectors (in billions of dollars 2000, financial years)

Surprisingly, since the Republican Party – which is in favour of reducing public spending – regained a majority in the Congress (1995), total items of discretionary spending – both military and civil – have risen by 40% in real terms, giving an overall increase of approximately 250 billion dollars.

Sourced from: : “Bush Budget Charts” – Cato Institute, 2004

If on the one hand the social spending and healthcare programs have become really and truly colossal in terms of prospective future debt, on the other hand it is worth stressing that, especially in recent years, discretionary items of expense (i.e. those not linked to automatic mechanisms but which on the contrary require an explicit vote to be 1

The Congressional Budget Office, “Measures of the U.S. Government’s fiscal position under current law”, August 2004.

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passed by Congress) have also risen enormously. This second group contains above all military expenses, which have experienced massive growth over the last few years. In order to make a correct estimate of military expense it is necessary to look at the whole of the federal budget. In fact military expenses in the strict sense – i.e. those recorded in the accounts of the Pentagon – in actual fact represent around 50% of total military spending, thus giving a softer version of a harder reality. According to calculations made by the economic historian Robert Higgs (January 2004), the items of expense of a “military nature” recorded in the accounts of other departments should also be counted: almost all of the so-called “foreign aid” of the Department of State – which are in actual fact expenses for indirect military assistance to other countries (typically for the war on drugs in Latin America); all of the accounts of the Veterans Department and the Homeland Security Department; interest expense connected with loans entered into in the past for military expenses. In financial year 2002 the sum of all these items gave a total defense-related outlay of slightly below 600 billion dollars compared to the figure of approximately 350 billion assigned directly to the Pentagon.

6. How real public spending rose in “non-defense” sectors in the first four years of each administration (all the indexes start from a level of 100) If we consider only the items of discretionary expenditure other than military expenses,

the

Republican

control of both the White House and the Congress saw a rise in real spending of over 25% during the last four years.

On the contrary, during the first four years of government by the previous administrations, the same items of expense either remained unchanged (Clinton) or declined (Reagan).

Sourced from: : “Bush Budget Charts” – Cato Institute, 2004

Maintaining the same ratio and considering the extraordinary items posted for the wars in Iraq and Afghanistan, in financial year 2004 the amount of around 400 billion dollars recorded in the accounts of the Department of Defense becomes some 750 billion dollars, approximately 180% of the whole federal deficit and a little over 110% of the whole foreign deficit. But that is not all: as graphs 4, 5 and 6 show, discretionary non-defense outlays began to accelerate in 1995 (the year in which the Republican Party returned to a majority in Congress), and then moved sharply higher again in the period when the Republicans held the White House as well as a majority in Congress. In the last three years the items of discretionary spending have risen in real terms by

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approximately 9% per annum compared to an average of just below 2% recorded over the last forty years.

Alongside this trend, other phenomena which help to define Big Government more clearly have emerged, or rather have re-emerged. First of all there has been a growing concentration of power, with a consequent gradual shift of the balance of power from the legislature in favour of the executive. One example is the continual recourse to emergency appropriations, a measure used typically to increase military spending on the grounds that military commitments are evolving in an unexpected or prolonged way; the war in Kosovo, the war on terrorism and the war in Iraq were or have been financed for more than 50% using these exceptional instruments (to understand the proportions, the request for an appropriation of 87 billion dollars, made in September 2003 for the war in Iraq, was the highest ever made since the early months of the Second World War).

A second phenomenon is the gradual weakening of the political representation of the electorate – this point will be returned to later. Civil liberties and criticism are suppressed more frequently: the two laws known as the Patriot Acts are an example for everyone. These Acts in practice reduce or sometimes even annul the constitutional rights and guarantees of citizens. Lastly, but not in order of importance, there has been an alignment of the media, which means that propaganda is being put out. A striking example of the latter phenomenon is given in a study published by the Kennedy School of Government (Harvard) 2 , which, among other things, describes how a meeting is held each month in Washington of representatives of the most important national media, of government, of Congress and of the secret services, in order to determine the margin of manoeuvre on information to be published, i.e. “what and how much”. By no means extraneous to this topic – in the sense that it does in any case help avoid useful information regarding the action of the executive being the subject of debate and possibly of criticism – is the ever more frequent recourse to secrecy for government documents, on the justification that national security could otherwise be put in jeopardy: in 2003 14 million documents were classified as secret compared with 11 in 2002 and 8 in 2001 – numbers which alone help to demonstrate clearly the dimension of Big Government. This latter phenomenon risks, among other things, being an explosive one: as more and more resources are allocated to external objectives (military expenditure) the greater need there is for propaganda to justify them (on this point, the events of the Iraq war seem to me to be an eloquent example) and for censorship to keep critical voices at bay.

In conclusion, public spending continues to grow independently of which party is in power (Democrats or Republicans), channelling domestic resources not towards domestic growth objectives (social, education, aid or whatever) but more and more towards an external commitment, often of the military kind (unproductive spending), assisted in this by the growing concentration of power in the hands of the executive.

2

J. Nelson, “U.S. Government secrecy and the current crackdown on leaks”, The Joan Shorenstein Center on the Press, Politics and Public Policy Working Papers Series, Fall 2002.

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2.

The second aspect, which is complementary to the first, is the progressive concentration of economic power. It is as natural as it is understandable that a consolidated industry tends to oppose the growth of new rival enterprises, pushing for regulation for example, thus hindering technological innovation and in the end generating an almost monopolistic domestic market. What is less obvious – and surprising, given American rhetoric on the subject of “liberalization” and “deregulation” – is state support for this phenomenon. In other words: for economic concentration to be perpetuated in time, the support of the state is needed (and in this way of course Big Government becomes even bigger). This point needs to be analysed in depth.

First of all it is as interesting as it is worrying to note that the boundary between the private sector and the public sector is gradually being eroded by the so-called system of revolving doors, meaning the systematic coming-and-going of managers between industry and federal agencies, if not actual ministries, which is by no means a new phenomenon but has reached abnormal proportions under this administration.

Furthermore – and this fact is even more important in order to understand the complexity of these forms of interdependence – oligopolistic industry is the main source of funding of candidates to Congress, either directly or through various lobbies.

Partly thanks to a convenient redesigning of the electoral colleges aimed at “selecting” the electorate (unbeknown to the voters), today we are witnessing a substantial freeze on nominations to Congress: some 90% of the seats in the Chamber are not actually open to any electoral competition, and the candidates elected can afford to vote not according to the will of their constituents but rather according to that of those who financed the election campaign. This fact helps to explain why in recent times, especially on the subject of foreign policy, we have been witnessing a gradual move towards a somewhat deceptive form of unanimity in parliamentary voting, which has become known as “bipartisan voting”. May one example clarify this: on September 10 of last year, the Chamber passed by 406 votes to 12 a resolution linking Iraq to terrorism and, by syllogism, to the attacks of September 11.

The foreign policy implications – and thus the implications for international economic relations - of this feature are considerable: the corporatism of industry combined with Big Government generates a crowding-out of private spending and a distortion of its allocation and reduces investment opportunities on the domestic market. Consequently the surplus production and profits generated on the domestic market have to be channelled into foreign markets in the form of subsidized exports, as “foreign aid” (a clear example of this is the agricultural and food surplus) or as capital exports, both for the direct acquisition of foreign businesses, preferably in strategic sectors such as primary goods and sources of energy (one example of the many is the almost total privatization of the public companies managing water resources in South America), and as foreign loans. The natural consequence is that in order to absorb American goods and capital, the outlet markets must as little regulated as possible, in other words it is necessary for the foreign governments to subscribe to the doctrine of “free trade”. This can be “spontaneous” or through political proxies (such as the dictatorships in South America in the Sixties and Seventies and those of central Asia

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today); otherwise, but this is the last resort, where it is necessary to maintain control over a strategic area and there is no possibility of obtaining informal control, then there is military intervention. Either way an increase in public spending is involved: subsidies to protected sectors, military costs to open up overseas markets and to keep them open, costs linked to any regime-change intervention or even occupation. This seems to me to explain in a simple way why the United States promote the “free-trade” model and the benefits of “globalization-liberalization-deregulation”, while maintaining a protectionist system in their own country. The double standard produces double benefits: it enables them to export surplus supply in protected sectors while at the same time channelling strategic resources, commodities and energy sources into America.

3.

Let us move on to the third aspect. What I have called the “financialization” of the global economy is in fact a distortion of the international monetary system, its transformation from a “gold standard” type of system to a “dollar standard” or a “T-bill” standard system. The mechanism that regulated the Bretton Woods system was similar to the gold standard, more specifically I would define it as a regulated system of credit mechanisms, where the international means of payment (the dollar) was the expression of an asset (gold). In a few words: a parity rate was established between gold and the dollar (at $ 35 an ounce) and at this rate the Central Banks could freely exchange dollars for gold. The US Treasury was committed to maintaining gold coverage for at least 25% of all the dollars circulating internationally and foreign currencies were pegged to the dollar at a rate that could if necessary be adjusted.

How did this mechanism work? Against a US BOP deficit, dollars were created which ended up in the pockets of countries which on the contrary had a BOP surplus; if the American deficits mounted up, so then did the dollars abroad and the foreign governments had the possibility of either keeping them and reinvesting them or else converting them into gold; this second option was the mechanism that rebalanced the system, because when the countries with BOP and dollar surpluses felt that they had too many dollars they would ask the American Treasury to convert them into gold.

Since stocks of gold were limited, at a certain point the US government would be obliged to raise interest rates to curb capital outflows and to reduce public spending until the decline in domestic demand and the level of domestic prices enabled them to reduce and then reverse the negative balance of the BOP. The first part of the story – the worsening of the US balance of payments and the resulting creation of dollars – is what happened during the nineteen-fifties, when the item of public spending driving the deficit with foreign countries was military spending. What actually changed in reality compared to the original intention constituted the sequel to the story: not only did America not raise interest rates to keep the outflow of gold in check, but - under Kennedy – it actually increased military spending and reduced fiscal pressure (and then with Johnson it increased welfare spending with the creation of the Medicare and Medicaid programs). In fact with the election of Kennedy the first tensions arose in the monetary system and gold at a certain point was changing hands at $ 40 an ounce; in 1964 the stock of dollars held by

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foreign Central Banks was almost as great as the stock of gold held by the US Treasury, and France and Germany were beginning to convert their dollars into gold systematically. The crucial point was that the whole foreign deficit was the result of military spending and any rebalancing of the system would have required either that this spending be financed by selling American investments abroad and raising taxes or that military commitments be reduced outright: in both cases it would have meant a drastic downsizing of the empire (and of corporate profits).

It was in these years that America forced the system, receiving in response only modest resistance from European countries (virtually only from France): it continued to increase public spending (even in the presence of full employment) thus increasing the foreign deficit, in 1968 it informally suspended the gold standard (foreign Central Banks undertook not to convert their dollars into gold but instead to buy Treasuries, which were tradable on the market and were convertible into dollars), until the gold standard for the conversion of dollars was officially suspended in1971.

The key to all this is the progressive shift – probably an unconscious one at the beginning of the entire process – from a system regulated by credit mechanisms and where the means of payment was the expression of an asset (gold), to a system regulated by debt mechanisms where the international means of payment is on the contrary the expression of a liability (the American public debt). On the back of the slogan “America will not allow foreign countries to dictate its domestic policy” – which will become a constant in American international relations – logic was thus inverted: in the first kind of system it is the countries with BOP surpluses, those with dollar receivables, who force the system to adjust by putting the burden of the adjustment on to the debtor country; in the second type of system it is America, the debtor country, who is dictating conditions and is forcing its creditor countries to finance its own debt. If at one time the debtor country had to raise its interest rates in order to attract capital to finance its BOP deficit, today it is the BOP deficit itself that is generating the dollars necessary to finance it, thus enabling America to keep its interest rates low thanks to the continuous purchase of Treasuries by “other” countries (there is no question of reinvesting the dollar surplus in any production activities: OPEC was ready to invest its petrodollars in American enterprises back in 1973 but was told in no uncertain terms that such an action “would be considered as a declaration of war”).

The abandonment of gold as the measure of the dollar’s value implies that creditor countries holding dollars are confident that they will be repaid, in other words, they have confidence in the fact that the dollar is “strong”. In fact since the dollar has been freely floating on the market, it has mainly been “strong” for debtor countries and has alternated between phases of strength and phases of weakness for creditor countries. And this has happened both for intrinsic reasons (such as higher growth and the international credibility of the country) and because America has consciously been following a “strong dollar” policy, threatening or actually causing a depreciation of its own currency only as retaliation against those countries who did not conform to its expectations or who posed a strategic challenge (as for example Japan did during the Eighties). This process has however allowed the reduction of domestic inflation, thus

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paving the way for the fall in interest rates, which began during the Eighties and which was much admired by the Soviet Union.

The irony of the story is that in any case America imposed itself on the world financial scene as the champion of a creditor-oriented system, a position that obviously suited its interests – because it helped it to oust Britain from its imperial throne – but which was sustainable because of its creditor position towards foreign countries and its BOP surplus: the Bretton Woods system and the aim, at least in the initial stages, of its institutions (the Monetary Fund, the World Bank, Gatt and then the WTO) were based on these premises. And the system continues to function along these lines for all the other debtor countries, those who could be referred to – to use a euphemistic term – as “non developed”. These countries – obliged to comply with the “free trade” model – are forced to enact policies of austerity (fiscal surpluses and high interest rates), policies of adjustment (crazy devaluations of their currencies) and policies of liberalization (savage privatization) with the result of maximizing financial power (through a vicious circle of international loans and a rise in foreign dollar-denominated debt) relative to local economic power (work and production) and the Welfare State (which, where it has existed, is being gradually dismantled). Even in this instance the double standard of “financialization” - better know as the “Washington Consensus” produces double benefits: it allows America to accumulate supplies of strategic resources abroad as a creditor country and to finance its public sector debt and the economic and military expansion of its empire thanks to its status as a privileged debtor nation.

The current situation Due to the mechanisms described above, the United States’ accounts with foreign countries have gradually deteriorated. The BOP deficit first appeared at the beginning of the Fifties and has been a constant since then. During the first few decades it was absorbed by the US net credit position towards foreign countries that had been accumulated in the first half of the last century and which was partly offset by the fact that the private sector recorded a positive savings rate (1.8% of average annual GDP). In the mid Eighties this “shock-absorber” ran out and foreign debt not only exceeded assets held abroad but began to grow more rapidly. At the end of 2003, foreign debt stood at approximately 70% of GDP, the net position with foreign countries was negative and amounted to just under 25% of GDP and to 300% of exports, which represent the natural source of currency needed to repay foreign debt over time (as a term of comparison, the ratio of foreign debt to exports of Argentina and Brazil at the time of their respective financial crises in 1999 and 2001, was around 400%).

An American research centre, the Levy Economic Institute, twice a year publishes a study of the evolution of the balances of the various sectors of the American economy (meaning the differences between savings and expenditure in the private sector, the public sector and the foreign sector) in which – as the basic scenario – shows the “constant-policy” trends for the next four years, i.e. what will happen if nobody does

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anything to change the current course of events. In the latest report published (August 2004)3, the authors made the following forecast: with the hypothesis of annual GDP growth of slightly over 3%, by the end of 2008 the Federal deficit will have risen to 9% of GDP and the public sector debt to 60% of GDP; thanks to a modest improvement in the accounts of the private sector, the current account deficit will have worsened slightly less but will in any case reach 7.5% of GDP and will take the net debt position with foreign countries to over 50% of GDP (also due to a rise in borrowing costs). We spoke earlier of the commitments made or put forward by the current administration, but which are in any case inconsistent with this scenario.

7. Dollar indexes (exchange rates weighted on the basis of trade relations between the United States and other countries) 160

The numbers on the right + 6800%

140

of the graph represent variations in the dollar in

120

+240%

percentage terms. For the “Broad”

100

- 40% * 80

and

Trading

“Other Partners”

indexes

the

period

covered is 31/1/1973 –

60

31/12/2004; 40

for

the

“Major Trading Partners” index the period covered

20

is 0 Jan-73

15/8/1971

–

31/12/2004.

Jan-78

Broad

Jan-83

Jan-88

Major Trading Partners

Jan-93

Jan-98

Jan-03

Other Important Trading Partners

Source: Our calculations using figures provided by the Board of Governors of the Federal Reserve System

It is against this backdrop that in the last few years many signals have emerged that suggest that the American “imperial drive” has run out of steam.

1.

America’s reaction to challenges to the financial mechanisms described above made recently by third-party countries has been out of all proportion. In the case of Iraq, the reaction was excessive: the excuse was Iraq’s open opposition to Arab oil being sold off cheaply to the Americans. In 1998 Saddam Hussein had already conducted a hard campaign against Saudi Arabia, which was ready to de-nationalize 3

W. Godley, A. Izurieta, G. Zezza, “Prospects and Policies for the U.S. Economy: Why Net Exports Must Now Be the Motor for U.S. Growth” Strategic Analysis, The Levy Economic Institute, August 2004.

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part of its upstream business in favour of American companies, and subsequently in August 2000 Saddam Hussein decided to uncouple oil transactions from the dollar and to denominate them in euros (a measure which implied the re-investment of Iraqi oil revenues in Europe rather than in America). In the case of Venezuela and Argentina, the response was uncertain: with Argentina – which stated that it was not prepared to honour an international debt that was the result of austerity and impoverishment measures dictated by the Fund – the same Fund that has for two years now been negotiating repayment (with private investors Argentina has already declared itself insolvent); with Venezuela – which has nationalized its oil industry and used the proceeds to increase its public spending especially in the sectors of health and education - America has twice attempted a regime change, but has received two resounding defeats in two years (the second one through the most democratic institution in existence, the referendum).

2.

Another alarm bell has been the weakening of the dollar despite the constant substantial inflow of foreign capital. The fall in the value of the dollar has been more marked against the other main currencies (-40% approximately since 1971), while compared to a broader index – which measures the value of the dollar against the currencies of both creditor and debtor countries – the American currency, after appreciating in value for thirty years, has declined significantly in recent years (-16% approximately since its all-time highs recorded at the beginning of 2002). We are thus witnessing a trend consistent with a low level of interest rates – both in absolute terms and relative to other countries – with a net debt position with foreign countries, a clear sign that there is perceived to be an excessive supply of dollars (see graph 7).

3.

However two facts strike me as more significant because they are structural.

First of all is the growing resort to the formal exercise of the empire, not only through wars and occupation, but also by making it into an explicit theory, with the doctrine of “pre-emptive war” as an instrument of systematic intervention aimed at maintaining hegemony and the re-armament that this involves4. In 1953, two historians, Gallagher and Robinson, put forward the following argument to analyse the evolution of the British empire in contrast with traditional interpretations5: that the informal empire, held in place by economic dependence (and known as Pax Britannica), and the formal empire, held in place by colonialism, are in fact complementary. Resort is made to the second form only when: a) the geographical area involved is of strategic importance to the empire (in terms of resources or geographical position), and b) it is no longer possible to dominate it through exercise of the informal empire. If we replace Pax 4

First mentioned in the paper “Rebuilding American Defenses” written in 2000 by the Project for the New American Century – a centre of neoconservative opinion and propaganda – the doctrine was formalized in September 2002 in a document of the National Security Council (“The National Security Strategy of the U.S.A.”).

5 J. Gallagher and R. Robinson, “The Imperialism of Free Trade”, The Economic History Review, 1953.

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Britannica with the Washington Consensus, and colonialism with nation building and the export of democracy, this analysis can reasonably be applied to the American empire. The difference is that both Britain in the nineteenth century and America in the first half of the twentieth century were creditor nations, and this was the basis of their international credibility, giving them the ability to exercise an informal empire.

The gradual passage of America to a debt position has reduced the international credibility of the country, obliging it to have greater recourse to the exercise of its formal empire. This process is a circular one: the more resort there is to the exercise of the formal empire, the more military spending grows, the worse the net position with foreign countries becomes, and international credibility falls even further, and so on.

Moreover the growing recourse to the formal empire, for those countries that are subjected to it, means territorial break-up, the disappearance of institutions, the spread of tribal powers and terrorism and the loss of the country’s historical, civil and cultural memory. This process is clearly explosive.

4.

The second significant aspect is on the domestic front. America is gradually assuming the development characteristics typical of a debtor country. The combination of high unproductive public spending and corporative protectionism favours concentration rather than competition, diverts funds and jobs away from economic and social development, away from the productive sectors of the economy towards the unproductive ones (such as defense and most of the service industries). An example of great interest is to be found in the report of the American Society of Civil Engineers (September 2003)6, which shows how most American infrastructures (roads, bridges, schools, waste treatment systems etc.) are in a state of advanced decay and would need repair and modernization for around an estimated 300 billion dollars per year over a period of five years (here the irony is that the funds allocated for rebuilding infrastructure in Iraq are far higher than the same items included in the federal budget for domestic infrastructure). The results of this shift of spending towards unproductive sectors are the phenomena of off-shoring, or moving production offshore, and outsourcing jobs to countries which have more recently appeared on the world market scene and which offer a total labour capacity of over five times that of America: China and India.

At the basis of America’s persistent, growing trade deficit, which is now insensitive to the business cycle, is the fact that America has to import the goods that it no longer produces, reducing at the same time its export potential. And this is not all: despite the dominant argument, which claims that these phenomena are to the advantage of everyone concerned (higher profits for businesses, lower prices for consumers, foreigners buying growing quantities of American produced goods), in reality they generate income, employment and know-how in the countries where production is located while, on the contrary, America loses these benefits permanently. The consequence of all this is that the prospects of development for American labour are 6

American Society of Civil Engineers, “Report card for America’s infrastructure – 2003 Progress report”, September 2003.

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linked almost exclusively to the creation of low-cost jobs with a low level of specialization and a low technology content. According to the ten-year projections of the Bureau of Labor Statistics, in this time frame America will lose its position of leadership in the field of technology, creating only 5% new jobs in the hi-tech sector7, and this will be the case even without taking into account the fact that today, three years from the end of the recession, there are some 200 thousand fewer jobs in that sector.

This is a road that leads in the opposite direction to the greatly extolled knowledge economy and to the old Fordist model where work was rewarded in order that it should become more productive and capable of consuming. This road leads to a model that can be defined as a “Wal-Mart” model, where mass produced goods are sold thanks to continual price reductions, and where the labour force finds itself systematically in the situation of having to choose between falling wages or job losses.

While America swallows up capital voraciously (it does in fact absorb some 80% of surplus world savings), it is shifting jobs abroad on a permanent basis, thus abandoning the development of its production capabilities. Neither is it worried – as we saw at the beginning – about how it is going to meet its future debt obligations with its own citizens (health, social security, pensions). In this case, the process is one of implosion.

The prospects How can this situation be resolved? First of all it must be stressed that apart from the dimensions involved, which are undoubtedly unique, the crisis of its model is nothing new for America. Twice in the past (in the Thirties and the Sixties), America had to face a crisis and managed to find a way out of it: at the end of the Thirties the economic crisis was overcome by imposing Big Government definitively and by increasing public spending; at the end of the Sixties the financial crisis was overcome by uncoupling the dollar from the gold standard and changing the whole of the international monetary system. Both these periods were characterized by the presence of voices of criticism which highlighted the risks involved and tried to set up political opposition. The Thirties saw the trend of the anti-militarist libertarians, who drew inspiration from Jefferson and who opposed the growing concentration of power in the hands of the executive; in the Sixties this trend was joined by left-wing (P. Sweezy, P. Baran) and independent economists (such as M. Hudson, who specialized in the analysis of international finance), and lastly by Kennedy, who was the most significant example of support on the political front, especially in terms of the expectations that he was able to arouse. Intervening in December 1962 at the Economic Club of New York, Kennedy spoke of the reasons behind the tax reform and why it was needed, stressing that cutting income tax would stimulate the economic machine and would 7

The whole of the February 2004 issue of the journal Monthly Labor Review Online is dedicated to these analyses.

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favour full employment, thus improving over time the capacity of America to self-finance its public sector deficit (a sort of supply-side economy before its time) and reducing the country’s dependence on external financing: Kennedy seemed to be quite clear about the link between the Federal deficit and the foreign deficit and the associated risks thereof. In the same speech he also dealt with the problem of military spending: his words expressed the conviction that the investments made in the military field in recent years had led America to occupy a position of strategic superiority in the nuclear field and that a good deal of progress had also been made in the conventional field, with the result that it was feasible in the medium term to pursue the objective of gradually reducing military spending. In this capacity, in spite of all his contradictions and the fact that his work remained incomplete, Kennedy epitomizes liberal aspirations more than any other politician, adopting certain features that are typically laissez-faire (less Big Government, fewer subsidies to oligopolistic industry), but at the same time avoiding the radical aspects preached by intellectuals of the libertarian tradition.

8. How important foreign investors are for the American public sector debt (percentage of long-term American Government securities held by foreign investors) 70%

60% 56%

50%

50% 45%

40%

40% 37%

30%

22%

20%

19% 15% 12%

10%

14%

0% Dic. 1974

Dic. 1978

Dic. 1984

Dic. 1989

Dic. 1994

Dic. 2000

Dic. 2001

Dic. 2002

Dic. 2003

Ott. 2004

Source: our calculations using figures supplied by the Department of the Treasury, Federal Reserve Bank of New York, Board of Governors of the Federal Reserve System

With the death of Kennedy the supporters of military confrontation and public spending got the upper hand (it was actually during these years that the neoconservative movement began, under the auspices of the hawkish Senator Jackson – a Democrat) and the voices of criticism became silent. Today the situation is analogous: we are in a peak phase, in which the absorption of resources and their utilization for corporative purposes are at a very high level and in which the cracks are becoming more and more evident; today many analyses are being made, the level of debate is rising, and alarm signals are coming from important economists (such as S.

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Roach, Chief Economist of Morgan Stanley) and from the establishment itself (for example P. Petersen, President of the Council on Foreign Relations, and A. Niskanen, President of the Cato Institute). The differences are of quantity – this time the deficits are huge and are growing rapidly – and of quality – the excess dollars and Treasuries abroad are held by Asian Central Banks (approximately two thirds of the total), see graphs 8 and 9.

Once the critical aspects of the model have been clarified, without wishing to make any rash hypotheses regarding the possibility of America forcing the situation again (it seems to me that all the options have been exhausted anyway), two possible scenarios can be envisaged, one involving a “soft landing” and the other a “hard (emergency) landing”.

1.

The first scenario is the one that most analysts preach and most observers hope for. In essence, it would involve a gradual re-absorption of both the public spending deficit and the BOP deficit through restrictive monetary and fiscal measures. Given the macroscopic nature of the deficits, the estimates circulating as to how much of a slowdown in growth would result are such that a period of several years of anaemic growth would be forecast. This would make the problem of downsizing the empire even more evident: if the rebalancing mechanism failed to be effective in conditions of more modest deficits and in the presence of a dollar-gold link, I find it difficult to imagine that this mechanism could work today, if not on a voluntary basis at least on a cooperative and multilateral basis, when the stakes are so much higher. A possible scenario yet not a very likely one.

9. The principal creditor nations of the United States – October 2004 (the distribution by country of US Treasuries held by foreign investors)

OPEC 3% Latin America 3%

Turkey, Israel 1% Canada 2%

Others 8% Japan 38%

Switzerland 3% Offshore centres 5%

Britain 8%

European Monetary Union 8%

Others Asia 10%

China + Hong Kong 11%

Source: our calculations using figures provided by the Department of the Treasury

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CHINA-AMERICA THE GREAT GAME

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2.

The second scenario is that of the hard landing: the countries with surpluses stop financing the American deficit and use the money for their own domestic ends.

The countries with a debt towards America, and towards the West in general, follow the example of Argentina and go bankrupt without repaying their debts. America, deprived of its funding, is forced to implement restrictive measures to its public finances together with a sharp devaluation of the exchange rate and a hike in interest rates. This is, in my view, the most likely scenario the longer America puts off making the necessary adjustment.

One of the reasons is that creditor countries (especially Japan and Europe) are very likely to find themselves in the condition of having to repatriate funds in order to finance the impact of negative demographic trends. Ageing populations with the resulting decrease in their active workforce will come about in these countries earlier and more rapidly than in the United States, and the self-financing channel (by increasing fiscal pressure) cannot be used because of the high tax levels already in existence. It was no chance that Haruhiko Kuroda – currently at the head of the Asian Development Bank and formerly an important consultant of the Japanese premier Koizumi – pointed out that this funding need will make it necessary, at a certain point, to keep within the Japanese domestic economy savings flows currently being directed towards financing the American BOP deficit. The devaluation of the dollar that would follow the repatriation of Asian and European capital would probably be substantial and would take place very rapidly, causing a worsening of prices for exporting countries (Asia and Europe). For debtor countries, the only way to break the vicious circle of “debt-loans-privatizations-underdevelopment-unemployment” and to take repossession of their own resources, would be to repudiate their financial debt (which would not actually be a great cost for the West) and to bring ownership of these resources back into the domestic market, after enacting a reform of the property system, which has often remained at a level comparable with the latifundium regime (at least in South America).

What remains uncertain is the time frame of these events. The projections made by the Levy Institute on the basis of current policies remaining constant, to which reference is made above, are actually conservative estimates: they do not, for instance, take into account, and cannot take into account, funds committed through emergency appropriations. What would happen if an Iranian and/or a Syrian front were to come into the picture8? How will Putin’s change of direction if not downright rebellion against the Washington Consensus be dealt with (blocking Jukos from trying to sell Russian natural resources abroad, the nationalization of the oil industry, the 8

In 1996 “A Clean Break” was drawn up, a policy document for the election campaign of Netanyahu in Israel. Written by various exponents of the American neoconservative movement - in the middle of the Clinton era – it preaches a regime change for Arab countries, starting with Iraq and continuing with Syria and Iran. Even more radical was a paper presented by the Rand Corporation in 2002 to the Defense Policy Board arguing that it would be a good idea to intervene directly with no half measures in Saudi Arabia and carve the country up.

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constitutional changes recently put forward, the announced increase of the percentage of official reserves invested in euros instead of in dollars)? So far America has made no explicit response to the “resource rush” undertaken by China, but in the event of an American slowdown the question of competition to control strategic resources would become a matter of some urgency. On the other hand we cannot exclude the possibility that America may try to limit its BOP deficit, and thus the accumulation of foreign debt, through extreme forms of protectionism combined with a creeping devaluation (as happened in 1973). Not only would the exports of creditor nations be penalized even further and arbitrarily, but their dollar receivables would lose value: the current administration has already given clear signs that it has no qualms about adopting such a policy. There are therefore elements that lead us to fear that America’s figures – and the instability that would be the result at international level – are destined to worsen extremely rapidly.

In reality the two scenarios put forward differ with regard to the speed of the adjustment, but not with regard to the direction involved: in both cases, in fact, there will be a rise in interest rates, a depreciation of the exchange rate and a slowdown of domestic demand. In the first instance it would all happen in an orderly fashion and by degrees, whereas in the second it would all happen much more quickly and much more massively. The probability of one or the other taking place depends, therefore, on how long the current situation drags on, as the numbers continue to get worse: the longer the adjustment is postponed over time, the greater it will be and the more likely it will be that the scenario will be that of the hard landing.

In 1961 Eisenhower felt the urgent need to warn his successors of the risks connected with the "military-industrial complex" meaning the "conjunction of an immense military establishment and a large arms industry”: a machine that has become gigantic in terms of the amount of money involved ("we annually spend on military security more than the net income of all United States corporations") and the number of people employed, and which is now such that "the total influence – economic, political, even spiritual – is felt in every city, every state house, every office of Federal government. (…) We must not fail to comprehend its grave implications”. During the Nineties America systematically and explicitly opposed all plans put in place by creditor nations, the European Monetary Union and the Asian Monetary Fund, in order to become more independent of the Washington Consensus, sabotaging the former and sinking the latter. Today there is no reason to suppose that things are any different and that attitudes are more amenable.

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CRUDE AWAKENINGS

by Margherita PAOLINI

The United States were caught by surprise by the new global energy competition, unleashed by China, India and other emerging countries. The return of the agreements of production between states, bete noir of the Americans.

1.

T

he Clinton administration left by way of inheritance to Bush a domestic

energy system already structurally weakened by the growing disparity between a continually expanding demand and an increasingly sluggish production of national oil and gas resources. The problem of excessive dependence on foreign supplies, in particular from the Middle East, was already seen as a risky exposure. The priorities then were the recovery, as quickly as possible, of the domestic productive capacity, the application of some energy saving measures and the regulation of products of consumption, considering that one part of the oil reserves is now exhausted and one can only count on four productive areas for the future. At any rate, given the unpreventable decline of oil reserves, the valorization of national natural gas resources was highly recommended both in terms of development and commercialization.

The American energy system has certain built-in rigidities which increasingly necessitate federal intervention in order to regenerate efficiency: a global demand of up to 60% of gas and oil, a transport sector responsible primarily for the growing quota of oil consumption (especially benzene) and for the incentives offered to the automobile industry with a low taxation on gas. Lastly an idle refining system with a treatment capacity of 16.5 million barrels a day (b/d), which cannot cover a demand that has grown to 23 million b/d. This difference accounts for foreign dependence even for a quota of finished products—about 2 million b/d—imported from Venezuelan refineries. The problem for Bush was serious but not insurmountable seeing that initially market prices granted sufficient profits to the operators of the energy sector.

But the slowdown of the economy which already preceded the trauma of September 11th froze the activities of the US operators. Then, the temporary crisis of demand following September 11th, especially in the transport sector, and the relative drop of energy prices caused the oil companies to seek foreign investments.

Consequently, a crisis befell a number of small and medium-size operators, which for many was irreversible. Thus was accentuated the already inexorable structural drop in domestic production.

But from the moment of the attack on the Twin Towers Bush concerns were focused on a different conception of energy security, supported by his vision of preemptive war. This was the basis of his policy of strategic supplies (Strategic Petroleum Reserve or SPR) which between 2002 and 2006 will have to reach 700 million barrels and perhaps more, the most vast global oil reservoir, guarded in caverns

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that were once salt mines. Today the SPR has officially reached a quota of 680 million barrels. A The system will be able to guarantee a reserve of 4.3 million b/d for 90 days.

The policy of massive reinforcement of strategic reserves begun in the months immediately preceding the war in Iraq has created an added demand which has further shaken a global market, which remains in balance but is threatened by diverse factors: the strong growth of energy demand in emerging countries; the drop in Venezuelan production, presently the US’ third supplier; and the first signals of strong speculative movements.

Between 2002 and 2004 prices on oil imported by the US, influenced by the Nymex reference that created the upsurge, suffered two successive flare-ups that raised them from an average of 23.7 to 36.7 dollars a barrel. US oil rose from 17.6 to 36.9 dollars a barrel. Beginning in 2003, energy production improved slightly. But in the meantime vice-president Cheney designed a map of provisions arranged with a restricted group of oil companies. This was reinforced by the bankruptcy of Enron, which was dismembered and divided amount the major energy firms.

The connection between the administration and the oil companies, begun to augment the security of energy facilities against terrorist attacks, is increasingly becoming a strategy of its own with the following aims: a forward policy of energy security reducing dependence on the Middle East and in particular on Saudi Arabia; blackmailing or taking down the Chavez regime which creates dangerous turbulence in Latin America; and spreading the American strategic presence to Asia and Africa.

The oil companies can reveal the best locations: those which guarantee large profits and which the US political and military presence (or NATO, or mercenary, but always organized by the Americans) contributes to ensuring their value. In the last two years the US plan for foreign supply for the near future has become focused on a few geographic macro areas.

If North America remains in theory the most secure resource system, policies of new production demand further investment. However the oil companies are still loath to venture it. Obviously they are involved in the Gulf of Mexico. The problems come from the northern area of Latin America-Trinidad -Venezuela-Columbia-Ecuador system, conceived by the oil companies, led by Chevron Texaco, as a reservoir integrated with the American one. The quarrel between Chavez and the corporations, exacerbated by the virulent anti-Americanism following the unsuccessful coup d’etat, affects the project. Even if Venezuela has recently increased oil exportation towards the US, commercial relations between the two countries are hanging by a thread.

Hopes and fears alternate in the North Sea and the Antarctic sea where BP, Royal Dutch Shell and Exxon Mobil must cede the way to Norwegian Statoil, destined to become the principal supplier of the American market. Further east great projects are underway on the reserves of offshore Russia. Khodorkovski’s Jukos was pressured

by Exxon Mobil and Chevron Texaco to transfer its best assets to them, valued at 20 billion dollars. But now 15% of its juiciest assets are in Putin’s hands who uses it for commercial purposes with China and Japan Things are better in the Caspian. Chevron Texaco drives the great project of developing the oilfields of Tengiz in Kazakhstan, where production destined for the

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US should double by 2008.

In the Middle East the heralded diversification continues to betting on Saudi Arabia which still maintains a position in the aristocracy of Washington’s preferred suppliers. Maintaining the necessary production from now until 2010 according to the American administration (20 million b/d), Riyadh risks ruining its oilfields, old and new. The Iraqi campaign has been disappointing until now. At least before the war, 1.3 million b/d arrived at very convenient prices on the American market. Now one hopes for the restart of exports: perhaps 1.7 million b/d in 2005: a flow well-protected by government militias and local administrations directly interested in their territories’ resources. Meanwhile the first contracts for technical assistance to regenerated and develop the Kirkuk and Rumayla oilfields were awarded to Royal Dutch Shell and BP, respectively.

It is in Africa that Bush-large corporations strategy should yield the most interesting results. Beginning in the North, with Algeria and now Libya, where Chevron’s spectacular entrance was announced. New development of oil and gas resources are involved in the basins of the so-called “Berber Pole”. However, culturally based autonomist claims are arising against the government, accused of being too “Arabized”.

The principal African pole is the Gulf of Guinea, from Nigeria to Angola, where traditional coastal suppliers are joined by Equatorial Guinea, Congo and Gabon.

Cameroon is becoming an outlet for new reserves discovered in Chad and exploited by the omnipresent Exxon Mobil and Chevron Texaco. Finally, the island of Sao Tome remains far offshore, away from terrorist attacks and political tension. By 2010, 25% of American oil imports will have to come from this region, which will be guarded thanks to a military base now under construction in Sao Tome.

And yet this strategy has not produced any significant improvement of the United States’ energy situation. Domestic production, with a few exceptions, continues to drop, while the bill for supplying continues to rise. To this one must add the growing cost of militarization abroad: the “oil protection” in zones of production, the defense of facilities and patrolling of maritime routes in the Gulf, the Arabian Sea, the Straits of Molucche, the South China Sea, etc.

2.

Since September 11th the oil companies have de facto written Bush’s energy agenda. And they have contributed to aggravating the crisis of the US system. The divide between growing consumption and falling supply has widened. Thus the dependence on foreign resources. This policy has ended up sacrificing gas, which is exists in vast amounts in North America, even more than oil. The United States have reserves that put them in fifth place in the world scale, behind Iran, Russia, Qatar and Saudi Arabia (which could in the future be superseded by Iraq).

The companies have snubbed the actions put forth by the national energy plan.

Among its priorities were the boosting of domestic gas production and commercialization. The minimal interest in national gas production combined with the scarcity of oil products has further weakened US energy market. The domestic and international juncture, which in 2004 determined the inexorable increase of consumer

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oil prices, has ended up involving gas as well. From 2002 to 2004 its price in the US rose by 48%.

Now that the price of US gas has more than doubled from 2.95 to over 6 dollars/MBTU, the large companies are interested once more, for two reasons.

The crisis of domestic gas supply makes for irresistible pressure on companies to start up the exploitation of the most precious reserves, many in federally protected areas, both domestic—parks and Indian reserves—and coasts and offshore. Until now these were spared thanks to a moratorium that President Clinton renewed until 2008.

The most desirable reserves, besides offshore Florida, are those of ANWR (Arctic National Wildlife Refuge), which are 100% protected. The bipartisan resistance in the Senate which had saved them until now has dissolved since the elections. Both the former Energy Secretary, Spencer Abraham, and the new one, Sam Bodman (previously Under Secretary of Commerce and Treasury and president of one of the most polluting companies), have announced the “necessity” of drilling to “guarantee to our citizens an adequate energy supply”.

The companies expect to obtain the necessary investments to drill. How? This time they can count on sufficiently profitable market prices. So commercial interests suddenly coincide with national ones. But the companies will be in charge.

The expected leap in US demand for gas, from 22 trillion cubic feet in 2003 to at least 31 trillion by 2025, explains the campaign promoted by Exxon-Mobil for foreign resources. This strategy involves the enhancing of Canadian production. Thus the development of the offshore reserves of the Beaufort Sea, the Arctic isles and Nova Scotia. The campaign extends to Mexico, strongly connected to the US network.

The North America is interconnected not only logistically but also in terms of management. The companies that matter—American, Canadian and Mexican—are always the same: Exxon Mobil, Chevron Texaco, Royal Dutch Shell, Conoco Phillips, Marathon, BP USA, etc.

Nonetheless, the key aspect of this enrichment is the areas of production foreign to the American continent. If the growing American demand is primarily served by foreign markets, investments for the commercialization of these reserves are required.

The most conspicuous projects are in Southeast Asia: in Malaysia (where as elsewhere, we find former pieces of Enron), in Indonesia (particularly offshore of the province of Aceh where Exxon Mobil operates), in Australia (Northwest Shelf) and in the Sea of Timor. Investments in this region should allow the building of a supply of LNG (liquid natural gas) to cover part of the growing demand of Japan and South Korea as well. The most ambitious objective is to monopolize the Asian market of LNG. In Qatar and Nigeria on the other hand, the great projects underway are intended for the American market (Chevron) and its British friend (BP). At the moment, a battle without quarter is underway over the projected building of plants and terminals along the US and Mexican coasts and offshore (California and the Gulf of Mexico). The boom of foreign supply is liquid natural gas is in fact sponsored by the White House. Since 2004 Bush has been making it a question of national security, almost more than oil. “I see an iceberg in front of us, a dreadful increase in the price of gas if we do not manage to build the necessary plants on the American coast.”

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Only one aspect of the boom of LNG is still in discussion. The plants and the great ships, particularly in Southeast Asia, could represent targets for terrorist attacks.

This will be a great boon to private security firms.

In 2002 US imports of LNG by sea accounted for little less than 1% of domestic consumption and came mainly from Trinidad. In 2020 they should account for 80%, making the US the largest importer of such resources and worsening its record of energy dependence.

The companies in Russia and Central Asia play a strategic role when it comes to gas, commercializing quotas of Russian, Kazakh and Turkic gas. As and perhaps even more than with oil, the Jukos collapse has given Putin full control over commercial treatment of gas. On the other hand, the “Orange Revolution” is creating a crisis for the flow of Russian supplies and those through Russia to Europe. Yushchenko wants to review the Russo-Ukraine joint-venture (International Gas Consortium) which manages 85% of Russian exportations of gas towards the West. The new Ukraine government intends to construct a society which involves instead German Ruhrgas and which works with the Turkmen government without Russian interference. A challenge to which Putin is attempting to respond by seeking alternatives to Ukraine for the exportation of Russian gas, exploiting the vastness of his territory and the diversified collocation of his reserves. The safest alternative will be in the future, in the arctic seas as well as Turkey.

Thanks also to the enormous energy profits of 2004, Russia is also undertaking the exploitation of reserves on the Jamal peninsula (western Siberia), the Sea of Barents, eastern Siberia and the Sakhalin peninsula. This should guarantee exports both to Europe and towards the Far East—on the basis of recent agreement signed with China and Japan. Further acquisitions of gas reserves are possible after the accord with Kazakhstan to divide a large field of oil and gas along the border between the two countries. Besides, it is highly likely that thanks to co-production of gas with Norwegian Statoil in the Sea of Barents, Russian Gazprom can become an important supplier of LNG to the east coast of America. Statoil is considered by the US one of its most important partners.

3.

The battle for gas reveals the growing competition in the world market for energy resources. As former Secretary of Energy Abraham observed, “I foresee that as far as gas is concerned, we will witness the same type of challenge as for oil”. The competition has swelled with the entrance of two new players, China and India, followed by a group of new entries that threaten critical mass, like Malaysia and Brazil.

China is also an important producer (which nonetheless can’t cover a demand which in 2004 reached 5.5 million b/d). The growth of domestic energy demand for these two players was forecast up to 2002. But no analyst imagined a similar rate of development.

These giants tend to get involved in the corporations’ hunt for reserves. And they acquire assets in important projects of LNG or oil prospecting. Chin in particular has stabilized its position in the South China Sea (Spratly and Paracelso islands), which it considers its own. From this platform the Chinese are projecting themselves

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towards significant zones in the Indonesian seas (around the Natuna archipelago) and in Southeast Asia, up to the coasts of Northwest Australia, where major companies are already stationed. The Chinese expansion in Southeast Asia is especially worrying for the Americans. Also because the Chinese acquisition of Unocal would grant to Beijing a notable know-how for energy resources in that area.

But Beijing’s invasion goes well beyond that: from the Middle East (oil explorations in Saudi al-Rub al-Hali, joint-ventures with Iran, which provides 40% of China’s oil consumption) to the Gulf of Guinea (where Nigeria is another important exporter), from Norway to Venezuela.

Partly thanks to China the Venezuelan leader Chavez can allow himself to snub the Americans. Caracas has stipulated a joint venture in a contract with the major Chinese state company—CNPC, which operates offshore—for the development of oil and gas reserves. This allows Chavez to sustain his neo-Bolivarist aspirations, seeking to build a Latin American energy pole, with obvious geopolitical connotations.

The Chinese model of consumption seeks to contain levels of dependence on importation through two basic choices. First: national companies are given incentives to acquire directly from the producing governments (operations from state to state), involving contracts of production sharing agreement (PSA). Second: the Chinese buy assets of energy groups or enter in quotas of projects already in development. This differs from other important consumers like the Japanese, which are at the point of dissolving their national company, which had a single objective—to directly seek new resources.

The Chinese and Venezuelan models—consumer and producer—represents the most dangerous challenge for the United States. They are building on a global scale, offering an enviable example to other emerging countries.

As far as India is concerned, its principal zone is the Middle East. Beginning with Iran. The Indians have stipulated with the Persians analogous to the Chinese one (40 billion dollars) for the import of LNG and the development of Iranian oilfields.

Tehran and Delhi have raised the prospect of a gas pipeline from Iran through Pakistan to India. This has profoundly irritated the Americans. They have been trying for its gas, to be developed by Exxon. But the Pakistanis consider it to costly and intend to go with the Iranian project, guaranteeing passage towards India. The Indian projections in the Gulf concern Saudi Arabia, Oman and Kuwait. In Southeast Asia, on the other hand, India’s principal partner is Malaysia. But above all, Delhi proposes to become the over a long term period among the major consumers of the region.

Lets move on to the third player of the competition, reentered into a new sort of energy triangle with China and India. Putin’s Russia also inserts itself into areas of strategic American interest, from Venezuela to Nigeria to Saudi Arabia, Until now it has worked onshore, so it is hardly competitive. Nonetheless, the collaboration with Norwegian Statoil will allow Russian companies to acquire experience in the technique of deepwater perforation. They will become dangerous competitors of other companies in their area of superiority. The American companies Chevron Texaco and Exxon Mobil, have lost the key to dialogue with Moscow. The projects in the field until 2003 were reviewed in the name of commercial and geopolitical logic. The

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Russo-American rapport returns to a purely market-oriented dimension. or example the accord that Gazprom signed in December 2004 with the American Conoco-Phillips, in partnership with France’s Gaz, for production of LNG in Shtokman.

The US-Russia competition continues on the Caspian, around a crucial question: where will Chevron Texaco’s quota of Kazakh oil go, once it leaves the Russian port of Novorossijsk on the Black Sea. Lets move on to Ukraine, where the “Orange Revolution” offers westerners a port in Odessa. Beyond this, the famous Baku-Ceyhan pipeline, is now completed for the Georgian part and creates some security concerns for the Turkish part, as it crosses Kurdish territory. The moribund Ambo project (Bulgaria-Macedonia-Albania) also reemerges. On December 28, 2004 a political protocol was signed for this alternative conduit, from the Black Sea to the Adriatic.

Europe is the most discrete competitor, because it contributes notably to supplying the American market with oil products. In fact the principal European countries possess a surplus of refining useful to American consumers. Nonetheless Europeans maintain strong interests in areas strategic for the US—the Caspian (oil and gas), North Africa (gas and oil) and the Gulf of Guinea (oil). Besides they consistently contribute to the development of Iranian energy, in clear opposition to American policy.

From this picture of international competition emerges the myopia of the corporations. Instead of serving as American strategic sensors, for a more stable and secure national policy, they have underrated the negative effects of the rise of US and international demand, seduced by the possibility of enormous earnings. Of course one can’t fault their earnings, seeing that in 2004 Exxon Mobil’s profits reached 25.3 billion dollars and BP reached 13.5 million pounds. They have also contributed to ruining the relations with suppliers from Venezuela, now labeled by the Bush administration as a “non-reliable supplier”, at least as long as Chavez is around.

Caracas is now working with Panama on an oil route from the Atlantic to the Pacific, which would allow the passage of 800 thousand b/d as Venezuela hopes to raise present production from 2.65 to 5 million b/d by 2009.

4.

In this competitive context, the American energy crisis becomes structural. It is now impossible for companies to acquire foreign resources at favorable prices. If last year the US paid 38 dollars a barrel, this year it is unlikely to drop below 35 dollars.

This figure will probably be the threshold of reference for OPEC, which announced the end of the phase of 22-28 dollars a barrel fixed in 2000. The producing countries, despite the weak dollar, have no desire to lose profits which they are used to.

At least once the earnings of the mainly Arab producers ended up in US banks.

Since September 11th, the diffidence in the Arab-American rapport favored the transfer of part of the oil capital. The Gulf producers were moved to invest at home, to confront social emergencies and thus reduce the support for the jihadists. If money arrives in America it is more to buy goods than to invest.

Once could object that with the price of oil fixed in dollars, America is not hit too hard. But if in the deficit of commercial balance, which in 2004 reached 660 billion dollars, one is not able to depreciate the cost of crude oil (over 200 billion),

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given the psychological effect of instability. Oil consumers continue to expand in the transport sectors as in the production of electric energy. With the supply always tied down, prices of benzene (+24%), diesel (+35%) and gas (+36%) have continued to rise in the course of the last year (January 2004-January 2005). The companies consider it normal that consumption has grown despite the increase of prices. In fact, the present prices of oil products are inferior in real terms to those of 1981. Even the fiscal quota has remained low to stimulate consumption—thus the increased sale of vehicles, beginning with pickups and SUVs which guzzle the most gas.

To reduce the debt it is necessary therefore to begin with the domestic market.

Here Bush could do something concrete and structural. The rise of consumption erodes commercial supplies, holding to levels fixed by the operators. Each negative variation of levels is used by speculators on an international crisis or a cut in OPEC production for profit. The rigidity of the American system, unable to adapt to minimal turbulence, geological or geopolitical, of the energy markets becomes obvious.

The US commercial supplies are hence considered by the international market as an important factor in the formation of speculative prices. Structural government action designed to calm matters would be useful. However, the president’s agenda continues to make the operation of strategic reserves a priority.

In this context of growing dependence on foreign supplies in an international market that is increasingly filled with competitors, Bush and the corporations are compelled to reemphasize the collaboration—never really interrupted—with Saudi Arabia. Riyadh has continued to provide continuity to the American market.

Arabian Light remains its north star. The difference in respect to pre-September 11th is that the regime’s stability seems highly compromised, while the reciprocal diffidence has grown. In sum, Riyadh is no longer the swing producer it once was.

Together with the Saudi-American retrouvailles, the other path followed by Bush consists in using nuclear energy for the production of electricity. But without too much emphasis, so as not to disturb the oil companies. The new Secretary of Energy, Sam Bodman has announced that the atomic centers are secure. Meanwhile the project continues to transform Yucca Mountain in Nevada into a nuclear waste deposit, with bipartisan support.

5.

The concept of a bringing together a strategy of national energy security seems to escape this administration. America oscillates between the security approach of the government which spends an enormous amount on protection (guarding of domestic plants, patrolling of maritime routes, guarding of foreign pipelines and oilfields) and the speculative approach of the energy firms.

Is their another way? Yes. But it is not written in Bush’s agenda. Lets try to lay it out in five points.

First: reduce the intensity of the growth of energy consumption, especially in the transport sector. For example, with an effective taxation on benzene, designed to cover other incentives. The automobile industry should be encouraged to produce lighter vehicles which consume less.

Second: stop the reduction of domestic production, giving staying power to the

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small and medium-size companies which work on reserves abandoned by the giants.

It is estimated that this activity could raise present production by about a third.

Third: balance the importation of LNG with a major domestic production of gas.

Fourth: create a sort of Monroe energy doctrine, which privileges North American suppliers (from Canada to Mexico).

Fifth: integrate this strategic choice with a plan of foreign resources, through accords from government to government of production sharing, differentiated but not dispersed according to the pure interests of the energy companies.

All these measures would greatly assist the government, preferable to a collage of recycled pieces of Enron or based on the whims of the corporations.

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THE EMPIRE ON CREDIT

by Lucio CARACCIOLO

Bush’s objective is to render America more independent from the world, since the world is terribly dangerous for America. Economic dependence from Asian central banks, a basically defensive-shaped army and a declining appeal on foreign populations make Bush’s “mission” a very hard one. While China stands on the way.

1.

O

n George W. Bush’s table in the White House, a recent visitor noticed just

one book: an anthology of selections from the Bible. Two years ago David Frum, brilliant neoconservative speechwriter, noted that in the presidential circle, the study of the Sacred Scriptures was “if not obligatory, not quite optional.”1 The most powerful leader in the world is a man of faith, as profound as it is open. His evangelical Christianity is not only a dimension of the soul, it is a guide for action. His favorite political philosopher is Jesus. Before making important decisions, he collects himself in prayer. When asked on what he bases the assurance with which he confronts issues of which he has no special knowledge, he replies: “My instinct”.2 Of course it is not true, as some of his former collaborators have maligned, that he imagines himself on a mission among humans to do God’s work. But without considering his fervent religiosity, a born again Christian who twenty years ago escaped the curse of the bottle, one cannot understand much of Bush—how he thinks, speaks and operates.

The world does not exactly burn with love for this president. The anti-Americans depict him as a marionette in the hands of capital, occasionally incarnated by his Vice President, Dick Cheney. No one suspects that Bush possesses the trappings of genius. Not even himself, seeing that he often speaks of his own academic performance with irony. He is capable of not knowing or forgetting the names of foreign leaders. He can assert that Sweden does not have a military, safe then to excuse himself. But it is not from these particulars that one judges a president of the United States. Furthermore, that which the world doesn’t like convinces the majority of Americans. For Bush, in the end, this is what counts.

An analysis sine ira et studio of the Bushian trajectory must therefore equally avoid facile irony and ingenuous enthusiasm. This pertains both to the awkward televised address of September 11, 2001, when the president overwhelmed by shock seemed unable to explain to himself and to his people what had happened and how one had to react, and to the proud claim of the “resounding success” of the first Iraqi elections, that shines a new light on the Mesopotamian expedition.

1 2

D. FRUM, The Right Man, New York 2003, Random House, p. 3.

R. SUSKIND, “Without a Doubt”, The New York Times, 10/17/2004.

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Before perusing Bush’s agenda, another warning. More than any other political figure, the president of the United States lives in a world of his own. In his own way.

Bush detests the stile of his predecessor. Clinton had transformed the White House into a sort of campus, where counselors and friends camped out till the morning hours, casually debating how to cure the ills of the planet. The time for Bush’s agenda comes in units of five minutes. There is no space for academic seminars. Nor for oblique, unconventional minds. Explains the president: “Many say that I’m wrong, I know. I presume I’m right.”3 To take the temperature of the Oval Office, it is convenient to listen to the lesson imparted by an influential counselor of Bush’s to the journalist Ron Suskind: “People like you live in what we call the community based on reality”, where one mistakenly believes “that solutions emerge from a careful study of a comprehensible reality. Today the world no longer functions like that. Now we are an empire. And while we act, we create our reality. And while you carefully study that reality, we act again, producing a new reality, that you can study…We are the actors of history. And it remains to you, to all of you, to study it.”4 Bush knows where history goes because he makes it. In the inaugural speech for his second term, this trust is expressed in messianic tones: “History has a visible direction, fixed by liberty and by the Author of liberty.”5 To confound the skeptics, critics and adversaries—almost half of America and a great part of world public opinion—he chose a solemn and inspired register, in the purest tradition of American idealism. Leaving aside the rhetoric of the occasion and the narcissism of his speechwriters, Bush is suited to take it seriously because he believes in what he says.

The question is how to bring his profession of faith back to earth. How to translate the vision into an agenda.

As far as domestic priorities are concerned—from the radical privatization of social security to further tax cuts, from the reduction of the twin deficits (the budget and balance of payments) to the emphasis on nuclear energy—we can put forth some formal criteria for evaluating their gradual progress or failure. But for the American mission in the world? If the United States pursues “the ultimate aim of eliminating tyranny in our world”, defined as the “work of generations”6, our grandchildren’s grandchildren will be able to devote themselves to judging Bush. Richard N. Haass, recently returned to the “community based on reality” after a stint among the “creators of reality” in Powell’s State Department, has observed that “liberty is not a doctrine of foreign policy”.7 3

J. D. MCKINNON, CH. COOPER, “Bush Will “Lead” Drive for Changes to Social Security”, The Wall Street Journal, 1/11/2005.

4 R. SUSKIND, op. cit.

5 Cfr. the text of Bush’s inaugural speech for his second term at http://www.whitehouse. gov/news/releases/2005/01/20050120-1.html 6 Ibid.

7 R. N. HAASS, “Freedom Is Not a Doctrine”, The Washington Post, 24/1/2005.

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Haass’ criticism may seem pertinent. But it is intrinsic to a classic, moderate vision of politics and its aims. It misses the revolutionary heart of Bush’s thought.

Perhaps he may not have studied Marx’s eleventh thesis on Feuerbach, but this president is convinced that the world is to be changed, not studied. America was founded on the idea of the perfectibility of man, on the diffusion of liberty and democracy as precursors to peace. If it abjured this idea, it would cease to be America.

Or at least that America which Jefferson assigned the goal of the “Empire of Liberty”.

And that for Bush is “an active force for good in the world.”8 Not all the leaders of the United States have been married to such a vision, and none have been immune from the temptations and the necessities of pragmatism.

Even Bush counts on his “sons of bitches” (Musharraf, Abdallah or Mubarak, in some measure Putin and Hu Jintao) to support the national interests and win the war on terrorism. But when he evokes a world revolution in the name of American values, we should not doubt his sincerity.

2.

And nonetheless, since politics is not measured by intentions but by their consequences, it is worthwhile to shift our attention from the president to the historical environment in which he operates. We will thus attempt to interpret Bush’s vision, bringing it back into time and space. Only in this way will we be able to get an idea of Bush’s geopolitical agenda. And to what degree he will be able to realize it. Lets consider the internal front first.

This is not really Bush’s second, but his third term. The first lasted from January 20, to September 11, 2001. Made president by an election that many of his compatriots considered illegitimate, jeered at by the intelligentsia and the establishment’s media figures. The second begins with the president in flight in the skies of an America under attack, culminates in the Afghan and Iraq campaigns, and ends with the clear victory over John Kerry in the November 2004 elections. The third, just begun, will determine if Bush will be remembered for verbal gaffes and bellicose adventurism or if instead he will have earned a place in the gallery of great American presidents as the victorious commander-in-chief of the war on terrorism.

But Bush’s last term will be divided in two. In the first half, until the midterm congressional elections, the president will be at the peak of his powers. In the second, however the 2006 vote goes, Bush will be a “lame duck”, above all because the American political arena will be focused on the choice of a successor. To the time restraint factor, one adds the divergence of interests between a president that cannot be reelected and Republican congressmen who certainly wish to be. Already now some in the Senate and the House have distanced themselves from the White House’s projects for social security reform and immigration.

To avoid being stifled by the brief time left to him and by politique politicienne, Bush has restructured his administration according to the principle of homogeneity.

After having faithfully carried out a strategy of which he was never convinced, Colin 8

Thus in his “State of the Union Address”, Washington, 2/2/2005, in http://www.whitehouse.gov/ news/releases/2005/02/20050202-11.html

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Powell has left the State Department. In his place Condoleezza Rice, intimate of the president, who in fact will continue to watch over the National Security Council, left to her former assistant, Stephen Hadley. Dick Cheney remains the “second number one”, even if he is not the shadow president that many paint him as. As far as the neoconservatives, maximum ideologues of the war on terror as global democratic revolution, are concerned, their influence in the administration will largely depend on the Iraqi experiment. Moreover each neocon is by now on his own. It takes all the anti-American fantasies of the conspiracy theorists to represent those ex-liberals as an omnipotent cabal. Their mentor in the administration, Deputy Secretary of Defense Paul Wolfowitz, has seen his aspirations for a more relevant task frustrated. The retiring of Powell and the enlargement of the Pentagon’s sphere of influence in the intelligence field, to the detriment of a reorganized CIA, instead enlarge the space to maneuver for Donald Rumsfeld, having miraculously survived the shame of Abu Ghraib. In sum, Bush’s second government is much more Bushian than the first.

3.

The president’s strategic objective is to render America more independent from the world because the world has been revealed to be terribly dangerous for America.

On September 11th, the United States were found to be vulnerable to that Muslim fanaticism that had served to deliver a death blow to the Soviet Union. Bush is convinced that America was attacked because it was too weak towards the jihadists.

The war on terrorism is above all an exhibition of force and determination to discourage an enemy that could strike again and with any means, including weapons of mass destruction. It is furthermore intended to reaffirm the global leadership of the United States over a new world, ideally redrawn in its own image and likeness.

The most recent Bush reinterprets the war on terrorism as a war for liberty and democracy. Because he believes it, of course. But above all because only in this way can he win it. Or at least declare victory. Exalting the Afghan, Palestinian and especially the Iraqi vote. But also the Ukrainian one, preceded by the “rose revolution” in Georgia. And hoping that soon it will touch Cuba or other “outposts of tyranny”.

In the now famous confidential memorandum of October 16, 2003, Rumsfeld admitted: “We don’t have a measure for determining if we are winning or losing the global war on terror.”9 Bush himself, in a moment of distraction, confessed on August 30, 2004 that this war “cannot be won”.10 In a strict sense, it is true: terrorism is a method exercised by homo sapiens since the dawn of mankind, and under every sky.

To extirpate the ideology and the practice of terror is utopia. A president that proclaimed victory in the conflict against terrorism would risk being refuted in that same moment by a fanatic’s bomb. But if the emphasis no longer falls on the calculation of terrorists captured or killed, on the Madrassas of anti-Western hate 9

Cfr. the internal letter on the “Global War on Terrorism” addressed 10/16/2003 from the Secretary of Defense to his closest civilian and military colleagues (Paul Wolfowitz, Doug Feith and Generals Dick Myers and Pete Pace), then leaked to the press.

10 Cfr. B. KNOWLTON, “Conventions Opens in Shadow of 9/11”, International Herald Tribune, 8/31/2004.

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closed or opened, on the fields of training jihadists cleared or replanted —and especially not on the list of fallen Americans—everything changes.

Bush has found the right measure— or rather the golden section that escaped Rumsfeld. The measure of success or defeat must be the advance or retreat of liberty in the world. If liberty is the secret plan of history—and the president, like many of his countrymen, is absolutely convinced of it—we can follow its progress and temporary defeats step by step across the planet. Like the work annually produced by Freedom House (see map) and baptized, with tasteful British understatement, “Map of Liberty”.

Here are mapped out the 88 “free”, 55 “partially free” and 49 “not free” countries of the world, updated in 2003. Ten years earlier, 72 states inhabited “paradise”, 53 “purgatory” and 49 the “inferno”. Bush may hope that in January 2009, when he departs the Oval Office, the banners of liberty on the last edition of the Map will be all the more numerous. If then the “ally” Saudi Arabia still figures among the supervillains, in the company of North Korea, Iran or Syria—patience (see table).

The president has decided that the American sphere of influence is the whole world. A world to redeem, in the tracks of the great universalist presidents Wilson and Reagan. Bush things that he has thus distilled the perfect formula, a balanced blend of idealism and pragmatism: “The survival of liberty in our land increasingly depends on the success of liberty in other lands. The best hope for peace in our world is the expansion of freedom in all the world.”11 Besides, liberty and democracy being relative and always debatable concepts, such a program presents the added advantage of not exposing itself to refutation (Bush must have read his Popper).

If for example in the Greater Middle East—at once the major front of the war against the jihadists and the laboratory of democratization of the Islamic archipelago—the window of opportunity opened by the Iraqi vote were to close, the White House could still point out that in the season of the “war on terror” and the missionary impulse, America remains number one, apparently without rivals. Europe is neither a great resource nor a great problem, and then it is divided, with a vast pro-American periphery that surrounds a skeptical central Hispano-Franco-German nucleus, reluctant but above all sterile. In Russia, the “friend” Putin must learn to behave himself, but he fails each time he attempts to reassert his preeminence over the “near abroad” or even just to halt the advance of Nato (read: America) in the heart of his former empire. China is growing, but its economy is tied tightly to that of America, which harbors spontaneous admiration for its model of development. If its ambitions go too far, it will end up clashing with India, which has just begun the climb to the high levels of power, and with Japan, thus confirming the US in the role as arbitrator of the Asian equilibrium.

As far as international organizations are concerned, they are floundering (UN) or tamed (IMF). America does not recognize the right of veto over its vital interests.

It is not sufficiently hypocritical to evoke an international order higher than its own sovereignty, as do the Europeans and the other secondary powers that would like to use it to contain the great strength of the US. The White House imagines, if anything, a 11

Cfr. Bush’s second inaugural speech, 1/20/2005, cit.

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“League of Democracies” in place of the obsolete and unreliable United Nations.

From the heavens of grand principles, clear and concrete advantages for the sole superpower descend to earth. This at least is Bush’s firm conviction. But is it really the case? Lets try to probe the foundation of American power, to verify its solidity. And lets hold fast to Rice’s counsel: “To determine if the course is right, I will never forget that the true measure is in its efficacy.”12 4.

The three decisive components for evaluating the effectiveness of the White House’s agenda are: the economy, military power and influence (soft power). The stronger and more autonomous America is in each of these fields, all intimately connected, the greater the hopes of success for the third Bush.

Economy. The United States grows at, for us, enviable rates (4.4% in 2004).

But the boom is the child of public spending to the stars, also in the cause of a war that costs more than presupposed (200 billion dollars for Afghanistan and Iraq, according to official estimates surely to fall). The growth requires robust injections of foreign resources, to sustain the internal demand. From here the colossal foreign debt—projected to break the ceiling of 8 trillion dollars, with a loss of balance of payments that last year superseded 650 billion dollars—that parallels the public deficit (413 billion). American depends therefore on credit supplied by the rest of the planet, especially Asia. Approximately 58% of American public bonds is in Asian hands, particularly Japanese and Chinese, attracted by the American consumer market and by protection (Japan) or US strategic threat (China). But this unbalanced interdependence, aided by a policy of weakening the American currency to secure the dollar standard, triggers a latent crisis for the US development model that neither Bush nor Greenspan can manage by themselves. For example, the implosion of the Chinese banking system and/or the necessity for Japan to confront the consequences of its aging population by bringing home the capital currently flowing towards the US are two not immediate but impending probabilities (see Martino Dolfini’s article).

In the energy field as well, America is discovering that it is no more able to determine its own destiny. In less than ten years the United States have passed from the rank of principle oil producer in front of Russia and Saudi Arabia, to having the primary negative balance as largest importer (in the future for gas as well). The logic of the great companies, sustained by the government, remains to procure abroad that which is not profitable to produce at home or that cannot be found there. But in recent years, while fishing for energy in the world sheltered by the vast American security network, the major corporations run into new and seasoned rivals. From China to India to the Russia under a supposedly tamed Putin, the competition knows neither certain rules nor secure friends. Besides, owing to the speculation and geopolitical instability that America has contributed to, energy prices are growing beyond the threshold of international market control. In a similar vein the contractual power of the United States, identified with its companies, appears redefined.

12

Cfr. R. COHEN, “Bush’s Smiles Meet Some Frowns in Europe”, The New York Times, 1/22/2005.

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Armed Forces. American arms serve to protect the security of the nation and to perpetuate the flow of external resources. Thus a kind of “empire on credit” founded on extraordinary military power and the hegemony of the dollar. One sustains the other.

Contrary to classical empires, American is not inclined to territorial expansion because such is not the root of its power.13 But how much is the American war machine really worth? Before the coming of Bush, the picture was not encouraging. In the eyes of the jihadists, rather, Washington appeared quite irresolute in the use of the force—from the retreat of US troops from Beirut called by Reagan after the bombing of the embassy (1983) to the less decorous flight from Somalia undertaken by Clinton ten years ago, followed by pinpricks in response to jihadist attacks in Africa and the Middle East, among which the attack on the U.S.S. Cole (October 12, 2000). Not to speak of the incomplete missions in the Balkans that have left Europe with several jihadist cells still entrenched in Bosnia (and not only there).

What use are the armed forces if they cannot win wars? Afghanistan and Iraq would have had to overturn such perceptions. In the first case, Bush has achieved a moderate success: the Taliban regime was knocked down and Osama’s bases destroyed.

But it was a sledgehammer blow to a nest of wasps. Some are holed up in Pakistan, in Iran or elsewhere; others fight US soldiers in Iraq. Meanwhile Karzai, however legitimated by the vote, remains the mayor of Kabul. In Iraq, as we will see later on, we are still wading through, despite the relative success of the elections of Jan. 30th.

If before the Iraq campaign had 752 bases installed in 130 countries14, the attrition of the war and imperial overextension forces the United States to recruit new troops. Thus confirming that even the US armed forces need partners. As the analyst George Friedman observed: “The United States don’t fight alone. They fight with coalition partners, which are either indigenous forces or nation-states. The reason is demographic. The US is always overwhelmed when it fights on the Eurasian continental mass. Technology alone is not enough to make up the difference.”15 Now the “indigenous forces” (mujahadeen in Bosnia, KLA guerillas in Kosovo, Northern Alliance in Afghanistan, Kurdish peshmerga in Iraq) are joined by private soldiers, trained by retired Pentagon officials. State partners, indigenous troops, or private warriors are useful to limit losses and prevent the costs of the campaign from falling entirely on the Americans shoulders.

Influence. In general, those who don’t have too much hard power—as is the case with us Italians—tend to like soft power. It is a rather mysterious object. For Joseph Nye, one of its American theorists, it approaches the Gramscian concept of hegemony. In plain words: “If I am able to find a way to make you want what I want,

13

Cfr. the volume of Limes, “L’impero senza impero”, n. 2/2004.

N. FERGUSON, Colossus. The Fall and Rise of the American Empire, London 2004, Allen Lane, p.

16.

15 G. FRIEDMAN, The Secret War, New York 2004, Doubleday, pp. 85-86.

14

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then I don’t have to force you” to do something.16 Saving time, effort and money.

In Bush’s first four years America has demonstrated a dramatic and surprising lack of soft power. Didn’t the critics of globalization—supposing that this term means anything—explain that such a presumed universal law of our time was only the Trojan Horse of Americanization? And that the internet is its instrument of occult persuasion?

And yet the “globalized” world has not become more American. If anything America is each day becoming more global to the point of provoking the alarm of those who fear the decomposition of the national fabric, corroded by ethnic diversification.17 More than foreign restraints on economic growth and limits on its military power, America should fear its declining appeal. As all the surveys reveal, the superpower’s popularity is somewhat low abroad. The concrete fallout is very serious both in terms of “made in the USA”—American brands suffer in hostile cultures—and especially regarding the power of coalition for the only superpower.

Bush may shrug his shoulders and make light of it, convinced that “America is America”. But if there is even a grain of truth in the analysis of the growing dependence of the “indispensable nation” (Madeleine Albright); if the prosperity, security and power of the United States are largely in other people’s hands; and if these hands are less and less friendly, then this is something to be concerned about. The empire without hegemony will not function for long.

The immutable premise of the world revolution foretold by Bush is that the peoples of the planet listen to the voice of America. In many cases, this is not so.

Thus why Bush’s (and Rice’s) new agenda highlights the significance of public diplomacy. Synonymous with dear old propaganda—or at times with the dezinformacija at which the USSR was the master. The thesis is that if others knew Americans as they believe themselves to be, they would love them. The problem is not the message but the inability to broadcast it in an agreeable way to the world’s ears.

This has yet to be demonstrated. Together with the emphasis on the use of force, the faith in propaganda and the propaganda of faith signals a curious American tendency to reproduce Soviet schemes.18 Hence losing ones.

5.

If America’s sphere of influence is the whole world, no one else has a right to a sphere of influence. Consequently, from the American point of view the allies should take some of the burden of the war upon themselves without contributing to directing it or trying to maneuver for geopolitical advantage. Or else get out of the way. The was Bush’s disposition immediately after the jihadist attack on the Twin Towers and the Pentagon: “To a certain point [of the war, ed.] we could remain alone. For me it’s not a problem. We’re America.”19 We do not know if the president has changed his mind.

Of course the facts would imply that not even Washington can go it alone. And publicly the president appears more ecumenical, less stingy with recognition (perhaps 16

J.S. NYE jr., The Paradox of American Power, Oxford 2002, Oxford University Press, p. 9.

Cfr. S. HUNTINGTON, Who Are We?, America’s Great Debate, London 2004, Free Press, p. 251.

18 Cfr. M. LIND, “How the US became the world’s dispensable nation”, Financial Times, 1/24/2005.

19 B. WOODWARD, Bush at War, New York 2002, Simon & Schuster, p. 81.

17

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ironical) towards the Europeans. But if the “friends and allies”—however one wishes to interpret this slogan—hope that Bush goes beyond the diplomacy of the smile and pat on the shoulder, they risk deluding themselves.

When supporting players and walk-ons feel backed into a corner by the lead performer and they know they lack the power to challenge him, they have three choices: a) to take time to build up their strength, pooling together their respective resources as much as possible; b) gain leverage over the giant to utilize its force to their own advantage; c) both strategies at once. The perception of an imperial America is evoking old and new geopolitical counterforces. History teaches that each absolute dominion provokes other poles of power to rise in reaction. But the challenge is covered over by the war on terrorism, that everyone is free to interpret according to their own interests. In fact, the war has an real and a metaphorical dimension. In the second case it acts as a by now torn shroud, that allows flashes of the crucial competition to seep through. That will determine if in the near future the United States will remain the only superpower or something less.

In the decades to come, only two actors appear capable of challenging the American colossus: China and Europe. The first hypothesis is rather concrete, the second quite theoretical, though still studied by geopolitically misguided analysts inside and outside the Bush administration.

Beijing has established a collaborative rapport with Moscow, from which it acquires weapons able to strike the American Pacific fleet. Nor is the financing of 6 billion dollars with which Chinese banks helped Putin incorporate the best morsels of Jukos, just snatched from the pro-American Khodorkovskij, into the state-owned oil company Rosneft’ particularly agreeable for Washington. Moreover, China is designing a vast Asian sphere of influence, at least up to where it does not encounter the realm of Indian (Nepal, Myanmar) or Japanese (Taiwan, Eastern Chinese Sea, Korean peninsula and the Sea of Japan) power. With Delhi and Tokyo the Chinese could moreover contract provisional marriages of interest. Of course the gestation of the free trade zone ASEAN+3, conceived by the Southeast Asian nations together with China, Japan and South Korea, does not gladden the hearts of Americans.

Prospectively, the result could be the largest commercial bloc on the planet, bigger than the European Union and Nafta.

As far as we are concerned, we confess that we can’t imagine that one might see in the European Union a new geopolitical actor hostile to the US, based around a Franco-German axis aligned with a Russia increasingly similar to a little USSR. Such a likelihood could only derive from the anti-European paranoia of some Americans, blinded by contempt for “Old Europe”. Moreover Bush seems decided to prevent the transatlantic fracture from ending up translating European frustrations into a challenge to America.

So today, in the world that matters the United States have just two declared and dangerous enemies: Iran, most importantly, and then North Korea, associated by Rice with Cuba, Myanmar, Byelorussia and Zimbabwe as “outposts of tyranny”. The North Koreans are already in possession, so it would seem, of a small nuclear arsenal, while the Persians are a few years away from the finish line (assuming that they haven’t

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reached it already). If Bush aims to contain Pyongyang’s paleocommunists with the arms of politics, he has not excluded the politics of arms against Tehran. Seen from Washington, the Ayatollahs’ regime is almost evil incarnate: the worse enemy that threatens to annihilate the best friend—Israel—with the atomic bomb. Unable to invade Iran, it is not left to the US to bet on a coup d’etat or an air strike against atomic sites, provided that the Israelis think to do it first. To imagine that they could thus liquidate Iranian ambitions to acquire the Bomb seems risky. Tehran’s regimes come and go, occasionally with the Americans’ help; the desire for nukes remains, because it is the symbol that affirms Iran as the greatest Middle Eastern power.

Here emerges a specific contradiction of Bush’s agenda. Among the motives that pushed him to attack Afghanistan and Iraq, one of the most important was the assumption that among the possible targets, these occupied first and second place in order of weakness. If Saddam had already possessed nuclear devices, perhaps the Americans would not have attacked him, or they would have done it differently. The message is clear: we can and will march against all tyrannies that threaten us, save those endowed with the Bomb. Ergo, any self-respecting rogue state attempts to secretly enter the atomic club, understood as a vaccine against a US-led preemptive war. A vicious circle that enhances the threat of defeat. And narrows the choice to surrender or war. In the first case Washington should resign itself to living in a very dangerous world. In the second it should prepare itself for a series of preemptive conflicts probably greater than the available resources.

For the United States the problem is not the possession of the Bomb in itself—otherwise it should concern itself with its best friends, Israel included—but the risk that it will fall into enemy hands. So Bush concedes to Brazil a program of Uranium enrichment which it denies to Iran, convinced that the first will make a civilian use out of it and the second will treat it as a nuclear deterrent. Probably.

But who can swear on the type of regime that will rule Brazil or Iran within twenty years?

The effects of overexposure are witnessed even on the Iraqi front. Only the myopia of professional anti-Americans can devalue the meaning of the elections. It was felt loud and clear throughout the Greater Middle East, and it still resounds. And Bush has availed himself of the opportunity to admonish the Saudi and Egyptian “friends” to open themselves up to democracy. Meanwhile assuring the Middle Eastern peoples that “the United States do have not the right nor the desire nor the intention of imposing our form of government on anyone else”.20 It’s a long way to realize his desires, by which Iraq would be by now set on the tracks of democracy, a beacon of liberty in the darkness of Middle Eastern regimes (almost all as tyrannical as they are more or less tied to Washington).

Let us yet assume the best scenario: by the beginning of 2006 a united Iraq, having approved the constitution by referendum, will have legitimated with a new vote a government of a more or less Shiite character. It would allow Bush (and us) to bring the troops home. On the ground the Americans would leave the necessary garrisons to 20

Cfr. the “State of the Union Address”, cit.

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manage a few strategic bases, which the White House considers the spoils of war. Is all well in the best of all possible Iraqs? Maybe. A weak, predominantly Shiite Iraq is however Iran’s geopolitical priority. The Persian area of influence in the Gulf would certainly be reinforced by it. Of course, the Iraqi Shiites are not assimilable to the Iranians; the quietist hawza of Najaf is not the militant one of Qom. But the pro-Iranian network in Shiite Iraq could incline Baghdad’s choices towards Tehran’s interests. It would perhaps result in a domino effect not desired by the Americans.

The Iraqi example could threaten to inflame the Shiite communities of the region, beginning with the Saudi-Arab ones, which lie on Riyadh’s richest oil reserves—a risk Bush would prefer not to run, in times of energy prices outside his control.

While Bush could rightfully show pride for the Iraq vote—or rather, for the Kurdish and Shiite vote in the Iraqi territories more or less controlled by the coalition—from which Tehran hopes to pick the fruits, the ayatollahs did all they could to widen their range of anti-Washington countermeasures. The terminals of the Persian network by now reach Russia (weapons, nuclear technology, energy pipelines), China and India (oil and gas), the France-Germany-Great Britain European triangle (whose mediation in the Iran-America atomic querelle is obviously not free of charge), to the point of entering the garden of the United States’ house, on the Southern costs of the Caribbean Sea. Here one witnesses a significant China-Venzuela-Iran energy triangulation. The United States’ greatest strategic competitor together with Castro’s neo-Bolivarist friend and the most hardened power of the “axis of evil”: a truly lethal cocktail. Beijing puts down money and agrees to a joint venture with Caracas to furnish it with crude oil, but also for research and development of the Venezuelan oilfields which Chavez made the major American companies vacate; Tehran offers the technologies in which it is rich, in order to facilitate the ambition Chavist projects of boosting oil production. The Iran-Venezuela agreement could delineate an anti-American front in OPEC, intent on buying up energy in the garden of the American house. Poor President Monroe is already rolling in his grave.

We don’t know where Bush keeps his agenda. However, we are certain that many of its pages will be written by the rest of the world.

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A VIEW FROM THE TRUMAN BALCONY: THE SECOND TERM OF GEORGE W. BUSH

A VIEW FROM THE TRUMAN BALCONY: THE SECOND TERM OF GEORGE W. BUSH

by John C. HULSMAN

An imaginary dialogue between the White House’s superstrategist, Karl Rove, and his chief. A good dose of realism should temper the revolutionary leap of the neocon agenda. A more democratic and less friendly Middle East?

Introduction: Time For A Private Chat

I

t is January 5th in the District of Columbia. The temperature in Washington is

unseasonably mild, with a light rain wafting down. Congress has just gone out of session until after the inaugural, scheduled for two weeks hence. The frantic pace that is the norm for the adrenaline junkies of the Capitol city has slowed to a relative crawl.

It is likely to remain so until after the presidential swearing-in, when life will resume its mad, but always-interesting pace. In such a rare lull, it would be entirely unsurprising if George W. Bush summoned Karl Rove, the genius behind his re-election victory, to the Presidential quarters for a long chat about what is to come.

Based upon what is within the realm of possibility, here is the best-case scenario for what they might say, at least if I transmogrified into the shape of Karl Rove.

Real-world limitations As Karl Rove settles himself in a comfy overstuffed empire-style armchair looking out over the Truman balcony to the Jefferson Memorial, he begins, ‘Sir, we are still on our way to restoring the dominance of the Republican Party in American electoral politics, last seen in the belle époque era stretching from William McKinley through the magical Theodore Roosevelt into the early 1930’s. We control the White House, House of Representatives, Senate, Supreme Court, most of the governor’s mansions, as well as the localities-a political grand slam. Worse for our Democratic enemies, a few structural issues are really working against them. First, as Americans continue to move south and west (note that the last elected president to claim to hail from the east coast was Jack Kennedy in 1960) they become more patriotic, more fiscally conservative, more religious, more worried about social and moral issues-in a word they become more Republican. You won well over 85 of the fastest 100 growing

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counties in the country. Unless the Democrats figure out how to connect with people not living on the coasts or the upper Great Lakes, they are toast.’

‘Second, the Democrats are still stung by the ghost of Vietnam-though not the one Senator Kerry wasted so much time talking about. Since the turmoil of the late 60’s, voters have consistently favored a generic Republican candidate over a generic Democratic candidate in terms of who can better deal with security issues. This remains the case today. Apparently our opponents cannot shake their unserious, hippy image, no matter how out of date such a stereotype may really be. This remained true even during the Clinton years-however then security issues fell in voters import to such an absurdly low level (as voters joined policy-makers in taking a holiday from history) that this great problem of the latter stages of the Cold War could be easily finessed. After al-Qaeda, after Afghanistan, after Iraq, and with Iran and North Korea looming on the horizon, the Democrats’ problem has returned with a vengeance.

Unless they can quickly convince voters they have become grown-ups on matters of national security, they are in for a long spell of opposition.’

The President smiled his lopsided grin, exclaiming, ‘Then we’ve got them on the run.’ Rove nodded absent-mindedly, but without real enthusiasm. The President, noticing, said sharply, ‘If all that you say is so, why the glum face?’ ‘Sir, the ever-hopeless Democrats are not the problem…we are.’ The President’s smile faded, he said somewhat dangerously, ‘What do you mean?’ Rove squirmed somewhat in his comfortable chair but returned the President’s gaze steadily. He had won the right to speak plainly, which was a trait George W. Bush deeply valued. ‘Well first, let’s take the case of our incredibly ambitious second term agenda. Three major political fights loom on the horizon, all of which will require a huge expenditure of political capital, time, and effort-two of which will require an initial gigantic expenditure of money.

There will quite likely be a number of vacancies to the Supreme Court in the new term-you have it in your power to dramatically influence the direction of America for the better part of the next quarter century by appointing young, conservative justices.

The democrats know this as well as we do-there will be blood on the carpet over this.’

‘Reform of Social Security, a crown jewel of the New Deal, will likewise be incredibly contentious. Also while in the long run such a policy makes fiscal sense, reform costs will be immense up-front. A fundamental reform of the incredibly over-complicated tax code will also require huge start-up costs. This is the ground we have chosen to stand upon, in terms of both securing your historical legacy as well as cementing Republican political dominance well into the future. It is a bold, exciting, worthy program. But it will take all that we have to accomplish. That sharply limits what we can do abroad.’

‘Second, Iraq, as of February 2005, will have cost the American taxpayer $200 billion, with the meter running. While America’s debt to GDP ratio is much lower than

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that of our European and Japanese allies, obviously spending this kind of money limits what else we can do abroad, to say nothing of the tragic loss of lives. We have 150,00 troops in Iraq at present, and our Army and units of the National Guard are seriously overstretched. With the election of an Iraqi government, however imperfectly arrived at, we should expedite our transition out of Baghdad. Even with this, we will be very involved there for much of your term, like it or not, and I don’t.’

‘Third, as Macmillan put it to JFK about what worried him, ‘Events, dear boy, events.’ Radical Islam, as illustrated in Madrid, remains a primary security threat to the west. Containing the spread of nuclear weapons to fundamentally unfriendly states such as Iran and North Korea will be issues that come to a head during the term. Iraq, al-Qaeda, Iran, North Korea. We have four primary security threats to the United States readily apparent-and I haven’t even begun to assess major geopolitical shifts such as the rise of China. Our plate is full.’

The President, ruminating softly said, ‘so here we find ourselves with a neo-conservative victory, while living in an undeniably realist world.’ Rove unfazed, grinned and said, ‘Exactly.”

A second term foreign policy agenda 1.

Concentrate on the war on terror

So the President asked the only question ever asked of an expert by a policy-maker, ‘What do you want me to do, boy genius?’ Rove blushed at the President’s mentioning his nickname, and replied, ‘First we have to set real priorities.

Fighting and winning the War on Terror should be our primary Foreign Policy objective. To do this, we have to define in much greater detail what we are talking about. We are not fighting a war, as Wilsonians in the Democratic Party would have us do, against evil in the hearts of men everywhere. As good conservatives we know such a war is unwinnable; worse, such a characterization does not differentiate between primary and tertiary American interests-overstretch and ultimately the decline of the United States as a great power is bound to follow such a strategy of tilting at windmills.

Specifically, we are fighting al-Qaeda and other manifestations of radical Islam. So far there is good news and bad news here. The first term saw significant American successes in this war. If al-Qaeda was then best thought of as an evil multinational, we have destroyed the home office (Afghanistan), obliterated its most faithful sponsor (the Taliban), cut its funding (speculatively somewhere in the neighborhood of 15 percent), and killed, captured, and set to flight around three-quarters of its senior leadership,’ ‘Not too shabby,’ the President grimly replied, ‘what’s the bad news?’ ‘Just as our efforts to combat al-Qaeda have evolved, so its efforts to survive have led to its

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own continued evolution as an organization. Call this the political equivalent of Darwin’s theory. Al-Qaeda’s home office may have been hit, but the branch offices around the world have shown themselves quite capable of continuing to function, be it through bombings in Bali, Istanbul, Riyadh, or Madrid. Worse, without central control, it is much harder to fathom the local motivations behind al-Qaeda’s branch offices, making analysis and detection far harder.’ ‘ ‘Al-Qaeda now functions as something more akin to a grant organization. Local groups with only the most tenuous ties to bin Laden contact al-Qaeda representatives with a plan that will advance interests the two groups hold in common. In the case of Spain, radical Islamists from neighboring Morocco provided many of the foot soldiers for the Atocha bombings-others from the Maghreb were involved as well. They went to al-Qaeda for help with financing, logistics, planning, and permission to use the feared al-Qaeda brand (naming themselves as part of the organization), much as any grantee would go to a donor for resources. In return, al-Qaeda reminded people of its relevance with its attack on a western, first-world country, and of its savvy, unquestionably the outrage helped determine the result of the Spanish election, throwing out the party of our friend Mr. Aznar.’ ‘Don’t remind me,’ the President said tersely. Rove went on, ‘as our abilities have evolved, sadly so have theirs. For all our successes al-Qaeda is more diffuse, harder to detect, and, in many ways harder to deal with. Like Hercules cutting off the head of the hydra, two seem to have sprouted in its place.’ The President absentmindedly responded, ‘What’s the second head?’

Rove answered somberly, ‘recruitment. As Don Rumsfeld mentioned around a year ago, while al-Qaeda, as it was is practical terms not the specific threat it once was, the broader situation is worse. Or as Don put it, ‘for every al-Qaeda operative we destroy if five young men emerge from a Madrass sworn enemies of America, determined to do violence to the country and its allies, are we really winning the war on terror?’’ ‘Good question,’ the President answered gloomily. Rove finished, ‘that is the problem. Radical Islam, as best we can measure it, is growing, even as al-Qaeda as it was is waning. Its future as an evil grant organization perfectly fits with this reality.

We must quickly evolve as well.’

2.

Other primary interests (Iran, North Korea, Russia, China, and Iraq) must be addressed Emboldened, Rove went on, ‘Second, we have to very quickly think our way through a large number of pressing foreign policy issues, some of which will come to a head right away and others of which will help shape our legacy. Iraq we have already talked about. The key conceptual challenge will be not letting it swallow the rest of the larger agenda.’

‘Iran is probably the single biggest crisis looming on the horizon. At the end of the first term, the Big Three in Europe (UK, France, Germany) were doing a pretty

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good impression of Neville Chamberlain, agreeing to bogus deals with the Iranians not worth the paper they were printed on due to a complete lack of diplomatic sticks to go with the economic carrots they were offering Tehran.’ The President laughed, but Rove cautioned, ‘before we get too superior our approach was even worse. Having discovered evil in the world we decided we didn’t want to negotiate with it. I always assumed diplomacy was about talking to people you didn’t agree with-otherwise we’d be spending a lot of time chatting with Canada.’ The President got angry, ‘by talking to the Mullahs you are conferring a dignity on them they don’t deserve and betraying those fighting for democracy in Iran.’

Rove knew he had to be careful. Speaking quickly and softly he said, ‘but you’ve hit on the problem of our democracy as panacea first-term policy. The dirty little secret is that what we have in Iran is a problem of Persian nationalism-both the students and the mullahs favor developing a bomb. I doubt Israel would be placated if Iranian democrats, still presumably virulently anti-Israel, came to power with a nuclear capability.’ ‘So what should we do?’ Rove said, ‘the only option is to coordinate with the Europeans.’ The President moaned. Rove hurried on, ‘yes, I know I’d rather have a root canal as well, but it’s the only way. They must be willing to discuss real sticks if the Iranians continue to cheat and try to develop a full nuclear fuel cycle. But we must also be willing to discuss carrots, such as diplomatic recognition, a non-aggression pact, and economic inducements if progress is to be made. Only by having a balanced, coordinated diplomatic approach is there a way around what could be shaping up as a catastrophic military confrontation. Without a complete change in policy such a crisis is inevitable.’

‘While we are discussing headaches, what about North Korea?’ the President asked. ‘Here China holds the key. We have to convince the new regime of Hu Jintao that China’s interests really do dovetail with ours in the short-term. For we are in a position to trade nightmares in the Korean peninsula. Our nightmare is a nuclear-armed Pyongyang, with the ability to proliferate such technologies. China’s nightmare is a nuclear arms race in East Asia. We must convince Beijing one nightmare leads to the other. If we fail in deterring further North Korean proliferation, how long will it take Australia, Japan, South Korea, and yes, Taiwan to acquire nukes?

But China, which accounts for the vast percentage of North Korea’s home-heating fuel, is the only country with real leverage over Pyongyang. So far, they have been reluctant to use it, fearing the implosion of Kim Jong-Il’s regime, the refugee crisis it would foist on China, and the loss of power South Korea taking over the north would signal for Beijing. Through quiet, secret diplomacy we must convince China to work with us, as the alternative, for them as well as us, is far worse.’

‘The two longer-term geopolitical assessments follow from this. We must first get over our romantic attachment to the immediate viability of Russian democracy and instead focus on working with Russia on the war on terror, seeing that Russian

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pipelines flow toward Japan and not China (with the oil eventually reaching the west coast), WMD issues, and integrating Moscow as firmly toward us as possible.’

‘What?” the President almost yelled. ‘I’m not saying we should give up on our goal of democratizing Russia. I’m just saying the romantic feelings we’ve had for the survival of the Gorbachev, Yeltsin, and even Putin regimes has entirely missed the boat. Russia is a complicated country of over a dozen time zones-its political and economic development is not about the whims of any one leader, however powerful.’

Now it was time for the President to blush, ‘you mean I shouldn’t have talked about looking into Putin’s eyes?’ ‘Eh…yes.’ Rove was glad to see the President was laughing. ‘We should not give up on democracy in Russia. We should, however, not let this get in the way of the huge agenda we have with Moscow-an agenda where our interests line up quite well. In the end by working more with the Kremlin we will have a better chance of influencing democratic outcomes than by scolding them for not electing people associated with the thievery of the Yeltsin era. But in the end, let’s, as you once said, show some humility here. Its up to the Russians to determine what sort of Russia emerges. We matter only at the edges.’

‘Anything else?’ the President asked, sarcastically. Rove pretended not to notice. ‘Well, yes…China. In the long-term, this is probably as important as anything other than perhaps the war on terror. In its guise as rising power, Beijing is tacitly signaling that it knows in the long-run Sino-American interests don’t line up well-it wants to dominate its region, an area where we are now first among equals. However, geopolitically we will have real opportunity to see that China remains a status quo power rather than becoming America’s primary rival.’ ‘How?’ ‘By making the price of challenging us higher, both positively and negatively.’

‘Positively, by locking China through its WTO membership into the world economic order, making it live up to its commitments, but also making it see the benefits of working cooperatively through trade with the West in general and the United States in particular. Conflict in the region would put all this in peril. Negatively, by bolstering already well established economic and military ties with regional powers such as Australia, Japan, and South Korea and by playing the India card. Establishing far closer ties with New Delhi is perhaps one of the biggest prizes of American victory in the Cold War. India will soon be the most populous country in the world. It is a democracy, albeit a fractious sort of one. It has embarked on a genuine course of economic liberalization, which is enriching it at a dramatic rate. Critically, it has a long history of antagonism with China for leadership of its region. In an interest-based way, be the angle geopolitical, economic, or military, India seems ripe for the plucking as a new major American ally. By ringing China with this array of countries, the penalty for their trying to dominate the region grows exponentially. That’s all we can hope for.’

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Conclusion-Nation-building: A Bridge too far The rain had let up and the President was getting antsy. ‘Well, Karl thanks for the input. I’ll think over what you said and we can get going on some of this.’ ‘One thing more, sir.’ Now the President was exasperated, ‘Yeah?” Rove responded meekly, ‘Is there any chance that we can abandon, after top-down nation-building efforts have failed in Haiti, Somalia, Bosnia, Kosovo, Afghanistan, and Iraq, the idea that imposing democracy works? Such a policy assumes history, culture, religion, and ethnicity (forces that have built up over millennia) can be ignored in a one-size-fits-all manner.

And that such an outcome can happen in a hurry, say the next four years? Let’s take the Middle East as an example. The dirty little secret of the region is that the corrupt, unrepresentative leadership of the region is far more pro-American than the Arab street.

If we could flick a light-switch and produce democracy there, radical Islamists would take over in Algeria, Mohammed V of Morocco would fall, as would King Abdullah of Jordan, even more radical Wahabists (and far more anti-American) would run Saudi Arabia, and God knows what kind of pro-bin Laden outfit would run Pakistan. Surely that is not the world anyone could want in Washington.’ Rove saw that he had gone too far. The President responded merely by saying a quiet, ‘I think we are done,’ as the senior political adviser left the Truman balcony.

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LIVING WITHOUT EUROPE

LIVING WITHOUT EUROPE

by David POLANSKY

Seen from Washington, the Old Continent is not a problem. The transatlantic tension is not a question of tone or language, but of diverging interests. The Euro-Arab rapprochement is a risk for America. The unheard lesson of Henry Kissinger.

E

urope is arguably the least geopolitical

factor in American foreign policy. This can be understood in one of two ways, both interconnected. First, American primary national interests are less engaged by Europe than by nearly any other major area of the globe. Second, what interests that exist are largely subsumed in a strange tangle of philosophical and emotional ties that tend to resist a straightforward analysis of policy concerns.

Any discussion of America’s strategic view of Europe must begin by noting that the transatlantic relationship is now undergoing a decisive transformation that many have attributed to the aftermath of September 11th, but is more the result of policy and rhetoric finally catching up to the changes that have occurred in the world since the end of the Cold War. It is somewhat unfortunate that these realities now been (too harshly) illuminated by the dominant personalities on both sides of the Atlantic today. Against the American side, much is made of the so-called neoconservative ideologues pursuing unilateralist policies of American aggrandizement. Against the European side it is fashionable to speak of neo-Gaullists seeking to use the European Union to balance the American superpower.

In other words, recent transatlantic developments have been passed off as the result of intransigence and unreasonableness on the part of certain Americans and Europeans (when they are not simply passed off as being the result entirely of the actions of Americans on the one side or entirely of Europeans on the other). The assumption then for many is that much can be resolved between America and Europe by an increased willingness to cooperate on both sides of the Atlantic. Such a renewed collaboration would be the basis for confronting myriad issues throughout the world. This has it exactly backwards. It is the issues themselves that present the problem for the alliance. While the tone of the disputes has been heated, even childish, the differences that spark them are real; they are the result of disparate worldviews and interests.

Nor is this simply the result of overconfidence on the part of American statesmen who believe that they can accomplish US aims without resorting to troublesome diplomacy. To see this clearly one might try a brief thought experiment: leaving aside the rhetoric, imagine that Bush is not the caricatured ideological unilateralist but simply a ruthless pragmatist. He is prepared to carefully manage relations with China and Russia despite the fact that neither conform well to his espoused democratic principles. He has worked in concert with the East Asian powers in trying to leverage the North Korea issue.

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Relations with Japan are stronger than they have been in years. He is balancing relations with Pakistan and India, which is no mean feat. He has even expanded American aid to Africa beyond what Clinton was prepared to give. In other words, Bush is prepared to work in tandem with other powers where it suits American interests.

Above all, the Bush administration is reacting to geopolitical changes that in fact have little to do directly with the transatlantic relationship. Nothing can now change the simple fact that the balance of power in the world is shifting inexorably towards Asia.

Simply put, Americans have more to hope for and more to fear from other parts of the world.

So what, if anything, is the American policy towards Europe itself? Secretary Rumsfeld’s comments regarding “Old” and “New” Europe may have seemed to represent the basis for a new strategic approach towards Europe. In short: isolate the core and engage the periphery.

This was more or less based on the assumption that—on foreign policy matters at least—a two-track Europe was emerging, with the Franco-German core and probably the Benelux countries as well rallying the continental opposition, alongside a more pro-American periphery in the Mediterranean and former Soviet bloc countries of Eastern Europe, from which a pool of ready allies could be drawn. This account was bolstered by the support pledged by Spain, Italy and the so-called Vilnius 8 during the run-up to the Iraq War. However, those nations that supported the war all faced strong internal opposition, particularly among the younger generation, which has little if any memory of communism and hence is more likely to view the US as imperium rather than liberator.

Furthermore, those continental allies that assisted the US were only able to provide minimal assistance in terms of putting boots on the ground. It was their show of support more than their actual support that came to be desired. Thus, allies are reduced to an abstraction, used more as evidence of the legitimacy of US undertakings than as actual tools to advance American interests.

This outcome of America’s diplomatic initiatives in Europe prior to the Iraq war was less the result, I think, of a deliberate strategy than of certain unconsidered assumptions on the part of the administration, and to a larger extent on the part of many Americans since the end of the Cold War. The major assumption was that European nations would continue to assist the US on an individual basis, out of specific interests, or more broadly because they favor the stability granted by an American-led world order.

Thus, the US will be able to “cherry-pick” its allies at will. However, this assumes that other nations will remain more or less independent actors. In fact, their ties to America are essentially tenuous and growing more so as European integration continues apace.

While there is little reason to believe that such integration will manage to forge a common foreign policy, it can certainly hamper the US bid for continental allies in its future endeavors.

In the end the EU has far more to offer—or at least is far more prepared to offer—those nations politically and economically than the US. As the Economist recently pointed out of what had been America’s staunchest European continental ally during the war, “After grumbling furiously about dangers to their sovereignty and their social values

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when they joined the European Union in May, Poles are discovering themselves now to be among the Union's most loyal citizens. Some three-quarters say they are happy with EU membership—and no wonder. In its first eight months of membership Poland got some €2.5 billion ($3.4 billion) from the EU budget, or roughly twice what it paid in…”1 Rumsfeld’s remark, and the subsequent dredge for allies was less a new direction for policy than it was a stopgap for transatlantic drift.

As for areas of danger in Europe, the sharpest change in terms of policy is in regards to the Balkans. During the first Bush administration, this was obscured by the overwhelming momentum of the events that followed September 11th. With another conflagration likely to occur in Kosovo in the near future, it will be more starkly revealed.

To put it bluntly, none of the principals nor Bush himself have much interest in returning to what they consider a failed policy in an area that is not strategically vital, particularly in light of their ongoing troubles with nation-building in that other part of the world.

Nor, with Putin an increasingly significant ally (and with relations already strained by his foolish power play in Ukraine), will they risk creating divisions with Russia in pursuit of Balkan stability. Some will no doubt be inclined to see this as a lamentable result of strained relations, but in truth, it is merely a willingness to delineate areas of interest.

Despite this, there is a strong argument that the developed nations that span the Atlantic have common interests in promoting stability and democracy in the world and that self-interest rightly understood would counsel those nations to concentrate less on the increasingly esoteric disagreements between them and more on the practical matters at hand.

Robert Kagan, ironically enough one of America’s most ardent Europeanists, offers a cogent summation of this position, which is shared by those in both parties, arguing that the common approach taken on Ukraine by the US and the EU points the way towards a basis for broader cooperation. In effect, America and Europe together form a bastion of liberal democracy. While America may emphasize force and the EU diplomacy, they both seek the spread of Western ideals as a way of promoting stability in a dangerous world.

By accident of history and geography, the European paradise is surrounded on three sides by an unruly tangle of potentially catastrophic problems, from North Africa to Turkey and the Balkans to the increasingly contested borders of the former Soviet Union. This is an arc of crisis if ever there was one, and especially now with Putin’s play for a restoration of the old Russian empire. In confronting these dangers, Europe brings a unique kind of power, not coercive military power but the power of attraction. The European Union has become a gigantic political and economic magnet whose greatest strength is the attractive pull it exerts on its neighbors. Europe's foreign policy today is enlargement; its most potent foreign policy tool is what the E.U.'s Robert Cooper calls “the lure of membership.”2

This, however, assumes that the EU and the US possess permanent common interests across a broad spectrum. In fact, the Ukraine incident aside, the US seems to have far more interest in managing its relations with Russia than with Europe. While the 1 2

“New Europe is doing well”, Economist, January 6, 2005.

Robert Kagan, “Embraceable E.U.”, The Washington Post, December 5, 2004.

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US has strongly supported Turkey’s entrance into the EU, its relations with Turkey will not be contingent on its relationship with Europe. Nor has this pointed towards a common position vis a vis the Arab world or China, whose autocratic nature has not influenced the EU’s position on the embargo. Simply put, transatlantic cooperation along this line is essentially limited by the fact that both America and the European Union have geopolitical interests that go beyond the question of liberal democracy.

The most obvious example of existing cooperation is also arguably the most pressing matter in the world right now: Iran’s nuclear program. While the French, the Germans and the British have pursued negotiations on that front (which Secretary Powell went out of his way to praise on numerous occasions), they have yielded little substantially. Progress is blocked by two particular structural problems: first, the US and the European countries involved have not managed to coordinate a joint approach; and second, if the United States seems unable to bring its military might to bear on the situation (a fact that Iran’s mullahs seem quite aware of), then it is quite unlikely that Europe will be able to muster the necessary stick with which to leverage the issue.

There is also one long-term danger coming from Europe that the administration has not, I think, given much consideration: that demographic trends could impel parts of continental Europe further towards the Arab nations on a geopolitical and economic level.

The American cold shoulder will offer little in the way of checking that impulse. With military basing moving ever outward and defense strategies focusing on the Pacific Rim, the Caucasus and the Middle East, Europeans will not be overly inclined to depend on the US for security. The Cold War alliance depended in part on the common belief that the United States had pledged itself to the strategic defense of Western Europe. That belief was thankfully never directly tested. Part of the measure of the changing alliance can be taken by analyzing the change in America’s concern for European security. This is less due to any conscious willingness to leave Europe out in the cold than from taking its safety and stability for granted as many Europeans themselves tend to. With Europe’s problems increasingly becoming internal rather than external, it is difficult for American to become actively engaged on that level, particularly as more immediate concerns call its attention elsewhere.

For once, any change in the direction of the transatlantic relationship will have to come from the European nations. In order to gain Washington’s proper attention, they will have to demonstrate three things: first, that they retain individual foreign policies and as such can be dealt with separately from the EU; second, that they possess the wherewithal to assist the US in its endeavors; and finally, that their aid comes at a reasonable price, depending on the situation. The first two will incline Washington to see cooperation with European nations as a useful thing that need not involve the diplomatic shenanigans it went through at the UN the last time around. The last will prevent those nations that do work with the US from simply being taken for granted, as frankly many have in Iraq.

All this, meanwhile, would be greatly aided by more skillful diplomacy. Much has been written about Bush’s wretched public diplomacy. Less has been noted about the problems afflicting Europe’s. Theodore Roosevelt, perhaps the most skillful foreign policy practitioner among American presidents, famously counseled, speak softly and

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carry a big stick. Not having much in the way of sticks, Western Europeans have simply substituted speaking loudly as a way of getting the US’ attention.

It may seem strange counsel coming from an American in the Age of Bush, but Europe's chief problem in the United States today results from a failure of European soft power.

Europe beats the broad back of American power with the sticks that it has—mostly, its trade power—but somehow that does not move the behemoth more than a few halting steps. It abuses the United States for its boorishness and its weak grasp of the fine points of international co-existence—but this somehow does not move the beast either.3

Americans—even Republicans—are surprisingly susceptible to diplomacy when it is well employed; they are quite deaf to criticisms of their worldview, which offer no policy alternatives.

Finally, what is the significance of this direction on European policy for the US? Since the time when America unabashedly embraced a global role during World War II, its alliances with Europe and with Great Britain have been the keystone of it involvement in the world beyond its hemisphere. Since the end of the Cold War, the US has generally embraced its position as “leader of the free world”, allowing it to link national interests with the common good of democratic, mainly Western, nations.

The US has never really been comfortable operating according to the traditional verities of power politics. It is no accident that its earliest endeavors at the beginning of the Cold War began with Europe and NATO. Henry Kissinger remarks of that generation of American statesmen that they “understood that, without its Atlantic ties, America would find itself in a world of nations with which—except in the Western Hemisphere—it has few moral bonds or common traditions. In these circumstances, America would be obliged to conduct a pure Realpolitik, which is essentially incompatible with the American tradition.”4 America’s distancing itself from Europe as it continues to expand its involvement throughout the world is very much a revolutionary measure. The anguished chorus of dissenters in America, witnessing the damaged transatlantic relationship, are expressing real dismay that at bottom is uncertainty at America’s ability to carry on alone, and perhaps even more at the effect that doing so will have on its basic character.

Meanwhile, all this is taking place against a backdrop of rhetoric as strong as any employed during the Cold War, as the Bush administration pledges itself to the global spread of freedom and democracy. In other words, Bush’s realistic assessment of Europe remains very much at odds with the idealism with which he approaches the rest of the world.

While the world will hardly slow down for the two to resolve their differences or to mourn their growing separation, it remains to be seen how Europe will proceed with America’s umbrella of protection gradually receding and how America will proceed without Europe’s conference of legitimacy on its increasingly revolutionary foreign policy.

3 4

Walter Russell Mead, “Goodbye to Berlin?”, The National Interest, Spring 2004.

Henry Kissinger, Diplomacy, Simon & Schuster, New York, 1994, p. 819.

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RETURN TO REALITY: IRAN SEEN FROM WASHINGTON

RETURN TO REALITY: IRAN SEEN FROM WASHINGTON

by Alexis DEBAT

What to do about Tehran? The Bush administration would like to topple the Iranian regime and block its nuclear ambitions. But it has not the means. A new school of thought is therefore emerging, which waters down the neocon strategy.

W

ith its ambitious domestic agenda and

its legacy bound tightly to the Herculean task of stabilizing Iraq, it is unlikely that the Bush administration will spend any political capital proactively taking on major foreign policy challenges in the next four years. Baring a terrorist event on US territory or against its installations abroad, we can rather expect the President and its new foreign policy team to revert to a more “Pavlovian” style of foreign policy management, where the US government only reacts to issues that international “flare-outs” force upon its agenda. Among those most likely to erupt is Iran’s renewed diplomatic, economic and nuclear ambitions in the Middle East and South Asia, where Washington and Tehran now share the same neighbourhood. Few challenges will be more crucial and harder to manage for the US than this Iranian “Great Game” from Beirut to Bombay. Especially because addressing this situation in a way that enhances US interests in the region will force the Bush administration (just as the conservative regime in Tehran) into painful options, pragmatic decisions that will probably cut deeply into the doctrines (“pre-emption and prevention”) and ideological fabric (Neoconservatism) laid out during George W. Bush’s first term. Even more than the stabilization of Iraq, where the US government can now hide behind “third parties” on the ground, the management of Iranian ambitions within the confines of the world’s most strategic and most vulnerable geopolitical sphere, will not only streamline the Bush administration’s multiple - and often contradictory - ideological leanings, but will set a doctrinal course for the foreign policy of the United States for the many years to come.

Missed Opportunities Few foreign policy issues have been more emotionally charged or more difficult to address for the US in the past 25 years than Iran’s regional ambitions. The trauma caused by the 1979 revolution and the subsequent hostage crises of the 1980s, as well as Tehran’s continuous sponsorship of anti-American violence, have led one administration after another to stay within the boundaries of a narrow ideological discourse with regards to the Iranian regime’s foreign and security policies. By depicting Iran as an illegitimate and “evil” force – a process that did not start with the

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administration of George W. Bush – Washington’s foreign policy bureaucracy tied itself to the notion that a rational dialogue with Tehran would be possible only after regime change occurred in Tehran. Fuelled by domestic political arithmetic and popular demonology, these self-imposed constraints somehow rejected the possibility that either of the two countries would change its course, and that ultimately they would have to break the status quo and start working on reconciling each other’s interests in the Middle East1. Considering the Iranian regime’s success at repressing any credible opposition (including the reformist movement) and the rejection of any military option against Iran by the Untied States, no US administration since 1980 has been sincerely willing to invest political capital to overcome these psychological and political roadblocks and design a concrete, substantial and realistic Iranian policy. The Washington foreign policy bureaucracy was for once united in locking itself up in a “non-Iranian policy” which culminated with the “Dual Containment” doctrine during the Clinton administration. Throughout the 1990s, the only significant policy decisions affecting the United States’ relationship to Iran - House Speaker Newt Gingrich’s $18 million covert action plan against Iran, and Senators d’Amato and Kennedy’s “Iran Libya Sanctions Act” of 1996 - were made by the Congress, not the executive branch.

After a decade or so of increased misunderstanding and conflict between the two countries, the election of George W. Bush in 2000, along with the alignment of US and Iranian regional interests over the overthrow of the Taliban regime in Afghanistan in the Fall of 2001, raised expectations on both sides and, for the first time in almost 25 years, opened the door to the possibility of a concrete dialogue. Despite the new administration’s neoconservative agenda and its deep ideological rifts on Iran, the American intervention in Afghanistan made contacts not merely desirable but inevitable. According to Kenneth Pollack’s excellent account of US-Iranian relations2, the Bush administration quietly allowed the opening of secret talks between low-level diplomats of the two countries in Geneva, as well as a small measure of coordination between US and Iranian intelligence in Afghanistan. Despite a few snags (some elements of Iranian intelligence facilitated the escape via Iran of senior Al Qaeda leaders such as Abu Musab as Zarqawi), this détente culminated during the Bonn conference in November 2001, when Iranian diplomats successfully pressured some Pashtun tribal leaders to subscribe to the Afghan political process advocated by the United States. But right when the two countries were ready for an even greater cooperation on Iraq, where the Bush administration was poised to attack next, and bring the Shi’as to power, Washington and Tehran failed to solidify this historical convergence of interests and institutionalize this pragmatic dialogue. The Geneva consultations were broken after Iran was alleged to be the source of an arms shipment to Palestinian radical groups intercepted by the Israeli navy in the Red Sea in January 2002, and the subsequent inclusion of the Mullah’s regime in President Bush’s “Axis 1

As expert Geoffrey Kemp pointed out in his excellent analysis of US-Iranian policies, “Iran is the only country in the world that refuses to have formal contact with U.S. officials. Even officials from North Korea and Cuba meet with the United States, as the Soviet Union did during the height of the Cold War”. See Geoffrey Kemp, “Iran: Can the United States Do a Deal?”, The Washington Qaurterly Vol. 24, No. 1 (Winter 2001).

2 Ken Pollack, The Persian Puzzle: The Conflict Between Iran and America, NY: Random House, 2004.

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of Evil” speech later that month3. This speech not only stalled the diplomatic process between the two countries, but immediately strengthened the position of Tehran’s hard-liners over reformist President Mohammed Khatami, who had been the most vocal advocate of an opening to the US. The relationship between Washington and Tehran then reverted to its usual and sterile cross-stream of angry statements and press releases that have become the essence of the two governments’ “no-policies” for the past 25 years.

Secret talks between former enemies united in a temporary - and inevitablecommunity of interests make for interesting displays of good intentions, but hardly amount to a policy, to which they are only the prelude. This roadmap between point A and B is precisely what is currently lacking in Washington.

A Clash of Ambitions Looking past the mantras and gesticulations that still make for the visible part of US-Iranian relations, it appears that the core of the conflict is a fundamental clash of ambitions. Iran sits on one of the world’s most strategic geopolitical nodes, at the crossroads between Egyptian, Syrian, Turkish, Russian, Saudi, Indian, and Chinese regional designs. The Iranian regime’s self defined “manifest destiny” over this area stretching from Lebanon to Central Asia has the potential to destabilize a region that includes approximately 75% of the world’s proven oil reserves, the most strategic economic arteries for energy transit between production (Middle East, Caspian Sea) and consumption areas4, 90% of global opium production5, almost all of the terrorist groups targeted by the War on Terror (not to mention a dozen or so major insurgencies), as well as the world’s second largest population of unemployed adults (15-65)6.

All recent foreign policy moves by the Iranian regime indicate that, now that it has strengthened its position at home, it is not only conscious of this unique position, but eager to play a pivotal, if not dominant, role7. This ambition is the main reason 3

The genesis of this decision to include Iran is laid out in Pollack’s book Iran sits on the cheapest, most technically feasible and therefore most realistic transit option for delivering Caspian energy to world markets (to the Persian Gulf of the Gulf of Oman through Iran.

5 According to a UN Office for Drug Control and Crime Prevention report, Afghanistan alone was responsible for 70% of global opium production in 2000 (3,300 tons). This number was dramatically reduced in 2001 because of a Taleban ban on production and the subsequent allied military operation in Afghanistan, but the country’s opium production bounced back to 3,600 tons in 2003, and is expected to rise even further in 2004.

6 See Tariq M. Yousef, « Macroeconomic Aspects of the New Demography of the Middle East and North Africa”, Annual World Bank Conference on Development Economics-Europe, June 26-28, 2000.

Available at: Hhttp://www.worldbank.org/research/abcde/eu_2000/pdffiles/yousef.pdf. See also the presentation made by Shahriar Hendi at the International Institute for Economic Studies’s annual conference in 1998: “Iran’s Foreign Policy and Energy Transitopportunities in the Caspian Region”, at: http://www.iies.org/OLD_Site/english/training-conf/conference/conf98-paper/pdf/hendi.pdf.

7 In a speech before the Iranian diplomatic corps on August 15, 2004, the Supreme Leader of the Islamic Republic of Iran, Ayatollah Sayyid Ali Khamenei, reiterated the basic principles of Iran's foreign policy as “promoting Islam, standing up to the hegemonic policies of arrogant powers [the United States] as well as defending the oppressed nations and supporting the world’s Muslims”. This focus on challenging the United States and its allies in the Middle East is a strong indication of Iran’s regional ambitions. Source: IRNA, August 15, 2004.

4

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behind most of Tehran’s major foreign policy initiatives of the past 15 years, from its decision to develop nuclear weapons, to the strengthening of its ties to the region’s large and strategically spread Shi’a minority8, as well as its support to insurgent and terrorist groups in the Gulf (Saudi Hezbollah responsible for the Khobar Towers bombing in Saudi Arabia in June 1996), in Israel and the Palestinian Territories (Hamas, Palestinian Islamic Jihad), and Lebanon (Hizb’Allah). It is also the main reason behind we can read Tehran’s active policy of pursuing such major strategic infrastructure projects as the pipeline to India, and building strong economic ties to China9.

All of these policy initiatives can be seen as part of a major push of Iranian “soft power imperialism” throughout the region.

But even if the Iranian government has learned to tone down its international activism and project its power through economic, diplomatic and cultural means, and taking the hypothesis (largely shared by most Iranian experts) that Tehran’s intentions aren’t bellicose and have yet to be proven as fundamentally detrimental to peace and stability in the region 10 , this policy has the potential to destabilize a vulnerable geopolitical area which still hasn’t found its way out of post-colonial disputes, religious and ethnic conflicts, as well as structural political and economic dysfunctions, but which stability remains one of the cornerstones of peace and prosperity in the 21st century. The fear that, by increasing the region’s ethnic and religious tensions, Iran’s “Great Game” - whose effects have been felt in just about every major event or initiative in this region since 1990, from Khobar in 1996 to the war in Iraq - would precipitate a major “domino crisis” throughout the Persian Gulf and South Asia, is the main reason behind the necessity to need to keep these Iranian ambitions in check, which is far from being lost in Washington.

Bracing for the inevitable Succeeding in this objective while preserving fragile American interests in the region remains the Bush administration biggest foreign policy challenge, at a time when Iraq is on the path to a delicate Shi’a-dominated rule, and Iran is months or years away from becoming a nuclear power11.

In the past three years, some neoconservative outlets have been very vocal in demanding that the Bush administration delivers on the promises made in its doctrines, slogans and ideological designs such as “the war on terror”, the “Axis of Evil”, the 8

According to the December 2004 edition of “The CIA World Factbook”, Shi’is make for 60 to 65% of the population in neighboring Iraq (15 million), 10% (about 2 million) in Saudi Arabia, 30% (about 300,000) in Kuwait, 70% in Bahrain (about 220,000), 19% in Afghanistan (about 5.4 million), 20% (about 32 million) in Pakistan.

9 In October 2004, The Iranian government signed a $70 Billion oil and liquid natural gas deal with China’s oil giant Sinopec Group. Source: AFP, October 30, 2004.

10 Tehran doesn’t hold any major territorial disputes and has neither the capacity nor the intention to conduct a major military operation.

11 Iran has already designed and successfully tested several ballistic missiles, some of which, such as the “Shahab-3”, are capable of carrying a nuclear warhead and reaching ranges as high as 1,500 Km. Source: The Fedaration of American Scientists, at: wwww.fas.org.

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“pre-emption/prevention” doctrine, and the “quest for liberty”, and start putting economic, diplomatic and even military pressure on the Iranian regime. It is true that Tehran’s dictatorial tendencies, continuous and active support to terrorism, anti-American rhetoric, and nuclear weapons program, make it a prime target of the new concept of “upstream threat management” that characterizes the Bush administration’s foreign policy12.

Reality, however, has put several heavy damps on this option.

The first is Iran’s influence in Iraq. In one of the greatest, and most overlooked ironies of the Bush administration’s foreign policy, the decision to intervene in Iraq with an ambition (to establish a democratic regime) that tied the historical legacy of the 43rd presidency and the credibility of its ideological fabric to the success of the American mission there, the Bush administration has placed a great portion its own success in Iraq – and the long-term credibility of US foreign policy - in the hands of the countries (Iran, Saudi Arabia, Syria) which most oppose its goals in the Middle East.

Now secure in its belief that US forces in Iraq would be sufficiently “tied down” in the country’s stabilization to prevent a military operation against its own regime, Iran has moved to its second foreign policy objective there: laying out a strong infrastructure with which it can gain a solid political foothold in Iraq and be able to influence events there13. Even if Tehran’s control over the Shi’a diaspora in the Gulf in general, and Iraq in particular, is far from certain, the success of such political entities as Dawa and the Supreme Council for Islamic Revolution in Iraq (SCIRI), who dominated the “Sistani list”, at the January elections in Iraq, have not only validated the Mullahs’ strategy, but strengthened Iran’s influence with its main neighbor for the long run.

This major development has once again emphasized in Washington the reality that, regardless of the fantasies expressed by some corners of the neoconservative archipelago during the past four years, the road to the fulfilment of the Bush administration’s historical designs laid out in the President’s Inaugural Address on January 20, 2005 – not to mention more immediate objectives such as the revival of the Israeli-Palestinian peace process14 - runs through Tehran.

The second, and maybe most obvious, restraint to the Bush administration’s first term doctrines and attitudes toward Iran, is simply the lack of good economic, diplomatic, or military options for stopping its nuclear weapons program and its support of terrorist groups. Despite the international community’s pressure and 12

“Upstream threat management”: the management of such threats as terrorism and the proliferation of weapons of mass destruction before it materializes in a way that harms US interests, or worse, its installations and citizens.

13 According to a recent article in the conservative magazine “US News & World Report” quoting several US intelligence documents, Iranian intelligence services have deployed several hundred agents and spent millions of dollars in Iraq, with the goal of building extensive intelligence networks as well as a strong base of influence throughout the country. Source: Edward T. Pound, “The Iran Connection”, US News & World Report, November 22, 2004.

14 Also, as demonstrated by their control over such terrorist groups as Hamas, Hizb’Allah and the Palestinian Islamic Jihad, as well as their past policy choices, which triggered the biggest terrorist wave in Israel in 1996, the Mullahs have a tremendous influence over the future of the other major foreign policy challenge in the Middle East, the Israeli-Palestinian peace process.

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Tehran’s agreement with the European Union last November to halt its uranium enrichment activities temporarily, and open negotiations on a long-term compromise, it seems very unlikely that Iran will voluntarily walk away from the historical opportunity of becoming a nuclear power and regaining its status as a major regional player. And even if it does, this sacrifice will come at a price which will, in essence, push Iran’s regional agenda and ambitions as far as if it was a nuclear power. This reality, along with China and Russia’s support to Iran at the UN Security Council, leaves only one option for coming to terms with this looming challenge: military force.

But contrary to Iraq, which was already teetering on the brink of economic, military and even political collapse when the American offensive against the regime of Saddam Hussein started in March 2003, Iran is an extremely difficult military target. It is a major regional power, with a considerable capacity for stirring up trouble against US interests throughout the world, and its military is badly equipped but fairly significant and very well trained15. Most important, its regime, while widely unpopular on several levels, wields absolute control over Iranian society, and is even in tune with its people’s traditional nationalist and anti-imperialist feelings when it comes to foreign policy.

Despite recent statements by leading neoconservative voices in Washington16, as well as the recent reports of increased US intelligence activities inside Iran17, and baring an Israeli military action against Iran’s nuclear facilities, which is always possible, there are every signs in the United States that Tehran will eventually be allowed to complete its nuclear designs – sometime between the end of this year and 2008 according to most estimates18.

However unsettling this prospect may seem for a country whose government is violently opposed to democracy, the existence of Israel, and the American presence in the Middle East, and is still actively supporting terrorist groups such as Hamas or Hizb’Allah, this development could prove to be a little less destabilizing than what most observers have led us to believe, especially if we consider that Iran’s strategic room for maneuver is even smaller and the US government’s.

First and foremost, because even Tehran’s most radical Mullahs have now realized that they do not have the capacity to single-handedly fulfil their main national security goal during the 1990s - the departure of the United States from the Gulf - in the short, medium, or even long term, and that they will only be able to exert their “soft power dominance” over the Middle East and South Asia through peaceful

15

As demonstrated in November and December 2004 by the “Payrovan-e-Velayat” (followers of Velayat), Iran’s largest military exercise, which underscored the Iranian army’s major logistical challenges but displayed its impressive firepower. See IISS’s “Strategic Balance 2004” for details.

16 At a recent meeting of the Jewish Institute for National Security Affairs in Washington, D.C., Undersecretary of State John Bolton said that “regarding Iran, all option remain on the table”, leaving the door open to a military operation.

17 Seymour Hersh, “The Coming Wars”, The New Yorker, January 24, 2005.

18 During an interview on a radio talk show in January 2005, Vice-President Dick Cheney confessed that “in the case of the Iranian situation, I think everybody would be best suited by or best treated and dealt with if we could deal with it diplomatically”. Source: AFP, January 22, 2005.

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coexistence, if not cooperation, with the United States19.

Second, because Iran’s economic crisis, combined with the considerable challenges of its demography20, makes attracting foreign investment not merely an added bonus but an absolute necessity for the Iranian regime if it wants to satisfy the two social forces that most threaten its survival: the middle class (bazaar), which is looking for a way out of the chronic economic slump, and the student community, which is yearning for greater cultural opening to the outside world and desperately needs jobs. Many among the clerical leadership realize that Iran's weak economy is a threat to stability, and a major obstacle to realizing their goal of transforming Iran into a regional power, and that the country's economic problems can no longer be ignored.

Already, according to University of Durham (UK) Professor Anoush Ehteshami, “there has been an ‘economization’ of Iranian foreign policy”21.

Third, as some Iran watchers already predict, because the nuclearization of Iran, while strengthening the dictatorial regime, will undermine the ideological bedrock and central claim to power of some of the most radical (and most anti-American) elements of Iran’s conservative camp: their role as guarantors of Iran’s sovereignty in the face of “foreign” (i.e., Western and American) influence.

While some of them still remain highly theoretical, there are every signs that these three trends are gradually tilting political balance of power in favour of the “conservative pragmatists” aligned with former (and probably future) president Ali Akbar Hashemi Rafsandjani, which strongly advocate a “China Model” where the Iranian government would open up its economy, and allow some social liberties while tightening political control and cracking down on free speech22.

A New Republican Doctrine?

The sheer energy of these harsh economic, diplomatic and military realities, as well as the narrowing room of maneuver both in Washington and Iran, has created a “tectonic momentum” forcing the two governments in the direction of a “painful grand bargain”, which will necessitate hard choices and fundamental shifts in ideology on both sides. As Nikolas Gvosdev and Ray Takeyh wrote in their remarkable analysis of US-Iranian relations in The Washington Quarterly, “Washington no longer has the luxury of waiting for a more pro-U.S. government to come to power in Iran”23. Far from being able to overthrow the Mullahs’ regime or compel Tehran to abandon what 19

See: Ray Takeyh, ed. Iran: Time for a New Approach, Report of an Independent Task Force Sponsored by the Council on Foreign Relations, Washington, D.C., Council on Foreign Relations, August 2004.

20 According to the CIA World Factbook, 40% of Iran’s population are currently under the age of 20, which means that the Iranian economy needs to create at least one million jobs per year in the next ten years.

21 Ehteshami, World Economic Forum’s roundtable on Iran, January 23, 2004. Available at: http://www.weforum.org/site/knowledgenavigator.nsf/Content/_S10611?open&event_id= 22 Even Supreme Leader Ayatollah Khamenei seems to be in favour of this scenario. See his October 11, 2004 speech: “Future is Bright for Islamic Republic”, IRNA, October 12, 2004.

23 Ray Takeyh, Nikolas K. Gvosdev, “Pragmatism in the Middle of Iranian Turmoil”, The Washington Quarterly Vol.27, N0°4 (Autumn 2004), pp 33-56.

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it considers as its legitimate nuclear and diplomatic ambitions in the Middle East, the Bush administration will have to treat Iran the same way it treats China: by firmly keeping the Iranian “Great Game” in check, while making a fundamental difference between Iran’s internal and external policies, even allowing for some of Tehran’s regional ambitions to come to life, as long as they threaten neither US interests nor the stability of Iran’s “area of interest”. Whatever path is chosen by the Bush administration, dealing with Iran in the next four years will need for the USG to tap into two of the rarest commodities in Washington: patience and restraint. Already, the “Iranian challenge” to the Bush administration’s doctrines and policies, as well as the difficulties experienced by the US in Iraq have profoundly altered the Republican party’s ideological fabric with regards to foreign policy. By striking down some of neoconservatism’s basic ideological tenets (such as Paul Wolfowitz’s and Elliott Abrams’s “world democratic revolution”), the question of Iran has suddenly brought back to the limelight of Washington’s bureaucratic and academic scene the pragmatic – and vastly successful - thinking of “realists” such as Henry Kissinger or George H. W. Bush’s national security adviser Brent Scrowcroft, whose two main advocates inside the Bush administration, Dr. Condoleezza Rice and Robert Zoellick at the State Department, have been put in charge of US diplomacy. There are already signs in Washington that this “realism” is now being combined with the other half of the neoconservative ideology - which advocates the pursuit of democracy abroad only when it is in the interest of the US - in a new school of thought dubbed as “offensive realism”, and embodied not only in Rice, but also in Vice President Dick Cheney’s foreign policy thinking, as well as Charles Krauthammer, Jeanne Kirkpatrick’s writings, and William Kristol’s writings24. If sustained and successful, this trend is likely to emerge as the dominant ideology of the Republican party for the next decade.

In the end, it is likely that historians will give neoconservatism credit for pointing post-cold war US foreign policy somewhere downwind from the forces of history and civilization. But it is certainly as likely that they will harshly judge the thinkers and officials, mainly in the Department of Defense, who took responsibility for implementing it, for failing to give their ideology enough flexibility and credibility to outlast its contradictions and serve as an effective policy tool.

24

On Iran and neoconservatism, see Franklin Foer: “Identity Crisis: Neocon v. Neocon on Iran” ,The New Republic (December 20, 2004).

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WHY WE BACK ISRAEL

WHY WE BACK ISRAEL

by David DONADIO

The US-Israel axis was formed in the Seventies and continues to be reinforced on the basis of common interests and values. Washington has no alternative in the region. The pro-Arab policies of the Europeans does not free them from the threat of terrorism.

T

he United States’ alliance with Israel has

come about gradually over the last four decades, as the American foreign policy establishment has come to believe that it is in America’s geopolitical interests as well as America’s broader liberal ideological interests, to support a strong democracy in the Middle East.

Although Israel’s original patrons in the west were Great Britain and France, those countries repositioned themselves after President Johnson allowed Israel to purchase American tanks and later fighter aircraft, and finally after President Nixon provided direct military aid to Israel, which brought it solidly within the U.S. sphere of influence in the early 1970s. In the 1950s, Great Britain and France had seen Israel as a vehicle to do their bidding against Gamal Abdel Nasser, the Egyptian pan-Arab nationalist who threatened their economic interests in the region by nationalizing the Suez Canal and closing it to their ships, but they later took American support for Israel—which also proved an effective guarantor of those interests—as an opportunity to reap all the benefits of restraining Nasser without any of the costs of being associated with the Jewish state.

For their part, having seen the resounding defeat of the Arab armies who fought Israel in 1956, 1967 and 1973, the Americans calculated that for as much as they might gain by trying to unite Arab countries around their antagonism for Israel, there was more to be lost by doing so. Between 1948 and 1967, the Americans supported Israel for the most part in name only, but they were probably hesitant to show any indifference to it because President Truman—who had defined the moral and political terms in which the United States pursued foreign policy throughout the Cold War—had stuck his neck out to make the world recognize Israel’s existence, and they didn’t want to appear willing to negotiate away any of the more vital interests Truman had protected, like Berlin. The Americans knew that preserving a peaceful, stable balance to Soviet power in the Middle East was in their long-term interest, and they recognized that an unbeatable Israel surrounded by belligerent but impotent neighbors was a better bet to that end than a power vacuum filled by a group of squabbling strongmen like Nasser and the Syrian dictator Hafez al Assad, all of whom in essence could become aligned with Moscow. The Americans therefore saw that a middle east without Israel didn’t look any more favorable for its interests, and would probably

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necessitate making deals which were at least as risky geopolitically as they were morally questionable.

In the eyes of the Americans, at bottom, the Middle East was a tinderbox full of people with all sorts of conflicting group loyalties—none of them particularly reconcilable to western democracy—and an alarmingly prevalent desire to kill for them. So the Americans understood that a balance of power between Israel and the Arab states which wanted to push it into the sea was likely to be more stable than a situation in which there was no Israel, and thus no longer any common object for Arab loathing—or in which the object which took Israel’s place in that role was the United States itself. Under such circumstances, the trans-national religious and ethnic forces of the region, almost all of them hostile to liberalism, might be allowed to rise up and assert themselves. The underlying political forces of the middle east—especially after the fall of the Shah in the Iranian Revolution of 1979—were difficult to predict and impossible to control, which made it advantageous to preserve a familiar Cold War balance of sovereign states, each aligned with either the United States or the Soviet Union.

Because Israel was a Jewish state, it was naturally hostile to the forces of Islamic fundamentalism, and also to the Soviet Union, which was making life very unpleasant for Russian Jews, and thus Israel was ideologically suited to becoming a client the United States could count on to balance Soviet influence in the Middle East. Moreover, even under its more hawkish leaders, such as Golda Meir—who initially refused to make peace with Nasser’s successor, Anwar Sadat, which made the 1973 war more likely—Israel’s central strategic objective was never to fight wars of aggression, nor to annex new territories, but only to ensure its continued security. Because the Israelis were committed in principle to peace, they forced Meir out of office for her refusal to recognize the sincerity of Sadat’s threats to start another war, and her failure to take any action beforehand to stop it. The Israelis thus shared the Americans’ ultimate interests in the Middle East: supporting the proliferation of peaceful, non-communist regimes which traded rather than fought with each other. So American officials realized that their position could be advanced by supporting Israel, or at least could not be improved by relinquishing support for Israel in favor of a roll of the dice among Arab states which might support the United States in one respect or another, but would always be looking for the door, because they would always hate what it stood for.

Americans have also always admired the way in which Israel has defended itself against aggression from all sides, in spite of being vastly outnumbered by its enemies. Their respect for Israeli resolve in the face of half a century of almost unabated violence is compounded by an emotional connection and a fundamental belief in the justice of the Israeli cause. Few moments better illustrate this connection than Moshe Dayan’s 1967 address, as Minister of Defense, after the Israelis retook the Western Wall, the holiest site in Judaism, which the Jordanians had been using as a latrine. Dayan stood before the Wall and read a short statement “We have returned to our most holy place, never again to leave it. To

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its Arab neighbors, the State of Israel extends its hands in peace, and assures all other religions that it will maintain full freedom and honor all their religious rights. We have not come to conquer others’ holy places or to curtail their religious rights, but to guarantee the unity of the city and live in it with the the others in harmony.”

Americans knew these to be the words of fellow Democrats, who cherished peace, and who fought not to eradicate another way of life, but only to protect their own.

Today, American critics of Israel are quick to decry the quantity of foreign aid the United States provides to Israel—which, by some accounts, amounts to one third of all U.S. foreign aid—as the work of a powerful Jewish lobby which has succeeded in turning the United States into a vehicle for the advancement of Israeli interests. This conclusion accounts neither for any possible confluence of interests between the United States and Israel—which are all the more significant in a time of war against radical Islamic terrorists—nor for the fact that for the first two decades of its existence, Israel protected its interests successfully with little help from the United States. Israel fought the war of 1948 with antiquated arms which had been manufactured in Czechoslovakia, ironically enough, for the Nazis. It fought the war of 1956 with French aircraft. Even in 1967, it defeated its Arab rivals handily with Americans to thank only for outdated tanks—and indeed, after President Johnson had failed to make good on his promise to compel Egypt to reopen the Strait of Tiran to Israeli shipping.

One could argue that events like the 1956 war, in which Israel, France and England started a war to force Egypt to reopen the Suez Canal to their ships—infuriating President Eisenhower—demonstrate that Israel occasionally pursues policies which conflict with American interests. The critics have a point, but for the billions of dollars which American taxpayers now transfer to Israel each year in the form of military aid, the United States has gained new leverage over Israel, and received what is in essence an implicit guarantee that it will not again soon make any bold moves without the knowledge and consent of the Americans.

Moreover, on several occasions, Israel has proven willing to serve American interests by taking on burdens the Americans didn’t want to bear. The most notable occasion in this regard was June 7, 1981, when the Israeli Air Force bombed the Osirak reactor complex in Iraq, which was to have built nuclear weapons for Saddam Hussein. The attack was met with the public scorn of the international community, but the Reagan administration was undoubtedly pleased that someone had seen fit to risk any reprisals to ensure that Iraq did not get the bomb.

The present standoff over the nuclear ambitions of Iran offers a glimpse into the significance of the Israeli-American alliance. In a time when Islamic terrorism isn’t particularly popular with Americans, its biggest state sposnsor is likely to feel a degree of pressure from the United States. But it is September 11th, and not any action by Israel, that

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has compelled Iran to accelerate its nuclear program, and thus the United States stands to gain little by softening its support for Israel. Because Iran is the brains and the brawn behind Hizballah, Israel has always been threatened by it, and is especially threatened by the prospect of an atomic Iran, which could deter Israeli and American action while exporting Islamic terrorism with impunity.

If the Israelis had a feasible plan to do so, they would almost certainly eliminate the Iranian nuclear program. The Americans share this desire, and their support for Israel enables them to say “we support Israel and its right to protect its national security by any means necessary.”

If the United States wanted Israel to act in Iran, it could probably precipitate action, and if it wanted to restrain Israel from acting, it could do a considerable amount to that end, as well. If a diplomatic solution to the crisis were to be found, perhaps the United States and Israel could offer the Iranian regime a guarantee that they would neither attack it nor provide support for any of its domestic opposition elements, provided that Iran abandoned its support for Hizballah and other terrorist groups, and provided continual proof that it had abandoned its nuclear weapons program. If a diplomatic solution were not to be found, the United States and Israel could pledge to cooperate at every level to deny Iran a nuclear weapon. In either event, the American-Israeli alliance bears fruit.

There is no guarantee that the United States could prevent Israel from acting in Iran, but in the present circumstances, unless the Israelis perceived a grave and imminent threat from Iran, it is unlikely that they would take such dramatic action without American approval.

There have, after all, been times when Israel has acted in ways that contravened American interests, but in spite of its miscalculation in, for instance, the 1985 Pollard debacle, Israel had and continues to have a modus vivendi in supporting the United States.

Over the last 30 years, Israel has become a client of inelastic demand, in that it needs the United States absolutely—far more than the United States needs it—which compels it to side with the United States more than ever. It continues to be a Jewish state amidst a sea of hostile Muslim states which almost all refuse to recognize its existence, so it has no hope of achieving its strategic objectives by changing its alignment, because no power other than the U.S. shares its fundamental commitment to deterring Arab despots and defeating Islamic terrorists. Whereas Arab states could turn to other patrons to provide missiles, tanks, radars and aircraft—just as Egypt decided to become an American client rather than a Soviet one in the mid-1970s—Israel has no feasible alternative to American alignment.

Israel may ingratiate itself to powers like India by and China by selling them advanced aerospace and electronic warfare capabilities, but they have less valuable support to offer in return, and in the end, Israel has a hard time doing deals without American approval.

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As we have no doubt all noticed, the end of the Cold War has had massive implications for American foreign policy. As victor and sole superpower, the United States no longer needed Israel to counterbalance the Soviets in the middle east, and could adopt a more nuanced posture in the region. Of course, within minutes of the end of the Cold War came the Gulf War, in which Arab governments supported the United States with unprecedented unanimity, and Palestinian Liberation Organization leader Yasser Arafat chose foolishly to side with Saddam Hussein. This cost Arafat a great deal of support in the international community, which undoubtedly made him more eager to negotiate as to the fate of the Palestinians and the Israelis.

Though the first President Bush would surely have liked to see a lasting peace between the Israelis and Palestinians, he was more concerned with consolidating the United States’ victory in the Cold War. With that work largely done, it was President Clinton who yearned for peace in the Middle East, and who hoped against history that he would preside over a handshake to end all handshakes. In August of 1993, Israeli prime minister Yitzhak Rabin and PLO leader Yasser Arafat shook hands on the White House lawn to mark the signing of the “Declaration of Principles,” the first of the Oslo Accords, which brought the Israeli and Palestinian leaders together for negotiations about a final settlement which were to realize the legitimate aspirations of the Palestinian people and Israel’s right to exist.

Though the Oslo process was billed as “Land for Peace,” the Palestinians never made good on their promise to rein in terrorists, and the Israelis never did enough to halt and roll back their settlements in the West Bank and Gaza. There was perhaps an opportunity for both parties to make good on their commitments in the summer of 2000, when President Clinton and Israeli prime minister Ehud Barak put forward the most far-reaching proposal to date, but Arafat rejected Barak’s offer, derailing the entire process.

In October of 2000, Arafat launched a second Intifada against Israel, denying President Clinton an opportunity to forge a lasting peace.

So far, the second Intifada has killed hundreds of Israeli civilians, but it has won little for the Palestinians, though it has driven Israel to build an internationally detested security fence around its borders with the West Bank and Gaza, with the intention of sealing those territories off and withdrawing from them altogether. Some analysts regard this as a strategic defeat for Israel, and it may well be, but it has also cut down on terrorist attacks enormously.

Whatever the consequences, Israeli prime minister Ariel Sharon has made a commitment to disengage Israeli forces in the West Bank and Gaza, and although the United States should waste no clout in defending every Israeli action in that pursuit, its policy toward Israel should continue to be one of general support. The more pressure the United States puts on Israel, the more likely Israel is to try and find new leverage by selling its many forms of expertise to regimes which the Americans might rather not see strengthened.

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More importantly, does the United States stand to make any measurable progress in the Middle East by pressuring Israel to make more concessions to the Palestinian Authority—which has thus far proved itself either uninterested or unable to prevent anti-Israeli terrorism? Would it not be a sign of American weakness in the face of Arab anger to allow itself to be played, as it was by Arafat, in a whole new round of negotiations?

Hatred of Israel is the customary political sentiment uttered across the Arab world, but that might also be because it’s the only one for which one can’t get shot. Arabs would probably be happier with progressive reforms in their own countries than they would with more Israeli concessions. For the United States to pressure the Israelis into a situation which, like Oslo, benefited the Palestinians and provided no peace in return, with the sole intention of seeming “even-handed” in the Middle East, might make angry Arabs happier for a minute, but until the Arabs could be persuaded to make peace with Israel’s existence, what difference would it make?

The question still remains: why should the United States support Israel now, when Israel seems unable to offer anything that other states in the region cannot, with the possible exception of the anger and disapproval of the international community? Critics like Carter administration national security advisor Zbigniew Brzezinski and former National Security Agency director William Odom argue that it is Israel’s existence as a Jewish state on land to which the Palestinians also have a claim that has brought about all the terrorist attacks against it, which is true in part, and that the United States is more likely to suffer similar attacks because it supports Israel, which is also true in part.

This analysis however, misses the larger point, which is that the political tests the United States now faces constitute a challenge, even if only a momentary one, to the entire system of state sovereignty. As the bipolar order of Cold War alliances breaks down and leaders go out in search of the new rules, the ugly underlying forces of the middle east are baring themselves. While it is possible for the United States to reason with Arab despots, it is not possible for it to reason with radical Islamic suicide bombers, who want the whole world either dead or Muslim, who cannot be deterred, and who hate Hollywood and Madison Avenue just as much as they hate Tel Aviv.

In the War on Terror, the United States finds in Israel an ally with unparalleled human intelligence gathering capabilities, whose spies can penetrate Arab governments and intelligence agencies with far greater ease than Americans can, and whose objective is ultimately the same as that of the Americans. The United States is an imperfect democracy which, by necessity, fought Hitler the mass murderer alongside Stalin the mass murderer.

Surely it can fight radical Islamic terrorists alongside another imperfect democracy.

Perhaps the strongest evidence that it is in American interests to continue supporting Israel, especially in the midst of the War on Terror, is that none of the states which have at one time or another attempted to placate the Arab world by withdrawing their support for Israel is any better off for it. The English foreign office has for decades maintained a

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pro-Arab position, and yet England is only at greater risk of attack by terrorist cells the likes of which operate out of Brixton mosques. Similarly, the French have considerable bona fides when it comes to supporting Arab dictators and maintaining relationships with theocracies the United States wants to freeze out, but they are no closer to extricating themselves from a growing demographic problem with their own large, unassimilated Muslim population. If supporting Arab despots instead of Israel were all it took to suppress radical Islamic terrorists, Brzezinski and Odom would be right, and France would have nothing to fear.

All this is because in the minds of radical Islamic terrorists, it is not Jews, but secular liberals, who are the enemy. So as liberals, Americans can either stand up with the Israelis, who share their beliefs, or they can dissemble and hope the terrorists interpret their indecisiveness as faith in Allah.

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DIRTY BOMBS, SUITCASE NUKES, AND CRUISE MISSILES: A TECHNOLOGICAL AND GEOPOLITICAL ASSESSMENT

DIRTY BOMBS, SUITCASE NUKES, AND CRUISE MISSILES: A TECHNOLOGICAL AND GEOGRAPHICAL ASSESSMENT

by Charles D. FERGUSON

Dirty bombs, nuclear suitcases and Cruise missiles: which will be the weapons of a new September 11th and from where will they come. The unknown factor of Russia. The risk of an attack launched from a boat moored off the long US coast.

B

ecause

of

cultural,

historical,

and

geographical influences, certain threats strike deep in national psyches. The Japanese attack against Pearl Harbor on 7 December 1941 and the terrorist attacks against New York and Washington, DC, on 11 September 2001 exposed America’s vulnerability to sneak attacks.

For decades, Americans felt sheltered by two oceans, the Atlantic and Pacific, and two friendly neighboring countries, Canada and Mexico. The attack on Pearl Harbor served as a wake up call that thousands of miles of ocean do not guarantee protection of the American homeland. However, because Pearl Harbor is located far from the U.S. mainland, Americans still lulled themselves into feeling somewhat immune to an attack on the continental United States. Less than two decades after Pearl Harbor, the Soviet Union’s launch of Sputnik in 1957 shattered this myth and spurred a ballistic missile arms race that directly threatened the American homeland. The end of the Cold War gave back to Americans some comfort of living in a sheltered land although they were still vulnerable to an accidental nuclear war with Russia. Moreover, despite the growing threat since the early 1990s of potentially hostile nations pursuing ballistic missile programs, that threat has yet to materialize.

More recently, the increasing threat of international terrorism has once again exposed the vulnerability of America’s homeland. Terrorists and other non-state entities have tended to rely and will likely continue to rely on conventional explosives as a means of attack. Nevertheless, during the past two decades, a new breed of terrorist has arisen that seeks unconventional weapons, such as biological, chemical, nuclear, and radiological weapons. This breed may also covet unconventional delivery systems, such as jet airliners, cruise missiles, and unmanned aerial vehicles (UAVs). All these modes of attack offer non-state enemies of the United States the capability to conduct almost undetectable or sneak attacks. These weapons vary tremendously in the damage they could inflict. Biological, chemical, and nuclear weapons are classified as weapons of mass destruction (WMDs), but only a nuclear weapon will undoubtedly cause massive

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destruction. Terrorists have used chemical and biological weapons, but these attacks have not killed many people because the weapons were relatively unsophisticated.

Although some terrorist groups have expressed strong interest in unleashing nuclear or radiological mayhem, they have yet to cross what many analysts consider a nuclear threshold. Once that precedent occurs for nuclear or radiological attacks, the United States and its allies could confront a nightmare scenario. Nevertheless, nuclear and radiological weapons differ markedly in the damage they can cause. A radiological weapon, one type of which is popularly known as a “dirty bomb,” would not cause massive destruction, but it could result in massive disruption because of social and psychological effects as well as economic damage from radioactive contamination.

Acquiring nuclear weapons from military arsenals is considered very difficult because of the strict security features nations usually employ. However, certain classes of nuclear weapons may have a higher risk of falling into terrorists’ hands. Such weapons would most likely have the attributes of portability and relatively weak security protections. Suitcase nukes may possess these vulnerabilities.

Concerning unconventional delivery systems, al Qaeda terrorists demonstrated on 11 September 2001 the devastating effect of manned jet airliners crashing into buildings.

Clearly, that precedent has been set. Terrorists may next try to control cruise missiles or UAVs to launch even stealthier attacks. On November 7, 2004, for instance, the Lebanese extremist group Hezbollah flew a UAV from Lebanon into Israeli airspace. Although the UAV did not fire a weapon, it worried Israelis and signaled that more sophisticated unmanned terrorist flights could take place soon.

Will the next wave of unconventional attacks against the United States use dirty bombs, suitcase nukes, UAVs, or cruise missiles? What is the technology underlying each weapon? What are the geographical routes of these potential unconventional attacks against the United States? Where would non-state entities most likely acquire these weapons or the materials to build such arms?

Radiation weapons: dirty bombs and other devices The term dirty bomb embodies the misconception that radiation weapons must employ conventional explosives. A more accurate description of a radiological weapon is a radiation dispersal device (RDD). An RDD can spread radioactivity through a variety of means, including detonating conventional explosives, spraying powdered or liquid radioactive materials, and contaminating water and food supplies. The effectiveness of each method depends on the chemical and radioactive properties of the radioactive source that fuels the weapon. For instance, cobalt-60 and iridium-192 usually consist of solid metal and are, thus, hard to disperse. In contrast, cesium-137 is usually formed into cesium chloride, which is powdered and, therefore, relatively easy to disperse or dissolve.

Although there are dozens of radioisotopes that could end up in an RDD, only eight pose high security risks because of their prevalence and their possession of

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radioactive decay half-lives roughly on the order of a human lifespan.1 These isotopes are americium-241, californium-252, cesium-137, cobalt-60, iridium-192, radium-226, plutonium-238, and strontium-90. All, except naturally occurring radium, are produced in nuclear reactors for commercial use. Less than ten countries, including Argentina, Belgium, Canada, France, the Netherlands, Russia, South Africa, and the United States, make most of the radioactive sources that employ the seven reactor-generated radioisotopes. Businesses within these countries and the United Kingdom are responsible for selling and distributing radioactive sources to almost all countries in the world.2 Terrorists have many options in acquiring potent radioactive sources. First, they could try to purchase or steal sources from major manufacturers or subsidiary companies.

Second, they could attempt to seize sources from end-users located in dozens of nations worldwide. Third, they could find “orphaned” sources (those that are lost or otherwise outside of regulatory control). The former Soviet Union, for instance, has an estimated hundreds of orphaned sources, many of which contain potent amounts of radioactivity.

Terrorists acquiring these sources would have to smuggle them from this area of the world to the United States. Fourth, they could try to hijack sources during transshipment through the United States. For example, a major manufacturer in Canada transports significant quantities of cobalt-60 through the U.S. mainland and major U.S. ports. Thus, an RDD attack on the United States can originate internally or externally.

Suitcase nukes In 1997, Russian General Alexander Lebed grabbed worldwide attention when he announced that Russia could not account for about 100 portable nuclear weapons, popularly known as suitcase nukes, weighing from 30 to 90 kg. Since the late 1990s, some Arab newspapers, such as Al-Hayat and Al-Watan Al-Arabi, have reported that al Qaeda operatives have bought such weapons. However, independent corroboration has never surfaced. Moreover, officials in Russia and Ukraine have repeatedly denied that any of these nuclear arms are missing. In 1996, the Russian government established a commission to determine the status of these weapons. Until recently, many doubted that the commission completed its job.3 In February 2004, however, Vladimir Denisov, the commission’s chairman, announced that it did finish the study. He stated that the

1

For a more detailed discussion of radioactive material trafficking and RDDs, see Charles D. Ferguson and Alessandro Andreoni, “Le vie della ‘bomba sporca’,” Limes, 1/2004, pp. 93-100.

2 Charles D. Ferguson, Tahseen Kazi, and Judith Perera, Commercial Radioactive Sources: Surveying the Security Risks, Occasional Paper No. 11, Center for Nonproliferation Studies, January 2003.

3 For informative reports on the suitcase nuke controversy, see Scott Parrish, “Are Suitcase Nukes on the Loose? The Story Behind the Controversy,” CNS Reports, November 1997; Nikolai Sokov, “‘Suitcase Nukes’: A Reassessment,” CNS Research Story of the Week, September 23, 2002; David Smigielski, “A Review of the Suitcase Nuclear Bomb Controversy,” RANSAC Policy Update, September 2003.

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commission matched records to actual weapons.4 Thus, this statement confirms that as of the mid-1990s these devices existed although many outside observers thought that Russia had already dismantled all suitcase nukes. The urgent question now is: what happened to those weapons since the survey was completed? Do they continue to exist? If so, will Russia move quickly to dismantle them in accordance with the intention behind the 1991-1992 U.S.-Russian Presidential Nuclear Initiatives, in which U.S. President George H. W. Bush, Soviet President Mikhail Gorbachev, and Russian President Boris Yeltsin pledged to eliminate whole classes of tactical nuclear weapons?

Even if suitcase nukes still exist, they may have become inoperable. Retired Russian General Vladimir Dvorkin has stated that these devices were required to have certain components replaced every six months. While it is uncertain what these components are, they may involve radioactive materials that undergo relatively rapid decay. In addition, suitcase nukes reportedly used special security devices, such as permissive action links, which require entering a specific code to unlock the weapon.5 If terrorists are able to acquire suitcase nukes, they would probably need insider help to identify the components that require replenishment and to obtain the codes necessary to unlock these weapons. Assuming that terrorists could accomplish all of these challenging steps, they would then have to smuggle a suitcase nuke through one of the more than 300 official border or port crossings into the United States or more likely across any point along the thousands of miles of relatively unprotected coastal or land borders.

Unmanned aerial vehicles and cruise missiles A cruise missile is “a missile that, like an airplane, sustains flight by aerodynamic means over most of its flight path.”6 Rockets can power very short-range cruise missiles, but small jet engines propel longer range cruise missiles. Like a ballistic missile, it is intended as a weapon-delivery system and can contain a payload of a conventional, biological, chemical, nuclear or radiological weapon. Unlike a ballistic missile, a cruise missile can often escape detection until only minutes before hitting a target because of its relatively low flight profile. Because of their low altitude trajectory and relative slowness, cruise missiles are more effective than ballistic missiles at dispersing biological or chemical agents or radioactive materials in powdered or solution forms.

Anti-ship cruise missiles have proliferated much more widely – to more than 70 countries –than land-attack cruise missiles– to only about a dozen industrialized countries.

Many of the countries with anti-ship cruise missiles are located in the developing world.

One of the most urgent concerns is that non-state entities could obtain anti-ship cruise 4

Nikolai Sokov, “‘Suitcase Nukes’: Permanently Lost Luggage,” CNS Research Story of the Week, February 13, 2004 and references therein.

5 Sokov articles, op cit.

6 Definition used in the 1987 Intermediate-Range Nuclear Forces Treaty between the United States and the Soviet Union.

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missiles and inexpensively modify them for a land-attack role. But this operation poses challenges. Many anti-ship missiles are jammed with electronics and have little extra space for modification. Nonetheless, the Chinese silkworm anti-ship cruise missile has enough room to suggest that “conversion will require less technical skill” than with other types of anti-ship cruise missiles.7 Many countries have purchased the silkworm and its variants as well as the French Exocet, the Russian Styx, and American Harpoon anti-ship cruise missiles. Countries in this group that may have an increased risk of terrorist acquisition of missile systems include Bangladesh, the Democratic Republic of Congo, Dubai, Egypt, Iran, Iraq, North Korea, and Pakistan. A terrorist group conceivably could launch a land attack cruise missile or a missile modified for such a role from a ship stationed off the coast of the United States. The strike range depends on the missile’s capability but could cover hundreds of kilometers. A cruise missile could also fit inside a cargo container and enter the United States through a port.

Using jet or propeller driven systems, unmanned aerial vehicles typically move slower than cruise missiles but share similar characteristics. Although traditionally UAVs were developed for conducting reconnaissance and gathering targeting information, they can also deliver weapons.8 Non-state groups could also try to build kit airplanes, costing about a few thousand euros, and adapt them to a UAV or cruise missile attack role. Such airplanes require only short runways – about the length of a football field. Conceivably, such attacks could originate from within the United States. Terrorists could make the unmanned airplanes or UAVs in a small warehouse near major urban areas. Innovations in guidance through use of the U.S. Global Positioning System or the Russian GLONASS or the soon-to-be-produced European Galileo system offer non-state entities enhanced accuracy that they could only have dreamed about several years ago. Unless more controls are exerted over cruise missile and UAV systems, this threat will continue to grow, and it should not come as a surprise if a terrorist group in the near future launches a sneak attack with one of these weapons.

7

Dennis M. Gormley, “UAVs and Cruise Missiles as Possible Terrorist Weapons,” in Occasional Paper No. 12, Center for Nonproliferation Studies, August 2003.

8 U.S. Office of Technology Assessment, “The Proliferation of Delivery Systems,” 1993, pp. 244-245.

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AUTHORS FRANCESCO SISCI – Heartland Co-editor and columnist of the Italian newspaper La Stampa.

ZHANG WENMU – Research fellow at the Chinese Institute of International Affairs.

YU XILAI – Director of Reform and Constitution website.

WANG SIRUI – Writer.

MARTINO DOLFINI – Economist.

MARGHERITA PAOLINI

–

Scientific Coordinator of Limes – Italian Review of Geopolitics.

LUCIO CARACCIOLO – Director of Limes – Italian Review of Geopolitics and of Heartland.

JOHN C. HULSMAN – Research Fellow at Heritage Foundation, Washington, D.C. DAVID POLANSKY – Research Fellow at Limes – Italian Review of Geopolitics and at Heartland.

ALEXIS DEBAT – Former official of French Army. Terrorism analyst and advisor at NBC News.

DAVID DONADIO – Freelance.

CHARLES D. FERGUSON - Science and Technology Fellow at the Council on Foreign Relations in Washington, DC.

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