Tag Archives: OECD

Why the International Community Shouldn’t be Worried About China

China’s rise has been one of the most impressive economic success stories of the 21st century so far. This despite relatively high levels of poverty, sub-par healthcare, and education systems and one-party rule for the past six decades. Moreover, prior to Communist Revolution China had a chaotic and violent history. Economic growth came only after Beijing obtained a level of security and stability coupled with an opening to the outside world which ultimately led to a place in the international community. Indeed, China’s rise is thanks to this openness and largely with the international community’s blessing. Today China is less much less of a threat than it used to be.

Officially China was and still remains a communist state. However, today’s Chinese Communist party is far less ideological than it was in Mao’s day and especially since Beijing decided to open up the country to the rest of the world. By opening up, China had much to gain economically despite the new challenges that would inevitably come with it.  Today, Beijing predominately faces two challenges on the domestic front. First is figuring out how to quell the near constant domestic unrest that occurs all across the vast country. This unrest is largely either underreported or not reported at all by the international media despite it’s scale which is a huge concern for Beijing.  A restless population undermines the Communist’s party’s legitimacy and rule.

Second is to successfully make the transition from a predominately export-driven economy to a mainly consumer-driven one like the economies of many of the Organization for Economic Co-operation and Development (OECD) countries. This is a delicate yet crucial transition that if Beijing doesn’t successfully make could also jeopardize the future of the Communist Party. Moreover, each challenge could adversely effect the other if they are managed poorly. That’s why Beijing has a strong incentive to keep it’s current social contract with the Chinese people, namely to provide economic prosperity and to guarantee certain personal freedoms in exchange for the public’s acceptance of one-party rule.

Abroad China’s main objective is to secure natural resources for their growing economy. Already, Beijing has managed to pull 500 million of its people out of abject poverty and yet, there is a sizable portion of the population that remains in poverty.  An entirely separate task is providing basic foodstuffs, needs and services to the newly-enfranchised Chinese middle class. For this, China has been instrumental in developing constructive relations the West, particularly the United States. Over the years Chinese politicians, scientists, engineers and business leaders have studied and visited the United States to learn how to better run their own country in a variety of ways.  Moreover, having received Most Favored Nation Status with the United States China has enjoyed one of the strongest bi-lateral relations of any two countries. Beijing’s widespread and full-fledged membership of the World Trade Organization (WTO), the UN’s International Atomic Energy Agency (IAEA) and accession to the G-20 has further solidified its important place in the international community. By contrast, revisionist powers of the past such as Nazi Germany flat out rejected such ties with the international community.

China also possesses nuclear weapons and although the United States believes it has almost 200 such weapons they have rarely been seen as much of a threat. Rather, it can be argued that China has become less of a threat with nuclear weapons. Ever since acquiring a nuclear arsenal, China has maintained a ‘no first use’ nuclear posture vowing not to strike first. Although this posture seems to have changed recently, chances of a nuclear escalation remain low making China much less of a threat today.

Granted, the Middle Kingdom is still an authoritarian state accused of a slew of human rights violations, widespread theft of American intellectual property and hotly disputed territorial claims in the South China Sea. For the latter, China’s neighbors in the South China Sea will be looking to the United States to play a pivotal role in helping to resolve the dispute peacefully. The hope is that international pressure will resolve these issues given how well integrated China is into the global economy.  In fact, it’s very integration into the international community is why China is not labeled a rogue state. By contrast Iran, a country labeled as a rogue state is accused of human rights violations while also financing terrorist activities around the world, assisting the Assad regime in Syria in a war against their own people, allegedly pursuing a nuclear weapons breakout capability, and, until recently electing a president that suggested among other things that Israel should be ‘wiped off the map‘.  Being less integrated in the international community means Tehran has fewer allies.  A fate that Beijing has avoided.

There is no question that the People’s Republic of China has had a tumultuous history from the Communist Revolution to Tiananmen Square. But the Middle Kingdom’s past is not prologue. It’s no accident that China’s rise has been part and parcel to it’s relatively fast-paced integration into the international community and global economy. Indeed, Beijing chose a path of economic development and growth within international norms and institutions which is why it continues to grow with the international community’s blessing.

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American Leadership in a Revised Unipolar World

Today, the United States still stands as the world’s unrivaled superpower.  However due to the absence of superpower rivalry a la the Cold War, the so-called ‘rise of the rest’, lessons learned in recent history with two wars and an over all pronounced lack of global and domestic leadership Washington has become the reluctant superpower in a different, revised unipolar world. A world where although the United States is not challenged politically, militarily, or economically around the world, it nonetheless is unwilling to make tough decisions in a world where there is no central threat to its supremacy yet no other hegemons to share power with.

How did we get here? Three major factors contributed to the change in unipolarity. First, was the continued reluctance of successive American Presidents and members of Congress to tackle the pressing domestic issues in any constructive way. Namely, healthcare, entitlements (mainly Social Security), education, immigration and infrastructure reform. Rising healthcare costs have become a serious public policy issue. Lopsided entitlement payer to payee ratios are projected in the not so distant future.  America’s primary education system continues to lag behind other OECD countries while our world-class institutions of higher education are granting advanced degrees to a number of foreign students who are not given the option to remain in the United States.  Moreover, America’s infrastructure–it’s power grid, roads, highways, ports and airports are quickly showing their age.

Admittedly the budget deficit has been enormous making it hard to make budget allocations for large-scale reforms a la the Great Society or the New Deal. However, a political culture of ‘kicking the can down the road’, by avoiding the tough issues and an obsession by members of Congress to get reelected has hindered even the most preliminary steps towards real reform. This inaction has less to do with the political leanings of our politicians–Democrat or Republican–and more to do with the political culture of today’s White House as well as Congress.

Second, the experience of the wars in Iraq and Afghanistan humbled Washington and created a war-weary American public. It’s too early to tell if Washington’s efforts at state-building in Iraq have paid off but it’s nation-building efforts–to construct a national identity using the power of the state–has fallen far short of its past efforts in places like Germany, Japan and the Philippines. If the current political situation in the Balkans is any indication, the post-Cold War era hasn’t been the best environment for outside powers to engage in nation-building. At least not without long, sustained foreign interventions in the form of United Nations peacekeeping forces or outright occupation.

Third, the post-Cold War and post-9/11 political environment has changed the view from Washington. In the more than two decades since the fall of the Soviet Union, the breadth, depth and weight of the variety of global conflicts and global issues like global warming and the rise of political Islam has been revealed. During the Cold War, the regional and even some domestic conflicts were seen through the prism of the great US-USSR superpower rivalry.  Moreover, the dominant preoccupation of the two superpowers was to keep the other in check militarily and politically.  The other conflicts and issues were a distant second to the ones Washington and Moscow faced.  Absent the Cold War, a whole host of smaller yet dire issues, conflicts and crises throughout the globe have come to the forefront. Couple that with domestic issues explained above and the United States finds itself in the unenviable–albeit default–position of having to prioritize which genocide to halt, which environmental issue to tackle and which ethnic or regional conflict or crisis to mitigate over the other.  This is not to say that Washington does not or will not play a role in the events and issues shaping our world.  Rather it’s that the United States is less able to play the leading role in every one of them.

One need not go very far for examples. America’s role in Unified Protector, the military intervention mission in Libya has been characterized as a ‘lead from behind‘ strategy. Here the United States provided the support that only a superpower can while it’s allies led the over all mission. This mission was widely seen as a tactical triumph but the jury is still out whether it’s a strategic success.  By contrast, the United States has not even come close to the same level of commitment or leadership in the conflict in Syria where an estimated 93,000 people have died.  If Libya does not descend into chaos, Unified Protector will be considered a strategic success as well. And so far, there is no palpable consensus as to whether the lead from behind strategy will be welcome in foreign capitols.

Another example is the ongoing Israeli-Palestinian peace process. The United States has been the lead mediator of the negotiations that have been ongoing for more than 40 years and over successive Israel and Palestinian administrations. The sheer length of the negotiations speaks of missed opportunities during the Cold War and arguably poor mediation on the part of the United States. The result has been not a resolution to the conflict but rather a permanent peace process yielding a fragile peace at best and an ongoing crisis at worst. This even while both Israelis and Palestinians agree that the end game is a two-state solution achieved only through diplomacy. However, until the United States figures out how to become an effective mediator, we can expect more of the same.

Granted, the United States has retained some key competitive advantages it still enjoys. The United States is at or near the forefront in technological advances, especially in computers, medicine and aerospace making it the world’s leading innovation hub. In fact, the United States government is still the global leader in research and development spending. As mentioned earlier, the United States has world-class institutions of higher education that are the envy of the world.  Not to mention the predominance of American films, music and iconic products worldwide that has translated to soft power in political terms. The United States has enjoyed these advantages for several generations and with no direct competition from any other single country, the United States will continue to do so for the foreseeable future. This despite there being no appropriate historical models for the United States to follow.

Although unipolarity never quite existed before the end of the Cold War, there have been times in history when certain powers did dominate.  But even among these, no comparable historical models exist. The Roman empire was sacked and torn to pieces only to be replaced by the chaos of the Middle Ages. The British Empire had the United States itself to help rebuild after World War II and to challenge the Soviet Union.  Moreover, the United Kingdom was an empire whose reign differed in kind and not simply degree to the United States. And then there was the Soviet Union which is a non-starter. With no reasonable models for it to follow, the United States does not have the luxury to simply abandon its global responsibilities.

Where we find ourselves today is a unipolar world where the United States is looking to find other countries to share it’s burden. So far this path has not been very fruitful. China, for example is extremely reluctant to meddle in the internal affairs of any other nation in any way.  Russia, because of its own host of domestic concerns is not in a position to offer global leadership outside the nonproliferation realm. Regional powers like Brazil and South Africa lack the military and political might to play a significant leadership role beyond their respective regions.

The United States is now more forced to lead rather than willing to lead.  This is the new normal in global politics characterized by the Obama Administration’s default “go out and make me do it” posture.  Note, that this is not the ‘nonpolar’ world that Richard Haass describes. Rather it’s what I call a revised unipolar world where the United States must increasingly make tough decisions on what  major conflict, crisis or issue it should lead.  Consequently, Washington will be increasingly accused of being the aggressor or the ‘do nothing’ superpower. Unless the international community can come together and agree to sharing the burden of the world’s conflicts, crises or issues, this revised unipolar world will be continue to be our reality.

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Why the United States has Already Lost on Iran

Ever since it was discovered that Iran was secretly pursuing a nuclear program in 2002, Tehran has insisted its program is for “peaceful purposes” only.  Washington, however is not buying it.  From the beginning they have steadfastly been against a nuclear-armed Iran. Then as now, Washington believed an Iranian bomb would trigger a whole slew of undesired consequences including but not limited to a nuclear arms race in the broader Middle East.  In the over 10 years since the United States has levied a series of progressively harsh economic sanctions on the Islamic Republic aimed at isolating the Iran economically from the international community. At the same time, Washington signaled to Tehran that if they come clean on their nuclear program, they would according to Obama be allowed, “to return to its rightful place among the community of nations.”

Moreover, the United States signaled that if they do so, Iran would have the right to peaceful nuclear technology under the Non-Proliferation Treaty (NPT). However, as the global economic pendulum shifts further east, Iran has little reason to believe the United States is the sole gatekeeper to the ‘community of nations’ therefore rendering Washington’s ultimatum to Iran as a false dichotomy.

For the United States, it’s a straightforward proposition. If its nuclear energy Tehran wants it should agree to halt its own indigenous uranium enrichment program in exchange for guaranteed access to nuclear power and a place in the international community. Washington considers this more than a fair deal to Iran which in many ways still considers Iran a rogue state.  For over thirty years, the United States has accused Iran of consistently supporting terrorist activities abroad in an effort to expand it’s influence while at the same time clandestinely pursuing a nuclear weapons capability away from the prying eyes of the international community.

Not surprisingly, the view from Tehran is different. Not only does the Islamic Republic not consider the United States the exclusive gatekeeper of the international community but it doesn’t see relations with the United States as playing a crucial or pivotal role in Iran’s future. At least not as long as there are emerging markets in need of Iranian oil–by far Iran’s biggest export.  And especially not when Washington itself grants waivers for their sanctions to some of Iran’s largest export partners.

Granted, Iran’s economy is contracting and they are not experiencing a windfall in oil revenue from developing countries now that many of the OECD (Organization for Economic Co-operation and Development) countries are not buying their oil. But there are signs that oil consumption in OECD countries has peaked while consumption in many parts of the developing world are rising. With projections like these in the pipeline, the Islamic Republic sees little reason to make any fundamental changes to their economic model in the foreseeable future or to give up its self-perceived right to enrich uranium in the face of international pressure.  Moreover, Tehran has called the United States the ‘Great Satan‘.  Iran harbors a deep suspicion of the West, particularly with the United States and Great Britain dating back at least to the 1953 CIA overthrow of Mohammad Mossadegh, Iran’s democratically elected Prime Minister. This deep suspicion over time has contributed to a history of mistrust between the two sides so it’s little wonder Tehran doesn’t always buy what Washington is selling even as Iran’s economy continues to falter.

The accumulation of sanctions has made life not only harder for Iran’s elite but they have made life more difficult for ordinary Iranians as well.  Tehran has been under sanctions of one kind or another since 1979.  Earlier sanctions mainly targeted individuals and certain industries both inside and outside Iran who were involved in propagating terrorism or contributing to Iran’s nuclear program. The most recent sanctions have hit ordinary Iranians the hardest by specifically targeting Iranian financial institutions as well as any foreign banks doing business on behalf of Iranian banks. The result has been a near complete collapse of the Iranian Rial making some basic essentials prohibitively expensive for ordinary Iranians. This in tandem with general economic mismanagement by the Islamic Republic has slowed the over all Iranian economy to a crawl.

Despite being one of the most sanctioned countries ever, Iran has managed to avoid becoming a failed state. Time and time again, the Islamic Republic has demonstrated its ability to do whatever possible to avoid economic collapse and by extension the regime itself.  In the last 34 years Tehran has managed to dodge the worst effects of the sanctions imposed by outside powers by exploiting loopholes, establishing new economic partnerships with other countries such as its growing trade with Iraq as well as enlisting the help of its economic partners for infrastructure projects.  What the regime cares about the most above anything else is its own survival and it has repeatedly shown it can weather any external economic shocks outside powers can throw at it.

No doubt the sanctions have inflicted significant pain to all levels of Iranian society. They have succeeded in denying Iran access to certain international markets as well as access to nuclear and advanced military technology.  But with a track record of avoiding some of the harshest sanctions ever imposed on a country by another and market demand for oil expected to rise in the developing world, Tehran sees little reason to change its economic trajectory in the foreseeable future.  Moreover, if the Islamic Republic can see its way out of it’s most recent economic malaise it will have rendered Washington’s ultimatum of ‘come clean on your nuclear program or face isolation’ as irrelevant.

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