Shadow Government

A U.S. Asia strategy for Hillary Clinton's trip

By Dan Twining

Hillary Clinton deserves kudos for making Asia her first trip as secretary of state. Generations of senior U.S. officials were trained and socialized as Atlanticists, a legacy of the centrality of Europe during the Cold War. However, it does not diminish our European allies to acknowledge that if the 20th century was an Atlantic century, the 21st century looks likely to be a Pacific one.

Clinton's inaugural trip to Asia is a timely reminder of this fact, and an important signal that the Obama administration is committed to sustaining U.S. leadership in this critical region, building on the good work of the Bush administration. Clinton deserves credit for making her first stop in Japan, America's most important Asian ally, followed by South Korea, a key partner with a pro-American president eager for closer economic and diplomatic cooperation. She then travels to Indonesia, the world's largest Muslim democracy and an extraordinary success story. She will conclude, appropriately, with a visit to China, where she has pledged to broaden the bilateral dialogue with a goal of intensifying cooperation on climate change and other non-economic issues.

Interestingly, Clinton's inaugural Asia trip, and her visits to these particular countries, were recommended to her during the transition by Secretary Rice's outgoing Policy Planning Staff. But State's policy planners also included India as a key stop in their proposed itinerary, and the absence of a visit to New Delhi is the latest in an array of troubling signals about the new administration's priorities on the subcontinent (the subject of a future post).

Clinton will benefit from a range of country- and issue-specific briefing papers provided her by the State Department's country desks and functional bureaus. But these will be primarily tactical in nature. Nor has the new administration defined its overarching goals in wider Asia. What then should the United States be doing strategically to strengthen our ability to shape and lead an Asia-Pacific century? Here is one possible roadmap for our new secretary of state:

1. Accelerate the rise of democratic great powers in Asia that are increasingly willing to help police the region. Among the Bush administration's most significant accomplishments were the transformation of the U.S.-Japan alliance and the construction of a wide-ranging strategic partnership with India. America should invest much more heavily in the modernization of Asia's other big democracy, Indonesia, a moderate Muslim nation of 235 million people sitting astride critical sea lanes and a future great power whose economy will surpass in size those of many European countries by the 2020s. Such strong Asian states along China's periphery could deter Chinese adventurism and help ensure its peaceful rise.

2. Encourage strategic cooperation among Asia-Pacific democracies. The vision of a "Pacific Pact" of free Asian nations has animated American leaders since Eisenhower, but Cold War divisions and the legacy of Japanese imperialism made it impossible to implement. Today, Asian nations are leading the effort to form democratic security concerts, a trend Washington should enthusiastically nurture. Japan has signed bilateral security pacts with Australia and India -- Tokyo's first such agreements outside the U.S. alliance -- and Australia and Indonesia have inked a bilateral security treaty. Japan, South Korea, Australia, and New Zealand are pursuing military interoperability with NATO. Japan led the formation of a quadrilateral security partnership with India, Australia, and the United States. Americans should be pleased that our democratic friends in Asia want to tie up with us and each other to promote regional peace and prosperity, which benefits China too.

3. Maintain relations with China in a strategic framework that enables cooperation and manages differences. The Bush administration created a strategic framework for managing U.S.-China relations that treated China with the respect worthy of a world power, expanded areas of functional cooperation, created frameworks for managing differences that allowed cooperation in other areas to continue, and pursued macro-level economic and diplomatic dialogues that sensitized each country to the other's strategic views and concerns.

President Obama can build on this foundation. A successful U.S. Asia policy will sustain good relations with China while strengthening ties with other Asian powers to foster a pluralistic regional order that remains conducive to U.S. leadership and the prosperity that such leadership has underwritten. Astute U.S. leaders will recognize China for what it is: a prickly, insecure giant that does not, at least for the foreseeable future, seek confrontation with the United States, shares an interest in sustaining elements of an international system that has been conducive to China's rise, and at the same time seeks a more privileged leadership role within that system.

4. Talk economics. There is a perception in Asia that America's recent focus on counterterrorism caused it to talk past regional allies primarily concerned with fueling economic growth. China has adopted Southeast Asia's economics-first discourse, and its influence has increased accordingly. We need to speak the same language as our prosperous friends, especially in times of economic contraction; they know that U.S. trade and investment agreements are qualitatively superior -- and more lucrative -- than anything China, India, or Japan have to offer. Passage of the Korea-U.S. Free Trade Agreement is especially important in this regard.

5. Reform international institutions for the Asia-Pacific century. The United States should lead to reform international institutions with the goal of making emerging Asian powers responsible international stewards rather than second-class citizens. Japan and India deserve seats on the UN Security Council, whose current membership was conceived at a time when the world looked rather different. India and China should be incorporated into the International Energy Agency, and we should consider how to bring India into APEC. Neither the G-8 (too Western) nor the G-20 (too big and diverse to be like-minded) seem like the right model for an international steering committee of the great powers. A calibrated G-8 expansion to a G-13, adding India, China, South Korea, Brazil, and Mexico, might be a better way to represent Asia's weight internationally while maintaining a democratic plurality.

6. Build the United States into Asian regional institutions. Most Asian leaders support a leading U.S. role in a regional order characterized by what Singapore's ambassador to Washington calls "asymmetric multipolarity" -- multiple centers of power in which the United States is strongest. This desire helps explain Asian efforts to construct regional organizations -- and why the United States should take them more seriously. Regional clubs help other Asian nations bundle their power to engage China from a position of strength, diluting its ability to dominate its neighbors and socializing it as a status quo power. Asian states worked to include India, Australia, and New Zealand in the East Asia Summit to prevent it from becoming Sinocentric. The United States may want to consider joining this club, which nearly all its members would welcome.

The question is not whether Asians will continue to develop regional clubs -- they will -- but in the words of Georgetown's Mike Green, "what the new institutions are to be based on: preserving Asian exceptionalism, as Beijing now argues, or pursuing a common set of values rooted in democracy and the rule of law," as Japan, India, and other states believe. The United States has a dog in this fight.

7. Stay engaged. The United States has better relations with Asia's great and regional powers than they have with each other. As one Japanese diplomat puts it, "Asians are all like spectators in a movie theater. They are all looking at the screen, which is America, rather than at each other." This allows Washington to pursue a Bismarckian foreign policy that places it at the hub of regional relationships. The U.S. role is especially important for Asia's smaller states: They are less likely to fall under the sway of their giant neighbors when they have options for partnership with a benign, distant partner. America's staying power at a time of dramatic strategic change gives smaller Asian countries geopolitical options they would not otherwise have.

8. Promote democracy. The material success of China's authoritarian rise has led to premature anxiety that economic modernization will not produce a middle class that demands democratic rights, as occurred in the West. We have heard similar sentiments before, when Asian strongmen, "Asian values," and bureaucratic capitalism were perceived to provide superior development models to free-market democracy. Democratization of the Asian tigers, the collapse of Japan's economic bubble, and democratic India's economic trajectory have demonstrated how wrong such assessments were.

Given most of Asia's embrace of universal values, China looks like the outlier rather than the model for its region, and democracy appears to be America's greatest source of soft power in a region that has embraced it wholeheartedly. With respect to China, the success of democracy in Taiwan, overwhelming popular support in Hong Kong for greater democratic freedoms, the growing prominence of a democratic discourse in Chinese civil society as manifested most recently in the Charter 08 movement, and the debate within China's Communist Party about how to institutionalize the party's dominance through the trappings of managed democracy all attest to the power of liberalism's appeal, and the prospects for it to shape China's own evolution.

9. Stay confident about America's ability to shape and lead a Pacific century. Americans should not fear the rise of Asia: As a Pacific nation, our dynamic, globalized economy and vibrant society will benefit immensely from the economic transformation of China and India, even as the combined power and norms of the Western allies continue to shape international society. We can face this future with confidence -- because it will fuel our own prosperity; because most Asian states support an "open regionalism" that includes the United States, not a return to the Sinocentric hierarchy of Asia's past; and because the values of democratic modernity to which Asian people aspire found their earliest and most enduring expression in the West.

Leaders in Japan, India, Korea, Indonesia, and beyond are increasingly speaking out about the importance of a values-based foreign policy. In doing so, they remind Americans of our own history, when our ascent to world power a century ago was marked by similar calls to make the world safe for democracy. To the extent that Asian governments and peoples continue to embrace universal values, we can be confident that our common ideals will be an enduring source of security and prosperity.

Shadow Government

Obama's pyrrhic victory on the stimulus package

By Phil Levy

As the fiscal stimulus saga draws to a close, we can ask what this opening salvo of the Obama presidency means economically, politically, and internationally.

The economic range of reactions to the stimulus can be oversimplified into three camps. The first camp could be called the Scientific Keynesians, with Paul Krugman at their forefront. This group typically looks at what the economy is capable of producing, subtracts what it is likely to produce in this slump, and identifies the difference as a gap to be filled. They have confidence that it's possible to bring spending online in a timely fashion and fine-tune the amounts so as to produce the requisite growth and jobs. They tend to view the $789 billion package as woefully inadequate (it doesn't fill the gap) and have been highly critical.   

A second group could be called the Cost-Benefit Covey. For them, federal spending is neither good nor bad, per se. It depends what it costs and what it will do. In a time of low interest rates and idle workers, there may be projects that are worthwhile that would not pass the test when the economy is humming. But the number of such projects is limited. As Larry Summers put it, this group is looking for spending that will be "timely, targeted, and temporary." Even if there were a $1.2 trillion output gap, that does not mean so much can be spent wisely in the time the gap remains open. Members of this loosely-defined group have criticized the stimulus plan as excessive and wasteful. They are not prone to embrace John Maynard Keynes' idea that we might just as well employ people to dig holes and fill them again. Members worry about racking up enormous debts and the high taxes or inflation those debts may bring.

A third group could be called the Animal Spiritualists. The same Lord Keynes used the term "animal spirits" to describe public confidence in the economy. Such confidence certainly seems to be at a low ebb at the moment. The question is how to restore it. In this light, perceptions are all-important. If the package is seen as being significant, it will create hope, people will buy again, and the economy will revive. There's not much precision to this approach; it's mostly psychology. While the Animal Spiritualists may be happiest with the fiscal stimulus package, they would seem vulnerable to the Scientific Keynesians and the Cost-Benefit Covey. If the public believes the critiques from either direction that the stimulus plan won't work, then those critiques will be proven correct.

My own sympathies lie closest to the Cost-Benefit Covey. I have little faith that the fiscal stimulus plan will revive the economy. There is an output gap, of course, but there are also some big structural problems -- like a collapsed financial sector and a housing sector in a downward spiral. Fixing those will be a prerequisite for recovery and may require all the resources we can muster.

Politically, President Obama seems to have dashed many of his major thematic campaign promises in his very first foray into large-scale policy-making. The crafting and selling of the stimulus package have been neither transparent, innovative, calm, nor bipartisan. Much of the package was crafted behind closed doors. The rush to push money out quickly left no time to develop creative new approaches. The president's dire warnings of doom did little to soothe fears, particularly in those who had doubts about the stimulus package's efficacy. And hopes for bipartisanship may have been the biggest victim of the endeavor. While President Obama was willing to exchange pleasantries with Republicans, those Republicans were largely excluded from the crafting of the bill and voted overwhelmingly against it.

Of course, a natural response by the Obama administration is that the Republicans were just engaging in rank partisanship. There are certainly Republicans motivated solely by politics, but this is why Sen. Judd Gregg's withdrawal as Commerce nominee is so devastating. Even President Obama's hand-picked reasonable Republican found the process unpalatable.  

On the international front, the bill portends trouble. The original excesses of the Buy American clauses were trimmed back, but President Obama missed a golden opportunity. Had he embraced Sen. John McCain's amendment to remove the clause, he would have demonstrated bipartisanship, assured the world that America was not embracing protectionism, and still retained existing legal authority to direct some contracts toward domestic producers. Instead, Sen. McCain's amendment was defeated. The remaining clause sends a bad signal, allows protection, invites retaliation and risks provoking numerous trade disputes.

If worried allies wish to call up and seek reassurance, they likely won't find the right person on the other line, as key international economic positions remain unfilled: Ron Kirk, the nominee for United States Trade Representative, has not yet had hearings scheduled, and there is a new vacancy at Commerce. The Treasury, meanwhile, may be otherwise occupied.

President Obama got the stimulus plan that he wanted, but at potentially a very high cost.