Shadow Government

What the Iraq surge tells about North Korea today

By Peter Feaver

The rapid deterioration of the situation on the Korean peninsula has collapsed President Obama’s North Korea policy (arguably before the Obama team even decided on a North Korea policy), and this has got me thinking about Iraq. What does Iraq have to do with North Korea? Well, as Bob Woodward relates in his book, one of the key arguments deployed against the surge strategy option in late fall 2006 involved North Korea, specifically the need for the United States to retain a strategic military reserve so as to maintain a full range of military options should the situation in North Korea deteriorate.

Precisely how the North Korean situation might deteriorate or what military options the United States would need at the time or even how large the strategic reserve needed to be so as to assure those options was not specified. Yet it seems reasonable to view the current unraveling as a fair approximation of the kind of concern that was envisioned and that had to be weighed. So it is reasonable to ask what the current crisis suggests about the strategic calculus that President Bush made in late 2006 when he decided, against the advice of most experts, to commit “all in” on the Iraq War.

On a superficial level, recent events might seem to vindicate the anti-surge position. As was argued, the United States is a global power with global security interests and, as was warned, a burgeoning crisis far removed from the Iraq theater has commanded the attention of the president’s national security team. Moreover, as was argued, our military options are somewhat more limited because essentially the entire ground combat power of the United States is committed to the wars in Iraq and Afghanistan (either in Afghanistan/Iraq now, reconstituting after an Iraq/Afghanistan tour, or scheduled for and preparing for deployment to Afghanistan/Iraq). Of course, there are forces available for very limited missions like a Non-combatant Evacuation Operation, but we probably could not maintain the current and scheduled OPSTEMPO in Afghanistan/Iraq and also simultaneously play a lead ground role in another war on the Korean peninsula. Bush effectively committed the strategic reserve of the United States to reverse the tide in Iraq and this has affected the options Obama has available in North Korea.

But dig a bit deeper and the case of those who were arguing for a strategic reserve and against the surge collapses. The advisors who made that argument were willing to risk defeat in the war we were in so as to be better prepared for a war we were not in. Would we in fact have more options in the Korean peninsula today if Bush had decided against the surge? Almost certainly not. The situation in Iraq likely would have deteriorated sharply into the full-blown civil-war that was then only in nascent form. The Iraqi Security Forces likely would have been split asunder by the sectarian violence, and we would have opted for one of three horrible choices: either U.S. forces would have hunkered down on the Forward Operating Bases while “Srebrenica on steroids” boiled around them, a humanitarian catastrophe eclipsing anything that had preceded it in the region; or U.S. forces would be fully engaged in the civil-war with beleaguered MNF-I commanders desperately calling for reinforcements; or, most likely and perhaps most catastrophically of all, U.S. forces would have retreated in defeat.

At the broader strategic, political, and psychological levels the situation would have been bleak in the extreme. The United States would have been a defeated power, and our position in the region would be in jeopardy. Assume for the sake of argument that the situation only reached moderate-case proportions, not the worst-case scenarios that would be all-too-plausible. Assume, therefore, that the United States would merely be scrambling to reassert deterrence against a rising Iran, reassure our oil-rich allies, and honor defense commitments to Israel -- set aside more dire situations like a region-wide Sunni vs. Shia conflagration.

In that world, would Obama actually have a richer menu of military options in North Korea now? Would he have the political will/capital to commit the recently defeated U.S. ground forces in the very place where the “America mustn’t fight land wars in Asia” strategic lesson was first forged? Or, to be fair to the original argument, would he at least have more leeway than he has now?

I don’t see it. On the contrary, I see him as having slightly more options now for dealing with North Korea than he otherwise might have precisely because Bush reversed the trajectory in Iraq. To be sure, the progress in Iraq is still fragile and reversible -- and there are ominous signs of that reversibility with the uptick in violence in the months since Obama codified a rigid withdrawal timeline. But the success of Bush’s surge strategy (crediting, of course, the courageous efforts of General Petraeus, General Odierno, and Ambassador Crocker, not to mention the brave men and women deployed in Iraq, who actually implemented the strategy) has gone some way to restoring America’s global strategic leverage. At a minimum, it seems to me inarguable that our strategic leverage is greater now than it would have been if we continued on the old trajectory.

It was walking through precisely this strategic calculus at the time that persuaded me that the surge was the best option and that those who were unwilling to commit the strategic reserve to Iraq were wrong on prescription, even if they had some sound points on diagnosis.

The truth is that the availability of U.S. ground forces is at most a secondary factor in limiting our options in North Korea. The South Korean army provides all of the ground forces needed to defeat North Korea, but only at horrific cost -- a cost that probably no South Korean leader would ever choose unless North Korea launched its own unprovoked invasion. Without an active and willing South Korean ally committed to the fight, there is no viable ground-based option for the United States. In other words, our military options for North Korea are air-based and our air options are not as constrained by the Iraq (and now Afghan) surge.

More fundamentally, our options are shaped by the broader geopolitical situation and the domestic political situation. Both are far more favorable to the projection of U.S. military power abroad because Bush opted for the surge. As we had hoped, the surge expanded -- significantly in some regions and at least on the margins in others -- the strategic menu that Bush’ successor enjoys. That was the strategic goal for the surge, and so far it is one of its most important legacies.

Shadow Government

The global problems with the GM boondoggle

By Phil Levy

What does $50 billion dollars buy these days? A major new non-tariff barrier and decades of disputes.

The Obama administration's role in the General Motors bankruptcy can be criticized on any number of grounds. Free marketeers like Ralph Nader have argued that it represents an inappropriate exercise of executive branch power without appropriate legislative backing. Richard Posner, a supporter of emergency funds for GM and Chrysler in December, has argued that the government has gone too far and should now have no role in owning and operating a major industrial firm. The Wall Street Journal opines that the disproportionate rewards granted to the United Auto Workers reek of political favoritism.

Almost lost among the momentous events of the GM denouement are the international trade implications. GM, of course, is a multinational company. In 2008, according to GM's annual 10-K report, GM made almost half of its $148 billion in revenue outside of the United States. GM summarized:

In 2008, we continued to perform well in emerging markets around the globe. We achieved record sales performances in our Asia Pacific and (Latin America/Africa/Mid-East) regions, and sold more than 2 million vehicles in Europe for the third consecutive year.

This helped offset a shrinking North American market for GM cars. One might think that a salvage plan for the auto giant would place a heavy emphasis on lowering costs and preserving access to these growing markets abroad. In particular, as the dollar weakens and the U.S. tries to rein in its consumption, the prospect of overseas profits would seem to be one of the few rays of hope available to the suffering automaker.

Actually, no. GM had recently informed Congress that it planned to produce roughly 50,000 subcompacts per year in China to sell in the U.S market in the near future. However, on Thursday, UAW President Ron Gettelfinger said that GM had agreed not to import the cars from China and to produce them in the United States instead as part of its deal with the UAW.

This change opens up an enormous set of problems for the United States that will stretch well beyond the automotive sector. The United States has commitments under the World Trade Organization for its tariffs on cars; it's supposed to avoid quantitative restrictions altogether. This latest policy switch looks very much like a government-mandated reduction in auto imports from China. A particularly sophistic trade lawyer might try to argue that this is just part of a labor deal, not an explicit U.S. government policy. But the UAW is currently receiving only what the Treasury Department decides it should get. Further, under current plans, the U.S. government will soon be a majority owner of GM. That will make it difficult for the government to dissociate itself from GM policies.

From the perspective of the U.S. taxpayer, this calls into question the likelihood of recouping the enormous infusion of funds into GM. That was going to be a problem in any case. In 2004, GM earned a net $2.7 billion. That was the only year of the last five in which they made profits. Even if the new GM were entirely devoted to repaying U.S. taxpayers, if every year is as good as 2004, and if the government charged GM a concessional interest rate, it would still take the new GM more than 25 years to repay.

But that all happened when GM was trying to make a profit. Now, GM will be trying to satisfy political demands for domestic employment, alongside demands for meeting environmental goals. It's more difficult to make money when you're not even allowed to try. 

Nor will GM be the only automaker affected. The principle criticism levied by opponents of the Korea-United States Free Trade Agreement has been that South Korea maintains non-tariff barriers that block imports of U.S. cars. Will the United States still make these arguments while it blatantly uses its financial leverage to block foreign auto exports into the United States?

And even if the Obama administration sees the auto sector as a special case, there's no particular reason to think the rest of the world will. Virtually every country in the world has politically-connected, import-competing industries with significant employment. It is hard to imagine they will show restraint when the U.S. fails to, particularly since the economic downturn has been even sharper for a number of major trading partners.

It could be argued that GM's profitability is not really the point. We don't want to save a U.S. automaker because they can make money producing cars around the world. We want an automaker that will build cars and employ auto workers here in the United States.

Fair enough, but then the administration's auto policy has been deeply misguided. Whenever the president has spoken of the importance of maintaining a U.S. auto industry, he has made clear that he is referring to GM, Chrysler, and Ford. If what we really care about is domestic employment in the automobile sector, the president should also care about plants owned by the likes of BMW and Toyota. According to a 2005 study by the Center for Automotive Research, almost 1 million jobs were linked to the "international automotive sector," and it has been the fastest-growing segment of the U.S. market for decades. If a failed U.S. auto firm were to be liquidated, these would likely be the buyers, along with U.S.-owned survivors like Ford. When inefficient firms are propped up, it is these healthier firms that suffer from the government-subsidized competition.

It is not entirely clear where the administration is driving with its bailout of GM, but it is crashing through some of the pillars of the global trading system along the way. $50 billion seems to be buying us a world of trouble.