Shadow Government

The 7 countries that are pissed at Obama (economics edition)

By Phil Levy

This week brought some rave reviews for the Obama administration's foreign policy performance at the six month mark. My colleague Dan Drezner remarked upon a puff piece sympathetic analysis this week in The New Republic that described the White House's diplomatic maneuvering as a work of genius. The Washington Post opened a lead editorial by stating that "...only one country has worse relations with the United States than it did in January: Israel."

The Post backed up this bold claim with survey data about America's popularity in nations around the world. The data show that President Obama is distinctly more popular than President Bush. But is this the right measure of the state of bilateral relations?

It's hardly the only thing one would find in a scenesetter cable on the eve of a high-level visit. Such an analysis would properly include factors like disputes, ongoing or resolved, and the willingness of the other government to cooperate with the United States on issues we deem important.

Public opinion is certainly relevant, but it can be misleading about the state of government relations. For example, a poll of Iranians fielded just before their recent election found a large majority favoring normal ties with the United States. That's hardly conclusive evidence that all is well between the United States and Iran. Even The New Republic piece acknowledged U.S.-Iranian tensions as the one discomfiting blemish in an otherwise carefree diplomatic landscape.

What if we survey that landscape with a more critical eye and move beyond public goodwill toward our leader? In the interest of stoking some debate, let me offer my list of countries with which relations have deteriorated in the last six months. I'll pocket the Post's Israel point and omit Iran, since relations with them are bad, but not necessarily worse. The list is necessarily subjective, but I'll give my reasons for each. You can apply your own weights.

1. Canada. Relations were not particularly bad between the Bush and Harper administrations. It's hard to think of an irritant as significant as the Buy American legislation that Obama signed into law with the stimulus bill. Though Canada was supposed to be exempted from that provision by an amendment recognizing U.S. obligations at the WTO and NAFTA, the Canadians are very upset about the way the measure has been implemented.

2. China. While the major issues between the United States and China are qualitatively unchanged, China is expressing substantially more concern about U.S. economic behavior than they did under the Bush administration. China is worried about the sustainability of U.S. deficit spending and what it will do to their trillions in dollar reserves. Of course, neither Bush nor Obama ever tabled a plan for a balanced budget, but the worst Bush deficit was 3.55 percent of GDP in 2004. According to the CBO, the best Obama-planned deficit in the next ten years will be 3.9 percent of GDP in 2013; the worst will be 13 percent in 2009.

3. Colombia. The Obama administration has done nothing to pass the Colombian Free Trade Agreement (FTA). The Colombians have been very explicit about how important the agreement is to them economically. All explanations for delay are based upon harsh criticism of the Uribe administration's performance.

4. Honduras. Whatever the merits of the argument over President Zelaya's ouster, in January we were getting along with them quite nicely.

5. Panama. Not only has the Obama administration teased the Panamanians with intimations of FTA passage that were later retracted, it has annoyed them with a never-ending series of requests to remove obstacles to the already-signed accord.

6. South Korea. While the Obama team has at least hinted that the Panama FTA may be passed soon, there have been no such suggestions about the FTA with Korea. The agreement was wildly controversial in Korea and the government ran serious risks by promoting it. They can hardly appreciate the way it has been placed in purgatory, particularly given the irony of the principal U.S. objection: Korean interference in its auto market. Nor has there been any notable security success with the North to offset the chill in economic relations.

7. The United Kingdom. This is a close call. On the one hand, the two countries have been enthusiastic partners in economic stimulus. On the other, a series of Obama nubs (the Churchill Bust bust, wrong-region DVDs, an iPod for Her Majesty) led some in the British press to ask how special the special relationship still was. The scales tip in favor of inclusion because the British have some of the same trade concerns as the Canadians.

The list clearly reflects my emphasis on the diplomatic importance of international economic relations. But a number of Washington ambassadors and foreign officials seem to share this view. Both at home and abroad, personal admiration for Obama has to be balanced against concerns about what his policies will do the pocketbook.

Shadow Government

The Obama administration gets Indonesia right and Burma wrong

By Dan Twining

Last Friday, Indonesia's electoral commission certified the winner of the country's recent presidential election, a free and fair contest that demonstrated the strength of democratic norms in a country ruled for decades by strongmen supported by Washington. Meanwhile, next door in Burma, a political show trial is preparing to convict that country's legitimately elected leader, Aung San Suu Kyi, of "crimes" she did not commit, most likely renewing her jail sentence to prevent her from contesting elections next year. Curiously, the Obama administration is flirting with the idea of normalizing relations with Burma's military junta, at a time when Indonesia's example -- and Indonesian leaders' outspokenness about Burma's repressive political system -- should be spurring the United States toward greater support for Southeast Asian democrats, rather than legitimizing the notion that Burma should be governed by the kind of strong hand that has been thoroughly discredited in Indonesia and across the region.

From 1967, when General Suharto seized power following a near-civil war, until 1998, Western officials and Asian elites commonly took the view that Indonesia needed a strongman at its helm. Justifications for authoritarian rule evolved over time, and included: (1) the need to hold together a fragile post-colonial state of sweeping territorial expanse with diverse ethnic groups and no tradition of unified nationhood, (2) the urgency of preventing a widespread communist insurgency in the 1960s from overthrowing the country's political order, as later occurred in Vietnam, Laos, and Cambodia, (3) the imperative of keeping Indonesia, rich in raw materials and geographically situated astride strategic sea lanes, in the Western camp during the Cold War, and (4) the wisdom of having an "authoritarian modernizer" to guide Indonesia's rapid economic growth in the 1980s and 1990s as an Asian "tiger" economy.

This narrative collapsed when Indonesians took to the streets in 1998, ousting Suharto in the wake of a financial crisis that debased Indonesia's currency and caused unemployment in the country to spike to levels comparable to America's Great Depression in the 1930s. Indonesia's political revolution was also spurred by a regional wave of democratization that spread from the Philippines in 1986 to South Korea, Taiwan, Thailand, Mongolia, and beyond over the following decade. After free parliamentary elections, Indonesia held its first direct elections for president in 2004, followed by those which have just given President Susilo Bambang Yudhoyono a decisive mandate for a second term.

The popular and performance legitimacy required by a system of democratic accountability has led SBY, as he is popularly known, to aspire to lead Indonesia to new heights. With the country's respected former central bank governor as his new vice president, the leadership team has set a target of matching China's economic growth rate and attacking entrenched corruption, a corrosive legacy of Suharto's clientelistic rule. Democratic Indonesia is finally beginning to punch its weight geopolitically: international newspaper headlines celebrate "Indonesia Rising" and suggest Indonesia as "Another ‘I' in the BRIC Story." The U.S. National Intelligence Council predicts that Indonesia will have an economy larger than those of most European nations by the 2020s. Leading Indonesian public intellectuals like Rizal Sukma ambitiously propose "a post-ASEAN foreign policy" of "strategic partnerships with global powers" grounded in Indonesia's values as a democracy. Yudhoyono speaks proudly of Indonesia's democracy as a source of soft power in the world and wants to leverage it to expand respect for human dignity and government accountability as sources of regional security, including through new institutions like the Bali Democracy Forum.

Burma is a different story. Its widespread poverty and brutal autocracy are a cancer in the heart of ASEAN, the club led by Asia's "tiger" economies that inducted Burma in 1997 in the hope that doing so would spur the kind of opening of Burma's economic and political system that has transformed the fortunes of its neighbors. It hasn't. Leaders in Indonesia, Malaysia, the Philippines, Singapore, and elsewhere are embarrassed by the Burmese junta's misrule and have been increasingly outspoken in saying so -- including during the debate over ASEAN's new charter, which creates a regional human rights body and is grounded in a framework of political and economic modernity that is anathema to the generals in Naypyidaw (Burma's new capital, built deep in the jungle and featuring plush underground bunkers for the country's paranoid leadership).

Since the junta rejected the results of the country's last elections in 1990, Burma's people have grown poorer as its ruling elite have grown richer from trade in gems, timber, narcotics, and other commodities, as well as the development of offshore natural gas fields that will deliver billions of dollars in revenues to Burma's governing elite over the coming decade. Civil conflict stemming from the junta's rule has produced millions of internally displaced people and refugees. Forced and child labor are rampant. The regime's security forces fired on peacefully demonstrating monks and rounded up large numbers of innocent civilians following non-violent protests in 2007. The country's political opposition has been eviscerated. The junta may be cooperating with North Korea to develop nuclear weapons.

In short, the pathologies that afflict Burma's failing state, all either derived or exacerbated by political misrule, make its regime a threat to its people, its neighbors, and the wider world. Burma's descent is in many respects a mirror-image of the success of Indonesia's vibrant democracy next door.

That's why it is hard to understand why the Obama administration is pursuing policies of engagement toward both countries. Secretary Clinton's successful visit to Jakarta on her first overseas trip marked the launch of a new U.S. effort to build a genuine strategic partnership with Indonesia -- one marked by a qualitative breakthrough of the kind that characterized the U.S. opening to India during the Bush administration. This is a worthy and important initiative whose timing could not be better, given Indonesia's democratic consolidation and Obama's own special ties to Indonesia.

But why is the administration at the same time holding out the promise of a qualitative transformation of U.S. relations with Burma? Clinton floated the idea of lifting U.S. investment and trade sanctions on the country during her recent visit to Thailand. Senior American officials huddled with Burmese counterparts to discuss a roadmap for closer cooperation on the sidelines of the ASEAN Regional Forum. The State Department is conducting a Burma policy review likely to result in the rollback of U.S. sanctions on Burma and the launch of new assistance programs channeled through the Burmese government.

Meanwhile, the U.S. Congress has just voted overwhelmingly to renew trade sanctions against Burma; the European Union has expanded its own sanctions regime; Indonesian and other leaders lament Burma's failure to pursue meaningful political liberalization; international assistance to Burma following the devastation wrought by Cyclone Nargis only appears to have strengthened the regime and its cronies rather than creating greater space for civil society; Aung San Suu Kyi is about to be sentenced to a new prison term; and the Burmese regime will stage-manage an election next year that renews its hold on power.

At a time when much of Asia, led in important respects by Indonesia, is taking a stronger stand in favor of democracy and human rights as regional public goods, Washington risks moving in the opposite direction.