As noted here in June, after the North Koreans brazenly torpedoed the South Korean warship Cheonan, the US presence in Korea has fostered a dysfunctional South Korean foreign policy overly reliant on an American military  stretched thin by many foreign commitments and budgetary pressures.  South Korea, a relatively populous, rich and technologically advanced nation, should not require US protection from the likes of a country as poor and backward as North Korea.  The American security umbrella has for too long encouraged South Korean appeasement of its thuggish northern cousins.

Meanwhile, the American military presence in South Korea has become an increasingly weak deterrent against North Korean aggression.  US troops, who refuse to go home thirty-five years after their war fighting the Chinese in Korea, remain an affront to Chinese nationalism.  The Wikileak’ed documents suggest that some elements within China’s ruling class may be open to the kind of bargain in which Korea is unified under the South’s control, so long as there is no American military presence in the northern part of the Korean peninsula.  Whether wishful thinking or not, it is the kind of deal the United States should be pressing for in Korea, as argued here .  An agreement could be part of a larger framework designed to stabilize US-Chinese relations, as suggested in this interesting  proposal.

Wikileaks, however, makes diplomacy everywhere far more difficult for the United States.  Any Chinese officials who are in any way open to a harder line against North Korea will now come under attack inside China as American lackeys, thanks to Wikileaks.  They may become marginalized or purged in the name of unity.  Confidentiality is often the heart of diplomacy, and that heart has been ripped out by Weakileaks.  Those who wish for a US foreign policy that is more diplomatic and less dependent on the Pentagon should lament the terrible damage done.  Foreign leaders, knowing that their words may be broadcast across the Internet, will now say nothing of consequence in confidentiality to American diplomats.   The ramifications of Wikileaks are devastating, a fact most conservatives understand. Some progressives get it too, like Heather Hurlburt, writing in the New Republic.   Interpol is now looking  for Julian Assange, the founder of Wikileaks.  He is to be arrested not for releasing classified information, but on charges of sexual assault.  But does it really take a sex crime to arrest a man whose reckless release of 250,000 classified documents will surely result in the deaths of many?  Wikileaks constitutes treason, pure and simple, and should be prosecuted accordingly.

These are dark and treacherous times in American foreign policy.  The war in Afghanistan is being lost and analysts are predicting more attacks from North Korea.   The ongoing economic crisis, caused by American financial malfeasance, and the devaluation of the dollar, undermine American prestige and credibility abroad.   Our military is overcommitted around the globe and increasingly under the budget knife at home.  American forces must be pulled back and our military commitments readjusted to the fiscal restraints and multi-polarity of the post-Cold War world, but in the short term we are obliged to stand by our allies, notably South Korea, and honor our commitments.

US diplomats need to step into the vacuum left by an inevitably diminishing American military global footprint, so that they can help create new security arrangements based partly on good intelligence, but unfortunately, Wikileaks has decapitated them.    Leadership from the White House is essential on many related fronts.  It should start by addressing the immediate issues of eliminating Wikileaks and working with China to stop the coming disaster in Korea.

Perhaps Obama said nothing about the Taliban and America’s scheduled military departure from Afghanistan and Pakistan because he was too busy talking to the American corporate executives who timed their business conference in Mumbai to coincide with his visit. Jeffrey R. Immelt of General Electric and Jim McNerney, CEO of Boeing and head of Obama’s Export Council, were 2 of the more than 200 taking political and economic advantage of this trip to Asia, which continues to Indonesia, South Korea, and Japan.

How many extra ironies can we count on this trip so far?  Let’s just start with six.

1.  “Outsourcing” is a politically charged issue and one that Democrats – our President notably in their number — have used to help explain unemployment levels officially still 9.6% at home, even before supplementing the figures with underemployment and discouraged workers.  “Darn it, we exported jobs when we sold India technology,” the argument used to run, “because now they’re using our technology with their cheap labor to sell us products we used to make at home.” And yet, Obama now favors eliminating the longstanding restrictions on exporting closely held technology to India.

2. “Ever since those horrific days two years ago, The Taj has been the symbol of the strength and resilience of the India people,” Obama told his hosts.  “So we use our visit here to send a very clear message that in our determination to give our people a future of security and prosperity, the United States and India stand united.”  Lovely sounds here, but where’s the strategy behind the verbiage?  When Obama set – and publicized – a withdrawal date from Afghanistan,  weren’t the Pakistani likely to cooperate with the Taliban and al Quaeda, both of which are likely to outlast the American presence?  India’s relationship with Pakistan has been tenuous for a long time.  A Pakistan with nuclear weapons and Taliban recruits symbolizes grave threats, not security.

3.  Perhaps the strategy is in Obama’s plan also to ease “dual use” restrictions that have prohibited Americans from exporting technologies that might be used for weapons?  “For America,” Obama says, “ this is a jobs strategy.”  It sounds political, too.

4.  Also political was the decision not to visit China during this trip to Asia.  President Obama probably wants to strengthen India,  Japan,  and our relationships with both countries as counterweights to China, but the plan may backfire.  China is a very proud country and may feel – justly – humiliated by its absence on the travel agenda.  Visiting South Korean can make matters even worse.

5.  Economically, Obama is miffed at China for keeping the yuan weak relative to the dollar. A weaker yuan, the argument goes, makes importing American goods more expensive for China, while simultaneously reducing the cost of Chinese goods for America.  Well, selling India our technology also makes Indian good potentially cheaper – and better – for American purchases.  Why has Obama become a supporter of freer trade in one instance and not the other?  (See Wick’s Centermovement post on November 1 for more on this matter. )

6.  “Because China’s manipulating its currency,” you say?  And the Fed’s decision Wednesday to buy $600 billion in US Treasury bills doesn’t also keep the dollar too low relative to the yuan?  Who’s responding to whom here?

Politics and economics are inextricably intwined in a world where physical distance has been trumped by improvements in communication, travel, and shipping.  “Free” or “freer” trade can build a vested interest in peace as well as take advantage of comparative advantage and raise the overall wellbeing of both sides to the transactions.  But we ignore at our peril the potential consequences to India and the world if, after we pull our soldiers out of the region, the Taliban gains access to Pakistan’s nuclear weapons.  Surely India will be preparing for this possibility, and we must recognize it, too.  Keeping the Taj Mahal Palace, that symbol of “strength and resilience” safe for another 3 centuries requires more than wishful thinking and pretty prose.  Much more.

Wrong.   And Robert Samuelson, with all due respect, is wrong too (read Samuelson’s view here).

First, let’s look back a little. When the Obama Administration imposed tariffs on the importation of Chinese tires, did we buy more American tires?  Not really.  Mostly, we bought more tires from Thailand and South Korea.  Taxing China may just be subsidizing other countries with cheap labor and cheap currencies.

Second, China might retaliate by taxing importation from America.  Do we want a trade war as well as a military war in Afghanistan and mounting tensions in the Mideast?  Smoot-Hawley was hurtful, not helpful, when this protectionist tariff was legislated in 1930, and trade is a much larger proportion of GNP in 2010 than it was eighty years ago.

Third, we fail to see the Chinese perspective, and do so at our peril.  Yes, it’s fact that China has stockpiled foreign money, purchasing $108 billion in other currencies in the last quarter alone. And, yes, buying other currencies with the yuan simultaneously raises the demand for foreign money and increases the supply of the domestic currency, thereby reducing its relative value.   But couldn’t China argue that it’s responding to a dollar American policies have made too low?

It’s also fact that the Fed has been buying American government debt rather extravagantly.  Calling it “quantitative easing (QE)” doesn’t make this fact fancy.  In the fall of 2008, Fed head Ben Bernanke bought $1.25 trillion in mortgage-backed securities and another $200 billion from “government-sponsored enterprises” – mostly for more mortgage-backed securities mostly from Fannie Mae and Freddie Mac.  All this activity we call “monetary policy” and we do it to pull us out of lingering and deep recession.

Even before we find out how much QE2 will cost, this increase in the supply of dollars dwarfs how much China has increased the supply of yuan.  Europe and Russia are already grumbling over the prospects of a weakening dollar.  How do we feel about them trying to control our monetary policy?  Why do we think China would feel any different?

The Fed, one could argue, has also kept the price of the dollar in yuan artificially low by a policy that sets the fed funds rate near zero.  Lower interest rates in America reduce demand for the dollar to buy t-bills and the like.  Remember that China has been our largest holder of government debt.  For that, we should in many ways be grateful.  Imagine, if we dare, how much we’d have to reward Americans to keep all of our government debt owned domestically.

Fourth, exports can be subsidized by more than artificially low exchange rates.  Why, some of us have even accused the Chinese government of “unfair” trading practices because they subsidize their clean-air industries.  How many of these whiners believe in global warming?  What would they say if the Chinese retorted, “You subsidize your exports through the public school system?”

Fifth, those who lose because of a cheap yuan tend to be concentrated and politically organized, while those who gain are diffuse and almost invisible.  It’s obvious to all – and most notably to politicians – when steel imports cause layoffs in the steel industry.  Remember when“compassionate conservative” President George W. Bush slapped a tariff on steel imports for that reason?  What about all the people who lose jobs because the price of domestic steel is too high to make profits in a variety of other businesses?  Who advocates for them?  International trade definitely affects the distribution of jobs — as does technological change, it’s important to note, but does it hurt or help overall domestic employment? We don’t really know, do we?

Sixth, the United States and China aren’t the only countries who want to devalue their way into higher domestic employment.  South Korea, Japan, and Thailand are manipulating their currency.  This recession is worldwide, and all of us are hurting.  But we can’t all devalue at once.  And trade among countries can be every bit as beneficial as trade among provinces, cities, and individuals.  It harnesses the gains from comparative advantage.

Clearly, the popular response in America to China’s latest actions to keep the yuan “devalued” is rage and a rush to retaliate.  Blaming “the Other”, we leap to the conclusion that our unemployment would be lower if it were cheaper for Chinese to buy our exports and more expensive for us to buy theirs?  Not so fast.  Not necessarily so.

But politicians are now trying to pick up votes by agreeing with us.  For truth and the good of the country, they shouldn’t.   Our problems are much bigger than any issues involving trade with China.  We need to breathe deep, relax, and take the perspective that if indeed the net effect of our and China’s currency maneuvers is an undervalued yen, then this huge country is giving us a huge sale.  And we like to buy things on sale, right?

It’s human nature to blame others rather than look for root causes that require difficult and personal change, and it’s political nature to try to harness this anger to win elections.  But much of human nature is something we should often strive to overcome. Today’s politicians preach division and target the lowest common denominators. Wouldn’t it be nice if instead they spoke and acted like President Lincoln, sharing his confidence that we’d “again [be] touched … by the better angels of our natures”?

“We propose investigations, detentions and prosecutions of high government officials, but we cannot resist [Karzai].  He won’t sign anything. We have great, honest and professional prosecutors here, but we need support.”

Karzai is possibly the biggest obstacle to defeating the Taliban because insurgencies feed on corrupt government.  If we are to have a chance of success against the Taliban, President Obama has rightly and repeatedly pointed to the necessity of the United States having a responsible Afghan partner.  Competing with Karzai for the “most unhelpful ally award” are factions within Pakistan’s intelligence services who support Taliban operations in Afghanistan by allowing militants and arms to cross the border.

We need to reevaluate our relationship with supposed allies who are in reality undermining our war against the Taliban. U.S. options in Afghanistan are dwindling along with  America’s political will to support the war.    It is time for US policy to adapt to the facts that we have no credible partner in Kabul and that Pakistan is likely to remain duplicitous.   We also need a fallback strategy consistent with a modest US military presence in Afghanistan.

First, it’s time to take away Karzai’s American Express Card.  Karzai and his cronies must no longer be permitted to line their pockets with US tax dollars, making themselves rich and at the same time discrediting the government they claim to run.  The United States and its NATO partners should increasingly find ways to go around Karzai’s officials and deliver foreign aid directly to local legitimate Afghan leaders and institutions.    Whether or not America can find loyal and reliable allies in the Pashtun areas of Afghanistan remains to be seen.  But we must try before the inevitable withdrawal of most US forces from the region.  Distributing the lion’s share of the cash ourselves will make this task easier.

Second, it is also time to  get quietly tough with Pakistan.  As Secretary of State Clinton has publically charged, Pakistani officials – somewhere – know the whereabouts of Osama Bin Ladin.  The billions of dollars the US gives in aid to Pakistan must be contingent upon a consistent anti-Taliban and anti Al Qaeda policy.  Unfortunately, the publicly scheduled withdrawal of US forces from Afghanistan minimizes our leverage.  To the Pakistanis the United States is obviously not a reliable partner.  Pakistan’s security forces will continue to play their traditional Islamist allies against their traditional enemy, India.  The only hope is that the Taliban, which for the first time recently waged a war inside of Pakistan, will continue to make itself loathsome to ordinary Pakistanis, and that its barbaric acts will moderate any reversion to Pakistan’s old pro-Taliban foreign policy.    Some smart Pakistanis must surely realize that the Taliban will eventually turn on them when it has sufficient strength.

Since Pakistan shows little sign of changing its ways,  the United States will turn to India for mutual support.  This is not  necessarily a bad thing.  As the world’s most populous democracy, India is America’s natural ally on the Asian continent.  Indians and Americans are equally enemies to Islamist extremism.  India is also the essential counter-weight to the growing power of China.  With many shared values and interests, India will agreeably do some of the heavy lifting for us in the region.

Historically, the battle for the region that today comprises Afghanistan and Pakistan is called “the great game.”   The United States would have played this game much better if the resources and political will that went into the invasion of Iraq gone to Afghanistan instead.  Had this happened, we might have left something behind  more permanent and more satisfying to the Afghan people as well as to our own interests.  But now American will and the resources we are willing to commit are slim to exhausted.  President Obama is unlikely to spend his diminished  political capital on Afghanistan.  The United States will play out its current hand under the leadership of General David Patraeus, a proven warrior.  Perhaps he will once again pull an ace out of his sleeve.

More likely, a relatively modest contingent of US troops will soon find themselves removed from the Pashtun areas of Afghanistan, and based in friendlier areas to the north from which we will make endless surgical strikes against Islamist militants festering in the area on either side of the mountainous the Pakistan – Afghanistan border.  Life for Pashtuns seems headed for particularly miserable future under Taliban rule and NATO bombardment.  In “the great game,” all parties seem headed for an unhappy stalemate.

The Broad Context: “Cold War anachronism” is probably not the most accurate way to describe the US presence in the Republic of Korea (hereinafter South Korea).  While the main front of the Cold War ended in August 1991 with the defeat of the hard-line Communist coup in the Soviet Union, Communist totalitarianism continues to rule in China, North Korea, Laos, and to a considerable extent in Vietnam.  Human rights and political and religious freedoms are as repressed in these countries as they were twenty years ago (though Vietnam has significantly relaxed its anti-religious policies).  The Chinese Party-military-police regime welcomes foreign capital and the opportunity to increase its cash reserves by selling massive quantities of low-cost products abroad, but this greater economic openness has had minimal impact on how it treats its people or on its determination to maintain a system as repressive as the one in North Korea.

Even apart from the nuclear issue, much is at stake in the ongoing Korean crisis:  for South Korea, its independence and the rights and freedoms of its people; for the other countries of East Asia, a climate of peace with sufficient regional stability to permit normal economic, social and political development; and for the US, all of the foregoing plus continued confidence in the reliability of US commitments to our allies and friends in the Pacific Basin, and the contribution this in turn makes to US and global security.

The Role of US Troops: Our military presence in South Korea is the main reason war has not broken out during the fifty-seven years since the armistice, in very much the way that our long presence, together with the UK and France, protected West Berlin.  In both cases the vastly outnumbered defenders successfully deterred an attack, despite severe pressures and periodic threats of annihilation.  Does anyone really think that the two million West Berliners would have remained free for a week if the Allies had removed their few brigades to West Germany?  If North Korea has long had in place sufficient forces to seize Seoul and send the South Korean government fleeing, a la 1950, the physical presence of the US “tripwire” is the only credible explanation for why it has refrained from doing so.

Withdrawing our forces offshore and offering instead assurances of future help would be a clear statement that our security commitment to South Korea is no longer what it was, despite our alliance.  One cannot effectively defend an ally against a massive land invasion solely with ships and remote airbases.  And we tried partial withdrawal a few years ago: in an effort to defuse tensions and after consultation with South Korea, we reduced troop strength by 25% and repositioned our forces within the country.  This move has obviously not helped to moderate the North’s policies.

And, as noted above, by staying in Korea we reassure not only South Korea but also our other allies in Asia that we will keep our commitments.

Nuclear Matters: North Korea’s nuclear-weapons programs further impede the process of working toward a stable modus vivendi between the two Koreas.  They add a new tension-heightening factor, lending support to those in the US who advocate air and ground military strikes to destroy the North Korean facilities.  This is not the optimal solution for South Korea or for us, and it increases the incentive to explore as wide a range as possible of other pathways to the goal of a non-nuclear North Korea.  In the off-and-on Six-Party Talks, we have on occasion persuaded the North Korean regime to slow down or temporarily suspend parts of its nuclear program.  But it has not sustained these positive steps, ditched the program, or restored IAEA controls.

Searching for a different approach, Stephen Erickson proposes a “grand bargain” — that we offer China a gradual but eventually complete US military withdrawal from South Korea as a bargaining tool if China will guarantee to prevent North Korea from attacking the South.

The success of such a strategy would depend on China’s actual medium- and long-term objectives and intentions.  How much do we really know, and not know, about these fundamental matters?   Based on what we do know, we can infer that China would be happy to see the US military leave South Korea, because any US retreat in the region opens an opportunity to expand China’s influence.  Japan cannot fill that vacuum in Korea because of its World War II history, and Russia doesn’t seem interested, so the way would be clear for Beijing.   Beyond this, however, we don’t really know a lot about China’s intentions and plans because except for certain aforementioned economic practices, China is not an open society.   Reliable, objective information on matters relevant to understanding non-economic Chinese objectives and policies is very difficult to obtain.  There is no consensus on these subjects among scholars in the West, many of whom bring to their work an understanding based on birth or long residence in China. Making a major policy concession on a matter vital to the US and its allies in East Asia with this level of uncertainty is a risk we should not be willing to undertake.  A decision to pursue the grand bargain would assume that once the US has left Korea, China would invest the resources needed to stand in the way of a North Korean attack on the South.  There is no evidence to support this assumption; and if China were to intervene to halt a North Korean invasion already begun, it would in effect be intervening on the side of the South, which is unthinkable.

Also, the grand bargain would not require China to denuclearize the North unless the South went nuclear.   If the North invaded, it might also use nuclear weapons, if it has any at the time, whether or not the South also possessed its own – thus piling nightmare upon nightmare.   But, to step back a moment, does China really want to denuclearize North Korea, and could it bring this off short of using force against the latter, whether or not the South goes nuclear?   If the Chinese actually support a nuclear-free peninsula, as they suggest they do, why didn’t China stop Pyongyang’s nuclear-weapons program fifteen or ten or even five years ago?  Either they don’t want to or they can’t, and both explanations undercut a key foundation of the proposed grand bargain.  One might think that the Chinese would want to be helpful to the US on Korea, because of the vast economic benefits they derive from our bilateral relationship, but there is scant public evidence of such helpfulness.  Does this decidedly unsupportive attitude provide any confidence that an assurance by Beijing would be honored in practice?   In such circumstances, the best decision is to hold on to the positions of strength we now have and to move cautiously through the darkness.

Possible Alternative Approaches:  At present, there is no realistic alternative to maintaining the US military presence in South Korea and continuing the Six-Party talks and accompanying shuttle diplomacy.  Fortunately, these activities are far from futile; rather, they are essential and promising, and may yield breakthroughs.  But we should still explore additional options.

Complicating the search for alternatives is the absence in East Asia of any regional security organization like NATO, the EU, the OSCE, the OAS or the African Union.  There is no regional structure within which to assemble an international peacekeeping force that could take the place of the US military presence.  The UN Security Council and the General Assembly (under the Uniting for Peace procedure) can establish such a force. China might be persuaded to support a UN peacekeeping force in the right circumstances.  Another possibility is a non-UN multilateral peacekeeping force, not under the command authority of the UN Secretary General but nevertheless authorized by the Security Council or the General Assembly.  Either option would be far better for South Korea and for us than trusting China to police the peninsula benevolently by itself.

On the nuclear issue, the UN system offers several negotiating forums in addition to the Security Council, including the (permanent) Conference on Disarmament and the IAEA.  In addition, UN-mandated sanctions can be further strengthened; while sanctions alone can almost never bring about a solution to an international problem, they are often an effective ingredient of a coordinated and sustained strategy.

Asia’s principal regional organization, the Association of South East Asian Nations (ASEAN), does not have an official role in regional security – and neither of the Koreas is a member.  However, both have participated in various ASEAN-organized meetings, including the annual ASEAN Regional Forum, which includes China, both Koreas, and the US, Russia and Japan.  Another format, the ASEAN + 3, which includes China, South Korea and Japan, meets to discuss economic issues but obviously provides yet another venue for informal contacts on other topics of common concern.

Finally, think-tank gatherings such as those organized by the International Institute for Strategic Studies (IISS) and the MacArthur Foundation have become important locations for informal discussion of new initiatives.   The IISS annual “Shangri-La Conference” on Asia, for instance, attracts the participation of ministerial-level officials, this year including US Defense Secretary Gates.   A solution to the Korean problem may just emerge from one of these meetings or from an ASEAN forum; if the ping-pong diplomacy of the 1970s could lead to something big, then so might something like this.

With the stakes so high and solid information on Beijing’s intentions and strategy so sparse, the options outlined above provide more prudent and more promising approaches than the proposal for a “grand bargain” with China.

Some suggest that greater diplomatic efforts to further tighten the economic screws on North Korea are the best approach, as if this is something new.

Even moderates in the US have long considered military options against North Korea as a means to prevent that country from building nuclear weapons, but such an approach is neither moderate nor prudent.

The path to pacifying North Korea runs through China, North Korea’s indispensible ally.  The torpedoing of the Cheonan, while terrifyingly destabilizing, may also present a diplomatic opportunity.  If our leaders will think broadly, the incident could be a catalyst for the United States and China to make a grand bargain over Korea

The Chinese, who are not exactly naive when it comes to international relations, surely understand the dangerous nature of the game being played by its ally.  South Korea cannot be endlessly provoked before it responds, perhaps drawing its American ally into the conflict.  Already Chinese interests are going to be compromised as South Korea and Japan will boost military spending and hold more tightly to their alliances with the United States as a result of North Korea’s belligerent and seemingly irrational actions.  Peace on the Korean peninsula is very much in China’s interests.

The Chinese military, which fought alongside its fellow Communist Korean ally in the Korean War, still has an ideological affinity for North Korea.    The Chinese Army reflexively blames any confrontation on American aggression.  Any negotiation with China must recognize the influence of this hard-line military faction within Chinese governing circles.

Chinese hard-liners are, however, more than balanced by the wing of the Communist Party that has led China’s amazing economic revolution.  These officials, some of whom were educated in the West, have a profound appreciation for stability.  As some fine reporting from the New York Times suggests, the US State Department, led by Hillary Clinton, seems to understand at least some of the subtleties that operate within the Byzantine Chinese governing structure.   Already China has changed its strictly neutral language; it will now “not protect” the Cheonan’s attackers.

The United States, for our part, is fighting a war in Afghanistan, trying to wind down a war in Iraq, still gripped by a recession, and facing debt and deficits the likes of which have not been seen since World War II, if then.  America’s ally, South Korea, yearns for peace with its northern brothers and sisters.  A new war in Korea is the last thing America and South Korea want, but South Korea can only be provoked so long before it retaliates.

As argued here four weeks ago, South Korea’s overwhelming superiority over the North in terms of economic strength, technological prowess, and population means that it should be able to defend itself without US help.  It would of course send all of the wrong signals to unilaterally withdraw American ground forces now, in light of the North Korean aggression.  But they could be withdrawn in coming years as part of a bargain with the Chinese.

The deal would look like this.  The Chinese would agree to support short-term punitive measures against North Korea, in order to give South Korea some satisfaction for the loss of its ship and crew members.  But more importantly, China would quietly guarantee that no similar incident would happen again.  China has the power to keep North Korea strictly in line, and would agree to do so.  In return, the US would promise to withdraw its ground forces from SouthKorea in a year or two.  After ten or so years of peace without incident, the US would withdraw all of its naval and air assets as well.

Removing US troops from South Korea would distance us from the Korean powder keg and itself help diffuse the situation.   North Korea would no longer be able to use the American presence as justification for its belligerent actions.  Nor would such actions be permitted by the Chinese because of the aforementioned agreement.  Getting out of Korea would save precious dollars and US military forces needed elsewhere.

With American troops gone, the hard-line Chinese military faction could claim a victory, an important element in any negotiation with China.  In all Asian cultures, and especially China, everyone must be given a means of saving face.  Chinese leaders concerned with economic development would achieve enhanced stability with no loss of Chinese prestige.

South Korea, for its part, would have a decade to replace American air and naval forces with its own.  Removing the 29,000 US soldiers on the ground in Korea would have little military consequence.   The US would remain South Korea’s ally and provide it with any needed weapons systems.

Were South Korea to develop its own nuclear weapons, to counter those of the North, it is hard to imagine that China would not embrace a follow-on deal, making the Korean Peninsula completely free of nuclear weapons.  As  President Reagan showed with the intermediate nuclear weapons he put in Europe in the 1980s, sometimes real disarmament comes from countering the arms build-up of your adversary with an arms build-up of your own.

The Obama Administration is making all of the right moves in the current Korean crisis, mixing toughness with caution and recognizing the pivotal importance of China as well as the political forces operating within China’s decision-making structures.  But are they looking beyond the  Cheonan incident to the broader opportunities, as well as the implications?  Are the Chinese ready for a grand bargain on Korea?  These are questions we should be asking.

Afghanistan / Pakistan, on the one hand, and Iran on the other, are the binary-epicenters from which US interests are most threatened.  It is on these focal points and the related areas spreading outward that the Obama Administration has wisely concentrated its attention.  President Obama deserves high marks for creating a foreign policy that moves in a concerted diplomatic fashion, deploys American military power appropriately, and focuses on the objectives most critical to US interests.

The prudence and coherence of the Obama Administration’s foreign policy stand in sharp contrast to that of its predecessor.  The sorry state of American diplomacy during the Bush years cannot be over-emphasized.  It was a time, perhaps like no other in American history, in which arrogance was perceived as the principle characteristic of US foreign policy.  This was diplomatically debilitating, and with US military spread thin in Iraq and Afghanistan, the foreign-policy tool chest was left just about empty.

The mere election of Barack Obama re-inflated American prestige in many parts of the world, especially in Europe, where American political campaigns are followed closely and where Obama’s professorial style and rhetorical skills are highly appreciated.  And of course his message for a more cooperative and less confrontational United States resonated with the European public.

Obama surprisingly won the Nobel Peace Prize for doing nothing except win an election with a political message welcomed by Europeans.  Many have argued that the award was a political gesture, which of course it was and always is.  Yes, there are individuals more deserving than Barack Obama, a point the President emphasized in his bully acceptance speech at Oslo.  The prize might better be seen as one awarded to the American people for turning away from a foreign policy too often based on unilateral action, or inaction as the case may be.

The foreign policy of the new administration began with what conservatives derisively called Obama’s international “apology tour.”  While the tour can be nit-picked for some unnecessary contrition  (before Venezuelan strong man Hugo Chavez for example), it was imperative to demonstrate that the United States is now a country willing to listen, negotiate and compromise.

The Obama Administration understood from the outset that a reservoir of international goodwill based on public relations, as well as on traditional deal making, would have to be built up in order to eventually achieve American strategic objectives.  President Obama obviously appreciates the need for meaningful help against our Islamist enemies in Afghanistan and Pakistan.   On Iran, the Administration has been maneuvering to establish effective international sanctions.

The President deserves credit for his deliberative decision to send 30,000 additional troops to Afghanistan.  European goodwill toward the new administration in Washington paid immediate dividends with the announcement that an additional 7000 non-US NATO forces would be sent to Afghanistan.  To command US forces in Afghanistan Obama chose General Stanley McCrystal to lead a surge-like campaign based on the anti-insurgency doctrine developed since the Viet Nam war, with an emphasis on protecting and serving Afghanistan’s major population centers.  Like the surge in Iraq, the Afghanistan surge seems to be working.

The courting of Pakistan by the Obama Administration is an especially important aspect of the struggle to root out Al Qaeda and its allies.  The Administration has vigorously pursued high-level negotiations and relationship-building with Pakistan’s political and military establishments.  Secretary of State Clinton made a high-profile visit to Pakistan last fall.  From this fascinating piece published in The New Republic, it is clear that US Chairman of the Joint Chiefs of Staff Michael Mullen has formed a important bond with Pakistan’s most important military figure, Army Chief of Staff, Ashfaq Parvez Kayani.  This week’s capture of the Taliban is almost certainly a product of the full-court US diplomatic press on Pakistan.

In related effort, the Administration’s only State dinner was served for Indian Prime Minister Manmohan Singh, signaling the importance of India in the scheme of US foreign policy.  India must show a peaceful face to Pakistan, in order to encourage the Pakistani’s to use military resources against the Islamists within their borders.   India is also an important democratic counterweight to China.

In the case of Iran, the world needed to see that the United States was completely open to negotiating with the regime in Tehran.  Before sanctions could have any hope of being established, the Islamic regime’s intransigence needed to be established beyond any reasonable doubt.

In the meantime, the Obama Administration made concessions to Russia on strategic defense in Eastern Europe.  As suggested here, setting the “reset button” with Russia and winning its support against Iran is no easy task, but clearly there will be no Russian cooperation against Iran at all without concessions to perceived Russian interests.  It now seems that Russia may go along with sanctions, though China will be another and still more difficult matter.  Russian cooperation is crucial in the case of Iran, and helpful in addressing the challenges in the Afghanistan / Pakistan theater.

As the diplomacy unfolded about Iran, the formidable domestic unrest within Iran caught the outside world by surprise.  The Obama Administration was criticized for not speaking out forcefully enough, or taking some action, in support of the protesters.  But in fact there was very little the US could do.  Associating too closely with the dissident movement inside Iran would only give credence to the regime’s charges that the opposition was manipulated from abroad by the US, the UK and Israel.  To limit the harm that sanctions may do to ordinary Iranians, the Administration is designing punitive economic weapons targeting the Iranian Revolutionary Guard’s substantial business interests.

The US relationship with China rises to the level of importance of the challenges the United States faces in the Middle East.  With China however, there is a certain predictability with regards to the divisive status quo issues that exist from one US Administration to the next:  the inflated Chinese currency pegged to the dollar, inaction over North Korea, human rights, Tibet and Taiwan.   Added to these, the Obama Administration has tried to convince the Chinese, who hold vast amounts of US debt, that the US is serious about getting its fiscal house in order.   It is not an easy sell. In this case, domestic fiscal policy spills over into foreign policy, and threatens American credibility.

Beyond the epicenters of US foreign policy in Afghanistan / Pakistan and Iran, a sideshow opened in Latin America, where the Obama Administration placed the United States on the wrong side of the so-called coup in Honduras.  The Honduran legislative and judicial branches were clearly trying to protect Honduras against leftist dictatorship of the sort found in Cuba and festering in Venezuela when they ordered the removal of President Zelaya.  In the end, official scholars at the Law Library of the US Congress found the actions of the Honduran military consistent with the Honduran Constitution.  The US ultimately backed a compromise endorsing this past autumn’s elections, and the crisis was resolved with no harm done, except maybe to US democratic principles.  As if to acknowledge that the US Administration really does appreciate who its true friends are in Latin America, the President singled out Columbia and Panama in his State of the Union speech in January.

The enormous complexity of the questions facing US foreign policy makers would boggle the minds of Bismark, Metternich and Grotius.   There is danger in expecting too much from any American administration. Fortunately, President Obama has had the wisdom to rely on former rival Hillary Clinton at State, the shrewd Bush-era holdover Robert Gates at Defense, former Marine General James Jones at National Security, and many other competent and even-tempered officials.  In the face of multiple difficulties, President Obama and his Administration are gamely pursuing a realistic foreign policy in pursuit of American interests.  On foreign policy, President Obama has earned high marks, and the overall grade of A-.

*    *    *

Author’s Note:

This is the last in CenterMovement.org’s series grading President Obama’s first year in office (see “Obama’s Foreign Policy and Defense Report Card, Part I: Terrorism” and “Taking Stock: Grading Obama’s Domestic Economic Policies His First Year in Office”). Adele Wick suggested a grade of C- for the President’s performance domestically.  I would have been even tougher and given him a D.

Why the large gap between Obama’s domestic and foreign policy performance?

President Obama’s mode of operation for foreign policy is everything his domestic policy is not:  deliberative, non-partisan, open-minded, far-sighted, flexible, mostly non-ideological, deferential to policy expertise and not politics, well-coordinated and well led.  These qualities have made and are making all of the difference.

We could all use more income and more assets – even Bill and Melissa Gates, who do such a good job of giving it away.  But money?  There’s already too much of it.

If you were worth $50 million, you’d never keep it all in cash, or all in your checkbook, would you?  Of course not.  You’d buy a McMansion, with multiple bathrooms and a Jacuzzi or two.  You’d get a new sports car or three.  How about a vacation home in the Hamptons and box seats at the playoffs?  The point is, there’s only so much of your assets you’d want to hold as money.

If we want to avoid inflation, we must “grow” the money supply at the same rate we grow the economy.  That’s because the only way we can end up with the right amount of money if we start with too much is to reduce the value of what we have, and we do so by raising price levels.

Courtesy of ShadowStats.com

Money can be defined in many ways.  Here, we’ll just look at M1, the narrowest of the official measures.   In the graph above, M1’s light gray trajectory tells a dark and scary story: double-digit growth while the economy’s contracting.  Inflation, here we come.  Even worse may be the negative growth right before the recession.  Could this have caused or aggravated the economy’s severe downturn?

Why is M1 growing so fast?  Partly to help our economy out of the recession.  Mostly to monetize the debt as stimulus packages and automatic stabilizers[1] combine to create record deficit levels.  The Federal Reserve paid for some of our $1.42 trillion deficit by buying the addition IOUs our government had to issue.  How did it buy them?  It simply printed money.

Money is cheap to produce, but producing too much is costly in many other ways.  The world is losing faith in the “greenback”.  European allies, oil-producing nations, Chinese and Russians talk about moving away from the dollar and towards a “basket of currencies”.  Investors flee to commodities like gold and silver.  If the oil trade is conducted in “petro-euros” instead of “petro-dollars”, the flight from the dollar as the world’s reserve currency will accelerate. The Brazilian supermodel Giselle Bundchen has already announced that she will no longer accept payments in dollars, but only in Euros.  Ahead of the pack, she made this decision more than two years ago.

In June, US Treasury Secretary Timothy Geithner was laughed at in China when he sought to assure students that China’s investment of more than $800 billion in America was secure.  In November, when President Obama toured Asia, he got a surly lecture from the Chinese on the irresponsibility of the Administration’s growing deficits and the Fed’s loose monetary policy.  Imagine, a lecture to the bastion of capitalism from the largest foreign holder of our government debt, communist China. The U.S. can expect more lectures and more pressure to get our fiscal house in order from our unhappy Chinese banker.  They may be followed by a call that our “Chinese line of credit” is going to be cut.

The supply of dollars cannot continue its double-digit growth without inflation. In 1980, this resulted in prime mortgage interest rates of 20.5% and a very slow and sticky economy.  Thirty years later, we must be attentive to international  consequences of domestic inflation as well.    If other countries have more sober monetary policies, they can predict that the dollar will be worth less in the terms that matter most to them: their own currency.  And they will get rid of the dollar.  Or, rather, dollars: they’ve been holding roughly one-third of all American M1.

American consumption has been the growth engine not only for the United States but also for much of the rest of the world.  We have been consuming more than we produce, and our extra consumption has fueled world growth as we import more than we export.  Domestic investment hasn’t really suffered: the world has sent many of those dollars back to America by investing in us.  They’ve also kept interest rates on the government debt from rising by buying t-bills and government bonds.

The United States and the rest of the world are in this mess together. They need our consumption demand, we need their savings and investments. If  “In God We Can Trust” money loses the trust of other nations, its exchange rate will fall.  The cost of  imported goods will rise, and the carrying costs of our national debt, already the fourth biggest item in our spending, will climb right along with them. Foreigners will suffer exchange-rate losses in the value of all the assets they hold in American dollars. We’ll cut back on imports and they’ll cut back on investments and savings in the US.  We’ll hurt them, and they’ll hurt us.  It’s this mutuality that may prevent sudden calamity. It’s only the unexpected that causes the crashes. As long as people can predict this future, the changes will be gradual.  But the cumulative effect could be substantial – and negative for all concerned.

With this future so easy to see and so hard to stomach, why haven’t we already changed course?  The two main reasons are both based on the fact that the money supply is increasing too fast largely because we’re monetizing debt that’s also increasing too fast.

First, although the honest ways to reduce debt are to spend less and tax more, reducing the real debt by unexpected inflation has substantial, if sneaky and short-term, appeal.[2] Second, for years what’s been truly bipartisan is cowardice. Politicians never want to say no to special interests or yes to tax increases.  After all, special interests are key to re-election and the always-important campaign contributions, and tax increases enrage voters. So our representatives have been dodging the tough choices, settling for partial and temporary fixes to our deficits. “Kicking the can further down the road”, they hope our problems will somehow disappear. This is the kind of “magical thinking” psychiatrists characterize as “adolescent.”  Time to grow up.  Now.

[2]The stealth stops when people realize the game, anticipate inflation, and demand higher interests to compensate for the loss in purchasing power.

Since the end of the Cold War, climate change and other man-made threats to the planet have diluted the focus on nuclear weapons.  Protestors waving anti-nuclear placards no longer fill the streets, and movies and books far less frequently fan popular fears of nuclear apocalypse.    Only occasionally do news headlines, like the recent ones coming out of Iran, inconveniently blow the mushroom cloud back into the public consciousness. Otherwise, the hysteria of the Cold War has been replaced by complacency.

The proliferation of nuclear technology into the hands of messianic Islamists should, in the coming years, push the minute hand on that Doomsday clock closer to midnight than ever before.  Now it is high time to anticipate and plan for any and all eventualities, use every tool available to keep a nuclear weapon from going off, and pray that something works.

A nuclear-armed Iran presents an especially alarming threat because that nation is a theocracy run by religious fanatics.  Iran has a growing missile capacity and, still more worrisome, could put atomic bombs into the hands of its terrorist allies.  The Iranian regime showed so little regard for human life during its war with Iraq in the 1980s that it sent waves of its own children out ahead of Iranian troops to clear enemy mine fields.  Nuclear weapons in the hands of such people is a terrifying prospect, to say the least.

The unhappy truth is that there is little the West can do to prevent a determined Iran from acquiring nuclear weapons.  The Obama Administration is right to play all of its diplomatic cards in an attempt to isolate Iran politically and economically.  Biting trade sanctions might add to the pressure currently being applied by a surprisingly large, brave and resilient internal political opposition.  Still, we cannot afford to assume such sanctions will work, or even that they will ever be firmly applied.  While Russia is now possibly prepared to cooperate against Iran, China still seems reluctant.

There is much talk about eventual attacks on Iran’s nuclear facilities, but military strikes are unwise.  As noted recently in the Wall Street Journal, air assaults, whether Israeli or American, seem at best capable of setting back Iran’s nuclear program for only a couple of years, if that.  Then these same targets, perhaps hidden and hardened more, would have to be struck again and again.  Meanwhile, what about North Korea?  Does it too get bombed?  And if another state run by madmen starts building nuclear bombs, does the United States strike yet again?

The doctrine of preemption – established under the George W. Bush Administration and used to justify the invasion of Iraq – is not only unworthy of the United States and the community of democratic nations, it is also impractical and counterproductive.  Perpetual bombardment of Muslim nations in particular will fertilize the ground for crop after crop of future Islamist fanatics.

Even the Israelis, who are explicitly threatened, may also have reservations about attacking Iran, at least for now.  They are uncharacteristically advertising a potential assault on Iranian nuclear targets, which in fact may suggest a diplomatic ploy rather than actual military intention.

For now, the Israeli goal is to get the world serious about putting pressure on Iran.  Down the nuclear road, however, Israel may find it untenable to sit idly by.  Israel has a unique set of strategic and political variables with which to contend, as well as a terrible historical burden.  The Jews will never be led to slaughter again.  Iran misreads their history at its own peril.

But where does all of this leave us?  The Nuclear Nonproliferation Treaty, signed in 1968, was supposed to limit those countries with nuclear weapons to the United States, the Soviet Union, China, Great Britain and France.  Three countries – India, Pakistan and Israel — did not sign the Nonproliferation Treaty, and each is now a nuclear power, although in Israel’s case its nuclear status is undeclared.  North Korea signed the treaty, violated it, and withdrew.  Subjecting proliferators like North Korea and Iran to near-complete economic isolation might keep the Treaty relevant for a time, but already Chavez’s Venezuela has positioned itself as Iran’s emergency economic lifeline, perhaps in return for nuclear technology with which it too can build nuclear weapons.  For more on this dismal prospect, see here.

The spread of nuclear weapons is not surprising.  Throughout the history of the world, no technology has ever failed to proliferate.  If North Korea, about the poorest and most isolated nation on earth, can build nuclear weapons, then any banana republic can, and will.    The world of the future seems to bristle with nuclear weapons.

If diplomacy has any chance of containing the nuclear tide, the great powers of the world must get serious about the threat.  The Nuclear Nonproliferation Treaty also commits the United States, Russia, China, Great Britain and France to eventually eliminating their own nuclear weapons stockpiles. The moral authority of the United States and its European allies is weakened when they deny other countries the very kinds of weapons that they, themselves, possess, and then take no meaningful steps to fulfill their own ultimate obligation under the Treaty.

Fortunately President Obama is now vocalizing the American desire to rid the world completely of nuclear weapons, in compliance with the Treaty.  In doing so, Obama symbolically joins hands with Ronald Reagan, who at Reykjavik, Iceland, in 1986 surprised the world (including his own advisors) when he proposed to Soviet General Secretary Gorbachev the idea abolishing all nuclear weapons from the face of the earth.  Here is an idealistic vision embraced by the left and right, and worthy of vigorous promotion.

In spite of the drama of Reagan’s ultimate nuclear disarmament proposal, the Reykjavik summit is most often remembered for the President’s stubborn refusal to let go of his concept for strategic defense.  Here again, the allegedly simple-minded Reagan was far wiser than all of his critics.  He understood the ultimate horror of nuclear holocaust, so while pursuing an idealistic diplomatic approach, he called upon the scientific prowess of the United States to produce a technologically advanced defense for the American public, something far more reassuring than Mutually Assured Destruction.

Twenty-three years later, Reagan’s strategic vision remains sound: a full -throttle diplomatic and effort to uphold the Nuclear Nonproliferation Treaty including the banning of all nuclear weapons from the planet, and a muscular research and development program for a multi-layered strategic defense.

As Reagan well understood, the two efforts are mutually re-enforcing.   The more effective America’s strategic defense becomes, the more likely that Russia and China will agree to scrap their own nuclear weapons if the United States does likewise.

To Reagan’s strategic defense, it is also vital to add layered port and border security. America’s political leadership has been shockingly irresponsible in failing to shore up these critical vulnerabilities.

The Doomsday clock still ticks.  In hindsight, maybe it wasn’t three minutes to twelve in 1984. Reagan was far more committed to peace than was generally understood.  But in the coming years, as nuclear The Doomsday clock still ticks.  In hindsight, maybe it wasn’t three minutes to twelve in 1984. Reagan was far more committed to peace than was generally understood.  But in the coming years, as nuclear technology almost invariably proliferates, blackest midnight will once again draw nigh.  We must get ready.

First, this anecdote illustrates the enormous soft power American culture has on China; if our commercial ties continue, Western soft power has the potential to completely undermine the authoritarian Chinese regime. But second, the young Chinese woman’s story also suggests the power of another story: the Thanksgiving story.

Consider the values enshrined in the story of Thanksgiving. Religious Freedom: the Pilgrims left Europe to practice their faith as they wished. Democracy: the “Mayflower Compact” was a sort of democratic constitution signed by all of the adult male settlers. Perseverance and Courage: The pilgrims endured the voyage across a vast ocean in a small vessel and their Plymouth colony barely survived the first winter. Peace and Friendship Between Distinct Cultures: Native Americans made it possible for the Pilgrims to survive that first winter, and in the spring they taught them how to plant Indian corn. Gratitude: In return for the charity of the Indians, the Pilgrims held the first Thanksgiving.

Sadly, the Thanksgiving story has come under attack. In the National Bestseller, Lies My Teacher Told Me: Everything Your American History Textbook Got Wrong, author James W. Loewen entitles one of his Chapters, “The Truth about Thanksgiving.” But in fact Loewen utterly fails to debunk Thanksgiving. The traditional story seems essentially true. Loewen reaches out to expand the context and grasp at anything he can find to blacken the characters of the Pilgrims, but this is not truth-telling; it is propaganda.

Every casual student of history knows Loewen’s most powerful argument against Thanksgiving, that it gave way to the near-extermination of Native Americans through disease and war. The horrific events that followed demonstrate the tendency for contrasting cultures to clash and for humans to engage in cruelty. There is nothing surprising here. Bad behavior constitutes the lion’s share of human history.

The American Thanksgiving story, much like the American Declaration of Independence, holds up an ideal set in or near a context in which that ideal is violated. The Declaration of Independence says that “all men are created equal,” but was written when one sixth of the population was held in slavery and women had secondary status. Still, nobody would say that these 18th Century realities made the spirit of the Declaration worthless. Likewise Thanksgiving should not be trashed in some misguided attempt to undermine American nationalism.

The ideals taught in the Thanksgiving story have blossomed all over the world since 1620. Whole societies have been built around majority rule and individual rights, including religious freedom, a thing unthinkable when Squanto first walked into the Pilgrim settlement. Cultures still clash, but untold numbers of the world’s inhabitants comprehend better than in times past the ethical imperative to cooperate and live in peace. As we lose our ethnocentrism, however, we must not also toss out those values that brought us to this point; instead these values – many of which can be found in the Thanksgiving Story – should be embraced more firmly.

Today our historically unprecedented high standard of living permits people with menial jobs to live better than nobility did three hundred years ago. Let us be grateful for what we have, rather than discard progress because it is not perfect. Rather than despair at the state of the world, the economy, and possibly our own individual situation, we ought to gaze out from a point of view that takes in the entire sweep of history. On that high place we can find hope and gratitude.

The Thanksgiving story reminds us that we are not alone and that better times lie ahead if we persevere. From American dining room tables to Chinese apartments crowded with youths holding chop sticks, we all aspire to the Thanksgiving values: to live democratically,  break bread together, attain our necessary sustenance, and find peace.