Topic: Foreign Policy and National Security

China Must Confront Its North Korea Problem

Great powers usually have client states. Although a sign of influence, the latter often are more trouble than they are worth. North Korea increasingly appears that way for Beijing.

The Chinese-North Korean relationship was oft said to be like lips and teeth, forged in blood during the Korean War. But even then, the relationship was fraught with tension.

Today those look like the “good ol’ days.” There is little doubt that the so-called Democratic People’s Republic of Korea has lost the support of Chinese public opinion.

Academics and analysts outside of government also show little love for China’s one ally, which only takes and never gives. Top officials no longer attempt to disguise their frustration with the North’s behavior.

The Kim regime has returned ill-disguised contempt. Emissaries from the People’s Republic of China came and went as the North Korean leader failed to make even a pretense of listening.

So Se Pyong, Pyongyang’s ambassador to the UN in Geneva and the UN’s Conference on Disarmament, predictably denounced the United States and South Korea. When asked if the North felt pressure from the PRC after President Xi called for dialogue over the Korean “predicament,” So responded: “Whether they are going to do anything, we don’t care. We are going on our own way.”

America’s Contradictory Yemen Policies

Reuters has an investigation today of the ways in which the Saudi-led War in Yemen has empowered Al Qaeda in the Arabian Peninsula (AQAP), the group’s local affiliate. While it’s been relatively obvious to observers for some time that AQAP had benefitted from the conflict, the extent of their newfound control and wealth as detailed in the article is fascinating.

Thanks to the seizure of the city of Mukalla, AQAP now controls Yemen’s third largest port, a position that Reuters estimates has allowed them to earn up to $2 million per day in fees and taxes. Extortion of businesses, including around $1.4 million from the state oil company, has also provided an easy revenue source, as has the far less subtle method of simply robbing the city’s banks.

Perhaps of more interest is AQAP’s approach to providing civic services and stability. While it’s untrue that Al Qaeda has never experimented with state-building before, such a strategy has more typically been associated with ISIS. As the Reuters investigation notes,  in Mukalla, Al Qaeda is trying to present themselves as a less cruel and brutal ruler than ISIS, an approach which seems to be working with some Yemeni citizens who fear a return to instability.

So entrenched is the group that it attempted to set up a formal profit-sharing deal with the national government to split oil revenues. It is even managing taxes for the citizens of Mukalla, cancelling payroll taxes and promoting various populist policies. All of this is a remarkable feat for a group which has been the focus of concerted US drone strikes and counterterrorism activities for more than a decade.

Andrew Bacevich Discusses America’s War for the Greater Middle East

U.S. foreign policy in the Greater Middle East has been a costly and counterproductive train wreck. But the elites who are responsible can’t see what is plainly apparent to the rest of us. Why is this?

Historian Andrew Bacevich has a few ideas. He’ll be at Cato next week to discuss his latest book, America’s War for the Greater Middle East: A Military History, and he previewed the book this past weekend at Politico Magazine.

Bacevich focuses on two key questions, and offers one big answer:

Why has the world’s mightiest military achieved so little even while absorbing very considerable losses and inflicting even greater damage on the subjects of America’s supposed beneficence? Second, why in the face of such unsatisfactory outcomes has the United States refused to chart a different course? In short, why can’t we win? And since we haven’t won, why can’t we get out?

The answer to these questions starts with questioning the premise. The tendency to see the region and Islamic world primarily as a problem that will yield to an American military solution is, in fact, precisely the problem. To an unseemly and ultimately self-destructive degree, we have endorsed the misguided militarization of U.S. foreign policy. As a consequence, we have allowed our country to be pulled into the impossible task of trying to “shape” the region through martial means.

We should dwell in particular on this idea of “shaping” the region, and the rest of the planet, generally.

The concept appears prominently in an early draft of the Pentagon’s Defense Planning Guidance of 1992. “The new international environment has…been shaped by the victory of the United States and its coalition allies over Iraqi aggression.” That was both “the first post-cold-war conflict” and “a defining event in U.S. global leadership,” going forward.

Then-Undersecretary of Defense for Policy Paul Wolfowitz, who helped supervise the drafting of the DPG, believed that the application of U.S. military power would deal with the “sources of regional instability in ways that promote international law, limit international violence, and encourage the spread of democratic government and open economic systems.” 

But Wolfowitz and other leaders of the foreign policy establishment vastly exaggerated the U.S. military’s capacity for shaping the global order. The Middle East has proved particularly resistant to U.S. “shaping.” Instead, the presence of U.S. forces has engendered considerable resistance. This often manifests itself in the form of violence against our military personnel in the region, as with the Khobar Towers bombing in 1996, or the attack on the USS Cole in 2000. But it also comes in the form of acts of terrorism against Americans and U.S. interests, including the attacks on embassies in Kenya and Tanzania in 1998, and, of course, right here at home on 9/11.

Foreign policy elites may have wanted to reshape the Middle East, and then the world, but our responses to the threat of Islamist terrorism emanating from the region have mostly shaped us.

Taiwan’s Best Option for Deterring China? Anti-Access/Area Denial

There are few David versus Goliath matchups in the international system quite like Taiwan versus China. Across virtually every indicator of national power, Taiwan is completely outclassed. In the past, Taiwan relied on a qualitatively superior military and an implicit U.S. security guarantee to maintain its de facto independence, but advances in military technology have enabled Beijing to close the quality gap. Taiwan’s military equipment and doctrine is ill-suited to this new reality. If Taiwan wishes to preserve its de facto independence, it must take a page out of Beijing’s playbook and adopt an anti-access/area denial (A2/AD) strategy.

A2/AD incorporates guided weapons and intelligence/observation systems to prevent enemy military forces from entering a specified area, and, failing that, make it costly for forces to operate within said area. Relatively inexpensive weapons systems that are difficult to defend against, such as long-range anti-ship cruise and ballistic missiles, are a hallmark of A2/AD. American military and political objectives in East Asia require power projection, the moving of air and naval power close to China’s shores. A2/AD is designed to make that difficult.

The same A2/AD concepts and technology that threaten U.S. forces’ freedom of movement can be used by Taiwan to defend against a Chinese invasion. This is just one of several military scenarios that could unfold, but the Taiwanese military should be prepared for the worst. The first phase of a Chinese invasion would be establishing air superiority over the Taiwan Strait and control of the sea around Taiwan. China needs to project power in order to accomplish its objectives. Taiwan can’t defeat China in a stand-up fight, but it can deny the PLA from achieving its objectives with an A2/AD strategy.

Today, Taiwan does not have the necessary military equipment, especially air and naval forces, to conduct an effective A2/AD strategy. Despite having talented pilots, the fighter aircraft of Taiwan’s air force are outclassed by new and numerous Chinese aircraft and missile systems. Earlier this week, the RAND Corporation published a study assessing Taiwan’s air defense options. The study recommends reducing the size of Taiwan’s relatively costly, aging, and increasingly vulnerable fighter fleet to invest a limited military budget toward mobile surface to air (SAM) missile systems. The relatively few surface warships in Taiwan’s navy are similarly vulnerable to Chinese weapons systems. James Holmes of the Naval War College recently recommended that Taiwan’s navy acquire more numerous, fast missile boats armed with anti-ship missiles instead of fewer, larger surface warships that would be relatively easy for the PLA to locate and sink.

Should Washington Close Its Nuclear Umbrella Over South Korea and Japan?

Donald Trump again is causing international consternation. His remarks about South Korea and Japan developing nuclear weapons set off a minor firestorm.

“It would be catastrophic were the United States to shift its position and indicate that we support somehow the proliferation of nuclear weapons to additional countries,” argued deputy national security adviser Ben Rhodes.

Actually, what would be catastrophic is American involvement in a nuclear war as a result of its defense commitment to another nation, especially one able to defend itself.

Neither country pays enough for its own protection, instead preferring to rely on Washington. The issue of one of them going nuclear “at some point is something that we have to talk about,” he explained.

That’s hardly a radical sentiment. The issue recently was raised by a former presidential candidate in South Korea. After Trump’s remarks Cheong Seong-chang of the Sejong Institute observed: “If we have nuclear weapons, we’ll be in a much better position to deal with North Korea.”

Over the years there has been talk in Japan about pursuing the nuclear option. Former Osaka Mayor Toru Hashimoto said Trump’s sentiments allowed “Japan to change the peace-addled notion that America will protect us.”

Despite the campaign to treat nuclear nonproliferation as sacrosanct, it cannot be decided in isolation. Broadly speaking, it is better if fewer nations have nukes.

Yet in some cases proliferation might be stabilizing. Had Ukraine not given up its nuclear weapons left over from the collapse of the Soviet Union, Russia might not have grabbed Crimea.

Worse, the way Washington won assent of some nuclear-capable powers to abstain is to provide a “nuclear umbrella,” that is, promise to use nukes to defend them if necessary. As a result, the price of nonproliferation in East Asia is America’s willingness to risk Los Angelas to protect Seoul and Tokyo, and maybe Taipei and Canberra too.

Today nonproliferation means only the bad guys get guns. In East Asia China, Russia, and North Korea are the nuclear powers. America is supposed to provide geopolitical balance.

The result of this situation truly could be catastrophic.

So far, America’s defense promises have not created stability. China is acting aggressively toward Japan, Philippines, and Vietnam in particular; Russia has challenged the U.S. in the eastern reaches of Europe and the Middle East. North Korea is worse, constantly breathing fire against its neighbors and the U.S.

Still, policymakers act as if U.S. defense guarantees will never get called. The threat of nuclear retaliation undoubtedly has deterrent value. However, the two great wars of the 20th century started because deterrence failed.

In particular, threats which seem inconsistent with underlying interests have little credibility. Thus, the Chinese have publicly doubted that America would risk nuclear war over Taiwan’s independence.

Moreover, once given, it is hard to back away from security commitments which have lost their original purpose. Which means if deterrence fails America could be at war automatically, without considering the stakes.

Finally, promising to defend other, smaller powers allows them to hold American security hostage. With Washington behind them they are more likely to engage in risky behavior. During the 2000s Taiwan’s independence-minded Chen Shui-bian upset Chinese sensibilities.

Washington’s view that they are covered by the “mutual” defense treaty likely has encouraged Tokyo to refuse to even discuss the status of the Senkaku/Diaoyu Islands with China. Philippines is attempting to enlist the U.S. in its squabble with Beijing over Scarborough Reef.

America’s nuclear umbrella deserves scrutiny and a serious debate. Yet Rhodes dismissed even discussing the idea, contending that “for the past 70 years” the U.S. has opposed nuclear proliferation. But when the world changes, policy also should change. As I pointed out in National Interest: “The greatest risk of catastrophe for this nation would be sleep-walking into an Asian nuclear war.”

Little-Known Facts About U.S. Trade With China

Trade with China in ServicesWilliam Galston’s Wall Street Journal column, “Why Trade Critics Are Getting Traction,” asks why U.S. employment in manufacturing fell from 17.2 million in December 2000 to 12.3 million last year.    He suggests that “import penetration from China [not Mexico] has been responsible for up to 20% of U.S. job losses.” But “up to” 20% explains very little, and that figure is at the high end of a range of estimates about 1999-2011 from a working paper by David Autor, David Dorn and Gordon Hanson. They speculate that “had import competition not grown after 1999” then there would have been 10% more U.S. manufacturing jobs in 2011.  In that hypothetical sense, “direct import competition [would] amount to 10 percent of the realized job loss” from 1999 to 2011.  Since 2007, however, the study’s authors find “a marked slowdown in import expansion following the onset of the global financial crisis, which halted trade growth worldwide.”

Deep recession and weak recovery is what slashed manufacturing jobs since 2007, not imports. In reality, imports always fall in recessions.  Although Autor, Dorn and Hanson emphasize imports of consumer goods (clothing and furniture), nearly half of U.S. goods imports (47.7% last year) are industrial supplies and capital goods which are essential inputs into expanding U.S. production.  That is a big reason why imports rise when U.S. industry expands and fall in slumps.

Even if “up to” 20% of manufacturing jobs lost since 2007 could be blamed on imports from China, as Galston claims, that need not mean the overall numbers of U.S. jobs were reduced.  “There is no evidence,” writes Galston, “that increased competition from China has produced offsetting employment increases in other industries whose products are traded internationally [emphasis added].”  Confining overall employment effects to “traded goods,” as Autor, Dorn and Hanson do, arbitrarily excludes services – such as financial and legal services, accounting, advertising, travel, telecom and insurance.   Services account for 32% of U.S. exports, and the U.S. runs a large and growing trade surplus with China ($28 billion in 2014) and with the world ($233 billion). Dollars foreign firms earn by exporting goods to the U.S. are commonly used to import services from the U.S. or to invest in U.S. real and financial assets; both those activities create U.S. jobs. Hollywood, Madison Avenue and Wall Street are big, high-wage U.S. exporters.

Confining the job impact to traded goods also excludes U.S. jobs in transporting, wholesaling and retailing Chinese goods (Walmart, Amazon…), as well as shipping U.S. exports to China and Hong Kong.  Incidentally, the U.S. ran a $30.5 billion trade surplus with Hong Kong last year, which isn’t counted trade with China though it really is.

Galston acknowledges that “rising productivity” [output per worker] is “part of the story” about manufacturing jobs.  In fact, it is essentially the whole story from 1987 to 2007, when U.S. manufacturing output nearly doubled.  The deep recession and slow recovery explain what happened to manufacturing jobs over the past ten years, not foreign trade.  

Index of U.S. Manufacturing Output and Employment

Time for a Debate on Sanctions Policy

This morning, I attended an interesting speech by Jack Lew, Secretary of the Treasury, on the future of economic sanctions. The speech was notable in that Lew made not only a defense of the effectiveness of sanctions, but also highlighted their potential costs, a variable that is too often missing from debates over sanctions policy.

Some of the points Lew made – like the argument that multilateral sanctions are better than unilateral ones – were hardly novel. Yet others were more interesting, including the argument that sanctions implementation should be based on cost/benefit analysis and an assessment of whether they are likely to be successful. Though such an approach sounds like common sense, it has not always been the rule.

He also focused on the importance of lifting sanctions once they’ve achieved their ends. This is a rebuke to some, particularly in congress, who have argued for reintroducing the sanctions on Iran lifted by the nuclear deal through some other mechanism. As he pointed out, refusing to lift these sanctions now means that they will be less effective in the future: if states know sanctions will remain in place regardless of their behavior, what incentive do they have to change it?

Perhaps most interestingly, Lew argued for the ‘strategic and judicious’ use of sanctions and against their overuse. This is an interesting argument from an administration for whom sanctions have often been the ‘tool of first resort.’ In doing so, he referenced both growing concerns about the costs of sanctions from the business community, and the broader strategic concern that overuse of sanctions could weaken the U.S. financial system or dollar in the long-run.

I still disagree with the Secretary on several points. While he is correct that nuclear sanctions on Iran have broadly been a success, he dramatically overstates the effectiveness of sanctions in the more recent Russian case. Much of the economic damage in that case was the result of falling oil prices, and sanctions have produced little in the way of coherent policy change inside Russia.

He also overstates the extent to which today’s targeted sanctions avoid broad suffering among the population. In fact, evidence suggests that modern sanctions still suffer some of the same flaws as traditional comprehensive trade sanctions, allowing the powerful to deflect the impact of sanctions onto the population, and reinforcing, not undermining, authoritarian dictators.

Despite this, it is refreshing to hear concerns about the long-term implications of runaway sanctions policy expressed by policymakers. In alluding to these concerns – many of which have been noted for some time now by researchers – the Treasury Secretary may help to spark a broader policy discussion of the benefits and costs of sanctions. If we wish to retain sanctions as an effective tool of foreign policy moving forward, such discussion is vital.

For more on some of the big issues surrounding sanctions policy, you can read some of Cato’s recent work on sanctions policy here and here, or check out the video from our recent event on the promises and pitfalls of economic sanctions