Topic: Foreign Policy and National Security

Russia, Sanctions, and Food

The Russian government announced on August 6 that it will ban imports of most food and agricultural products from Australia, Canada, the European Union, Norway and the United States for one year.  The full extent of the ban, as well as its effects on exporters and Russian consumers, are not yet clear.  It is interesting, though, to contrast this action with an earlier effort to use food sanctions as a diplomatic weapon:  the 1980 embargo of U.S. grain sales to the Soviet Union. 

The Soviets had invaded Afghanistan in December 1979 with 80,000 troops and 1800 tanks.  President Carter responded by cancelling private contracts to supply 17 million metric tons (MMT) of U.S. wheat and corn to the Soviet Union.  However, he chose to allow shipment of 8 MMT that had been agreed as part of the 1975 U.S.-Soviet Grains Agreement.  Sales in excess of the level assured in the Grains Agreement were embargoed.

Because grains are relatively fungible, and because numerous countries had surpluses available for export, the Soviets were able to replace most of the embargoed grain from willing suppliers.  Argentine agriculture did particularly well during that timeframe.  U.S. agriculture did not do so well.  Market prices had been relatively high, in large part due to strong export demand.  When a considerable portion of that demand evaporated with the stroke of a pen, commodity prices fell precipitously. 

The grain embargo became a potent political issue in the 1980 presidential campaign.  Ronald Reagan’s opposition to the embargo helped to boost his campaign in rural areas.  He took office in January 1981 and revoked the embargo three months later.

In retrospect, the grain embargo generally is seen as supporting the proposition that economic sanctions often inflict greater costs on the country imposing them than on the country at which they are aimed.

The new sanctions are expected to cut off some $15 billion in Russian imports from the EU.  Russia has been Europe’s second largest (behind the United States) export market for foodstuffs, accounting for 10 percent of the EU’s total foreign sales.  The United States has a smaller stake, with only $1.3 billion of food/ag exports to Russia.  That country has been the third largest market for U.S. poultry exports.  About 7 percent of U.S. poultry exports – valued at over $300 million – were shipped to Russia last year, down from 20 percent as recently as 2008.  Russia’s WTO commitments should prevent import restrictions based on political pressures.  Nonetheless, trade in poultry appears to have fluctuated over time in response to the influence of Russia’s domestic poultry producers.  (It’s worth noting that Russia’s import ban does not include either baby food or wine.  It’s not clear how those omissions should be interpreted.)

How the Sharing Economy Can Help Developing Nations

While many sellers and buyers in the so-called sharing economy might like it for its convenience, there is a case to be made that in the developing world decentralized and peer-to-peer economies could help solve a crippling informational problem in environments with weak property rights and bad regulatory regimes.

Writing in Forbes earlier this week, Adam Ozimek, Director of Research and Senior Economist at Econsult Solutions, Inc., pointed out that the rating systems used by companies such as Uber and Airbnb allow for customers to “do what we previously thought tight regulations and even natural monopolies were needed to do.” Before the rise of the technologies that allowed for Uber and Lyft to exist, the taxi industry could argue that customers might face rip-offs or safety concerns in the absence of regulation. Thanks to the rating system used by companies in the sharing economy, this informational problem can be overcome.

U.S.-China Relations: Setting Priorities, Making Choices

The United States confronts increasingly urgent challenges around the globe.  Washington’s policies are widely seen as failing

The Obama administration has been doing a little better, but not good enough, with China.  There is no open conflict between the two, but tensions are high. 

Territorial disputes throughout the South China Sea and Sea of Japan could flare into violence.  North Korea is more disruptive than ever.  Other important issues lurk in the background.

While there should be no surprise when important powers like the U.S. and People’s Republic of China (PRC) disagree, the two must work through such issues.  Unfortunately, the U.S. is far better at making demands than negotiating solutions.  In particular, Washington seems to ignore the interdependence of issues, the fact that positions taken in one area may affect responses in others.

For instance, the U.S. famously initiated a “pivot” to Asia, or “rebalancing” of U.S. resources to the region.  The U.S. implausibly claimed that the shift had nothing to do with China. 

But the residents of Zhongnanhai are not stupid.  For what other reason would America reaffirm military alliances and augment military forces in Beijing’s backyard?

Yet at the same time the Obama administration was pressing the PRC to apply greater pressure on North Korea to end the latter’s nuclear program and constant provocations.  Step on Pyongyang’s windpipe and force North Korea to yield, said Washington.

The U.S. acted as if it was asking for a small favor.  In fact, no one knows how the Democratic People’s Republic of Korea would react.  Worst geopolitically for China would be eventual Korean reunification, which would leave an expanded U.S. ally hosting American troops on the Yalu.

America’s Korea Problem: The North Is Angry and the South Is Dependent

The Democratic People’s Republic of Korea is angry with the U.S., citing all manner of crimes and misdemeanors.  Worse, Washington has turned the Republic of Korea into an international welfare queen, apparently forever stuck on the U.S. defense dole.

It’s time for the ROK to graduate and America to allow the Koreans solve their own problems.

Last week North Korea’s deputy UN ambassador, Ri Tong-il, denounced Washington:   U.S. behavior “is reminding us of the historical lasting symptoms of a mentally retarded patient.”  The DPRK’s list of grievances was long. 

Although it’s tempting to dismiss Ambassador Ri’s dyspeptic remarks, he made a legitimate point when justifying his nation’s nuclear program:  “No country in the world has been living like the DPRK, under serious threats to its existence, sovereignty, survival.”  Even paranoids have enemies.

In any war the North would face South Korea, which has vastly outstripped Pyongyang, and the U.S., the globe’s superpower.  East Asia is filled with additional American allies, while the North’s Cold War partners, Moscow and Beijing, have drifted away.  Impoverished, bankrupt, and alone in a world in which Washington bombs and invades small countries at will, the DPRK would be foolish to entrust its survival to U.S. self-restraint.

Which raises the question:  just what is America doing with troops on the Korean peninsula? 

The Malaysian Air Shoot Down Changes Nothing: America Cannot Save Ukraine

The agony of the families of the 298 people who died on flight MH17 lives on.  Fighting has prevented Dutch personnel from reaching the crash site.  However, despite calls for stronger action against Russia and its separatist clients in Ukraine, the tragic shoot down changed nothing in practice. 

American intelligence reportedly concluded that Russian separatists misjudged the flight for a Ukrainian military plane, which seems most likely.  If so, then what to do?

The bodies were still warm in Ukraine when America’s hawks began stiring the war machine.  Said Sen. John McCain:  involvement of Russia or Russian separatists in the plane shoot down “would open the gates for us assisting, finally, giving the Ukrainians some defensive weapons [and] sanctions that would be imposed as a result of that.  That would be the beginning.” 

The better answer, however, remains to do largely nothing.  The MH17 incident, while outrageous, actually is no trigger for anything.  Errant attacks on civilians, while always tragic, are not unusual.

However, in none of the earlier cases did an accidental or erroneous shoot down act as a casus belli.  Not once did much of anything happen.  Even during the Cold War such incidents were resolved peacefully.  The U.S. has no more cause than before for extensive involvement in the Ukraine imbroglio. 

Of course, Moscow’s geopolitical machinations are to be deplored.  But Russia is no Soviet Union and Vladimir Putin is no Joseph Stalin.  Unlike the U.S.S.R., Russia represents no ideological or military threat to America.

In fact, Putin’s Russia appears to have reverted to a traditional great power, concerned about international respect and border security.  Its ambitions are fierce, but bounded. 

Moscow’s intervention in Ukraine, like the former’s war against Georgia, is consistent if unfortunate.   But such action isn’t likely to lead much further.  Indeed, Moscow apparently has no interest in swallowing Ukraine, with a majority of non-Russians (in contrast to Crimea), just like it did not absorb Georgia.  Aggression further west is even less likely.

President Barack Obama correctly dismissed the threat posed by Moscow:  “Russia is a regional power that is threatening some of its immediate neighbors, not out of strength but out of weakness.” 

Undercurrents of Liberty in China

BEIJING, CHINA—Everything in China is big.  Including the battle over its future.

I recently returned from the People’s Republic of China.  It’s always a fascinating place with a future as yet unresolved. 

The country is growing economically, but no one really believes the government’s statistics.  The “one child” policy has created a birth dearth that may leave the PRC old before it grows rich. 

The PRC’s future is not yet determined.  Politics remains authoritarian, and it isn’t obvious that democracy would yield a meek Beijing. Nationalism could become an even more dangerous force without the current government’s power to close off discussion. 

Nevertheless, the young are restless.  Those I met had little patience with the Chinese Communist Party. 

Many hoped to go to America for school, for both its educational opportunities and personal freedoms.  Moreover, they weren’t afraid to speak out in front of others.

Ukraine Crisis Reminds Americans Why NATO Should Not Expand

The bitter conflict in Ukraine drags on.  Russia continues to destabilize Kiev and NATO remains divided on how to respond.

Washington has taken the lead against Moscow even though America has little at stake in Russia’s misbehavior.  In fact, the crisis has generated a spate of U.S. proposals to take military action and expand NATO.

For instance, Sen. John McCain urged adding Ukraine to the “transatlantic” alliance.  Former UN ambassador John Bolton suggested including Georgia and Ukraine.  Other proposed candidates for the alliance include Armenia, Bosnia-Herzegovina, Finland, Kosovo, Macedonia, Moldova, Montenegro, and Sweden. 

Efforts to expand NATO are strikingly misguided.  The end of the Cold War eliminated the reason for creating the alliance. 

However, alliance advocates acted like nothing had changed and proposed new justifications for the old organization.  Member governments eventually turned NATO into a mechanism to integrate Central and Eastern European states.   

NATO has turned into a dole for indolent rich countries.  After Moscow’s collapse the Europeans steadily reduced their military outlays. 

Now the Ukraine crisis has reminded everyone that the alliance might be called upon to confront nuclear-armed Russia.  Several of the newest members are screaming for America to “reassure” them by establishing bases and deploying troops.

This ludicrous situation demonstrates the folly of NATO expansion.  The U.S. should not compound its earlier mistake by bringing in additional members with even less strategic value. 

The list of potential members suggests strategic madness in Washington.  For instance, tiny Balkan states Bosnia-Herzegovina, Macedonia, and Montenegro never have mattered for U.S. security.