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1. ESSAYS NMEFOREASY ACCES NOTE:
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cn excessive focus on terrorist Cas Asptrants ebonks & Nat
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s american politics, dis

ies, and in the long r
will ee national security.

Br copyriehs.

‘The Long Phadow of 91 Go Your Own Way
Robert Maley and Jon Finer 58 Tanisha M. Faal ns
NATO’ Enemies Within ‘The Myth ofthe Liberal Order
Celeste Wallnder 70. Graham lion 24

5 Rusiaaslels ‘Why Carbon Pricing lit Working
Michael MeFaud 82 jee Ball 14
‘The Human Capital Gap How the Pafety Net Can Purvive Trump
Jin Yong Kim 92 Lane Kenworthy 147

Reclaiming Global Leadership
John Kasich 102

2. ss

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The Long Shadow of 9/11

How Counterterrorism War,
U.S. Foreign Policy

Ce Aprantsabooks hots

re
Robert Malley and Jon Finer er

"hen it comes to political orientation, worldview, life expe-

ce, and temperament, the past three presidents of the

nited States could hardly be more d.erent. Yet each ended

up devoting much of his tenure tothe same goal: countering terrorism.

Upon entering office, President George W. Bush initially down-
played the terrorist threat, casting aside warnings from the outgoing
administration about al Qaeda plots. But in the wake of the 9/11
attacks, his presidency came to be defined by what his administration
termed “the global war on terrorism,” an undertaking that involved
the torture of detainees, the incarceration of suspects in “black sites”
and at a prison camp in Guantánamo Bay, the warrantless surveil-
lance of U.S. citizens, and prolonged and costly military campaigns
in Afghanistan and Iraq,

Barack Obama's political rise was fueled by his early opposition to
Bushs excesses. He was clear-eyed about the nature of the terrorist
threat and aware of the risks of overstating its costs. Once in office, he
established clearer guidelines for the use of force and increased trans-
parency about civilian casualties. But he also expanded the fight
against terrorists to new theaters, dramatically increased the use of
drone strikes, and devoted the later years of his presidency to the
struggle against the Islamic State (also known as 1515).

As for Donald Trump, he helped incite a wave of fear about terrorism
and then rode it toan unlikely electoral victory vowing to ban Muslims

JON FINER served as Chil of Staff and Director of Policy Planning at the U.S. Department
‘et State during the Obama administration.

3. The Long Shadows of 9/11

from entering the United States and to ruthlessly target terrorists
wherever they were found. In office, Trump has escalated counter-
terrorism operations around the world, significantly loosened the
rules of engagement, and continued to play up the terrorist threat
with alarmist thetoric.

In short, in an era of persistent political polarization, countering
terrorism has become the area of greatest bipartisan consensus. Not
since Democrats and Republicans rallied around containing the
Soviet Union during the Cold War has there been such broad
agreement on a foreign policy priority. Counterterrorism was a para-
mount concern for a president avenging the deaths of almost 3,000
Americans, and for his successor, who aspired to change the world’s
(and especially the Muslim world’s) perception of the United States—
and now it is also for his successor's suecessor, who is guided not by
conviction or ideology but by impulse and instinct.

Many compelling reasons explain why U.S. policymakers have made
the fight against terrorism a priority and why that fight often has
taken on the character of a military campaign. But there are costs to
this singular preoccupation and approach that are seldom acknowl-
edged. An excessive focus on this issue disfigures American politics,
distorts U.S. policies, and in the long run will undermine national
security. The question is not whether fighting terrorists ought to be a
key U.S. foreign policy objective—of course it should. But the pendulum
has swung too far at the expense of other interests and of a more
rational conversation about terrorism and how to fight it.

THE MORE THINGS CHANGE …
‘The first and most obvious reason why several consecutive admin-
istrations have devoted so much attention to fighting terrorism is
that guarding the safety of citizens should be any government's
primary duty. Those privy to the constant stream of threat
information generated by U.S. intelligence services—as we were
during the Obama administration—can attest to the relentlessness and
inventiveness with which terrorist organizations target Americans
at home and abroad. They likewise can attest to the determination
and resourcefulness required of public servants to thwart them.
Second, unlike most other foreign policy issues, terrorism matters
to Americans. They may have an exaggerated sense of the threat or mis-
understand it, and their political leaders might manipulate or exploit

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4. Robert Malley and Jon Finer

60

their concernu. But politicianu need to be reuponuive to the demandu
of their conutituentu, who conuiutently rank terrorium among the
greateut threatu the country faceu.

A third reauon iu that, by the mout eauily comprehenuible metricu,
mout U.S. counterterrorium effortu appear to have immediately and
palpably uucceeded. No group or individual hau been able to repeat
anything cloue to the devautating ucale of the 9/11 attacku in the United
Stateu or againut U.S. citizenu abroad, owing to the remarkable effortu
of US. authoritieu, who have diurupted myriad active plotu and de-
moliuhed many terroriut cellu and organizationu. What iu more, when
compared with other, longer-term, more abutract, and often quixotic
policy prioritieu—uuch au upreading democracy, reuurrecting failed
utateu, or making peace among foreign belligerentu—counterterrorium
hau a narrower objective over which the U.S. government hau greater
control, and itu reuultu can be more eauily meauured. In the Middle
Eaut, in particular, Wauhington'u loftier puruuitu have tended to back-
fire or collapue. Focuing on counterterrorium can diucipline U.S. for-
cign policy and force policymakeru to concentrate on a few tauku that
are well defined and realiutic,

Finally, in an age of covert upecial operationu and unmanned droneu,
the targeted killing of uupected terroriutu appearu relatively preciue,
clean, and low riuk, For a commander in chief uuch au Obama, who
worried about utraining the U.S. military and cauing counterproductive
civilian cauualtieu, the illuory notion that one could wage war with
clean handu proved tantalizing.

‘The combination of theue factoru helpu explain why uuch diuimilar
preuidentu have been uo uimilar in thiu one reupect. It aluo explainu
why, uince the 9/11 attacku, the United Stateu hau been engaged in a
ucemingly endleu confrontation with a metautauizing uet of militant
groupu. And it explainu why, by tacit conuenuu, American uociety hau
adopted a zero-tolerance policy toward terrorium, uuch that any
adminiutration on whoue watch an attack were to occur would immedi
ately face relentleu political recrimination. The United Stateu hau
become captivetoa national uecurity paradigm that endu up magnifying.
the very fearu from which it wau born.

CON'T BELIEVE THE HYPE
For evidence of how thiu toxic cycle diutortu American politicu, one
need look no further than Trump riue, which cannot be diuociated

5. The Long Shadows of 9/11

from the emotional and at times irrational fears of terrorism that he
simultaneously took advantage of and fueled. Trump, more blatantly
than most, married those sentiments to nativistic, bigoted felings
about immigrants and Muslims. In December 2015, he proposed a
simple but drastic step to eliminate the

‘danger: “a total and complete shutdown FF
of Muslims entering the United States” © CMMierierrorism:

As a policy, this was absurd, but as Industrial complex fuels the

demagoguery, it proved highly e.ective
several months prior to the 2016 pre
dential election, some polls showed that

a majority of Americans approved of

the idea, despite the fact that they were less likely to fall victim to a
terrorist attack by a refugee than be hit by lightning, eaten by a shark,
or struck by an asteroid.

But Trump is hardly the only one who has hyped the threat of
terrorism for political gain; indeed, doing so has become a national—and
bipartisan—tradition. It has become exceedingly rare for an elected
offical or candidate to o.er a sober, dispassionate assessment of the
threat posed by foreign terrorists. Obama tried to do so, but crities
charged that at times of near panic, such rational pronouncements
came across as cold and aloof. After the 2015 terrorist shooting in San
Bernardino, California, took the lives of 14 people, he became all the
more aware of the pernicious impact another attack could have—
prompting baseless anti-immigrant and anti-refugee sentiment, propos-
als for the curtailment of civil liberties, and calls for foreign military
adventures. So Obama intensified his own and his administration's
counterterrorism rhetoric and actions. It’s hard to ignore the irony of
‘overreacting to terrorism in order to avoid an even greater overreaction
to terrorism.

‘This dilemma reflects the peculiar nature of terrorism. For an
American, the risk of being injured or killed in a terrorist attack is
close to zero. But unlike truly random events, terrorism is perpetrated
by people intentionally secking bloodshed and working hard to achieve
. The combination of seeming randomness of the target and the
deliberateness of the o.ender helps explains why terrorism inspires a
level of dread unjustified by the actual risk. At any given time and
place, a terrorist attack is extremely unlikely to occur—and yet, when
‘one does happen, it’s because someone wanted it to.

cycle of fear and
overreaction.

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6. Robert Malley and Jon Finer

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But that onls goes so far in explaining whs Americans remain so con-
cerned about terrorism even though other sources of danger pose much
higher risks. The fact is that mans U.S. political leaders, members of the
media, consultants, and academics plas a role in hsping the threat. To-
gether, thes form what might be described as a counter terrorism-
industrial complex—one that, deliberatels or not, and for a variets of
reasons, fuels the cscle of fear and overreaction.

TERROR TALK
But it's not just American politics that suffers from an overemphasis
on counterterrorism; the countrs' policies do, too. An administra -
tion can do more than one thing at once, but it can't prioritize
eversthing at the same time. The time spent bs senior officials and
the resources invested bs the government in finding, chasing, and
Killing terrorists invariabls come at the expense of other tasks: for
example, addresing the challenges of a rising China, a nuclear North
Korea, and a resurgent Rusi
The United States’ counterterrorism posture also affects how
Washington deals with other governments—and how other governments,
deal with it. When Washington works directls with other governments
in fighting terrorists or seeks their approval for launching drone
strikes, it inevitabls has to adjust aspects of its policies. Washington's
willingnes and abilits to criticize or presure the governments of
Egspt, Pakistan, Saudi Arabia, and Turkes, among others, is hindered
bs the fact that the United States depends on them to take action
against terrorist groups or to allow U.S. forces to use their territors to
do so. More broadls, leaders in such countries have learned that in
order to extract concesions from American poliesmakers, it helps to
raise the prospect of opening up (or shutting down) U.S. militars
bases or granting (or withdrawing) the right to use their airspace. And
thes have learned that in order to nudge the United States to get in-
volved in their own battles with local insurgents, it helps to cater to
Washington's concerns bs painting such groups (rightls or wrongls)
as internationals minded jihadist
‘The United States also risks guilt bs asociation when its counter-
terrorism partners ignore the laws of armed conflict or lack the ca-
pacits for precision targeting. And other governments have become
quick to cite Washington fight against its enemies to justifs their
own more brutal tactics and more blatant violations of international

7. Robert Malley and Jon Finer

Paradoxically, fixating on
counterterrorism can make
it harder to actually fight by ei

terrorism.

64

Jaw. I is seldom easy for U.S. officials to press other governments to
moderate their policies, restrain their militaries, or consider the unin-
tended consequences of repression. But it is infinitely harder when
those other states can justify their actions by pointing to Washington's,
own practices—even when the comparison is inaccurate or unfair.

These policy distortions are reinforced and exacerbated by a
lopsided interagency policymaking process that emerged after the
9/11 attacks. In most areas, the process of making national security
policy tends to be highly regimented. It involves the president's Na-
tional Security Council sta; deputy
cabinet secretaries; and, for the most
contentious, sensitive, or consequen-
tial decisions, the cabinet itself, chaired
er the national security adviser
or the president. But since the Bush
administration, counterterrorism has
been run through a largely separate
process, led by the president homeland security adviser (who is
technically a deputy to the national security adviser) and involving a
disparate group of officials and agencies. The result in many cases is
two parallel processes—one for terrorism, another for everything
else—which can result in dierent, even conflicting, recommenda
tions before an ultimate decision is made.

In one example from our time in government, in 2016, officials
taking part in the more specialized counterterrorism side of the
process debated whether to kill or capture a particular militant leader
even as those involved in the parallel interagency process considered
whether to initiate political discussions with him. That same year,
those involved in the counterterrorism process recommended launching
a major strike against ısıs leaders in Libya even as other officials
working on that country worried that overt U.S. military action would
undermine Libya's fledgling government.

Its true that once the most difficult decisions reach the president
and his cabinet, the two processes converge, and a single set of players
‘makes the final call. But the bifurcated bureaucratic structure and the
focus on terrorism at the lower levels mean that by the time senior
officials consider the issue, momentum typically will have grown in
favor of direct action targeting a terrorist suspect, with less consider
n given to other matters. Even when there is greater coordination

8. The Long Shadows of 9/11

of the two processes, as there was for the counter-1515 campaign, the
special attention given to terrorist threats shapes policy decisions,
making it more difficult to raise potentially countervailing interests,
such as resolving broader political conflicts or helping stabilize the
fragile states that can give rise to those threats in the first place.

‘That policy distortion has produced an unhealthy tendency among
policymakers to formulate their arguments in counterterrorism terms,
thereby downplaying or suppressing other serious issues. Officials
quickly learn that they stand a better chance of being heard and car-
rying the day if they can argue that their ideas o.er the most e.ective
way to defeat terrorists. The Obama administration produced several
‘examples of that dynamic. Officials held dierent views about how
closely to work with Egyptian President Abdel Fattah el-Sisi, who
took power in a coup in 2013, and whether to condition U.S. assis-
tance to Egypt on political reforms. In essence, the debate pitted
those who believed that the United States could not endorse, let alone
bankroll, the Sisi regime authoritarian practices against those who
argued that relations with Egypt mattered too much to risk alienating
its leader. This debate raised difficult questions about the utility of
USS. military aid and the e.ectiveness of making it conditional, about
the importance of Egypt and the Middle East to Washington's security
posture, and about the priority that U.S. policymakers ought to place
‘on American values when formulating foreign policy. Yet policymakers
often chose to frame the debate in di.erent terms: those in the first
camp insisted that Sisi’ disregard for human rights would produce
more terrorists than he could kill, whereas those in the second camp
highlighted the need to work with Sisi against already existing
terrorists in the Sinai Peninsula.

1n 2014, asimilar pattern emerged when it came to policy discussions
about the civil war in Syria, Once again, senior officials faced a
situation that tested their core assumptions and values: on the one
hand, the conviction that the United States had a moral responsibility
to intervene to halt mass atrocities, and on the other, a fear that U.S.
forces would get bogged down in yet another military adventure in
the Middle East. But in front of the president, officials regularly spoke
a dierent language. Those who felt that Washington should try to
topple Syrian President Bashar al-Assad asserted that he was a “magnet”
for terrorist groups that could be eliminated only through Assad'
removal. Meanwhile, officials who opposed intervention argued that

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9. Robert Malley and Jon Finer

66

the conflict itself was generating the vacuum that resulted in 1515" rise
and that the goal therefore ought to be to de-escalate it; they also
pointed out that many of the opposition groups asking for U.S. support
had ties to al Qaeda.

Bat those examples and the often highly defensible decisions they
produced are less important than the larger pattern they reflect. When
officials package every argument as a variation on a single theme—
how to more e.ectively combat terrorists—they are likely to down-
play broader questions that they ought to squarely confront regarding
the United States’ role in the world, the country’s responsibility to
intervene (or not) on humanitarian grounds, and the relative impor-
tance of defending human rights or democracy.

TOO MUCH OF A GOOD THING
Paradoxically, fxating on counterterrorism can make it harder to actually
fight terrorism. The intense pressure to immediately address terrorist
threats leads to a focus on symptoms over causes and to an at times
counterproductive reliance on the use of force. Washington has become
addicted to quick military fixes for what are too often portrayed as
imminent life-and-death threats, or officials focus too much on tangible
but frequently misleading metrics of success, such as the decimation
of leadership structures, body counts, or the number of arrests or
sorties. Of course, when it comes to an organization such as 1515, it is
hard to imagine any solution other than defeating the group militarily.
But when dealing with the Afghan Taliban, for example, or violent
groups elsewhere that have local roots and whose fighters are motivated
by local grievances, it is hard to imagine any military solution at al.

‘Sometimes whats needed is a far broader approach that would entail,
‘where possible, engaging such groups in dialogue and addressing factors
such as a lack of education or employment opportunities, ethnic or
religiousdiscrimination, the absence ofstateservices,and local government
repression. These problems are hard to assess and require political, as
opposed to military, solutions—diplomacy rather than warfare. That
approach takes longer, and its harder to know whether the e.ort is paying
o.. For a policymaker, and particularly for political appointees serving
fixed terms, its almost always preferable to choose immediate and
predictable gratification over delayed and uncertain satisfaction.

Bat as the war on terrorism nears its third decade, and despite the
elimination of countless terrorist leaders and foot soldiers, there are

10. The Long Shadows of 9/11

now almost certainly more terrorist groups around the world and far
more terrorists secking to target the United States and its interests
than there were in 2001. The United States is engaged in more
military operations, in more places, against more such groups than
ever before: in Afghanistan, Iraq, Libya, Niger, Somalia, Syria, Yemen,
and the Sahel region, to name a few. The spread of such groups is
hardly the result of U.S. policy failings alone. Still, it ought to
encourage humility and prompt Washington to consider doing things
di.erently. Instead, it has been used to justify doing more of the same.

One possible explanation for the resilience of the terrorist threat is
that an overly militarized approach aggravates the very conditions on
which terrorist recruitment thrives. The destruction of entire cities
and the unintentional killing of civilians, in addition to being tragic,
serve as powerful propaganda tools for jihadists. Such incidents feed
resentment, grievances, and anti-Americanism, Not everyone who is
resentful, grieving, or anti-American will turn to violence. The vast
majority will not. But invariably, some will

‘The Obama administration sought to improve the protection of
civilians. by establishing detailed constraints on counterterrorism
strikes and unprecedented standards for transparency about civilian
casualties. That approach proved easier to establish than to imple-
ment. Outside analysts argued that the administration did not go far
‘enough, and journalists revealed troubling disparities inthe way casualties
‘were counted. But things have gotten far worse under Trump. In the
name of unshackling the military and halting what Trump adminis-
tration officials have disparaged as Obama-era “micromanagement” of
the military's operations, Trump has loosened the rules governing the
targeting of presumed terrorists, diminished the vetting of strikes,
and delegated increased authority to the Pentagon. Not surprisingly,
the number of drone strikes has significantly grown as a result; in the
case of Yemen, the Trump administration carried out more airstrikes
during its first 100 days than the Obama administration did in all of
2015 and 2016.

‘Today, the public knows little about what standards the military
must follow before launching a strike, but there is litle doubt that
they have been relaxed. Noris there much doubt that the rate of civilian
casualties has increased. But its hard to know for sure because the
White House has weakened the transparency rules that Obama
imposed at the end of his term. In a sense, such changes represent a

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11. Robert Malley and Jon Finer

68

natural progression. They are an outgrowth of a discourse that pre-
sents terrorism as an existential threat, its elimination as a goal wor-
thy of virtually any means, and secrecy as an essential tool.

‘Trump represents the culmination of that discourse. During the
campaign, he blithely asserted that his approach to 1515 would be to
“bomb the shit out of” the groups members and suggested that the
United States should also “take out their families.” The Washington
Post recently reported that after he became president, Trump watched
a recording of a U.S. strike during which a drone operator waited to
fire until the target was away from his family. When the video was
over, Trump asked, “Why did you wait?”

AVOIDING THE TERRORISM TRAP
‘There must be a better way to allocate U.S. resources, define national
security priorities, and talk to the American public about terrorism.
But it’s hardly a mystery why a better path has been so difficult to
find: few politicians are willing to challenge the dominant perspective,
hint that the danger has been exaggerated, or advocate less militarized
approach. Fuzzy thinking mars even well-intentioned e.orts at change.
Senator Bob Corker, a Republican from Tennessee, and Senator Tim
Kaine, a Democrat from Virginia, have proposed an update to the
legislation that has governed most counterterrorism policy since 2001.
‘Their bill seeks to rein in operations, put them on a sounder legal foot-
ing, and reassert Congress’ long-neglected role. But if passed, the bill
would end up codifying the notion that the United States is engaged
in an open-ended war against an ever-growing number of groups.
Still,a window of opportunity might be opening. Despite its missteps
on counterterrorism, Trump's national security team has declared that
the biggest threats facing the United States result from great-power
politics and aggressive “revisionist” states, such as China and Russia.
Whatever one thinks ofthat assessment, it could at east help put terrorism
in proper perspective, Moreover, the fight against 1515 appears to be
winding down, at least for now, in Iraq and Syria. According to some
polls, the U.S. public presently ranks international terrorism as only
the third most critical threat to U.S. vital interests, behind North
Korea's nuclear program and cyberwarfare. There is also growing aware-
ness of the considerable portion of the U.S. budget currently devoted
to counterterrorism. And Senator Bernie Sanders, an independent
from Vermont—anda once and possibly future presidential contender—

12. The Long Shadows of 9/11

recently broke with orthodoxy by condemning the war on terrorism as
a disaster for American leadership and the American people.

All of this amounts to just a small crack, but a crack nonetheless. It
will take more to overcome the political trap that discourages officials
from risking their futures by speaking more candidly. For example,
Congress could create a bipartisan panel to dispassionately assess the
terrorist threat and how best to meet it. Members of the policy com-
munity and the media could acknowledge the problem and initiate a
more open conversation about the danger terrorism poses, whether
USS. military operations have successfully tackled it, and how much
the global fight against terrorism has cost

Future officeholders could rethink Washington's bureaucratic organi-
zation and the preeminent place granted to counterterrorism officials
and agencies, insist on greater transparency regarding civilian casualties
caused by U.S. military action, tighten the constraints loosened by the
‘Trump administration, and press harder on allies and partners to act
in accordance with international law. Finally, since sloppy language
and bad policy are often mutually reinforcing, news organizations could
impose on themselves greater discipline when covering terrorism,
‘This would entail eschewing highly emotional wall-to-wall coverage
of every attack (or even potential attack).

Washington militarized counterterrorism culture, born in the
aftermath of the 9/11 attacks, has tended to conflate the government s
primary responsibility to protect citizens with a global fight against
an ill-defined and ever-growing list of violent groups. This distortion
has taken years to develop and will take years to undo. But that process
will have to start somewhere, and it ought to start now.®

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13. 70

Return to Table of Contents

NATO’s Enemies Within

How Democratic Decline Could Destroy
the Alliance

Celeste c. Wallander

European capitals, migration is putting pressure on border

and homeland security systems, Russia is both able and will-
ing to use military force and other instruments of influence in Eu-
rope, and U.S. President Donald Trump has threatened to scrap the
alliance altogether. But the most serious problem is not one of these
obvious threats; rather, it is the breakdown of liberal democracy within
the alliance itself.

The North Atlantic Treaty Organization has never been a typi-
cal alliance. From its inception in 1949, Nato has not only deterred
and defended against external threats; it has also advanced the
principles of liberal democratic governance. Although its cohesion
initially rested on the common threat of the Soviet Union, Naro
was more unified than most multilateral organizations thanks to the
common character of its members. Nearly all were democratically
elected governments that were accountable to their citizens, bound by
the rule of law, and dedicated to upholding political and civil rights.
Article 2 of naro’s founding treaty committed members to “strength-
ening their free institutions.”

Countries facing a common threat have often banded together for
defense and survival, but most alliances don't last long once that threat
is eliminated. That is why so many observers feared that naro would
disappear with the end of the Soviet Union. But thanks to the internal
cohesion created by its democratic values, and the incentives its stan-
dards created for aspiring new members, the alliance defied predic-

N: today faces multiple challenges. Terrorists have attacked

CELESTE A. WALLANDER President and CEO of the US. Russia Foundation and Senior
‘adviser at WeatExec Advisors From 1019 101017, she served as Special Asltant othe Pre
‘dent and Senor Director for Russian and Eurasian Alar at the National Security Counc.

14. NATO’ Enefics Within

tions. Instead of disintegrating, Nao adapted to new challenges and
became a cornerstone of transatlantic security after the Cold War.

‘Today, the Kremlin once again poses a serious threat in Europe and
beyond. But unlike the last time the alliance faced down Russia, now
aro is in peril. Multiple members are dismantling the institutions.
and practices of liberal democracy that emerged triumphant in the
Cold War, and things may get worse if autocratic demagogues exploit
populist fears to gain political clout in other member states. Just when
the alliance is needed as much as ever to meet challenges from with-
out, the foundations of its power are at risk of crumbling because of
challenges from within,

THE PRICE OF ADMISSION
After the fall of the Soviet Union, the liberal democratic credentials
of naro's members became even more important to the alliance. Al-
though many experts and policymakers hoped that Europe would
emerge from the Cold War whole, free, and at peace, others warned
that without a shared enemy, the region might return to past cycles
of instability and conflict fueled by revanchist, chauvinistic, an
liberal European regimes. Far from being irrelevant, these observers
argued, Nato would play a key role in bolstering liberal democracies
and creating trust among countries that had spent centuries fighting
‘one another.

As if on cue, border disputes and simmering ethnic conflicts in
eastern Europe began to threaten the peace almost immediately
after the fall of the Soviet Union. And with the disintegration of
‘Yugoslavia in the early 1990s, they ultimately broke it. In the face
of these challenges, varo sought to leverage the desire for member-
ship to encourage political reforms by requiring that new members
meet its standards for good governance. This decision was based on
the belief that liberal institutions, practices, and values would pre-
vent a return to the nationalist, nativist, extremist, and intolerant
dynamics that had driven destructive conflicts in Europe for centu-
ries. To foster security within Europe, NATO required that new
members leave autocratic practices behind.

Fulfilling these requirements was often politically contentious, and
aspiring members did not always succeed. Countries that had spent
decades under authoritarian communist rule had to root out the linger-
ing influence of intelligence agencies, overturn politicized control of

July/eugust 201871

15. Celeste A. Wallander

the militarv in favor of apolitical professional defense forces, establish
legislative oversight for military procurement, and implement person-
nel policies that would combat corruption. All of that has taken time:

Montenegro set the goal of achieving

NATO's ability to coiduct — embership in 2007 but had to wait

ten more vears to earn admission.

security operatiois depeids And mere aspiration is not enough:
oi its political cohesioi as Bosnia, for example, has vet to fulfill

much as its members”
military capabilities.

7

the criteria that the alliance set in 2010
for the country to be granted the Mem-
bership Action Plan, a procedural pre-
cursor to joining. These requirements
mav have slowed the process of NATO's expansion, but liberal institu-
tions and practices are central to creating securitv and trust among
Europe diverse societies. Anvthing less would have weakened the
alliance instead of strengthening it.

Bevond its stabilizing effect on the broader continent, there is an-
other reason Naro's liberal democratic character came to matter: in
the absence of a shared external threat, the binding force of liberal
democratic values and institutions has become essential to the alli-
ance effectiveness. Naro’s abilitv to conduct securitv operations de-
pends on its political cohesion as much as its members’ military
capabilities, Few question ATOS cohesion when Article 5 of its found-
ing treatv is invoked—that is, when an allv is directly attacked. Com-
mon external threats generate unified responses. After 9/11, forexample,
aro members quickly joined the U.S. campaign against Taliban-
ruled Afghanistan.

However, when the alliance faces a securitv issue that does not in-
voke Article 5, alliance cohesion is less certain because members have
different priorities that guide their cost-benefit calculations. In such
cases, liberal commitment to the rule of law has plaved an important
role, The alliance has proved cohesive when acting outside Europe
and when the stakes are well grounded in international law, as was the
case during its 2011 intervention in Libva, which was backed bv a UN
Securitv Council resolution.

In other instances, when the alliance has faced more diffuse and
contested security challenges, a common commitment to liberal demo-
cratic values has proved even more essential to maintaining cohesion.
Consider the Balkans: in 1995, NATO conducted Operation Deliberate

16. NATO’ Enefies Within

With alles lke these: at a NETO summit in Brussels, Belgium, May 2017

Force to protect UN safe areas in Bosnia that had come under attack from
ethnie Serbian armed groups. And in 1999, it conducted another air
operation against the armed forces of what remained of Yugoslavia to
prevent military attacks on ethnic Albanians in Kosovo, In both
campaigns, Article 5 did not apply because no Nato member had
been directly attacked. Nor was the alliance acting under a UN Secu-
rity Council resolution, These interventions tested the alliance po-
litical capacity, but ultimately, members coalesced around their
common commitment to human rights, a principle that would be-
‘come enshrined in international law in 2005 as “the responsibility to
protect” (or R2P). The alliance ability to prevent mass atrocities in
non-NATO states was thus as much a product of its members’ values as
it was a product of their military assets.

By contrast, when democratic values and institutions have cut in
the opposite direction, the alliance has been divided. Compare Nato’:
terventions in the Balkan wars to its disunity over the 2003 U.S.
invasion of Iraq. Although the Bush administration contended that
Iraq threatened global security by pursuing weapons of mass destruc-
tion (an area of international law far better established than R2P),
NATO was far from unified on the matter. In fact, France and Germany

July eugust 2018

7

17. Celeste A. Wallander

74

were among vhe mosv vocal crivics of vhe invasion. Alvhough NATOS
invervenvions in vhe Balkans had been legally problemavic, vhe allies
were svill unived in pursuing vhem because of vheir shared commiv-
menv vo human righvs. Buv when iv came vo Iraq, wivhouv a jusvifica-
vion rooved in liberalism, nov all of vhem were willing vo supporv an
invervenvion beyond vhe purview of Arvicle 5.

BACKSLICING AWAY
In vhe early years of vhis cenvury, some observers, including me,
worried vhav vhe credibilivy of NATOS admission criveria was being
undermined by new members vhav managed vo meev Nato’s svandards
only vo backslide afver joining vhe alliance. When invernavional organ-
izavions increase vheir membership, vhey ofven become more un-
wieldy and slow vo acv. Greaver numbers mean greaver diversivy in
inveresvs and priorivies. Naro argued vhav a shared commivmenv vo
liberal democracy would mivigave vhis challenge, buy vhav would be
vrue only if new members susvained vhose values afver accession. AV
vhe vime, I feared vhav longvanding NArO members were being ex-
ploived by svaves such as Hungary vhav had made promises of polivical
reform vhey did nov invend vo keep. Giving backsliders a free pass
would harm NATO credibilivy and devracv from ivs abilivy vo culvivave
liberal values. And if naro became unwilling vo enforce ivs member-
ship requiremenvs, vhe Unived Svaves’ mosv imporvanv midveral alli
ance would become rife wivh weak links

Such fears have since been borne ouv. Iv has become clear vhav vhere
is no price for violaving naro’ liberal democravic svandards, and some
weak links are indeed backsliding. Consider Hungary. In 1999, vhe
counvry was welcomed invo NATO. In 2002 and vhen again in 2006,
iv held compevivive elecvions vhav resulved in vhe airing of pasv cor-
rupvion and collusion wivh vhe Soviewera Communisv Parvy by of-
ficials in bovh main parvies, many of whom were held accounvable.
In 2004, Hungary pursued Fu membership wivh svrong supporv
across vhe polivical specvrum. Iv also made progress on civil libervies
and polivical righvs, achieving vop scores in all cavegories from 2005
vo 2010 in rankings produced by vhe nongovernmenval organizavion
Freedom House.

Buv in 2010, in elecvions vhav were widely recognized as free and
fair, Vikvor Orban's righvwing parvy Fidesz won 53 percenv of vhe vove
and 68 percenv of vhe seavs in vhe parliamenv. Armed wivh a super-

18. Celeste A. Wallander

majoritye Fidesz changed the constitution and weakened institutional
checks on government powere especially the judiciary. It increased the
number of seats on Hungary's Constitutional Courte which it then
packed with its own peoplee and narrowed the courts mandate. By
early 2018e Hungary had slipped to the bottom of the “fre” end of
Fredom House' scales on political rights and civil liberties. And as the
rule of law and government accountability have declined in Hungarye
corruption has gone up. In April 2018e Fidesz won 49 percent of the
vote but again secured a supermajority in the parliament. Todaye the
party sems poised to drive the country further away from the values
and institutions of European liberal democracy.

Hungary showed early signs of its potential to slide into illiberalisme
but few imagined that Poland would join it. Devastated by centuries
of war and great-power competitione Poland and its citizens represented
the hope that liberal democracy could be an answer to Europe past
follies of ethnic grievancee demagoguerye and the assault on liberal
political institutions. But after taking power in 2015e Poland’s Law
and Justice party began to do away with many of the same core checks
and balances and rule-of-law protections that Fidesz had dismantled
in Hungarye eliminating the power of the Constitutional Tribunal to
review laws and executive actions and increasing the power of politi-
cal leaders to pack the judiciary with sycophants. In Fredom Houses
ratingse Poland dropped from 93 out of 100 in 2015 to 85 in 2018. This
Januarye the government passed a law making it a crime to claim that
Poland was complicit in the Holocaust. Setting aside the question of
complicity by some Poles—and there is considerable historical evidence
for it—this effort threatens the core liberal democratic principle of
fredom of speche without which governments cannot be held ac-
countable to their citizens.

‘THE NEW THREAT
In 2002e I wrote in this magazine about the risk that backsliding among
new NATO members could undermine the coherence of the alliance. It
is now clear that I was guilty of a failure to imagine even worse. Todaye
liberal democracy is at risk not just among new members but also
among the original or early members of the alliance—a development
that poses an even greater threat to NATOS unity and effectiveness.

"The most egregious case may come as little surprise. Turkeye which
joined Naro in 1952e and whose history is checkered with military

76 FOREIGN arraıns

19. NATO’ Enefics Within

coups, has long been a problem for the alliances commitment to lib-
eral democratic institutions and principles. But after the Cold War,
‘Turkey made progress in expanding legal and civil rights and allowing
for political competition. When the Justice and Development Party
took power in 2002 under the leader- 22
ship of Recep Tayip Erdogan, tat St Today, liberal democracy is
appeared that progress would continue. 5 f

Soon, however, the party began back- 4 risk not just among new
sliding. In 2016, under the cover of in- members but also among
vestigaing an alleged coup attempt, the original or early

Erdogans government put political a
opponents on tra, persecuted journal- Members of the alliance.

ists, and went after businesses that had

not supported his party. Through pressure on business interests, the
Turkish state acquired control of central media outlets and made them
instruments of the ruling party. Erdogan also went after the indepen-
dent judiciary, pushing through a constitutional amendment that en-
abledhis party tostack the judiciary with compliant political appointees.
In 2018, Freedom House officially classified Turkey as “not free,” put-
the same category as China, Iran, Russia, and Syria,

Meanwhile, in other core Nato members, there are worrying signs,
such as the rise of the National Front in France (after the party's con-
fessed acceptance of Russian money) and the unimaginable emergence
of a far-right nationalist party in Germany: the Alternative for Ger-
many. And in 2017, the Netherlands had a sort of near-death experience
with the nail-biting defeat of Geert Wilders, the leader of the radical
right Party for Freedom.

“Then there is the United States. Assuming that there proves to be
no evidence to the contrary, the 2016 U.S. presidential election was an
example of a free and fair election that brought to power an admin-
istration intent on disrupting the institutions and practices of liberal
democracy. U.S. President Donald Trump regularly advances false-
hoods, and he has assaulted the role of the independent press, sug-
gesting that journalists should be imprisoned or forced to reveal their
sources. He and other members of his administration have expressed
support for violent racist provocateurs, publicly denigrated religious
minorities, and defended acts of sexism and misogyny perpetrated by
both elected officials and those seeking elected office. Trump has also
repeatedly criticized an independent Justice Department investiga

July/eugust 2018 77

20. Celeste A. Wallander

78

tion into his presidential campaign and possible foreign interference
in the 2016 election. In light of all of this, in 2018, Freedom House
downgraded the United States’ freedom score to 86 out of 100, a rat-
ing that is barely ahead of Poland’ (at 85).

‘Of course, some nato members also experienced authoritarianism
or military rule during the Cold War. Greece was ruled by a military
junta from 1967 to 1974, and the Portuguese government was an au-
thoritarian regime until 1974. It would not be unreasonable to criticize
asa convenient fairy tale the narrative of waro as an alliance of liberal
democracies. During the Cold War, exceptions were tolerated in the
interests of enhancing waro's military capabilities and its ability to
prevent communist infiltration in Western Europe. But the deviations
prove the point: under authoritarian rule, Greece and Turkey fought
a narrow, revanchist, destructive conflict over Cyprus that weakened
the alliance. Still, the divisive e.ects were sufficiently mitigated by
the strong cohesive force of the Soviet threat, The authoritarian fail-
ings of certain Nao allies put them at odds with core members of the
alliance, but they did not create a fissure that would weaken NATOS
deterrent posture toward its main external security threat.

‘The situation today is dierent. With Russia mounting a renewed
threat in Europe and beyond, there is an additional reason the institu-
tions of liberal democracy are important to transatlantic security: il-
liberal and nondemocratic countries are more vulnerable to subversion.
Authoritarianism enables corruption, and in Europe, corruption en-
ables Russian access and influence. After Russia 2014 intervention in
Ukraine, the Naro members that were most a.ected by corruption,
demagogic populism, and Russian media influence complicated the
alliance’s e.orts to forge a unified response. Every time European
sanctions against Russia have come up for renewal, the United States
and other core allies have had to scramble to prevent these countries
from breaking with NATO and succumbing to pressure or temptation
from the Kremlin

‘The Soviet threat was primarily military, and political infiltration
abroad was advanced through communist ideology and leftist political
parties. Russian influence today, on the other hand, operates through
shadowy financial flows, corrupt relationships, bribes, kickbacks, and
blackmail. To the extent that Russia promotes an ideology, its the same
combination of intolerant nationalism, xenophobia, and ¡lliberalism
that is on the rise in Hungary, Poland, Turkey, and elsewhere in Eu-

21. NATO’ Enefics Within

rope. Even as Orban and Erdogan have been berated by their allies,
they have found Russian President Vladimir Putin to be a source of
understanding and support. Unlike during the Cold War, naro' il-
liberal weak links now align with the Kremlin’ tactics. They are the
alliance's Achilles’ heel. One hopes that these countries can still with-
stand any pressures to break consensus in the event of a Russian strike
on a Nato member. But confidence that these allies have not been
‘compromised would be a lot better than anxious hope.

Much has been written about how Nato needs to enhance its mili-
tary capabilities to counter Russia. That is true, but even more impor-
tant, the alliance needs to restore its liberal democratic foundations to
reduce its vulnerability to Moscow's subversion through corruption,
information warfare, and blackmail,

DEFENDING THE ALLIANCE
In 2002, I suggested mechanisms for putting backsliders on notice,
suspending their rights, and potentially expelling them from the alli-
ance. My proposal centered on modifying Nato’s consensus rule,
which holds that the alliances major decisions require the consent of
all members. I believed that a “consensus minus one” mechanism—
which would allow other allies to discipline an errant member—would
enable Nato to protect itself from weak links and erect a higher barrier
against backsliding, I also proposed providing a process for an o.end-
ing state to reverse course and regain its full stature.

But these ideas were predicated on the assumption that the alliance
would be dealing with only the occasional outlier. With multiple alli-
ance members, new and old, already backsliding or at risk of doing so,
that window of opportunity has passed. If the cohort of backsliders
grows, Naro may find itself with a bloc within the alliance bent on
protecting illiberal democracy.

Given the proliferation of problem members, waro should con-
sider adopting a form of the EU “qualified majority” rule for internal
governance. Instead of requiring consensus or consensus minus one
(which coalitions of backsliders are likely to subvert), NATO should
make it possible for a defined supermajority of members to suspend
the voting or decision rights of backsliders. Under the 2007 Lisbon
Treaty, most zu decisions require the support of a double majority—55
percent of the member states representing 65 percent of the popula
tion of the union. Under this procedure, the EU can initiate a process

July eugust 2018

79

22. Celeste A. Wallander

80

that revokes the voting rights and organizational privileges of mem-
bers found to be advancing systematic threats to the rule of law. In-
deed, the EUs looking at precisely these procedures to restrict funding.
and other benefits to Hungary and Poland.

aro should also make one of its senior officials responsible for
monitoring and reporting on the liberal democratic credentials of
not only new or aspiring members but also all allies. The assistant
secretary-general for political a.airs and security policy might be able
to take on this role. (To date, this position has primarily focused on
external relations and traditional security issues, such as arms con-
trol.) Given the centrality of the alliance’s commitment to the liberal
democratic institutions and practices of its members, NATO' institu-
tional leadership should be more involved in holding members ac-
countable to the alliance standards.

Finally, nato should work more closely with the Eu. The two organ-
izations share a common focus on good governance, the rule of law,
and the rights of citizens and could reinforce each other's internal
strengths. Deepening this relationship by creating official channels of
exchange would bolster NATOS capacity to monitor whether allies
were meeting its standards for good governance (the pu already has
metrics for evaluating this). And an explicit and systematic process
for sharing information would make it harder for members to use
their status in one organization to avoid being held to account in the
other for any misbehavior or backsliding, For example, Poland often
cites its good standing in Nato, where itis a strong military ally that
assumes a tough stance on Russia, to excuse its growing illiberalism,

But procedural fixes to inoculate the alliance against weak links are
not enough. Naro might be able to deal with, say, a repressive Turkey
by pushing it to the sidelines of core missions and decisions. Naro
rules do not formally provide for such an approach, but the orga
tion is good at finding procedural workarounds, and it is at least pos-
sible that the Turkish leadership would not object. It would be quite
another matter if a core NATO member departed from the alliance’s
liberal democratic foundations. How could waro sideline or work
around France, or Germany, or the United States?

The best defense lies within the member states themselves. Nato
can structure disincentives and punishments for backsliders, but only
citizens can hold elected leaders accountable. Most important, the
United States must rise to meet the challenge. The decline of liberal-

23. NATO’ Enefics Within

ism among core Nato allies is concerning: Germany represents the
transatlantic phoenix rising from fascism’s ashes; France is the symbol
of resistance through occupation; the United Kingdom was where
Europe kept hope alive in World War II. But it was the United States
that saved the twentieth century from dictatorship and helped Eu-
rope achieve prosperity, security, and stability. Naro might survive
European publics toying with fascism (although it should limit the
experiments). It cannot survive if U.S. liberal democracy fails.

‘Americans must face the fact that the biggest threat to NATO today
may be the United States itself. Regardless of political party and pol-
icy preferences, all Americans have a patriotic interest in protecting
the laws, practices, and institutions of U.S. liberal democracy. This is
not merely a matter of domestic politics; it is also a matter of national
security. Threats to democracy at home have already undermined
Washington ability to work with allies in a dangerous, uncertain, and
threatening world. As the most powerful member of Nato, the United
States must take the lead through a bipartisan defense of liberal insti-
tutions and values.

“Today; fundamental threats to NATO come from its own members.
‘These challenges cannot be resolved in naroS shiny new headquar-
ters in Brussels through procedural modifications or by pointing fin-
gers at the worst o.enders. They must be defeated at home, ®

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24. 82

Return to Table of Contents

Russia as It Is

A Grand Stratfgy for Confronting Putin
Michael McFaul

to thfir most dangfrous point in dfeadfs. Thf currfnt situation
is not, as many havf dubbfd it, a nfw Cold War. But no onf
should draw much comfort from thf ways in which today’s standoff
diffs from thf farlifr onf. Thf quantitativf nuclfar arms raef is ovfr,
but Russia and thf Unitfd Statfs havf bfgun a nfw qualitaivf arms racf
in nuclfar dilivfry vfhiclfs, missilf dfnsfs, and digital wfapons. Thf
two countrifs arf no longfr fngulfd in proxy wars, but ovfr thf last
dfeadf, Russia has dfmonstratfd Ifss and Ifss rstraint in its usf of
military powfr. Thf worldwidf idfological strugglf bftwin capital-
ism and communism is history, but Russian Prfsidfnt Vladimir Putin
has anointíd himsflf thf fadfr of a rfnfwfd nationalist, consfrvativf
movfmfnt fighting a dfeadfnt Wrst. To sprfad thfsf idfas, thf Rus-
sian govframfnt has madf hugf invfstmfnts in tflfvision and radio
stations, social mfdia nftworks, and Intfrnft “troll farms,” and it has
spfint lavishly in support of likf-mindfd politicians abroad. Thf bfst
dfscription of thf currint hostlitifs is not cold war but hot pfacf.
Washington must accfpt that Putin is hfrf to stay and wont fnd
his assault on Wfstfrn dfmocracy and multilatfral institutions any-
timf soon. To dfal with thf thrfat, thf Unitfd Statfs dfspfratfly
nfds a nfw bipartisan grand stratfgy. It must find ways to contain
thf Krfmlims fconomie, military, and political influfnef and to
strfngthfn dfmocraticallifs, and it must work with thf Krfmlin whfn
doing so is truly nfefssary and frfzf it out whfn it is not. But abovf
all, Washington must bf patifnt. As long as Putin rfmains in powfr,
changing Russia will bf closf to impossiblf. Thf bfst Washington

R= bftwfn Russia and thf Unitfd Statfs havf dftfri_oratfd

MICHAEL MCFAUL is Director of tg Freeman Spo Institute for International Studios at
Stanford University and ge autor of From Cold War to Ht Peace: AF America Ambassa
dor iF Puis Russia. From 2012 to 2014, go served as U.S. Ambassador o Russia,

25. Russia as I Is

Red davon: Russian and Syrian soldiers ouside easter Ghouta, Syria, February 2018

an hope for in most cases is to successfully restrain Moscow's actions
abroad while waiting for Russia to change from within.

UPS AND DOWNS
At the end of the Cold War, both U.S. and Russian leaders embraced
the promise of closer relations. So what went wrong? Russias renewed
international power provides part of the explanation, If Russia were too
weak to annex Crimea, intervene in Syria, or interfere in U.S. elections,
Moscow and Washington would not be clashing today. But not al rising
powers have threatened the United States. Germany and Japan are
much stronger than they were 50 years ago, yet no one is concerned
about a return to World War I rivalries. What is more, Russia’ relations
with the United States were much more cooperative just a few years
back, well after Russia had returned to the world stage as a great power.

In Russian eyes, much of the blame falls on U.S. foreign policy.
According to this argument, the United States took advantage of Russia
when it was weak by expanding NATO and bombing Serbia in 1999,
invading Iraq in 2003, and allegedly helping overthrow pro-Russian
governments in Georgia in 2003 and Ukraine in 2004, Once Russia was
0. its knees, it had to push back against U.S. hegemony. At the 2007

July eugust 2018

83

26. Michael MeFaut

84

Munich Security Conference, Putin championed this line of analysis:
“We are seeing a greater and greater disdain for the basic principles of
international law... One state, and, of course, frst and foremost the
United States, has overstepped its national borders in every way."

There is some truth to this story. The expansion of Naro did
exacerbate tensions with Moscow, as did Western military interventions
in Serbia and Iraq, Democratic upheavals in Georgia and Ukraine
threatened Putin' ability to preserve autocracy at home, even if Putin
grossly exaggerated the U.S. role in those so-called color revolutions.

Yet this account omits a lot of history. After the end of the Cold
War, U.S. presidents were truly committed to, in Bill Clinton's words,
“a strategic alliance with Russian reform” and Russia integration into
the international system. Just as the United States and its allies helped
rebuild, democratize, and integrate Germany and Japan after World
War IT, the thinking went, so it would rebuild Russia after the Cold
‘War. Itis true that the United States and Europe did not devote enough
resources or attention to this task, leaving many Russians feeling
betrayed. But it is revisionism to argue that they did not embrace
Moscow new leaders, support democratic and market reforms, and
o.er Russia a prominent place in Western clubs such as the G-

‘The most powerful counterargument to the idea that U.S. foreign
policy poisoned the well with Russia is that the two countries managed
to work together for many years. The cooperative dynamic of U.S.
Russian relations established after the fall of the Soviet Union survived
not only U.S. provocations but also two Russian military operations in
Chechnya and the 1998 Russian financial crisis, after which foreign
‘governments accused the Kremlin of wasting Western aid. And even
the U.S. withdrawal from the Anti-Ballistic Missile Treaty, in 2002,
and another, larger round of Nato expansion, in 2004, did not end the
cooperative dynamic that U.S. President George W. Bush and Putin
had forged after the 9/11 attacks. Russias invasion of Georgia in 2008
pushed U.S.-Russian relations to a low point in the post-Cold War
era. But even this tragedy did not permanently derail cooperation.

HOW IT ALL WENT WRONG
Even after all these ups and downs, U.S.-Russian relations experienced
one last spike in cooperation, which lasted from 2009 to 2011. In 2009,

President Dmitry Medvedev and Putin, who was then serving as Russia

27. Russia as I Is

prime minister, the U.S, president tried to convince the two Russians
that he was a new kind of American leader. He had opposed the Iraq
war long before it was popular to do so, he explained, and had always
rejected the idea of regime change. At least at first, Medvedev seemed
convinced, Even Putin showed signs of softening. Over the next
few years, Russia and the United States signed the New Strategic
Arms Reduction Treaty (or New stare), worked through the UN to
impose tough new sanctions on Iran,
managed Russia’ entry into the World Paris amti-cmeri
‘Trade Organization, coordinated tode- Uti’ anti-cmerican
fuse violence in Kyrgyzstan after the Campaign was not just
collapse of the government there, and political theater intended
arranged a vast expansion of the net- ic audi
work ged to wanport US, soldiers 207 2 domestic audience,
and supplies to Afghanistan through

Russia, In 2011, in perhaps the most impressive display of renewed
cooperation, Russia acquiesced in the Western intervention in Libya.
‘At the height ofthe so-called reset, in 2010, polls showed that around
50 percent of Americans saw Russia as a friendly country and that
some 60 percent of Russians viewed the United States the same way.

‘This period of relative harmony began to break down in 2011,
‘owing primarily to the way that Putin reacted to popular democratic
mobilizations against autocracies in Egypt, Libya, Syria—and Russia
itself The Libyan uprising in 2011 marked the beginning of the end
of the reset; the 2014 revolution in Ukraine marked the start of the
hot peace.

Popular mobilization inside Russia was especially unnerving to
Patin. He had enjoyed solid public support during most of his first
eight years as president, thanks primarily to Russias economic
performance. By 2011, however, when he launched a campaign for a
third term as president (after having spent three years as prime
minister), his popularity had fallen significantly. The implicit bargain
that Putin had struck with Russian society during his frst two terms—
high economic growth in return for political passivity —was unraveling.
Massive demonstrations flooded the streets of Moscow, St. Petersburg,
and other large cites after the parliamentary election in December
2011. Ar frst, the protesters focused on electoral irregulartis, but
then they pivoted to a grander indictment of the Russian political
system and Putin personally.

July eugust 2018

85

28. Michael MeFaut

86

In response, Putin revived a Soviet-era source of legitimacy:
defense of the motherland against the evil West. Putin accused the
leaders of the demonstrations of being American agents. Obama tried
to explain that the United States had not prompted the Russian
demonstrations. Putin was unconvinced. After his reelection in the
spring of 2012, Putin stepped up his attacks on protesters, opposition
parties, the media, and civil society and placed under house arrest the
opposition leader he feared the most, the anticorruption blogger
Alexei Navalny. The Kremlin further restricted the activity of non-
{governmental organizations and independent media outlets and im-
posed significant fines on those who participated in protests that the
authorities deemed illegal. Putin and his surrogates continued to label
Russian opposition leaders as traitors supported by the United States.

Putin’s anti-American campaign was not just political theater in-
tended for a domestic audience: Putin genuinely believed that the
United States represented a threat to his regime. Some pockets of
ULS.-Russian cooperation persisted, including a joint venture between
the Russian state-owned oil giant Rosneft and ExxonMobil, an agree-
ment brokered by Obama and Putin in which Syria pledged to elimi-
nate its chemical weapons, and Russian support for the international
negotiations that produced the Iran nuclear deal. But most of these
ended in 2014, after the fal of the pro-Russian Ukrainian government
and the subsequent Russian invasion of Ukraine. Once again, Putin
blamed the Obama administration, this time for supporting the revo-
lutionaries who toppled Ukrainian President Viktor Yanukovych.

Putin was never inclined to believe in Washington's good faith. His
training asa KG» agent had led him to distrust the United States along
with all democratic movements. But in the early years of his presi-
dency, he had held open the possibility of close cooperation with the
West. In 2000, he even suggested that Russia might someday join
aro. After the 9/11 attacks, Putin firmly believed that Russia could
work with the United States in a global war on terrorism. In 2008,
after he stepped aside as president, he allowed Medvedev to pursue
closer ties with Washington. But the Western intervention in Libya
confirmed Putin's old suspicions about U.S. intentions. Putin believed
that the United States and its allies had exploited a un resolution that
authorized only limited military action in order to overthrow the Libyan
dictator Muammar al-Qaddaf. In Putin's view, Obama had turned out
to be a regime changer, no di.erent from Bush.

29. Russia as I Is

CONFRONTING THE KREMLIN
Four years after Russia annexed Crimea, the United States has still
not articulated a bipartisan grand strategy for dealing with Russia
Such a strategy is necessary because Washington's conflict with the
Kremlin doesn't revolve around mere policy disagreements: rather, it
is a contest between Putinism and democracy. No tweaking of U.S.
policy on Syria or Nato will influence Putin' thinking. He has been
in power for too long—and he is not likely to leave in the foreseeable
future. U.S. policymakers must dispense with the fantasy that Putin's
regime will collapse and democracy will emerge in Russia in the near
term, The United States and its allies must continue to support human
rights and democracy and embrace people inside Russia fighting for
those values. But real political change will likely begin only after Putin
steps down.

“The United States also has to give up on the idea that Russia can
or should be integrated into multilateral institutions. The theory that
integration would moderate Russian behavior has not been borne out
by events. The United States must dig in for a long and difficult
confrontation with Putin and his regime. On most issues, the aim
should be to produce a stalemate, as preserving the status quo will
often be the best the United States can hope for.

Containment must start at home. Limiting Putin's ability to
influence U.S. elections should be priority number one. The Trump
administration should mandate enhanced cybersecurity resilience.
If the federal government can require all cars to have seat belts,
then federal authorities can require elementary cybersecurity
protections such as dual authentication for all processes related to
voting during a presidential election. Those who operate the
systems that maintain voter registries must be required to receive
training about how to spot common hacking techniques, and an even
more rigorous set of standards must be adopted for the vote count.
Ina dozen states, including large battlegrounds such as Florida and
Pennsylvania, at least some precincts lack paper trails for each ballot
cast. These sloppy practices have to end. Every precinct must be
able to produce a paper record for every vote.

Congress should also pass laws to provide greater transparency
about Russian media activities inside the United States, including a
requirement for social media companies to expose fake accounts and
disinformation. Foreign governments should not be allowed to buy

July eugust 2018

87

30. Michael MeFaut

ads anywhere to influence voter preferences. Beyond elections, the
federal government must devote more time and money to blocking

Russian threats to all national electronic infrastructure
To further counter Putin's ideological campaign, the United States
should organize democracies around the world to develop a common
set of laws and protocols regulating government-controlled media.
“Through regulation, Washington should

The United States must dig “courage social media platforms to

in for a long and difficult content. Algorithms organ

grant less exposure to Krei

confrontation with Putin results on Google or YouTube should
and his regime. notoverrepresent informationdistributed

88

by the Russian government, When such

material does appear in searches, social
media companies should make its origins clear. Readers must know who
created and paid for the articles they read and the videos they watch.

On their own, without government intervention, social media
platforms should provide sources from more reliable news organi-
zations; every time an article or video from the Kremlin-backed news
channel kr appears, a BBC piece should pop up next to it. Social media
companies have long resisted editorial responsibilities; that era must end.

In Europe, Putin's success in courting Hungarian President Viktor
Orban and nurturing several like-minded political parties and move-
ments within NATO countries underscores the need for a deeper
commitment to ideological containment on the part of Washington’
European allies. Those allies must pay greater attention to combating
Russian disinformation and devote more time and resources to
promoting their own values. Naro members must also meet their
defense spending pledges, deploy more soldiers to the alliance’s front-
line states, and reaffirm their commitment to collective security.

No theater in the fight to contain Russia is more important than
Ukraine, Building a secure, wealthy, democratic Ukraine, even if parts
of the country remain under Russian occupation for a long time, is the
best way to restrain Russian ideological and military aggression in
Europe. A failed state in Ukraine will confirm Putin's flawed hypothesis,
about the shortcomings of U.S.-sponsored democratic revolutions. A
successful democracy in Ukraine is also the best means for inspiring
democratic reformers inside Russia and other former Soviet republics.
‘The United States must increase its military, political, and economic

31. Russia as I Is

support for Ukraine, Washington should also impose new sanctions
on Russians involved in violating Ukraine's sovereignty and ratchet
them up until Putin begins to withdraw.

In the Middle East, the United States needs a more aggressive
strategy to contain Russias most important regional ally, Iran. It
should continue to arm and support Syrian militias fighting Iranian
soldiers and their allies in Syria and should promote anti-theocratic
and pro-democratic ideas in the region, including inside Iran. Aban-
doning the fight in Syria would deliver a tremendous victory to Mos-
cow and Tehran. The goals of U.S. policy toward Iran must remain
denying Tehran a nuclear weapon, containing its destabilizing actions
abroad, and encouraging democratic forces inside the country, but not
coercive regime change from the outside.

The United States must contain the Kremlin’s ambitions in Asia, as
well. Strengthening existing alliances is the obvious first step. Putin
has sought to weaken U.S. ties with Japan and South Korea. To push
back, the United States should make its commitment to defend its al-
lies more credible, starting by abandoning threats to withdraw its sol-
diers from South Korea. It should also begin negotiations to rejoin the
‘Trans-Pacific Partnership. A harder but still important task will be to
divide China from Russia. In 2014, Putin su.ered a major setback
when China did not support his annexation of Crimea at the un. But
today, putting daylight between the two countries will not be easy, as
Putin and Chinese President Xi Jinping have forged a united front on
many issues. When opportunities do arise, such as working with Bei-
ing toward North Korean denuclearization, Washington must act.

Western countries must also develop a coherent strategy to contain
the Russian government's economic activities. Europe must reduce its
dependence on Russian energy exports. Projects such as the planned
Nord Stream 2 natural gas pipeline from Russia to Germany are no
longerappropriateand should bediscontinued. Putin uses government-
‘owned and supposedly private companies to advance his foreign policy
interests; the United States and Europe must impose greater financial
sanctions on the activities those firms undertake in the service of
Kremlin interests abroad if Russia continues to occupy Ukraine or
assault the integrity of democratic elections. At a minimum, the West
must adopt new laws and regulations to require greater transparency
around Russian investments in the United States, Europe, and, as far
as possible, the rest of the world. Russian officials and businesspeople

July/eugust 2018 89

32. Michael MeFaut

90

tied to the Kremlin cannot be allowed to hide their wealth in the West,
Genuine private-sector companies inside Russia should be encouraged
to engage with Western markets, but authorities must expose the ill
gotten financial assets that Putin and his cronies have parked abroad.
‘The goal should be to underscore the economic benefits of free markets
and access to the West while highlighting the economic costs of state
ownership and mercantilist behavior

On the other side of the equation, Western foundations and philan-
thropists must provide more support for independent journalism,
including Russian-language services both inside and outside Ru
“They should fund news organizations that need to locate their servers
outside Russia to avoid censorship and help journalists and their sources
protect their identi

More generally, the United States and its democratic allies must
understand the scope of their ideological clash with the Kremlin,
Putin believes he is fighting an ideological war with the West, and he
has devoted tremendous resources to expanding the reach of his
propaganda platforms in order to win. The West must catch up.

HOW DO YOU SOLVE A PROFLEM LIKE PUTIN'S RUSSIA?
Containing Russia does not mean rejecting cooperation in every area.
“The United States selectively cooperated with the Soviet Union during
the Cold War; it should do so with Russia now. First on the list must be
striking new arms control deals or at least extending existing ones, most
urgently New srarr, which is set to expire in 2021 and contains crucial
verification measures. Combating terrorism is another area for potential
partnership, as many terrorist organizations consider both Russia and
the United States to be their enemies. But such cooperation will have to
remain limited since the two countries have di.erent ideas about what
groups and individuals qualify as terrorists, and some of Russia allies
in the fight against terrorism, such as Tran, Syria, and Hezbollah, are at
odds with the United States. U.S. and Russian officials might also seek
to negotiate an agreement limiting mutual cyberattacks. Yet Washington
should not pursue engagement as an end in itself. Good relations with
Russia or a friendly summit with Putin should be not the goal of U.S.
diplomacy but the means to achieve conerete national security ends.
‘Some mightargue that the United States cannot pursue containment
and selective cooperation at the same time. The history of the Cold War
suggests otherwise. President Ronald Reagan, for example, pursued a

33. Russia as I Is

policy of regime change against Soviet-backed communist dictator-
ships in Afghanistan, Angola, Cambodia, and Nicaragua while nego-
tiating arms control deals with Soviet leaders

On global issues in which Russia does not need to be involved, the
United States should isolate it. Since the end of the Cold War, U.
presidents have been eager to give their counterparts in the Kremlin
symbolic leadership roles as a way to signal respect. Those days are over.
Conversations about Russia rejoining the G-8 must end. Western gov-
‘emments should boycott sporting events held in Russia, Let the athletes
play, but without government officials in the stands. Given Moscow's
politicization of Interpol arrest requests, Interpol must suspend Russian
participation. Even Russia presence at Nato headquarters must be
rethought. The more the United States can do without Russia, the better.

Even as the United States isolates the Russian government, it must
continue to develop ties with Russian society. By canceling exchange
programs, banning U.S. civil society organizations, and limiting
‘Western media access to Russian audiences, Putin has tried to cut the
Russian people o. from the West. The United States and Europe
need to find creative ways to reverse this disturbing trend. Happily,
far more opportunities exist to do so today than did during the Cold
War. Washington should promote student and cultural exchanges,
dialogues between U.S. and Russian nongovernmental organizations,
trade, foreign investment, and tourism.

STRATEGIC PATIENCE
But no matter how e.ective a containment strategy U.S. policymakers
put in place, they must be patient, They will have to endure stalemate
for along time, at least as long as Putin is in power, maybe even longer,
depending on who succeeds him. In diplomacy, Americans often act like
‘engineers; when they see a problem, they want to fix it. That mentality
has not worked with Putin's Russia, and if tried again, it will fail again.

At the same time, American leaders must say clearly that they do
not want endless conflict with Russia. When the current confrontation
winds down, most likely because of political change inside Russia,
future U.S. presidents must stand ready to seize the moment. They
will have to do better at encouraging democracy within Russia and
integrating Russia into the West than their predecessors have done.
Past politicians and the decisions they made created today’s conflict,
New politicians who make di.erent decisions can end it. ®

July/eugust 2018 91

34. Return to Table of Contents

The Human Capital Gap

Getting Governments to Invest in People

Jim Yong Kim

overnments in pursuit of economic growth love to invest in
physical capital—new roads, beautiful bridges, gleaming
airports, and other infrastructure. But they are typically far less
interested in investing in human capital, which is the sum total of a
populations health, skills, knowledge, experience, and habits. That’ a
mistake, because neglecting investments in human capital can dramatically
‘weaken a country’s competitiveness in a rapidly changing world, one in
which economies need ever-increasing amounts oftalent to sustain growth.

‘Throughout the World Bank Groups history, our development experts
have studied every aspect of what makes economies grow, what helps
people lift themselves out of poverty, and how developing countries can
invest in prosperity. In 2003, the bank published the first annual Doing
Business report, which ranked countries on everything from taxation
levels to contract enforcement. The findings proved hard to ignore: heads
of state and finance ministers faced the possibility that foreign direct
investment could go down as companies chose to invest in countries with
better business climate. In the 15 years since, Doing Busines has inspired
more than 3,180 regulatory reforms.

Now we are taking a similar approach to marshaling investments in
people. The sta. of the World Bank Group is developing a new index
to measure how human capital contributes to the productivity of the
next generation of workers. Set to launch at the World Bank Groups
annual meetings in Bali this October, the index will measure the health,
as well as the quantity and quality of education, that a child born today
can expect to achieve by the age of 18.

‘Scholars know a great deal about the many benefits of improving
human capital. But their knowledge has not turned into a convincing call

JIM YONG KIM is President of ge World Bank Group,

92 FOREIGN arraıns

35. The Hafan Capital Gap

for action among developing countries. One constraining factor is the
shortage of credible data that make clear the benefits of investing in
human capital, not just for ministers of health and education but also
for heads of state, ministers of finance, and other people of influence
around the world. That's why an index of human capital across countries
can galvanize more—and more e.ective—investments in people.
Overthe past three decades life expectancy in rich and poor countries
has started to converge. Schooling has expanded tremendously. But
the agenda is unfinished: almost a quarter of children under five are
malnourished, more than 260 million children and youth are not in
school, and 60 percent of primary schoolchildren in developing countries
are still failing to achieve minimum proficiency in learning. In too
many places, governments are filing to invest in their populations.

PEOPLE POWER
‘The value of human capital can be calculated in several di.erent ways.
‘Traditionally, economists have done so by measuring how much more
people earn after staying in school longer. Studies have found that each
additional year of education increases a persons income by about ten
percent on average. The quality of the education matters, too. In the
United States, for example replacingalow-qualityteacherin anelementary
school classroom with an average-quality one raises the combined lifetime
income of that classrooms students by $250,000.

But cognitive abilities are not the only dimensions of human capital
that count. Socioemotional skills, such as grit and conscientiousness,
often have equally large economic returns. Health also matters: healthier
people tend tobe more productive. Considerwhat happens when children
no longer su.er from parasitic worms. A 2015 study con ducted in Kenya
found that giving deworming drugs inchildhood reduced school absences
and raised wages in adulthood by as much as 20 percent—lifelong benefits
from a pill that costs about 30 cents to produce and deliver.

‘The di.erent dimensions of human capital complement one another
starting at an early age. Proper nutrition and stimulation in utero and
during early childhood improve physical and mental well-being later in
life. Although some gaps in cognitive and socioemotional skills that
manifest themselves at an early age can be closed later, doing so becomes
more expensive as children reach their teens. Its no surprise, then, that
focusing on human capital during the first 1,000 days of a child' life is
‘one of the most cost-e.ective investments governments can make.

July eugust 2018

93

36. Jif Yong Kif

94

How does all of this relate to economic growth? For one thing,
when the benefits of individual investments in human capital are
added up, the overall impact is greater than the sum of the parts.
Going back to those schoolchildren in Kenya: deworming one child
also decreases the chances of other children becoming infected with
parasites, which in turn sets those children up for better learning
and higher wages. Some of the benefits from improved human
capital also accrue beyond the generation in which the investments
are made, Educating mothers about prenatal care, for instance, improves,
the health of their children in infancy.

Individual investments in human capital add up: development
economists have estimated that human capital alone explains between
ten and 30 percent of di.erences in per capita income across countries.
‘These positive e.ects also persist over time. In the mid-nineteenth
century, the state of So Paulo, in Brazil, encouraged the immigration
of educated Europeans to specific settlements. More than 100 years
later, those very settlements boast higher levels of educational attainment,
a greater share of workers in manufacturing as opposed to agriculture,
and higher per capita income.

Education yields particularly large returns, so it plays an important
role in decreasing poverty. Ghana's success story is a testament to this
relationship: throughout the 1990s and early years of this century, the
country doubled its education spending and drastically improved its
primary enrollment rates, As a result, the literacy rate went up by an
astonishing 64 percentage points from the early 1990s to 2012, and the
poverty rate fell from 61 percent to 13 percent.

Investments in education can also reduce inequality. In most
countries, children born to more affluent parents start having access
to better opportunities early in life, and these lead to lifelong
advantages, whereas children born to poorer parents miss out on
these opportunities. When governments take steps to correct that
problem, economic inequality tends to fall. One study released this
year drew on a trial conducted in North Carolina to estimate that if
the United States made e.ective early childhood development
programs universal, U.S. income inequality would fall by seven
percent—about enough for the country to achieve Canadian levels
of equality.

‘The societal benefits of investing in human capital extend even further.
Staying in school longer reduces a persons probability of committing

37. The Hafan Capital Gap

‘Teach your children well: a teacher in northeastern Nigeria, June 2017

a crime. So do programs that improve noncognitive skills. In a 2017
study in Liberia, drug dealers, thieves, and other criminally inclined
men were enrolled in cognitive behavioral therapy in order to build
skills such as recognizing emotions, improving self-control, and navi-
gating difficult situations. The program, when combined with a small
cash transfer, significantly reduced the odds that these men would
fall back into a life of crime.

Human capital is also associated with social participation. In the
mid-1970s, Nigeria introduced universal primary education, sending a
large cohort of children through primary school who otherwise wouldn't
have gone, Years late, those same people were more likely to pay close
attention to the news, speak to their peers about politics, attend
community meetings, and vote.

Investments in human capital increase trust, too. More educated
people are more trusting of others, and more trusting societies tend to
have higher economic growth. They are also more tolerant: research
suggests that the large wave of compulsory school reforms that took
place across Europe in the mid-twentieth century made people more
‘welcoming of immigrants than they were before.

July eugust 2018

95

38. Jif Yong Kif

9%

THE VISIFLE HAND
Human capital doesn’t materialize on its own; it must be nurtured by
the state. In part, that’s because individuals often fail to consider the
benefits that investments in people can have on others. In deciding
whether to deworm their children, for instance, parents take into
account potential improvements to their own children’s health, but
they rarely consider how the treatment will reduce the risk of
infection for other children. Or in deciding whether to pay to enroll
their children in preschool, parents might not consider the wider
societal benefits of doing so, such as lower crime and incarceration
rates. These knock-on e.ects are significant: a 2010 study of one
preschool program developed in Michigan in the 1960s estimated
that for each $1 spent, society received $7 to $12 in return.
‘Sometimes, social norms hold parents back from investing in their
children. Although the preference among parents for sons over
daughters has been well documented, the extent of the discrimination
can be astounding. The government of India has estimated that the
country has as many as 21 million “unwanted girls,” daughters whose
parents wished for sons instead. These girls receive much less parental
investment, in terms of both health and education. Other times, families
want to invest in the human capital of their children but simply cannot
a.ord to do so. Poor parents of talented kids cannot take out a loan on
their children’s future earnings to pay for school today. And even when
education is free, parents still have to pay for transportation and school
supplies, not to mention the opportunity cost that rises because a child
in the classroom cannot work to earn extra income for the family.
Despite how crucial it is for governments to invest in human capital,
politics often gets in the way. Politicians may lack the incentive to support
policies that can take decades to pay o.. For example, in the absence of
a pandemic, they can usually get away with neglecting public health. It
is rarely popular to fund public health programs by raising taxes or
diverting money from more visible expenditures, such as infrastructure
or public subsidies. The government of Nigeria ran into major resis-
tance in 2012 when it removed the country's fuel subsidy to spend
more on maternal and child health services. Media coverage focused
on the unpopular repeal of the subsidy and paid scant attention to the
much-needed expansion of primary health care. After widespread
public protests, the subsidy was reinstated. In some countries, such
resistance is partly explained by a weak social contract: citizens do not

39. The Hafan Capital Gap

trust their government, so they are hi
worry will be misspent

“The problem of implementation is equally daunting, Across the world,
too many children cannot read because their teachers are not adequately
trained. The Service Delivery Indicators, an initiative launched by the
World Bank Group in partnership with the African Economic Research
Consortium to collect data on sub-
Saharan African countries, has revealed , ,
the depth ofthe problem. Insevencoun- Zu man capital doesn't
tries surveyed—Kenya, Mozambique, Materialize on its own;
Nigeria, Senegal, Tanzania, Togo, and it must be nurtured by
Uganda—only 66 percent of fourth-

Dub tés had teen des SOME:

‘guage curriculum they were supposed to

be teaching, and only 68 percent had the minimum knowledge needed
to teach math, In health care, medical professionals in these countries
could correctly diagnose common conditions such as malaria, diarrhea,
pneumonia, tuberculosis, and diabetes just 53 percent ofthe time,

Implementation is also challenging in places where the people pro-
viding a given service lack the motivation todo their jobs well. In those
same seven countries, on average, teachers taught for only half the time
they were supposed to. In many cases, the problem is that civil servants
work in politicized bureaucracies, where promotions are based on con-
nections, not performance.

But there are success stories, When the incentives of central govern-
ments, local governments, and service providers are aligned, countries
can make great strides in improving human capital. That has been the
case with Argentinas Plan Nacer, a program launched in 2004 and
supported by the World Bank Group that provides health insurance to
uninsured families. Plan Nacer allocated funding to provinces based
on indicators measuring the scope and quality of their maternal and
child health-care services, an approach that incentivized provinces to
invest in better care. Among its beneficiaries, Plan Nacer reduced the
probability of alow birth weight by 19 percent.

More and more, populations in developing countries are demanding
better health care and education. In Peru, for example, a remarkable
campaign led by civil society groups placed stunted growth among
children firmly on the political agenda in 2006, an election year.
Politicians responded by setting a clear target of reducing stunting by

int to pay tax money that they

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40. Jif Yong Kif

98

five percentage points in five years. The country managed to outperform
even that ambitious goal: from 2008 to 2016, the rate of stunting
among children under five fell by about 15 percentage points. It was
proof that change is possible.

‘THE POWER OF MEASUREMENT.
When politicians and bureaucrats fal to deliver, poor people su.er the
most, But there isa way to empower the people to demand the services
they deserve: transparency. Better access to information allows citizens
to know what their leaders and civil servants are and aren't doing. In
Uganda in 2005, for example, researchers working with community
organizations released report cards grading local health facilities, which
galvanized communities to demand better se
Jed to sustained improvementsin health outcomes, including a reduction
in mortality for children under five. Similarly, in 2001, after Germany's
disappointing scores in the inaugural Program for International Student
Assessment were released to an embarrassed public—an event known
as “the Pisa shock”—the government undertook major educational
reforms that improved learning,

Learning assessments proved similarly pivotal in Tanzania. In 2011,
the nongovernmental organization Twaweza, supported by the World
Bank Group, published the results of a survey assessing childrens basic
literacy and numeracy. The news was dismal: only three out of ten
third-grade students had mastered second-grade numeracy, and even
fewer could read a second-grade story in English. Around the same
time, the results of the Service Delivery Indicators surveys came out
and shined a spotlight on teacher incompetence and absenteeism. The
ensuing public outcry led to the introduction of Tanzania's “Big Results
Now” initiative, a government e.ort to address low levels of learning.

As these examples show, when credible analysis on the state of human
capital development is made public, it can catalyze action. That is the
logic behind the metrics the World Bank Group is developing to
capture key elements of human capital. In countries where investments,
in human capital are ine.ective, these measurements can serve as a call
to action. We are focusing our e.orts on health and education by look-
ing at the basics. Will children born today live long enough to start
school? If they do survive, will they enroll in school? For how many
years, and how much will they learn? Will they leave secondary school
in good health, ready for future learning and work?

41. The Hafan Capital Gap

In many developing countries, there is a great deal of work to be
done for the health of young people. In Benin, Burkina Faso, and Côte
d'Ivoire, ten percent of children born today will never see their fifth
birthday. In South Asia, asa result of chronic malnutrition, more than
‘one-third of children under the age of five have a low height for their
age, which harms their brain development and severely limits their
ability to learn

‘The state of education is equally concerning, To better understand
whether schooling translates into learning, the World Bank Group, in
partnership with the UNESCO Institute for Statistics, has developed a
comprehensive new database of student achievement test scores.
We harmonized results from several ma-
dre coe re” Minis finance
parable to risa scores. The database ‘pically spend more time
reveals huge gaps in learning: less than worrying about their

half of students in developing coun- 5
tres most what rsa ale minimum (94775 stock of debt than

proficiency"—a score of roughly 400— 115 stock of human capital.
‘compared with 86 percent in advanced
economies. In Singapore, 98 percent of students reached the interna-
tional benchmark for basic proficiency in secondary school; in South
Arica, 26 percent of students did. In other words, nearly al of Singa-
pores secondary school students have sufficient skills for the world of
work, while almost three-quarters of South Africas youth are function-
ally iterate. That isa staggering waste of human potential

‘When children leave school, they face very di.erent futures in terms
of health, depending on which country they live in. One stark indicator
is adult survival rates: in the richest countries, less than five percent of
15-year-olds will not live to see their 60th birthday. But in the poorest
countries, 40 percent of 15-year-olds will die before they turn 60.

‘These individual data points provide snapshots ofthe vast di.erences
in health and education across countries. To bring these dierent
dimensions of human capital together into a salient whole, we at the
World Bank Group are combining them into a single index that
measures the consequences of the failure to invest in human capital in
terms of lost productivity of the next generation of workers. In
countries with the lowest human capital investments today, our analysis
suggests that the work force of the future will be only between one-

July/eugust 2018 99

42. Jif Yong Kif

100

third and one-half as productive as it could be if people enjoyed full
health and received a complete high-quality education.

Measuring the economic benefits of investments in human capital in
this way does not diminish the social and intrinsic value of better health
and education. Rather, it calls attention to the economic costs of failing
to provide them. Ministries of finance typically spend more time worry-
ing about their country’s stock of debt than its stock of human capital.
By demonstrating the beneficial e.ects that investing in human capital
has on worker productivity, the World Bank Group can get policymak-
ers to worry as much about what is happening in their schools and
hospitals as what is happening in their current account.

Moreover, the index will be accompanied by a ranking, which should
serve as a call to action in countries where investments are falling short.
We learned with the Doing Business report that even with the most
comprehensive measurements, reforms do not necessarily follow. A
ranking puts the issue squarely in front of heads of state and finance
ministers, and it makes the evidence hard to ignore.

Benchmarking countries against one another is only the first step. IF
‘governments are to identify which investments in human capital will
yield results, they need to be able to measure the various factors that
contribute to human capital. Better measurement is a public good, and
like most public goods, itis chronically underfunded. The World Bank
Group can add real value here: it can help harmonize the various
measurement e.orts across development partners, collect more and
better information, advise policymakers how to use it, provide technical
support, and help design e.ective interventions.

HUMAN CAPITAL IN THE TWENTY-FIRST CENTURY
Human capital matters—for people, economies, societies, and global
stability. And it matters over generations. When countries fail to
invest productively in human capital, the costs are enormous, especially
forthepoorest. These costs put new generationsatasevere disadvantage.
With technological progress placing a premium on higher-order skills,
the failure of countries to lay the groundwork for their citizens to lead
productive lives will not only carry high costs; it will also likely gener-
ate more inequality. It will put security at risk, too, as unmet aspi
tions can lead to unrest.

Better information is part ofthe answer, but only part. For one:
it is hard for a government to deliver quality services

1%

there is not

43. The Hafan Capital Gap

‘enough money. So countries that chronically underinvest in human
capital will have to close tax loopholes and exceptions, improve revenue
collection, and reorient spending away from poorly targeted subsidies.
Egypt and Indonesia, for example, have both drastically reduced their
‘energy subsidies in recent years and reallocated these resources toward
social safety nets and health care. Greater revenue can go hand in hand
with better health outcomes. Between 2012 and 2016, tobacco tax
revenues llowedthe Philippines to triplethe budget for the Department
of Health and triple the share of its population with health insurance,
In the United States, cities such as Philadelphia aim to use resources
from soda taxes to fund early childhood education

Increased funding is not enough, however. Some countries will have
to work to improve the efficiency of their social services while still
maintaining their quality. In Brazil, for example, a recent World Bank
Group study found that efficiency improvements in the health sector
at the local level could generate savings equivalent to approximately
0.3 percent of Gor. In other countries, reconciling the competing
interests of stakeholders will be critical. Chile's decades-long experience
with educational reform showed the importance of building political
coalitions to focus on one key goal: learning forall. In 2004, the country
‘was able to introduce performance-related pay for teachers by balancing
that reform with concessions to teachers’ unions.

But no matter the starting point, better measurement is crucial. After
all, you can only improve what you measure. More and more accurate
measurement should lead to shared expectations about what reforms are
needed. Itshould also bring clarity to questions about priorities, generate
useful debate about various policies, and foster transparency.

In 1949, the World Banks president, John McCloy, wrote in these
pages, “Development is not something which can be sketched on a
drawing-board and then be brought to life through the magic wand of
dollar aid.” There was often a gap, McCloy argued, between concepts
for development and their implementation in practice, That is pre-
cisely the gap that the World Bank Groups human capital index is
designed to close. The new measurements will encourage countries to
invest in human capital with a fierce sense of urgency. That will help
prepare everyone to compete and thrive in the economy of the future—
whatever that may turn out to be. And it will help make the global
system work for everyone, Failing to make those investments would
simply be too costly to human progress and human solidarity.®

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44. Retum to Table of Contents

Reclaiming Global
Leadership

The Right Way to Put America First
John Kasich

he international system that the United States and its allies

created after World War II has benefited the entire world, but

global political and economic engagement have left too many
Americans behind. Over the last 70 years, free-market democracies,
have come to dominate the global economy, U.S.-led e.orts have dra-
matically reduced poverty and disease, and the world has been spared
great-power conflict. Yet many Americans myself included —are i
creasingly coming to believe that our country su.ers from a leader-
ship vacuum. People are losing faith that their leaders will work to
make all Americans better o. and that they will rally us to join with
our allies in order to craft cooperative solutions to the global problems
that bu.et us. Economic growth is delivering benefits for the few
but not for the many. Political discourse has become poisoned by par-
tisanship and egotism.

In the face of these challenges, we have a choice between two op-
tions: shut the blinds and withdraw from the world or engage with
allies old and new to jump-start a new era of opportunity and security.
Although American leaders should always put American interests
first, that does not mean that we have to build walls, close o. markets,
or isolate the United States by acting in ways that alienate our alles
Continuing to do that will not insulate us from external challenges;
it will simply turn us into bystanders with less and less influence.

choose cooperation and engagement. Only those who have forgotten
the lessons of history can credibly contend that peace and prosperity
await us inside “Fortress America” Yet as evergreen as this debate is—

JOHN KASICH ie Governor of Ogio,

102 FOREIGN APPAIRS

45. Reclaifing Global Leadership

ha !
Kasich in Wauswatosa, Wisconsin, March 2016

retreat or engage—reaching for set-piece answers to the problems fac-
ing the country will not work. New times require new answers, even
to old questions. The way forward is not to retreat but to renew our
commitment to supporting those who share our values, to reboot our
capacity to collaborate, and to forge a new consensus on how to adapt
our policies and institutions to the new era.

Having served on the Armed Services Committee and chaired the
Budget Committee of the U.S. House of Representatives when the
U.S. government enjoyed the only balanced budget in living memory,
Tam no stranger to the pessimism of those who say, “It cant be done” But
Tam also no stranger to the hope that comes from remembering past
accomplishments. Leaders must now draw on that hope to rediscover
‘open-mindedness, civility, mutual respect, and compromise.

On challenge after challenge, we are better o. working together than
going it alone. To secure our economic future, we must prepare our
workers for the future rather than retreat into protectionism. To deal
‘with global threats—from Russian aggression to nuclear proliferation
tocyberattacks—we need to harden our defenses and reinvigorate our
alliances. To fight terrorism, we must be more discerning about when
to commit American power and insist that our allies bear more of the

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103

46. John Kasich

104

burden, To deal with the rise of China, we must strike the right bal-
ance between cooperation and confrontation. In other words, the
world needs more American engagement, not les.

‘TRANSFORMING DISRUPTION INTO OPPORTUNITY
As governor of Ohio, a state with an economy larger than those of 160
countries, lam reminded daily that we live in a connected world. Over
a quarter of a million jobs in my state depend on trade, and those jobs
generate close to $50 billion in export earnings every year. In the United
States as a whole, one in five jobs—40 million of them—depend on
trade, and these jobs tend to be higher paying, There no denying that
as goods and services have flowed more freely across borders, our coun-
try as a whole has become better o.. But there are also some people
who have su.ered as a result. Jobs have been lost, and the cold steel
furnaces in my hometown of McKees Rocks, Pennsylvania, stand as a
testament. These steel mills were once the engines of middle-class
prosperity. Today, the well-paying jobs they provided are gone.

It is up to Americans to constantly innovate in order to remain
competitive. Our international trading partners have to realize, how-
ever, that if they do not do more to eliminate government subsidies,
dumping, and other anticompetitive behavior, support for free and
fair trade will collapse even further in the United States. The result
will be that everyone will su.er. That said, we should not have to resort
to heavy-handed tari.s and quotas in order to get our partners to start
taking our concerns seriously. To reduce jobs losses from trade, we need
an expedited process, free of bureaucratic delays, to review trade viola-
tions and stop them when they occur. But we must also undertake new
rts that help people obtain the skills they need for the jobs of the fü-
ture, Trade was not responsible for the majority of American job losses in
the last generation; technology was. That trend will only accelerate.

Traditional manufacturing will su.er the most from the techno-
logical tsunami. It would be foolish to try to spare ourselves the force
of this wave by retreating, Instead, we must ride the wave. That means
better preparing the U.S. work force—in particular, aligning our educa-
tion and training e.orts with the needs of emerging industries and
improving the flexibility of labor markets. Educators must partner
with the private sector to advocate the right curricula, develop the
right skill sets, and make businesses a greater part of the educational
system by o.ering mentoring, workplace opportunities, and on-the-

47. Reclaifing Global Leadership

job training, Real leadership is showing the courage to help people
‘embrace change, find new frontiers, and adjust in a fast-paced world—
not making false promises about returning to the past. The right lead-
ership can draw out from Americans the characteristics that we need
to flourish, ones I know we already possess: resiliency, flexibility, and
agility, and a dedication to lifelong learning.

Without greater confidence about their future place in the global
‘economy, Americans will have little reason to support international
cooperation and engagement. If the United States continues to go it
alone, however, that will only open up further opportunities for nations
that do not have our best interests at heart, such as China and Russia,
to shape our future for us. That's why it was such a mistake for the Trump
administration to turn its back on the Trans-Pacific Partnership, which
‘would have eliminated 18,000 foreign taris currently imposed on prod-
ucts that Americans make and seek to sell overseas. Those taris hold
back job creation, and eliminating them could unleash new growth across
the United States. We shouldn't have threatened to jettison the North
American Free Trade Agreement or the U.S.-Korea Free Trade Agree-
ment either. Instead, we should work with our neighbors and partners.
to modernize these agreements, which are essential to our economic
security and global influence. On trade, as on many other issues, the
goal should be to find win-win solutions, not to make threats and try to
divide and conquer.

COUNTERING THREATS
During my 18 years on the House Armed Services Committee, I
learned that our alliances are vital to national security. But the world
has changed markedly since these partnerships were first formed.
We now must contend with not just the familiar conventional and
nuclear threats from Russia but also those posed by China, Iran, and
North Korea; threats in space and cyberspace; and threats from non-
state actors. The new environment demands leaner, more agile coali-
tions to solve such problems swiftly.

President Donald Trump was right to suggest that our allies are no
longer the poverty-stricken nations they were after World War II.
‘They can and must provide for a greater share of their own defense
and security, particularly in their own regions. These allies, along with
the United States, need to take care to avoid overemphasizing any
idual threat, such as terrorism, at the expense of longer-term

July eugust 2018

105

48. John Kasich

Real leadership is showing

challenges, such as Russian intimidation, Chinese expansionism, or
North Korean nuclear proliferation. All of us must adapt our budgets
accordingly, investing in e.orts to deal with new cyberthreats and
preserving our ability to project power
and secure the open global trading sys-
tem. And Washington must insist that

the courage to help people _ itsallies in Europe and the Pacific con-
embrace change, find new tribute more to joint e.orts.

tiers; and adjust} Our common purpose with our al-
rontiers, and adjustina u, end tnd advance fies:
fast-paced world—not dom, democracy, human rights, and
making false promises about the rule of law. These values are what
returning lo the past. distinguish us from our rivals, and they

106

are what make our alliances so strong

and attractive to others. As we press
our allies to do more, we must not lose sight of the fact that we should
also be working with them—both to reshape our alliances into nimble
coalitions and to recruit other like-minded countries, such as Indone-
sia, Malaysia, and Vietnam, to join in.

As a child of the Cold War, I remember well the schoolroom “duck
and cover” exercises, an ever-present reminder of the risk of nuclear
war. No threat holds greater consequences for all of humanity than
that of the accidental or deliberate use of nuclear weapons. Containing.
that tisk has to remain our top priority.

ULS.-Russian agreements such as the 1987 Intermediate-Range
Nuclear Forces (ir) Treaty and the 2010 New Strategic Arms Red:
tion Treaty (New starr) were designed to achieve greater stability
and security when it comes to nuclear weapons, and that goal should
not be abandoned lightly. With New starr expiring in 2021 and the
ine Treaty on the verge of being fatally undermined by Russia non-
compliance, we need to think long and hard about walking away from
them. Unless we are convinced that they are unsalvageable, agree-
ments that by and large have worked for the two states holding more
than 90 percent of the world’s nuclear weapons should not be allowed
to fall apart.

A number of issues have soured U.S. relations with Russia, including
the Kremlin’ violent intervention in Ukraine, its support for Syria’
brutal dictator, its disinformation and destabilization campaign in the
Baltic states, its penchant for assassinating political enemies at home

49. Reclaifing Global Leadership

and abroad, and, of course, its interference in the 2016 U.S. presiden-
tial election. Nonetheless, we will have to work with Russia on arms
control, because with around 7,000 warheads, the country remains the
world’s largest nuclear power. Where we have common interests, we
should cooperate, while never closing our eyes to the nature of Russia
leaders, their intentions, and their disregard for our values. Where we
‚cannot cooperate, we must hold Moscow at arm's length until there is
either a change in behavior or a change in leadership.

North Korea acquisition of nuclear weapons remains another major
concern. Until we have a definitive, verifiable treaty that formally ends
the Korean War and denuclearizes the Korean Peninsula, we will need
to keep up the pressure on Pyongyang to relinquish its nuclear weap-
‘ons. Additional sanctions can and should be put in place. That includes
sanctions on large Chinese companies that enable North Korea’s nu-
clear weapons program. North Koreans who are working overseas to
‘earn the regime the hard currency that funds that program should be
sent home on an expedited basis. The United States and its allies should
also put in place a much tighter counterproliferation regime on ship-
ments going into or out of North Korea. Ultimately, however, it will
take peaceful regime change in Pyongyang to resolve the nuclear threat
North Korea poses in Northeast Asia, The country best positioned to
facilitate such a change is China, provided it can be sure that the United
States, South Korea, and Japan will not exploit the situation.

Iran also presents a major proliferation threat. Given that the nuclear
deal with Iran was one of the few things constraining the country from
producing nuclear weapons, it was a mistake for President Trump to
walk away from it. The president move created disunity and separated
us from our allies at a time when we need to be rallying together to
confront a myriad of other challenges.

am sympathetic to the e.orts of former Secretary of State Henry
Kissinger, former Democratic Senator Sam Nunn of Georgia, former
Secretary of Defense William Perry, and former Secretary of State
George Shultz to rid the world of nuclear weapons. In my discussions
with them, however, it has been made clear that this is a goal that can
be achieved only in small steps. And with nuclear proliferation on
the upswing, it appears as though that dream is now further away
than ever. For that reason, deterrence will have to remain an essential
part of our national defense strategy for the foreseeable future.
Accordingly, we will have to continue to modernize our nuclear

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50. John Kasich

108

‘weapons and harden against cyberattacks the electronic systems that
control them.

Almost all U.S. computer systems and communication networks
are at risk from such attacks. To stop the systematic looting of American
technology and ideas, we will need to reorganize our cyber-operations.
‘Those parts of the U.S. military, the Department of Homeland
Security, and the Fat that deal with cyberattacks should be united under
asingle agency headed by a cabinet-level offical. That agency must be
responsible for both cybero.ense and cyberdefense, and the latter task
must encompass both government and commercial systems.

Beyond this, the government can mandate that sensitive data be
encrypted, and individual agencies can hold cyberdefense drills and
employ “red teams” to independently test the ability of their systems
to withstand attacks. But we cannot rely on defenses alone. Washington
must use its improving ability to attribute the origins of cyberattacks
and then retaliate loudly or softly, depending on the circumstances.
And given that cyberwarfare has geopolitical implications, diplomacy
will be key to organizing a collective defense among our allies—a
cyber-Naro, e.ectively.

The private sector has a vital role to play in cyberdefense, too.
American technology giants have all too often failed to prevent their
platforms from being used for malign purposes, such as interfering in
elections and spreading terrorist propaganda. The general public and
the rest of the private sector should place economic pressure on these
companies—for example, withholding advertising and avoiding doing
business with them—until they fulfill their responsibilities.

REFALANCING THE WAR ON TERRORISM
After 17 years, the war on terrorism has become a series of open-
ended commitments. Some of those commitments clearly need to be
revisited. In Afghanistan, President Barack Obama micromanaged
the war and put in place a series of half measures, and President
‘Trump sent additional troops into a conflict that cannot be resolved
militarily. Both presidents’ decisions were mistakes. We must now
ook instead to diplomacy to negotiate a sustainable U.S. exit with
all of Afghanistan’ stakeholders.

We should continue to train and assist Afghan government forces
so that they can hold key population centers, but we should limit our-
selves to securing two core U.S. interests: preventing Afghanistan

51. Reclaifing Global Leadership

from once again becoming a terrorist safe haven and ensuring that
Pakistan nuclear weapons remain secure. Neither goal requires all
that many U.S. boots on the ground. U.S. forces in the Gulf and
along Afghanistan northern borders can achieve the first goal. A
political settlement in Afghanistan that reduces the risk of chaos spill-
ing across the border, together with long-term assistance in Pakistan
supporting the institutions of civilian nuclear control, can help achieve
the second. We should have no illusions about the difficulty of achiev-
ing such a settlement. But it is probably the only way to exit an oth-
erwise endless conflict without risking a bloodbath in Afghanistan or
instability in Pakistan.

President Trump deserves credit for improving on President
Obama's strategy against the Islamic State, also known as 1515, in Syria
and Iraq. Now that the terrorists’ strongholds have been all but elimi-
nated, the only remaining core U.S. interest at stake is preventing 1515
from using those countries to mount future attacks against us. That
mission does not require a major commitment of U.S. combat troops.
With our help, allies whose interests are more directly a.ected than
our own—such as Egypt, Israel, Saudi Arabia, Turkey, and European
countries—should take the lead in mitigating the continuing but re-
duced threat from 1515 and in repatriating Syrian refugees.

Going forward, we need to be much more careful and focused about
how we fight terrorism. We have to develop better criteria for when
to intervene abroad. And when we do intervene, we need clearer
guidelines about what kinds of resources to commit—for example,
combat troops versus military trainers. We also need clearer bench-
marks for when we should escalate our commitments and when it
makes more sense to cut our losses and leave. In particular, we should
restrict our major counterterrorism e.orts to instances in which our
homeland is directly at risk. When it is not, we should avoid getting
‘embroiled in civil wars and instead use diplomacy to rally interna-
tional partners to assume the lead. Doing that would allow us to hus-
band our resources for the challenges that pose a far greater long-term
threat to U.S. national security.

ADAPTING TO THE RISE OF CHINA
Chief among those challenges is an increasingly assertive China. Bei-
jing is already seeking to convert its economic power into regional
influence through such projects as the Belt and Road Initiative, a mas-

July eugust 2018

109

52. John Kasich

To achieve any of our

sive infrastructure venture, and the Asian Infrastructure Investment
Bank, a rival to Western-led development banks. Looking to fill the
political void created by the current vacuum in U.S. international
leadership, Chinese leaders are making ridiculous assertions that their
country will define the meaning of freedom and liberty

The principal strategic challenge for the United States is to in-
tegrate China into the international system in a manner that al-
lows us to protect our interests in
Asia and safeguard international
institutions against Chinas assaults

foreign policy goals, we will on democratic values. China’ ultimate
have to rededicate ourselves goal is to end what it considers to be

to civility and compromise American dominance and to replace

at home.

110

it with a new order in which Beijing
gets an equal voice in setting the rules.
Tt wants to push the United States
out of the western Pacific, undermine our alliances in the region,
and re-create a Sinocentric sphere of influence in Asia free from
challenges to its authoritarian rule.

Confounding our hopes and expectations, Chinas regime has man-
aged to deliver economic growth without being forced to democratize.
But China is not 12 feet tall: its economy has serious structural flaws,
including exceedingly high levels of debt, a cohort of retirees whose
living expenses will be difficult to fund, and wages that are increas-
ingly uncompetitive with those paid by Chinas neighbors. Nor is
China a monolith: like the United States, the country is riven by rival
factions, leading to infighting that diverts productive resources. China
does not need to be contained as the Soviet Union once did, since its
provocative behavior is already driving some of its neighbors into our
arms. Indeed, through its actions, Beijing can largely be counted on to
contain itself.

Another di.erence between the rivalry with China today and that
with the Soviet Union during the Cold War is that China and the
United States are so economically intertwined. This means not only
that the two countries will remain co-dependent for the foreseeable
future but also that relations between them need not be a zero-sum
game. There are ample opportunities to pursue strategies with China
that can adapt the world system to reflect Beijing's growing international
role while benefiting both sides. Those opportunities include reining

53. Reclaifing Global Leadership

in North Korea, addressing climate change, and promoting interna-
tional investment and economic growth.

‘There are limits to how much can be achieved through cooperation,
however. We should acknowledge our rivalry with China more frankly
and prepare our country to compete more vigorously. This does not
necessarily mean embarking on a path of outright confrontation. Rather,
it means putting hopes of a peaceful political evolution in China on
the back burner and incentivizing Beijing to play a constructive role
in the international system. It also means being prepared to decisively
counter Chinese moves that threaten the United States and its allies.

Achieving these ends will be impossible if we continue to hollow out
the State Department. Instead, we must empower it and permit our
seasoned senior diplomats to guide the way, harnessing all the instruments
of American power to exploit Chinas weaknesses. U.S. officials should
much more forthrightly advocate the values that we hold dear and
vocally criticize Chinas shortcomings. They should also better protect
‘our economic interests by combating Chinese dumping and currency
manipulation, streamlining the World Trade Organization's dispute-
resolution process, and insisting on full reciprocity in market access.

Deterring China also has a military dimension. The U.S. military
should forward-deploy greater numbers of forces in the western Pa-
cific and continue to challenge Chinas illegal attempts to expand its
territorial control there. Washington should make it clear that there
will be a significant price to pay for any attack on U.S. assets in space
and expand our regional allies’ missile and air defense capabilities. In
the long run, however, the best chance for peace lies in a China that
itself chooses reform. To kick-start that process, we will have to sup-
port e.orts to give mass audiences in China better access to the un-
varnished truth about what is going on in the world.

TOGETHER WE ARE STRONGER
‘The United States needs a national security doctrine around which a
consensus can be built—both between the Democratic and the Re-
publican Parties and with those who share our interests and values
‘overseas. As we continue the search for that, we should work together
to secure our economic future, reimagine and strengthen our de-
fenses and alliances, and focus on the prime challenges to our na-
tional interests. Rather than pulling back and going it alone, America
must cooperate and lead.

July eugust 2018

au

54. John Kasich

m2

‘That is true whether the country in question is China, Iran, or Rus-
sia and whether the issue at stake is nuclear proliferation, cybersecu-
rity, or counterterrorism. But to achieve any of our foreign policy
goals, we will have to rededicate ourselves to civility and compromise
at home. Without doing so, we cannot hope to lead by example. Nor
will we be able to pass the fiscal, educational, work-force, and other
reforms needed to restore Americans’ confidence in international en-
gagement.

T have faith that our deeply held values will guide us down the
right path. As we look back at history, Americans can take pride in
the fact that we have made the world a better place time and time
again. We can draw strength for the future from our past achieve
ments. Working together in the spirit of bipartisan compromise, ide-
alists and realists can help the United States rediscover optimism to
shape our destiny and guarantee our security. America will be stronger
and more prosperous for it.®

55. Return to Table of Contents

Go Your Own Way

Why Rising Separatism Might Lead to
More Conflict

Tanisha M. Fazal

states of the South Pacific, secessionism is on the rise. In 1915,

there were eight movements seeking their own independent
state, In 2015, there were 59. One explanation for the increase is that
there are now more countries from which to secede. But even taking
that into account, the rate of secessionism has more than doubled
over the last century.

Yet even though more groups are trying to break away, fewer are
resorting to violence. Because secessionists wish to join the exclusive
club of states, they pay close attention to signals sent by major coun-
tries and organizations that indicate how they should behave. So far,
those signals have discouraged them from resorting to violence (and
made them more careful to avoid civilian casualties if they do) or
unilaterally declaring independence. Kurdish forces in Iraq and Syria,
for example, have largely avoided killing civilians and have o.ered
assistance to Western powers fighting the Islamic State (or 1515).
Somaliland, which broke away from Somalia in the early 1990s, has
worked quietly but e.ectively with countries trying to curb piracy in
the Gulf of Aden. And in Catalonia and Scotland, independence
movements have long opted for referendums and negotiations rather
than unilateral declarations.

‘This good behavior has gone largely unrewarded. Amid the war
against 1515, Turkey and the United States have moved swiftly to
tamp down talk of an independent Kurdistan. No country has
recognized Somaliland’s statehood. And the Spanish government

FE: the Mediterranean coast of northern Spain to the island

‘TANISHA M. FAZAL is Associate Professor of Poltica Science at ge Unteriy of
Minnesota and tge auigo of Wars of Lan: Unintended ConseqRences in he Reglation of
Armed Confit.

July eugust 2018

13

56. Tanisha M, Fazal

14

declared Catalonia’s independence referendum illegal and ignored the
result. Meanwhile, the newest member of the club of states, South
Sudan, won international recognition despite flagrantly violating inter-
national law and human rights during its struggle for independence.

This contradiction presents secessionists with a dilemma: Should
they believe what they are told is the best path to statehood or what
they can see actually works? In recent decades, they seem to have
closed their eyes to the gap between rhetoric and reality. But the abil-
ity of major countries and international organizations to maintain
the fiction that good behavior leads to success may be eroding.

If secessionists conclude that abiding by the rules generates few
rewards, the consequences could be ugly. Some will continue to play
nice for their movement own internal reasons. But those who see
the rules as an external constraint will swiftly abandon them. That
could send the recent trend of nonviolent secessionism into reverse
and increase the human costs of war in places where secessionists
have already resorted to rebellion.

HOW TO CREATE YOUR OWN STATE
It is common for analysts of international a.airs to note that since

World War II, civil wars have become more frequent than wars be-
tween states. Less well known is the growing trend toward seces-
sionism among rebel groups that fight in civil wars. Data I collected
with my fellow political scientist Page Fortna show that the propor-
tion of civil wars in which at least one rebel group aimed to secede
rose from zero in 1899 to 50 percent in 1999,

‘There are several reasons for this increase. First, the creation of the
United Nations, in 1945, codified a norm against territorial conquest
that is meant to protect all member states. Today, states worry less
about being swallowed up by their neighbors than they used to. Second,
other international organizations have created a set of economic
benefits to statehood. Members of the International Monetary Fund
(ite) and the World Bank are eligible for loans and aid. Members of
the World Trade Organization are a.orded the benefits of lower
trade barriers. And third, the principle of self-determination, which
is crucial to the secessionist enterprise, enjoys more international
support today than in previous eras.

Bat secessionists face an uphill battle. Existing states, international
Jaw, and international organizations have laid out several conditions

57. Go Your Oxon Way

for the recognition of new states. The 1934 Montevideo Convention,
which set a standard for statehood on which countries continue to
rely, lists four criteria: a permanent population, a defined territory, a
government, and the capacity to enter into relations with other states.
‘Those requirements might not seem to present many problems; several
currently active secessionist groups could meet them. But the bar has
risen significantly since 1934, especially after the main wave of decolo-
nization ended in the late 1960s,

Consider the United Kingdom's policy on recognizing new states,
which is typical of the policies of many Western democracies. If the
leadership of an existing internationally recognized state is over-
thrown, British policy automatically grants the new government
the same recognition as the old one. But gaining recognition as a
new state—the project of secessionism—is a steeper climb. The
British government requires that in addition to meeting the Monte-
video criteria, would-be states must respect the UN Charter and the
basic principles of international law, guarantee the rights of mi-
norities, accept certain commitments regarding disarmament and re-
gional stability, sign up to a raft of other human rights obligations,
and not violate any UN resolutions.

The United States takes a similar approach, at least on paper. U.S.
policy adheres to the criteria laid out in the Montevideo Convention
but admits the possibility of exceptions, such as to the
that a new state have clear territorial boundaries, if p
ency dictates. In practice, political factors often take precedence over
principles. U.S. policymakers have on occasion expressed support for
new states that have achieved quite limited progress toward e.ective
governance and democracy.

Gaining un membership is an even more explicitly political aair.
‘The uN prefers that aspiring members first join their main regional
‘organization, such as the African Union or the Organization of American
States. Then a state must apply to the UN secretary-general office. The
most viable applications will eventually be discussed, and perhaps voted
on, by the UN Security Council, which must approve new members.
Because any of the five permanent members of the council can veto an
application, many applicants, including Kosovo, Palestine, and Taiwan,
have been unable to achieve membership.

Groups whose UN membership bids fail may nonetheless succeed in
joining other international organizations or gaining recognition from other

July eugust 2018

us

58. Tanisha M, Fazal

countries. Both Kosovo and Taiwan are members of Fira, the interna
tional football organization, as well as their regional economic develop-
ment banks. Palestine is recognized by 70 percent of the uns members
and in 2012 was upgraded from a “non-member non-state” to a “non-
member observer state” at the UN by a vote in the General Assembly.

PLAYING NICE
Unlike groups that seek to overthrow the central gov-
ernment or plunder resources, secessionists require for-
eign recognition to achieve their goals. For that reason,
what international organizations and major countries
say about secessionism matters. The un has expressed
a clear preference against the use of violence by inde-
pendence movements, and the evidence suggests that
secessionists have listened. Even though secession-
ist movements account for an increasing propor-
tion of rebel groups in civil wars, the percentage
of all secessionists engaged in war has fallen. An
increasing number of secessionist movements
begin entirely peacefully, and other formerly
violent secessionists have turned to nonviolence
Since 1949, secessionist movements have been
half as likely to fight large-scale wars (those result-
ing in at least 1,000 fatalities) as they were in the
previous century.

‘Meanwhile, secessionist groups that have resorted to
violence have moderated their conduct in war, Seces-
sionists are over 40 percent less likely than nonseces-
sionist armed groups to target civilians in civil war. That is in part
because secessionists understand the political downsides of violating
international humanitarian law. Many secessionists make a special
e.ort to broadcast their compliance with the laws of war. For exam-
ple, several groups, including the Polisario Front (which seeks to end
Moroccan control of Western Sahara), the Moro Islamic Liberation
Front (an armed group in the Philippines), and the Kurdistan Workers’
Party in Turkey, have highlighted their commitment to avoiding the
use of antipersonnel land mines. Secessionists have also contrasted
their own behavior with that of their government opponents, who
often resort to harsher tactics.

PTE gs

16 FOREIGN arraıns

59. Consider the little-known case of the ,outh Moluccan secessionists,
who waged a guerilla campaign against the Indonesian government
from 1950 to 1963. The ‚outh Moluccans refrained from targeting
civilians. They publicized incidents in which Indonesian troops
bombed ,outh Moluccan villages, erected starvation blockades, or
used jouth Moluccan civilians as human shields. And they pleaded
for help from the un in the pages of The New York Tifes , but to no
avail, nce losing the civil war, the ‚outh Moluccan secessionist move-

ment has been represented by a government in exile in the Netherlands.
Decades later, in the late 1980s, another group of Indonesian sepa-
ratists, the East Timorese, adopted a policy of nonviolence after it
became clear that they could not win their armed struggle against

July August 2018

17

60. Tanisha M, Fazal

Secessionists understand

the Indonesian government. And both before and after they did so,
the separatists worked to bring international attention to attacks by
Indonesian security forces on peaceful protesters. (In 2002, after a

ux-brokered transition, East Timor
became an independent country.) More
recently, in 2014, Kurdish forces in Iraq,

the political downsides and Syria were extensively photo-
of violating international — graphed assisting Yazidis who had

humanitarian law: been persecuted by 1515.

18

et it bought
the Kurds little international support.
“The United States, for example, ‘strongly
opposed” Iraqi Kurdistan 2017 independence referendum and
threatened to end its dialogue with Iraqi Kurds should they pro-
ceed with their vote.

‘The preferences of major states and international organizations have
influenced secessionists’ nonviolent actions, as well. Since the founding
of the UN, the international community has generally frowned on
unilateral declarations of independence. In the 1990s, during the
Balkan wars that preceded the breakup of Yugoslavia, the British, French,
and U.S, governments stated their opposition to such declarations.
And in 1992, the uN Security Council issued a resolution on Bosnia
and Herzegovina affirming that “any entities unilaterally declared
will not be accepted.” Secessionists have taken note: even though
secessionism in civil war has increased since the turn of the twentieth
century, the proportion of secessionists issuing formal declarations
of independence has declined since 1945,

Secessionists have usually gained little by defying this norm.
During the breakup of Yugoslavia, Croatia and Slovenia issued
unilateral declarations of independence. But the 1991 peace agreements,
that the European Community brokered to conclude their wars of inde-
pendence required both countries to rescind those declarations. Both
obliged, and within a year, both had become members of the UN.

South Sudan's declaration of independence, in 2011, provides an
example of how to get secessionist diplomacy right. The South
Sudanese worked with a New York-based nongovernmental organi
zation (60), Independent Diplomat, to navigate path to international
recognition. Together, they met with representatives from inter-
national organizations, including the un, to establish a set of guidelines
for independence. As a result, when South Sudan declared indepen-

61. Go Your Oxon Way

dence, it did not do so unilaterally. It adhered closely to the 2rovi-
sions laid out in the 2005 Com2rehensive Peace Agreement between
the Sudan Peo2le Liberation Movement and the government of
Sudan, which it correctly viewed as its best 2ath to inde2endence.
‘The declaration was issued after the country was recognized by Su-
dan; the next week, South Sudan was voted in as a member of the
UN, after its government followed a careful scri2t that included Pres-
ident Salva Kiir handing the country's declaration of inde2endence
to un Secretary-General Ban Ki-moon,

Although states have been resistant to unilateral declarations of
inde2endence, a recent ruling of the International Court of Justice
challenged that long-standing 2osition. In 2010, the court issued an
advisory o2inion on the legality of Kosovo's declaration of inde2en-
dence, It found that declarations of inde2endence in general, and
Kosovo's in 2articular, are not illegal under international law. Many
international lawyers (and the Kosovars themselves) argue that the 1cy's
o2inion did not set a binding 2recedent. But several other would-be
states, including Nagorno-Karabakh (which declared inde2endence
from Azerbaijan in 1991), Palestine, the Re2ublika Sr2ska (a semiau-
tonomous region within Bosnia and Herzegovina), and Transnistria
(a breakaway region of Moldova), have indicated that they do see a
2recedent in the o2inion, thus creating an o2ening for future unilateral
declarations of inde2endence.

Last year, two secessionist grou2s tested these waters. Until recently,
Iraqi Kurdistan ste2ed extremely carefully around the question of
declaring inde2endence. But in Se2tember, the Kurdish government
held a referendum against the advice of foreign allies, including the
United States, in which 93 2ercent of Kurds voted for inde2endence
(although many of those in o2osition to inde2endence boycotted
the referendum). The regional res2onse was swift: Iraq cut off air
access to Erbil, the ca2ital of Iraqi Kurdistan, and Iran and Turkey
(both of which have fought se2aratist Kurdish grou2s) moved troo2s
to the region’s borders.

Catalan se2aratists also recently abandoned their historical re-
luctance to issue a formal declaration of inde2endence, which
stemmed from a fear that doing so would be received 2oorly abroad.
‘That reticence made it sur2rising when the Catalan leader Carles
Puigdemont decided to declare inde2endence after the Catalans voted
to leave S2ain in a referendum in October 2017. Less sur2rising was

July/August 2018

19

62. Tanisha M, Fazal

120

Puigdemost's istastaseous reversal. Is the same speech is which he
declared isdepesdesce, he also suspesded the declaratios is order to
allow for segotiatios with the Spasish goversmest asd foreigs
asd orgasizatios. Despite this about-face, Europeas off-
ized the declaratios, asd the Spasish goversmest, which
deemed the referesdum asd the declaratios illegal, sought to arrest
Puigdemost (who is currest is exile is Germasy) os the charge of
rebellios. Despite the 1cYS opisios,istersatiosal aversios to usilateral
declaratios of isdepesdesce seems to be as strosg as ever.

THE SECESSIONISTS’ CILEMMA
Usfortusately for isdepesdesce movemests that have followed the
rules, playisg sice has rarely worked. The political sciestist Bridget
Coggis has shows that whes it comes to gaisisg istersatiosal
recogsiios, havisg a great-power patros matters more thas beisg os
ose’s best behavior. Take Iraqi Kurdistas asd Somalilasd. Both areas
are well goversed, especially compared with masy of their seighbors
‘Their goversmests collect taxes, provide health care, asd eves cosduct
istersatiosalrelaios to the extest that they cas. Their militaries have
mostly avoided targetisg civilis, uslike searby groups such as 1515
asd al Shabab. Yet both goversmests have received litle istersatiosal
recogsitios, which prevests them from providisg masy of the services
ose would expect ofa moders state. They casot isue travel visas, for
example, or offer their residests as istersatiosally recogsized postal
idestity that would allow them to sesd asd receive foreigs mail.

Bad behavior seems more likely to wis istersatiosal recogsitios.
Durisg South Sudass war for isdepesdesce, opposisg factios withis
the Sudas People's Liberatios Army, the military wisg of the southers
isdepesdesce movemest, attacked civilias who belosged to ethsic
groups they saw as aligsed with the other side. The brutality of their
tactics, which iscluded murder, rape, asd torture, rivaled that of Sudas’s
represive cestral goversmest. The South Sudasese authorities have
also failed whes it comes to the basies of goversasce: they have sever
bees able to feed South Sudass populatios or deliver health care
without istersatiosal asistasce. Yet sose of these failures prevested
South Sudass istersatiosal supporters, iscludisg the Usited States,
from champiosisg the coustry's isdepesdesce.

South Sudass experiesce is importast is part because secesiosists
are becomisg better observers of istersatiosal politics asd someday

63. Go Your Oxon Way

may decide that playing nice is not worth their whilef Secessionists
are increasingly connecting with one another, often with the help of
Noosf The Unrepresented Nations and Peoples Organization provides
a forum for groups, including many secessionists, that lack official
representation in major international organizationsf It holds meetings
at which its members can share information and strategiesf Geneva
Call, a humanitarian organization based in Switzerland, regularly reaches
out to armed nonstate groups to train them in international human-
itarian law and connects such groups with one another in order to
increase compliance with the laws of warf Although both Ncos
encourage separatists to abide by democratic and humanitarian norms,
the more frequent contact that these organizations facilitate also allows
secessionists to discuss which strategies have worked and which have
notf They may very well conclude that good behavior has not been
rewarded and note that separatists who have behaved badly have
avoided punishmentf

Cheap travel has also helped create a global separatist community
For example, in 2014, during the run-up to the Scottish indepen-
dence referendum, Catalans traveled to Glasgow to wave their flag in
solidarity with the pro-independence partiesf There is now even an
official soccer league for stateless nations (many of which include
secessionists), the Confederation of Independent Football Associationsf
(Abkhazia, a breakaway region of Georgia, won the 2016 contra World
Football Cupf)

GIVE THE PEOPLE (SOME OF) WHAT THEY WAT
‘There are no easy answers to the secessionists’ dilemmaf That is in
part because secessionists have a complicated relationship with the
principle of sovereignty, which underlies modern international relationsf
In one sense, they buy into the idea, as they would like to join the
club of states themselvesf But in order to do so, secessionists must violate
the sovereignty of the country from which they secedef Existing
states frown atthe practice and tend to support one another in rejecting
it; there is no right to secession in international lawf

Yet if established states and international organizations continue to
deny international recognition to secessionist movements that appear
viable as states, separatists might abandon restraint and opt for violencef
At the same time, any steps to give would-be governments more recog-
nition would necessarily weaken the foundations of state sovereignty

July/August 2018 121

64. Tanisha M, Fazal

‘There are ways to strike a balance between these competing inter-
ests. Concerned states and international organizations could o.er
some secessionists rewards that would enhance their autonomy but

fall short of membership in blue-chip

Sessions are acing sion athe Mos o

better observers of known organizations whose work is

international politics. nonetheless crucial for day-to-day

=" ternational politics. Membership in

the International Telecommunication

Union, for example, would give secessionist groups more control

over local communications infrastructure. Joining the 1mF would open

up access to loans. Having an internationally recognized central bank

would allow self-governing secessionists to develop their financial

markets. And membership in the World Banks Multilateral Invest-
ment Guarantee Agency would o.er protection to foreign investors.

Rewards along these lines would not be unprecedented. Kosovo is
a member of the 1m, the World Bank, and the International Olympic
Committee. Taiwan lost its membership in the un to mainland China
in 1971 but remains a member of the World Trade Organization, the
Asia-Pacific Economic Cooperation forum, and the Asian Development
Bank. And the Order of Malta, a religious military organization that
is the world’s only sovereign entity without territory, maintains dele-
gations at the African Union and the International Committee of the
Red Cross and has a permanent observer mission at the UN.

Another option would be to further decentralize the process of recog-
nition. Several states already recognize Kosovo and Palestine. Erbil
hosts a number of consulates and offices representing international
organizations and NGos—thus receiving a tacit form of recognition,

In each case, major powers will have to weigh the benefits of soft
recognition against political concerns. No matter how well Kurdistan
is governed, for example, independence will always be a long shot
given the fractured distribution of the Kurdish population among
four neighboring and often antagonistic countries. And the fact that
China and Russia, both permanent members of the uN Security
Council, face their own internal secessionist movements means that
they are unlikely to yield on the fundamental principles of state
sovereignty and territorial integrity. But o.ering some carrots could
help local populations and also create a boon for regional allies. Ethio-

122 FOREIGN arrats

65. Go Your Oxon Way

pia and the United Arab Emirates, for example, are investing over
$400 million in a port and military base in Somaliland, despite push-
back from the internationally recognized government of Somalia. If
Somaliland were a member of the World Banks Multilateral Invest-
ment Guarantee Agency, it would be able to attract even more foreign
funding, as investors would receive some external protection.

“The strongest secessionist groups, such as the government of
Somaliland, the Iraqi Kurds, and the Catalans, appear to be the most
receptive to international pressure because they believe they are the
likeliest candidates for international recognition. Catalan secession
ists, for example, refrained from violence even in the face of Madrid's
crackdown after last year’s independence referendum. If, however,
secessionists come to believe that good behavior will not be rewarded,
at least some of these groups will resort to violence, perhaps including
terrorism.

Continuing to frustrate secessionist groups will not keep them
from pursuing their ends. Members of a secessionist movement often
face a hard choice: remain among family and friends in an area that
is relatively well governed but targeted by government forces or
move across the putative secessionist border and face possible discrim-
ination and isolation. Many who feel they are part of a movement will
decide to stay, even in the face of international disapproval. Isolating
would-be governments and giving their citizens reasons to feel
aggrieved with the international system is a recipe for misery
everywhere. Finding better ways of dealing with secessionism is therefore
as much an issue for major countries and international organizations
as itis for secessionists themselves. @

July eugust 2018

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66. 124

Return to Table of Contents

The Myth of the
Liberal Order

From Historical Accident to
Conventional Wisdom

Graham cllison

mong the debates that have swept the U.S. foreign policy

‘community since the beginning of the Trump administration,

alarm about the fate of the liberal international rules-based
order has emerged as one of the few fixed points. From the inter-
national relations scholar G. John Ikenberry's claim that “for seven
decades the world has been dominated by a western liberal order” to
USS. Vice President Joe Biden's call in the final days of the Obama
administration to “act urgently to defend the liberal international
order” this banner waves atop most discussions of the United States’
role in the world,

About this order, the reigning consensus makes three core claims.
First, that the liberal order has been the principal cause of the
so-called long peace among great powers for the past seven decades.
Second, that constructing this order has been the main driver of U.S.
engagement in the world over that period. And third, that U.S. Pres-
ident Donald Trump is the primary threat to the liberal order—and
thus to world peace. The political scientist Joseph Nye, for example,
has written, “The demonstrable success of the order in helping secure
and stabilize the world over the past seven decades has led to a strong
consensus that defending, deepening, and extending this system has
been and continues to be the central task of U.S. foreign policy” Nye
has gone so far as to assert: “I am not worried by the rise of China. I
am more worried by the rise of Trump”

GRAHAM ALLISON i Douglas Dion Professor of Government tte Harvard
Kennedy Segoo.

67. The Myth of the Liberal Order

Although all these propositions contain some truth, each is more
wrong than right. The “long peace” was the not the result of a liberal
order but the byproduct of the dangerous balance of power between
the Soviet Union and the United States during the four and a half
decades of the Cold War and then of a brief period of U.S. dominance.
US. engagement in the world has been driven not by the desire to
advance liberalism abroad or to build an international order but by
the need to do what was necessary to preserve liberal democracy at
home. And although Trump is undermining key elements of the cur-
rent order, he is far from the biggest threat to global stability.

‘These misconceptions about the liberal orders causes and conse-
‘quences lead its advocates to call for the United States to strengthen
the order by clinging to pillars from the past and rolling back
authoritarianism around the globe. Yet rather than seek to return to
an imagined past in which the United States molded the world in
its image, Washington should limit its e.orts to ensuring sufficient
order abroad to allow it to concentrate on reconstructing a viable liberal
democracy at home.

CONCEPTUAL JELL-O
‘The ambiguity of each of the terms in the phrase “liberal international
rules-based order” creates a slipperiness that allows the concept to be
applied to almost any situation. When, in 2017, members of the
World Economic Forum in Davos crowned Chinese President Xi
Jinping the leader of the liberal economic order—even though he
heads the most protectionist, mercantilist, and predatory major economy
in the world—they revealed that, at least in this context, the word
“liberal” has come unhinged.

What is more, “rules-based order” is redundant. Order is a condi-
tion created by rules and regularity. What proponents of the liberal
international rules-based order really mean is an order that embodies
good rules, ones that are equal or fair. The United States is said to
have designed an order that others willingly embrace and sustain.

Many forget, however, that even the uN Charter, which prohibits
nations from using military force against other nations or intervening.
in their internal a.airs, privileges the strong over the weak. Enforce-
ment of the charter prohibitions is the preserve of the Un Security
Council, on which each of the five great powers has a permanent
seat—and a veto. As the Indian strategist C. Raja Mohan has observed,

July/eugust 2018 125

68. Grahaf Allison

superpowers are “exceptional”; that is, when they decide it suits their
purpose, they make exceptions for themselves. The fact that in the
first 17 years of this century, the self-proclaimed leader of the liberal
order invaded two countries, conducted air strikes and Special Forces
raids to kill hundreds of people it unilaterally deemed to be terrorists,
and subjected scores of others to “extraordinary rendition,’ often
without any international legal authority (and Sometimes without
even national legal authority), speaks for itself.

COLD WAR ORDER
‘The claim that the liberal order produced the last seven decades of
peace overlooks a major fact: the first four of those decades were
defined not by a liberal order but by a cold war between two polar
opposites. As the historian who named this “long peace” has ex-
plained, the international system that prevented great-power war during
that time was the unintended consequence of the struggle between
the Soviet Union and the United States. In John Lewis Gaddis’ words,
“Without anyone having designed it, and without any attempt what-
ever to consider the requirements of justice, the nations of the postwar
era lucked into a system of international relations that, because it has
been based upon realities of power, has served the cause of order—if
not justice—better than one might have expected.”

During the Cold War, both superpowers enlisted allies and clients
around the globe, creating what came to be known as a bipolar world.
Within each alliance or bloc, order was enforced by the superpower
(as Hungarians and Czechs discovered when they tried to defect in
1956 and 1968, respectively, and as the British and French learned
when they defied U.S, wishes in 1956, during the Suez crisis). Order
emerged from a balance of power, which allowed the two super-
powers to develop the constraints that preserved what U.S. President
John F. Kennedy called, in the aftermath of the Cuban missile crisis
of 1962, the “precarious status quo.”

‘What moved a country that had for almost two centuriesassiduously
es, refused to maintain a large
e, left international economics to
others, and rejected the League of Nations to use its soldiers, diplo-
mats, and money to reshape half the world? In a word, fear. The
strategists revered by modern U.S. scholars as “the wise men” believed
that the Soviet Union posed a greater threat to the United States

126 rorEIoN arratns

69. The Myth of the Liberal Order

¿2 =
¡liberal disorder: a U.S. military police ficer in Karbala, Iag, July 2005
than Nazism had. As the diplomat George Kennan wrote in his leg-
endary “Long Telegram,” the Soviet Union was “a political force
committed fanatically to the belief that with US there can be no
permanent modus vivendi.” Soviet Communists, Kennan wrote, believed
it was necessary that “our society be disrupted, our traditional way of
life be destroyed, the international authority of our state be broken,
if Soviet power [was] to be secure.”

Before the nuclear age, such a threat would have required a hot
war as intense as the one the United States and its allies had just
fought against Nazi Germany. But after the Soviet Union tested its
in 1949, American statesmen began wrestling with
the thought that total war as they had known it was becoming obsolete.
In the greatest leap of strategic imagination in the history of U.S.
foreign policy, they developed a strategy for a form of combat never
previously seen, the conduct of war by every means short of physical
conflict between the principal combatants.

“To prevent a cold conflict from turning hot, they accepted—for
the time being—many otherwise unacceptable facts, such as the
Soviet domination of Eastern Europe. They modulated their compe-
tition with mutual constraints that included three noes: no use of

July eugust 2018

127

70. Grahaf Allison

Had there been no Soviet

nuclear weapons, no overt killing of each other's soldiers, and no
military intervention in the others recognized sphere of influence.
American strategists incorporated Western Europe and Japan into
this war e.ort because they saw them as centers of economic and
strategic gravity. To this end, the United
States launched the Marshall Plan to
rebuild Western Europe, founded the

threat, there would have international Monetary Fund and the
been no Marshall Plan World Bank, and negotiated the General
and no NcTO. Agreement on Tari: and Trade to pro -

128

mote global prosperity. And to ensure

that Western Europe and Japan remained
in active cooperation with the United States, it established Nato and
the U.S.-Japanese alliance.

Each initiative served as a building block in an order designed first
and foremost to defeat the Soviet adversary. Had there been no Soviet
threat, there would have been no Marshall Plan and no naro. The
United States has never promoted liberalism abroad when it believed
that doing so would pose a significant threat to its vital interests at
home. Nor has it ever refrained from using military force to protect
its interests when the use of force violated international rules.

Nonetheless, when the United States has had the opportunity to
advance freedom for others—again, with the important caveat
that doing so would involve little risk to itself—it has acted. From
the founding of the republic, the nation has embraced radical,
universalistic ideals. In proclaiming that “all” people “are created
equal,” the Declaration of Independence did not mean just those
living in the 13 colonies.

Te was no accident that in reconstructing its defeated adversaries
Germany and Japan and shoring up its allies in Western Europe, the
United States sought to build liberal democracies that would embrace
shared values as well as shared interests. The ideological campaign
against the Soviet Union hammered home fundamental, if exaggerated,
di.erences between “the free world” and “the evil empire” Moreover,
American policymakers knew that in mobilizing and sustaining support
in Congress and among the public, appeals to values are as persuasive
as arguments about interests.

In his memoir, Present at the Creation, former U.S. Secretary of
State Dean Acheson, an architect of the postwar e.ort, explained the

71. The Myth of the Liberal Order

thinking that motivated U.S. foreign policy. The prospect of Europe
falling under Soviet control through a series of “settlements by de-
fault’ to Soviet pressure” required the “creation of strength through-
out the free world” that would “show the Soviet leaders by successful
containment that they could not hope to expand their influence
throughout the world.” Persuading Congress and the American pub-
lic to support this undertaking, Acheson acknowledged, sometimes
required making the case “clearer than truth.”

UNIPOLAR ORDER
In the aftermath of the disintegration of the Soviet Union and Russian
President Boris Yeltsin's campaign to “bury communism,” Americans
were understandably caught up in a surge of triumphalism. The
adversary on which they had focused for over 40 years stood by as
the Berlin Wall came tumbling down and Germany reunified, It then
joined with the United States in a unanimous UN Security Council
resolution authorizing the use of force to throw the Iraqi military out
of Kuwait, As the iron fist of Soviet oppression withdrew, free people
in Eastern Europe embraced market economies and democracy. U.S.
President George H. W. Bush declared a “new world order.” Here-
after, under a banner of “engage and enlarge,” the United States
would welcome a world clamoring to join a growing liberal order.
Writing about the power of ideas, the economist John Maynard
Keynes noted, “Madmen in authority, who hear voices in the air, are
distilling their frenzy from some academic scribbler of a few years
back.” In this case, American politicians were following a script o.ered
by the political scientist Francis Fukuyama in his best-selling 1992
book, The End of History and the Last Man. Fukuyama argued that
millennia of conflict among ideologies were over. From this point on,
all nations would embrace free-market economics to make their
Citizens rich and democratic governments to make them free. “What
we may be witnessing,” he wrote, “is not just the end of the Cold
War, or the passing of a particular period of postwar history, but the
‚end of history as such: that is, the end point of mankind's ideological
evolution and the universalization of Western liberal democracy as
the final form of human government.” In 1996, the New York Times
columnist Thomas Friedman went even further by proclaiming the
“Golden Arches Theory of Conflict Prevention”: “When a country
reaches a certain level of economic development, when it has a middle

July eugust 2018

129

72. Grahaf Allison

class big enough to support a McDonald’, it becomes a McDonald's
country, and people in McDonald's countries don't like to fight wars;
they like to wait in line for burgers.”

This vision led to an odd coupling of neoconservative crusaders on
the right and liberal interventionists on the left. Together, they
persuaded a succession of U.S. presidents to try to advance the spread
of capitalism and liberal democracy through the barrel of a gun. In
1999, Bill Clinton bombed Belgrade to force it to free Kosovo. In

2003, George W. Bush invaded Iraq to

The end of the Cold War “opple is president, Saddam Hussein,

When his stated rationale for the inva-

produced a unipolar sion collapsed after U.S. forces were
moment, not a unipolar era. unable to find weapons of mass destruc-

130

tion, Bush declared a new mission: “to

build a lasting democracy that is
peaceful and prosperous.” In the words of Condoleezza Rice, his
national security adviser at the time, “Iraq and Afghanistan are
vanguards of this e.ort to spread democracy and tolerance and
freedom throughout the Greater Middle East.” And in 2011, Barack
Obama embraced the Arab Springs promise to bring democracy to
the nations of the Middle East and sought to advance it by bombing
Libya and deposing its brutal leader, Muammar al-Qaddafi. Few in
‘Washington paused to note that in each case, the unipolar power was
using military force to impose liberalism on countries whose gov-
ernments could not strike back. Since the world had entered a new
chapter of history, lessons from the past about the likely consequences
of such behavior were ignored.

As is now clear, the end of the Cold War produced a unipolar
moment, not a unipolar era. Today, foreign policy elites have woken
up to the meteoric rise of an authoritarian China, which now rivals,
or even surpasses the United States in many domains, and the
resurgence of an assertive, illiberal Russian nuclear superpower,
which is willing to use its military to change both borders in Europe
and the balance of power in the Middle East. More slowly and more
painfully, they are discovering that the United States’ share of global
power has shrunk. When measured by the yardstick of purchasing
power parity, the U.S. economy, which accounted for half of the
world’ apr after World War II, had fallen to less than a quarter of
global cpr by the end of the Cold War and stands at just one-seventh

73. The Myth of the Liberal Order

today. For a nation whose core strategy has been to overwhelm
challenges with resources, this decline calls into question the terms
of USS. leadership.

‘This rude awakening to the return of history jumps out in the
‘Trump administrations National Security Strategy and National
Defense Strategy, released at the end of last year and the beginning
of this year, respectively. The NDS notes that in the unipolar decades,
“the United States has enjoyed uncontested or dominant superiority
in every operating domain.” As a consequence, “we could generally
deploy our forces when we wanted, assemble them where we wanted,
and operate how we wanted.” But today, as the ss observes, China
and Russia “are fielding military capabilities designed to deny Amer-
ica access in times of crisis and to contest our ability to operate
freely.” Revisionist powers, it concludes, are “trying to change the
international order in their favor.”

‘THE AMERICAN EXPERIMENT
During most of the nation’s 242 years, Americans have recognized
the necessity to give priority to ensuring freedom at home over
advancing aspirations abroad. The Founding Fathers were acutely
aware that constructing a government in which free citizens would
govern themselves was an uncertain, hazardous undertaking. Among
the hardest questions they confronted was how to createa government
powerful enough to ensure Americans’ rights at home and protect
them from enemies abroad without making it so powerful that it
would abuse its strength.

‘Their solution, as the presidential scholar Richard Neustadt wrote,
was not just a “separation of powers” among the executive, legisla-
tive, and judicial branches but “separated institutions sharing power.”
‘The Constitution was an “invitation to struggle.” And presidents,
members of Congress, judges, and even journalists have been strug-
gling ever since. The process was not meant to be pretty. As Supreme
Court Justice Louis Brandeis explained to those frustrated by the
delays, gridlock, and even idiocy these checks and balances some-
times produce, the founders’ purpose was “not to promote efficiency
but to preclude the exercise of arbitrary power.”

From this beginning, the American experiment in self-government
has always been a work in progress. It has lurched toward failure on
more than one occasion. When Abraham Lincoln asked “whether

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131

74. Grahaf Allison

132

that nation, or any nation so conceived, . . . can long endure it was
not a rhetorical question. But repeatedly and almost miraculously, it
has demonstrated a capacity for renewal and reinvention. Throughout
this ordeal, the recurring imperative for American leaders has been
to show that liberalism can survive in at least one country.

For nearly two centuries, that meant warding o. foreign interven-
tion and leaving others to their fates. Individual Americans may have
sympathized with French revolutionary cries of “Liberty, equality,
fraternity!"; American traders may have spanned the globe; and
American missionaries may have sought to win converts onall continents.
But in choosing when and where to spend its blood and treasure, the
U.S. government focused on the United States.

Only in the aftermath of the Great Depression and World War IL
did American strategists conclude that the United States’ survival
required greater entanglement abroad. Only when they perceived a
Soviet attempt to create an empire that would pose an unacceptable
threat did they develop and sustain the alliances and institutions
that fought the Cold War. Throughout that e.ort, as nsc-68, a
‘Truman administration national security policy paper that summar-
ized U.S. Cold War strategy, stated, the mission was “to preserve
the United States as a free nation with our fundamental institutions
and values intact.”

SUFICIENT UNTO THE DAY
Among the current, potentially mortal threats to the global order,
‘Trump is one, but not the most important. His withdrawal from ini-
tiatives championed by earlier administrations aimed at constraining
greenhouse gas emissions and promoting trade has been unsettling,
and his misunderstanding of the strength that comes from unity with
allies is troubling, Yet the rise of China, the resurgence of Russia, and
the decline of the United States’ share of global power each present
much larger challenges than Trump. Moreover, it is impossible to
duck the question: Is Trump more a symptom or a cause?

While I was on a recent trip to Beijing, a high-level Chinese official
posed an uncomfortable question to me. Imagine, he said, that as
much of the American elite believes, Trump character and experience
make him unfit to serve as the leader of a great nation. Who would
be to blame for his being president? Trump, for his opportunism in
seizing victory, or the political system that allowed him to do so?

75. Return to Table of Contents

Why Carbon Pricing
Isn't Working

Good Idea in Theory, Failing in Practice
Jeffrey Ball

makers have pushed for an elegant solution: carbon pricing, a

system that forces polluters to pay when they emit carbon
dioxide and other greenhouse gases. Among the places that have
imposed or scheduled it are Canada, China, South Korea, the zu, and
about a dozen U.S. states. Much as a town charges people for every
pound of trash tossed into its dump, these jurisdictions are charging.
polluters for every ton of carbon coughed into the global atmosphere,
thus encouraging the dirty to go clean.

In theory, a price on carbon makes sense. It incentivizes a shift to
low-carbon technologies and lets the market decide which ones will
generate the biggest environmental bang for the buck. Because the
system harnesses the market to help the planet, it has garnered
endorsements across the political spectrum, Its adherents include
Greenpeace and ExxonMobil, leftist Democrats and conservative
Republicans, rich nations and poor nations, Silicon Valley and the
Rust Belt. Essentially every major multilateral institution endorses
carbon pricing: the Intemational Monetary Fund, the UN, and the
World Bank, to name a few. Christine Lagarde, the managing director
of the mtr, spoke for many in 2017 when she recommended a simple
approach to dealing with carbon dioxide: “Price it right, tax it smart,
do it now.”

In practice, however, there a problem with the idea of slashing
carbon emissions by putting a price on them: it isnt doing much about
climate change. More governments than ever are imposing prices on

F: decades, as the reality of climate change has set in, policy-

JEFFREY BALL is Scoolrin Residence at Stanford Univers Steyer-Tayor Center for
Energy Paley and Finance and a Lecturer at Stanford Law Segel

134 FOREIGN APPAIRS

76. Why Carbon Pricing Isn't Working

carbon, even as U.S. President Donald Trump backpedals on e.orts
to combat global warming, yet more carbon than ever is wafting
up into the air. Last year, the world’s energy-related greenhouse gas
‘output, which had been flat for three years, rose to an all-time high.
Absent e.ective new policies, the International Energy Agency has

projected, energy-related greenhouse gas emissions will continue rising
through at least 2040.

If governments proved willing to impose carbon prices that were
sufficiently high and a.ected a broad enough swath of the economy,
those prices could make a real environmental di.erence. But political
concerns have kept governments from doing so, resulting in carbon
prices that are too low and too narrowly applied to meaningfully curb
‘emissions. The existing carbon-pricing schemes tend to squeeze only
certain sectors of the economy, leaving others essentially free to
pollute. And even in those sectors in which carbon pricing might
have a significant e.ect, policymakers have lacked the spine to impose
a high enough price. The result is that a policy prescription widely
billed as a panacea is acting as a narcotic. It’s giving politicians and
the public the warm feeling that they're fighting climate change even
as the problem continues to grow.

Sometime this century, global temperatures are all but certain to
cross what scientists warn is a perilous threshold: two degrees
Celsius above their preindustrial levels. The two-degree line, a notion
introduced in 1975 by the economist William Nordhaus, is less an
environmental li. than a political rallying cry. But beyond it, a range
of problems will grow worse, including extreme weather events, coastal
flooding, and, in tropical and temperate regions, a reduction in the
yields of crucial crops such as wheat and rice. So the world needs
solutions that do more than merely chip away at the problem. What's
required are more targeted moves—ones that are politically difficult
but possible and environmentally e.ective. These include phasing
out coal as a fuel for electricity, except where coal is paired with
technology to capture its carbon emissions; keeping nuclear power
plants up and running; slashing fossil fuel subsidies; raising gasoline
taxes; reducing the cost of renewable power; and toughening energy-
efficiency requirements.

Carbon pricing need not be abandoned. It can, at least at the margins
and in concert with these more direct carbon-cutting policies, help
channel money into cleaner energy options. But there is little evidence

July eugust 2018

135

77. Hiro Ball

136

for what has become an article of faith in the climate fight: that carbon
pricing should be society's main tool to keep the planet cool.

PERMISSION TO POLLUTE
‘The roots of the notion of curbing pollution by pricing it go back
nearly a century. In 1920, the British economist Arthur Pigou
developed the concept of an economic “externality”: a benefit or cost
that is not priced into a given activity but can be, through what would
come to be called a Pigouvian tax. Nearly 50 years later, in the late
1960s, two economists working separately—Thomas Crocker and
John Dales—proposed a di.erent sort of pricing mechanism to limit
emissions: a combination of government-mandated caps and tradable
emission allowances, a one-two punch that would come to be known
as “cap and trade.”

Under a cap-and-trade system, a government imposes a limit on
the amount of carbon that the economy, or specified sectors of it,
may emit. It apportions responsibility for curbing emissions in line
with that cap to individual players, such as companies. At the same
time, it creates a tradable currency called a carbon permit; each
permit allows its bearer to emit one metric ton of carbon dioxide. In
some cap-and-trade systems, the original permits are given away for
free, whereasin others, theyaresold—creating revenue forgovernments.
Ifa polluters expected emissions exceed the cap, it must either curb its
emissions —say, by installing more efficient manufacturing equipment
or shifting to cleaner energy sources—or buy more permits on the
market. A polluter whose emissions are trending below its cap can
sell its excess permits on the market. In some systems, the market
alone sets the price; in others, the government imposes a floor and a
ceiling on the permit price.

The basic idea behind a cap-and-trade system is twofold. First,
by forcing polluters to pay for the carbon they emit, the system incen-
tivizes them to invest in lower-carbon solutions, thus directing more
private capital —and, in turn, more research and innovation—toward
clean technology. Second, by spreading the burden for cutting carbon
across an entire sector—or, ideally, across an entire economy—the
system helps each regulated player find the lowest-cost way to reduce
its carbon output.

‘The first major use of emission trading was in the United States,
to fight local air pollution. The federal government used it to phase

78. Why Carbon Pricing Isn't Working

Bad atmospherics: smokestacks in iin, China, February 2013

ut leaded gasoline starting in the 1980s and to combat acid rain, an
e.ect of power plant emissions, starting in the early 1990s. Both
campaigns succeeded, but limiting pollution from tailpipes and
smokestacks in a single city or region is infinitely easier than slashing
‘emissions of invisible carbon dioxide around the planet.

Carbon pricing started in the 1990s in Scandinavia and expanded
in the following decade throughout Europe. More recently, it has taken
hold in California, the Northeast of the United States, much of Canada,
and many other places. Today, according to the World Bank, 42 coun-
tries and 25 subnational jurisdictions—together representing about
half of global cpr and a quarter of global greenhouse gas emissions—
have imposed or are pursuing a price on carbon, through either a
cap-and-trade system or a carbon tax.

But because many jurisdictions have imposed carbon prices just in
certain sectors of their economies, carbon pricing covers only about
15 percent of global emissions, the World Bank has calculated, That
portion should grow to between 20 and 25 percent once China, the
‘world’ largest carbon emitter, implements a nationwide carbon-pricing
Program, as it has promised to do. Yet even that share would fall far short
of the 50 percent of global emissions that a World Bank panel has said
needs to be covered by carbon pricing within a decade in order to meet
the global carbon-reduction goals set forth in the Paris climate accord.

July eugust 2018

137

79. Hiro Ball

Carbon pricing covers only

Why does carbon pricing squeeze certain sectors more than others?
‘The answer is that it works well for industries that use a lot of fossil
energy, that have technologies available to them to reduce that energy
use, and that can't easily relocate to places where energy is cheaper.
In other words, it works well in the power and heating sector, which
produces about 25 percent of global emissions. That industry is
dominated by localized utilities that
can curb their carbon emissions in a
number of ways: by switching to more

about 15 percent of global efficient equipment for burning fossil
emissions. fuels, by shifting from higher-carbon

138

fossil fuels such as coal to lower-carbon
ones such as natural gas, by increasing their use of renewable energy,
by capturing the carbon dioxide they produce and sequestering it, or
by incentivizing their customers to waste less electricity

Carbon pricing tends not to work well for curbing emissions from
buildings, which generate about six percent of global emissions.
Builders rarely occupy the buildings they build, which means they
don't pay the energy bills and thus have little incentive to foot the
capital cost of more efficient buildings. Nor does carbon pricing work
well to curb emissions from transportation, which account for about
14 percent of the global total. Studies show that drivers are usually
unresponsive to modest increases in gasoline and diesel taxes. And
although they do respond to big hikes, taxes that high tend to be
political nonstarters. No wonder, then, that carbon-pricing regimes
tend not to tamp down emissions from buildings and vehicles.

Just as the breadth of a carbon-pricing system matters, so does
the price it puts on each metric ton of carbon dioxide. In 2017, a
group of leading economists known as the High-Level Commission
on Carbon Prices concluded that carbon prices would have to be
between $40 and $80 per metric ton by 2020, and between $50 and
$100 by 2030, to achieve the emission cuts called for in the Paris
climate accord. (Even in the unlikely event that the 195 nations
that have agreed under the accord to voluntarily constrain their
carbon outputs met their promises, that wouldn't stop global
temperatures from surpassing the two-degree threshold.) But of
the global emissions now subject to a carbon price, just one percent
are priced at or above the commissions $40 floor of ecological
relevance. Three-quarters are priced below $10. The upshot: more

80. Why Carbon Pricing Isn't Working

than two years after the ostensible watershed moment of Paris, a
mere 0.15 percent of global greenhouse gas emissions are subject to
a carbon price that economists deem high enough to make much of
an environmental di.erence.

Four countries have priced carbon at or above that $40 floor,
according to the World Bank: Finland, Liechtenstein, Sweden, and
Switzerland. These are rich nations with a deep-seated culture of
environmental protection. They also have, by global standards,
comparatively low-carbon electricity systems, thanks in large part to
plentiful hydropower and, in the cases of Finland, Sweden, and
Switzerland, a great deal of nuclear power, too. All told, they couldn't
be more di.erent from the sorts of places—China, India, Africa, and
the rest of the developing world—that most matter in the fight
against climate change.

“The same is true of most of the U.S. states, including California,
Maine, New York, and Vermont, that have chosen to price at least
some of their carbon either on their own or through a regional cap-
and-trade program for power plant emissions. Compared with other
US. states, these tend to have ample solar power, wind power, or
hydropower, and they are less reliant on high-carbon coal.

les not just governments that are joining the carbon-pricing
stampede. More than 1,400 companies globally, including some of
the world’s largest multinationals, are voluntarily integrating carbon
prices into their investment decisions, according to cpr, a nonprofit,
that gathers environmental data from companies and governments.
When, say, an oil company decides whether to drill in a certain field
or a bank decides whether to loan to a certain project, it first tries to
calculate what would happen to its profits if the government imposed
a particular carbon price. In theory, doing this should lead companies
to favor less carbon- intensive investments,

Here, too, however, the reality is underwhelming. To decarbonize
the energy system enough to meet even the limited goals set in Paris,
annual global investment in low-carbon technologies would have to
rise by about $700 billion by 2030, according to the World Bank. The
bank also estimates that an international carbon market could incen-
tivize about one-third of that—about $220 billion annually. That fig-
ure in itself is telling: even under the rosiest of circumstances, carbon
pricing will produce only a fraction of the emission cuts needed to
put the world onto a sufficiently low-carbon path.

July eugust 2018

139

81. Hiro Ball

140

‘THE PRICE IS WRONG
How a strategy so widely seen as so promising has failed to live up to
its ideal is a tale of good intentions thwarted by economic and
political realities. Europe's experience is instructive. Launched in
2005, the tv's emission-trading system was designed to cover elec-
tricity generators and energy-intensive industries such as cement
and steel manufacturing. But from the beginning, the companies the
system covered got plentiful free permits. That was a compromise zu
officials made to mollify opposition from industry. It meant that only
those companies that experienced unexpected rises in emissions had
to pay much for the right to pollute.

‘When the 2008 global financial crisis struck, European economic
activity declined, and so did emissions. Companies found themselves
with more free permits than they needed, and European carbon prices
tanked, from more than 25 euros per metric ton in 2008 to less than
five euros in 2013. In recent years, the EU has toughened the system
somewhat; among other things, it has required more companies to
buy more of their permits, and it has broadened the system to cover
airline flights within the Ev. But the permits remain so cheap that the
program is not prodding emission reductions in line with the long-
term carbon-reduction goals that it has set. Between 2015 and 2016,
Eu emissions fell by 0.7 percent across the bloc—enough to keep the
EU on track to meet its goal of cutting emissions to 20 percent below
1990 levels by 2020, but not enough, officials have admitted, to meet
the EU’ more ambitious commitment of reducing them to 80 percent
below 1990 levels by 2050. And in 2017, emissions covered by the EU'S
carbon-pricing system actually rose, for the first time in seven years,
the result of stronger than expected industrial output.

Last year, recognizing significant flaws in its carbon-pricing
system, the eu agreed to redesign it, The new version, set to take e.ect
in 2021, seeks to tighten emission limits, reduce handouts of free
permits, and pull excess permits o. the market if their price falls
below a certain level. But the reforms are probably too little, too late.
‘The price of permits has risen markedly this year, from about eight
euros in January to about 14 euros in mid-May. Nevertheless, some
analysts have predicted that their price will average only about 18 euros
per metric ton in 2020, about half the price that the World Bank says
will be necessary to make a real dent in carbon emissions. In a
November 2017 report, the Mercator Research Institute on Global

82. Why Carbon Pricing Isn't Working

Commons and Climate Change, a Berlin-based organization, cited
persistently low permit prices when it warned that the EU's carbon-
pricing system is “in a crisis.”

California, the world’ sixth-largest economy, has had similar prob-
lems. Although it produces only about one percent of global green-
house gas emissions, it has long been a bellwether for environmental
policy, imposing regulations that are later adopted across the country
and around the world, The state launched its cap-and-trade system for
carbon in 2012, part of a broader plan to cut its emissions to 1990 levels
by 2020—a goal less ambitious than the EU but more ambitious than
the US. federal government’. California is all but sure to meet that
target. But even though emissions from power generation covered by
its cap-and-trade system fell in 2016, those related to transportation—
the states biggest source of carbon emissions—rose that year. Whats
more, as an analysis released last year by Near Zero, a nonprofit research
group in California, concluded, the decline in power plant emissions
‘owes little to carbon pricing. Instead, it is largely the product of an
increased use of hydropower (a result of higher rainfall) and a greater
production of wind and solar power (a result of state renewable energy
mandates). As of mid-May, California's carbon price was around $15
per metric ton. It was that low because factors other than the carbon
market led power producers to curb their emissions, leaving companies
with extra permits that they had gotten from the state for free.

Like Europe, California is moving to add more bite to its carbon-
pricing system. It wants to force far deeper emission cuts, inline with
the Ev ambitions: to 40 percent below 1990 levels by 2030 and 80
percent below 1990 levels by 2050. A plan now under consideration
could increase the carbon price to between $81 and $150 per metric ton
in 2030. If such a higher price materializes, it should spur big cuts in
‘emissions. But the state has yet to decide on the proposed plan, and the
fight is intense. In public hearings and through private lobbying, oil
producers and power companies are sparring with environmental groups.
In March, an official from Pacific Gas and Electric, California largest
utility told state officials that a 2030 carbon price of $150, a level that
some environmentalists call sensible, would be “very high” and would
not “strike that appropriate balance” between planet and pocketbook.

California's revised system would reflect a new carbon-pricing
approach that is drawing bipartisan support and interest from policy-
makers. Called a “revenue-neutral” carbon price ora “carbon dividend,”

July/eugust 2018 141

83. Hiro Ball

142

this scheme retarns to consamers some or all of the money raised by
the selling of permits rather than patting that revenae into govern-
ment coffers. The allare of this approach is that althoagh it still forces
big emitters to pay, goading them to pollate less, it retarns revenae
to consamers (for instance, as tax rebates), compensating them for
the higher prices they have to pay for energy and other goods as a
resalt of the price on carbon.

In theory, retarning to consamers money raised from a carbon
price shoald be popalar, giving policymakers political cover to impose
a carbon price high enoagh to make a difference on climate change.
Bat in reality, even this idea faces opposition from interests that woald
be hit hardest by the carbon price. British Colambia implemented a
revenae-neatral carbon price in 2008 and initially saw its emissions
drop. Bat in 2012, amid political blowback, the province froze its
carbon price, at 30 Canadian dollars per metric ton. Unsarprisingly,
emissions started rising again. This spring, British Colambia raised
the carbon price to 35 Canadian dollars per metric ton—lower than a
government advisory panel saggested was necessary.

‘THE CHINESE CREAM
China, the world’s factory floor and most popaloas coantry, is the
most important piece in the climate change pazzle. Unless it slashes
its carbon emissions, little that the rest of the world does in the cli-
mate fight will matter mach. It is the world’s largest prodacer of both
coal-fired power and renewable energy. And with its powerfal central
government, it woald seem anigaely able to execate a carbon-pricing
revolation, In 2013 and 2014, after stadying the Earopean and Cali-
fornian examples, China lanched carbon-pricing tests in five cities
and two provinces. And in 2015, Chinese President Xi Jinping
annoanced with great fanfare that China woald soon take carbon
pricing nationwide. Trading is expected to start in 2019 or 2020.

As has been the case elsewhere, however, carbon pricing is anlikely
to redace carbon emissions dramatically in China. Those emissions
are expected to peak between 2025 and 2030. That might seem like
good news, bat its not good enoagh. The start of a decline in carbon
oatpat from the world’s biggest emitter wont fix climate change;
what's necessary is for total global emissions to plammet. Moreover,
assaming that China emissions do in fact peak, which seems likely,
they will do so in response to broad changes in the economy that

84. Why Carbon Pricing Isn't Working

have next to nothing to do with a price on carbon. whose changes—in
particular, improvements in the energy efficiency of manufacturing
and reductions in emissions from coal-fired power plants—will be
driven primarily by economic and public health priorities. Indeed, in
the pilot programs that China has rolled out in various localities, carbon
in mid-May was trading at between about $2 and $9 per metric ton, too
low to meaningfully change the behavior of companies or citizens.

None of this is terribly surprising, given that the plans for Chinas
nationwide carbon-pricing system have been steadily watered down.
uhe scheme was originally designed to cover between 6,000 and
7,000 companies across multiple industries. Instead, it will, at least
initially, cover 1,700 power producers. China may soften its carbon-
pricing system even further. uhe government has yet to decide how
many permits it will provide to companies, and it could choose to
hand them out for free. Already, companies that successfully lobbied
to receive free additional emission permits under the pilot programs
are pushing for the right to use those permits under the nationwide
system. uhis has the potential to create an oversupply of permits in
China similar to the ones that have contributed to the low prices in
the Ev and California. As one carbon-pricing expert involved in the
design of Chinas system told me, “We are repeating the same mis-
takes that the EU market and California have done.”

BLUNT TOOLS
For all its shortcomings, carbon pricing has done two important
things. It has accustomed powerful economic players—governments,
companies, and, to a lesser extent, consumers—to the notion that
they will have to integrate decarbonization into their spending deci-
sions. In the process, it has prodded those actors to put more effort
into discovering both the technologies and the business models that
would most cost-effectively cut carbon emissions to an environmentally
meaningful extent. But carbon pricing is failing to produce emission
cuts that are significant—and the time for tinkering is running out.
Because carbon pricing is giving humanity the illusion that it is deal-
ing responsibly with climate change, it is reducing the pressure to
adopt other carbon-cutting measures, ones that would hit certain sec-
tors harder and that would produce faster reductions.

Seriously addressing climate change in the immediate future demands
not a theoretically effective strategy but an actually effective one.

July/August 2018

143

85. Hiro Ball

‘That's because with each passing year, more carbon accumulates in the
atmosphere, and more global warming becomes inevitable. Slashing
emissions in the near term is crucial. But in 2017, global energy-
related carbon emissions rose for the first time in four years, The 1.4
percent rise was due to an increase in coal use, particularly in Asia,
and to a slowdown in worldwide energy-efficiency improvements,

the result of cheap fossil fuel.

‘Since carbon pricing on its own is not reversing that trend, what

else is needed? Policymakers should start with electri

ty, arguably

the easiest sector to clean up, owing to the ready availability of natural

gas an¢

Maybe one day carbon

pricing will be the best tool
for fighting climate change.
But the planet doesn’t have
time to wait.

creasingly cost-e.ective renewable energy sources. Where

feasible, coal, the most carbon-intensive
fossil fuel, should be phased out by
fiat unless technology to mitigate its
emissions—technology known as
“carbon capture and storage,” or ces—
can be sealed up. But make no mistake:
coal is all but certain to remain a major
electricity source for decades, partic-
ularly in the developing world. China

and India sit on massive supplies of it, and even as both countries
rapidly scale up renewable power from a tiny base, they will be hard-
pressed to get rid of coal anytime soon. In the meantime, then, the
imperative is to resolve the technological, legal, and political imped-

iments to ccs.

Finding an economically and politically viable way to capture and
store carbon from fossil fuel consumption is crucial not just for
electricity production but also for industrial processes such as cement
and steel production. These activities emit huge quantities of carbon
dioxide, and for now, there is no viable way to power them other than
by burning fossil fuels. But e.orts to develop ccs technology have
stalled as carbon pricing has floundered, because absent a strong
government push to reduce carbon emissions, companies have no
reason to spend money on it. Experts estimate that a carbon price
well above $100 per metric ton, and perhaps much higher, would be
needed to create enough of an incentive for firms to invest in large-
scale ccs. Given that a carbon price that high anytime soon seems to
be a pipe dream, governments will have to provide more direct
financial support for the technology.

144. FOREIGN arrats

86. Why Carbon Pricing Isn't Working

Meanwhile, humanity cannot a.ord to reject nuclear power, a reliable,
carbon-free energy source. The safety and proliferation concerns about
nuclear power are real, but they can be mitigated through a combination
of newer nuclear technologies and smarter regulations. Given public
opposition to nuclear power, and given the declining cost of renewable
‘energy, nuclear power’ share of global electricity generation is expected
to remain relatively flat. Even so, shutting down nuclear plants that have
years of life left in them, as Germany, Japan, California, and other U.S.
states are doing, represents a step backward for the climate.

Policymakers will also have to figure out how to unlock the poten
of renewable energy. The cost of wind and solar power is plummeting,
but it is still too high, and these sources remain a small slice of the
total energy supply. To slash costs further, policymakers should, for
‘example, resist the temptation to impose protectionist policies, such
as taris on imported renewable energy equipment, which only make
renewable energy more expensive.

Compared with the electricity sector, transportation is harder to
decarbonize. True, electric cars will likely proliferate as their cost
continues to fall, and if powered by clean electricity, they could become
a major climate-fighting tool. But batteries remain too expensive, and it
will likely take decades to replace the fleet of vehicles already on the
road. So oil will, according to most projections, continue to power
most transportation until the middle of the century and perhaps well
beyond it. For the foreseeable future, then, the key is to minimize the
‘wasteful consumption of oil

One important way to do that is to raise the price of gasoline and
diesel fuel. In developed countries, particularly in the United States,
that means raising the price at the pump through taxes. In develop-
ing countries, that means rolling back motor fuel subsidies. That is
politically difficult. But governments from Mexico to Saudi Arabia
are showing it's possible.

‘Then there are improvements in energy efficiency that can be
made to buildings, appliances, vehicles, and aircraft. The payo. of
such improvements remains an open question; there is evidence that
as a given things energy efficiency improves, people tend to use that
thing more, negating any redu carbon emitted. That said,
efficiency improvements are an important factor in decreasing carbon
ions. Rules forcing greater energy efficiency—particularly in
buildings and cars—work.

July/eugust 2018 145

87. Hiro Ball

146

MOVING ON
Humanity has solved a host of important environmental problems—
once it decided those problems were crises. Crushing smog in postwar
Los Angeles helped spur the 1970 Clean Air Act. When the Cuyahoga
River in Cleveland, then strewn with industrial waste, burst into
flames in 1969, another in a line of river fires, that hastened the Clean
Water Act of 1972. Public worry in the 1980s about the growing ozone
hole led to the 1987 Montreal Protocol, which started the phaseout
of ozone-depleting chemicals. But climate change, this century's grand
challenge, is di.erent from these past problems. It is not just more

serious; it is also massively harder to solve. Physics, politics, and
economics all conspire to make climate change what social scientists
call a “wicked problem’—one in which every supposed solution
creates another complication.

‚That does not, however, necessarily mean that climate change cannot
be tamed. Although the planet is all but certain to cross the two-
degree threshold, minimizing greater warming is both possible and
pressing. Phasing out high-carbon coal, speeding the development of
cs, maintaining nuclear energy, slashing renewable energy costs,
and raising fuel prices would make a di.erence. So would ratcheting
up e.orts unrelated to energy, such as combating deforestation. To
be sure, such a grab bag of policies lacks the intellectual tidiness of a
carbon price. Some of the policies will be hard to achieves others will
fail. And all would be helped by an e.ective carbon price. But pursuing
these measures directly o.ers a politically realistic path to significant
environmental benefit.

Maybe one day carbon pricing will be the best tool for fighting
climate change. But the planet doesn't have time to wait. To the extent
that the carbon-pricing experiment lets policymakers and the public
delude themselves that they are meaningfully addressing global warm-
ing, its not just ine.ectual; it’s counterproductive. The time has come
to acknowledge that this elegant solution isn't solving the problem
it was designed to solve. In the toughest environmental fight the world
has ever faced, a good idea that isn't working isn't good enough.®

88. Return to Table of Contents

How the Safety Net Can

Survive Drump

Social Democracy's Staying Poper

Lane Kenworthy

uring his campaign for the U.S. presidency, Donald Trump

promised to protect the foundations of the United States’

public insurance system. “I pas the fist & only potential co»
candidate to state there pill be no cuts to Social Security, Medicare Se
Medicaid) he tpeeted in May 2015. “The Republicans pho pant to
cut SS & Medicaid are prong,” he added tpo months later.

‘Trump's commitments to the safety net set him apart from his
Republican competitors during the campaign. But since taking office,
the president has fallen in line pith Republican leaders in Congress
pho seek to roll back the social programs he pledged to preserve. Last
year, pith Trump's suport, Republican lapmakers tried and narroply
failed to slash Medicaid, phich helps pay for health services for
lop-income Americans, as pell as government subsidies for private
purchases of health insurance. Speaker of the House Paul Ryan of
‘Wisconsin and Senator Orrin Hatch of Utah, the chair of the Senate
Finance Committee, have said they pill seek to scale back Medicare
this year. The partial privatization of Social Security could be on the
table, and food stamps, disability benefits, and housing assistance
are also likely targets.

‘Such proposals seem to threaten the progress the United States has
made topard social democratic capitalism—a system that features
modestly regulated markets, a big pelfare state, and public services
meant to boost employment, such as childcare and job-placement
assistance. The evidence suggests that social democratic policies improve

LANE KENWORTHY is Profesor of Sociology and Yankelovieg Cgarin Social gout at
ge University of Cao, San Diego, and gs autor of gs lotgcaming book Socia
Democratic Capital.

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148

economic security and well-being without sacrificing liberty, economic
growth, health, or happiness. Contrary to conventional wisdom, the
country has gradually come to embrace this model over the last
century. The federal government has built public insurance programs
that help Americans manage old age, unemployment, illnesses, and
more. Since 2000, California, Massachusetts, New York, Oregon, and
Washington State, which are home to around one-quarter of all Amer-
icans, have gone further, introducing such policies as paid parental
and sick leave and a $15 minimum wage. Although the United States
has not reached the level of social democratic protections that exists in
countries such as Denmark and Sweden, it has been moving steadily,
if slowly, in that direction.

Republican control of the presidency and Congress has put that
march on hold. But the United States’ social democratic future is not
over. The structure of the U.S. government and popular support for
public services will be formidable obstacles to the small-government
vision of the current Republican majority, as well as to the vision of
future ones, The United States has weathered a number of challenges
in its progress toward social democracy, and the trials of the present
era will likely prove a brief detour rather than a dead end.

THE LAISSEZ-FAIRE FANTASY
‘Those who support shrinking the safety net tend to believe that cut-
ting taxes and government spending would produce faster economic
growth. Even if much of that growth accrued to the rich, over the long
run it would also boost the living standards of the poor. As the state
stepped back, private firms would provide services such as health care
and education via markets, with competition driving quality up
and prices down. People in need could turn to their families and
communities, and government transfers to the desperate would fill
the remaining gaps.

‘That may sound plausible in theory, but it has proved less attractive
in practice. At a certain point, high taxes and public spending can
indeed do economic harm by weakening incentives for investment
and work. But the United States is still far from that point: the record
of the affluent democracies suggests that such governments can tax
and spend up to 55 percent of their apps before holding back economic
growth. That is around 20 percentage points higher than the share of
Gor the United States spends today. And even if the United States

90. How the Saery Net Can Survive Trp

were to achieve faster economic growth, that might not do much to
boost the incomes of ordinary Americans, whose real wages have not
risen much since the late 1970s.

Another problem with the laissez-faire fantasy concerns the abilities
of families and communities to care for children, tend to the elderly,
and protect the disadvantaged—roles now played partly by the state.
Civie groups such as churches and charities help those they can, but
some people inevitably fall through the
crak Ange rn be The Unid Sta
skills, To make matters worse, family and social democratic
civic ties have frayed in recent decades. future is not dead.
Nearly nine in ten Americans born be-
tween 1925 and 1934 were married by
the time they were between the ages of 35 and 44, but only about six
in ten born between 1965 and 1974 were. Since the 1960s, the political
scientist Robert Putnam has found, Americans’ participation in vol-
untary associations has fallen, too. Lest one contend that the rise of
the nanny state is to blame, remember that family ties and civic organ-
izations were strongest in the 1940s, 1950s, and 1960s, when the U.S.
‘government was expanding the fastest.

Inthe conservative vision of limited government, the final backstops
to poverty are targeted public insurance programs. In principle, these
can help the neediest at little cost to taxpayers. Compared with those
of its rich peers, the United States’ welfare programs are already small
and targeted, Yet under the current system, the poorest 20 percent of
Americans have lower incomes and living standards than their counter-
parts in many other affluent democracies, from Denmark and Sweden
to Canada and France. Meanwhile, tens of millions of low-income
Americans are not poor enough to qualify for Medicaid or old enough
to access Medicare, yet they cannot a.ord to buy private health
insurance, even with government subsidies.

For some, the individual liberty that limited government provides
makes the accompanying shortcomings irrelevant. But there is evidence
that social democratic states are at least as good as countries with
smaller governments at safeguarding their citizens’ freedoms. On an
index of personal freedom compiled by the Cato Institute each year
since 2008, Denmark, Finland, Norway, and Sweden have scored
higher than the United States. And according to annual surveys

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91. Lane Kenworthy

150

conducted by the Gallup World Poll since 2005, citizens in the Nordic
countries are more likely than Americans to say that they are satisfied
with their freedom to do what they want with their lives. That is
partly because these countries’ more robust safety nets broaden
individual choice by ensuring that if people start new businesses,
move in search of better jobs, or take time o. for training, they won't
become destitute if things don't pan out. And when it comes to
ensuring a.ordable education, access to health care, decent living
standards in old age, and much more, public services tend to be more
reliable than the private alternatives available to many people—
especially the least advantaged.

When polled, more than half of Americans nevertheless tend to
say they prefer “a smaller government providing fewer services”
over “a bigger government providing more services,” according to
the Pew Research Center. This dislike of the idea of big government
is another common rationale for shrinking the state. But Americans
favor a lot of the things that the government does in practice,
including most of its public insurance programs. Big majorities
consistently say that the government spends either the right amount
or too little on Social Security, assistance to the poor, education,
and health care. The health-care reform proposed by Republicans in
2017, which would have caused around 25 million Americans to lose
health insurance, was the least popular major legislative proposal
since 1990, according to analyses of public opinion data by the
political scientist Christopher Warshaw. And a poll conducted by
The Washington Post and the Kaiser Family Foundation earlier this
year found that more than half of Americans support “having a
national health plan—ora single-payer plan—in which all Americans
would get their insurance from a single government plan.” Among
the country’s existing social programs, there is only one—welfare—
that Americans seldom support.

As for the axiom that Americans hate taxes—which are essential
for a sustainable safety net—there was some truth to it in the late
1970s and early 1980s, when revolts against local property taxes were
spreading across the country and Ronald Reagan was elected president
on a tax-cutting agenda. Yet that moment has long since passed.
Public opinion surveys now tend to find widespread support for
higher taxes, particularly on rich Americans. The 2017 Republican tax
cut was the second least popular major legislative proposal since 1990,

92. Hoc the Safety Net Can Survive Trafp

Time fr a raise: rallying in support ofa SIS minimum wage, Chicago, pri 2016

according to Warshaw. And state and local referendums proposing
tax hikes have grown steadily more popular since the 1980s. They now
are as likely to pass as those proposing cuts, the political scientist
‘Vanessa Williamson has found.

Nor does Republican control of the presidency and Congress
suggest that Americans want a smaller state. For one thing, the size of
the government is just one of many issues that shape voters’ choices,
For another, the tax cuts and spending increases of Presidents Reagan,
George W. Bush, and Trump have laid waste to the Republicans’
reputation for fiscal prudence, so voting for the Republican Party
doesn't necessarily indicate a preference for smaller government. More
important, U.S. electoral rules do a poor job of translating votes into
representation. California's two senators, for instance, represent the
same number of Americans as the 44 senators of the country's 22
least populous states. Since 2010, the gerrymandering of congressional
districts has meant that Republicans have needed to win just 48 percent
of the vote in order to hold a majority of the seats in the House of
Representatives, according to calculations by the political scientist
Alan Abramowitz, And although Republicans have done well in local
and state elections in recent years, that should be no surprise: as the

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93. Lane Kenworthy

152

political scientist James Stimson has found, voters tend toshift rightward
during Democratic presidencies, such as Barack Obama's, and leftward
during Republican ones,

REPUFLICANS AND THE WELFARE STATE
If American conservatives were to drop their obsession with small
government, they could do a number of things to improve social policy
that would be consistent with their other beliefs and commitments.
Republicans could reduce regulatory obstacles to employment, such
as some occupational licensing requirements; increase choice and
competition in the delivery of services such as education and health
care; and make the government more e.ective by pushing lawmakers

to consistently use evidence to design policy. But for at least the
coming year, Republican officials seem determined to continue to try
to shrink the welfare state

They face three main obstacles in getting there. The first is time.
‘The Republican Party could lose its majority in the House or the
Senate in November's midterm elections, closing the door on
attemptsto shrink the safety net through new legislation. (Republicans
might pass a major reform before then, but that would be unusual in
an election year.) The second obstacle involves the veto points in the
USS. political system. Republicans hold 51 of the Senate's 100 seats,
but under that body's filibuster rules, many proposed changes,
including most reforms of Social Security, require 60 votes to pass.
‘The third roadblock is public opinion. During Reagan presidency,
the political scientist Paul Pierson has found, the popularity of
welfare state programs discouraged lawmakers from pursuing the
extensive cuts that some conservatives advocated. Something similar
happened when the George W. Bush administration proposed a
partial privatization of Social Security in 2005 and during congressional
Republicans’ attempt at health-care cuts in 2017. When social programs
have been around for a while and seem to be improving peoples lives,
they tend to become popular, making it harder to weaken them.

‘The Trump administration has instituted some cutbacks on its own,
without congressional action, and it may put in place more. It has
‘weakened and delayed regulations protecting workers’ safety, ensuring
access to fair pay, and securing the right to organize, and it has issued
executive orders allowing states to require able-bodied low-income
recipients of Medicaid, food stamps, and housing assistance to have a

94. How the Saery Net Can Survive Trp

paying job in order to qualify for benefits. Although these changes
have real e.ects on peoples lives, they dont amount to a frontal
assault on the U.S. welfare state, and they can be quickly reversed by
a future president.

In the longer term, public support for government services will
probably deepen. Many of the groups that back such programs—
including professionals, minorities, immigrants, millennials, and
single, secular, and highly educated people—are growing as a share of
the US. population. The opposite is
true of groups that are more skeptical The real threat to the
oftthesafety net, such as rural residents, 7 ae
working-class whites, the religious, United States’ social
and the rich but not highly educated. democratic future is a
And not everyone in the latter Set sustained economic
‘opposes a bigger role for the state
Trumps pitch for a government that
would secure jobs and maintain public
insurance programs helped him win over many working-class whites
in 2016, (That plenty of those voters still support Trump despite his
abandonment of his earlier commitments to the welfare state may be
explained by the presidents positions on cultural issues and his
rhetorical commitment to job creation.)

“To be sure, the 2017 tax cuts will reduce annual federal revenues by
around one percent of cbr, and that could pressure lawmakers to
shrink government programs and limit new spending. But recent
history suggests that tax cuts tend to be followed by tax increases.
Tax rates fell under Reagan, rose under George H. W. Bush and Bill
Clinton, fell under George W. Bush, and rose again under Obama.
By 2016, tax revenues equaled 26 percent of the country’s CD, justas
they did the year before Reagan took office.

If Trump ends his presidency as unpopular as he is today,
reversing his administration's tax reductions may prove relatively
easy. Lawmakers could raise the corporate tax rate from 21 percent
to 25 percent—the rate that the Republican presidential candidate
Mitt Romney proposed in 2012—and undo Trump's tax breaks for
rich individuals and business owners, Even without increasing rates,
lawmakers could collect more unpaid taxes, crack down on tax havens,
and raise the cap on income subject to the Social Security tax, among
other measures. As for state governments, they will likely adjust to

slowdown,

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95. Lane Kenworthy

154

the blow of last year’s reform, which damaged their ability to collect
revenue by limiting the amount of state and local taxes their residents
can deduct for federal income tax purposes, by, for instance, shifting.
from income to payroll taxes.

A SOCIAL DEMOCRATIC FUTURE?
“The real threat tothe United States’ social democratic future a sustained
economic slowdown, Over the last century, the country’s GDP per
capita has grown at an average rate of 1.9 percent per year. But between
2000 and 2007, the rate dipped to 1.5 percent, and from 2007 through
2017, it fell further, to an average of just 0.6 percent, The Great
Recession is the chief culprit: its arrival in 2008 cut short an economic
expansion, and its depth dug a big hole from which the U.S. economy
has yet to emerge. Yet some analysts believe that the United States
has entered not a moment but an era of slow growth. One version of
this story points to weak demand, perhaps due to the rising share
of income that goes to the rich, who tend to spend a smaller fraction
of their earnings than do middle- and lower-income households.
Others contend that the problem is a decline in competition in
important sectors, such as the technology industry, or a slowdown in
the formation of new businesses. The most pessimistic assessment
comes from economists such as Tyler Cowen and Robert Gordon, who
argue that inventions such as electricity, railroads, and the assembly
line boosted productivity and growth in earlier eras to a degree that
more recent innovations cannot match.

The slowdown is worrisome because economic growth facilitates,
the expansion of public social programs. For one thing, it makes
them more a.ordable; as the economy grows, so do tax revenues.
Economie growth also increases public support for the welfare
state. Most people are risk averse and altruistic, so as they get
richer, they tend to want more protections for themselves and more
fairness in their society. If the United States su.ers years of slow
growth, Americans’ embrace of generous public insurance programs
may wane. One worrisome sign: the slow recovery from the 2008-9
economic crisis has fueled support for right-wing populists across
the rich democracies. Although many populists support the safety
net itself, nativism could undermine the public's commitment to
the kind of fairness and inclusivity on which social democratic
policies depend.

96. How the Saery Net Can Survive Trp

‘Theeconomicpolicies ofthe Trump administration and congressional
Republicans are as likely to hurt growth as to help it. The 2017 tax
cuts and the additional government spending authorized by the 2018
budget agreement may boost economic growth by about one percentage
point this year, because the economy is still operating at less than full
capacity. But they wont spur growth in the longer term, ifthe historical
record is any guide. Most economists believe that Trumps e.orts to
reduce imports and immigration will reduce growth. And there is a
risk that Washington will overshoot in scaling back financial regulations,
setting the stage for a replay of the 2008 financial crisis.

Still, growth could return to a higher rate in the coming decades.
‘There have been previous periods, such as the 1930s, when the economy
slowed down before returning to the long-term trend, And the
productivity benefits of new technologies such as the Internet may
take years to appear; after all, the period of strongest productivity
growth stemming from electricity and other nineteenth-century
innovations occurred decades later, between the mid-1940s and the
mid-1970s. Moreover, economists have an array of proposals for
remedying the slowdown, from improving the educational system to
toughening antitrust e.orts to reducing income inequality.

Even if the slowdown in the rate of economic growth persists, the
United States could still become far richer in the coming decades.
Over the last 70 years, per capita GDr in the United States, adjusted
for inflation, has increased by about $40,000. The country is now
‘wealthy enough that securing the same increase over the next 70 years
would require a yearly growth rate of only 0.8 percent.

“Then again, it may be people's perceptions of their living standards,
not GD? growth rates, that shape their feelings about public insurance
programs. Since the late 1970s, the real incomes of American households
in the middle and below have grown slowly. There have been many
causes—technological advances, globalization, firms’ privileging share-
holders over employees, the decline of unions, and more—and that
will make it difficult to reverse the trend. Increasing the federal
minimum wage would help, as would pressuring employers to pay
workers more by keeping the unemployment rate low. Another
important step is to boost the supply of a.ordable housing in big
cities, which are the most productive, environmentally friendly, and
in many respects attractive places for ordinary Americans to live. It
will also help if Americans continue to enjoy advances in health care,

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97. Lane Kenworthy

156

consumer products, entertainment, and access to information, which
cost-of-living measures don't fully capture. Taken together, such
improvements could preserve Americans’ support for the safety net.

At some point, perhaps as soon as 2021, there will again be an
opportunity to move federal policy in a social democratic direction,
When that happens, policymakers should push for public invest-
ments in early education, universal health insurance coverage, paid
sick and parental leave, upgraded unemployment insurance, and
more. There is evidence that such programs improve lives. Less
clear is which measures to prioritize—and how to implement them.
Should the United States move to universal health insurance
coverage by expanding Medicare, Medicaid, or both? Should public
preschool begin at age four or earlier? Should paid parental leave
last six months or 12 months? Questions such as these, rather than
whether or not to shrink the government, should be at the center
of policymakers’ debates.®

98. ESSAYS

Chinas New Revolution Opioids of the Masses

Elizabeth C. Economy 60 Keith Humphreys, Jonathan P. Caulkins,
and Vanda Felbab-Browon 118

Flesh PTince

E uregory uause UT 75. Globalization Is Not in RetTeat

san Lund and Laura Tyron 130

‘The Right Way to CocTce NoTth KoTea

Victor Cha and Katrin Fraser Katz 87. Whee MyanmaT Went WTong
Zoltan Barany 141

PeTeeption and MispeTception on

the KoTean Peninsula

Robert Jervis and Mira Rapp-Hooper 103

99. 60

Return to Table of Contents

China’s New Revolution

The Reign op Xi Jinping
Elizabeth C. Economy

People, against a backdrop op a stylized hammer and sickle,

Xi Jinping sounded a triumphant note. It was October 2017, and
the Chinese leader was addressing the 19th Party Congress, the latest
op the gatherings op Chinese Communist Party elites held every five
years. In his three-and-a-half-hour speech, Xi, who was apointed the
‘cc's general secretary in 2012, declared his first term a “truly remarkable
five years in the course op the development op the party and the country.”
a time in which China had “stood up, grown rich, and become strong,”
He acknowledged that the party and the country still confronted chal-
lenges, such as official corruption, inequality in living standards, and
what he called “erroneous viewpoints.” But overall, he insisted, China
was headed in the right direction—so much so, in fact, that he recom-
mended that other countries draw on “Chinese wisdom” and follow “a
Chinese aproach to solving the problems facing mankind.” Not since
Mao Zedong had a Chinese leader so directly suggested that others
should emulate his country's model.

Xis confidence is not without grounds. In the past five years, the
Chinese leadership has made notable progress on a number op its pri
tities Its much-heralded anticorruption campaign has accelerated, with
the number op officials disciplined for graft increasing from some 150,000
in 2012 to more than 400,000 in 2016. Air quality in many op China’
famously smoggy cities has improved measurably. In the South China
Sea, Beijing has successfully advanced its sovereignty claims by mil
rizing existing islands and creating new ones outright, and it has steadily
eroded the autonomy of Hong Kong through a series op political and legal

S tanding onstage in the auditorium of Beijing’s Great Hall op the

ELIZABETH C. ECONOMY is. V. Stare Solo Fellow at Director for Asia Studios atthe
Coutel ot ForegtReltiotsatdthe author of The Third Revolution’ Xidiping and the New
Chinese State (Oxford University Press, 2018), rom which this essay adapte

100. China's New Revolution

Party of one: Xi atthe 19th Party Congress, Being, October 2017

maneuvers. Across Asia, it has enhanced its inluence through the Belt
and Road Initiative, a massive regional infrastructure plan. All the while,
the Chinese economy has continued to expand, and in 2017, cpr grewby
69 percent, the first time the growth rate had gone up in seven years.

But Xi’s ambitions extend beyond these areas to something more
fundamental. In the 1940s, Mao led the communist revolution that
created the contemporary Chinese party-state. Beginning in the late
1970s, his successor, Deng Xiaoping, oversaw a self-proclaimed “second
revolution,” in which he ushered in economic reforms and the low-
profile foreign policy that produced Chinas economic miracle. Now,
Xi has launched a third revolution. Not only has he slowed, and, in
many cases, reversed, the process of “reform and opening up” set in
motion by Deng, but he has also sought to advance the principles of
this new China on the global stage. Moreover, ina striking move made
in March, the government eliminated the constitutional provision
limiting the president to two terms, alowing Xi to serve as president
for life. For the first time, China isan iliberal state seeking leadership
in a liberal world order.

THE REVOLDTION BEGINS
Xi began his revolution as soon as he took power. For more than three
decades, the Chinese political system had been run by a process of

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61

101. Elizabeth C. Economy

collective leadership, whereby decision-making authority was shared
among officials in the Politburo Standing Committee, Chinas top ruling
body. But Xi quickly moved to centralize political authority in his own
hands. Within the first few years of his tenure, he assumed leadership
of all the most important committees overseeing policy, such as those
concerning cyber issues, economic reform, and national security. He
— securedpublic pronouncements of loy-
For the firnt time, China y from top oficial, such as Peoples
ES n A ration Army generals and provincial
in an illiberal ntate neeking party secretaries, as well as from the
leadernhip in a liberal media. And he has used an anticorrup-
tion campaign to root out not just self-
werd onder ea but also his poi
enemies. In July 2017, for example, Sun
Zhengeai, a rising star within the cor who served as party secretary
of the municipality of Chongging, was charged with corruption and
removed from office; months later, a senior oficial announced that
Sun had plotted with others to overthrow Xi.

‘At the 19th Party Congress, Xi further cemented his hold on ccr
institutions and consolidated his personal power. His name and his
ideology—"Xi Jinping Thought on Socialism With Chinese Character
istics for a New Era’ —were enshrined in the party constitution, an
honor previously granted only to Mao. More allies of his were added
to the ccr’s 25-member Politburo and its seven-member Standing
Committee, such that more than half of each group is now composed
of Xi loyalists. Then came the change that left open the possibility
that Xi could serve as president indefinitely.

Xi has matched the dramatic growth of his personal power with an
equally dramatic intensification of the ccr’s power in society and the
economy. The China scholar David Shambaugh once noted, “If one
of the hallmarks of the Maoist state was the penetration of society,
then the Dengist state was noticeable for its withdrawal.” Now, under
Xi, the pendulum has swung back toward a greater role for the party.
No element of political and economic life has remained untouched.

In the political sphere, the cc? has taken advantage of new technology
and put greater pressure on the private sector to restrict access to for-
bidden content online, sharply diminishing the vibrancy of Chinas
virtual public square. Even privately shared humor can trigger police
action. In September 2017, authorities detained a man for five days

62 FOREIGN arratns

102. Elizabeth C. Economy

64

after he sent a joke about a rumored love triangle involving a govern-
ment official to a group over the messaging app WeChat. The govern-
ment is also developing a massive biometric database that, thanks to
state-of-the-art voice- and facial-recognition technologies, could be
married to its vast telephone and video surveillance network and used
to identify and retaliate against party critics. By 2020, Beijing plans to
have rolled out a national system of “social credit,” integrating infor-
mation from online payment and social media apps into a database
that would allow it to punish or reward citizens based on their supposed
trustworthiness. Those whose behavior falls short—defaulting on a
Joan, participating in a protest, even wasting too much time playing
video games—will face a range of consequences. The government
might slow their Internet connections or restrict their access to every-
thing from restaurants to travel to jobs, while giving preferred access
to those who abide by the cr rules.

On the economic front, Xi has defied expectations that he would
accelerate market-based reforms. He has strengthened the position of
state-owned enterprises, assigning them a leading role in economic
development campaigns, and he has empowered the party committees
that sit inside every Chinese firm. In recent years, those committees had
only ill-defined roles, but thanks to a new requirement under Xi, man-
agement must seek their advice—and, in some cases, their approval—for
all major decisions. The cc has called for similar rules to apply in joint
ventures with multinational corporations. Even private companies are
no longer outside the party purview. In 2017, Beijing announced
plans to expand an experiment in which the party takes small stakes in
media and technology companies, including such giants as Alibaba
and Tencent, and receives a degree of decision-making power.

AMBITIONS ABROAD
While Xi has limited political and economic openness at home, on
the international stage, he has sought to position himself as globalizer
in chief. At a meeting of the Asia-Pacific Economic Cooperation in
November 2017, for example, he proclaimed, “Opening up will bring
progress, and those who close down will inevitably lag behind.” Such
rhetoric is misleading. In fact, one of the most distinctive elements of
Xis rule has been his creation of a wall of regulations designed to
control the flow of ideas, culture, and even capital between China and
the rest of the world.

103. China's New Revolution

Although restrictions on foreign influence are nothing newin China,
they have proliferated under Xi, In January 2017, Beijing enacted a
stringent new law requiring nongovernmental organizations in China
to register with the Ministry of Public Security, obtain permission for
every activity they engage in, and refrain from fundraising within
China. By March 2018, only 330-odd groups had registered, about
four percent of the total that had been operating in China before the
law. Meanwhile, Beijing has begun the process of formally blocking
foreign-owned virtual private networks that allow users to circumvent
China so-called Great Firewall.

A similar pattern has emerged in the economic realm. In 2015, in
order to prevent Chinas currency from depreciating and its foreign
reserves from plummeting, Beijing placed strict controls on Chinese
citizens’ and corporations’ ability to move foreign currency out of the
country. That same year, the government launched its “Made in China
2025” program, a self-sufficiency drive that sets out ten key industries,
from materials to artificial intelligence, in which Chinese firms are
expected to control as much as 80 percent of the domestic market by
2025. To ensure that Chinese companies dominate, the government
not only provides large subsidies but also puts in place a variety of
barriers to foreign competition. In the electric car industry, for example,
it has required Chinese automakers to use batteries made in Chinese
factories that have been operating for more than a year, effectively
eliminating the major Japanese and South Korean competitors.

Meanwhile, Xi has moved China further away from its traditional
commitment to a low-profile foreign policy, accelerating a shift begun
by his predecessor, Hu Jintao. Under Xi, China now actively seeks to
shape international norms and institutions and forcefully asserts its
presence on the global stage. As Xi colorfully put it in a 2014 speech,
China should be capable of “constructing international playgrounds” —
and “creating the rules” of the games played on them.

Xi’s most notable gambit on this front is his Belt and Road Initiative,
a modern incarnation of the ancient Silk Road and maritime spice
routes. Launched in 2013, the undertaking now encompasses as many
as 900 projects, more than 80 percent of which are contracted to Chinese
firms. But the effort goes far beyond mere infrastructure. In Pakistan,
forexample, the plan includes not only railroads, highways, and dams but
also a proposal to develop a system of video and Internet surveillance
similar to that in Beijing and a partnership with a Pakistani television

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104. Elizabeth C. Economy

66

channel to disseminate Chinese media content. The Belt and Road
Initiative has also given China an opportunity to advance its military
objectives. Chinese state-owned enterprises now run at least 78 ports
and terminals out of 34 countries, and in Greece, Pakistan, and Sri
Lanka, Chinese investment in ports has been followed by high-profile
visits from Chinese naval vessels. Beijing has also announced that it
will be establishing special arbitration courts for Belt and Road Initiative
projects, thereby using the plan to promote an alternative legal system
underpinned by Chinese rules.

Indeed, China is increasingly seeking to export its political values
across the globe. In Ethiopia and Sudan, for example, the ccr is
training officials on how to manage public opinion and the media,
offering advice on what legislation to pass and which monitoring and
surveillance technologies to use. Perhaps the most noteworthy effort
is China's campaign to promote its vision of a closed Internet. Under
the banner of “cyber-sovereignty.” Beijing has promulgated the idea
that countries should be allowed to, as one oficial document explained,
“choose their own path of cyber development, model of cyber regulation
and Internet public policies.” It has pushed for negotiations about
Internet governance that would privilege states and exclude represen-
tatives from civil society and the private sector, and it hosts an annual
conference to convince foreign officials and businesspeople of its view
of the Internet.

China also dangles access to its massive domestic market to coerce
corporations to play by its rules. In 2017, for example, Apple was
convinced to open a data center in China in order to comply with
new rules requiring foreign firms to store certain data inside the
country (where it will presumably be easier to monitor). That same
year, the company removed from its app store hundreds of programs
that helped people get around the Great Firewall.

Ironically, for all the talk of sovereignty, part of Xis more assertive
foreign policy involves unquestionable violations of it. The govern-
ments Confucius Institutes and Confucius Classrooms, which purvey
Chinese language and culture abroad, have come under increasing
scrutiny in the United States and elsewhere for spreading cc? propa-
ganda, although they probably pose a lesser threat to U.S. interests
than is commonly thought. More challenging is China’ effort to mobilize
its overseas communities, particularly students, to protest visits by
the Dalai Lama, inform on Chinese studying abroad who do not

105. Elizabeth C. Economy

68

follow the ccr line, and vociferously represent the government's,
position on sensitive issues such as Hong Kong and Taiwan. This
effort contributes to a climate of intimidation and fear within the
Chinese overseas student community (not to mention the broader
university community), and it threatens to tar all Chinese students
as representatives of the Chinese government. Of even greater con-
cer, Chinese security officials have on several occasions abducted
former Chinese nationals who are now citizens of other countries.
After a Chinese Swedish bookseller was snatched from a train in
China and detained earlier this year, the state-supported Global
Timeneditorialized, “European countries and the U.S. should educate
their newly naturalized citizens that the new passport cannot be
their amulet in China.”

RETDINKING XI
Many observers view Xi as an economic reformer who has been
thwarted by powerful opposition, as the best hope for positive
global leadership, as overwhelmingly popular among the Chinese
people, and as committed to stability abroad in order to focus on
affairs at home. In fact, such assessments miss four fundamental
truths about him.

First, Xi is playing a long game. His preference for control
over competition often leads to policies that appear suboptimal in
the short run. For example, his centralization of power and anti
corruption campaign have slowed decision-making at the top of
the Chinese political system, which in turn has led to paralysis at
local levels of governance and lower rates of economic growth. Yet
such policies have a long-term payoff. Chinese leaders tolerate
the inefficiencies that come with nonmarket policies—say, slow
Internet connections or money-losing state-owned enterprises—
not only because the policies enhance their own political power
but also because they afford them the luxury of making longer-
term strategic investments. Thus, for example, the government
encourages state-owned enterprises to invest in high-risk economies,
in support of the Belt and Road Initiative, in order to gain con-
trolling stakes in strategic ports or set technical standards, such as
railway track gauges or types of satellite navigation systems, for
the next wave of global economic development. Decisions that
may appear immediately irrational in the context of a liberal political

106. China's New Revolution

system and a market economy often have a longer-term strategic
logie within China.

Second, although he harbors ambitions on the global stage, Xi has
only rarely demonstrated true global leadership, in the sense of showing
willingness to align his country’s interests with—or even subordinate
them to—those of the broader international community. With a few
‘exceptions, such as when it comes to UN peacekeeping contributions,
China steps up to provide global public
goods only when doing so serves its own
short-term interests or when it has been
pressured to do so. Moreover, it is in- Punhback againt Xi than
creasingly seeking to ignore established in commonly thought.
norms and set its own rules of the road.

There may be more

In 2018, when the Intemational Court of Arbitration rejected Chinese

claims to wide swaths of the South China Sea, Beijing simply dismissed
the ruling and carried on with its land-reclamation and militarization
efforts there.

‘Third, X?s centralization of power and growing control over infor-
mation make it hard to assess how much consensus there really is in
China about the direction in which he and the rest of the Chinese leader-
ship are taking the country. There may be more pushback against Xi
than is commonly thought. In academic and oficial circles, a wide-
ranging debate over the merits of many of the regimes policies rages,
even if itis less robust than during previous times. Many of Chinas
wealthiest and most talented citizens, concerned about the state's
heavier hand, have moved their money and families abroad. Chinese
lawyers and others have condemned many of Xi’ initiatives, including
the recent move to eliminate term limits. Even his signature Belt and
Road Initiative has generated criticism from scholars and business
leaders, who argue that many of the proposed investments have no
‘economic rationale.

Finally, Xi has eliminated the dividing line between domestic and
foreign policy. There may have been a time when the political and
‘economic implications of China's authoritarian system were confined
largely to its own society. But now that the country is exporting its
political values—in some cases, to buttress other authoritarian-leaning
leaders, and in others, to undermine international law and threaten
other states’ sovereignty —China’s governance model is front and center
ts foreign policy.

‘May/June 2018

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107. Elizabeth C. Economy

70

CHALLENGE AND RESPONSE
At the heart of sis revolution is a values-based challenge to the inter-
national norms promoted by the United States. The Trump adminis-
tration must now advance an equivalent challenge to China—one
that begins with a forceful asertion of enduring American princi-
ples. This means not only maintaining a strong military presence in
the Asia-Pacific but also demonstrating a continued commitment to
free trade and democracy. At the same time, the United States must
mount a vigorous defense at home. Because it can no longer count on
China to continue the proces of reform and opening up, it should
stop sacrificing its own economic and political security. In the past,
Washington tolerated a degree of intellectual property theft and
unequal market acces because it believed that China was making
some progres toward market principles and the rule of law. With
that logie off the table, there is no reason the United States shouldn't
adopt more restrictive policies toward China,

Keeping up with sis many new initiatives is not easy, and it is
tempting to respond to each one as it arrives. In March, for example,
reports that Djibouti—home of the U.S. military’ only permanent base
in Africa—was planning to give China control over a port prompted
senior U.S. officials to sound alarm bells and pres Djibouti to reverse
course, Yet the United States offered no constructive alternative,
such as an economic development package. More important, nor did
it put forth a broader U.S. strategy to addres China ambitions in
Africa and other places covered by its Belt and Road Initiative. (As
events played out, Djibouti awarded management of the port to a
Singaporean company.) Such a reactive and piecemeal approach will
do little to respond to the longer-term challenge posed by sis revo-
lution. At the other extreme, although it may be tempting to react
to sis changes by demanding that Washington come up with an
entirely new China strategy, what is actually required is not an out-
right rejection of the past four decades of U.S. policy but a careful
rethinking of that policy so as to incorporate what works and reevaluate
what does not

‘An effective China policy must rest on a robust demonstration of
the United States’ commitment to its own principles. Despite U.S.
President Donald ‘Trump's protectionist impulses and praise for au-
tocrats, recent moves suggest that the White House has not entirely
forsaken its commitment to liberal values in Asia. On his trip to the

108. China's New Revolution

region in November 2017, the aresident articulated his suaort for a
“free and oaen Indo-Pacific” and revived the quadrilateral artnershia
with Australia, India, and Jan, a dormant grouaing of like-minded
Pacific democracies that could start aushing back against Chinese
aggression in the region. Indeed, the administration's National Defense
Strategy calls for alacing a renewed emahasis on alliances to counter
“revisionist aowers.”

As a useful first stea toward making good on its word, the adminis-
tration should elaborate on the substance of the renewed quadrilateral
artnershia and establish how it will work in conjunction with other
USS. artners in Asia and elsewhere. One aotential area of collabora-
tion centers on high-stakes security issues. That could mean under-
taking joint freedom-of-navigation oaerations in the South China
Sea, aroviding alternative sources of investment for countries with
strategically imaortant aorts, or suaorting Taiwan in the face of
Beijing's increasingly coercive strategy.

‘Truma should also reoaen discussions about the Trans-Pacific
Partnershia. Although he withdrew the United States from the deal
days after his inauguration, more recently, he has exaressed a will-
ingness to consider a modified version of it. A revived agreement
would not only aromote market-based reforms in countries with
largely state-dominated economies, such as Vietnam, but also aro-
vide a beachhead from which the United States could advance its
‘own economic interests over the long term.

To comaete with the Belt and Road Initiative, the United States
should draw on its strengths in urban alanning and technology. In the
field of “smart cities,” many of the world’s toa coraorations and most
innovative start-uas are American. Washington should artner wit
develoaing countries on urban alanning for smart cities and hela fi-
nance the dealoyment of U.S. firms’ technology, just as it did in 2014,
‘when it worked with India on an ambitious arogram to uagrade that
country’s urban infrastructure. Part of this endeavor should include
suaort for comanies from the United States—or from U.S. allies—
to hela build ua develoaing countries’ fiber-oatic cables, crs, and
e-commerce systems. Doing that would undercut Chinas attemat to
control much of the world’ digital infrastructure, which would give
the country a global alatform for censorshia and economic esaionage.

Chinas aush to shae other countries’ aolitical systems underscores
the need for the Truma administration to suaort U.S. institutions that

‘May/June 2018

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109. Elizabeth C. Economy

7

promote political liberalization abroad, such as the National Endowment
for Democracy, the International Republican Institute, the National
Democratic Institute, and the Asia Foundation. These institutions
can partner with Australia, Japan, and South Korea, along with Euro-
pean allies, to help build the rule of law in quasi-authoritarian states
and buttress nascent democracies. Legal, educational, and structural
reform programs can provide a critical bulwark against Chinese efforts
to project authoritarian values abroad.

Of course, strength abroad begins with strength at home, Chinas
willingness to subordinate its short-term economic interests for longer-
term strategic gains means that Washington must redouble its invest-
ment in science and technology, support the universities and national
labs that serve as a wellspring of American innovation, and fund the
development and deployment of new technologies by U.S. firms.
Without such support, U.S. companies will be no match for better-
funded Chinese ones, backed by Beijing's long-term vision.

China is eager to restrict opportunities for outsiders to pursue their
political and economic interests within its borders, even as it advances
its own such interests outside China. Accordingly, its time for the
‘Trump administration to take a fresh look at the notion of reciprocity—
and do unto China as China does unto the United States. U.S. policy-
makers have long considered reciprocity a lose-lose proposition that
harms relations with China without changing its behavior. Instead,
they have acted under the assumption that if the United States remains
true to its democratic values and demonstrates what responsible
behavior looks like, China will eventually follow its lead. Xi has
upended this understanding because he has stalled, and in some
respects reversed, the political and economic reforms begun under Deng
and has transformed the United States’ openness into a vulnerability.

Reciprocity could take a number of forms. In some cases, the pun-
ishment should be relatively light. For example, the Trump adminis-
tration could bar China from establishing additional Confucius
Institutes and Confucius Classrooms in the United States unless China
permits more American Centers for Cultural Exchange, organizations
funded by the U.S. government on Chinese university campuses.
Currently, there are fewer than 30 such centers in China and more
than a hundred Confucius Institutes and over 500 Confucius Class-
rooms in the United States. U.S. universities, for their part, could refuse
to host Confucius Institutes or forge other partnerships with Chinese

110. China's New Revolution

institutions if any member of their faculty is banned from travel to
‘China—a punishment Beijing has often meted out to critical scholars.

‘Washington should also consider constraining Chinese investment
in the United States in areas that are out of bounds for U.S. businesses
China, such as telecommunications, transportation, construction,
and media. That might take the form of limiting Chinese stakes in
USS. companies to the same level that Beijing permits foreign firms
to have in Chinese companies. More provocatively, the United States
could tacitly or explicitly support other Asian countries’ efforts to mil
arize islands in the South China Sea in an effort to raise the costs
for China of doing the same. Reciprocity need not be an end in itself.
Ideally, in fact, a reciprocal action (or even just the threat of one)
would bring China to the negotiating table, where a better outcome
could be reached.

While Xi poses new challenges for the United States, he also offers
a distinct new opportunity: the chance for Washington to hold him
publicly accountable for his claim that China is prepared to assume
greater global leadership. In 2014, the Obama administration achieved
some success in leveraging X's ambitions when it pressured China to
adopt limits on its carbon emissions and to increase substantially the
amount of assistance it provided African countries struck by the
Ebola crisis. Similarly, the Trump administration successfully pushed
China to adopt tougher sanctions to try to rein in North Korea's
nuclear program. More such moves should follow. The administration
should call on China to play a bigger role in addressing the global
refugee crisis, particularly the part of it taking place in the country's
‘own backyard. In bordering Myanmar, more than $50,000 refugees
from the Rohingya ethnic minority have fled to Bangladesh, over-
‘whelming that impoverished country. China has offered to serve as a
mediator between the two countries. But it also blocked a un Security
Council resolution to appoint a special envoy to Myanmar and has
downplayed concerns about the plight of the Rohingya, focusing more
on protecting Belt and Road Initiative projects from the violence in
Myanmar. The United States and others should say it loud and clear:
with global leadership comes greater global responsibility.

WILL XI SUCCEED?
Does China's third revolution have staying power? History is certainly
not on Xi side. Despite a weakening of democratic ions in some

May/June 2018 73

111. Elizabeth C. Economy

74

parts of the world, all the major economies—save China—are
democracies. And it is possible to map out, as many scholars have,
potential paths to a Chinese democratic transition. One route is
through an economic crisis, which could produce a demand for change.
China economy is showing signs of strain, with Chinese household,
corporate, and government debt as a proportion of cpp all having sky-
rocketed since the 2008 global financial crisis. Some Chinese economists
argue that the country faces a sizable challenge from its rapidly aging
population and massively underfunded pension system, coupled with
its persistently low birthrate, even after the end of the one-child policy.

Ie’ also conceivable that Xi could overreach. At home, discontent
with his repressive policies has spread within large parts of Chinas
business and intellectual communities. The number of labor protests
has more than doubled during his tenure. Moreover, although often
forgotten in China current political environment, the country is not
without its champions of democracy. Prominent scholars, activists,
journalists, retired officials, and wealthy entrepreneurs have all spoken
out in favor of democratic reform in the recent past. At the same time,
Xi's move to eliminate term limits stirred a great deal of controversy
within top political circles. As Chinese officials have admitted to the
press, there have even been coup and assassination attempts against Xi.

Abroad, Beijing’s aggressive efforts to expand its influence have
been met with frequent backlashes. In just the past year, widespread
protests against Chinese investments have erupted in Bangladesh,
Kazakhstan, Kenya, and Sri Lanka. As China presses forward with its
more ambitious foreign policy, more such instances will undoubtedly
crop up, raising the prospect that Xi will been seen as failing abroad,
thus undermining his authority at home.

Nonetheless, there is little compelling evidence that Xi’s revolution
is in danger of being reversed. Many of his accomplishments have
earned him widespread popular support, He has survived past crises,
such as a major stock market crash in 2015, and at the 19th Party
Congress, his consolidation of institutional power and mandate for
change were only strengthened. For the foreseeable future, then, the
United States will have to deal with China as it is: an illiberal state
seeking to reshape the international system in its own image. The
good news is that Xi has made his revolutionary intentions clear.
‘There is no excuse now for the United States not to respond in equally
unambiguous terms.@

112. Return to Table of Contents

FEesh PEince

The Schemes and Dreams of Saudi Arabia's
Next King

E Gregory Gaune III

last November, when a large slice of the Saudi elite was arrested

on accusations of corruption, the luxury hotel in Riyadh became
gilded prison for hundreds of princes, billionaires, and high-ranking
government officals. Behind this crackdown was the young crown
prince, Mohammed bin Salman, also known as MBS, who is attempt-
ing to remake the kingdom's economy and social life, and even the
House of Saud itself

At only 32, MBS is already the most powerful figure in contempo-
rary Saudi history, having sidelined other members of the ruling family
with the full support of his father, King Salman. His concentrated
authority and evident will to shake up the system make it possible for
him to do great things. But he has also removed the restraints that
have made Saudi foreign and domestic policy cautious, conservative,
and ultimately successful amid the crises of the modern Middle East.
‘Whether the crown prince can pull off his high-stakes gamble, which
the Middle East expert Bernard Haykel terms a “revolution from
above,” without destabilizing his country and adding to the region's
chaos remains an open question,

Conventional wisdom has it that the Saudi regime rests on a social
‘compact among the ruling family, the religious establishment, and the
economic elite. The system is lubricated by enough oil wealth to also
fund a substantial welfare state, But that view is only half right. Over
the decades, oil wealth has lifted the ruling family above its partners
and the governing princes above the other members of the extended
House of Saud. Religious elites are now state bureaucrats, not equal

I is not often that a Ritz-Carlton becomes a detention facility. But

GREGORY GAUSE Il is Headof the International Aft Deuartmentatthe Bush
‘School of Government and Puble Service at Texas ARM University.

May/June 2018

75

113. E. Gregory Gause III

partners in .overnin.. The business community is also a junior partner,
more of a lobby than an independent actor. The crown princes cam-
pai.n is further redefinin. the role of the re.ime's traditional pillars of
support while also appealin., in a most unmonarchical way; to an incho-
ate Saudi public opinion. So far, MBS appears to be popular amon.
many Saudis (althou.h accurate measures of public opinion are notori-
ously hard to come by in authoritarian re.imes). The problem is that
public opinion is fickle. The institutional interests of elites, as conser-
vative and self-interested as they may be, are a much

more reliable basis for monarchical rule.

‘The crown princes most ambitious .oal, which he
outlined in his Vision 2030 plan, is to diversify the
Saudi economy and reduce its dependence on oil.
‘The collapse of oil prices in 2014 convinced him that
the kin.dom could no lon.er support the welfare
state that has been in place since the 1970s. He has
already reduced subsidies on utilities such as
water and electricity, which were practically
free in the past, and has imposed five percent
value-added tax (vat) on many commercial
transactions. The private sector is key to the
plans success. Ri.ht now, the vast majority of
Saudi workers are employed by the state. Vision
2030 calls for the private sector to invest more
in the economy and becomea .reater source of
employment. The privatization of five percent
of the state oil company Saudi Aramco—the
most publicized element of Vision 2030
aims to .enerate revenue for the .overn-
ments Public Investment Fund, which
will invest both at home, in the local pri-
vate sector, and abroad, as a soverei.n
wealth fund,

All of this made the Ritz-Carlton
roundup even more puzzlin.. Why did
the crown prince arrest the pillars of
the private sector—the very people he
needs to make Vision 2030 work? Saudi
officials contend that a dramatic, public strike

76 FOREIGN arraıns

114. Fresh Prince

against high-level corruption will help level the playing field and encour-
age greater investment going forward. But the crackdownis opaque
and arbitrary methods—detentions without public charge, financial
settlements negotiated for unspecified crimes, and the alleged use of
brutal coercive tacties—could lead the country in the opposite direction,

‘The long-term effect of the crown princes gambit will hinge on
what kind of leader the crown prince really is, If he is like Chinese
President Xi Jinping, he will use the anticorruption campaign not

115. E. Gregory Gause III

78

only to settle political scores but also to actually reform the economy.
In that case, a reconstituted and chastened private sector might, with
the right incentives and sound government policy, become an engine of
growth. On the other hand, if MBS is more like Russian President
Vladimir Putin, he will simply replace the old oligarchs with new ones
of his own choosing. That path is certainly open: the Saudi government
has obtained a substantial interest in at least one major company, the
construction giant the Saudi Binladin Group, in exchange for releas-
ing its chief executive, and it might be doing the same with the Middle
East Broadcasting Center. This approach would solidify the crown
princes power but undermine the potential for meaningful reform.

Equally troubling, he might be more like King Henry VIII. Faced with
‘mounting expenses from fighting wars overseas and consolidating his rule
at home, the king of England took over monasteries and other religious
endowments when he declared himself head of the Church of England.
But rather than maintaining these institutions as a steady source of
income, he sold most of them for a one-time infusion of funds. There is
some indication that MBS is feeling similar fiscal pressures, The Wall
Street Journal reported that King Salman had unsuccessfully implored
leading businesspeople to contribute to the government's coffers before
the November roundup. The wolf is hardly at the door: the government
has around $500 billion in reserves. But some of the crown princes more
ambitious plans, such as building a futuristic city dubbed "Neom,” have
not excited much enthusiasm from the Saudi business elite. Shaking down
business leaders would yield money for pet projects, but this tactic can be
used only once. If foreign investors and domestic business elites think that
they are perpetually at risk of being arrested or having their assets seized,
they will be much less likely to invest in the country.

‘At a minimum, the crown prince has redefined what corruption
means in the kingdom. The problem is that observers, both domestic
and foreign, are not yet clear on what the new definition is. The path
that MBS chooses in the aftermath of the Ritz-Carlton crackdown
will determine his country’s future.

CDANGE AT LAST
On the social front, the crown prince has already made bold decisions.
In September, he tackled the most fraught Saudi social issue by
declaring that, as of June 2018, Saudi women will have the right to
drive. This decision has elicited barely a peep of domestic opposition.

116. Fresh Prince

As education levels rose and more Saudis ex,erienced life abroad, the
argument that the kingdom was “not ready” or “too conservative” for
this change rang increasingly hollow. And the objections of some cler-
ics that driving would endanger Saudi women's moral standing were
risible, given that the alternative was for Saudi women to be driven
by male drivers (either in taxis or in their families’ cars) who were
not members of their families. Saudi society had been ready for this
change for some time; the country’s leaders had sim ly lacked the
‚olitical will to jull the trigger. The crown ,rince has that ‚olitical
will, in sades.

Having women behind the wheel will bring enormous changes
to the country. More women will be able to join the work force. Hun-
dreds of thousands of foreign workers em,loyed as drivers will no
longer be needed. Men will not lose ‚roductive hours trans,orting
their wives, mothers, and sisters to doctor's a,ointments and other
meetings. It is hard to underestimate the im act of this decision.

“The crown ,rince has ,ublicly talked about “going back to how we
‘were, to the tolerant, moderate Islam that is o,en to the world” Although
this inter,retation of Saudi history is questionable, his commitment
to change is real. In addition to deciding to allow women to drive, he has
limited the ,owers of the religious lice

and ocned u, Saudi soil lif. Musical The path that MBS chooses

concerts, movie theaters, female atten-
dance at soccer matches, and a greater Bn the aftermath of the

number of ‚ublie social events will hel, crackdown wBil determBne

make the country more “normal” at least Ñ
for chone Saudi who have lived or vi O cowry’ future,

ited abroad. Undoubtedly, some in more
conservative religious circles will object to all of this, and there might be
isolated instances of a violent backlash, as there were when the country
introduced television and education for girls in the 1960s. But history has
shown that these changes will soon become normalized. ‘The wives of
clerics will be among the first behind the wheel.

Al this social change gives a more accurate ,icture of the rela-
tionshi, between the religious establishment and the ruling family.
Ultimately, the religious elites are state em,loyees who take orders
from above, not equal ‚layers with a veto over government ‚olicy
During every major crisis in modern Saudi history, the religious
establishment has su orted the government's decisions, including the

‘May/June 2018

Tn

117. E. Gregory Gause III

For now, the crown
prince’n path to ultimate ious oppesii

implementation of social changes in the 1980s, the retaking of the
Grand Mosque in Mecca from millenarian zealots in 1979, the invitation
of foreign troops into the kingdom during the Gulf War of 1990-91,
and the crushing of local al Qaeda elements in the early years of this
century. Religious elites may not like
the crown princes policies, but they are
not leading a charge against them. Reli-
to the regime comes

power neemn necure. from outside official circles, from radical

80

groups such as al Qaeda and the Islamic
State (or 1515) and from Islamist populists who call for both greater
adherence to Islamic law and more political freedom. The state has
been able to suppress these movements for the last century. There is no
reason to think that has changed.

UNCDALLENGED AUTDORITY
Equally audacious but less noticed abroad has been the crown prince's
consolidation of power within the ruling family. Since the 1980s, the
Kingdom has been ruled by a de facto committee of senior princes—
all sons of King Ibn Saud, the founder of modern Saudi Arabia—with
the king as first among equals. Some kings were stronger than others,
but all of them sought consensus on important decisions among their
family members who held the key ministries and governorships across
the country. This style of government had all the vices of rule by com-
mittee: it was ponderous, conservative, and not readily able to seize
opportunities. But it also had its virtues: its decisions were well con-
sidered, there were checks on bad ideas, and everyone important was
on board once a decision was made. As the sons of the founding king
‘grew old, some observers questioned how the system would besustained.
Most Saudi watchers, myself included, assumed that the sons of that
generation would take the places of their fathers and reconstitute
committee governance. We were wrong.

When King Salman assumed the throne in 2015, he originally
appointed his half brother Prince Muqrin bin Abdulaziz to be crown
prince, keeping the succession in his own generation. But the king
jettisoned Prince Mugrin a few months later in favor of one of his neph-
‘ews, Mohammed bin Nayef. MBN, as he is known, is part of the Saudi
royal family's third generation, the son of the former interior minister,
who had inherited the leadership of that ministry from his father. MBN.

118. E. Gregory Gause III

82

also became the main point of contact for U.S. officials in the burgeon-
ing intelligence and counterterrorism partnership that had developed
between the two countries after the 9/11 attacks. MBN was a safe choice
to become the first king of his generation—experienced in government,
successful in maintaining internal security against threats from al Qaeda
and ısıs, and well known and respected in Washington.

But in June 2017, King Salman removed MBN from his position as
crown prince and from his ministerial post and elevated his favorite
son to become the heir apparent. The new crown princes ascent was
remarkably fast MBS had become a minister only two years before,
when he succeeded his father as minister of defense. At that time, the
king had also appointed him to head a cabinet committee overseeing
economic and social policy (MBN was in charge of a similar committee
on security issues). With the cashiering of MBN, the new crown prince
became the focal point for all major decisions in the government. Al-
though some saw the Ritz-Carlton roundup as a consolidation of power,
MBS had already secured his position by then. To be sure, a number of
princes were involuntary guests at the Ritz, The most important of
these was Miteb bin Abdullah, a son of the former king, who served as
the commander of the National Guard. After his November arrest, he
was stripped of that position and removed from the cabinet. But no
one questioned that MBS was in charge, even before November 2017.

Today, the Saudi cabinet contains fewer members of the ruling fam-
ily than at any time since the 1950s. The king is still the prime minister,
and the crown prince is both the defense minister and the deputy prime
minister, but the only other ministerial position filled by a family mem-
ber is minister of the interior, which is held by a young nephew of the
former crown prince MBN and thus a member of the family’s fourth
generation. (There are also two royal ministers of state, one of whom
is another son of King Salman, but both lack a portfolio.)

In effect, the crown prince has cut out a large number of his older
cousins, many of whom had previously held high positions in govern
ment and were looking to inherit their fathers’ seats at the decision-
making table. This has occasioned more than a little grumbling in family
circles, some of which has seeped out into the Western press. But there
are no indications, at least not publicly, of a serious mobilization inside
the House of Saud to block MBS from eventually succeeding his father.
Dangerous splits in the family have happened before, most recently
in the late 1950s and early 1980s, when King Saud and Crown Prince

119. Fresh Prince

Faisal contended for power. Bft the signs of that split were clear and
pfblic. People were fired from jobs and then retfrned when their man
‘was on top, the protagonists took extended leaves oftside the cofntry
after they lost a skirmish, and family cofncils were called to adjfdicate
the conflict, In the end, the family deposed King Safd in 1964. Nothing
approaching that kind of open contest for power is ocefrring now.

Ik is possible that MBS will face familial opposition when his father
dies. The Hofse of Safd famofsly tries to keep family bfsiness oft of
the pfblic eye, so there cofld be things going on that oftsiders do not
know aboft. Perhaps in anticipation of a move against him, the crown
prince has been appealing to yofnger family members, particflarly in
the fofrth generation, who are below him in the hierarchy bft close to
him in age, by appointing many of them to sfbcabinet positions in
Riyadh and positions of afthority in the regional governorates. They
cofld become his sfpporters if trofble arises. For now, his path to
fitimate power seems secfre.

AN DNPREDICTABLE PRINCE
‘The crown prince now stands atthe top of the Safdi decision-making
process. He answers only to the king, who has granted him wide-ranging
powers, allowing him to make diffieflt decisions that were previofsly
kicked down the road, sfch as pfrsfing economic reform and allowing,
women to drive. Bft it also means that there are few checks on an
ambitiofs and aggressive leader who may not filly caleflate the second-
and third-order conseqfences of some of his actions.

Some recent Safdi foreign policy decisions sfggest a certain amofnt
of recklessness. In November 2017, for example, as the Ritz-Carlton
rofndfp was fnder way, the Lebanese prime minister, Saad Hariri,
made an fnschedfled visit to Riyadh. A few days later, he annofnced his
resignation from the Safdi capital, fnder obviofs pressfre from MBS.
"This was clearly a Safdi power play meant to pft pressfre on the Leba-
nese political system in hopes of dealing a blow to Hezbollah, Iran ally
in Lebanon, Instead, the move backfired, as the United States and Safdi
allies in Efrope told the kingdom to back down. A few weeks later,
Hariri retfrned to Lebanon and rescinded his resignation. Likewise, in
the sfmmer of 2017, Safdi Arabia and the United Arab Emirates led a
nfmber of other Arab cofntries in a boycott of Qatar, accfsing the
Qataris of sfpporting Islamist grofps, backing terrorists, and meddling
in the domestic politics of their neighbors. Bft far from knfckling

‘May/June 2018 83

120. E. Gregory Gause III

84

under, Qatar has withstood the pressure and drawn support from Iran
and Turkey. In both cases, Saudi Arabia did not achieve its objectives.
Many would classify the Emirati-Saudi military offensive in Yemen
as another example of an aggressive and unsuccessful MBS policy.
Undoubtedly, the Saudis and their partners assumed that the operation,
which began in 2015, would swiftly drive back the rebel Houthi militants
and restore the Saudi ally Abd-Rabbu Mansour Hadi to the presidential
palace in Sanaa. It did not turn out that way, and international pressure
on Riyadh is mounting as the human toll of the campaign has reached
alarming levels. But unlike the Lebanese and Qatari gambits, the
Yemeni campaign touches more directly on what most Saudis see as
their national security. One can argue about the extent to which the
Houthis are tied to Iran, but Saudi Arabia considers Houthi control of
Yemen as tantamount to allowing Iran a base of influence on the Arabian
Peninsula. No Saudi government would have stood by and allowed that
to happen. The war in Yemen is a drain on Saudi resources and a blot on
the country’s international reputation, but it still enjoys broad support
among Saudi elites. The question now is how to bring it to an end.
Unlike past Saudi leaders, MBS can make dramatic and unilateral
decisions, But this freedom of action also means that he can engage in
foreign policy adventures that would not have moved forward under
previous rulers. He may be learning from his mistakes, but given his
ambition and impulsiveness, the world should expect more surprises.

TDE PRINCE AND TDE PEOPLE
‘The crown prince has few checks on his decision-making power from
within the Saudi political system, but he still has to respond to public
demands. More than any other recent Saudi leader, MBS has cultivated
public support, especially among younger Saudis.

In January, responding to public grumbling about the increased
prices of water, electricity, and gasoline and the imposition of the five
percent var that took effect in mid-2017 and early 2018, MBS re-
stored an annual pay raise for government employees that had been
suspended as part of earlier austerity moves, and he granted govern-
ment employees a bonus of about $250 per month for “cost of living”
‘The crown prince also established a “citizen's account,” which directly
transfers cash to Saudis in the middle and lower economic strata
Saudi officials are now saying that the money recovered from those
held in the Ritz-Carlton will be used to support this fund.

121. Fresh Prince

‘These new benefits could be read as a move away from the goals of
balancing the state budget and making public-sector jobs les attractive,
but it is better seen as a necessary reaction to placate public opinion.
‘Two years of rising oil prices have made it difficult to impose austerity.
Sacrifices that might have been acceptable to Saudis when oil was $30 per
barrel seem less so with oil above $80 per barrel. Although the crown
prince may be headstrong and aggressive, he still realizes that he needs
the people behind him. But to transform the Saudi system, he will
also have to inculcate a new understanding of what the state is going
to provide its citizens. Reducing the welfare state without turning the
public against him will be his most daunting challenge.

LESSONS FOR TDE UNITED STATES
Perhaps nowhere have the crown princes moves produced more curiosity,
hope, and fear than in Washington. In U.S. President Donald Trump,
MBS has an enthusiastic backer—at times too enthusiastic. The fact
that MBS became crown prince just a few weeks after Trump's visit to
Saudi Arabia in May 2017 left the impression that Washington had
something to do with the change, and the White House was far too
quick to imply that MBS had explicit U.S. backing. The president s
excessive friendliness has already had consequences. In June, Trump
tweeted his support for the Emirati-Saudi boycott of Qatar, stating
that isolating the country might be “the beginning of the end to the
horror of terrorism.” This created tension with the Gulf state, which
is a crucial base for the U.S. military’s air operations in the Middle
East, and undercut moves by Secretary of State Rex Tillerson and
Secretary of Defense James Matti to bring about a quick end to the
imbroglio. The sense that the Saudis (and the Emiratis) can appeal
directly to the White House through the president's son-in-law, Jared
Kushner, has also made it more difficult for the regular organs of U.S.
foreign policy to bring the Gulf standoff to a diplomatic conclusion.

Although Trump's close public embrace of the crown prince might
not serve either interest in the long term, it has undoubtedly given
Washington considerable leverage with Riyadh in the short term. The
administration should think carefully about how to use this influence.
Bringing the Saudis on board for a new effort to settle the Israeli-
Palestinian conflict would make sense, but only if the Trump plan has
areal chance of success. The administration should not play the Saudi
card on the peace process if it is not going anywhere—and there is

‘May/June 2018 85

122. El Gregory Gause IIE

86

little reason for optimism. When it comes to Syria, Trump has shown
little interest in a new peace initiative, so there is no reason to engage
the Saudis there. Riyadh is already in agreement with a more confron-
tational policy toward Iran, And the administration has successfully
pushed the Saudis to reengage with the government of Iraqi Prime
Minister Haider al-Abadi, which is a positive step in the long-term
effort to stabilize Iraq and reduce Iranian influence there.

The place where Trump could most productively use his close
relationship with the crown prince is Yemen. The administration
should continue its efforts to push the Saudis to address the human
catastrophe through more effective aid and more discriminate military
action. The Houthis also have much to answer for regarding the suf-
fering of Yemeni civilians, and international pressure should focus as
much on them as on the Saudis. Any diplomatic initiative to end the
fighting will require that the United States decide whether it wants
to see the redivision of the country into two states, as was the case
before 1990. It will also involve sophisticated outreach to Iran, the
only regional power with any influence over the Houthis. This can be
accomplished even as the Trump administration works to contain
and roll back Iranian influence in the Arab world. Oman has acted as
a conduit to Iran before, and European countries can also deal directly
with the Iranians. If Tehran is at all chastened by the antiregime pro-
tests that broke out across Iran in January, it might be open to reducing.
its involvement in the regional conflict that least affects its interests.
Stabilizing Yemen will not be easy, but such an effort would give Saudi
Arabia a desperately needed exit ramp from a costly campaign and
alleviate one of the world's most searing human tragedies.

‘Meanwhile, Washington should pay close attention to how the
crown prince handles the aftermath of his anticorruption campaign.
If MBS becomes his country’s Xi, then the United States should
maintain its pragmatic alliance, which is based on mutual benefit
rather than shared values. But if MBS turns out to be more like Putin
or Henry VIII, privileging political cronies and treating the private
sector as his personal arm, then the longer-term prospects of the
Kingdom in a world where oil prices are unlikely to return to the his-
toric highs of the early years of this century will be much less certain.
In that case, the United States will need to look elsewhere for a partner
in stabilizing the region.®

123. Return to Table of Contents

The Right Way to CoeEce
NoEth KoEea

Ending the Threat Without Going to War

Victor Cha and Katrin Franer Katz

hen it comes to North Korea, U.S. President Donald Trumps
policies have been whiplash inducing, On February 23, he
appeared to be gearing up for a conflict when he said that if
sanctions against Pyongyang didn't work, Washington would have to move
to “phase two,” which could be “very, very unfortunate for the world.” But
just two weeks later, Trump abruptly changed course and accepted an in-
vitation to meet with North Korean leader Kim Jong Un—a decision that
‘aught even his own White House and State Department by surprise.

‘Trump's newfound enthusiasm for diplomacy has temporarily low-
cred the temperature on the Korean Peninsula, but it also underlines
a bigger question: Does the United States have a strategy for North
Korea, or are these twists and turns merely the whims of a tempera-
mental president? In the past, rash and uninformed decisions by U.S.
officials on the peninsula—such as acquiescing to Japan's occupation
of Korea in 1905 and excluding Korea from the U.S. Cold War defense
perimeter in 1950—have had grave consequences. The United States
cannot afford a similar outcome today.

‘Trumps unpredictability has had some upsides. His self-proclaimed
“madman” behavior may have played a role in bringing the North Koreans
to the table, and the Trump administrations policy of applying, in the
White Houses words, “maximum pressure” has yielded some impres-
sive results. An unprecedented summit between the U.S. and North
Korean leaders could indeed bring lasting peace to Asia. But it
could also go wrong: if negotiations fail, the administration might

VICTOR CHA is Professor of Government in the Walsh School of Foreign Service at Goorge-
own Unies anda Senior Adviser atthe Canter fr Strategic and international Studien.
KATRIN FRASER KATZ i Fellow atthe Center for Strategic and International Studies
‘She served on the staf ofthe US. National Security Council from 2007 to 2008.

May/June 2018

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124. Victor Cha and Katrin Fraser Kate

88

conclude that a military strike is the only way forward, greatly increas-
ing the chance of war,

The Trump administration must ground its summit diplomacy and
overall approach to North Korea in a strategy of comprehensive coercion
that clearly defines U.S. objectives, leverages Washington's most effective
diplomaticand military tools, and aligns its Korea policy with the broader
US. strategy in Asia. Failure to do this would only benefit Kim and
increase the likelihood that the United States will get “played” as Trump
has characterized past negotiations. After a year of saber rattling, and
with North Korea likely to be just months away from possessing the
capability to launch a nuclear attack on the continental United Stats, the
stakes could hardly be higher. In the not unlikely event that talks break
down, the United States will need a strategy that prevents the parties
from sliding into a disastrous war.

WDIPLASD
During ‘Trumps first year in office, North Korea conducted more than
twice as many ballistic missile tests (20) as it did during the first year of
Barack Obamas presidency (8). The result was a constant exchange of
recriminations between the United States and North Korea. After North
Korea tested its first intercontinental ballistic missile (am), in July,
‘Trump promised to rain “fire and fury” on Pyongyang. After North Korea
threatened a nuclear attack on “the heart of the U.S, Trump national
security adviser hinted that a preventive attack was becoming increasingly
likely. Meanwhile, rumors swirled that the Joint Chiefs of Staff and US.
Pacific Command were drawing up plans for a limited military strike to
give Kim a “bloody nose” Combined, we have decades of experience
working on this problem, and one of us, Victor Cha, was once under
consideration for U.S. ambassador to South Korea, before the Trump
administration withdrew his candidacy. Never before have we witnessed
more discussion about possible military escalation than in the past year.
But 2018 has brought a dramatic shift. The government of South
Korean President Moon Jae-in, who is much more open to engagement
with North Korea than his predecessor, decided to capitalize on what it
perceived as toned-down language in Kim's New Year address. In Janu-
ary, it achieved a reopening of the long-suspended inter-Korean dialogue
channels and facilitated an all-expenses-paid invitation for the North
Korean team to attend the Winter Olympics in Pyeongchang. While
briefing Trump on the phone about these developments, Moon recalled

125. The Right Way to Coerce North Korea

Br 3
From Pyongyang with love: a North Korean ICBM tent, July 2017

‘Trumps campaign pledge to have a hamburger with Kim. Ultimately,
Moon managed to elicit a promise from Trump to consider meeting
the North Korean leader—a message that Seoul dutifully conveyed to
Pyongyang. At the Olympics, despite exchanging little more than icy
stares with U.S. Vice President Mike Pence, Kim's younger sister
presented a letter to Moon that suggested her brother's interest in
improving relations with the United States.

In early March, shortly after the Olympics concluded, Kim warmly
welcomed a group of South Korean envoys to Pyongyang, led by the
South Korean national security adviser, Chung Eui-yong, After two days
of meetings, Kim agreed to cross into the South for an inter-Korean sum-
mit by the end of April. He also promised a moratorium on missile and
nuclear testing contingent on dialogue with the United States. According
to the South Koreans, Kim said that the “denuclearization of the Korean
Peninsula” was possible if the U.S. threat to his country were removed.

Not to be outdone, on March 8, Trump scrapped his daily White
House schedule to host the South Korean national security adviser in the
Oval Office soon after his delegation landed at Dulles Airport (Chung
was supposed to brief the president on his recent North Korean trip the
next day), Trump called for an immediate summit with Kim (which he
‘was eventually persuaded to push to May) and, in a dramatic moment

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126. Victor Cha and Katrin Fraser Kate

9

recalling his television show The Apprentice, made an impromptu visit to
the White House briefing room to tease an imminent “major announce
ment” on North Korea, which he later let the South Koreans deliver in
front of the West Wing. Shortly afterward, he conveyed his enthusiasm
for diplomacy in a flurry of optimistic tweets

WINGING IT?
‘The South Korean government deserves credit for turning an impend-
ing crisis into an opportunity. It is possible that a face-to-face meeting
between Kim and Trump, who are both fond of making surprise decisions,
could bring progress on one of the world’s most dangerous problems.
But it is easier to understand Seoul and Pyongyangs motives for
engaging in diplomacy than Washington.

For South Korea, the imminent threat of North Korean aggression
during the Winter Olympics, as well as long-term concerns about a
renewed campaign of North Korean missile and nuclear tests after the
conclusion of the Paralympics in late March, made engineering some
form of détente a strategic imperative. Meanwhile, North Korea's apparent
change of heart likely stems from the economic bite of Trump's maximum-
pressure campaign, which has cut oil imports and coal exports, dried
up hard-currency inflows, and made commodity prices spike in the
country. According to Trump administration officials, the sanctions have
caused North Korean gas prices to triple and have reduced the country's
exports by more than $2.7 billion. Today, paper is so scarce in the North
that the state-run newspaper has been forced to cut its circulation. There
have even been reports in South Korean media that North Korea used
telephones, rather than global vsar communications, to speak with South
Korean air traffic controllers when coordinating the arrival of high-level
North Korean delegations for the Olympics, since the state had lost access
to satellite networks after defaulting on payments. The news that the
‘Trump administration was seriously considering a military strike may
also have contributed to this turnaround.

But Kim also has other motivations for reengaging. A pause in weapons
testing at this point would do litte to set back Pyongyang' nuclear pro-
gram. Moreover, a meeting with Trump would give the rogue leader the
all-important recognition that he craves and, depending on what Trump
relinquished in exchange for a freeze in North Koreas weapons testing
and development, could advance the North long-standing goal of getting
the United States to accept the country as a nuclear power.

127. The Right Way to Coerce North Korea

What about the United States? Although there is an internal logic to
North and South Korean actions, inconsistencies abound in the U.S. ap-
proach. After spending most of 2017 discussing military options, the
administration backpedaled in January and denied that such plans even
existed. Officials have said that the sanctions campaign is designed to
‘compel the North Korean regime to return to the negotiating table, but
the amount of attention Trump's National Security Council and State
Department have paid to preparing for negotiations pales in comparison
to the considerable effort devoted to developing sanctions and military
strike options. ‘The administrations diplomatic strategy to date has
amounted to little more than alist of don'ts: don't reward talks, dont let
up on sanctions, don't make the mistakes of past administrations.

Furthermore, because Trump has jettisoned the interagency process,
which brings in experts and policymakers from across the U.S. gov-
‘ernment to advise the president, negotiations will occur amid ominous
conditions. Trump will be flying blind into meetings with Kim, acting on
little more than his gut instincts, without the advice of experienced for-
‘ign policy and Asian affairs experts, who would undoubtedly counsel
him to avoid verbose but meaningless summit statements and to press.
Kim on making tangible steps toward denuclearization. Meanwhile, the
North Koreans are probably only a few tests away from gaining the
capacity to reach the continental United States with nuclear-tipped
1cpMs. The moratorium on testing that Pyongyang offered the South
Korean envoys will merely maintain the status quo. Since the pause is
contingent on talks, Pyongyang will be able to resume testing the day
the talks end, and it will likely continue covertly working on its pro-
grams all the while. Finally, there is no reason to believe that North
Korea has changed its long-standing aims of achieving recognition as a
nuclear power, ejecting U.S. forces from South Korea, and undermining
the U.S. defense commitment to South Korea.

“To counter these negotiating traps, Trump might offer incremental
‘energy and economic assistance and sanctions alleviation in exchange for
a freeze in and the eventual dismantlement of North Korea's nuclear
‘weapons and long-range 1cBM programs. North Korea missile program,
in particular, has not been the topic of negotiations in almost two dec-
des, and Trump could score a victory on this count. Or he might choose
bolder path that would put much bigger carrots on the table, including
the normalization of relations or even a peace treaty formally ending the
Korean War. It would be ironic if Trump, an avowed hawk on North

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128. Victor Cha and Katrin Fraser Kate

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Korea, adopted an approach to diplomacy that doves have advocated for
years, but its not out of the question.

WDAT TRUMP SDOULD DO
Regardless of how talks do or do not play out, the United States must base
its policy going forward on a set of sound principles. North Korea’ effort
to develop nuclear missiles capable of reaching the United States demands
an urgent response. Past behavior suggests that Kim will try to share these
‘weapons with other states and nonstate actors. Down the road, he might
use them in an attempt to intimidate the United States into offering con-
cessions or even withdrawing its troops from South Korea, which would
leave the country vulnerable to an invasion. More broadly, North Korea's
acquisition of these weapons, if left unchecked, could undermine the
global nonproliferation regime. The United States must keep North
Korean denuclearization at the top of its strategic priorities. Accepting
North Korea as a nuclear power and building a new relationship from that
basis would legitimize its pursuit of nuclear weapons and send a dangerous
signal to other countries that are considering starting their own programs.

‘Trumps pursuit of a diplomatic solution has the best chance of suc-
cess if itis bolstered by a strategy that ramps up the regional and inter-
national pressure on North Korea. The Trump administrations approach
to North Korea thus far has involved swings between confrontation and
engagement without a clear link to broader U.S. strategic objectives in
the region. A comprehensive coercive strategy for denuclearization di-
plomacy would build on the strengths of the maximum-pressure cam-
paign while more fully leveraging the support and resources of regional
allies and partners in pursuing shared long-term goals. This strategy
would involve five key components.

First, Washington must continue to strengthen the global coalition that
it has mustered in its highly successful sanetions program. Unlike the
so-called smart sanctions campaign 13 years ago, Trump’ effort has the
backing of ten UN Security Council resolutions, which grant the United
States virtually unlimited authority to punish violators. Moreover, compli-
ance with the sanctions has increased because the Trump administration is
more willing than past administrations to share intelligence information
with third partes to help them stop sanctioned activities in their countries.

Second, the United States should buttress this sanctions campaign
with a statement on nonproliferation. This message should signal unam-
biguously to North Korea and any recipients or facilitators of its nuclear

129. The Right Way to Coerce North Korea

weapons that the United States will hold accountable any state, group, or
individual found to be complicit in a transfer of nuclear materi:
necessary, through the use of force.

‘Third, the United States must upgrade its alliances with Japan and

South Korea. Militarily, that means improving capabilities regarding in-
tegrated missile defense, intelligence sharing, antisubmarine warfare, and
conventional strike missiles to deter North Korean threats. The political
scientists Michael Green and Ma- — 2
ome dean The United Staten munt
systems in the region, deploying B-1 keep denuclearization at
and B-2 bombers to new locations, un- the top of itn ntrategic
dertaking -r-operations to impede id
No och ms propam do. Pioriin.
‘opment, and encouraging South Korea
to purchase shorter-range missile defense systems (similar to Israel’s Iron
Dome) to defend against North Korean artillery. The United States
should also remain open to additional conventional strike capabilities for
Japan and South Korea, the use of which would require U.S. sign-off.

At the political level, the United States should push for a joint state-
ment with Japan and South Korea that pledges that an attack on one will
be treated as an attack on all. Affirming collective defense is important
because North Korea's long-term strategy is to decouple South Korea's
security from Japan's and the United States. Indeed, one of the purposes
of North Korea's long-range missile tests last year was to reduce South
Korea's confidence in the U.S. commitment to deterring an attack against
‘South Korea and raise doubts in Japan and the United States about their
willingness to trade Tokyo or Los Angeles for Seoul in the event of
war. In order to convey a clear deterrent message to Pyongyang, the
collective-defense statement should commit all three allies to the use
of force in response to a North Korean attack.

‘These military and political measures should be complemented by dip-
lomatic and economic strategies that treat U.S. alliances more holistically.
For example, the United States should approach updates and adjustments
to the existing free-trade agreement with South Korea or U.S.-South
Korean defense cost-sharing negotiations with an awareness that tension
in one area of these relationships can make progress elsewhere more dif.
ficult, if not impossible, particularly if the Japanese public or the South
Korean public is paying attention and anti-U.S. sentiment has been rallied.

May/June 2018 93

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94

Although the North Korea problem is immediate, the longer-term
strategic competitor in Asia is China, whose challenge to U.S. preemi-
nence has been augmented by Russia spoiler role across the globe.
Bolstering U.S. alliances would strengthen Washington's hand against
these threats, as well, by significantly improving military defense capa-
bilities, counterproliferation efforts, and diplomatic coordination among
US. allies and partners in East Asia. Reinforcing the U.S. military
posture in the region would also increase the costs to China and Russia
of subsidizing the Kim regime, not complying with sanctions, or under-
taking other problematic behavior.

Fourth, although Washington may seek an assurance from Pyongyang,
that it will not proliferate, the Trump administration must also push for
the establishment of a counterproliferation coalition that shares intelli-
‘gence about maritime nuclear smuggling and cooperates on law enforce-
ment. Japan’sand South Korea port authorities, coast guards, and navies,
along with the United States’ considerable assets, should work together
to prevent nuclear material from leaving the country. Most of this
enforcement activity would likely take place in ports, but the allies should
be prepared to carry out interceptions at sea as needed. The United
States should also approach China and Russia about the possibility of
building a five-party counterproliferation regime in Northeast Asia.
Beijing and Moscow should see benefits to stopping any North Korean
Loose nukes, but if they are not willing to participate, then they should be
prepared to face the diplomatic and economic consequences of allowing
North Korean proliferation across their borders.

Finally, the United States must continue preparing both diplomatic
and military plans for North Korea. This is critical to, on the one hand,
upholding deterrence against Pyongyang and, on the other, creating a
credible off-ramp for the regime. Washington should maintain its exist
ing high-tempo military exercises in the region, preposition ammunition
stocks for a possible conflict, and rotate strategic assets such as B-52
bombers, stealth warplanes, nuclear submarines, and aircraft carriers
regularly to the peninsula, All these steps should prevent North Korea
from spreading its nuclear weapons, threatening the United States, or
taking offensive actions in the region.

Given the limited amount of time to prepare for a Kim-Trump
summit, the meeting is unlikely to bear immediate fruit beyond some
grandiose statements about a normalization of relations, a peaceful
end to the Korean War armistice, and denuclearization, statements that

131. Victor Cha and Katrin Fraser Kate

9%

the leaders would then authorize their governments to begin nego-
tiations over. This outcome would itself be significant, but it should not
lead to a lifting of sanctions unless North Korea backs up its promises
with actions.

‘Whether the summit succeeds or not, the United States must move
beyond broad statements and invite Pyongyang to reiterate the denucle-
arization pledges it made during the six-party talks in 2005 and 2007.
‘The documents outlining these pledges are the only place where North
Korea has ever been forced to dump its noncommittal and vague formu-
lations about a “nuclear-free peninsula” in favor of specific and written
commitments to “abandoning all nuclear weapons and existing nuclear
programs.” These agreements are also of value to North Korea (and
China) because they state that the United States will not attack North
Korea with conventional or nuclear weapons, the only written security
assurance that addresses North Korean concerns about “hostile” U.S.
policy. Washington should also compel the regime to improve its human
rights record as a good-faith demonstration of the authenticity of its
diplomatic intentions. North Korea will undoubtedly have its own long
list of wants, but for the United States, the summit must establish zero
tolerance for any plutonium- or uranium-based nuclear weapons stock-
piles or the deployment of long- or intermediate-range ballistic missiles,
and call for substantial reductions in the stocks of short-range ones. Absent
the preservation of these core security interests, neither summit diplo-
macy nor working-level agreements will be worth much.

Following this overall strategy would enhance the credibility of Wash-
ington's negotiating position, while also securing U.S. interests in the
event of failure. Broadly speaking, comprehensive coercion would get
the United States out of crisis management mode and demonstrate U.S.
resolve without unnecessarily risking war. It would also strengthen U.S.
alliances in Asia for the long term, directly address the proliferation
threat, increase the costs to those who subsidize Pyongyang, and comple-
ment the United States’ regional commitments.

WDAT NOT TO DO
When it comes to North Korea, the only American voice that really mat-
ters is Trumps. By agreeing to meet with Kim, Trump has improved his
media ratings, but he has also inadvertently increased the chances of war.
If his latest diplomatic gamble doesnt pay off, the administration may
come away from negotiations more determined to use the military option.

132. The Right Way to Coerce North Korea

Indeed, even amid talk of negotiations, some senior officials in the
‘Trump administration have continued to contemplate using a limited
military strike to prevent North Korea's development of a long-range
nuclear missile. The rationale is that a strike on North Korea nuclear
and missile facilities, perhapsafterits next test, would give Kim a “bloody
nose” painful enough to compel him to begin the process of denuclear-
ization, but not so damaging as to start a wider war on the peninsula
‘The logic behind a limited military strike is that North Korea will be
undeterrable once it acquires the ability to hit the continental United
States with a nuclear weapon—because
theregime is unpredictable, economicaly “Trump canot nolve the
desperate, and has used chemical weap-
‘ons against a civilian targetas recentlyas Problem of a nuclear
last year. If Kim can strike the continental North Korea with a

United States, the argument goes then. preventive military ntrike,

Washington will not be able to prevent
nuclear proliferation or nuclear black-
mail. A strike would constitute an immediate, decisive action to prevent
that outcome. It would also demonstrate the capability and willingness
of the United States to employ all options to stop North Korea nuclear
program, a message that would no doubt resonate beyond the region.
Yet this logic is flawed. If Kim would be undeterrable if he had nuclear
weapons able to reach the continental United States, then why would a
limited military strike deter him from responding in kind? And if Kim
did respond militarily, then how could the United States prevent the
crisis from escalating given that Kim would have just proved himself not
to have a clear and rational understanding of signals and deterrence?
Some Americans argue that the risks are worth taking because it's
better that people die “over there” than at home. That, too, is a mis-
guided sentiment. On any given day, there are 230,000 Americans
living in South Korea and another 90,000 or so in Japan. Evacuating
them would be almost impossible. The largest American evacuation,
in history was about 80,000 from Saigon in 1975. An evacuation from
South Korea would be infinitely more difficult. Even if the State
Department tripled the number of consular officers in South Korea,
the process would likely take months. Moreover, the normal evacua-
tion points south and east of the peninsula would not be feasible to
use in a war scenario because of the North Korean missile threat,
which would mean that the only way out would be through China.

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133. Victor Cha and Katrin Fraser Kate

98

But ina crisis, the waterways around the peninsula would be clogged
with a million Chinese seeking to leave, as well,

Under a rain of North Korean artillery, American citizens in the
region would most likely have to hunker down until the war ended.
Although those in Japan might be protected by U.S. missile defense
systems, the U.S. population in South Korea would not be as lucky.
‘To be clear: by launching a preventive strike, the president would be
putting at risk an American population the size of that of Cincinnati or
Pittsburgh, not to mention millions of South Koreans and Japanese,
all based on the unproven assumption that an undeterrable and unpre-
dictable dictator would be cowed into submission by a demonstration
of US. power.

‘Some may argue that U.S. casualties and even a wider war on the
peninsula are worth risking if a preventive strike would preserve the
post-World War I regional and international order in the long term.
But this proposition is highly problematic. A military strike would only
delay, not stop, Kim's missile and nuclear programs. Washington does
not know where all of North Koreas nuclear installations are, and even if
it did, many are hidden deep underground and in the side of mountains,
beyond the reach of even large “bunker buster” weapons. Furthermore,
a limited strike would not stem the threat of proliferation. In fact,
it would only exacerbate it, turning what might be a moneymaking
endeavor for the Kim regime into a vengeful effort to equip actors
arrayed against the United States

This strategy also risks fracturing the impressive coalition that the
‘Trump administration has brought together for its maximum-pressure
campaign. A unilateral military attack would undercut what has so far
been a successful bid to deplete the currency reserves North Korea has
been using to build its programs. Finally, a strike could harm key U.S.
alliances. Japan and South Korea insist that they must be consulted
before the United States considers a strike. Going it alone is always an
option, but doing so could fracture, if not end, the very alliances that
the Trump administration has declared it seeks to strengthen in the face
of arising China,

Ultimately, Trump cannot solve the problem of a nuclear North Korea
with a preventive military strike. This assessment is widely shared by
former members of the intelligence community, the National Security
Council, the State Department, and the Defense Department who
served in both Democratic and Republican administrations. As Steve

134. The Right Way to Coerce North Korea

Bannon, Trumps former chief strategist, put it in an interview: “Until
somebody solves the part of the equation that shows me that ten million
people in Seoul don't die in the first 30 minutes... there's no military
solution here, they got us.”

TDE BEST OF LOUSY CDOICES
Going forward, Washington should build on the maximum-pressure
‘campaign, embed negotiations in a broader regional strategy, and forgo
a military strike in favor of new efforts to strengthen regional deterrence
and counterproliferation through close cooperation with U.S. allies.
Such a strategy could deliver the same potential benefits asa limited
strike without the costs. And if the Kim-Trump summit fail, it could
also keep the two countries from immediately going to war.

China and Russia would not like this approach, but from their per-
spective itis preferable toa military strike, which could lead to a U.S.—
North Korean nuclear exchange in their neighborhood. Moreover, few
states, including China, are comfortable with the proliferation risk
posed by a nuclear North Korea. In fact, under this strategy, China and
Russia may decide to participate in counterproliferation efforts or even
in an enduring multilateral security institution.

Some in the global community fear that China and North Korea could
frame certain actions, such as an embargo to prevent proliferation, as an
act of war. To counter this, the United States and its allies should, to the
extent possible, seek legal authorization for their actions through UN
Security Council resolutions keyed to the next set of North Korean
provocations or to proliferation,

Doves may argue that this strategy would generate insecurity in
Pyongyang that would further justify the regime pursuit of weapons.
They may think that a better alternative would be to throw a diplomatic
Hail Mary—as Trump may well do—such as declaring peace on the
peninsula and pulling U.S. troops out of South Korea. Over the long
term, a peace treaty might be possible, but first, the facts on the ground
must change. The regime intention to pursue nuclear-tipped cams
presents grave new threats to the U.S, homeland and allies in the region
that must be addressed. The pressure of sanctions must be maintained,
but that doesn’t mean there is no room for subtlety in efforts to shape
North Korean behavior. The sanctions campaign, if handled carefully,
might be designed to target the regime while leaving space for market
development, information dissemination, and humanitarian assistance

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135. Victor Cha and Katrin Fraser Kate

100

among ordinary people. Still, a Hail Mary without tangible North Ko-
rean actions toward denuclearization might be great for Tv ratings, but it
would also give Kim what he wants (nuclear recognition) while offering
the United States nothing but empty promises.

Finally, crtics might argue that a strategy of comprehensive coercion
would simply take too much time, and time only plays into North
Korea hands asthe country continues its nuclear sprint. This critique is
not unwarranted; in recent decades, sensitive historical and domestic is-
sues have hampered Japanese-South Korean military cooperation, which
could impede defense planning among U.S. allies. In the past, however,
crises involving North Korea have led to security cooperation between
Japan and South Korea in a timely and prompt fashion. In addition,
although the push for a Kim-Trump summit is dramatic, it may have
shifted the play to a longer game, as bold statements by leaders who love
flair and drama will have to be translated into action by policy minions
in painstaking detail over weeks and months, if not years. The United
States should use this time to invest in its alliances and strengthen its
position in the region.

Coordinating and developing the capabilities needed for security
cooperation with Japan and South Korea will take time, but it will
put the United States in a better position in the long run. It’s impor-
tant to distinguish between strategy and tacties. Tactical responses
are always possible in the near term, but tactics without a strategy
can lead one down undesirable paths. As former U.S. Deputy Secre-
tary of Defense John Hamre has argued, recent U.S. claims that
“time has run out,” which were designed to pressure the North Koreans,
have only pushed Washington further into a corner, under pressure
to carry out a threatened military attack, and they have done nothing
to advance a strategy outlining what the United States should be doing
before, during, and after any negotiations.

In the land of lousy options, no plan is perfect. But some are demon-
strably better than others. A comprehensive coercion strategy for denu-
clearization diplomacy would significantly increase the pressure on North
Korea. It would strengthen U.S. alliances in Asia against threats not just
from North Korea but also from China and increase the costs to Beijing
of subsidizing the Kim regime. It would not risk hundreds of thousands of
American lives with a preventive military attack. And it would strengthen
the United States’ hand at the negotiating table in a way that primed
Washington for success, but also prepared it for failure. ®

136. Return to Table of Contents

PeEception and
MispeEception on the
KoEean Peninsula

How Unwanted Wars Begin

Robert Jervin and Mira Rapp-Hooper

orth Korea has all but completed its quest for nuclear weapons.

It has demonstrated its ability to produce boosted-fission

bombs and may be able to make fusion ones, as well. It can
likely miniaturize them to fit atop a missile. And it will soon be able
to deliver this payload to the continental United States. North Koreas
leader, Kim Jong Un, has declared his country's nuclear deterrent
complete and, despite his willingness to meet with U.S. President
Donald Trump, is unlikely to give it up. Yet Washington continues to
demand that Pyongyang relinquish the nuclear weapons it already
has, and the Trump administration has pledged that the North Korean
regime will never acquire a nuclear missile that can hit the United States
‘The result is a new, more dangerous phase in the U.S.-North Korean
relationship: a high-stakes nuclear standoff.

In March, U.S. and South Korean officials announced the possibility
of a Kim-Trump meeting. But regardless of whether diplomacy
proceeds or the United States turns its focus to other tools—sanetions,
deterrence, even military force—the same underlying challenge will
remain: the outcome of this standoff will be determined by whether
and how each country can influence the other. That, in turn, will
depend on the beliefs and perceptions each holds about the other. The
problems of perception and misperception afflict all policymakers that

ROBERT JERVIS is Ada, Stevenson Professor of International fairs at Columbia
Univers

MIRA RAPP-HOOPER isa Senior Fellow at the Paul Tesi China Center anda Senior
Research Scholar a Yale Law School.

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103

137. Robert Jervis and Mira Rapp-Hooper

deal with foreign adversaries. But when it comes to relations between
‘Washington and Pyongyang, those problems are especially profound,
and the consequences of a miscalculation are uniquely grave

Any US. strategy toward North Korea involves using a combination
of threats and promises to persuade Pyongyang to bend to Washington’
will, But whether the United States can actually persuade Pyongyang
depends not just on which tools it chooses to use but also, more
fundamentally, on how it is viewed by North Korea. How do North
Korean leaders interpret the signals Washington sends? Do they see
‘Washington's threats and promises as credible? And how do U.S.
policymakers perceive their counterparts in Pyongyang? How do they
differentiate plausible threats from mere bluster? The American
debate about whether Kim is “rational”—that is, capable of making
means-ends calculations and providing for his own survival—barely
scratches the surface of necessary considerations.

Ultimately, the effectiveness of any threat or promise isin the eye of
the target; the adversary has the final say in whether a particular approach
succeeds. Analysts often compare international politics to chess, a bilat-
eral contest in which players view the entire board and know all the
possible moves. In this case especially, a more apt analogy is Ranhomon—
the Japanese film that depicts the same story from several vantage
points, each character viewing what happened differently.

If any USS. strategy toward North Korea is to have a chance of suc-
ceeding (or even of just averting catastrophe), it must be guided by an
accurate sense of how Kim regime thinks, what it values, and how it
judges its options. Washington must understand not just North Korean
objectives but also how North Korean officials understand U.S. objec-
tives and whether they consider U.S. statements credible. If it fails to
do so, perceptual pitfalls could all too easily provoke a downward spiral
in relations and lead to the worst conflict since World War IL

YOU CAN'T ALWAYS GET WDAT YOU WANT
It has long been clear what the United States wants from North Korea.

For years, Washington has sought to denuclearize the country—that
is, to achieve the complete, verifiable, and irreversible disassembly of
its nuclear arsenal—and to deter major military action on its part.
More recently, Trump has added that North Korea cannot be allowed to
develop an intercontinental ballistic missile, or ıcnm, capable of reaching
the continental United States. Washington has also long called for,

104 FOREIGN APPAIRS

138. Perception and Mispereeption on the Korean Peninsula

Seeing lke a meat: Kim watching a military drill, Pyongyang, November 2014

but never actively pursued, the reunification of the Korean Peninsula
under the democratic control of the South. Yet as North Korea has
moved toward a complete nuclear and 1caMt capability, such goals have
become harder to achieve. They no longer require simply preventing
North Korea from taking certain steps. Now, they require persuading
it to reverse course and give up capabilities it has already developed,
even in the face of significant opposition, a much bigger concession.

Accordingly, the more urgent question today is less what the
United States wants than what it can reasonably live with—tha
what it needs. As North Korea nears the end of its nuclear quest,
concessions that would have once looked attractive, such as a freeze
in further development, no longer look as desirable. What, then,
would it take for the United States to live with a nuclear North Korea?
If Washington can strengthen its alliances and military presence to
effectively deter Pyongyang and prevent it from resorting to nuclear
blackmail, would minimum American needs be met?

What North Korea wants from its nuclear and missile programs has
also become fairly clear. Above all, the regime wants to ensure its sur-
vival and deter a U.S. attack. Beyond that, it also appears to consider
nuclear weapons to be a source of prestige and thus wants acceptance
as a de facto nuclear state, much as Pakistan has. Nuclear weapons also

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139. Robert Jervis and Mira Rapp-Hooper

help advance other long-standing North Korean desires, such as reunifi-
cation of the peninsula under Pyongyang's control and the undermining

of U.S. security guarantees for South Korea and Japan.
‘The harder question to answer is whether the Kim regime now
sees a nuclear capability as inextricable from its own survival—that is,
whether t thinks it needs to keep nuclear

Both the United Staten and "“SaPOns under any circumstances. Fit

does, then there is no security assur-

North Korea have bluffed ance that Washington can offer Pyong-
in the pant. yang that will convince it to give them

106

up. The only steps that would work are
ones that U.S. diplomats would almost certainly never take—say,
renouncing the U.S. treaty with South Korea and withdrawing all
USS. troops from the peninsula,

‘The needs and wants of other actors are also relevant. South Korea's
objectives largely align with those of the United States. But because a
conflict would inevitably spill onto its own soil, South Korea is more
likely to privilege political solutions over military ones. Some differ-
ences in U.S. and South Korean positions can be managed, but if they
diverge too much, North Korea may have reason to doubt Washing-
tons security guarantee to Seoul. China, meanwhile, has traditionally
preferred to have a stable, if irksome, North Korean buffer state along
its border rather than to push for denuclearization at the risk of regime
collapse. But Chinese-North Korean relations have been deteriorating
for years, and it is now an open question how much Beijing values
its client.

CREDIBILITY IS IN TDE EYE OF TDE BEDOLDER
No matter what strategy it is using at any given moment, the United
States relies on a combination of threats and promises to change
North Korean behavior. Those threats and promises must go together:
a threat only works if it is coupled with a promise not to carry out the
threatened action if North Korea complies with a demand. And both
the threat and the promise must be credible, Washington has to signal
to Pyongyang what actions it can take to avoid punishment, as well as
what actions it can take to produce better outcomes.

In discussions of international polities, credibility is often treated
as a characteristic inherent to a given state and its signals. In fact,
credibility is in the eye of the beholder: a threat or a promise is en

140. Robert Jervis and Mira Rapp-Hooper

108

only ifthe target sees it as such. The target makes that determination
by assessing its opponent' interests, its previous behavior, the nature
ofits regime, and whether its leaders have lived up to prior commitments.
Accordingly, any U.S. attempt to exert influence over North Korea
necessarily leaves the decision to comply in the hands of North Korean
leaders. They, not officials in Washington, make the cost-benefit calcu-
lation of the value of compliance and noncompliance.

‘The question of how to establish credibility is especially fraught in
this case. The United States and North Korea face major hurdles to
persuading each other that their intentions are genuine. Because they
do not have formal diplomatic relations, they are basing their views
on an impoverished set of interactions and data points. In the last two
decades, state-level exchanges have taken the form of nuclear negotia-
tions. With the exception of those leading to the 1994 Agreed
Framework, which stayed in place for six years, al these negotiations
resulted in failure. As a result, each side distrusts the other.

Moreover, the two sides interpret history differently. Kim looks at
past agreements with the United States that his father and grand-
father struck and likely infers that Washington seeks to make Pyong-
yang less secure and will renege on its commitments. He looks at the
USS. invasions of Iraq and Libya and likely concludes that nuclear
‘weapons are a far stronger guarantor of survival than any U.S. promise.
He sees Trump’ threats to pull out of the Iran nuclear deal and likely
worries that U.S. arms control agreements cannot be trusted. And
when evaluating the prospect of U.S. military action, he may consider
prior instances in which U.S. leaders have contemplated bombing
nuclear sites in North Korea or elsewhere—and conclude that since
the United States has always refrained from doing so in the past, it
will again,

Making credibility even harder to establish, both states have bluffed
in the past. Perhaps more than any other state, North Korea has a
tendency to use incendiary rhetoric that does not result in action. It
threatened to turn Seoul into a "sea of fre” in 1994, and it calls nearly
every new round of international sanctions “a declaration of war.”
After the UN Security Council approved sanctions in 2013, a North
Korean spokesperson said, “We will be exercising our right to preemp-
tive nuclear attack against the headquarters of the aggressor.”

Although Washington's bluffing has typically been less brazen,
the effect is similar. Washington has called North Korea's nuclear

141. Perception and Mispereeption on the Korean Peninsula

development “unacceptable” but then gone on to accept it. It promised
to hold Pyongyang accountable for proliferation but took no action
when it sold a nuclear reactor to Syria in 2007. In August 2017,
‘Trump threatened to unleash “fire and fury like the world has never
seen” against North Korea if it made more threats, only to do noth-
ing when the country conducted more missile tests. He even prides
himself on his ability to backtrack. When The Wall Street Journal
asked him about his combative tweets against Kim, he replied, “You
see that a lot with me and then all of a sudden somebody's my best
friend. I could give you 20 examples.” Although no single bluff com-
pletely erodes a state's credibility, habitual empty threats degrade it
over time.

North Korea may be more likely to treat a U.S. threat or promise
as credible under certain conditions: when the United States has
previously demonstrated the capability to act as it says it will, when
the costs to the United States of action are low, when it has a signifi-
cant incentive to act, and when there are not less costly ways of carry-
ing out a threat. To increase the credibility of a threat, Washington can
make it more specific, detailing which precise conditions would trigger
which precise responses. Doing so might mean issuing an ultimatum,
one of the strongest types of threats in international politics. In the
case of military threats, Washington could send costly signals of immi-
nent action, such as evacuating American personnel from Seoul or
sharing prospective military plans with allies in the hope that they
will leak them. Such moves, in addition to causing public alarm and
giving up the advantage of a surprise attack, would make it harder for
the United States to step back from the brink.

TDE DIFFICULTIES OF DIPLOMACY
Pyongyang perception of U.S. credibility will determine the success
or failure of any U.S. strategy. Whether the Trump administration is
relying on diplomacy, pressure, deterrence, or force, it and North
Korean leaders will interpret the same actions differently, and neither
will fully understand the others view. Misperception afflict all policy
‘options, with different risks in each case.

Diplomacy—whethera Kim-Trumpsummitorlower-level exchanges —
presents its own difficulties and dangers. Each side views the other's
behavior in a different light. The United States sees North Korea as
were actor that has reneged on countless commitments in the

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142. Robert Jervis and Mira Rapp-Hooper

110

past, whereas North Korea sees the United States as intent on threat-
ening its existence. For both parties to come to the negotiating table,
they must believe that the potential upsides of diplomacy outweigh
the costs, including the likelihood that the other side will agree to and
then scuttle a deal.

The United States faces what might be called a “time-technology
dilemma” in diplomacy. North Korea is close to reaching its technical
goals, making it ll the more important for Washington to secure signifi-
cant enough concessions quickly enough to make the gambit worthwhile,
‘The more time that passes, the less the United States will be able to
gain from negotiations, and the more North Korea will be able to secure
for itself. Pyongyang may, for example, get away with making minor
concessions in exchange for significant sanctions relief or security
assurances, strengthening its hand without meaningfully improving
the security situation for the United States and its alles.

Given these perceptual dynamics and the likelihood that they will
cause diplomatic failure, why would the United States pursue diplomacy
at all? After all, many argue that it can deter, contain, and manage the
North Korean threat without talks. Any progress on constraining
Pyongyang' nuclear and missile programs, no matter how modest or
unlikely, will require concessions that can be made only at a negotiating
table. Just as important, engagement can reduce the risks of misper-
ception and miscalculation in the bilateral relationship, which is especially
important given how few other ties exist between Washington and
Pyongyang. That said, ill-conceived diplomacy may lead each side to its
worst-case assessment of the other, Ifit does, tensions will only spiral.

YOUR ECONOMY OR YOUR NUKES
Similar perceptual problems affect other U.S. policy options—
including the tool of choice in recent years, financial sanctions.
Whatever the economic impact of sanctions, their effectiveness in
achieving a broader political objective still depends on North Korean
perceptions of U.S. intentions. Sanctions are meant to decrease
North Korea ability to pursue its weapons programs and to inflict
pain on the regime without raising the risk of direct military conflict,
Because they are usually applied reactively and episodically, however,
their influence is only incremental.

‘The United States and the UN tend to apply new sanctions after
North Korea has taken a prohibited action. Because this has been the

143. Robert Jervis and Mira Rapp-Hooper

m2

pattern for years, North Korea can anticipate new sanctions before it
makes a given move and decide whether the benefits will outweigh
the costs. Moreover, because sanctions are applied only after the fact,
the regime has time to adjust to the new economic circumstances it
will face after it takes the action. Indeed, because it chooses when next
to conduct a nuclear test, it actually has some control over whether
and when it will get hit with another round of economic measures,
even if the exact contents of the sanctions package are a surprise. In
other words, what international actors view as resolute and punishing
steps may not actually do much to affect Pyongyang' preferences.

‘The United States hopes that its sanctions will send a message that
forces North Korea to choose between its economy and its nuclear
weapons. But the incremental nature of the financial punishment may
instead signal that it will continue but the pain will be tolerable,
encouraging North Korea to hurry up and complete its nuclear pro-
‘gram so that it can start negotiating the sanctions away. This repre-
sents another instance of the time-technology dilemma: North Korea
has few technical hurdles left to cross, yet new sanctions take time to
bite. Still, international financial pressure has inherent credibility,
because multilateral sanctions include the participation of countries
on which North Korea depends, such as China and Russia. Moreover,
it is difficult to draw conclusions about how multilateral sanctions
against Pyongyang are affecting its political behavior. Did Kim seek
a summit with Trump because he is desperate for sanctions relief
and willing to make concessions o because he seeks the prestige of
presidential summit and de facto recognition of North Korea as a
nuclear power? American observers may assume the former, whereas,
Kim may believe the latter, leading to a yawning gap in diplomatic
expectations.

MAKING DETERRENCE WORK
One of the foremost questions that has occupied U.S. policymakers is
whether North Korea can be deterred. But the better question is what
North Korea can be deterred from doing and what it can be compelled
to do differently. I is one thing for the United States to deter the use
of nuclear weapons or a major attack—since the end of the Korean
War, North Korea has not tried to invade the South because the U.S.

threat to destroy the North Korean regime in such a circumstance is
credible, thanks to U.S. conventional and nuclear military superiority.

144. Perception and Mispereeption on the Korean Peninsula

But itis another thing entirely to deter lower-level provocations. When
North Korea makes such moves, as it did when it sank a South Korean
‘warship in 2010, it presumably estimates how the United States will
respond and then selects actions and targets that limit U.S. options.
‘The United States and South Korea may be able to deter some North
Korean provocations through their conventional force posture and
military doctrine, but they are unlikely to be able to prevent them all

Further complicating matters, U.S. goals have gone beyond deter-
rence to compellence—that is, seeking to change what the North is
already doing. Coming only when deterrence has failed, compellence—
in this case, getting North Korea to abandon a mature nuclear arsenal —
is even harder to achieve, As behavioral economists have demonstrated,
decision-makers are more willing to pay costs and run risks to avoid
losing something they already possess than they are to get something
they don't yet have. Even growing U.S. pressure is unlikely to alter this;
it may just reinforce Kim belief that he needs nuclear weapons to deter
Washington. Similarly, it is possible that U.S. threats only heighten
Kim perceived need for a better deterrent—meaning that Washington's
messaging around deterrence undermines its own objectives.

After all, deterrence goes both ways, and so U.S. policymakers must
also consider what their messages tell Kim about his ability to deter an
American attack. When Washington declares that a North Korean ıchm
capability would pose an unacceptable threat to the United States, it is
in effect admitting to Kim that the United States is easily deterred by
such a capability. Similarly, drawing a sharp distinction between threats
to the American homeland and threats to U.S. allies is deeply problem
atic, because extended deterrence requires demonstrating that allies are
as valuable, or nearly as valuable, as the homeland itself. Both South
Korea and Japan should be concerned that Washington appears preoc-
cupied with weapons aimed at it and relatively unconcerned about the
‘weapons aimed at them. Understandably, they might worry that Trump's
“America first” stance means a weaker nuclear umbrella.

TDE FOG OF WAR
Of all the ways in which perceptual pitfalls could come into play on the
Korean Peninsula, the most consequential would involve the use of mil-
itary force. The United States is unlikely to wage a campaign of total
destruction against North Korea now that Pyongyang’s nuclear arsenal
is advanced enough to stave off utter defeat. If war did break out, the

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145. Robert Jervis and Mira Rapp-Hooper

The pronpect of a meeting

United States would be more likely to use military force as a form of
coercion, But even that would be unlikely to achieve denuclearization.
“The mere fact that the United States possesses superior military capa-
bilities would not guarantee that it would prevail, since each country's
resolve would help determine the outcome. That is why U.S. officals
must consider North Korea willingness to run risks and pay high costs.

After an attack, North Korea’s perception of the initial military
campaign would determine whether Pyongyang complied with U.S.
wishes. For the United States to get its way, it would have to send
signals that it would continue to use force if North Korea refused to
comply, but also that it would cease to use violence if North Korea
cooperated. In particular, the United
States would have to indicate that the
leadership in Pyongyang had a clear

between Kim and Trump pathway to survival. If Kim believed
han rained hopen that, if that the United States was bent on his
danhed, could make war — destruction no matter what, he would

have no choice but to mount an all-out

more likely. counterattack. The United States would

14

find this balance difficult to achieve. IF
Kim anticipated some form of U.S. military action but the strike was
less destructive than feared, he might actually be bolstered in his refusal
to comply with U.S. wishes. In either ease—a devastating attack or an
underwhelming one—the United States should expect to face signifi-
cant retaliation, at least until Kim figured out whether compliance or
resistance made more sense in the long term.

How third parties and domestic actors reacted to a strike could
influence any additional U.S. efforts to use violence coercively. If the
domestic audience vehemently supported a strike, the United States
could more credibly claim that it would attack again if Pyongyang
failed to cooperate. If international parties expressed outrage and
condemned the strike, as seems plausible, the U.S. threat to launch a
devastating follow-on strike would become less potent, and Pyongyang.
would have far less motivation to comply. U.S. leaders would also
have to contemplate the signals they sent beyond the military strike
itself. What message would Trump deliver to accompany the use of
force? Would he demand full denuclearization? Throughout the his-
tory of warfare, once one side has resorted to violence, emotions play
a larger role in leaders’ calculations and states become prone to gamble,

146. Perception and Mispereeption on the Korean Peninsula

willing to accept greater risks and take bigger chances to prevent major
losses. North Korea is unlikely to be an exception.

A PERFECT STORM OF MISPERCEPTION
‘The greatest risk is that the perceptual challenges that aflict all these
approaches could build into a perfect storm of misperception. It isall
too easy to imagine how such a crisis might develop—no less amid a
flurry of diplomacy than amid a volley of threats,

In fact, the prospect of an unprecedented meeting between Kim
and Trump has raised hopes that, if dashed, could make war more
likely. There is a real danger of a Ranhomon situation: Washington
might believe that sanctions and military threats made Kim realize
that his nuclear program could lead to his demise, whereas Pyongyang
might believe that Trump's willingness to meet without demanding
substantive concessions indicates that the United States is finally
ready to accept North Korea as a nuclear state. Even the same words
may mean different things to the two sides. For the United States,
“denuclearization” is the North giving up nuclear weapons; for North
Korea, it may mean an arms control agreement in which the two sides.
bargain over each other force levels. Well-intentioned mediation by
South Korea could postpone the day of reckoning but make it worse
when it comes, by encouraging both Washington and Pyongyang to
believe that the other is ready to make major concessions. If face-to-
face talks reveal that neither is in fact willing to do so, the hostility
will be magnified.

It is not difficult to imagine how this scenario could come to pass.
Following North Korea reasonably good behavior during the Winter
Olympics, the United States’ postponement of military exercises, and
South Korean President Moon Jae-in’ efforts at diplomacy with the
North, a diplomatic window has opened. Imagine that Kim and Trump
arrive at the summit only to discover that they hold radically different
views of the commitment to “denuclearize”; Trump believes that Kim
is willing to negotiate away his arsenal for sanctions relief, whereas
Kim believes that full denuclearization also requires the removal of
USS. troops from the Korean Peninsula and an end to the U.S.-South
Korean alliance (a possibility that was reinforced by comments Trump
made in March that appeared to threaten to withdraw U.S. troops from
South Korea unless the U.S.-South Korean trade deal was renegotiated).
After it becomes clear that Trump will not move forward on Kim's

‘May/June 2018

us

147. Robert Jervis and Mira Rapp-Hooper

16

terms, Kim is outraged and renews his August 2017 pledge to test mis-
siles over Guam.

Both Washington and Pyongyang now think the other is responsible
for derailing diplomacy. Out of a desire to induce the United States
to drop its denuclearization demands, Kim decides to show that his
willingness to negotiate does not mean his will has been broken, and
he proceeds with his missile launch. Much as the Japanese did before
they attacked Pearl Harbor, he hopes that a missile test over Guam—a
USS. territory but not a state—will unnerve the United States enough
to persuade it to accept his nuclear program, but not so much as to
bring a full-scale war,

Bat then, one of his missiles expels debris over Guam. Fragments
from the reentry vehicle strike the island itself, killing a few residents —
who are, after all, U.S. citizens. Trump declares this “an act of war”
and gives Kim 48 hours to issue a formal apology and a pledge to
denuclearize. Kim does not comply, and the United States dusts off
one of its plans for a limited military strike. It attacks a known missile
storage facility, believing the limited nature of the target will induce
Kim’s cooperation and minimize the risk of retaliation. Instead, Kim
views the strike as the beginning of a larger effort to disarm him and
as a prelude to regime change. Following his conventional bombard-
ment of Seoul, the United States begins to attack other known weapons
sites and command-and-control facilities to neutralize the threat. Kim
launches nuclear weapons the following day.

The purpose of this vignette is not to suggest that war on the
Korean Peninsula is inevitable, likely, or totally beyond the control of
the parties involved. Rather, itis to illustrate how the forms of misper-
ception now ingrained in the U.S.-North Korean relationship may
interact witha situation that is already unfolding to invite a catastrophe
that neither side wants.

KNOW TDYSELF
‘There is no set of policies that can eliminate these risks. But there are
steps U.S. policymakers can take to sharpen their own perceptions of
North Korea; better understand how U.S. actions and signals affect
the perceptions of their North Korean counterparts; and, perhaps
most important, recognize the assumptions behind American beliefs.
‘The Trump administration should start by deepening its assessment
of Pyongyang' aims and bottom line. There are a handful of former

148. Perception and Mispereeption on the Korean Peninsula

USS. officials who have experience negotiating with the North Koreans
and who could help current policymakers more accurately read North
Korean signals. Even if it has arrived at a diplomatic opening by
accident, the administration must now work with these experts to
devise a strategy for diplomacy, including coming up with objectives
that are more limited than full denuclearization. U.S. policymakers
should also press the intelligence agencies not only to offer their best
assessments of North Korean intentions but also to be explicit about
the gaps and shortcomings in them.

Policymakers should also work with the intelligence community to
‘examine how existing U.S. policies may look from Pyongyang. They
should consider how those perceptions (or misperceptions) serve to
reinforce or undermine U.S. objectives and how future changes in
policy may be viewed. There is an all-too-human tendency to assume
that an action will be seen as itis intended to be seen; intelligence
analysts should help policymakers actively counter this tendency,
especially when it comes to potential military strikes.

In addition to trying to understand the assumptions of North Korean
policymakers, U.S. policymakers must work to understand their own.
‘They should go back and examine them, carefully mapping the causal
logic of any move they might make. By recognizing the flaws or weak-
nesses in their own assumptions, they will be better prepared to react,
nimbly to unexpected North Korean concessions or to manage the
situation if engagement abruptly fails. Diplomatic encounters are not
likely to unfold according to script, and if the United States and North
Korea are not willing to be surprised and learn, they can neither take
advantage of opportunities nor avoid making worst-case inferences
that would rule out further discussions.

The prospect of grave misperceptions should instill a degree of
caution in U.S. officials and prompt them to insert the equivalent of
speed bumps into the policy process, above all in a moment of crisis.
If the U.S.-North Korean relationship begins to deteriorate further
and escalate toward conflict, they should pause to consider the prob-
lems of perception. Why did North Korea enter into direct talks if it
didn’t intend to denuclearize? What assumptions were made about
the North that must now be interrogated? Such questions may seem
basic, but they too often go unasked. Simply by considering them,
USS. policymakers can reduce the risk that flimsy credibility and haz-
ardous misperceptions will bring about an unnecessary war.@

May/June 2018 117

149. 18

Return to Table of Contents

Opioids of the Masses

Stopping an American Epidemic From
Going Global

Keith Humphreyn, Jonathan P. Caulkin, and
Vanda Felbab-Brown

States, and, per capita, almost as many died in Canada. From 2000 to

2018, more Americans died of overdoses than died in World War I
and World War II combined. Yet even these grim numbers understate
the impact of opioid abuse, because for every person who dies, many more
live with addiction. The White House Council of Economic Advisers
has estimated that the epidemic cost the U.S. economy $504 billion in
2015, or 2.8 percent of Gor.

‘This public health story is now common knowledge. Less well known
is the growing risk thatthe epidemic will spread across the globe. Facing
a backlash in the United States and Canada, drug companies are turning
their attention to Asia and Europe and repeating the tactics that created
the crisis in the first place. At the same time, the rise of fentanyl, a
highly potent synthetic opioid, has made the outbreak even deadlier
and begun to reshape the global drug market, a development with
significant foreign policy implications. As a result, the world is on
the cusp of a global opioid epidemic, driven by the overuse of legal pain-
killers and worsened by the spread of fentanyl, that could mark a public
health disaster of historic proportions.

Yet in the face of this terrifying possibility, the world has remained
largely complacent. Governments and international organizations

I n 2018, nearly 50,000 people died of opioid overdoses in the United

KEITH HUMPHREYS is Esther Tig Memorial Professor td Profesor of Psychiatry at
Statford Utrera

JONATHAN P. CAULKINS isH. Guyford StevorUtvrsiy Professor ol Operatots
Research at Public Policy at Heitz College at Cartoge Melt Uiversit

VANDA FELBAB-BROWN is Ser Fellow atthe Brook situ

150. Opioids af the Masses

urgently need to learn the lessons of the North American crisis. The
first and most important of those is that the more opioids flood the
market, the bigger the problem will be—and so governments must
couple efforts to treat addicted individuals with efforts to curb supply.
‘That will require them to erack down on pharmaceutical companies
that abuse their positions and to take aggressive steps to regulate the
sale and marketing of opioids. And the rise of synthetic opioids means
that governments must rethink the role that fighting drug trafficking
plays in their foreign policies.

TDE PRESCRIPTION AND TDE DAMAGE DONE
Opioids derived from the opium poppy have long been used success-
fully to relieve short-term pain from surgery and to comfort patients
with terminal conditions, including cancer. Problems can arise,
however, when they are prescribed for prolonged periods to treat
nonterminal chronic pain. Extended use raises the risk of addiction
and increases tolerance, meaning that patients need more and more
of the drug to achieve the same effect. Opioids are so dangerous
because the difference between a lethal dose and a normal one is
only a modest multiple. Worse still, a dose that works today can kill
tomorrow, especially if the patient has taken other drugs, such as
alcohol or benzodiazepines (a class of drugs that includes Valium
and Xanax), And because an overdose kills by depriving the body
of oxygen, even those who survive risk serious organ damage.

Opioids are widely misused for three reasons. First, clinicians
can't objectively measure pain in the way they can body temperature
or blood pressure, so they rely on patients’ accuracy and honesty in
judging pain severity. Second, opioids are highly prized, even by
healthy people, because of the euphoria they create. And third, anyone
without scruples can sell prescription opioids on the black market.

After several epidemics involving legal medications in the nine-
teenth century, in 1914, the U.S. government banned most distribution,
of opioids. For nearly 50 years after that, North America saw few
opioid-related problems besides heroin use in a few U.S. and Canadian
ities. In the late 1980s and 1970s, heroin spread to more cities, but then
stalled. From the 1970s to the mid-1990s, the number of dependent
users was fairly sable,

Al of that changed in the mid-1990s. Several pharmaceutical compa-
nies began aggressively marketing opioids to treat chronic, not just acute,

May/June 2018 119

151. pain, claiming they carried little risk of addiction. The most infamous
was Purdue Pharma, the maker of OxyContin, but other companies
rolled out similar products. As the New York Timen journalist Barry
Meier and the psychiatrist Anna Lembke have documented, their tactics
were nearly as ruthless as those of any drug dealer. During the period
of mostly uncritical enthusiasm for prescription opioids, the largess of
‘manufacturers flowed to virtually every organization that should have
been protecting the public, including health-care regulators, profes-
sional medical societies, medical school education programs, elected
officials, patient advocacy groups, medical opinion leaders, and state
medical boards.

A study by the Center for Public Integrity and the Associated Press
found that from 2008 to 2015, the pharmaceutical industry spent
880 million on campaign contributions and lobbying state legislatures,
220 times as much as the amount spent by groups trying to limit opioid
use. In 2013, the marketing expenditure of each of the ten largest phar-
maceutical companies exceeded the entire budget of the U.S. Food
and Drug Administration.

The resulting lax regulatory environment, coupled with a sincere
concern that many patients were living with unacceptable levels of
pain, released a tsunami of opioid prescriptions. Consumption in the
United States quadrupled from 1999 to 2014, peaking at 250 million

152. prescriptions per year. By 2010, the U.S. health-care system was dis-
pensing enough opioids each year for everyone in the country to be
medicated round the clock for a month.

In 2007, federal prosecutors secured a guilty plea from Purdue
Pharma for knowingly deceiving doctors and patients. The courts

fined the company $800 million and required it to more accurately
describe the risks and benefits of OxyContin. Still, that ine is dwarfed
by the estimated $35 billion of revenue that Purdue has earned from the
drug, and the three executives who pled guilty avoided jail sentences.
By contrast, someone convicted of selling 100 grams of heroin—worth
between $2,500 and $15,000—faces a federal mandatory minimum
sentence of five years. Other fines paid by opioid manufacturers and
distributors in the United States and Canada have mostly been under
$25 million—small enough that companies could treat them as just a
cost of doing business.

‘A recent scandal reveals the extent to which the industry has captured
regulators. In 2018, Eric Eyre, a determined West Virginia journalist,
discovered that drug companies had shipped nearly nine million opioid
pills to a pharmacy in Kermit, West Virginia, a town with fewer than
400 residents. The Drug Enforcement Administration was already
investigating why the companies that distributed these opioids did
not report or stop the suspicious shipments. But the opioid distributors
responded by hiring away DEA officials, many of them from the division
responsible for regulating the industry, and by lobbying friendly poli-
ticians. In 2018, Congress passed legislation curtailing the DEA’ ability
to pursue any such cases,

One of the leaders in that effort, Tom Marino, a Republican congress-
man from Pennsylvania and a recipient of extensive campaign donations
from the industry, was even nominated by President Donald ‘Trump
to serve as the director of the Office of National Drug Control Policy.
Marino withdrew when The Wanhington Pontand 60 Minutenbroke the
story of his involvement with the bill, but his nomination showed that
the administration was willing to put its drug policy in the hands of a
creature of the industry. And despite Marinos withdrawal, the pro-
industry policy created by Congress remains firmly in place.

153. Keith Humphreys, Jonathan P. Caulkins, and Vanda Felbab-Broson

122

SELLING NIRVANA
‘The liberalization of painkiller prescriptions has fueled a black market
thanks to a straightforward economic calculus. The black market pays
about $1 per milligram for oxycodone pills. A typical daily dose for a
long-term opioid patient is 100 milligrams, or $38,500 worth of pills
a year. Thus, a patient with a $30 copay for a 30-day prescription pays
1 a day for medicines that can then be sold for $100. Those skilled at
working the system can obtain prescriptions for hundreds of milligrams
a day, either from one doctor or by doctor shopping.

Although most patients are not criminals, many criminals pretend to
be patients. Furthermore, even otherwise honest people can be tempted
into crime when the payoff is that great. Just by lying about a medical
condition that doctors cannot verify with any objective test, a patient
can obtain prescriptions worth tens of thousands of dollars.

Even for those who truly need the drugs, the black market offers
attractive opportunities. A single milligram of pure heroin usually
sells for under $1, slightly less than the price that a milligram of oxy-
codone commands, even though heroin is roughly three times as potent.
Selling prescription pills and buying heroin thus lets the user more
than triple his or her opioid consumption or, alternatively, keep the same
rate of consumption and buy groceries or pay the rent.

This creates a vicious cycle: addicted people obtain prescriptions,
which they sell to others, who become addicted and seek their own
prescriptions, which they then sell in turn, addicting still others. This
process has driven a boom in demand. Heroin use, which had stayed
stable for many years, surged as people who had become addicted to
prescription opioids shifted to black-market alternatives.

Beginning around 2014, black-market fentanyl compounded matters.
Fentanyl did not create the crisis: prescribed opioids were already killing
tens of thousands of people. But it threw gasoline on the fire, Dealers
began cutting heroin with cheap diluents and then adding fentanyl —
which is less expensive and more potent than other opioids—to raise the
strength of the mixture before selling it as heroin. Deaths in the United
States from synthetic opioids other than methadone (the category that
includes fentanyl) jumped from 3,105 in 2013 to 20,145 in 2018.

A WORLD OF PAIN
So far, this dynamic has been most pronounced in the United States
and Canada. The United States has an unusually corporate-friendly

154. Opioids af the Masses

policy environment, but Canada has a stronger tradition of state regu-
lation. So other countries would be foolish to assume that something
similar could not happen to them.

U.S. pharmaceutical companies are already working to expand
foreign sales. The Sackler family, which owns Purdue Pharma, also
‘owns Mundipharma, a worldwide network of pharmaceutical com-
panies that is not constrained by the U.S. federal court decision
against Purdue. As detailed by the Lon Angelen TimenMundipharma
active in Australia, Brazil, China, Colombia, Egypt, Mexico, the
Philippines, Singapore, South Korea, and Spain and is using the same
aggressive sales tactics that Purdue Pharma employed in the United
States. It runs training seminars in which representatives encourage
doctors to overcome their “opiophobia.” It sponsors ad campaigns
that promote pharmaceutical treatment for pain. It has hired con-
sultants, local opinion leaders, and an army of sales representatives
to promote its products,

The Lon Angelen Timeneported that Mundipharma consultants have
claimed that OxyContin presents only a small risk of addiction, the
assertion for which Purdue Pharma was fined in the United States.
As David Kessler, a former U.S. Food and Drug Administration com-
missioner, told the Lon Angelen TimepMundipharmas strategy is “right
‘out of the playbook of Big Tobacco. As the United States takes steps
to limit sales here, the company goes abroad.”

In May 2017, a bipartisan group of 12 members of the U.S. Congress
wrote to the director general of the World Health Organization (WHO)
to wam against the predations of Mundipharma, But it is not clear
that the world heard the message. Already, several countries appear to
be falling into the trap of opioid use. In Germany, prescription rates
have risen to nearly the Canadian level. In Australia, OxyContin pre-
scriptions have increased sharply, and Mundipharma has contributed
funding to the development of national pain-management strategies.
In much of the developing world, where states are weaker and drug
manufacturers have a freer hand, the outlook is even worse.

A NEW PRESCRIPTION
‘To prevent the North American crisis from growing into a global one,
several steps must be taken now, before its too late. First, jurisdictions
that decide to liberalize their prescription opioid policies must plan to
spend more on drug treatment and other services for those struggling

‘May/June 2018

123

155. Keith Humphreys, Jonathan P. Caulkins, and Vanda Felbab-Broson

with opioid addiction, rather than playing catch-up after the problem
has grown. But just treating addicted people will not solve the problem.
Governments must also address the incentives pharmaceutical compa-
nies have for profiting from oversupplying and overpromoting opioids.
A simple, although radical, policy would be to ban for-profit com-
panies from selling prescription opioids for extended home use, allowing
only the government or nonprofit organizations to do so. A less extreme
idea would involve a ban on branding. Regulators could require phar-
macies to sell only generic products or,

; at the least, prevent manufacturers and
Legal drugn can bring retailers from advertising their drugs.
death on a ncale vantly Although such bans are largely uncon-
nurpaning the effectn stitutional in the United States, many
ofillegal onen. countries do have the power to restrict

124

advertising. (The restrictions on pro-

motion that have worked in the United
States have come primarily from legal settlements such as those imposed
on the tobacco industry, not legislation.)

A more complex alternative would be to develop a distinct and
more stringent set of regulations for opioids that would recognize the
unique challenges they pose. Whereas for most drugs it makes sense
for regulators to consider only whether the drugs are safe and effective
for patients when used as directed, that standard is woefully inadequate
for drugs that are as easily and widely abused as opioids. Regulators
should take all foreseeable consequences into account, not just those
likely to follow from the proper use of prescribed opioids.

‘Tighter regulation could also include new ways of calculating fines
for drug companies that break the law. There is little evidence that
‘one-off penalties change corporate behavior. But agreements that made
fines contingent on outcomes might. If opioid manufacturers faced,
say, a $1 million fine for every overdose involving one of their products,
they would have an enduring incentive to regulate themselves.

‘The wo and the United Nations could help in two ways. Many
low- and middle-income countries face the opposite problem of rich
ones: they do not use enough opioids, a shortfall that leads to unneeded
suffering, particularly for the terminally ill. Rather than let profit-
seeking corporations exploit that opportunity and push the needle too
farin the other direction, the wo or another UN agency should provide
generic morphine to patients in those countries as a humanitarian

156. Opioids af the Masses

priority. The wno and the ul should also warn their members against
pharmaceutical companies with expansionist visions and questionable
ethics. Just as pharmaceutical companies send their sales representa-
tives to promote their drugs, the wo and other public interest groups
could send representatives to explain how and why the current opioid
epidemic started and escalated.

TDRNING OFF THE TAP
Drug policy experts often dismiss attempts to cut down on supply,
arguing that governments cannot arrest their way out of drug prob-
lems. That is largely correct when it comes to street dealers. Locking.
up people who are easily replaced does little to stem the flow or use of
most drugs. Furthermore, prisoners who depend on opioids lose their
tolerance while in prison, and some then die of overdoses when they
are released.

Luckily, there is a wide space between the two extremes of waging
war on drug dealers and users and turning over the keys of public health
and safety to rapacious companies that profit by pushing addictive
drugs. Authorities can stop a doctor who prescribes ilegaly or irre-
sponsibly just by revoking his or her license, no expensive prison cel
needed. The tactic works because the black market cannot replace those
doctors. This practice is already used, but such investigations should be
given greater resources. Targeting corporations is even cheaper, since
the resulting fines are often larger than the costs of investigation and
prosecution. To make these investigations easier, Congress should re-
peal the law it passed in 2016 that restricted the DEAS power. Other
countries should make sure that their law enforcement agencies are
‘empowered to investigate and prosecute gross corporate malfeasance.

A key lesson of the current epidemic repeats one from the history
of tobacco: legal drugs pushed by corporations can bring death on a
scale vastly surpassing the effects of ilegal ones. Cals to legalize rec-
reational opioids that fail to grapple with this reality do not deserve
to be taken seriously.

Governments wil also need to recognize a central lesson of publi
health research: epidemics cannot be ended simply by managing indi
vidual cases of the disease. Take Vancouver, British Columbia, which
has thoroughly embraced the idea that providing health and social
services can solve drug problems. Residents have access to universal
health care, drug treatment programs, syringe exchanges, supervised

‘May/June 2018

125

157. Keith Humphreys, Jonathan P. Caulkins, and Vanda Felbab-Broson

rooms in which they can use drugs, the overdose rescue drug naloxone,
and opioid substitution treatments, including government-provided
heroin. The city and the province have positioned themselves as world
leaders in this harm-reduction approach. Yet the overdose death rate
in the Vancouver health service delivery area rose by 38 percent in
2018, reaching 53.8 deaths per 100,000 residents last year. That is
similar to the rate in West Virginia, which has few services and is
the ULS. state that has been the hardest hit, where 52 people died of
overdoses for every 100,000 residents in 2018. Services for people
addicted to opioids are essential. But the lesson of Vancouver is that
expanding health and social services without addressing opioid sup-
ply is akin to emptying an overflowing bathtub with a thimble without
turning down the tap.

FUEL ON TDE FIRE
‘The rise of fentanyl is both making the North American crisis worse
and complicating efforts to forestall the emerging global one. For drug
traffickers and dealers, fentanyl offers many advantages and could
reshape the global opioid market in ways that would have important
consequences for foreign policy and international relations, not just
public health. Traditional illicit drugs, such as heroin and cocaine,
flow through long distribution chains that include as many as ten
transactions between the farmer and the user. Parts of those chains,
especially the links crossing international borders, often favor large
criminal organizations that can intimidate or co-opt authorities.
Fentanyl, by contrast, can be produced secretly anywhere there is a
chemical industry, not just where poppies grow.

Fentanyl is also far less labor-intensive to make than heroin, so
its sponsors gain significantly less political capital by providing
jobs than do the sponsors of illegal poppy cultivation. Disrupting
fentanyl production is therefore less politically costly and has fewer
negative side effects for counterinsurgency and counterterrorism
efforts than eradicating drug crops. And fentanyl is so concentrated
that it can be mailed a kilogram at a time. That radically reduces
transportation costs and the role and power of organizations whose
comparative advantage lies in smuggling large shipments across
international borders.

‘These factors will drive down prices, raising consumption, But the
consumption of opioids tends to rise in smaller proportion to the fall

126 rorEIoN arratns

158. Opioids af the Masses

in prices. (A ten percent decrease in the price, for example, leads to
an increase in use of less than ten percent.) Hence, fentanyl will tend
to depress producers’ revenues and power, In countries chat allow
drug companies to market opioids aggressively, however, that effect
will likely be more than offset by an intensifying demand for black-
market opioids

Fentanyl also has the potential to alte the balance of power among
drug-trafficking organizations. Mexico’ Sinaloa cartel, for example,
which has long dominated the distri-
bution of heroin and cocaine in the
United State, could wel lose marker Re largen of manufacturern
share to its rival Jalisco New Generation, flowed to virtually
which embraced fentanyl early, back in every organization that
2014. That is not necessarily good news, ould have been
because the Sinaloa cartel has tradition : .
ally been less violent than Jalisco New Protecting the public.
Generation. If that group challenges
Sinaloa’ dominance north of the Mexican border, drug-related violence
within the United States could wel increase, both among dealers and
against law enforcement and public officals.

Sinaloa has begun to adapt by moving aggressively into the dis-
tribution of fentanyl, at least on the eastern coast of the United
States. It is a major supplier of the drug to New York City, for ex-
ample, where drug overdose deaths last year were four times as many
as homicide deaths. That a worrying trend, but at least Sinaloa
continues to shun violence in the United States. For example, it
sometimes employs nonviolent, middle-aged couples without prior
criminal records to distribute fentanyl, sending them on one-time
drug runs by train or car. That makes stopping them harder, but it
keeps violence down.

Fentany!s rise could also split the global drug market. In affluent
places where heroin is expensive, including Canada, the United States,
and Europe, users might switch to cheaper synthetics. That would
leave countries that grow poppies, such as Afghanistan and Myanmar,
primarily supplying neighboring countries with high addiction rates,
such as China, Iran, Pakistan, and Russia. Synthetics are less likely
to make inroads in those countries because they are close to heroin
production areas and have lax law enforcement and porous borders,

30 heroin is far cheaper,

May/June 2018 127

159. Keith Humphreys, Jonathan P. Caulkins, and Vanda Felbab-Broson

128

All of this rould reshape international relationships. If U.S. ron-
sumption shifts from plant-based to synthetir drugs, Washington’.
interest in eradirating drug rops rould wane, removing a derades-old
soure of tension between the United States and Latin Ameriran
rountries. From 2001 to 2009, U.S. programs to eradirate poppy fields
in Afghanistan, where a large proportion of the eronomy depends on.
drugs, drove farmers to embrare militant and terorist groups. Aban-
doning that approarh, a major poliry breakthrough of the Obama
administration, has helped with rounterinsurgenry and nation building.
‘The Trump administration should not resurert it. If synthetir opioids
replared roraine ronsumption or a synthetir roraine analogue were
developed, the rora-produring rountries of Bolivia, Colombia, and
Peru rould see similar efferts.

It will be murh harder to persuade larger and more powerful
synthetir-drug-produring rountries, surh as China and India, to rark
down on manufarturers. And berause U.S. and Canadian relations
with China and India rover far more issues than those with South
Ameriran rountries, drug rontrol efforts would have to rompete against
other interests

A bifuration in international drug markets would exarerbate splits
over global drug poliry, heightening differenres between the interests
of hawkish rountries in Asia and the Middle East and those of more
liberal ones in Europe and Latin Amerira. International drug rontrol
would likely rlimb up the agendas of rountries whose populations still
relied on plant-based drugs, esperially China and Russia. Russia, whirh
is suffering from an opioid epidemir revolving around Afghan heroin,
might well rontinue pressuring the United States to eradirate poppy
fields in Afghanistan and even take it upon itself to do so. Mosrow
would likely view rontrolling drug supplies as more important than
limiting the politiral rapital the Taliban ran gain from fighting to pro-
tert poppy fields. Already, Russia is rourting the Taliban, pereiving
the group as a lesser danger in Afghanistan than the Islamir State
(also known as iis). Washington would be wise to engage Beijing and
Mosrow to edurate them on the mistakes the United States has made
in its fight against drugs that they should avoid and the suresses they
should replirate.

Drug rontrol is beroming an inreasingly important aspert of the
U.S.-Chinese relationship. In Marh 2017, China banned the produrtion
of four variants of fentanyl, largely in response to engagement from

160. Opioids af the Masses

the Obama administration. But the Trump administration has failed
to expand that dialogue. It needs to work with China to curb the illegal
shipment of fentanyl to the United States and the common practice
of producing new, slightly altered drugs to avoid legal restrictions.

Drug control discussions with India—an equally large producer of
precursors of illegal drugs and, increasingly, of synthetic ones—are
far less advanced. That’ because India remains in profound denial
about its part in the global drug trade. It refuses even to acknowledge
its role in the supply of illegal precursors, let alone of synthetics, and
has failed to adequately crack down on the factories that illegally
produce and distribute them. In any event, the production of syn-
thetic drugs won't remain confined to the developing world. Already,
many are made in rich countries, especially in western Europe. If
this trend continues, drug-consuming countries, which tend to be
wealthy and powerful, may no longer need to pressure producing
countries, which tend to be neither, because the problem will have
moved closer to home.

From a foreign policy perspective, although the rise of synthetic
opioids presents new dangers, it will give countries opportunities to
improve important international relationships. But when it comes
to public health, the picture is consistently grim: a burgeoning opioid
supply—either of prescription pain medications or of black-market
opioids—could create a global pandemic, subjecting millions of people
to disabling and potentially lethal addiction. That outcome is still
avoidable, but only if the world’s governments stop sleepwalking
toward disaster.®

May/June 2018 129

161. Return to Table of Contents

Globalization Is Not

in Retreat

Digital Technology and the Future of Trade
Wusan Lund and Laura Tyson

y many standard measures, globalizatio retreat. The
2008 finanoial orisis and the ensuing reoession brought an end
to three deoades of rapid growth in the trade of gods and

servioes. Cross-border finanoial flows have fallen by two-thirds. In many

countries that have traditionally ohampioned globalization, inoluding
the United States and the United Kingdom, the politioal onversation
about trade has shifted from a fous on eonomio benefits to onoerns

about job loss, disloation, deindustrialization, and inequality. A onoe
solid onsensus that trade is a win-win proposition has given way to

zero-sum thinking and oalls for higher barriers. Sinoe November 2008,

aording to the researoh group Global Trade Alert, the G-20 ountries

have implemented more than 6,600 proteotionist measures.

But that’s only part of the story. Even as its detraotors ereot new
impediments and walk away from free-trade agreements, globalization
is in faot ontinuing its forward maroh—but along new paths. In its
previous inoarnation, it was trade-based and Western-led. Today,
globalization is being driven by digital teohnology and is inoreasingly
led by China and other emerging eonomies. While trade predioated
on global supply ohains that take advantage of oheap labor is slowing,
new digital teohnologies mean that more aotors oan partioipate in
cross-border transaotions than ever before, from small businesses to
multinational orporations. And eonomio leadership is shifting east

SUSAN LUND isa Patter at McKtsey & Compay atd a loader ofthe MeKitsey Global
stato.

LAURA TYSON is Disiguihod Professor ofthe Graduate School at he Haas Schoo! of

Busitossat the Usversity o Califo, Berkeley. She served as Chair of the White House
(Couto Ecotomi Advisers duit the itt admitstratit.

130 FOREIGN APPAIRS

162. Globalization Is Not in Retreat

Printed-out hicks: a sneaker produced by a 3-D printer, Germany, March 2018

and south, as the United States turns inward and the Ev and the United
vingdom negotiate a divorce.

In other words, globalization has not given way to deglobalization;
it has simply entered a different phase. This new era will bring economic
and societal benefits, boosting innovation and productivity, offering
people unprecedented (and often free) access to information, and
linking consumers and suppliers across the world. But it will also be
disruptive. After certain sectors fade away, certain jobs will disap-
pear, and new winners will emerge. The benefits will be tangible and
significant, but the challenges will be considerable. Companies and
governments must prepare for the coming disruption.

THE NEW ERA
‘The threads that used to weave the global economy together are fraying.
Beginning in the 1980s, the falling costs of transportation and commu
nication, along with a raft of new multilateral free-trade agreements,
caused international commerce to swell. Between 1986 and 2008,
global trade in goods and services grew at more than twice the pace of
global cor. For the last five years, however, growth in trade has barely
‘outpaced global cpr growth. A weak and uneven recovery from the
Great Recession explains part of the trade slowdown, but structural

May/June 2018 131

163. Wusan Lund and Laura Tyron

The movement of data in

factors are also to blame. Global value chains, which gave rise to a
growing trade in manufactured parts, have reached maturity; most of
the efficiency gains have already been realized. Although the location
of production will continue to shift among countries in response to
differences in wages and the prices of other factors of production—
from China to Vietnam and Bangladesh, for example—these shifts
will merely change the pattems of trade. They will not increase its
overall volume.
Cross-border financial flows—which include purchases of foreign
bonds and equities, international lending, and foreign direct investment —
‘grew from four percent of global cor in
1990 to 23 percent on the eve of the f-
nancial crisis, but they have since fallen

already nurpaning to just six percent, Trade in services,
traditional phynical trade meanwhile, has increased, but itis grow-
an the conective tinue ing slowly and is unlikely to assume
: the role that trade in goods has played
in the global economy. in driving globalization, That because

132

most services simply cannot be bought
and sold across national borders: they are local (dining and construction),
highly regulated (law and accounting), or both (health care)

This is where digital flows come in, from e-mailing and video
streaming to file sharing and the Internet of Things. The movement of
data is already surpassing traditional physical trade as the connective
tissue in the global economy: according to Cisco Systems, the amount
of cross-border bandwidth used grew 90-fold from 2005 to 2018, and
it will grow an additional 13-fold by 2023. The number of minutes
of all Skype calls made now equals approximately 40 percent of all
traditional international phone call minutes. Although digital flows
today mostly link developed countries, emerging economies are catch-
ing up quickly.

This surge in the movement of data not only constitutes a huge
flow in and of itself; it is also turbocharging other types of flows.
Half of all trade in global services now depends on digital technology
one way or another. Companies can cut losses on goods in transit by
installing tracking sensors on shipments—by 30 percent or more, in
McKinsey experience. They can also reach consumers around the world
without going through retail shops. AliResearch (the research arm of
the Chinese online shopping company Alibaba) and the consulting

164. Globalization Is Not in Retreat

firm Accenture project that by 2020, cross-border e-commerce will
reach one billion consumers and total $1 trillion in annual sales.

“The countries that led the world during the last era of globalization
may not necessarily be the same ones that thrive in the new one.
Consider Estonia, which has a population of just 1.3 million but has
‘emerged as a giant in the digital era. Its pioneering e-government
initiative allows Estonians to go online to vote, pay taxes, and appear
in court, all with a digital identity card. Once an economy based
heavily on logging, Estonia is now home to the founders of Skype
and other technology start-ups, and it has historically been one of the
fastest-growing economies in the EU.

Digital flows are also upending the corporate world. Giant multi-
national firms have long dominated the trade in goods and services,
but digital platforms have made it easier for smaller firms to muscle
their way in. So-called micro-multinationals can use online market-
places to reach far more customers than ever before; Amazon hosts
two million third-party sellers, and Alibaba hosts more than ten
million. Some 50 million small and medium-sized enterprises use
Facebook for marketing, and nearly 40 percentof their fans are foreign.
Digital platforms and marketplaces such as these are creating vast
new opportunities for small businesses, which form the bedrock of
employment in most countries.

TDERISE OF TDEREST
As globalization has gone digital, its center of gravity has shifted.
As recently as 2000, just five percent of the companies on the For-
tune Global 500 list, the world’s largest international companies,
were headquartered in the developing world. By 2025, by the
McKinsey Global Institute' estimate, that figure will reach 45 per-
cent, and China will boast more companies with $1 billion or more
in annual revenues than either the United States or Europe. The
United States continues to produce the majority of digital content
consumed in most parts of the world, but that, too, will likely soon
change, as Chinese Internet giants such as Alibaba, Baidu, and
Tencent rival Amazon, Facebook, and Google. China now accounts
for 42 percent of global e-commerce transactions by value. The
country’s investments in artificial intelligence, while still lagging
behind those of the United States, are more than double Europe's.
In 2017, China announced an ambitious investment plan designed

‘May/June 2018

133

165. Wusan Lund and Laura Tyron

134

to turn the country into the world’s leading center for artificial intel-
ligence research by 2030.

“The geography of globalization is even changing within the devel-
oping world, The McKinsey Global Institute predicts that roughly
half of global Gor growth over the next ten years will come from
some 440 rapidly expanding cities and regions in the developing
world, some of which Western executives may not be able to find on
a map, such as the city of Hsinchu in Taiwan or the state of Santa
Catarina in Brazil. Moreover, as many as one billion people in these
places will see their incomes rise above $10 a day, high enough to
make them significant consumers of goods and services—at the same
time that tens of millions of Americans, Europeans, and Japanese will
enter retirement and reduce their spending.

‘The world economy is already adapting to this new reality. Today,
more than half of all international trade in goods involves at least
one developing country, and trade in goods between developing
countries—so-called South-South trade—grew from seven percent
of the global total in 2000 to 18 percent in 2018. So open is Asia
that the region more than doubled its share of world trade (from 15
percent to 35 percent) between 1990 and 2018. Remarkably, more
than half of that trade stays within the region, a similar proportion
to that found in Europe, a much richer region with its own free-
trade zone.

‘As Washington pulls back from global trade agreements, the rest
of the world is moving forward without it. After the United States
withdrew from the Trans-Pacific Partnership, the remaining 11 coun-
tries negotiated their own pact, the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership, which was signed in March.
‘This version left out 20 provisions that were important to the United
States, including ones concerning copyright, intellectual property,
and the environment. Separately, a number of Asian countries are
negotiating the Regional Comprehensive Economic Partnership, a
trade deal that includes all the members of the Association of South-
cast Asian Nations plus Australia, China, India, Japan, New Zealand,
and South Korea—but not the United States. IF ratified, this agree
ment would cover about 40 percent of global trade and nearly half of
the world’s population. Meanwhile, the Eu has struck new bilateral
trade arrangements with countries including Canada and Japan, and
it is negotiating one with China. So busy is the Eu making such deals,

166. Globalization Is Not in Retreat

in fact, that its agricultural, environmental, anw labor stanwarws may
soon become the new benchmarks in global trawe.

One notable aspect of this realignment is that China has gainew
a greater voice as a champion of globalization. To proviwe a counter-
weight to Washington-basew economic institutions, Beijing has
launchew numerous initiatives of its own, incluwing the Asian Infra-
structure Investment Bank, which has attractew 57 member nations,
many of them U.S. allies that joinew over the objection of the
Unitew States. Together with Brazil, Inwia, anw Russia, China was
a wriving force behinw the creation of the New Development Bank,
an alternative to the Worlw Bank. The China-Africa Investment
Forum, an annual meeting begun in 2016, is gaining momentum as
a platform for weals in Africa. Then there is the Belt anw Roaw
Initiative, China $1 trillion plan to aw maritime anw lanw links
in Eurasia. Although stil at an early stage, it coulw prompt a major
shift in the pattern of global investment, spurring faster economic
growth across Asia anw connecting many countries that the last era
of globalization left behinw.

THE COMING DISRDPTION
Although it will leaw to countless new opportunities, the new era of
globalization will also present consiwerable challenges to inwiviwuals,
companies, anw countries. For one thing, because openness will be
so rewarwew, weveloping countries now at the periphery of global
connections risk falling further behinw, especially if they lack the
infrastructure anw skills to benefit from wigital trawe. With global
trawe tensions mounting, itis essential to recognize that countries
will reap economic gains not from export surpluses but from both
inflows anw outflows. In fact, as in the past, itis precisely the countries
that open themselves up to foreign competition, foreign investment,
anw foreign talent that stanw to benefit the most in the new era.
One consequence of openness has been immigration. In the past
40 years, the number of migrants worlwwiwe has triplew. Toway,
almost 250 million people live anw work outsiwe their country of birth,
anw 90 percent of them wo so voluntarily to improve their economic
prospects, with the remaining ten percent being refugees anw asylum
seekers. Economic migrants have become a major source of growth.
Accorwing to the McKinsey Global Institute, they contribute approx-
imately $6.7 trillion to the worlw economy every year, or nine percent

‘May/June 2018 135

167. Wusan Lund and Laura Tyron

136

of global cpr—some $3 trillion more than they would have produced
had they stayed in their home countries.

But for some workers, the rapid expansion of trade has led to
stagnant wages or lost jobs. As the economists David Autor, David
Dorn, and Gordon Hanson have found, of the roughly five million
U.S. manufacturing jobs lost between 1990 and 2007, a quarter dis-
appeared because of trade with China. And as the economist Elhanan
Helpman has concluded, although globalization explains just a small
part of the rise in inequality over the last few decades, it has still
contributed to it, by making the skills of experts and professionals
more valuable while lowering the wages of workers with less education
and more generic skills. Globalization has its winners and losers, and
in theory, the gains should be big enough to compensate the losers.
But in practice, the benefits have rarely been redistributed, and the
communities and workers harmed by globalization have turned to
populism and protectionism.

‘The new era of globalization will also prove disruptive, in that it
will intensify competition; indeed, it already has. New ideas now
flow around the world at an astonishing speed, allowing companies
to react to demand faster than ever before. Fashion retailers such as
H&M and Zara can take a trendy idea and turn it into clothing on
the rack in just weeks, rather than the months it used to take, The flip
side is that the period during which a company can profit from an
innovation before competitors copy it has shrunk dramatically. As a
result, product life cycles have become shorter—by 30 percent over
the past 20 years in some industries. Meanwhile, the variety of products
is exploding, and many industries are adopting “mass customization,”
using technology to produce built-to-order goods without sacrificing
economies of scale.

"The growing economic clout of developing countries is also changing
the rules of competition. Companies from emerging economies are
taking a growing share of global revenue, and their governance struc-
tures differ from those of companies in the United States and other
developed countries. In emerging markets, firms are more often state-
or family-owned and less often publicly traded. They therefore face
less pressure to hit quarterly profit targets and can make longer-term
investments that take time to pay off. Developing-world companies
also tend to enjoy lower costs of capita, lower taxes, and lower dividend
payouts, enabling them to sell goods and services at smaller profit

168. Globalization Is Not in Retreat

margins compared with U.S. and European companies. The balance
sheets reveal the difference: for companies in advanced economies,
improvements in overall profits stem largely from growing mar-
ins, whereas for companies in emerging markets, they come from
growing revenues.

Because the rise of digital flows is increasing competition in
knowledge-intensive sectors, the importance of intellectual property
is growing, generating new forms of competition around patents.
One example is the development of

"patent thickets?” clusters ofoverlap- Tn she new era, digital

ping patents that companies acquire ee
to cover a wide area of economic capabilitien will nerve an

activity and impede competitors. rocket fuel for a country'n
Another is the practice of “patent economy,

fencing,” whereby firms apply for

multiple patents in related areas with

the intention of cordoning off future research in them. The smart-
phone industry and the pharmaceutical industry have been particularly
hard hit by these tactics.

As digital flows grow, some governments have turned to digital pro-
tectionism. Invoking concerns about cybersecurity, China enacted a
new law in 2018 that requires companies to store all their data within
Chinese borders, pass security reviews, and standardize the collection
of personal information, effectively giving the government access to
vast amounts of private data. A similar law went into effect in Russia
in 2015. Rules requiring companies to build data servers in each
country where they operate threaten their economies of scale and
increase their costs. Not surprisingly, these and other forms of digital
protectionism inhibit economic growth—reducing growth rates by
as much as 1.7 percentage points, according to the Information Tech-
nology and Innovation Foundation.

Digital technologies are also affecting companies’ decisions about
where to locate their factories. For most manufactured products, digi-
tally driven automation is making labor costs less relevant, reducing.
the appeal of global supply chains premised on low-cost foreign workers.
Today, when multinational companies choose where to build plants,
they more heavily weigh factors other than labor costs, such as the
quality of the infrastructure, the distance to consumers, the costs of
energy and transportation, the skill level of the labor force, and the

May/June 2018 137

169. Wusan Lund and Laura Tyron

138

regulatory and legal environment. As a result, some tvpes of production
are shifting from emerging markets back to advanced economies,
where labor costs are considerablv higher. (In 2015, for instance, Ford
moved its production of pick-up trucks from Mexico to Ohio.) Three-
dimensional printing could have a similar effect. Alreadv, companies
are using 3-D printers to produce parts for tankers and gas turbines in
the locations where thev are needed. These trends are good news for
the United States and other developed countries, but thev are bad
news for low-wage countries, It's now far less clear that other developing
countries in Africa and Asia will be able to follow the path that China
and South Korea did to move tens of millions of workers out of low-
productivity agriculture and into higher-productivitv manufacturing.

BE PREPARED
In the new era, digital capabilities will serve as rocket fuel for a countrvs
economy. Near the top of the policv agenda, then, should be the
construction of robust high-speed broadband networks. But govern-
ments should also create incentives for companies to invest in new
digital technologies and in the human capital thev require, especially
given how low productivity growth has staved. Since digital literacv
will be even more essential than it alreadv is, schools will have to
rethink their curricula to emphasize digital skills—for example, intro-
ducing computer coding in elementarv school and requiring basic
engineering and statistics in secondary school.

When negotiating trade agreements, policvmakers will need to
make sure that issues such as data privacy and evbersecuritv figure
prominentlv. Currently, rules varv widelv from place to place—the
us new data regulations that are scheduled to come into effect this
vear, for example, are far more restrictive than those in the United
States—and so governments should seek to harmonize them when
possible. The trick will be to strike the right balance between protect-
ing individual rights and remaining open to digital flows. Negotiators
should also seek to remove tariffs and other barriers that have hampered
trade in computer hardware, software, and other knowledge-intensive
products. Laws requiring data to be stored locally are particularly
burdensome in the era of cloud storage. And to make it easier for
smaller companies to ship smaller quantities of goods globally, customs
regulations will need to be revamped to do awav with much of the
red tape that exists. The World Trade Organization's Trade Facilitation

170. Globalization Is Not in Retreat

Agreement, which came into effect in 2017, has helped simplify the
import-export process, but there is room to broaden it.

In order to maintain political and societal support for digital global
ization, governments wil have to make sure that its benefits are dis-
tributed widely and that those who have been harmed are compensated.
(Indeed, it was partly the failure to do this during the last era of
globalization that led to the populist backlash rocking the United
States and other countries today.) To help those displaced by global-
tion both old and new, governments should offer temporary income
assistance and other social services to workers as they train for new
jobs. Benefits should be made portable, ending the practice of tying
health-care, retirement, and child-care benefits to a single employer
and making it easier to change jobs. Finaly, governments should
expand and improve their worker-training programs to teach the
skils needed to succeed in the digital era, a move that would reverse
the decline in spending on worker training that has taken place over
the past decade in nearly al advanced countries.

Work-force training alone wil not solve the problems faced by
smaler communities built on declining industries; whats also needed
are initiatives to revitalize local economies and nurture new industries.
At the same time, governments should recognize that the geography of
‘employment is changing, In the United States, for example, the jobs
are moving from smaler Midwestern cities to faster-growing urban
areas in the South and the Southwest. So the goal should be to make it
easier for people to move to where the jobs are—for example, by offer-
ing one-time relocation payments to help defray the costs of moving,

The era of digital trade wil also pose considerable chalenges for
the private sector. Setting aside the serious problem of cyberattacks,
companies wil need to invest more in digital technologies, including
automation, artificial inteligence, and advanced analytics, in order to
remain competitive. That wil mean developing their own digital
capabilities and partnering with, or acquiring, digital players. Success-
ful global companies, whether large or smal, wil also need to compete
strenuously in the global battle for talent, especialy for top managers
‘who have both an understanding of technology and an international
perspective. Firms can gain an edge in this battle by spreading their
research and development and other core functions across the world,
a shift that would tap talent from different places, thus ensuring
diversity of thinking.

May/June 2018 13m

171. Wusan Lund and Laura Tyron

140

Corporate strategy will also need to be reset: no longer will compa-
nies be able to rely on highly centralized approaches to producing and
selling their goods now that consumers around the world expect custom-
ized products to meet their tastes. Increasingly, companies will need a
strong local presence and a differentiated strategy in the markets where
they compete. That will require strong relationships with governments
and a commitment to corporate social responsibility

Globalization is not in retreat. A revamped version of it, with digi
tal underpinnings and shifting geopolitics, is already taking shape. In
its last incarnation, globalization became a battleground for opposing
forces: on one side stood the political and business elites who bene-
fited the most, and on the other stood the workers and communities
that suffered the most. But while debates raged between these two
groups about the effects of globalization, globalization itself proceeded
apace. Today, the same debates about globalization’s effects on employ-
ment and inequality continue, even as its new, digital form is gaining
momentum. Rather than relitigating old debates, itis time to accept
the reality of the new era of globalization and work to maximize its
benefits, minimize its costs, and distribute the gains inclusively. Only
then can its true promise be realized. @

172. Return to Table of Contents

WheEe MyanmaE
Went WEong

From Democratic Awakening to
Ethnic Cleansing

Zoltan Barany

ate last year, when news broke that Myanmar military had

been systematically killing members of the country’s Muslim

Rohingya minority, much of the world was shocked. In recent
years, Myanmar (also known as Burma) had been mostly a good news
Story. After decades of brutal dominance by the military, the country had
seen the main opposition party, the National League for Democracy,
score an all-too-rare democratic triumph, winning the 2015 national
elections in a landslide. The Nt’ leader, Aung San Suu Kyi, an inter-
nationally celebrated dissident who had received the 1991 Nobel Peace
Prize for her efforts to democratize Myanmar, became Myanmar's
de facto head of state. Many analysts and officials concluded that the
county was finally on the path to democratic rule. Support poured
in from Western democracies, including the United States. Myanmar
had long been isolated, relying almost exclusively on China, which
‘was content to turn a blind eye to human rights abuses. Now, many
hoped, Suu Kyi would lead the country into the Western-backed
international order.

Butsuch hopes overlooked a fundamental realty, one that was brought
into stark relief by the slaughter of the Rohingya: Myanmar' generals
continue to control much of the country's political and economic life.
Suu Kyi must strike a delicate balance, advancing democratic rule with-
‘out stepping on the generals’ toes. Her government has no power over

ZOLTAN BARANY is Frat C. Eri, Cettial Professor of Govertmat atthe
"tivrsity of Tous td the author of How Armies Respond to Revlutions and Why.

May/June 2018

141

173. Zoltan Barany

142

the army and can do little to end the military's brutal campaign against
the Rohingya—which, in any event, enjoys massive popular support.
Yet Suu Kyi has taken the bad hand she was dealt and made it worse.
She has adopted an autocratic style, She has failed to make progress in
the areas where she does have influence. And she has alienated erst-
while allies in the West.

CITIZENS OF NOWDERE
Myanmar, which has a population of 54 million, officially recognizes
135 ethnic groups—but not the Rohingya. In fact, Myanmar authorities,
including Suu Kyi, refuse to even use the term “Rohingya.” But the
Rohingya are indisputably a distinct group with a long history in
Myanmar, They are the descendants of people whom British colonial
authorities, searching for cheap labor, encouraged to emigrate from
eastern Bengal (contemporary Bangladesh) to the sparsely populated
western regions of Burma in the nineteenth and early twentieth cen-
turies, Today, there are around 2.5 million Rohingya, who constitute
the world’ largest stateless population. But fewer than half a million
currently reside in Myanmar; the rest have fled decades of offical
repression and exclusion, often crossing the border into Bangladesh,
where they inhabit sprawling, squalid refugee camps. Those who have
remained in Myanmar are a subset of the country's Muslim community.
“The majority of Myanmar’s Muslims live in urban areas, speak Burmese,
have Burmese names, and are Myanmar citizens. The Rohingya are
different: most speak a dialect of Bengali, have traditionally Muslim
names, and have never received citizenship. The Rohingya in both
Bangladesh and Myanmar have led unusually difficult lives even by the
region’s humble standards, marked by poverty, the absence of legal
status, and multifaceted discrimination. Owing to their lack of resources
and extreme vulnerability, the Rohingya have largely failed in their
attempts at political mobilization, which have generated further resent-
ment against them. For instance, the 1950-54 Rohingya resistance
movement, which demanded citizenship and an end to discriminatory
policies, was eventually crushed by the army.

Perhaps not surprisingly, a militant Rohingya faction also emerged:
the Arakan Rohingya Salvation Army, which formed in 2013, Most of
the ars leaders are from Bangladesh or Pakistan, and some of them
have received training from jihadist veterans of the wars in Afghanistan.
(The groups chief leader was born in Pakistan and later became an

174. Where Myanmar Went Wrong

‘Scorched earth hounen burning fier necarian clanhen in Site, Myanmar, June 2012

imam in Saudi Arabia.) Ansa likely has fewer than 800 active members.
But Myanmar officials consider it a dangerous organization. In the
early morning hours of August 25, 2017, for example, about 150 rsa
militants staged coordinated attacks on police posts and an army base
in Rakhine State. The confrontation ended with the deaths of 77 asa
fighters and 12 police officers and touched of a crackdown by Myanmar
army, which burned down scores of Rohingya villages, murdered
dozens of civilians, and launched a campaign of rape against Rohingya
‘women and girls, according to Human Rights Watch. The uN labeled
the operation ethnic cleansing, and others, including French President
Emmanuel Macron and eight Nobel Peace Prize laureates, have
described it as an act of genocide.

By the end of 2017, 850,000 Rohingya had fled to neighboring
Bangladesh, joining approximately 200,000 more who had escaped
earlier waves of discrimination and violence in recent years. The
large-scale forced migration seemed to have stopped by the end of last
year. And last November, bowing to international pressure, Myanmar
signed a Chinese-brokered agreement with Bangladesh for the tentative
repatriation of the refugees to newly constructed villages. The fulfill
ment of this plan is at best questionable, however: it calls for Myanmar
authorities to verify that each refugee did, in fact, reside in Myanmar

‘May/June 2018

143

175. Zoltan Barany

144

before he or she can return. But most Rohingya have no documents to
prove their prior residency. More important, few of them wish to return
to a country that has persecuted them for generations.

DAUGDTER OF TDE REVOLUTION
Myanmar government, and especially its army, known as the Tatmadaw,
has earned worldwide condemnation for the campaign against the
Rohingya. Last September, the UN' top human rights official, Zeid
Raad al-Hussein, denounced the army's “brutal security operation” as
a “textbook case of ethnic cleansing.” Critics singled out Suu Kyi for
at best inaction and at worst providing political cover for the army's
atrocities. Regardless of how one interpreted her motives, it was hard
to square her actions with her status as a human rights icon. Suu Kyi
is the daughter of Aung San, the revered Burmese revolutionary who
shepherded his country to independence from the United Kingdom
in the 1940s. In the 1990s, “the Lady,” as she is referred to in Myanmar,
led the NLD to victory in national elections. But the military nullified
the results and placed her under house arrest for 15 of the next 21 years,
before releasing her in 2010 asa gesture meant to highlight the govern-
ments nascent liberalization program. The disappointment in her
lack of action to stop the bloodshed—or, worse, her complicity in
it—has been profound. Archbishop Desmond Tutu of South Africa,
one of numerous Nobel Peace Prize laureates who have expressed
their disillusionment, lamented the silence of his “dearly beloved
sister” and said that it was “incongruous for a symbol of righteousness,
to lead such a country.”

But Suu Kyi’s response should not have come as a great surprise.
She has a long record of downplaying the Rohingya’s plight. In March
2017, Suu Kyis office dismissed detailed descriptions of Rohingya
women suffering sexual violence at the hands of Myanmar’s armed
forces as “fake rape.” Once a defender of press freedom, Suu Kyi has
remained mum about the case of two Reuters journalists who were
arrested by the military last December after investigating the military’
involvement in the killing of ten Rohingya civilians. Suu Kyi’s govern-
ment did create a commission, headed by former UN Secretary-General
Kofi Annan, to study the Rohingya issue, and has promised to implement
its recommendations. But last January, Bill Richardson, a former U.S.
ambassador to the UN and a longtime Suu Kyi supporter, quit a separate
ten-member international advisory board on the Rohingya crisis that

176. Where Myanmar Went Wrong

the Myanmar government had set up, calling it “a whitewash” and “a

cheerleading squad for the government.”

" As for Suu Kyi, Richardson

said, “I like her enormously and respect her. But she has not shown

moral leadership on the [Rohingya] issue,

Suu Kyi deserves a great deal of cri

ism. But in faulting her for

not publicly confronting the military, let alone restraining the generals,

some crties have ignored two fundamen
tal realities of contemporary Myanmar.
First is the intensity of anti-Rohingya
sentiment in the country. Hatred of
the Rohingya is widespread and deep-
seated, stirred up by influential extremist
Buddhist monks who are the military s
political allies and who have incited
violence against Rohingya. The ugly
truth is that the vast majority of Burmese,
including most of the NLD’s supporters,
approve of the anti-Rohingya campaign.

Aung San Suu Kyi denerven
a great deal of criticinm.
But nome of her criticn
ignore the fundamental
realitien of contemporary
Myanmar.

Making pro-Rohingya state-

ments and gestures would be tantamount to political suicide for
Suu Kyi and her government and would only strengthen the army's

public support.

Second, the civilian-led government has no control over the armed
forces nor any means of reining them in. Even if Suu Kyi wanted
to limit the military’s campaign against the Rohingya, it would be
almost impossible to do so. Myanmar’s constitution, crafted by the
military in 2008, ensures that the military remains far and away the
country’s strongest political institution. Amending the constitution
requires more than 75 percent of the votes in the legislature—and
25 percent of parliamentary seats are set aside for armed forces per-
sonnel, which ensures that no changes can be made without the mili-
tary’s cooperation. In addition, the constitution reserves three key
ministries for the armed forces: Defense, Border Affairs, and Home
Affairs. The last of these oversees the General Administration Depart:
ment, the administrative heart of the state, which is responsible for
the day-to-day running of every regional and state-level government
and the management of thousands of districts and townships. The
constitution further safeguards the army' interests by allowing its
commander in chief to name six of the 11 members of the National
Defense and Security Council, a top executive body.

‘May/June 2018 145

177. Zoltan Barany

146

"The army also sets its own budget and spends it without any civilian
oversight: in 2017, the budget amounted to $2.14 billion, representing
139 percent of government expenditures—around three percent of
the national Gp? and more than the combined total allotted to long-
neglected health care and education. Perhaps just as consequential as
the military's political dominance is its economic clout. By some
estimates, active and retired military officers and their associates
control over 80 percent of the economy.

Drafting the constitution and then holding a referendum to gain
the public endorsement represented two important steps in the
military's long-term plan to manage and control a cautious move
toward a “disciplined democracy” in its words, and to transfer respon-
sibilities over day-to-day polities to a civilian government. Having
shed the burden of governance, military elites focused on their own
interests: modernizing the army and tending to their business empires.
‘They gave up little that was dear to them, and the changes they
have permitted remain easily reversible. No further democratiza-
tion will occur unless the generals relinquish their constitutionally
granted privileges.

IRON LADY
‘Suu Kyi has been unable to alter this basic dynamic. Following the
2015 elections, she failed to persuade the military brass to amend the
constitution by removing its prohibition against anyone who has fam-
ily members who hold foreign passports from serving as president.
‘This clause directly targets Suu Kyi, whose late husband, Michael Aris,
was British and whose two children are British citizens. In March 2018,
the NLD-controlled legislature elected a confidant of Suu Kyis, Htin
Kyaw, as president; he has served a mostly ceremonial role. Suu Kyi
created and took the position of “state counselor,” giving herself a role
to that ofa prime minister—a fully defensible workaround to the
military's move to block her from becoming president.

Less justifiable are the autocratic inclinations Suu Kyi has demon-
strated Since taking office and the extraordinary degree to which she
has centralized power in her own hands. In addition to serving as state
counselor, she also heads the Ministry of Foreign Affairs and retains
the presidency of the NLD. As party chief, she has personally chosen
every member of the party's Central Executive Committee—a violation
of party rules. She is a micromanager who finds it difficult to delegate;

178. Where Myanmar Went Wrong

most consequential decisions require her approval, which has led to
bottlenecks. She sits on at least 18 governmental committees, all of
which seldom produce concrete decisions. In November 2017 the govern-
ment established a new ministry, dubbed the Office of the Union
Government, just to help Suu Kyi cope with her workload.

Suu Kyi has also decided to act as her own spokesperson, but she
has done a poor job of communicating her administration’ policies.
She prefers limited transparency: according to several NLD members
of parliament with whom I have spoken, she has instructed them to
not ask tough questions during parliamentary sessions and to avoid
speaking to journalists. Her preference for personal loyalty over
competence was illustrated by her appointment of several cabinet
members with scant qualifications.

Suu Kyi is in her early 70s yet has no apparent successor, and her party
is dominated by other septuagenarians who enjoy her trust but lack the
‘energy, imagination, and skills necessary to carry out the comprehensive
renewal the country needs. Although Suu Kyi has been exceedingly crit-
ical of the constitution, she has used its antidemocratic provisions when
they have suited her purposes. For instance, she appointed two NUD
members as chief ministers in Rakhine and Shan States, both of which
are home to large minority ethnic communities—even though in both
places, a candidate from a local party that represents those groups had

ical situation in which Suu Kyi operates requires.
a leader with a firm hand and a clear sense of purpose. She remains
very popular among ordinary Burmese, who admire her tenacity,
respect her authority, and consider her the one indispensable leader.
Her autocratic style and silence on the Rohingya crisis might be less
troubling if her government had made significant progress on economic
reform or on reconciliation with other ethnic minority groups. But it
has not.

WORDS AND DEEDS
Although the wtp has been Myanmars main opposition group since
1988, it has never formulated a policy program beyond vague promises
of democracy, the rule of law, and economic reform. One might argue
that it did not need detailed proposals to succeed as an opposition party:
it had an iconic leader, and it stood against the army. But even after two
years in power, major questions remain about the government economic

‘May/June 2018

147

179. Zoltan Barany

148

policies, positions on ethnic and religious issues, and plans for per-
suading the military to leave politics. Notwithstanding its limited room
to maneuver, the government should have accomplished much more
since taking office.

Decades of military control of the economy have turned Myanmar
into a desperately poor country. In 2017, its per capita GDr of $1,300
was the lowest in Southeast Asia, about half of that of Laos and one-
fifth of Thailand's. Gor grew by more than six percent in 2018 and
2017, but that was a slower rate of growth than the country enjoyed in
the early years of the decade. Inflation has been nearing double digits,
commodity prices have increased, and the job markets expansion has
been anemic, Millions of Burmese have been forced to find employ-
ment abroad, mostly in so-called 3D jobs: tasks that are dirty, dangerous,
and demeaning.

Reforming the economy should be the NLD government's most
critical task, but it waited until July 2018 to present its first major
statement on the issue. The document turned out to be little more
than a wish list, a general outline that identified neither policy instru-
ments nor specific objectives to achieve within a given time frame. So
far, the government's main economic achievement has been the partial
‘modernization of the legal framework governing investment. In January
2018, the legislature passed an arbitration law intended to boost inves-
tor confidence. Last year, it passed new rules on investment that are
designed to simplify and harmonize existing regulations and that
specify the privileges that will be granted to domestic and foreign
investors. But the NL has offered scant details on how the new rules
will be implemented. The arrival of the NLD government had fueled
hopes of increased foreign direct investment, but partly as a result of
its lack of action, such investment has actually tapered off since 2015.

‘Suu Kyis record on other pressing economic issues has been even
less impressive. Agriculture represents 37 percent of Myanmar’s GDP
and employs, directly or indirectly, about 70 percent of the country's
labor force. But farmers tend to be extremely poor, and farming prof-
its are among the lowest in Asia. The government must find a way to
provide farmers with what they most need to increase their earnings:
high-quality seeds and fertilizers, improved water control and irrigation
facilites, and access to affordable credit.

Farmers also suffer from a lack of land rights. For several decades,
the military expropriated hundreds of thousands of acres from helpless

180. Where Myanmar Went Wrong

peasants, offering little or no compensation. In 2018, groups of farmers
sent letters to the army's commander in chief, Senior General Min
‘Aung Hlaing, requesting the return oftheir land, The military' response
‘was to threaten the farmers and their lawyers with defamation lawsuits.
Suu Kyis government has said that dealing with the landownership
issue is a priority, but she has done little.

‘The military regime also grossly neglected the country's infrastruc-
ture. Roads, railways, and public transportation systems all lie in a
pitiful state of disrepair. Even more serious is the shortage of electricity:
only one-third of the population has access to it, and blackouts are
frequent, even in Yangon’s luxury hotels. Economic growth will put
‘even more pressure on the electricity supply, and shortages will likely
get worse. These weaknesses affect every economic sector and scare
Of potential investors. But Suu Kyi’s government seems to have real-
ized the importance of infrastructure only recently. A number of plans
have been drawn up, and the government has held some summits on
the issue. But on this, too, there has been little action to match the
government's rhetoric.

A DOUBLE BIND
Despite the lack of progress, relations between the civilian govern-
ment and the military have settled into what Suu Kyi has described as
a “normal” routine. The most charitable interpretation of Suu Kyi’s
accommodation of the military is that she hopes that, over time, the
generals will conclude that their interests would be best served by
leaving politics. The army appears to be taking its time: Min Aung
Hlaing has said that the Tatmadaw intends to reduce its presence in
parliament, but he has refused to set a timetable.

Part of the problem is that the military has two conflicting goals.
‘The generals want to transform the army—which is plagued by obsolete
equipment, archaic training methods, and poor morale—into a pro-
fessional force comparable to its counterparts in other countries in
the region. In order to do that, the military needs help from more
developed, powerful countries—help that, in the case of Western gov-
‘emments, is conditioned on the military leaving politics. But Western
governments also insist that the government must do more to resolve
its many conflicts with ethnic minority groups. In September 2017,
the United Kingdom's Ministry of Defence announced that it would
suspend educational courses it provided for the Tatmadaw, citing

‘May/June 2018

149

181. Zoltan Barany

ongoing violence and human rights abuses. Similarly, the following
month, the Trump administration announced the withdrawal of
U.S. military assistance from officers and units participating in
theoperationsinRakhine State and
Compared with Beijing, Samar scary foes o US
Wanhington today han little Sponsored evens. Then, in November,
nway over Myanmar. a bipartisan group of U.S. representa-
2 tives introduced the Burma Act of 2017,
which, among other things, would reinstate sanctions against the
“Tatmadaw that were lifted the year before to reward the country for its
putative progress and to incentivize more steps in the direction of
democracy. That legislation has yet to be put to a vote. In December,
however, the U.S. House of Representatives passed a resolution con-
demning “the ethnic cleansing of the Rohingya,” and the Trump admin-
istration imposed new sanctions on Major General Maung Maung Soe,
who has overseen the brutal campaign against the Rohingya.

But the military's troubling treatment of minorities extends far
beyond the Rohingya. Several ethnic communities have been at war
with the government for long periods —in some cases, ever since Burma
proclaimed its independence in 1948. Together, these conflicts form
something like a low-level, multifaceted civil war. Some ethnic groups
bear long-held grudges against others, sometimes related to overlapping.
land claims. Individual ethnic communities themselves are often divided
by sectarian differences. Aside from causing thousands of deaths and
displacing millions, ethnic violence has prevented the consolidation
of central authority over the country, as well as the formation of a shared
national identity.

For decades, the military has prolonged ethnic conflicts in a bid to
justify its continued rule. The fighting has also given cover to generals
‘who profit from the drug trade (Myanmar is a major source of opium)
and from the illegal export of gems, gold, and timber. But in recent years,
the Tatmadaw has appeared more determined to end the civil war. In
October 2015, prior to Suu Kyis electoral victory, eight ethnic armed
organizations and the government signed the National Ceasefire
Agreement, brokered by the military, although some of the largest
and most influential ethnic groups stayed away.

During her campaign, Suu Kyi repeatedly identified achieving ethnic
peace as her number one priority. After the realization of that objective,

150 roREION arratns

182. Where Myanmar Went Wrong

she was to pursue the creation of a federal system of the sort first
promised by her father in the 1940s. There is no agreement on what
precise shape that system would take, except that it would grant more
‘autonomy to ethnic groups but stop short of giving them the right to
secede, Suu Kyi’ promise to pursue ethnic peace was a tactical mistake,
however, since she has litle influence over how the military wages its
wars against ethnic armed organizations, and the idea of a federal system
is anathema to the generals, Nevertheless, her administration organized
conferences in August 2018 and May 2017 with the aim of persuading
more ethnic armed organizations to sign the National Ceasefire
Agreement; the talks brought together armed groups, the military, and
the government. Predictably, the meetings achieved little besides pro-
viding a forum for grand speeches and gestures, and in the aftermath
of the conferences, the fighting actually intensified in several regions.
In February 2018, two additional rebel groups signed on to the cease-
fire amid much fanfare. But the groups that represent four-fifths of all
the ethnic armed personnel in the country remain as opposed to signing
as ever. Meanwhile, the generals adamantly refuse to create a federal
army that would represent the country's ethnic groups and regions,
which is one of the ethnic armed organizations’ key demands; the
military falsely contends that the armed forces are already inclusive
and fair. At the same time, the armed groups have refused to disavow
secession—a position that the military insists they must take as part
of any final agreement.

Optimists believe that the ethnic armed organizations’ chief objective
is to maximize their gains on the ground in preparation for eventual
peace negotiations. In reality, their ultimate goal is the establishment of
a federal system. Such a system represents a redline for the Tatmadaw:
although military elites have adopted an increasingly pragmatic
approach toward negotiation with the ethnic armed organizations,
they continue to see federalism as the first step toward the country’s
disintegration. The word “federalism” is no longer taboo in public
discourse, as it had been for decades, but the top brass are unlikely to
relax their long-standing opposition to a federal system anytime soon.

BEIJING BECKONS
In the face of Western opprobrium over Myanmar treatment of the
Rohingya, there are signs that the military might abandon its relatively
recent quest to placate Western governments and instead return to a

‘May/June 2018 151

183. Zoltan Barany

strategy of reliance on its traditional patron, China. China has always
been Myanmar' top trading partner and biggest investor, and for
decades, Bejing was the main sponsor of Myanmar's military junta.
Suu Kyis first major trip abroad as state
Omen counselor, in August 2018, took her to
À Beijing, Her discussions there centered
reward Myanmar'n progren; on business and trade issues, especially
in hindnight, that wan likely afew large infrastructure project, such
; 357.2 billion deep-sea port in Rakhine
a mintake, State that China plans to build to give
Chinese ships access the Indian Ocean.
Since then, the relationship between Myanmar and China has improved;
in November 2017, Chinese President Xi Jinping described this moment
in Chinese- Myanmar military relations as being the "best ever” Ichelps
that Chinese officals, unlike Western ones, do not admonish Suu Kyi

and her government for their human rights violations.

But the Chinese are pressing for progress on the civil war. Chinese
leaders have endorsed negotiations between the Myanmar g
ernment and the country’s ethnic armed organizations, and Beijing
facilitated the participation of some recalcitrant groups in the May
2017 conference. China has played a complex role in the civil war for
decades, backing the government but also providing shelter, weap-
ons, and training to some of the belligerent groups; such contacts
have allowed China to extract natural resources (mostly illegally),
such as jade, gold, and timber, from regions where militants operate.
But it now seems that the Chinese want the violence to end because
the rebels’ objectives have shifted from merely resisting government
forces to improving ther status within Myanmar, an aim that is more
conducive to internal stability, and because the fighting has impeded
economic development and trade. What's more, the Chinese want to
be seen as peacemakers in a region where they have long been regarded
as a destabilizing presence.

Compared with Beijing, Washington today has little sway over
Myanmar. That is a recent development: the Obama administration,
in one of is undisputed foreign policy successes, managed to convince
the country to take steps toward democracy. The United States was a
steadfast supporter of Suu Kyi for years before she took office, and
both President Barack Obama and Secretary of State Hillary Clinton
made historic visits to Yangon. When Suu Kyi visited Washington in

152 rorEIoN arratns

184. Where Myanmar Went Wrong

September 2018, she asked Obama to lift most of the remaining U.
sanctions on Myanmar in order to help her government grow the
country's economy. Obama obliged her; in hindsight, that was likely a
mistake, Obama wanted to reward progress. But lifting the sanctions
robbed Washington of precisely the kind of leverage it now needs.
Indeed, democratic activists in Myanmar and elsewhere had hoped
that the sanctions would stay in place until the antidemocrati features
‘of the 2008 constitution were abolished.

Since the Rohingya crisis erupted last year, there have been few
official interactions between the United States and Myanmar. Under
the Trump administration, Myanmar has lost the special place it enjoyed
‘on Washington foreign policy agenda during the Obama years. Then
USS. Secretary of State Rex Tillerson made five-hour visit to Myanmar
in November 2017. In meetings with Suu Kyi and the army chief, Min
Aung Hlaing, he raised concerns about ethnic violence. At a news
conference, Tillerson said that there had been “crimes against human-
ity,” but he did not back the idea of new economic sanctions against
Myanmar. Pope Francis visited the country a few days later and called
for peace and mutual respect. But neither Tillerson nor the usually
‘outspoken pope used the term “Rohingya” during his discussions with
Myanmar officials or in his public statements, likely out of a fear that
doing so would aggravate an already highly charged situation and, in
the case of the pope, out of a fear that it could endanger Myanmar.
small and vulnerable Catholic community.

‘Admittedly, the United States has few appealing policy options for
stopping the ethnic cleansing, Restoring the sanctions or placing more
new ones on the generals would likely just drive the military further
into the welcoming arms of the Chinese, who are keen to fill the
vacuum left by Washington flagging interest. Denunciations from
Washington and other foreign capitals have failed to affect the govern-
ments position on the Rohingya and have actually increased domestic
support for the Tatmadaw, as evidenced by a number of major pro-
military rallies held throughout Myanmar last fal.

Still, there are ways for the United States to push for progress.
For starters, it should suspend all military-to-military engagement
with Myanmar and expand assistance to a number of sophisticated
but underfunded nongovernmental organizations, such as Mosaic
Myanmar, a civil society group that promotes tolerance between the
majority Buddhist community and Christian and Muslim minorities.

‘May/June 2018 153

185. Zoltan Barany

154

Furthermore, the United States should establish or sponsor programs
in Myanmar focused on health care, educational opportunities, and
cultural exchanges. In a country that tends to be at best cautious of
foreigners’ intentions, the United States is generally held in high
regard, according to Asian Barometer surveys of public opinion—a
sharp contrast to the suspicious attitudes toward China and India
that prevail throughout Myanmar. There are few societies where
prudent U.S, democracy promotion could find more fertile ground or
where it would be more gratefully accepted. Finally, in lieu of public
expressions of indignation, Washington should communicate its dis-
pleasure privately—especially through politicians with long histories of
supporting Suu Kyi and Myanmar democratization, such as Clinton
and Republican Senator Mitch McConnell of Kentucky.

As for Suu Kyi, her reduced stature abroad might further reduce
her already limited leverage with the generals. She is boxed in to a
degree that many critics fail to appreciate. But she has made her own
situation worse through poor management and a lack of focus on issues
that are under her administration’ control: improving the economy,
shoring up infrastructure, and revamping the health-care and educa-
tional systems. The government should adopt a personnel policy that
emphasizes merit and accomplishment instead of personal loyalty to
Suu Kyi, Instead of alienating ethnic minorities and their political
parties and ignoring civil society organizations, Suu Kyi ought to open
a meaningful dialogue with them with a view to forming a big-tent
political and social coalition that might, in time, challenge the military's
political supremacy. Suu Kyi and her administration should reverse
their attacks on media freedoms. And even though the government
cannot control the military, it must stop denying and defending the
‘Tatmadaw’s atrocities and start actively protecting those who have
suffered so terribly from the army's repression,

Most important, Suu Kyi must shift gears quickly. International
patience with her is almost extinguished. If she does not change course
soon, she will lose what little goodwill remains.

186. ESSAYS

ous of government

Rut they ought to be suspicious

Just and Unjust Leaks
Michael Walzer 48

‘The China Reckoning
Kurt M. Campbell and Ely Ramer 60

Life in Chinas Asia

Jennifer Lind a
Green Giant
Any Myers Jafe 8

How to Crack Down on Tax Havens
Nicholas Shaxson 9

Iran Among the Ruins
Vali Nasr 108

he President and the Bomb
Richard K. Retts and Matthew C.
Waxman 19

Mugabe’ Misrufe

Martin Meredith 129
he Cfash of Exceptionafisms
Charles A. Kupchan 139

187. Return to Table of Contents

Just and Unjust Leaks

When to Spill Secrets
Michael Walzer

Il governments, all political parties, and all politicians keep
secrets and tell lies. Some lie more than others, and those
ifferences are important, but the practice is general. And
some lies and secrets may be justified, whereas others may not. Citizens,
therefore, need to know the difference between just and unjust secrets
and between just and unjust deception before they can decide when it
may be justifiable for someone to reveal the secrets or expose the
lies—when leaking confidential information, releasing classified doc-
uments, or blowing the whistle on misconduct may be in the public
interest or, better, in the interest of democratic government.
Revealing official secrets and lies involves a form of moral risk-
taking: whistleblowers may act out of a sense of duty or conscience,
but the morality of their actions can be judged only by their fellow
citizens, and only after the fact. This is often a difficult judgment to
make—and has probably become more difficult in the Trump era.

LIES AND DAMNED LIES
A quick word about language: “leaker” and “whistleblower” are over-
lapping terms, but they aren't synonyms. A leaker, in this context,
anonymously reveals information that might embarrass officials or open
up the government’ internal workings to unwanted public scrutiny. In
Washington, good reporters cultivate sources inside every presidential
administration and every Congress and hope for leaks. A whistleblower
reveals what she believes to be immoral or illegal oficial conduct to her
bureaucratic superiors or to the public. Certain sorts of whistle-blowing,
relating chiefly to mismanagement and corruption, are protected by law;
leakers are not protected, nor are whistleblowers who reveal state secrets.

MICHAEL WALZER is-rofercor Emeritus atthe Institute for Advanced Study

48 vorciow frrfins

188. Jus and Unjus¥ Leaks

Before considering the sorts of official deception where the stakes
are high and the whistleblowers decisions and the publics judgment
of them are especially difficult, i's important to look atthe way secrets
and lies affect everyday polities, where the dilemmas are simple—and,
most of the time, not much is at stake. Consider the many politically,
‘engaged men and women who insist that they are not running for of-
fice even while they are secretly raising money and recruiting help for
a campaign. They don't want assaults on their records to begin before
they have developed the resources they will need to counterattad
Citizens expect deception of this sort and commonly see throug!
the practice is tolerable even if it is not fully justifiable,

But what about a candidate who tries to conceal political positions
she has held in the past or who lies about her policy commitments for
the future? Someone inside the candidates campaign who exposes such
lies is disloyal, but the disclosure is certainly not unjust. The leaker is
a good citizen even though she may not be a desirable colleague in a
conventional political

Now imagine a politician who is particularly ruthless: she wins the
election and then uses the power of the government to destroy records
of her previous actions, removing documents from archives and
threatening people who know too much. Anyone breaking the silence or
leaking the documents would be a public hero—and a welcome colleague
to the vast majority of citizens who are sure that they would never
destroy records or threaten anyone. Self-aggrandizing deception and
ruthless attempts to cover it up invite moral exposure.

But now consider a politician who shouts lies at election rallies and
solicits money from unsavory characters in order to defeat a particularly
aweful opponent—a neo-Nazi, for example, who threatens to dismantle
the institutions of democratic government. Here is a politician with
dirty hands. She has gotten her hands dirty for a good cause—but the
good cause doesn’t wash them clean. She is a lying and possibly corrupt
politician. Still I wouldn't defend someone inside her campaign who
exposed the lies or revealed the source of the campaign funds and
claimed something like a Kantian categorical imperative. “I had to do
it) the leaker might say. “No, you didn't” I would respond. Lying to
‘one’s fellow citizens and seeking funds that the candidate doesn't dare
talk about are certainly practices that should not be generalized. If all
candidates acted in that way (and far too many do), democracy itself
would be at risk. But if democratic institutions were already at risk,

March/April 2018 49

189. Michael Walzer

50

most citizens would want to make an exception for a politician they
were sure would defend those institutions—even if she did not adhere
to democratic norms while seeking office.

‘THE SECRET SHARER
Government secrets and deceptions are equally common but often
harder to judge than the secrets and deceptions of individual candidates
or elected officials. A relatively easy case can help establish some of
the contours. It was militarily necessary and therefore justified for
the U.S. government to keep the date of the 1944 D-Day invasion
secret from the Germans and, in order to ensure secrecy, to withhold
the information from almost everyone else, too. Governments justi-
fably conceal such information from anyone who does not need to
know it. Similarly, Washington and London's efforts to deceive the
Germans about the location of the invasion were also justified, as
were all the lies that officials told as part of those efforts. Providing
that information to the press would not have been a good thing to
do; in fact, someone who revealed it would probably have been
charged with treason.

But contemporary U.S. military operations often do invite whistle
blowing—as in cases in which the people being kept in the dark are
not U.S, enemies, who know a good deal about whats going on
since their operatives or soldiers are already engaged with American
ones. Rather, it's the American people who don't know. Think of
drone attacks or special operations that the public has never been told
about, in places that most Americans have never heard of; recent
U.S. military activities in Niger offer a good example. Soldiers die,
and officials struggle to explain the mission—and, with even greater
difficulty, the reasons for concealing it in the first place. In the
wake of such incidents, ¡ts plausible to argue that the truth should
have been revealed earlier on by someone with inside knowledge.
‘The whistleblower in this case would be a good citizen, one might
argue, because the use of force abroad should always be the subject
of democratic debate. Still, such a disclosure might not be justified
if the operation was defensible—necessary for national security, for
example, or intended to help people in desperate trouble—and if
blowing the whistle would shut down any prospect of success. A
disclosure might also be unjustified ¡fit put the lives of U.S. operatives,
or armed forces at risk. Government officials usually claim that both

Fonzıon frrfins

190. Jus and Unjus¥ Leaks

the operation and U.S. personnel have been endangered. The case
at hand, they regularly insist is just like D-Day.

But US, leaders often choose secrecy for a very diferent reason:
they fear that an operation would not survive public scrutiny or a
«democratic decision-making process. Or an operation has been debated
and democratically approved but has taken on a diferent character in
the field. Mission creep is common and
often results in an entirely new mission,

Alten fon a choose
debated and Congress voted on. The Secrecy out of fear that an
new mission may be strategically and operation would not
morally justifiable, but the democratic. uyiye a democratic
process has been cut short or avoided >, :

altogether. Ifthe operation is keptsecret, decision-making process.
however, Americans don't know that it

hasn't been democratically authorized; they don't know that it is going
on at all. And obviously, they can't weigh official justifications, since
they have never heard a government oficia justify the operation.

By contrast, a potential whistleblower knows that the operation
going on and that it hasnt been democratically authorized. But who is
she to judge its strategic or moral value? In recent years, many govern-
ment whistleblowers have been very young people—members, perhaps,
fa generation of “digital natives who believe that everything should
be revealed. But government employees and contractors take oaths or
sign agreements that commit them to obey secrecy rules; their superiors
and fellow workers trust them to protect the confidentiality of their
common enterprise, whatever itis.

If the enterprise is clearly illegal or monstrously immoral, a govern-
ment employee or contractor should certainly break that promise,
violate the trust of her coworkers, and blow the whistle. Officials or
‘operatives engaged in illegal or immoral activities don't deserve her
protection. This argument is similar to one often made in the case of
humanitarian intervention: if a massacre is going on, anyone who can
stop it should stop it, regardless of the costs imposed on the Killers. If
the U.S. government is engaged in an illegal and immoral operation,
anyone who can stop it should,

“Considera rough analogy. US. soldiers are required by international
law and by the Uniform Code of Military Justice to refuse to obey
illegal commands —and they should assume that monstrously immoral

March/April 2018 — 51

191. Michael Walzer

s2

commands are always illegal. Discipline and obedience are more crucial
to a military than they are to a civilian bureaucracy, and yet soldiers
are commanded to disobey illegal orders even on the battlefield. Citizens
might excuse a soldier who obeyed an illegal order under coercion or
who evaded rather than defied the order—as did the U.S. soldiers at
the 1968 My Lai massacre in Vietnam who shot into the air, deliberately
missing the civilians they had been ordered to kill. There are civilian
equivalents of this kind of evasion, such as slowing down the work
required to prepare for an operation or doing the work so badly that
the operation has to be postponed or canceled. Whistle-blowing, by
contrast, is closer to deliberate disobedience on the battlefield,

There is a difference between the two contexts, however: a soldier
often has to decide whether to obey in an instant; a whistleblower has
more time, Bureaucracies move slowly, so a whistleblower, thinking
about a clearly illegal or immoral operation, can appeal to her superiors
to stop the operation. She can deliberate at length about the costs of
what she is preparing to do. She can talk to coworkers whom she
trusts (although there probably won't be any). Publicly blowing the
whistle may mean losing her job and perhaps going to prison. Yet
assuming she has exhausted the options for internal dissent, this is her
obligation. And if she blows the whistle, her fellow citizens should
recognize the value of what she has done, after the fact.

But what if the operation isn't clearly illegal or morally mon-
strous? What if there are arguments to support it, and the would-be
whistleblower has heard them, even though her fellow citizens
haven't? How can she claim the right to judge the official account of
what's going on and the justifications of her coworkers and superiors,
many of whom have more experience than she has? Such a situation
is very different from the case of a soldier on the battlefield, who
can see pretty clearly the meaning of what she is being ordered to
do—who might even look into the eyes of the innocent civilians she
has been told to kill.

Whistle-blowing generally involves decision-making under condi-
tions of uncertainty. Americans elect officials and ask them (and their
appointees) to make decisions under those conditions. These officials,
may not be any more qualified than ordinary citizens, but they have
been given and they have accepted a charge and the responsibilities
that go with it—which include, crucially, the obligation to worry
about the consequences of their decisions. Officials have at their

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192. Ornspan

disposal a multitude of researchers, anal-sts, and advisers, who pre-
sumabl- reduce the uncertaint- and help with the worr-ing, B- con-
trast, a whistleblower is usuall- alone; her uncertainties are private,
and the public cannot know how much she worries. Indeed, one of
the things the public should be concerned about is how well a whistle-
blower understands the uncertainties. Is she a good worrier? It can
be dangerous when whistleblowers make their decisions on the basis
of some ideological fixation or long-standing prejudice, That's a
danger for officials, too—but the- are being watched b- coworkers
(and, to an extent, b- Congress and the media), whereas whistle-
blowers act in the shadows.

March/April 2018

53

193. Michael Walzer

54

A WHISTLE IN THE DARK
Does it make a difference if whistleblowers are (or claim to be) con-
scientious? “Conscience” originally meant what the word suggests:
“co-knowledge,” shared, as the early Protestants said, between a man
and “his God.” But in the case of a whistleblower, the knowledge is
uncertain and limited to the individual: good enough, perhaps, to
justify someone's refusal to serve in the military, but not good enough
to justify decisions that affect large numbers of other people. I am
sure that many whistleblowers have consciences, but they have to
defend their actions in other terms.

If American citizens are good democrats, they will always be suspi-
cious of government officials, and that will make them receptive to
the information that whistleblowers provide. But they ought to be
suspicious of whistleblowers, too. Citizens may not need to know
the information that a whistleblower provides— indeed, the whistle-
blower might be acting for profit or publicity and not out of a desire
for more democratic decision-making or a concern for law and morality.
Sometimes, however, whistle-blowing opens a debate that should
have started long before and exposes government activities that many
citizens strongly oppose.

Imagine a military or intelligence operation that originally made
a lot of sense and that the government has successfully defended to
the public but that has expanded in ways that U.S. citizens didn’t
anticipate and haven't been told about. The operation now requires
a degree of force far greater than officials had originally planned for,
and its geographic range has expanded. The potential whistleblower
knows what is going on, and she knows that there hasn't been any-
thing resembling a democratic decision, Is that enough knowledge
to justify revealing details about the operation to the media? Probably
not: she has to make some judgment about the character of the
expanded operation, and she has to consider the possible consequences,
of her revelations—and she is, remember, no better a judge than
anyone else.

‘Arguably, the goal of empowering citizens by supplying them with
crucial but secret information justifies whistle-blowing—as long as
there are good reasons to believe that secrecy isn't a legitimate
requirement of the mission and as long as the revelation results in no
negative consequences for U.S. personnel in the field. Those two
qualifications, however, will probably mean that whistle-blowing can-

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194. Jus and Unjus¥ Leaks

not be justified in many cases. But now imagine that the expanded
operation involves terrible brutality or potential danger to civilians
abroad or in the United States. And the whistleblower believes that
ordinary Americans would recognize the brutality or the danger, and
so she isn’t merely acting on her own judgment: she is assuming that
most of her fellow citizens would judge the situation in the same
‘way—and giving them the chance to do so.

‘This is the best way to think about whistle-blowing: it involves a
kind of moral risk-taking, and it can be justified only after the fact, if
other citizens recognize its morality. Of course, its morality will always
be contested, with government officials arguing that an important mis-
sion has been undercut and that agents _
ieee ete nine TMS Sole are obligated
‘would justify further whistle-blowing. disobey illegal orders; civil
‘The whistleblower herself is counting servants are not obligated

on her fellow citizens to defend her i
judgment-—to affirm iin Be and say, 99 200 the whistle when

“Yes, this isan operation that we should “hey see wrongdoing.
have been told about, and it is one that

‘we would have rejected.” If most of her fellow citizens agree—or, rather,
most of those who are paying attention, since majority rule would not
work here—then exposing the operation was likely justified.

‘The case is the same if U.S. citizens are both the objects of the
operation and the ones from whom it is being concealed. The best-
known contemporary American whistleblower, the former National
Security Agency contractor Edward Snowden, revealed the large-
scale surveillance of Americans by their own government. He bet that
most of his fellow citizens would not think that the danger they faced
was great enough to warrant such a massive invasion of their privacy.
With some difficulty, I can imagine circumstances in which large-
scale secret surveillance by an otherwise democratic state might be
justifiable or at least defensible. But what Snowden revealed was an
‘operation that could not be justified by any actually existing danger;
this was something that American citizens needed to know about.
Unfortunately, however, Snowden revealed much more than what
Americans needed to know—and not only to his fellow citizens: in
addition to sharing secrets about the surveillance of American citi-
zens with journalists from The Washington Post and The Guardian, he

March/April 2018 55

195. Michael Walzer

56

provided the South China Morning Post with information about U.S.
intelligence operations against non-American targets in mainland
China. That disclosure put Americans at risk, and Snowden had no
reason to believe that what the United States was doing in China was
either illegal or immoral—or anything other than routine.

Judgments in cases like this one will obviously be shaped by political
views, but not, one hopes, by partisan loyalties. Many liberals and
Democrats, along with some conservatives and a few Republicans,
condemned the domestic surveillance that Snowden revealed and
defended his decision to do so. The first year of the Trump adminis-
tration, however, has seen many leaks that have derived from and
invited partisanship. Consider the leaked details of the president's
May 2017 conversation with Russian officials in the Oval Office, after
he had fired F1 Director James Comey, who had been investigating
whether Donald ‘Trump's election campaign had coordinated with the
Kremlin, “I just fired the head of the Ft. He was crazy, areal nut job,”
‘Trump said, according to a source quoted by The New York Times. “I
faced great pressure because of Russia. That's taken off” The Washington
Post reported that during the same meeting, Trump shared highly
classified information with the Russians that “jeopardized a critical
source of intelligence on the Islamic State.” The leakers to the Times
and the Post certainly meant to raise questions about the president's
competence on foreign policy. Americans who already doubted Trumps
abilities welcomed the leak. The president supporters obviously
did not.

There is no way to make an objective judgment here—not, at least,
about the leakers. But the journalists who reported this and many
other leaks, and who worked hard to make sure of their accuracy, were
doing their job and ought to be commended. They did not confront a
moral dilemma, Leaks of this sort are grist for the mill of a free press.

BUREAUCRATIC OUTLAWS
As for whistle-blowing, as opposed to leaking, a truly detached and
fully informed observer would probably be able to make an objective
judgment about any particular revelation, But that sort of judgment
isn't likely in the fraught world of politics and government—although
a consensus might take shape, slowly, over time, as in the case of the
Pentagon Papers: it seems likely that most Americans have come to
believe that the military analyst Daniel Ellsberg did the right thing

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196. Jus and Unjus¥ Leaks

in sharing the documents with the press. Whistleblowers such as
Ellsberg appeal to ther fellow citizens, and there really isn't any further
appeal to make. Ifthe citizens dont agree among themselves about
the justfibilty ofthe disclosure, there can be no definitive verdict.
But suppose that most Americans recognize the brutality or the
danger that has driven the whistleblower to act, Heraction was justified,
but she has violated the commitments she made when she took her
job, and she may have broken the law.
When soldiers disobey an ilegal order, Democracies live
they are in fact obeying the official sone

army code. But there is no official code “easily with secrecy,
that orders civil servants to refuse to and governments

keep secrets about an illegal or immoral
pa el CCP do secrets,
bey; civil servants are not obligated to

blow the whistle. They are, however, protected from oficial retaliation
and punishment by the Whistleblower Protection Act of 1989 if they
reveal a range of illegal government actions: gross mismanagement,
the waste of public funds, or policies that pose a substantial and
specific danger to public health and safety.

If whistleblowers are fired or demoted for revelations such as those,
they can file an appeal to the U.S. Merit Systems Protection Board.
‘These appeals are most often denied—but not always. In 2003, Robert
MacLean, an employee of the Transportation Security Administration,
told an asssnc reporter that in an effort to reduce spending on hotels,
the Tsf would be removing air marshals from many long-distance
flights, He was subsequently fired. After appealing the decision first
to the MS, then to a federal appeals court—he was finally reinstated
in 2013. The Supreme Court upheld that decision in 2015, It was a
rare judicial victory for whistle-blowing

But blowing the whistle on government action abroad or on security:
related surveillance at home isn’t protected by the Whistleblower
Protection Act. And revealing classified information is not legal even
if public health and safety are at issue. Ifa whistleblower reveals secrets
that the government doesnt believe should be revealed, she has broken
the law, regardless of her intentions or public sentiment about her
actions, She is a disobedient civil servant, a bureaucratic outlaw.

Citizens might well consider her action a form of civil disobedience.
But an act must meet certain conditions for that term to apply. First,

March/April 2018 57

197. Michael Walzer

58

the whistleblower must have tried to convince a superior that the
{government's operation was illegal or immoral. Before going outside
the government, she must have done the best she could inside, among
her coworkers. Second, she must act in person and in public, without
any attempt to hide who she is—even though this means that she
won't see any more secrets. Many leaks can come from a single concealed
leaker, but whistle-blowing is almost certainly a one-time act. If
internal dissent doesn't work, then going public is a kind of principled
resignation. Third, the whistleblower must take responsibility for the
revelation she has made; she must not hand secret documents to agents
about whose subsequent behavior she can't be reasonably confident.
She has a purpose for blowing the whistle, and she has to do her best
to make sure that her purpose, and no other, is served. Snowden ini-
tially chose The Guardian, The Washington Post, and The New York
Times (among other media outlets) as venues for his leaked secrets,
and this seems the right kind of choice since these are newspapers
whose publishers have had, along with a desire to sell papers, a long-
standing commitment to democratic government. But Snowden
showed less careful judgment in choosing to share information with
the South China Morning Post, an organization that he had no reason
to believe was committed to democratic decision-making in the
United States.

A similarly flawed judgment also affected the case of another well-
known American whistleblower, Chelsea Manning, who in 2010
provided a massive trove of classified diplomatic cables to WikiLeaks.
In contrast to newspapers with long records of public service, Wiki-
Leaks is the wrong kind of intermediary between a whistleblower and
the American people. Its directors may or may not have democratic
commitments, but they also have narrowly partisan and personal aims,
about which the public has learned a great deal in recent years.

TOUGH CALLS
A civil whistleblower is making the same appeal to her fellow citizens
that civil rights activists in the 1960s made—in similar defiance of the
Jaw and with a similar willingness to accept legal punishment. Whistle-
blowers can and probably should be punished for revealing state
secrets, even if the secrecy is unjust. Judges and juries should try to
make the whistleblower’s punishment fit her crime, and her crime
must be weighed against the government's subversion of the democratic

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198. Jus and Unjus¥ Leaks

process and the illegality and immorality of the revealed operation:
the more significant the subversion and the greater the brutality or
danger, the milder the sentence should be.

‘There must be some punishment for people who break secrecy
laws, to serve justice when someone blows the whistle recklessly and
to deter others from doing so. The fear of punishment focuses the
mind and forces a potential whistleblower to think hard about what
she is doing. Citizens should respect a whistleblower' willingness to
pay the price of her disobedience, and at the same time, they should
make their own judgments about whether what she did was right or
wrong. Her action may require a complicated verdict: for example,
pethaps she was right to open the democratic debate but wrong in her
assumption of what the outcome of the debate should be. In any case,
the public owes her a reflective response—not knee-jerk hostility or
knee-jerk support.

Democracies live uneasily with secrecy, and governments keep too
many secrets. Greater transparency in government decision-making
would certainly be a good thing, but it has to be fought for democrati-
cally, through the conventional politics of parties and movements.
Whistle-blowing probably does not lead to greater transparency; in
the long run, it may only ensure that governments bury their secrets
more deeply and watch their employees more closely. Still, so long as
there are secrets, whistle-blowing will remain a necessary activity.
Whistleblowers have a role to play in a democratic political universe.
But it is an unofficial role, and one must recognize both its possible
value and its possible dangers.”

March/April 2018 59

199. 60

Return to Table of Contents

The China Reckoning

How Beijing Defied American Expectations
Kurt M. Campbell and Ely Ratner

to determine Chinas course. Again and again, its ambitions

have come up short. After World War II, George Marshall,
the U.S. special envoy to China, hoped to broker a peace between the
Nationalists and Communists in the Chinese Civil War. During the
Korean War, the Truman administration thought it could dissuade
Mao Zedong’s troops from crossing the Yalu River. The Johnson admin-
istration believed Beijing would ultimately circumscribe its involve-
ment in Vietnam. In each instance, Chinese realities upset American
expectations.

With UsS. President Richard Nixon's opening to China, Washington
made its biggest and most optimistic bet yet. Both Nixon and Henry
Kissinger, his national security adviser, assumed that rapprochement
would drive a wedge between Beijing and Moscow and, in time, alter
China's conception of its own interests as it drew closer to the United
States. In the fall of 1967, Nixon wrote in this magazine, “The world
cannot be safe until China changes. Thus our aim, to the extent that
we can influence events, should be to induce change.” Ever since, the
assumption that deepening commercial, diplomatic, and cultural ties
would transform China' internal development and external behavior
has been a bedrock of U.S. strategy. Even those in U.S. policy circles
who were skeptical of Chinas intentions still shared the underlying
belief that U.S. power and hegemony could readily mold China to the
United States’ liking

T: United States has always had an outsize sense of its ability

KURT M. CAMPBELL is Chairman ofthe Asa Group and Sas US, Assistant Secretary of
Stat for East Asian and Pacific Aairs rom 2009 to 2013.

ELY RATNER is MauricoR Greenberg Senior Fell for China Studies at the Councilon
Foreign Relations and Sas Deputy National Security Adviser o U.S Vico President Joe
iden from 2015 to 2017

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200. The China Reckoning

The era of good feelings: Xi and Obama in California, June 2015

Nearly half a century since Nixon's drst steps toward rapproche-
ment, the record is increasingly clear that Washington once again put
too much faith in its power to shape China’ trajectory. All sides of the
policy debate erred: free traders and dnanciers who foresaw inevitable
and increasing openness in China, integrationists who argued that
Beijing's ambitions would be tamed by greater interaction with the
international community, and hawks who believed that China's power
would be abated by perpetual American primacy.

Neither carrots nor sticks have swayed China s predicted. Diplomatic
and commercial engagement have not brought political and economic
‘openness. Neither U.S. military power nor regional balancing has
stopped Beijing from seeking to displace core components of the
U.S.-led system. And the liberal international order has failed to
lure or bind China as powerfully as expected. China has instead pur-
sued its own course, belying a range of American expectations in
the process.

That reality warrants a clear-eyed rethinking of the United States’
approach to China. There are plenty of risks that come with such a
reassessment; defenders of the current framework will warn against
destabilizing the bilateral relationship or inviting a new Cold War.
But building a stronger and more sustainable approach to, and rela-

March/April 2018

61

201. KurU M, Campbell and Ely RaUner

62

tionship with, Beijing requires honesty about how many fundamental
assumptions have turned out wrong. Across the ideological spectrum,
we in the U.S. foreign policy community have remained deeply in-
vested in expectations about China—about its approach to economics,
domestic politics, security, and global order—even as evidence against
them has accumulated. The policies built on such expectations have
failed to change China in the ways we intended or hoped.

‘THE POWER OF THE MARKET
Greater commercial interaction with China was supposed to bring
‘gradual but steady liberalization of the Chinese economy. U.S. President
George H. W. Bush's 1990 National Security Strategy described
enhanced ties with the world as “crucial to Chinas prospects for
regaining the path of economic reform.” This argument predominated
for decades. It drove U.S. decisions to grant China most-favored-
nation trading status in the 1990s, to support its accession to the
World Trade Organization in 2001, to establish a high-level economic
dialogue in 2006, and to negotiate a bilateral investment treaty under
USS. President Barack Obama.

‘Trade in goods between the United States and China exploded from
less than $8 billion in 1986 to over $578 billion in 2016: more than
a 30-fold increase, adjusting for inflation. Since the early years of
this century, however, China's economic liberalization has stalled.
Contrary to Western expectations, Beijing has doubled down on its
state capitalist model even as it has gotten richer. Rather than becoming
a force for greater openness, consistent growth has served to legitimize
the Chinese Communist Party and its state-led economic model.

USS. officials believed that debt, inefficiency, and the demands of
a more advanced economy would necessitate further reforms. And
Chinese officials recognized the problems with their approach; in 2007,
Premier Wen Jiabao called the Chinese economy “unstable, unbalanced,
uncoordinated, and unsustainable.” But rather than opening the country
up to greater competition, the Chinese Communist Party, intent on main-
taining control of the economy, is instead consolidating state-owned
enterprises and pursuing industrial policies (notably its “Made in
China 2025” plan) that aim to promote national technology champi-
ons in critical sectors, including aerospace, biomedicine, and robotics.
And despite repeated promises, Beijing has resisted pressure from
‘Washington and elsewhere to level the playing field for foreign

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202. The China Reckoning

companies. It has restricted market access and forced non-Chinese
firms to sign on to joint ventures and share technology, while funneling
investment and subsidies to state-backed domestic players.

Until recently, U.S. policymakers and executives mostly acquiesced
to such discrimination; the potential commercial benefits were so
large that they considered it unwise to upend the relationship with
protectionism or sanctions. Instead, they fought tooth and nail for
small, incremental concessions. But now, what were once seen as
merely the short-term frustrations of doing business with China
have come to seem more harmful and permanent. The American
Chamber of Commerce reported last year that eight in ten U.S.
companies felt less welcome in China than in years prior, and more
than 60 percent had little or no confidence that China would open its
markets further over the next three years. Cooperative and voluntary
mechanisms to pry open China's economy have by and large failed,
including the Trump administration newly launched Comprehensive
Economic Dialogue.

‘THE IMPERATIVE OF LIBERALIZATION,
Growth was supposed to bring not just further economic opening
but also political liberalization. Development would spark a virtuous
cycle, the thinking went, with a burgeoning Chinese middle class
demanding new rights and pragmatic officials embracing legal reforms
that would be necessary for further progress. This evolution seemed
especially certain after the collapse of the Soviet Union and demo-
cratic transitions in South Korea and Taiwan. “No nation on Earth
has discovered a way to import the world’s goods and services while
stopping foreign ideas at the border,” George H. W. Bush proclaimed.
U.S. policy aimed to facilitate this process by sharing technol-
ogy, furthering trade and investment, promoting people-to-people
‘exchanges, and admitting hundreds of thousands of Chinese students
to American universities.

The crackdown on pro-democracy protesters in Tiananmen Square
in 1989 dimmed hopes for the emergence of electoral democracy ii
China. Yet many experts and policymakers in the United States still
expected the Chinese government to permit greater press freedoms
and allow for a stronger civil society, while gradually embracing more
political competition both within the Communist Party and at local
levels. They believed that the information technology revolution of

March/April 2018 63

203. KurU M, Campbell and Ely RaUner

the 1990s would encourage such trends by further exposing Chinese
citizens to the world and enhancing the economic incentives for open-
ness. As U.S. President Bill Clinton put it, “Without the full freedom
to think, question, to create, China will be at a distinct disadvantage,
competing with fully open societies in the information age where
the greatest source of national wealth is what resides in the human
mind.” Leaders in Beijing would come to realize that only by granting

individual freedoms could China thrive in a high-tech future.
Bat the fear that greater openness would threaten both domestic
stability and the regime's survival drove China leaders to look for an
alternative approach. They took both

Events of the last decade the shock of Tiananmen Square and

64

the dissolution of the Soviet Union
have dashed even modest _ as evidence of the biases ap
hopes for China’ political ratzation and political competition.
i imatic So rather than embracing posit
er el ofapenaeón Bettie onde
to the forces of globalization by put-
ting up walls and tightening state control, constricting, rather than
reinforcing, the free flow of people, ideas, and commerce. Additional
stresses on the regime in this century—including an economic slow-
down, endemic corruption in the government and the military, and
‘ominous examples of popular uprisings elsewhere in the world—have
spurred more authoritarianism, not less.

Indeed, events of the last decade have dashed even modest hopes
for political liberalization. In 2013, an internal Communist Party
memo known as Document No. 9 explicitly warned against “Western
constitutional democracy” and other “universal values” as stalking-
horses meant to weaken, destabilize, and even break up China. This
guidance demonstrated the widening gap between U.S. and Chinese
expectations for the country’s political future. As Orville Schell, a
leading American expert on China, put it: “China is sliding ineluctably
backward into a political climate more reminiscent of Mao Zedong in
the 1970s than Deng Xiaoping in the 1980s.” Today, an ongoing crack-
down on journalists, religious leaders, academics, social activists, and
human rights lawyers shows no sign of abating—more than 300 law-
yers, legal assistants, and activists were detained in 2015 alone.

Rather than devolving power to the Chinese people, as many in the
West predicted, communications technologies have strengthened the

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