Power Politics

1. U.S. to head to Moon for $104 billion. The Associated Press reports that NASA projections indicate that it will cost a total of $104 billion to send astronauts to the moon by 2018. That averages to approximately $8 billion per year. While some analysts contend that this is an exhorbitant sum that would be more prudently spent on domestic priorities, they underestimate the long-term value of the space program. It is indeed true that there are other pressing priorities requiring attention; culling the large federal budget deficit is perhaps the most prominent. Yet the government spends on programs that cut across the spectrum of human endeavors, and for good reason; there is virtue in moderation. For a country with a GDP exceeding $10 trillion annually, an $8 billion annual investment in reaching the moon is quite reasonable, especially considering the long-term payoff.

Exploring beyond the confines of the Earth is a natural impulse following in the best traditions of human progress; venturing to the moon is a prestige project that will bring recognition and national pride for decades to come. More pragmatically, maintaining a cutting-edge and vibrant space program will be useful for the economic and political competition of the 21st century. Having an edge in space technology will put the US at the forefront of research and innovation in this area, where it enjoys its greatest competitive advantages. Furthermore, as control over space and extraterrestrial bodies becomes an increasingly important and pertinent issue in the new century, the ability to actually make use of and exercise real authority there will become essential. A great power does not remain so on technological inertia, and investing in an active space program must be a key part of American policy in the 21st century.

2. Indonesia accelerates Aceh pullout. I’m pleased to report that, as I previously projected, the latest Aceh peace treaty seems to be sticking. The fundamentals point toward continued progress.

3. The AP reports that the US and EU are prepared to submit a Security Council resolution against Iran. Although I understand Western frustration with Iran, this is the wrong way to try to overcome obstacles in the nuclear disarmement talks. Submitting a resolution should only be considered if somehow the Russian and Chinese vetoes are neutralized, and accomplishing that would require far more diplomatic concessions than would be wise. Submitting a resolution only to have it shot down cannot have salutary effects on the effort to disarm Iran.

4. Singapore’s biotechnology push. I once again applaud Singapore for its visionary economic policies. Biotechnology will be perhaps the most important industry of the 21st century, and Singapore is in a prime position to capitalize on it. Its investments and friendly government policies will be rewarded bountily in the long-term. Singapore is perhaps the only managed market economy that has sustainably prospered, and this further demonstrates the government’s strategic acumen.

5. Clark seeks alliances after narrow victory. I must admit that I’m disappointed in the outcome of the New Zealand election. I have no complaints with Clark’s stewardship of the economy; she has down a magnificent job, although I suppose further reform would be beneficial. Nevertheless, her continuance of the government’s sadly misguided anti-nuclear policy is detrimental to both New Zealand and the United States. Auckland’s nuclear prohibition has complicated its security situation and prevented negotiations on a lucrative free trade deal with the United States. The island-state should instead adopt a policy similar to that of neighboring Australia, cultivating close relations with both Washington and Beijing but ultimately allying itself with Washington. Until the anti-nuclear posture is reversed, Washington should refuse to sign a free trade accord. Hopefully New Zealanders will come around soon enough.

KYRGYZSTAN: U.S. base can stay, but rent will rise. As the competition for influence, basing, and oil resources (the new Great Game) heats up in Central Asia, the Central Asian states themselves will be able to play the great powers off against each other. Kazakhstan, the most powerful state in the region, has done it best, but as this demonstrates the others will follow. So long as they remain geopolitically important points of contention, both the United States and China (SCO) will be willing to pay up. In this case, Bishkek knows that it’s an important operating theater for the United States, and so it intends to extract concessions for the value of the base. It’ll probably try the same trick again in other areas, most likely with success.

Singapore says in final negotiations with Boeing over F-15 order. Wrong again! I suppose I underestimated the sheer importance of the US-Singapore security alliance to the Singaporean government and thus miscalculated where the geopolitical influence would fall. I still think that the country would’ve been better off diversifying and getting the Rafale, but I was totally wrong in my prognostications on this issue. The readers who wrote in disagreement won this round.

Blair under pressure on launch aid for Airbus.

The UK government must decide urgently on providing hundreds of millions of pounds in launch aid to Airbus if it is to secure Britain’s role in the European aircraft maker’s next generation A350 aircraft project.

The decision is highly sensitive, as the granting of financial support will inflame the trade conflict between the US and the European Union over state subsidies to Boeing and Airbus for the development of large civil aircraft. […]

Government support, which could total up to £380m ($700m, €559m) is regarded by the UK aerospace industry as vital to protect UK technology and to maintain the central UK role in future Airbus programmes alongside France, Germany and Spain.

The special relationship between Britain and the United States is indeed the most important factor in British foreign relations. Nevertheless, maintaining its industrial and technological base (and remaining a strong supporter of European aerospace and defense) is an extremely important priority for Britain. I think they should give the launch aid, because Britain’s relationship with the US is durable enough to take the hit (Washington owes London, anyway).

Taiwan’s Cabinet Approves Reduced Arms package. I discussed the arms deal before here. I’m glad the Taiwanese were able to finally work it out and get the acquisition passed, as it’ll greatly bolster their defenses against China over the next decade or two.

Pakistan Air Force to Hold War Games. This is an excellent demonstration of the tensions that have lately been reintroduced into the Indo-Pakistani relationship (after a short period of euphoria); I previously covered some of the issues here. Suffice it to say that, though the prospects of war remain unlikely, the prospects of peace are similarly dim. With the region in a state of flux, facing pressure from across the board, New Delhi and Islamabad are entrenching themselves. Other states, such as Israel, are taking advantage of the situation; Russia and China are exploiting the opportunity to peddle weaponry and influence. How this will impact the rise of India remains to be seen, but one can be sure that both Beijing and Washington will be looking to exploit this chill in relations for geopolitical gain. Will China forge closer relations with Islamabad in order to contain India? Will America be able to maintain favorable relations with both?

China urges action against threat of militarization of outer space. There’s recently been an upsurge in talk about the role of space in military affairs, some of which I discussed here. Right now, the US military is particularly interested in having weapons and planes traverse through space (from Earth, into space, and then back to Earth), which could offer dramatic advantages in range, speed, and flexibility. China is focusing on its space program as well; Beijing is looking into both prestige programs (going to the moon, for example) and military programs (advanced surveillence satellites). However, Washington has a tremendous edge in space technology, which concerns China greatly. In response, the Chinese have invested in anti-satellite weaponry and cyberwarfare, but remain relatively incapable of denying America the military use of space. With the Pentagon looking into jam-proof GPS satellite technology, undetectable stealth satellites, and satellite defense mechanisms, China is rightly worried that its countermeasures may soon become highly ineffective. Until it can catch up to the United States in terms of spending and technology, all Beijing can do to slow down the Pentagon’s progress is to try to establish an international norm against using space for military purposes. It won’t have much success.

Several decades down the line, China will probably be able to match Washington in space; until then, it’ll do whatever it can to impede America’s ability to exploit space militarily.

Vow to cut subsidies fails to ignite enthusiasm. Last October, I wrote a strong endorsement of President Yudhoyono of Indonesia. I was optimistic that he would prove to be a strong and capable leader; in many ways this has turned out true. Up to this point, his performance has been very impressive, and I’ve supported reestablishing military ties with Jakarta. Unfortunately, it seems Yudhoyono has lost his way. His handling of the massive depreciation of the rupiah has been atrocious; his refusal to reduce the terribly costly fuel subsidies that contributed a great deal to the crisis is an appalling failure in leadership. It behooves him to rectify this situation immediately, lest the government or economy collapse. It would be tragedy for his record to be permanently marred by a simple error in judgement, when he has done so much good for the country in the past year.

The following is a select and partial list of the trends and events to watch in 2005. I’ll try to keep you updated as new developments emerge over the course of the year.

United States: With President Bush and the Republican party energized by a massive victory at the polls last November, look for the administration to expend its political capital aggressively in support of its second term agenda. Sources close to the White House suggest that Mr. Bush’s proposed tax code reform will take a back-seat to ambitious Social Security reform, judicial nominations for the high court, and tort reform. Inflation concerns at the Fed and Wall Street continue to frame the economic situation, while the economy is expanding at a solid albeit sluggish rate.

It’s an open question as to whether Mr. Bush will be able to successfully conquer the political third rail of Social Security and institute fundamental reform. His proposal is decent, but others floating around look quite nice indeed. The economic issues involved are far beyond the scope of this blog, but be that as it may I would consider the passage any meaningful and well designed reform package to be a step in the right direction of curbing the serious fiscal defects faced by the US. Even a modest package of tort reform would be beneficial for American businesses and consumers, and I look forward to the passage of compromise legislation in a relatively painless manner.

Changes in the composition of the executive foreign policy team, particularly in the State and Defense Departments, suggest that the President is prepared to pursue a more multilateralist and conciliatory foreign policy than during his first term. The evolving balance of power between the two departments also presents an issue to watch, since during the administration’s first term the pendulum swung heavily to Defense, and now it looks to be headed back to State. Whether the President is prepared to engage in a radical institutional overhaul of the foreign policy establishment as advocated by some conservative thinkers remains to be seen, although one suspects not. Finally, how the administration funds and operates the Millennium Challenge Account and other organs of soft power, which play an understated but integral role in US foreign policy, is (as always) an issue of some import.

South America: Three key issues dominate the South American scene this year. The first is Brazil’s continuing growth, both economically and politically. Under the terrific leadership of President Lula da Silva, the country has maintained stellar rates of economic growth, and his hard-hitting political style has allowed him to drive through needed structural reforms. This has emboldened Brasilia to seek a more active role in world affairs and further threaten the crumbling regional hegemony enjoyed by the United States. Brazil is shaping itself up to be the new dominant South American power, and its relations with the rest of the continent will be instructive in gauging its success. However, Brazil’s economic gains are somewhat illusory, since they’re mostly driven by dramatic increases in exports to China, the EU, and the United States. With soybean demand in China and Europe (one of Brazil’s most lucrative industries) at unsustainable highs, and growth in China set to slow, Brazil’s rapid economic growth is unsustainable in 2005. Instead, look for a return to sluggish growth, albeit slightly higher than that of previous decades. The fact that Brazil’s neighbors are likely to suffer similar fates (particularly Venezuela, which is embarking on an unsustainable and highly unstable economic policy program), and the general instability in many countries (such as Bolivia), are a volatile mixture that present the specter of a regional collapse or a return to mediocrity.

The second key issue, related to Brazil’s rise in power, is the encroachment of China and Russia into South America. China recently signed a large spate of trade deals in the region aimed at securing raw materials and political influence in exchange for large investment packages. Moscow also took a renewed interested in the area during 2004, and expects the sales of military arms to rise to more than $100 million per annum. How China and Russia continue to consolidate their gains the region, and how far Washington will go before pushing back, will set the stage for the new interplay of powers in the area.

Europe: The fate of the European Union and the political intrigues playing out in Eastern Europe constitute the issues to watch in Europe this year. Although it isn’t until 2006 when British voters choose whether or not to accept the new constitution (and there is a very good chance they will reject it), the outcomes of the referendums posed to voters this year on the issue will be instructive. Overwhelming support would be a boon to the EU commission, while tepid acceptance or even outright rejection would reduce the credibility of the European Union as a central political institution.

Russia and Eastern Europe are of particular interest this year. In Moscow, Mr. Putin continues his drive to expand his political power and centralize authority to within the Kremlin. In 2004 he successfully broke Yukos and with it the main sources of funds for his opposition. How he handles the aftermath of Yukos in 2005, the continued expansion of Gazprom as a tool of Russian policy, and Mr. Putin’s economic policies will all be instrumental in forging the shape of the Russian economy for decades to come. How Mr. Putin continues his centralization of power, and whether he continues to enjoy success in his move toward extreme authoritarianism will dictate the future composition of the Russian state. The showdown between Moscow and Washington over the future of Eastern Europe will be at the center of regional affairs this year, and Moscow’s unsuccessful attempt to retain dominance over Ukraine portends badly for Russia’s chances. How newly democratic Ukraine and Georgia reform their political institutions and conquer internal problems are also key facets to watch.

Africa: As one of the fronts on the War on Terror, Africa continues to serve as a host for small detachments of US troops who become integrated with communities and build up coordination with the locals to shut terrorists out. How this strategy works and evolves is the subject of some importance, since it offers an alternative method for stemming the spread of Islamic fundamentalism. It will also be interesting to watch how the political situation there plays out in Somalia, with the great powers eying it for its critical deep water port serving the Middle East.

Asia Pacific: Three factors will dominate the Asia Pacific this year. The first is the continuing struggle for resources between Japan, China, and India. This struggle heated up last year, and continues to define the overall strategic policies of each nation. Look for agreements and treaties dividing up underseas energy deposits, as well as numerous joint-ventures and bilateral agreements as China and India try to secure and soak up every last resources. The second is regional militarization. Look for the beginning of formal Japanese constitutional reform, and more aggressive deployment of Japanese defense assets. China and India are continuing their military buildups and modernizations, while Singapore, Malaysia, and Indonesia are on a buying spree. In particular, the results of fighter competition between the F-15, Eurofighter, and Raphael in Singapore will inform future defense purchases by all nations. A victory by the Eurofighter would certainly help the beleaguered program. Finally, the dual specters of North Korea and Pakistan continue to haunt the entire region.

Importance: Here’s how I would place these concerns in terms of importance and, consequently, coverage at this blog.

1. Struggle for resources in Asia.
2. Russian politics and policy.
3. A new US foreign policy team and the changes it will make.
4. Encroachment by Russia and China into South America, the traditional domain of the United States.
5. North Korea.

1. Poland, Hungary, Sweden, and Lithuania fail to pass the financial tests required for entry into the eurozone. Meanwhile, Greece acknowledges that its deficit numbers for 2001 that enabled Athens’ entry into the eurozone were “misreported.” The actual deficit was higher. These two stories illustrate why the European Union, while a potentially effective forum for facilitating intra-European commerce, will not supersede the current order of nation-states in Europe. Not only do great powers such as France ignore its edicts when advantageous, but also the serious lack of control that the European Commission exercises over the fiscal policies of member states makes effective intergovernmental integration impossible.

2. India’s government again demonstrates a commitment to free market reform. This time, New Delhi has made it clear that foreign investment is encouraged, despite opposition from the communist elements of the governing coalition. This is a very positive sign for future Indian economic development.

3. A leading international think tank, the IISS, has published a report in part suggesting that the war in Iraq has emboldened Iran and North Korea to produce and proliferate nuclear weapons. The report’s findings, at least when it comes to North Korea, are flawed, however. While it is true that Washington’s expenditures on the war in Iraq reduced the money available to finance other operations, and many military assets were diverted to support the war, these have had an insignificant effect on the Korean situation. Already American options were pretty much limited to containment - an outcome the Bush administration planned and designed for. Additional financial resources would have made little difference in how the crisis played out, and a more powerful concentration of military power on the peninsula would not have upset the stalemate already established. In fact, the Iraq conflict negatively affected the Korean nuclear crisis little, if at all.