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271. The Dollar Dilemma

Author:
Barry Eichengreen
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Legions of pundits have argued that the dollar's status as an international currency has been damaged by the great credit crisis of 2007-9 -- and not a few have argued that the injury may prove fatal. The crisis certainly has not made the United States more attractive as a supplier of high-quality financial assets. It would be no surprise if the dysfunctionality of U.S. financial markets diminished the appetite of central banks for U.S. debt securities. A process of financial deglobalization has already begun, and it will mean less foreign financing for the United States' budget and balance-of-payments deficits. Meanwhile, the U.S. government will emit vast quantities of public debt for the foreseeable future. Together, these trends in supply and demand are a recipe for a significantly weaker dollar. And as central banks suffer capital losses on their outstanding dollar reserves, they will start considering alternatives. This is especially likely because these trends are superimposed on an ongoing shift toward a more multipolar world. The growing importance of emerging markets has sharply reduced the United States' economic dominance, weakening the logic for why the dollar should constitute the largest part of central-bank reserves and be used to settle trade and financial transactions. As emerging markets grow, they naturally accumulate foreign reserves as a form of self-insurance. Central banks need the funds to intervene in the foreign exchange market so that they can prevent shocks to trade and financial flows from causing uncomfortable currency fluctuations. This capacity becomes more important as previously closed economies open up and when international markets are volatile, as has been the case recently. It is only logical, in other words, for emerging markets to accumulate reserves.
Topic:
Financial Crisis
Political Geography:
United States

272. Without Conditions

Author:
Deepak Malhotra
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Diplomacy appears ready to make a comeback. The United States, after years of reluctance, is reconsidering the role of negotiation in confronting extremism and managing international conflict. India has resisted an aggressive response to the 2008 terrorist attacks in Mumbai and is open to diplomatic engagement with Pakistan over Kashmir. Participants in the six-party talks have been scrambling to decide whether, when, and how to engage North Korea since its nuclear test of May 2009. The generals in Afghanistan are busier today than they have been in recent years, but so are the diplomats. Certainly, not everyone has rushed to the bargaining table -- witness, for example, the military defeat of the Tamil Tigers in Sri Lanka. But governments around the world are asking themselves the same important question: When should they negotiate with their enemies? Determining the precise conditions for such talks is never easy. In the shadow of terrorism, the calculus is all the more complex. Not only can acts of belligerence or extremist violence strain or derail ongoing negotiations, but the persistence of violence is often the primary reason governments refuse to negotiate in the first place. This has long been the case in Israel, for example, where successive governments, especially those led by the conservative Likud Party, have refused to negotiate with Palestinian leaders until they bring the violence to a halt. The same dynamics influenced the peace process in Northern Ireland in the years leading up to the 1998 Good Friday Agreement. North Korea's recent provocations have elicited a similar response from hard-liners in Japan, South Korea, and the United States. The ability of extremists to derail negotiations through violence and belligerence presents policymakers with a high-stakes dilemma: Should the muzzling of extremism be set as a precondition to negotiations, or should negotiations be initiated in order to reduce support for extremism? Similar considerations have plagued peace efforts around the world, from Colombia, where the government has struggled for decades to determine when it should demand a cease-fire from FARC (the Revolutionary Armed Forces of Colombia), to Kashmir, where using violence to derail prospective talks has become a predictable tactic. In Afghanistan, Iraq, and Pakistan, surges in extremist violence are threatening to further destabilize already-weak governments.
Topic:
Diplomacy
Political Geography:
Pakistan, United States, Kashmir, and Mumbai

273. Copenhagen's Inconvenient Truth

Author:
Michael Levi
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
This December, diplomats from nearly 200 countries will gather in Copenhagen to negotiate a successor to the 1997 Kyoto Protocol, which for the first time bound wealthy countries to specific cuts in greenhouse gas emissions. Most of these emissions come from burning fossil fuels -- coal, oil, and natural gas -- for energy, from deforestation, and from the agricultural sector. They must be cut deeply in the coming decades if the world is to control the risks of dangerous climate change. Most of those devoted to slashing the world's greenhouse gas emissions have placed enormous weight on the Copenhagen conference. Speaking earlier this year about the conference, UN Secretary-General Ban Ki-moon was emphatic: "We must harness the necessary political will to seal the deal on an ambitious new climate agreement in December here in Copenhagen. . . . If we get it wrong we face catastrophic damage to people, to the planet." Hopes are higher than ever for a breakthrough climate deal. For the past eight years, many argued that developing nations reluctant to commit to a new global climate-change deal -- particularly China and India -- were simply hiding behind the United States, whose enthusiastic engagement was all that was needed for a breakthrough. Now the long-awaited shift in U.S. policy has arrived. The Obama administration is taking ambitious steps to limit carbon dioxide emissions at home, and Congress is considering important cap-and-trade and clean-energy legislation. The road to a global treaty that contains the climate problem now appears to be clear. But it is not so simple. The odds of signing a comprehensive treaty in December are vanishingly small. And even reaching such a deal the following year would be an extraordinary challenge, given the domestic political constraints in Washington and in other capitals that make such an agreement difficult to negotiate and ratify. The many government officials and activists seeking to solve the climate problem therefore need to fundamentally rethink their strategy and expectations for the Copenhagen conference.
Topic:
Government
Political Geography:
United States and Washington

274. The Unbalanced Triangle

Author:
Stephen Kotkin
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The Chinese-Russian relationship is more opportunistic than strategic, Bobo Lo argues. The United States is stuck watching from the sidelines and may be pushing Moscow further into Beijing's pocket.
Political Geography:
Russia, United States, China, Beijing, and Moscow

275. Securing the Information Highway

Author:
Wesley K. Clark and Peter L. Levin
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Cyberwarfare is not an abstract future threat. The United States' electronic defenses are vulnerable and Washington must act quickly to secure computer networks, software, and hardware before it is too late.
Topic:
Security
Political Geography:
United States and Washington

276. Losing Controls

Author:
Mitchel B. Wallerstein
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Since the early days of the Cold War, the United States has restricted the export of certain advanced technologies and the sharing of sensitive scientific and technical information with foreign nationals. Initially, these restrictions were justified on the grounds that the Soviet Union and its Warsaw Pact allies were engaged -- through fronts, third parties, and outright espionage -- in a systematic effort to buy or steal information, technology, and equipment developed in the West that they could then use in their own military systems. Because Soviet industry could not design or produce certain high-tech products, such as personal computers or sophisticated machine tools, the Soviets were forced to obtain them by other means. By successfully denying technology to the Soviet Union, the United States enabled NATO to maintain a strategic and tactical advantage without having to match the Warsaw Pact nations' troop strength in the field. Yet 20 years after the fall of the Berlin Wall and long after the Soviet Union ceased to exist, the same system of export controls remains in place. It has only become more arcane and ineffective with time. U.S. export controls have survived largely because of outdated "fortress America" thinking -- the view that the United States is the primary source of most militarily useful scientific ideas and products and that it can continue to deny technology to potential adversaries without seriously damaging the global competitiveness of U.S. companies or, in the end, jeopardizing national security. In an earlier era, when the United States was far more economically and technologically dominant, the costs associated with a technology-denial strategy were easier to absorb. But in today's highly competitive world, the business lost due to export controls poses a threat to the well-being of key U.S. industries; estimated losses range as high as $9 billion per year.
Topic:
NATO and Cold War
Political Geography:
United States, America, and Soviet Union

277. Intervention to Stop Genocide and Mass Atrocities: International Norms and U.S. Policy

Author:
Matthew C. Waxman
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The collective international failure to stop genocidal violence and result - ing humanitarian catastrophe in Sudan prompts the familiar question of whether the United States or, more broadly, the international community has the political will and capabilities necessary to deter or stop mass atrocities. It is well understood that mobilizing domestic and international political support as well as leveraging diplomatic, economic, and maybe even military tools are necessary to stop mass atrocities, though they may not always be enough. Other studies have focused, therefore, on what steps the United States and its international partners could take to build capabilities of the sort needed to prevent, stop, and remedy these crimes. This report approaches the problem from a different angle and asks whether the current international legal regime with regard to the use of military force—that is, international law regulating the resort to armed intervention—is appropriate and effective in deterring and stopping mass atrocities.
Topic:
Foreign Policy, Genocide, and Humanitarian Aid
Political Geography:
United States and Sudan

278. Enhancing U.S. Preventive Action

Author:
Paul B. Stares and Micah Zenko
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Since taking office, the Obama administration has repeatedly affirmed its intent to prevent potential future international crises from becoming the source of costly new U.S. military commitments. In one of the earliest foreign policy pronouncements of the new administration, Vice President Joseph R. Biden declared: “We'll strive to act preventively, not preemptively, to avoid whenever possible or wherever possible the choice of last resort between the risks of war and the dangers of inaction. We'll draw upon all the elements of our power—military and diplomatic; intelligence and law enforcement; economic and cultural—to stop crises from occurring before they are in front of us.” Not long afterward, General James L. Jones, in his first speech as national security adviser, echoed much the same objective: “We need to be able to anticipate the kind of operations that we should be thinking about six months to a year ahead of time in different parts of the world to bring the necessary elements of national and international power to bear to prevent future Iraqs and future Afghanistans.” And in a major speech to the Veterans of Foreign Wars in August 2009, President Barack Obama also declared that “one of the best ways to lead our troops wisely is to prevent the conflicts that cost American blood and treasure tomorrow.
Topic:
Conflict Prevention and Foreign Policy
Political Geography:
Afghanistan, United States, and Iraq

279. The Dollar and the Deficits

Author:
C. Fred Bergsten
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
Topic:
Economics and Monetary Policy
Political Geography:
United States

280. The Nukes We Need

Author:
Keir A. Lieber and Daryl G. Press
Publication Date:
11-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The Obama administration is right that the United States can safely cut some of its nuclear arsenal, but it must retain the right capabilities. Otherwise, the United States' adversaries might conclude -- perhaps correctly -- that Washington's nuclear strategy rests largely on a bluff.
Topic:
Cold War
Political Geography:
United States and Europe