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491. The United States in the New Asia

Author:
Robert A. Manning and Evan A. Feigenbaum
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
President Barack Obama heads to Singapore in November for the 2009 Asia-Pacific Economic Cooperation forum (APEC) summit. It will be his first foray into the arcane world of Asian multilateralism. And if his administration adopts a new approach, it could yet fashion a more sustainable role for the United States in a changing Asia.
Topic:
Development, Economics, Globalization, International Trade and Finance, and Bilateral Relations
Political Geography:
United States and Asia

492. Improving Resolution Options for Systemically Relevant Financial Institutions

Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
There are critical holes in the existing regulatory framework for handling large complex financial institutions that become impaired. First, regulators may not have the legal authority to do what is necessary to resolve a distressed institution's problems, including selling some divisions, closing or liquidating others, renegotiating or abrogating some contracts, and finding parties to manage what is left. Second, even if regulators have the necessary authority over part of the institution, they may not have authority over the whole firm. Holding companies, for example, often have subsidiaries that are incorporated in multiple countries and therefore governed by different legal codes. Third, regulators are unlikely to be aware of all the interconnections within the institution, and between the institution's various subsidiaries and other firms. This uncertainty makes it difficult for regulators to know the best way to restructure a financial institution or, indeed, whether restructuring is even feasible without enormous disruption.
Topic:
Economics, Markets, and Financial Crisis

493. An Agenda for NATO

Author:
Zbigniew Brzezinski
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
NATO's 60th anniversary, celebrated in April with pomp and circumstance by the leaders of nearly 30 allied states, generated little public interest. NATO's historical role was treated as a bore. In the opinion-shaping media, there were frequent derisive dismissals and even calls for the termination of the alliance as a dysfunctional geostrategic irrelevance. Russian spokespeople mocked it as a Cold War relic. Even France's decision to return to full participation in NATO's integrated military structures -- after more than 40 years of abstention -- aroused relatively little positive commentary. Yet France's actions spoke louder than words. A state with a proud sense of its universal vocation sensed something about NATO -- not the NATO of the Cold War but the NATO of the twenty-first century -- that made it rejoin the world's most important military alliance at a time of far-reaching changes in the world's security dynamics. France's action underlined NATO's vital political role as a regional alliance with growing global potential. In assessing NATO's evolving role, one has to take into account the historical fact that in the course of its 60 years the alliance has institutionalized three truly monumental transformations in world affairs: first, the end of the centuries-long "civil war" within the West for transoceanic and European supremacy; second, the United States' post-World War II commitment to the defense of Europe against Soviet domination (resulting from either a political upheaval or even World War III); and third, the peaceful termination of the Cold War, which ended the geopolitical division of Europe and created the preconditions for a larger democratic European Union. Even France's decision to return to full participation in NATO's integrated military structures -- after more than 40 years of abstention -- aroused relatively little positive commentary. Yet France's actions spoke louder than words. A state with a proud sense of its universal vocation sensed something about NATO -- not the NATO of the Cold War but the NATO of the twenty-first century -- that made it rejoin the world's most important military alliance at a time of far-reaching changes in the world's security dynamics. France's action underlined NATO's vital political role as a regional alliance with growing global potential. In assessing NATO's evolving role, one has to take into account the historical fact that in the course of its 60 years the alliance has institutionalized three truly monumental transformations in world affairs: first, the end of the centuries-long "civil war" within the West for transoceanic and European supremacy; second, the United States' post-World War II commitment to the defense of Europe against Soviet domination (resulting from either a political upheaval or even World War III); and third, the peaceful termination of the Cold War, which ended the geopolitical division of Europe and created the preconditions for a larger democratic European Union.
Topic:
NATO and Cold War
Political Geography:
Russia and France

494. The Default Power

Author:
Josef Joffe
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Every ten years, it is decline time in the United States. In the late 1950s, it was the Sputnik shock, followed by the "missile gap" trumpeted by John F. Kennedy in the 1960 presidential campaign. A decade later, Richard Nixon and Henry Kissinger sounded the dirge over bipolarity, predicting a world of five, rather than two, global powers. At the end of the 1970s, Jimmy Carter's "malaise" speech invoked "a crisis of confidence" that struck "at the very heart and soul and spirit of our national will." A decade later, academics such as the Yale historian Paul Kennedy predicted the ruin of the United States, driven by overextension abroad and profligacy at home. The United States was at risk of "imperial overstretch," Kennedy wrote in 1987, arguing that "the sum total of the United States' global interests and obligations is nowadays far larger than the country's power to defend them all simultaneously." But three years later, Washington dispatched 600,000 soldiers to fight the first Iraq war -- without reinstating the draft or raising taxes. The only price of "overstretch" turned out to be the mild recession of 1991. Declinism took a break in the 1990s. The United States was enjoying a nice run after the suicide of the Soviet Union, and Japan, the economic powerhouse of the 1980s, was stuck in its "lost decade" of stagnation and so no longer stirred U.S. paranoia with its takeover of national treasures such as Pebble Beach and Rockefeller Center. The United States had moved into the longest economic expansion in history, which, apart from eight down months in 2001, continued until 2008. "Gloom is the dominant mood in Japan these days," one Asian commentator reported in 1997, whereas "American capitalism is resurgent, confident and brash." That year, the New York Times columnist Thomas Friedman wrote that "the defining feature of world affairs" was "globalization" and that if "you had to design a country best suited to compete in such a world, [it would be] today's America." He concluded on a triumphant note: "Globalization is us."
Topic:
Globalization
Political Geography:
United States, Japan, and Washington

495. Low and Behold

Author:
Edward L. Morse
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
After dropping from close to $150 in the summer of 2008 to under $34 last winter, the price of oil had more than doubled by the spring and was hovering around $60 in July. It is unlikely to rise to last summer's peak anytime soon. To the contrary, there are good reasons to believe that lower prices are here to stay for a while. Last year's high prices and the recession have severely damped demand, and the growth of new production capacity, especially in Saudi Arabia, is buoying supplies. The rapid fall and then rebound in oil prices over the past year surprised many people. But it was not unusual: commodities markets are cyclical by nature and have a history punctuated by sudden turning points. Although this generally makes it difficult to forecast prices, it is safe to say that commodities markets will remain lower over the next few years than they have been over the past five. In the oil industry, the most important new factor that accounts for low prices is the return of surplus production capacity among the members of the Organization of the Petroleum Exporting Countries (OPEC) for the first time since 2002-3. Most oil industry analysts expect high prices to return soon, along with economic recovery. This is probably a mistaken view; more likely, the prices for oil and other commodities will be range-bound again. This would be a happy development, as it would provide unusual opportunities to tame the volatility in prices. An extended period of low prices could reverse the trend toward resource nationalism, the tendency of producing countries to concentrate control over their resources in the hands of state-run entities, that has characterized energy politics for most of the last decade. It would also translate into new chances for constructive diplomacy with oil producers and set the stage for more balanced relationships between energy producers and their buyers.
Topic:
Diplomacy
Political Geography:
Saudi Arabia

496. 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

497. The Death of Dayton

Author:
Patrice C. McMahon and Jon Western
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
After 14 years of intense international efforts to stabilize and rebuild Bosnia, the country now stands on the brink of collapse. For the first time since November 1995 -- when the Dayton accord ended three and a half years of bloody ethnic strife -- Bosnians are once again talking about the potential for war. Bosnia was once the poster child for international reconstruction efforts. It was routinely touted by U.S. and European leaders as proof that under the right conditions the international community could successfully rebuild conflict-ridden countries. The 1995 Dayton peace agreement divided Bosnia into two semi-independent entities: the Federation of Bosnia and Herzegovina, inhabited mainly by Bosnian Muslims and Bosnian Croats, and the Serb-dominated Republika Srpska (Serb Republic, or RS), each with its own government, controlling taxation, educational policy, and even foreign policy. Soon after the war's end, the country was flooded with attention and over $14 billion in international aid, making it a laboratory for what was arguably the most extensive and innovative democratization experiment in history. By the end of 1996, 17 different foreign governments, 18 UN agencies, 27 intergovernmental organizations, and about 200 nongovernmental organizations (NGOs) -- not to mention tens of thousands of troops from across the globe -- were involved in reconstruction efforts. On a per capita basis, the reconstruction of Bosnia -- with less than four million citizens -- made the post-World War II rebuilding of Germany and Japan look modest. As successful as Dayton was at ending the violence, it also sowed the seeds of instability by creating a decentralized political system that undermined the state's authority. In the past three years, ethnic nationalist rhetoric from leaders of the country's three constituent ethnic groups -- Muslims, Croats, and Serbs -- has intensified, bringing reform to a standstill. The economy has stalled, unemployment is over 27 percent, about 25 percent of the population lives in poverty, and Bosnia remains near the bottom of World Bank rankings for business development.
Topic:
Development
Political Geography:
Bosnia and Herzegovina

498. 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

499. 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

500. The Other Climate Changers

Author:
Jessica Seddon Wallack and Veerabhadran Ramanathan
Publication Date:
09-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
At last, world leaders have recognized that climate change is a threat. And to slow or reverse it, they are launching initiatives to reduce greenhouse gases, especially carbon dioxide, the gas responsible for about half of global warming to date. Significantly reducing emissions of carbon dioxide is essential, as they will likely become an even greater cause of global warming by the end of this century. But it is a daunting task: carbon dioxide remains in the atmosphere for centuries, and it is difficult to get governments to agree on reducing emissions because whereas the benefits of doing so are shared globally, the costs are borne by individual countries. As a result, no government is moving fast enough to offset the impact of past and present emissions. Even if current emissions were cut in half by 2050 -- one of the targets discussed at the 2008 UN Climate Change Conference -- by then, humans' total contribution to the level of carbon dioxide in the atmosphere would still have increased by a third since the beginning of this century. Meanwhile, little attention has been given to a low-risk, cost-effective, and high-reward option: reducing emissions of light-absorbing carbon particles (known as "black carbon") and of the gases that form ozone. Together, these pollutants' warming effect is around 40-70 percent of that of carbon dioxide. Limiting their presence in the atmosphere is an easier, cheaper, and more politically feasible proposition than the most popular proposals for slowing climate change -- and it would have a more immediate effect. Time is running out. Humans have already warmed the planet by more than 0.5 degrees Celsius since the nineteenth century and produced enough greenhouse gases to make it a total of 2.4 degrees Celsius warmer by the end of this century. If the levels of carbon dioxide and nitrous oxide in the atmosphere continue to increase at current rates and if the climate proves more sensitive to greenhouse gases than predicted, the earth's temperature could rise by as much as five degrees b+efore the century ends.
Topic:
Climate Change and United Nations