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Entries in China (496)

6:01AM

Time's Battleland: If issued, Libyan ICC arrest warrants would continue "perfect" Africa record for court

After many weeks of speculation and veiled threats-by-extension from Western government leaders, the prosecutor of the International Criminal Court announced on Monday that he is seeking arrest warrants for Muammar Qaddafi, his son Seif al-Islam Qaddafi and his brother-in-law Abdullah al-Sanousi for systematically targeting citizens in Libya's ongoing protests and civil strife. Libya isn't a signatory to the ICC treaty, and prosecutor Luis Moreno-Ocampo declared that the Libyan people should take it upon themselves to make the arrests, if warrants are granted. Moreno-Ocampo said he had enough evidence to go to trial immediately, just another sign that the Qaddafi clan has crossed a line that disallows their staying in power - as far as the West is concerned.

Read the entire post at Time's Battleland.

11:09AM

WPR's The New Rules: Four Options for Redefining the Long War

There is a profound sense of completion to be found in America's elimination of Osama bin Laden, and the circumstances surrounding his death certainly fit this frontier nation's historical habit of mounting major military operations to capture or kill super-empowered bad actors. Operation Geronimo, like most notable U.S. overseas interventions of the past quarter-century, boiled down to eliminating the one man we absolutely felt we needed to get to declare victory. Now we have the opportunity to redefine this "long war" to America's most immediate advantage. I spot four basic options, each with their own attractions and distractions.

Read the entire column at World Politics Review.

12:01AM

Just how scared Beijing is becoming over inflation

FT story on the big fine the Chinese gov levied on consumer products company Unilever for publicly announcing that it planned to lift prices.  Apparently some consumers rushed into stores and bought up stuff in anticipation of the price hike, spooking the authorities.  So they slapped a $300,000 fine on the company.

FT:  "The move by the National Development and Reform Commission, China's economic planning agency, will heighten concern among foreign and domestic companies that they may not be able to pass rising costs on to consumers."

Nervous in government service.

11:24AM

Time's Battleland: "Pakistan: indispensable to US security?"

I am amazed at how quickly the Obama administration is going out of its way to assure everyone that we're sticking with Pakistan for the long haul no matter what. No discussion and little explanation, it's just assumed that Pakistan becomes the new indispensable partner that anchors US national security, even as every day reveals some new aspect where we clearly don't trust the government, military or secret police whatsoever.

Read the entire post at Time's Battleland blog.

7:00AM

Time's Battleland: "Counter-terrorism beats nation-building? Are we going to bury COIN all over again?"

My old classmate Fareed Zakaria recently made the argument that counterterrorism beats nation-building when it comes to winning the war on terror. Taking Osama Bin Laden's killing as a point of American pride, he says that sort of military/intelligence operation is what we're good at, and so we should stick with it versus pursue the larger counterinsurgency (COIN) effort that General David Petraeus has now led in both Iraq and Afghanistan. This is a broad point to be making off the Bin Laden operation, especially as Petraeus heads to CIA. While I may agree with Fareed WRT Af-Pak, let me express a larger concern.


Read the entire post at Time's Battleland.

1:00AM

The Chinese in Africa: welcome is wearing off

Nice Economist piece on the Chinese in Africa.  Echoes of the "ugly American":

Once feted as saviours in much of Africa, Chinese have come to be viewed with mixed feelings—especially in smaller countries where China’s weight is felt all the more. To blame, in part, are poor business practices imported alongside goods and services. Chinese construction work can be slapdash and buildings erected by mainland firms have on occasion fallen apart. A hospital in Luanda, the capital of Angola, was opened with great fanfare but cracks appeared in the walls within a few months and it soon closed. The Chinese-built road from Lusaka, Zambia’s capital, to Chirundu, 130km (81 miles) to the south-east, was quickly swept away by rains.

Business, Chinese style

Chinese expatriates in Africa come from a rough-and-tumble, anything-goes business culture that cares little about rules and regulations. Local sensitivities are routinely ignored at home, and so abroad. 

But here's the essential dynamic to take into account when making snap judgments:

 In the South African town of Newcastle, Chinese-run textile factories pay salaries of about $200 per month, much more than they would pay in China but less than the local minimum wage. Unions have tried to shut the factories down. The Chinese owners ignore the unions or pretend to speak no English.

They point out that many South African firms also undercut the minimum wage, which is too high to make production pay. Without the Chinese, unemployment in Newcastle would be even higher than the current 60%. Workers say a poorly paid job is better than none. Some of them recently stopped police closing their factory after a union won an injunction.

Good piece that explores a variety of theories as to why the Chinese are wearing out their welcome despite the money flow.

My sense:  The Chinese, like anybody else, try to see what they can get away with.  If Africa wants better from China, it needs to demand it but likewise provide it.  This is a once-in-a-lifetime opportunity for the continent, which can shape it for the better or squander it like other opportunities in the past that - in many ways - were far less kind.

1:05PM

WPR's The New Rules: For U.S., Abandoning the Middle East not a Solution

America's successful assassination of Osama bin Laden, long overdue, naturally renews talk across the country about ending the nation's military involvement in Afghanistan-Pakistan. Coupled with the ongoing tumult unleashed by the Arab Spring, Washington is once again being encouraged to reconsider its strategic relationship with the troubled Middle East. The underlying current to this debate has always been the widely held perception that America's "oil addiction" tethers it to the unstable region. Achieve "energy independence," we are told, and America would free itself of this terrible burden.

Read the entire column at World Politics Review.

10:52AM

Time's Battleland: "A provocative vision of a post-supercarrier US Navy"

The notion of doing away with traditional big-deck carriers gets a high-profile boost this month in the latest (May) issue of Proceedings, the U.S. Naval Institute's official rabble-rouser. It's written by a friend and colleague, Capt. Henry (Jerry) Hendrix, along with a retired Marine Lt. Col., Noel Williams. Hendrix, a truly innovative thinker, currently works for the legendary Andy Marshall at the Pentagon's Office of Net Assessment - a great match. The piece notes the rising capabilities of the Chinese navy and its efforts to keep us - and our carriers - as far from their shores as possible. 

Read the entire post at Time's Battleland.

A reworking of my post yesterday about the carrier piece in Proceedings, meaning this was the pilot post I worked out with Thompson at Time.  After this shakedown cruise, I'll do the post up first for Battleland and then link from here, like I do with Esquire's The Politics Blog.

11:28AM

Latin America turning to East, but not exactly in China's pocket yet.

The FT has a curious headline on this piece, which kicks off a special section on "new trade routes" for Latin America.  It says, "China is now region's biggest partner."

A region once known for instability has sailed through the global financial crisis. Poverty is falling, the middle classes booming, and asset markets bubbling.

This is due to a spectacular expansion of commodity-based trade. Over the past decade, fast-growing emerging countries, be they in Asia, India or Africa, have shown a near insatiable demand for the commodities that Latin America has in such abundance, whether Argentine soya, Brazilian iron ore, Chilean copper or Peruvian gold.

The change has been rapid: in 1999, trade betwen Latin America and China was a mere $8bn. By 2009, according to UN figures, it had grown 16 times to $130bn. By comparison, bilateral trade with the US rose by just a half over the same period.

Less well appreciated is how intra-Latin American trade has grown over the same period. During the colonial years, neighbouring countries were more likely to trade with Europe than each other. Now, growing business and infrastructure links are bridging Latin America’s huge geographical obstacles – its vast forests and giant mountain ranges – knitting the region’s economies together.

If anything, the pace of change has increased since the global financial crisis. Developed markets remain mired in sluggish growth and high debt. Meanwhile, emerging economies are surging ahead; they now account for three-quarters of global economic growth, according to the Inter-American Development Bank (IADB).

The rising middle classes of the emerging world are behind this shift. They aspire to own the same homes and cars, and eat the same foods, as their peers in the developed world. As a result, their economies have a higher propensity to consume the commodities that Latin America produces.

Most dynamic new partner, yes, but the same piece later states that US trade with the region was $486B in 2009, or "almost four times China's total." If US trade grew by half over the last decade, then it grew in the range of about $150B, or more than China's entire amount.

Piece also says that 90% of the FDI flowing into the region's two biggest economies, Mexico and Brazil, come from OECD or Old Core economies.

Would seem that an editor got excited.

1:27PM

Quote of the day: China's "new" carrier

FT story on Chinese navy trotting out used Ukrainian carrier that it is using to train its personnel for the ultimately home-built carrier it should possess near the end of the decade.  China also practiced outfitting a carrier here because it bought the hull from Ukraine in 1998 unfinished (meaning they've been at it 12 years on some level).

Carrier is named Shi Lang, for a 17th century admiral who conquered Taiwan - get it?

The quote from a non-Chinese naval officer:

Owning a carrier is one thing, operating one, or even a carrier strike group, is something completely different.

By the time China can operate a carrier strike group, the US should have left that field and moved onto something far more flexible, fungible and unmanned in execution.

Or we can hang around the 20th century while China plays catch-up.

1:07PM

A grain of salt please on the Assassin's Mace

Nice reporting by Paul Roberts at ThreatPost (Kaspersky Lab Security News Service, HT to Dave Emery) of some analysis of China's own cybersecurity amidst all this talk in Washington that the PLA is readying its killer opening "Assassin's Mace" blow in any fight over Taiwan or thereabouts.  It opens nicely:

The official line in Washington D.C. is that there's a new Cold War brewing, with an ascendant China in the place of the old Soviet Union, and cyberspace as the new theater of war. But work done by an independent security researcher suggests that the Chinese government is woefully unprepared to fend off cyber attacks on its own infrastructure.

The gist that follows:

For the last 18 months, Dillon Beresford, a security researcher with testing firm NSS Labs and divorced father of one, has spent up to seven hours a day of his spare time crawling the networks of China's state and provincial governments, as well as stealthier networks belonging to the PLA and the country's top universities. Armed with free tools like Metasploit and Netcat, as well as Google Translate, he's pulled back the curtains on the state of cyber security in China. What he's discovered may come as a surprise to many U.S. policymakers and Pentagon officials. 

Dillon BeresfordContrary to the image of China as a nearly invincible cyber powerhouse, Beresford says in an interview with Threatpost Editor Paul Roberts, that the fast-growing nation suffers from woeful cyber security practices at home that leave, literally, thousands of networks and databases vulnerable to even trivial, remote attacks. Beresford, whopublicized holes in domestic Chinese SCADA systems in September, 2010, said the country's aggressive cyber offense abroad, he said, is in stark contrast to an almost total lack of basic cyber defense at home that has left both classified and unclassified government networks vulnerable to attack and compromise. 

Great post (really an interview with Beresford) and worth reading in full.

I have had some very smart people in DC warn me ominously about all of China's continuing military advances and I'm buying almost none of it.  I see them putting up a Potemkin village of a defense designed, as Beresford suggests, to hide great weaknesses.  It is a lot of wasted effort because the US has no intention of doing anything other than to scare China (deterrence), which makes China's showy counter-efforts to do the same all the more pointless.

As if there's nothing else to be done in this world that the planet's two biggest and highly interdependent economies insist on pursuing this asinine sideshow!

This is business as usual in the PNT, which hopefully Panetta disciplines better than Gates did.  On the Chinese side, it's poorly supervised generals with too much money on their hands.  The fiscal pain will solve the issue on our side, and the right crisis will inevitably reveal China's misaligned military - as in, not appropriate to their actual emerging global security needs.  They remain in fighting-the-last-war mode - a good indication of their complete lack of recent operations that matter whatsoever (thus no learning).  Let them field their carrier design alongside their new carrier-killer missile and think themselves so clever.  I find most of it pathetically unimaginative and unbefitting their rise.  They desperately need better military leadership on top.

12:01AM

Nestle gets in on the feast

FT story on a "bolt-on deal" for Nestle:

Nestlé underlined its determination to expand in fast-growing emerging markets with the acquisition of a majority stake in one of China’s best-known regional foods groups.

Nestlé said the deal to buy 60 per cent of family-owned Yinlu Foods Group would spearhead its push into products geared to local tastes. Yinlu, which has had a long association with Nestlé as a co-manufacturer of ready-to-drink Nescafé instant coffee, makes ready-to-drink peanut milk and ready-to-eat canned rice porridge.

No price for Yinlu, which is based in China’s south-east Fujian province, was revealed. Analysts’ estimates for the value of the stake in Yinlu, which has annual sales of about SFr750m ($835m), ranged between SFr540m and SFr1bn.

The deal will deepen Nestlé’s penetration in China, where the Swiss group is already known for its international Nescafé, Maggi and Kit Kat brands, as well as some products sold only domestically.

Paul Bulcke, Nestlé’s chief executive, said the deal “demonstrates our long-term investment in China and our commitment to further developing local brands.”

Analysts said the transaction was another example of multinationals keen to grow in China trying to make or acquire products to suit local consumer tastes.

Nestle is an interesting company, what with the move into pharmanutricals (pharma inserted into foods to make therapy and eating one--sounds weird but it has huge applications in developing regions where nutrients are hard to get, as are drugs) and its aggressive push onto the table of the emerging global middle class.

Nestle has been in China for 20 years and employs 14,000 workers there in 23 factories, but it still feels the need to make buys like this to take full advantage of the growth of the middle class, which likes to eat better, use more electrical appliances, drive cars - for the first time, etc.

I always like to keep an eye on these guys.They think ahead nicely, which is why Nestle is the world's biggest food company. Started in 1867 by Henri Nestle in Switzerland. He makes the first milk food for a baby and uses it to save his neighbor's child. Nestle is also one of the most boycotted companies in the world. Why? Food is a very touchy subject - as are babies.

9:05AM

Being the global demand center has its perks

FT story on how "China influence on design growing fast."

Fundamental tenant of my vision since the late 1990s:  when the global demand center shifts in an industry, everything changes for that industry.  Now, it's Chinese tastes and desires that shape design, not so much the American consumer.   Yes, some customization by market, but the underlying dynamics shift.

At the Shanghai car show that opens today, General Motors and PSA Peugeot Citroën will both launch global models for the first time in China, a symbol of how the car industry’s centre of gravity continues to shift to the mainland, the largest car market.

But it is not just about launching the new-generation Chevrolet Malibu or Citroën DS-5 first in China, to attract more Chinese buyers.

The shift goes both ways.

When GM on Monday unveiled its Buick Envision SUV concept car, it revealed a car designed in China, for the world.

Chinese tastes are increasingly influencing the design of cars driven not just in China, but around the world.

China is having the greatest influence on luxury cars.

Demand for premium cars is soaring in China, making it crucial for luxury carmakers to satisfy them first.

When Mercedes-Benz set out to design a new S-Class luxury saloon, to hit showrooms in 2014, Daimler flew 100 Chinese consumers to customer clinics in Germany and the US to ensure they had input in the car’s design.

But the Chinese car boom is shaping the look of some mass-market cars too.

When General Motors designed its LaCrosse saloon, the brand, which is popular in China, devised a roomy and plush rear seat of the kind that Chinese owners – many of whom have chauffeurs – prefer.


“It’s a natural extension of the size and importance of the China market,” Kevin Wale, head of GM in China, says.

Ed Welburn, GM head of global design, says: “The trends here in China are having an influence on the design of our brands, but it is not a case of China dictating what cars are driven in Detroit.

“The influence is more subtle.”

Mr Welburn says one of the reasons Buick has become so successful in China – where owning a Buick is a status symbol – is that its fluid lines are more oriental in feel than the angular shapes of some other global auto models.

“China connected with Buick in a very positive way because . . . Buicks have a lot of flow in their design and Chinese artwork and calligraphy have a lot of flow,” he says.

“I’ve encouraged the design team here to . . . continue to play that up, and they have used that aesthetic in every detail [of the Envision SUV concept car], to give the same kind of feeling you get with a jade sculpture.”

Mike Dunne of Dunne & Co, an Asian motor industry consultancy, says: “Five years ago, no one would have imagined that China would have surpassed the US as the largest market.

“But now it’s natural that these cars are being developed for Chinese customers and sold globally.

This is such an amazing change in just a decade, but it signals globalization's immense power.  It is evidence such as this that always makes me laugh when people posit globalization's retreat because of this or that policy in the West, or the dividing up of the internet, etc.  There are some profound forces at work here and they mostly have to do with greed for a better life.  It's a demand function - not a supply one.

8:55AM

WPR's The New Rules: Long-Term U.S. Presence in Afghanistan a Mistake

The Obama administration has begun talks with Afghanistan designed to quell the Karzai government's fears about being abandoned by the West come 2014. Those talks are said to involve negotiations for long-term basing of U.S. troops involved in training Afghan security forces and supporting future counterterrorism operations. This can be seen as a realistic course of action, given our continuing lack of success in nation-building there, as well as our inability -- although perhaps unwillingness is a better term -- to erect some regional security architecture that might replace our presence. But there are good reasons to question this course.

Read the entire column at World Politics Review.

11:17AM

State capitalism's real weakness: an inability to control the economy

Interesting piece in the WSJ on China's inability to control inflation, which is really taking off.  Food, for example, is 10% higher than this time last year (which is nothing compared to gas in the US).

Basics of the piece notes that China's Central Bank must kowtow to the Party's wishes, and the Party tends to be captive to the interests of the exporters and "free-spending local governments," both of whom feel they've got their marching orders too regarding growth.

So you basically have China's Bernanke going around begging for help and not really participating in the top decision-making meetings, most of which occur in the ten-person State Council headed by Premier Wen or the nine-person Politburo Standing Committee headed by GenSec Hu.  While the PBOC (People's Bank of China) would prefer to push harder on inflation, the party and government fear triggering a downturn.  Two different views, of course, point being that the political overwhelms the economic logic - the main point of Ian Bremmer's book, "End of the Free Market."

Watching a political system refuse to deal with economic reality doesn't exactly mark China's state capitalism as superior - just differently incentivized.  We don't have the same fears of social unrest over economics here that they do.

This is fundamentally why China is a lot farther away from creating an international reserve currency than imagined.  To have one is to send more capital abroad than you take in (giving others to hold in reserve) and China will simply have a devil of a time reorienting from their Japan-plus growth model of publicly-enabled investment and export-driven growth, in large part for the same dynamics cited here:  the Party and Government are too influenced by industrial concerns.

The beautiful irony here persists:  China is more the Marxist ideal of capitalism run amok than America is today - by a ways.  It's also far more indicative of industrialists/financiers having taken over the government, in that Marxian fear, than America is today as well.  Again, you have to go back to the late 19th-century US history to find similarities that hold true.

Larger point:  state capitalism remains - at best - an evolutionary precursor to our mix of big firms/small firms (see Baumol Et. al, "Good Capitalism, Bad Capitalism"). 

8:13AM

WSJ: "The Chinese want our nuts." Roast 'em if you got 'em!

Sometimes China feels like a nut (2009), sometimes it doesn't (2005).  But when it does and that nut is the pecan, then an entire US industry changes - overnight.

Pecans are very American, the WSJ piece begins, as the pecan is the state nut of Arkansas, Alabama and Texas. Since forever, the price of pecans has followed the usual ag pattern of boom-and-bust. That all changed a few years back when the Chinese and their burgeoning middle class entered the picture.

Why do the Chinese get so turned on to pecans?  Advertising. Retired Chinese woman:  "We used to eat only walnuts, and then we saw on TV that pecans are more nutritious than walnuts." 

And an industry is reshaped.

The underlying dynamic that will increasingly knit the two nations together:

Nearly $1 of every $5 China spent on U.S. items last year went to buy food of some sort, $16.6 billion worth, according to the U.S. Department of Commerce. U.S. exports of goods of all sorts to China more than doubled between 2005 and 2010. Exports of crops and processed foods—soybeans, dairy, rice, fruit juice—more than tripled. Exports of pecans rose more than 20-fold.

Naturally, fears arose in the industry - or at least among its middlemen.  Check this out:

American shellers complained that selling so many premium pecans to China—the Chinese want the biggest, best nuts—would undermine both the domestic market and export markets in Europe. So they held back orders. China responded by going directly to growers. As Texas A&M pecan expert Jose Pena puts it: "It's kind of hard to tell a grower not to sell to the highest bidder."

There is a larger lesson in there:  US could use a new partner but prefers the seemingly safe "known known" of Europe.  Then China comes along and upsets the dynamics, but still the industry's insiders say, we must stick with what we know.  China goes directly to suppliers, and this is a bit threatening, but who can argue with sales?

Same is true for a lot of what America seeks to do in the Gap/developing world.  We assume our only allies are our old allies.  China shows up and creates all this positive change, but we find it upsetting and have a hard time interacting with them on the subject, preferring our known knowns from Europe. But the path ahead is clear enough:  the market has shifted and we've got some new friends - if we choose to get past the fear and recognize them as such.

This has been my underlying logic going back to "Blueprint for Action" (2005, but started briefing in late 2003). "Implausible!" and even "impossible" in the pol-mil realm, because we prefer the enemy image (AirSea Battle Concept), but the solution for our having too few resources to throw against too many fake states undergoing remapping in the Gap is clear enough: you ally yourself with the great demand producer in the system right now.

10:06AM

WPR's The New Rules: Strategic Balancing vs. Global Development

The World Bank's 2011 World Development Report is out, and this year's version highlights the interplay between "conflict, security, and development." That's a welcome theme to someone who's spent the last decade describing how globalization's spreading connectivity and rules have rendered certain regions stable, while their absence has condemned others to perpetual strife. But although the growing international awareness of these crosscutting issues is long overdue, the report ultimately disappoints by focusing only on the available tools with which great powers might collaborate on these stubborn problems, while ignoring the motivations that prevent them from doing so. 

Read the entire column at World Politics Review.

11:10AM

Quoted in Time magazine article on US defense budget

Very sharp article by Mark Thompson.

The opening:

On a damp, gray morning in late February, Navy admirals, U.S. Congress members and top officials of the nation's biggest shipyard gathered in Norfolk, Va., to watch a computerized torch carve bevels into a slab of steel as thick as your fist.

The occasion: the ceremonial cutting of the first piece of a $15 billion aircraft carrier slated to weigh anchor in 2020. That ship — still unnamed — will follow the just-as-costly Gerald R. Ford, now 20% built and due to set sail in 2015.

Meanwhile, on the other side of the world, China is putting the final touches on a new class of DF-21 missiles expressly designed to sink the Ford and its sister ship as well as their 5,000-person crews. China's missiles, which will likely cost about $10 million each, could keep the Navy's carriers so far away from Taiwan that the short-range aircraft they bear would be useless in any conflict over the tiny island's fate.

Aircraft carriers, born in the years before World War II, are increasingly obsolete platforms of war. They feature expensive manned aircraft in an age when budgets are being squeezed and less expensive drones are taking over. While the U.S. and its allies flew hundreds of attack missions against targets in coastal Libya last month, cruise missiles delivered much of the punch, and U.S. carriers were notable only for their absence. Yet the Navy, backed by the Pentagon and Congress, continues to churn them out as if it were still 1942.

"It's just tradition, the industrial base and some other old and musty arguments" that keep the shipyards building them, says Thomas Barnett, a former Pentagon deep thinker and now chief strategist at Wikistrat, a geopolitical-analysis firm. "We should scale back our carrier design to something much cheaper and simpler. Think of mother ships launching waves of cheap drones — that would actually be more frightening and intimidating." Even Defense Secretary Robert Gates warned last year of "the growing antiship capabilities of adversaries" before asking what in Navy circles had long been the unaskable question. "Do we really need 11 carrier strike groups for another 30 years when no other country has more than one?"

Across Washington, all sorts of people are starting to ask the unthinkable questions about long-sacred military budgets . . .

Our conversation was mostly about carriers.  I'm not the great hardware man, but I know enough that we're continuing to buy in the very-few-and-ridiculously-expensive mode rather than the many-and-the-cheap mode that's clearly emerging in cutting-edge technologies.  I know also that we're deeply impressed with China's efforts to catch-up on that same track, which, of course, is truly meaningful if you believe major conventional war with China is in the offing.  I do not, and so I find that spending on both sides to be largely a waste, less so for us because we seek to keep high the threshold to great-power war and that's a good thing. Problem is, we teach China the same path and now we're increasingly locked into this idiotic arms race that serves neither of our actual national security interests and actually denies us the cooperation that would enable both to accomplish more in the global security arena at less cost.

But why save money - and the world, when we can waste it in large amounts?  We're stuck in our QWERTY pathway because it's what we know and love, and it's what our Congress loves to buy.  And so China follows us stupidly down that rabbit hole, and we both dream of future missile wars over no-man's lands, while the reality of globalization's rapid expansion stares us in the face in Africa and the Middle East and we're largely irrelevant to the process because we continue to buy billion-dollar platforms to tackle $100 enemies.

This is my favorite part of the piece, worth getting into the blog for later use:

We are spending more on the military than we did during the Cold War, when U.S. and NATO troops stared across Germany's Fulda Gap at a real super-power foe with real tanks and thousands of nuclear weapons aimed at U.S. cities. In fact, the U.S. spends about as much on its military as the rest of the world combined.

And yet we feel less secure. We've waged war nonstop for nearly a decade in Afghanistan — at a cost of nearly a half-trillion dollars — against a foe with no army, no navy and no air force. Back home, we are more hunkered down and buttoned up than ever as political figures (and eager defense contractors) have sounded a theme of constant vigilance against terrorists who have successfully struck only once. Partly as a consequence, we are an increasingly muscle-bound nation: we send $1 billion destroyers, with crews of 300 each, to handle five Somali pirates in a fiberglass skiff.

While the U.S.'s military spending has jumped from $1,500 per capita in 1998 to $2,700 in 2008, its NATO allies have been spending $500 per person over the same span. As long as the U.S. is overspending on its defense, it lets its allies skimp on theirs and instead pour the savings into infrastructure, education and health care. So even as U.S. taxpayers fret about their health care costs, their tax dollars are paying for a military that is subsidizing the health care of their European allies.

Not only is our government becoming an insurance company with an army (some DC wag's great line), but we're enabling others to do the same while they cut down their own army.

And yes, China is headed on the same path.  It dreams of a moment in the sun, but it will be cruelly brief and then the realities of accelerated aging and global security vulnerabilities sets in, and then all this arms build-up over Taiwan and the island chains will seem like so much nonsense.  But, most definitely, the PLA has a few good years of stupid, uncontrolled spending ahead of them, and it will act like any bureaucracy in that mode:  it will waste money catching up somewhat to America's Leviathan force, and when it gets close enough to matter, Beijing will realize it was all a colossal waste of time and money that bought them nothing, because they will never pull that trigger, and even giving the impression that they will triggers a counter-balancing across the region that America is only too happy to provide in terms of arms sales.

Pointless, pointless, pointless.

Meanwhile, globalization moves on, creating the real global security landscape out there.

I say, thank God our budget mess arrived earlier than theirs, because it will force the logical change earlier than theirs.  We will be renewed; they will drop off a demographic cliff - and globalization will move on.

Mentioned in the piece one more time:

But $1 trillion in cuts wouldn't really be as drastic as it sounds — or as the military's no-surrender defenders insist. Such a trim would still leave the Pentagon fatter than it was before 9/11. Besides, there are vast depots of weapons that are ready for the surplus pile. The number of aircraft carriers could be cut from 11 to eight, and perhaps all could be scuttled in favor of Barnett's drone carriers. The annual purchase of two $3 billion attack submarines to maintain a 48-sub fleet as far as the periscope can see also could be scaled back. The $383 billion F-35 program really isn't required when U.S. warplanes remain the world's best and can be retooled with new engines and electronics to keep them that way. Reagan-era missile defenses and the nuclear arsenal are largely Cold War relics with little relevance today. Altogether, Congress could save close to $500 billion by smartly scaling back procurement over the next decade.

It's a bold and intelligent argument from Thompson, and I really think this is one of the best pieces of his that I've ever read.  It comes very close to opinion journalism - but at its best.  These are fair questions, and he poses them well.

Plus, I just like the phrase, "Barnett's drone carriers."

12:02AM

WPR's The New Rules: U.S. Global Role Depends on Hard Fiscal Choices

Much of the global perception of America's long-term decline as the world's sole surviving superpower is in fact driven by our fiscal decline. That's why I was disturbed to hear Democrats so quickly dismiss GOP Sen. Paul Ryan's bold, if flawed, federal budget proposal on the grounds that it would "end Medicare as we know it."  Frankly, arresting our decline means ending a lot of things "as we know them." That's simply what being on an unsustainable path forces you to do.

Read the entire column at World Politics Review.

11:17AM

Eurasia Group's Ian Bremmer and David Gordon cite top geo-pol risks for 2011

David Gordon is an old friend, who, as the National Intelligence Officer for economics and globalization in the National Intelligence Council, came to most of my wargames at the Naval War College and World Trade Center in NYC.  He later became Vice Chair of the NIC and then head of policy and planning at State in the final Bush years (when diplomacy made quite the comeback).  One of the smartest guys I know and just a great guy all around.  After Bush ended, he left government and went to direct research at Ian Bremmer's Eurasia Group, which specializes in political risk consulting.

Ian, you know from his books ("J Curve," "Fat Tail," "End of the Free Market"), all of which have made it into my own books or columns.  Ian and I did a back-and-forth on his "The Call" blog at Foreign Policy regarding the last one.  Ian is deservedly recognized as THE political risk guru out there (he often writes with Nouriel Roubini) and he's done an amazing job of building up Eurasia Group from nothing in just over a dozen years.  Having worked with Steve DeAngelis is building up Enterra Solutions over the past 6 years, I truly appreciate what that takes.  

I've been working for Dave and Ian since January as a consultant on a project for the government that's been a lot of fun and there are others in the hopper, so this is turning out to be a nice working relationship in addition to my other affiliations.  I've missed working for the USG these past few years, so it's been great to get back to that sort of analysis.

The top ten risks cited will also sound familiar enough to readers of this blog.  Here's the opening, plus the list as links to the report:

The risks that exercise us most usually center on a country, an issue, an event. We worry over political chaos before or after an election, a coup in a fragile regime, or military conflict with a rogue nation. But for the first time since we've been writing, the political risk environment is much broader this year. It's the change in the world order itself that gives us most cause for concern.

Two years after the financial crisis, there's a strong argument to be made for optimism. The American economy is poised for (at least modest) growth and emerging markets are still churning ahead. By that logic, it's high time for governments, captains of industry, banks, and citizens to get back to business. Time to leave behind record gold prices and put the trillions of dollars sitting on the sidelines back to work.

But that conclusion implies a level of confidence, if not quite comfort, with where the world is headed. Whatever your expected shape of economic recovery—a U-curve, V-curve, L-curve, or something else—we're entering an entirely new world order. That means new ways for states to relate with one another both politically and economically. It means new areas of conflict. 2011 looks to be the year that our understanding of how the world works becomes out of date.

This is scary not because it's incomprehensible but because the scale of change is so great that it becomes difficult to manage. Few of us have experienced a transition of this scope. Following the collapse of the Soviet Union two decades ago, it was fashionable, briefly, to herald a new world order. The pronouncements were premature. Soviet collapse remade the global security balance, but its economic impact was considerably more modest. The advanced industrialized economies had ruled the global economic system; the end of the cold war meant a move from the G7 to the "G7 plus one." Globalization sped up a bit, the West had new countries to invest in (at least for a while), and some of the old ones (Germany) got stronger. "Plus one" didn't imply a new world order.

That's not true today. After the financial crisis, the G7 was replaced by the G20. This change brought no challenge to America's global military supremacy. But the rules of the economic road are a different story and the new geopolitical order is shaped not by a military balance but by an economic one. This new world order marks the end of a decades-long agreement on how the global economy should function. This is world-changing indeed, because the dominant economic trend of the last half century, globalization, now faces a direct challenge from geopolitics.


The rise of this new order will have a profound impact on nearly all of the world's big-picture, long-term trends. A lack of coordinated governance on key economic issues will become entrenched and give rise to lasting international conflict. States and corporations will become more closely aligned in both developed and developing states. Most significantly, we'll see a shift in the highest levels of global conflict to the region where globalization and geopolitics collide with greatest force: for the past twenty years, the sharpest geopolitical tensions were to be found in the Middle East; we'll now see a decisive and long-term shift of those tensions to Asia.

All the risks we're looking at in 2011—conflict from the North Korean succession process, the unwillingness of China to budge under international pressure, the lack of political and economic coordination in Europe, currency controls intensifying global economic misalignment, the geopolitics of cybersecurity—are intensified by this transition to a new world order. The red herrings on our list avoid risk in spite of it.

Surprisingly, and despite all the anxiety these changes have created, there's no name for this new era. We propose the G-Zero. This is the lens through which we'll understand global events in the coming years. It's our top risk for 2011.

THE RISKS

1 The G-Zero
2 Europe
3 Cybersecurity and geopolitics
4 China
5 North Korea
6 Capital controls
7 US gridlock
8 Pakistan
9 Mexico
10 Emerging markets
*Red herrings

Being Mr. Counterintuitive, I like the "red herrings" the best. They are Iran, Turkey, Sudan and Nigeria. I like the optimism on each.