The Economic Crisis and National Strategy

Summary
The current global economic crisis has multiple ramifications on U.S. foreign policy. Not only does this crisis reveal fissures in U.S. diplomatic strength; but also, it highlights the strengths of Neo-Communism. Geopolitical Thoughts believes U.S. foreign policy principals need to be paying attention to the subtle monetary and economic moves from these Neo-Communistic nations throughout the duration of this unprecedented global economic crisis. Such moves can reveal as much about these new governmental abilities and intentions as do overt military moves. Moreover, U.S. leaders should treat this crisis as an opportunity to identify its own weaknesses.

Analysis
During his presidency, Dwight Eisenhower was quoted as saying the strength of the United States wasn’t its military, but its economy. Eisenhower’s remark still rings true in relation to the economy being more important for the U.S. than any other nation. However, what was once the U.S.’s strength is now an Achilles’ heel as it pertains to diplomatic leverage.

Much has changed since Ike’s presidency. Most notable for purposes of this discussion is the rapid economic development throughout the world. No longer does the health of the U.S. economy dictate the direction of all other’s. Furthermore, no longer is democracy’s chief protagonist a Marxist structure that is fundamentally flawed. The point is in the new world order total dependence on a globalized economy can work against capitalistic democracies. The U.S. as compared to China and Russia is a perfect example of this argument.

The ability for the United States to influence international issues is dependant upon the strength of the U.S. economy. As the U.S. economy goes, so goes its international influence. While part of this is the basic reality of being a capitalistic country, this paradigm should not be as correlative as it currently is. Part of the reason is the U.S. shift to a NeoCon-driven foreign policy dampening the U.S.’s ability to leverage its ideals and goodwill. Regrettably, an unpredictable side-effect is how this devalued goodwill has allowed the potential for longer-term security threats to develop.

Geopolitical Thoughts has argued for some time that the Neo-Communistic political structures that continue to evolve in Eurasia has a real potential to threaten U.S. interests long-term. In a Neo-Communistic structure, the consolidated political power allows for opportunistic moves internationally and flexibility to mandate domestic issues economically swiftly. This structure gives these national structures the necessary domestic support because of the government’s willingness to allow a quasi-capitalistic economy that ensures the support of its oligarchs. The strength of this quid-pro-quo structure is harder to see when the global economy is thriving. During good economic times, nations from the outside can point to the economic wealth that is created with the false belief that capitalism is dictating government decisions. However, this current economic environment reveals just how much control these nation’s leaders have.

Russia
Most news sources point to the suffering Russian market and ruble to argue that Russia is at risk of slipping back to the economic and social unrest of the early 1990’s. That would be an over-simplification of the global situation. Worse, this ignores Russia’s ability to capitalize on the situation for long-term benefits. This global economic crisis has created opportunities for Russia to take advantage of the situation by providing diplomatic, economic, and military assistance. Russian President Dmitri Medevev and Prime Minister Putin have been quick to react to fluidity of the situation.

Russia is leveraging the situation diplomatically to get back into good graces with the EU. They have given the German military approval to transport weapons and military equipment through Russia to German units in Afghanistan. Additionally, President Medvedev signed a decree giving Spain permission to send troops and supplies through Russian territory to support the Spanish presence in Afghanistan. These acts of generosity are providing the leverage to prevent Ukraine, and other former-Soviet satellites, inclusion into NATO.

Russia is making overt military moves with the knowledge that it is hard for the U.S. to focus on issues outside of the U.S. economy. They are seeking a strategic airbase in Tajikistan. Putin is aggressively attacking the issue of U.S. missile defense systems in Poland. Somalia is reaching out to Russia for assistance in addressing piracy with military force despite the fact that the U.S. Navy already patrols the region.

Russia’s relative strength is revealed in other ways. Russia is using economic leverage where possible. Unlike the U.S. and virtually all EU nations, Russia is not facing the economic crisis with an over-levered balance sheet. Russia remains very well capitalized. Its reserves are still over $450 billion even after a 25%+ slide since August. Russia was Iceland’s first call for financial assistance when that nation started to collapse. Russia stated its willingness to curtail crude production if need be, a signal that it is not as dependant upon the commodity as many think. Russian companies, many flush with cash, are capitalizing on other country’s weakness. Russia’s largest gold mining company is taking a controlling interest in Kazakhstan’s largest gold company. Without a Neo-Communistic governmental structure, Russia would not be able to capitalize so rapidly on the U.S.’s weakness due to the economic crisis.

China
The situation between the U.S. and China is much less nuanced. China is in a much greater position of strength than Russia and knows it can flex its muscle at will. Domestic U.S. auto manufacturers are pleading for government funds arguing that the U.S. economy depends upon their health to prevent a depression. However, the U.S. auto industry impact pales in comparison to China’s influence on global and U.S. economic growth. For example, the $150 billion infrastructure plan being proposed by President-elect Obama might be an incremental positive to the U.S. economy, eventually. Unfortunately, this stimulus is a moot point compared to China’s infrastructure ambitions that are four times the size of the U.S.’s. ($585 billion, to be exact.) The rapidity with which China can kick-start needed U.S. metallurgic coal, steel, or heavy equipment exports dwarfs anything that the U.S. government can do to stimulate the economy.

Because China, like Russia, has evolved into a new form of government structure, it too has an ability to allow for economic growth without relinquishing governmental control. This Neo-Communistic structure gives such a nation multiple levers to pull when need be. Domestically, China is managing economic growth efficiently and effectively. They are curtailing steel production by shutting down inefficient, overly-polluting mini-mills through manipulation of Nationally-controlled bank financing as well as access to electricity. Democratic free-market nations like the U.S. cannot do this. This structure also allows more control over the pace of growth and all of the international ramifications that come with it. Case in point, by merely resuming its domestic steel production, China would instantly resurrect the 90% decline in Baltic Drybulk Rates to normalized levels, effectively saving entire economic sectors from pending financial collapse. The Chinese government knows this. The U.S. leadership knows this too. The problem is many in the U.S. want to believe it is free-market capitalism at work and not market manipulation. By doing so is to ignore what the situation really is: a growing dependency on a country that is not democratic and is not afraid to challenge the U.S.

Summary
Until the credit crisis is over and signs of an economic recovery are seen, the United States’ position of strength on the international stage will slowly erode, even if it seems imperceptible to the naked eye. In the meantime, it is important to realize this new form of government, Neo-Communism, is starting to flex its muscles. This new coupling of totalitarianism governmental leadership with quasi-capitalism poses long-term threats to U.S. interests. This should be a warning signal for the importance of reclaiming the intrinsic value of promoting freedom through nuanced foreign policy and not forced-democracy. Hopefully, such a realization of this fact will be one of the silver linings that comes out of this recession’s aftermath.

Need to Shift Middle East Foreign Policy

Discussing the Middle East as a tempest pot is nothing new. However, public attention to the issue tends to shift focus from the biggest perceived threat to the next. This encourages the interest in confronting a singular person than truly discussing the political instability as a whole. Some who are politically motivated want to exploit this by encouraging Americans to believe that removing Ahmadinejad from Iran will miraculously improve conditions in the Middle East just like it was argued the same would happen with the removal of Hussein in Iraq. However, as an Air Force colonel on the condition of anonymity pointed out, “Most of the Middle East Problems are economic.” This individual, who deals directly with the State Department in the region, stated that the supposed cultural differences go away with an economic structure that trickles throughout the population.

This idea of an economically-focus foreign policy effort instead of a military-focused effort pinpointed on terrorism is gaining attention, albeit not enough. Just this week, lost in the shuffle of the U.S. election, Jordan’s Queen Rania highlighted the issue of unemployment in the Arab world. She stated that the number of unemployed adults under 30 in the region is likely to grow from 15 million (a startling figure in and of itself) to a staggering 100 million by 2020. The Middle East already has the highest rate of unemployment among young adults in the World.

The decreased level of violence in Iraq has sent mixed signals to the U.S. public that the Middle East is slowly settling down. True, the U.S. might be succeeding in its efforts against terrorist cells. That is a matter of subjectivity. However, the bigger picture of the Middle East shows an increasingly fluid situation with more countries seeking regional supremacy.

The point of this line of discussion is that U.S. foreign policy in the Middle East needs to focus on economic development, the true lynch pin to stability in the region. If the U.S. doesn’t, someone else might provide the needed long-term economic stimulus and gain influence over key Middle East players. Additionally, this economic unrest in the Middle East will continue to feed terrorist activities and aggressive sovereign nation actions.

A Subtle Shift in Foreign Policy?

It is fair to state that the diminished influence of Neoconservatives on U.S. foreign policy has indeed occurred after reading the U.S. Secretary of Defense Robert Gates' comments this past week to the British strategic studies group, Oxford Analytica.

Gates has already shown an aversion to the Cheny/Wolfowitz form of foreign policy. Almost immediately after taking the reins at the Pentagon, Gates influenced the decision for the Iraq troop surge, a not-so-subtle indictment of the established paradigm. Instead of ignoring the importance of NATO and the UN for nation building, Gates has shown a pragmatic stance towards embracing these organizations. He remains open to new lines of thinking regarding Iraq, Iran, and North Korea.

It is not the SecDef's job to craft foreign policy. However, it appears that the Bush Administration is in more and more of a lame-duck mode leaving more responsibilities to others. This is partly evidenced by the starring role, and near-complete control, that has been given to Treasury Secretary Paulson throughout the September financial crisis. A less-noticeable hand-off has happened for a longer duration at the Pentagon where Gates is taking less daily directive from the White House. This influence at the agency level is significant because as Inauguration Day approaches, the subtle effects of these policy shifts will have lasting effects well beyond January.

Make no mistake, Gates remains an appointee of the President. As such, he does not make remarks that conflict with certain politically-sensitive subject matters. However, Gates is putting his stamp on the direction of U.S. military involvement globally; and it appears that his stamp is from a softer ideological ink pad. A well-articulated foreign policy must embrace the nuances of geopolitics with a big, Teddy Roosevelt stick. In other words, just as Chamberlain-level appeasement should not be considered an adequate Foreign Policy, neither should an Irving Kristol-level of preemptive use of force. Gates clearly understands this. At the Oxford Analytica event Mr. Gates articulated that the U.S. foreign policy goal should be, “to balance restraint in international affairs with the resolve and will to back up our commitments and defend our interests when called upon.” Geopolitical Thoughts hopes that the next administration embraces this balanced, gradated approach to international affairs.

Clowns to the Left of me, Jokers to the Right...

...and with apologies to Stealers Wheel... here we are, stuck in the middle. There have been some startling events this past summer that continue to point towards a rapidly-developing second Cold War.

We have all watched Hugo Chavez these past few years with a mixture of confusion and amusement. (Anyone who's attended the annual Offshore Technology Conference to see PDVSA's booth can agree with the latter.) But if history has taught us anything, one of the emotions we shouldn't ignore is concern. In late August, Iran and Venezuela formed a formal partnership. This is much more than just two of the world's wackiest leaders sharing tea. There are the obvious implications to the world energy complex. There are the more subtle possibilities should Russia, Iran, and Venezuela continue to make overt displays of power together. And then there is the downright scary implications of terrorism increasing in the U.S.'s backyard.

The LA Times confirmed that American officials believe Hezbollah is already making preparations to establish operations in Venezuela. As William Falk points out, "The group intends to create a special terrorist cell to kidnap Jewish businessmen in Latin America and take them back to Lebanon, the intelligence officials said. Another danger, they say, is that Hezbollah could use Venezuela as a base from which to insert terrorists into the United States." This news should have been more widely reported, but it happened during a time span dominated by news of the DNC, hurricane evacuations, and the RNC.

Venezuela's actions won't be ignored by DOD, the NSA, or the CIA. However, there are only so many things the U.S. can do unilaterally. The current U.S. foreign policy, in part, has been held together by the U.S.'s ability to have troops in direct contact with Al-Sadr-led Hezbollah efforts in Iraq. What happens to the foundation of this policy if Hezbollah successfully transfers their operations to a nation the U.S. has absolutely no ability to influence through military threat?

Georgia in a vacuum

The U.S. media has been giving adequate attention to the increasing U.S. response to Russia's actions in Georgia. However, there has been a surprising amount of events that have received little mainstream media attention stateside. In fact, aside from an occasional blurb, a major point that is being overlooked is the support Russia is getting for its actions in Georgia. This is not to say that Russia's support is from the likes of the U.K. or Japan, but it is to say that Russia is doing spin-control of its own to help legitimize their actions. The more Russia can create an appearance of legitimization on the international stage, the easier it will be for Russia to complicate any efforts the U.S. may try to employ in diplomatic circles such as enlarging NATO. This may seem like a feeble maneuver, yet it is another step in Russia's strategy for regional superiority and influence. Worse, this is another step in the burgeoning Second Cold War (more on that later). The Georgia actions are not in a vacuum. The Bush Administration may know this, but the U.S. media isn't giving this aspect of the situation enough attention by exploring the bigger implications.

US Foreign Policy and the NeoCon Platform

Russia's President, Dmitry Medvedev, once again stunned Western nations with the announcement that Russia now recognizes Abkhazia and South Ossetia as independent regions. This news is unnerving for a myriad of reasons; the most obvious being that the rules of international law are being destroyed in part because a country has shown it can invade a sovereign nation without consequence. It is also equally obvious and equally unnerving that a country (a G-8 member, no less) can recognize regions within a different nation's borders as independent. However, a more nuanced reason this is unnerving is the bigger picture this paints in regards to a Second Cold War and the U.S.'s current approach to addressing it. Along this theme, the BBC had a fascinating interview with Georgian President, Mikheil Saakashvili. (Watch the interview.) As Saakashvili adroitly points out, this is much bigger than a regional issue. This is a nation [Russia] unilaterally trying to redraw the European map. These actions are nothing short of the first deliberate steps towards a new Cold War of ideals. Thus, if the U.S. is, in fact, entering (or already has entered) a Second Cold War, then analyzing the U.S.'s foreign policy platform is as important now as it has been since the end of the original Cold War. For the duration of the Bush Administration, the United States has adhered to a NeoCon-based foreign policy. For years a debate had raged in Washington over the academic validity of a NeoCon strategy to world issues. It is well documented that Cheney and Wolfowitz, among others, believed that intervention would lead to a domino effect of democracy. (For the full-blown edict on this concept, read The Project for the New American Century treatise entitled Rebuilding America's Defenses: Strategies, Forces, and Resources For a New Century.) Even though the debate over the NeoCon movement faded in public circles after the failed efforts in Iraq, it has not in the White House. The Bush Administration continues to speak in NeoCon tones, and still pushes these concepts as the best strategy. A pillar to the NeoCon belief is that once a country has become a part of the capitalistic society, it has too much at stake to risk alienation by other trading partners by using military force or aggression. Essentially, it is the belief that greed triumphs all. However, we are witnessing the double-edged sword of greed; i.e., capitalism. While the promise of wealth through capitalism can push communistic nations into ruins like we saw at the end of the U.S.S.R.; it is being exhibited that greed doesn't necessarily beat out nationalism. This is a major flaw in the NeoCon beliefs. Russia is proving, quite effectively, that a Neo-Communistic state can embrace greed while still maintaining an over-riding sense of nationalism and power. If this is true, then in one brief summer, Russia has ended the debate on the power of capitalism as a chief weapon in a NeoCon strategy. While the idea of spreading democracy is admirable and the belief in capitalism must remain a key element to all U.S. foreign policies, it is time to charter a new course for U.S. international efforts. While Geopolitical Thoughts is not calling for a return to Detente, the methods to support the NeoCon ideals have shown to be imprudent. As we embark upon a new U.S. presidency, it is vital to consider a new course in foreign policy as our foes no longer appear to be not only developing-nations of moderate size in the Middle East and SE Asia; but also, massively-populated, wealthy nations. Therefore, the next U.S. president must embrace a long-term foreign policy that addresses immediate and larger threats such as Neo-Communist Russia, as well as possible future threats such as Neo-Communist China. It is Geopolitical Thoughts belief that the U.S., heretofore, has not adequately appreciated the long-term implications of the Russian actions. Once hailed a new breed of Former-Soviet-Union leaders, Mikhail Saakashvili has been a trusted champion for U.S. interests in the region. However, political wonks in Georgia say that Saakashvili has played his cards poorly, and is now in serious jeopardy of losing power. (To listen to the BBC interview, President Saakashvili's words had a tone of resignation.) If the failed invasion of Iraq wasn't enough to shift the U.S. foreign policy away from a NeoCon platform, losing such an advocate as Saakashvili better. If not, the U.S. actions, or lack thereof, are putting the U.S. further into a position of strategic weakness for years to come.

This is Not Your Father's Soviet Union

Suddenly, it's the good ol days. All Russia, all the time. Where is Thatcher and Reagan when we need them? While it's good that the mainstream media is now focused on the pending implications of a new Russian dominance; it is also important that a modicum of understanding be applied to the subject. Yes, Russia did invade the break-away region of South Ossetia, Georgia. Yes, Russia has shown little interest in listening to the US's opinions. Yes, Russia is showing strong body language over its distaste for the Polish-US missile agreement. However, this is not your father's form of Soviet Communism, and that is important to note. The Russian actions over the past few weeks are nothing that contradict their actions over the past few years. What we are seeing out of Russia is a consistent posturing that is in accord with their new form of government: Neo-Communism. The problem is that fear can manifest itself into action. This is something that the US leadership must refrain from doing. One example of this would be Ukraine. This past weekend, reports began to surface of a growing concern about Russia's interest of next going into Ukraine. The fears within this once-Soviet-bloc nation are high. Aides to the President of Ukraine are accusing the Prime Minister, Yulia Tymoshenko, of supporting Russia's moves into Georgia and is a Russian sympathizer. Even the NY Times has jumped on the theme (http://www.nytimes.com/2008/08/17/world/europe/17ukraine.html?th&emc=th). However, it is GeoPolitical Thinking's belief that a more thorough examination of the situation is warranted before we start building our modern-day nuke bunkers and rewrite Paul McCarthy's "Back in the U.S.S.R.". While GeoPolitical Thinking is not supporting Russia's invasion into South Ossetia, it was not an action in a vacuum. Russo-Georgian relationships have been strained for years, lest we forget that Georgia is one of the few former Soviet nations to deploy troops to Iraq in support of the US administration's actions. (Georgian President Mikheil Saakashvili was lead to believe by the US administration that supporting the US in the Middle East would ensure support for him, if need be, against Russia. A quid pro quo that Saakashvili is finding out will only go so far.) This year, before the images of tanks rolling into South Ossetia popped up on television sets, Russia and Georgia were in tense talks over Abkhazia, a different region of Georgia that broke away before South Ossetia did.) The point is, to say that Russia invaded a defenseless nation is an overstatement and a blatant decision to ignore the broader picture. It is GeoPolitical Thinking's perspective that the new brand of Russian rule, Neo-Communism, is not interested in country-invading. That would lead Russia down the same path it knows won't work. Instead, Putin (and his surrogate, Medvedev) sees the former satellite nations as a buffer zone. By keeping these nations from being full-blown democratic, US-EU-mini-me's; strategically, Russia keeps any nation from having an easy path into Russian home soils. While the thought of a country invading Russia is silly; it is, nonetheless, a strategic mandate Russia must embrace for itself to ensure a strong national defense. Just as we would do the same if Mexico were an avenue for invasion (should those untrusting nations of Panama or Belize become hostile!), Russia must always protect its boarders as a part of a bigger strategy. (Even if this is done poorly by keeping some former satellites in disarray.) It is also important to realize that a strategy of conflicts over democracy in satellite nations doesn't necessarily mean Russia loses. It is an indirect way of maintaining regional dominance. While we must closely watch actions and comments from the Kremlin, if we begin to behave like we are fighting the U.S.S.R. and it's 1984, we are weakening our defensive posture. The US military cannot afford to do that.