Re-engage! America and the World After Bush

US's global dominance 'Reduced': It's nearly official!

Thomas Fingar, the U.S. government's highest ranking intelligence analyst, recently told a semi-public audience that he envisions a steady decline in U.S. dominance in the coming decades, according to this intriguing report in today's Wapo. Joby Warrick and the venerable Walter Pincus wrote the WaPo piece. They add that the still unpublished report that Fingar was previewing in his recent speech,

also concludes that the one key area of continued U.S. superiority -- military power -- will "be the least significant" asset in the increasingly competitive world of the future, because "nobody is going to attack us with massive conventional force."

This argument that raw military power-- the one area in which the US still quite clearly outpaces all other world powers-- has rapidly declined in significance (or, one might say, in utility) in recent years is a very important one.  It is certainly, an argument that the country's legislative as well as executive branches should take into good consideration as they ponder the priorities for the already deeply in-the-red US federal budget over the years ahead.

It is also an argument that I have made, very explicitly, in Chapter 6 of Re-engage! America and the World After Bush.

Coincidentally, today's WaPo also has a report, citing congressional budget analysts, that notes that, when the federal budget year ends on September 30, the one-year federal budget deficit will have risen to $407 billion-- "and the next president is likely to face a shortfall [annually, on the current account] in January of well over $500 billion."

All these repeated months and years of deficits add up to the horrendous mountain of accumulated debt that is one of Pres. Bush's primary legacies to the nation-- debt that our children and grandchildren will be laboring under for generations to come. That WaPo article also has a handy graphic charting how the current-account budgets have plummeted from a $236.2 billion surplus in FY 2000 to the expected $407 billion deficit this year.

Back to Fingar. He is a significant voice for calm reason and reality-based analysis within the US government. Back in 2002, when he was the head of analysis in the State Department's Bureau of Intelligence and Research (INR), his was one of the government's few intelligence outfits that stuck to its skepticism regarding the claims that Saddam had ongoing WMD programs. But the INR view (which was shared by many of the professional career analysts in the CIA-- though they were notably unsupported by Mr. 'Slam Dunk' George Tennet) got crowded out on that occasion by the vociferous rantings and fabricated charges raised up by the pro-war ideologues in various other government intel shops, primarily those within Rumsfeld's and Cheney's offices.

As the head of the newly created (and over-arching) National Intelligence Office, Fingar is now the person responsible for the periodic 'National Intelligence Estimates' that aim to provide the very best data, analysis, and conclusions to the President and-- as appropriate-- the public. In doing this job he has worked hard to instill, throughout the whole of the country's unwieldy alphabet soup of official intel agencies, the same standards of rigorous analysis, professional integrity, and accountability that he previously upheld at INR. 

I heard him speak at the New America Foundation a few weeks ago.  He seemed very straightforward and smart. He also seemed very aware that rebuilding the external credibility of the US intelligence agencies, after the travesty of their performance over the WMDs-in-Iraq charges was revealed for all to see, will be every bit as hard (and is every bit as important in a democracy) as rebuilding the internal professional standards and sense of professional pride and morale within all the agencies themselves.

Well, the report that Fingar was previewing in his recent speech, a National Intelligence Council report titled "Global Trends 2025", will apparently be published pretty soon. We should all watch out for it.

Warrick and Pincus explain that the presentation in which Fiongar laid out these argument was given to a gathering of intelligence professionals in Orlando, Florida last Thursday. (I imagine Fingar himself, who is a savvy public-affairs operative, made sure that copies of the transcript fell into Warrick and Pincus's hands.) They write,

"The U.S. will remain the preeminent power, but that American dominance will be much diminished," Fingar said, according to a transcript of the Thursday speech. He saw U.S. leadership eroding "at an accelerating pace" in "political, economic and arguably, cultural arenas."

... In the years ahead, Washington will no longer be in a position to dictate what new global structures will look like. Nor will any other country, Fingar said. "There is no nobody in a position . . . to take the lead and institute the changes that almost certainly must be made in the international system," he said.

The predicted shift toward a less U.S.-centric world will come at a time when the planet is facing a growing environmental crisis, caused largely by climate change, Fingar said. By 2025, droughts, food shortages and scarcity of fresh water will plague large swaths of the globe, from northern China to the Horn of Africa.

For poorer countries, climate change "could be the straw that breaks the camel's back," Fingar said, while the United States will face "Dust Bowl" conditions in the parched Southwest. He said U.S. intelligence agencies accepted the consensual scientific view of global warming, including the conclusion that it is too late to avert significant disruption over the next two decades. The conclusions are in line with an intelligence assessment produced this summer that characterized global warming as a serious security threat for the coming decades.

They write that energy security issues will become more complex and intense (duh!) Also, this:

Nearly absent from Fingar's survey was the topic of terrorism. Since the last such report, the intelligence community has projected a declining role for al-Qaeda, which was deemed likely to become "increasingly decentralized, evolving into an eclectic array of groups, cells, and individuals." Inspired by al-Qaeda, "regionally based groups, and individuals labeled simply as jihadists -- united by a common hatred of moderate regimes and the West -- are likely to conduct terrorist attacks," the 2004 document said.

The new assessment saw a continued threat from Iran, however. Fingar predicted steady progress in the Islamic republic's attempts to create enriched uranium, the essential fuel used in nuclear weapons and commercial power reactors. For now, however, there is no evidence that Iran has resumed work on building a weapon, Fingar said, echoing last year's landmark National Intelligence Estimate on Iran, which concluded that warhead-design work had halted in 2003.

He said Iran's ultimate decision on whether to build nuclear weapons depended on how its leaders viewed their "security requirement" -- whether they thought their government sufficiently safe in a region surrounded by traditional enemies.

Iranians are "more scared of their neighbors than many think they ought to be," Fingar said. But he noted that the United States had eliminated two of Iran's biggest enemies: Iraq's Saddam Hussein and the Taliban regime in Afghanistan.

"The United States took care of Iran's principal security threats," he said, "except for us, which the Iranians consider a mortal threat."

I agree with just about everything Fingar said in the presentation-- though by 2025, I find it highly unlikely that the US will still be the "pre-eminent" power in world affairs. The size of the continuing budget deficits and the continuing lack of a resolution to many chronic US crises-- internally and externally-- more or less precludes that.

But that's a matter of emphasis. In general, his report will be well worth watching for.

Regarding budget, though, I do wonder how much the whole exercise of producing this report has cost US taxpayers? Just imagine, Thomas Fingar could simply have bought a copy of my book-- cover price $14.95-- and covered almost exactly the same range of issues, and reached very similar conclusions....

[This post was cross-posted at 'Just World News'.]

Mahbubani on western hypocrisy, etc.

Attentive readers of Re-engage! will know that I'm quite a fan of Kishore Mahbubani, an extremely smart strategic thinker who was Singapore's ambassador to the UN until a couple of years ago.Recently, he had a great piece of commentary in the Financial Times on "the meaning of the Georgian war."  (Hat-tip to Bernhard of MoA for noting this article.) Mahbubani writes:

Sometimes small events can portend great changes. The Georgian fiasco may be one such event. It heralds the end of the post cold-war era. But it does not mark the return of any new cold war. It marks an even bigger return: the return of history. The post cold-war era began on a note of western triumphalism, symbolised by Francis Fukuyama’s book, The End of History. The title was audacious but it captured the western zeitgeist. History had ended with the triumph of western civilisation. The rest of the world had no choice but to capitulate to the advance of the west. In Georgia, Russia has loudly declared that it will no longer capitulate to the west. After two decades of humiliation Russia has decided to snap back. Before long, other forces will do the same. As a result of its overwhelming power, the west has intruded into the geopolitical spaces of other dormant countries. They are no longer dormant, especially in Asia. Indeed, most of the world is bemused by western moralising on Georgia. America would not tolerate Russia intruding into its geopolitical sphere in Latin America. Hence Latin Americans see American double standards clearly. So do all the Muslim commentaries that note that the US invaded Iraq illegally, too. Neither India nor China is moved to protest against Russia. It shows how isolated is the western view on Georgia: that the world should support the underdog, Georgia, against Russia. In reality, most support Russia against the bullying west. The gap between the western narrative and the rest of the world could not be greater. It is therefore critical for the west to learn the right lessons from Georgia. It needs to think strategically about the limited options it has...

The fourth paragraph there describes something that "westerners" crucially need to be able to understand. Westerners do not monopolize either humankind's smarts, or its sensibilities, or its way(s) of looking at the world. Indeed they (we) are in a distinct minority, and badly need to understand that. Especially given that one of our bedrock values in the world is that of the equality of all human persons.... Well, it still is, isn't it? Mahbubani has a lot more there, too.  Including this:

In the US, leading neo-conservative thinkers see China as their primary contradiction. Yet they also support Israel with a passion, without realising this stance is a geopolitical gift to China. It guarantees the US faces a hostile Islamic universe, distracting it from focusing on China. There is no doubt China was the bigger winner of 9/11. It has stabilised its neighbourhood, while the US has been distracted. Western thinkers must decide where the real long-term challenge is.* If it is the Islamic world, the US should stop intruding into Russia’s geopolitical space and work out a long-term engagement with China. If it is China, the US must win over Russia and the Islamic world and resolve the Israel-Palestine issue. This will enable Islamic governments to work more closely with the west in the battle against al-Qaeda. The biggest paradox facing the west is that it is at last possible to create a safer world order. The number of countries wanting to become “responsible stakeholders” has never been higher. Most, including China and India, want to work with the US and the west. But the absence of a long-term coherent western strategy towards the world and the inability to make geopolitical compromises are the biggest obstacles to a stable world order. Western leaders say the world is becoming a more dangerous place, yet few admit that their flawed thinking is bringing this about. Georgia illustrates the results of a lack of strategic thinking.

* I guess my only criticism of this analysis is over Mahbubani's argument that "Western thinkers must decide where the real long-term challenge is," with the choice presented being a strictly dyadic one between it being "the Islamic world" and it being China. Actually, I don't think the choice is anywhere near as dyadic as this implies (and anyway, the policies that he prescribes for either choice are broadly similar.) But here's the deeper problem: he is still in the mindset at that point of arguing that the "west" needs to identify a main enemy-- or as he says, a "real long-term challenge"-- that is another state or bloc of states. But then, in the last paragraph he goes against that thinking-- certainly, with respect to China-- when he underlines that China, like India, wants to work with the US and west.  And here's an addendum to that: so do most governments in "the Islamic world", and so, indeed do most Muslims... provided this cooperation with the US and the west is on a basis of mutual respect and fair cooperation. Neither China nor the vast majority of members of "the Islamic world" want to overthrow any western governments and dominate their countries, which is what, for a period of time, the Soviet Union aspired to do. So where is the real "long-term challenge" that the west faces? I believe it is the challenge, for Americans, of starting to see themselves (ourselves) as co-equal members of the world community rather than standard-bearers in some kind of existential, life-or-death contest with enemy states that requires us to bear the huge costs of maintaining our bloated military and using it to "keep order" right around the world: 360 degrees, 24/7. And then, oh yes, there are plenty of other, very serious long-term challenges that we and the rest of the world community all face together. Challenges like dealing with:

• climate change;
• global inequality and the suffering of our brothers and sisters in the low-income world;
• weapons proliferation;
• the occurrence of conflict-driven atrocities;
• the anti-humane violence perpetrated by Islamist extremists and others...

So please, while we're facing serious challenges like those ones, let's not, as "westerners," go round the world looking for whole blocs of people and governments to make war on, as well. Kishore Mahbubani was quite right there, in his last paragraph, when he wrote that few western leaders were prepared to admit that their own flawed thinking has been making the world a more dangerous place. But I think the greatest flaw in the thinking of most westerners has been this need to organize the world, and mobilize one's own resources and activities, around the definition of a state or bloc of states as our enemies, to be faced down or toppled with our military power. It is that tendency that has made the world more dangerous for everyone-- ourselves, along with many, many others. Now, we need to adopt the much more realistic stance of aligning ourselves at the side of the world's other six billion people, facing the challenges that confront all of us, together. One final note: A couple of days after reading Mahbubani's article I wrote over at my 'Just World News' blog a post titled The return of geography, which readers here might also find interesting. (The present post was also originally published at JWN, here.)

My 'CSM' article on the implications of the Georgia crisis

This article, which appeared in the August 22 edition of The Christian Science Monitor, uses some of the kind of analysis I use in Ch.6 of the book to look at the implication of the mid-August Georgia crisis for world politics. It starts like this:

The tectonic plates of world politics have been shifting for several years now, and on Aug. 8 the extent of this shift became plain. In Beijing, China held a stunning coming-out party as a world power. Meanwhile, 4,000 miles away, Russia invaded neighboring Georgia, signaling loud and clear that it would no longer be taken for granted.       Russia is back. China has emerged. Suddenly, the United States isn't the world's only superpower.                     How will these three big powers interact in the years ahead, and what does that mean for all of humanity?

Then, it goes on to note the many levels at which the nations of today's world are interdependent and notes other differences between the world power system today and the highly competitive nature of the Cold War system.

George Soros on the financial crisis, military spending, and more

I just had the good fortune to participate in a media teleconference organized with legendary financier and social entrepreneur George Soros by the New America Foundation.  Soros was speaking about his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means, which was released yesterday exclusively as an e-book, cost $22.95. (Details here.)

Soros is well-known as a big-picture thinker, and one of the things that fascinated me about the teleconference discussion was how he talked about the deep connectedness between many of the issues that are covered in the Re-engage! book.  For example, he said that though he judged that the United States' military spending on its wars in Iraq and Afghanistan had not yet become a huge burden on national economy, this situation was set to change over the years immediately ahead.  The level of these military expenditures will most likely be rising, he said; and this would act as an ever-increasing burden on the national economy and a motor for inflation.

He also, in response to a separate question, identified investment in pro-green technology as one of the best possible ways to provide a broad stimulus to the economy, now that the stimulus effect of consumption by US consumers can no longer play that role.

In the teleconference, he projected a generally cautious optimism that the worst is past in the current global financial crisis.  In his introductory presentation he mentioned a recent "turning point" min this regard, but did not elaborate on that until I asked him to.  He then said his view was that the global financial system "had a moment of truth in early '07.  Then there was a sort of twilight period until August '07, when we did have the turning-point, and now we have the fallout from that and the financial crisis."

He based his argument on a broad analysis of the thinking of the leading participants in world financial markets.  Basically, he said, the dominant thinking in both the US and the UK since 1980 has been that of "market fundamentalism", including the view that controlling money supply is a sufficient way to control not only money markets but also credit markets.  That view, he said, is based on an assumption that all participants are acting on the basis of perfect information (and also, I would add, that they are all acting in good faith toward each other and everyone else.)  But, he continued, the assumption about perfect information has now been shown to be false; and the imperfections in the information base of leading investors then allowed the rise of "bubbles" at two different levels: the US-based housing bubble, which we have all seen, and also a supervening "super-bubble" affecting the world credit markets as a whole...

He expressed himself as generally hopeful (though by no means certain) that the worst is now past, and that the US authorities will step in with appropriate actions to minimize the negative fallout from the financial crisis. However, in an op-ed in yesterday's Financial Times, he also warned that there are still serious risks ahead:

the authorities ought to prepare for the next shoes to drop. I shall mention only two. There is an esoteric financial instrument called credit default swaps. The notional amount of CDS contracts outstanding is roughly $45,000bn (£23,000bn). To put it into perspective, that is about equal to half the total US household wealth and about five times the national debt. The market is totally unregulated and those who hold the contracts do not know whether their counterparties have adequately protected themselves. If and when defaults occur, some of the counterparties are likely to prove unable to fulfil their obligations. This prospect hangs over the financial markets like a sword of Damocles that is bound to fall, but only after some defaults have occurred...

The other issue is rising foreclosures. About 40 per cent of the 6m subprime loans outstanding will default in the next two years. The defaults of option-adjustable-rate mortgages and other mortgages subject to rate reset will be of the same order of magnitude but occur over a longer period. With single family home sales running at an annual rate of 600,000, foreclosures will overwhelm the market and cause prices to overshoot on the downside. This will swell the number of homeowners with negative equity who may be tempted to turn in their keys. The fall in house prices will become practically bottomless until the government intervenes. Cutting foreclosures should be a priority but the measures so far are public relations exercises.

My own judgment of the probability that we are "past the worst" in the current crisis is more pessimistic than George Soros's.  This is based not only on information of the kind  he provides there but also on my evaluation of the readiness of the U.S. Congress to undertake a meaningful intervention in the financial arena.

In today's Washington Post, Dana Milbank provided a great public service when he wrote a report of the Senate Banking Committee's hearings into the Federal Reserve's $30 billion bailout of teetering investment firm Bear Stearns in which he listed each member of the committee according to how much money they have received from securities and investment firms.  Hence, he refers to Committee Chair Sen. Chris Dodd of Connecticut not in the usual way as (D-CT) but as  (D-$5,796,000).

The biggest receiver there seemed to be Sen. Chuck Schumer of New York, described by Milbank as (D-$6,162,000).

Milbank was basing his designations on data provided by the Center for Responsive Politics, whose very helpful website is here. Their page on political donations made by securities and investment firms is here.

Regarding George Soros, meanwhile, I have to say I find him a fascinating person with considerable-- if not always well-organized-- intellectual talents. In December 2003, he published a book titled The Bubble of American Supremacy, whose title alone is food for considerable thought. In an article he published based on the book, he made these very accurate observations:

The supremacist ideology of the Bush Administration stands in opposition to the principles of an open society, which recognize that people have different views and that nobody is in possession of the ultimate truth. The supremacist ideology postulates that just because we are stronger than others, we know better and have right on our side. The very first sentence of the September 2002 National Security Strategy (the President's annual laying out to Congress of the country's security objectives) reads, "The great struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom—and a single sustainable model for national success: freedom, democracy, and free enterprise."

The assumptions behind this statement are false on two counts. First, there is no single sustainable model for national success. Second, the American model, which has indeed been successful, is not available to others, because our success depends greatly on our dominant position at the center of the global capitalist system, and we are not willing to yield it.

Anyway, I'll be looking for his new book with interest.

Fun facts: How big is the US national debt? Who holds it?

When I was writing Re-engage! last year, I got to do a lot of research about issues and areas I'd never written about much before.  One was the macroeconomics of the relationship between the US and the rest of the world (for Chapter 6 of the book.)  It's amazing how much data and information you can find, quite easily, on Web these days.

So if you go to this page on the US Treasury Dept.'s "Treasury Direct" website, you can then click through to the most up-to-date information available about the total level of the US public (national) debt.  I just downloaded the PDF file of the most recent of the monthly reports posted there-- the one for February 2008.  And I learned that the total amount of US federal government debt that's held by the public on Feb. 29 was $5,259,804 million. That is, $5.26 trillion.

Here is a graph, made from 2007 White House budget numbers, that shows the trend in national debt levels over time, since 1950.

And which other countries hold the current US debt?  This page, on the U.S. Treasury's main website, is automatically updated with the latest info on who the "Major Foreign Holders" of Treasury securities are.  The latest figures there right now are for the end of December 2007.  Non-US entities-- and I am not sure if this includes "sovereign wealth funds" and other quasi-non-governmental entities and non-governmental entities, as well as central banks-- are recorded as owning a total of $2.354 trillion of our debt on December 31, 2007, up from $2.103 trn a year earlier. 

Of the December 31, 2007 holdings, the top five foreign holders were:

1. Japan: $581.2 billion ($622.9 bn in Dec. '06)
2. Chine: $477.6 billion ($396.9 bn in Dec. '06)
3. United Kingdom: $157.4 bn ($92.6 bn in Dec. '06)
4. "Oil exporters"*:  $137.9 bn ($110.2 bn in Dec. '06)
5. Brazil: $129.9 bn ($52.1 bn in Dec. '06)

*Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,     Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.

I guess for me, the big surprises there are the steep increases in US Debt holdings by the U.K. and Brazil.  It looks as if Brazil must have had a huge trade surplus with the US in 2007!