By Dawn's Early Light

China and Oil - A Dialogue

Editor's Note:  My wife and I were the fortunate recipients of a splendid vacation in Cabo San Lucas at the One and Only Palmilla in the form of a developer retreat sponsored by the financial arm of a major auto manufacturer earlier this week. I am in the business of developing and preserving affordable multi-family housing in the United States.  This trip was a good reminder of the benefits of a global, competitive economy. The tax credits generated by the creation of affordable housing has high demand and a limited supply in the US market.  I am fortunate to be a part of the supply side of that equation.  With a new-found tan and a look at how "the other half" live (the rooms were rumored to be $700 USD a night), I have had a bit of time to reflect on the Chinese bid for Unocal in a global economy.

How to Treat an Emerging China - A Blog Dialogue

My gut reaction to the Chinese offer to buy Unocal for $18.5 billion, topping the Chevron offer of $16.5 billion, was at first worry.  I had heard that the Chinese state owns a 71% interest (source Economist) in CNOOC, the China National Offshore Oil Corporation.  Capitalism works best when there is a fair playing field and the thought of the Chinese government buying an American oil company while it makes aggressive moves towards Taiwan seemed like a bad move for freedom.  The orange ball with the Spirit of 76 logo in blue is a familiar site in Los Angeles and has always seemed a truly American company with a global outlook.

However, I have had the opportunity to read other opinions such as Tom Collins' of QuillNews who believes this is a great opportunity to encourage China to work economically for its objectives rather than militarily.  The Economist link above supports the acquisition as well.  The WSJ notes the 10 largest publicly traded oil companies from ExxonMobil, with a market cap of $334 billion (18 times larger than Unocal), to EnCana, a Canadian firm with a $26.4 market cap (1.4 times larger).  Unocal doesn't even get close to the top 10 of the publicly traded companies, and these figures do not include countries with private oil companies.

Oil is basically a commodity (a very important commodity that nations have many times gone to war over).  A barrel that China keeps for herself means that she is not buying it on the open market, thereby allowing more barrels to flow to other countries.

On the other hand, bloggers such as Laer of Cheat-Seeking Missiles write about the strategic implications:

• "Thailand, where Unocal operates 100 oil platforms
• Indonesia, including 90% ownership of fields around the Makassar Straits, which most oil to China would have to pass through
• Vietnam, critical also to sea lanes
• Myanmar and the Yadana pipeline to Thailand
• Azerbaijan, which is a bit too far west but still could figure into China's strategic interests in Central Asia.
• Congo, which would go nicely with China's rabble-rousing in Zimbabwe"

Reader Challenge

There are compelling arguments on both sides, and Congress is already taking action.  Here are some important questions to consider:

1. What national security interests are at stake?
2. Is the cause of freedom expanded or diminished if the sale goes forward?
3. Is it fair for a state-owned company of a communist country to purchase a US company that trades in oil?
4. If the US denies the sale, what will China's response be towards free markets and capitalism?
5. What are the possible consequences for US-Sino relations if the bid is rejected/accepted?
6. What are the implications for Unocal shareholders, who would like the best price for their shares?

I invite readers to comment by clicking on this link at the Fourth Rail.  I will address the questions asked above and others based on reader responses and debate.  Hopefully this will be an enlightening and civil, free-spirited debate.

A View from Abroad (Part II)

The Pew Global Attitudes Project (Full PDF report is here) is rich in information from 16 different nations.  Mining this data has some interesting gems that appear missing in most of the MSM accounts of the survey's reporting.

For Part II of this series, I will focus on US-Franco relations and some surprising results.  No doubt the war in Iraq, along with French, English and American diplomacy, soured the French public on the "We are all Americans now" mentality in the immediate aftermath of 9/11.  However, the 2005 Pew report seems to indicate that the bottom of relations has been reached and a period of reconciliation has begun.

Prior to 9/11, the French public had a favorable opinion of the US in the low 60% range.  It freefell to 43% in 2003, with a further dip to 37% in 2004, and has now returned to 43% in 2005.  For a European reference, the British had a 55% favorable rating of the US, Netherlands 45%, Germany and Spain 41%, and Poland a healthy 62%.  While the socialist nations of Europe all rate the US at below 50%, the trend is improving.  Iraq and the lack of a Soviet threat to Europe must account for a good deal of the negative feelings to the lone superpower, but also the implicit threat of American-style capitalism is part of the equation as well.  The English and Polish economies have less to fear from US-style capitalism.  In fact, their economies are much closer in design to America's than France and Germany. 

The high unemployment rates only increase the insecurity of French, Dutch and Germans toward the US economic engine of "raw" capitalism.

Americans have an 83% favorable view of themselves, compared to France's 74% positive rating for their own nation.  However, the French love the Germans (more than the Germans love them) with an 89% rating.  Shockingly, the French view China with a 58% positive rating, 15% higher than their view of the US.  No wonder why France is more than happy to sell arms, regardless of their danger to US forces, to China.

US responses to the Tsunami disaster, which had a disproportionate effect on Europeans on vacation over the Christmas holiday, are interesting in Europe.  66% percent of Germans, 51% of the French and 62% of the Dutch had a more positive view of the US based on our humanitarian response. 

So where are the positives for US-Franco relations that were promised in the prior post?  The data is found in the responses to "How Western Publics View Americans" on 3 positive traits and 4 negative traits.

Positive

• Hardworking  - 89% of the French, higher than any other country surveyed and even our own view in the US of 86%.  The French do not view the US as a culture of slackers, and this points to a contrast with their own economic/social model.
• Inventive - 78% of the French (compared to 81% of Americans) view the US favorably in this category.  Invention is an important component of economic growth. 
• Honest - 67%, tied with Great Britain for second place in the view of Americans as being trustworthy.  This bodes well also for long-term foreign policy as the French are likely to see Americans as doing what they pledge to do.

Negative Traits

• Greedy - Only 31% of the French see the US as greedy, compared to 70% of Americans.  This contrast of extreme low and extreme high in the survey is interesting.  However, given the French view of Americans as "hardworking" and "honest", this result should not be all that surprising.  It does also assist the US in conveying an altruistic foreign policy abroad.
• Violent - The French view America as violent by a percentage of 63%, the second highest in the survey.  Given the influence of American films and television, this statistic is not that surprising. 
• Rude - Only 36% of the French view Americans as rude.  If only the converse were true.
• Immoral - For all the differences over the war, only 37% of French view the US as immoral, below even our own opinion of 39% here at home.

Three of the Positive Traits and 3 out of the 4 negative traits all speak favorably about French views about American characteristics.  This may give the US an opportunity to build upon the low opinions the socialist Western Europeans have of the US.

Religion is an area where the US and France divide the most.  61% of the French view the US as "too religious", compared to Jordanians, who view, by a figure of 95%, that the US is "not religious enough".  I see few opportunities to bridge this gap unless Americans give up their faith or the French experience a massive revival or allow the Muslim population to grow beyond the estimated 10% currently.

French perceptions appear most off when the statistic of "How Others Feel About Your Country" is analyzed.  80% of the French believe they are liked abroad compared to only 26% of Americans.  Both nations are probably somewhere in the middle. 

The road ahead between Washington and Paris will continue to have diplomatic strains over Iraq, the War on Terror, and China.  However, there are areas of mutual respect between the US and France where progress can be made on nuclear issues, trade (Airbus-Boeing aside), genocide, AIDS in Africa and encouraging democracy abroad. 

US and Vietnam and Oil

I, unfortunately, let the visit of the Prime Minister of Vietnam, Phan Van Khai, with President Bush go by uncommented upon.  Nevertheless, the visit was extremely important and is a good indicator of US policy in Asia.  The relationship has implications with US-Sino relations as well, especially because of oil, which is only highlighted by China's desire to invest heavily into Mobil. 

Vietnam is in a strategic geographic position with important oil shipping lanes nearby.  Rather than attempting to, as they say, reinvent the wheel, I would like to refer you to Tom Collins' excellent work (he has a history inside the oil industry) and unique perspective on the visit over at QuillNews.

"But the energy realities of the region remain.  Oil and energy security will be on the agenda when Khai visits with President Bush today. However, now instead of competing over oil discoveries and drilling rights nearby, China and its East Asian neighbors are forced to rely on oil and gas shipped from the Middle East. Pressure on security of the sea lanes remains paramount to every state in the region where no one trusts anybody else. China’s military build up, partly in its blue water navy to project military power at sea, continues and is causing nerves to twitch in the region.  Now, instead of working to deal with the riches of oil at home, Vietnam and the US find themselves again talking about oil – this time keeping sea lanes for oil transportation open. 

When Khai appears in the White House to discuss mutual interests, the US and Vietnam can discuss the US desire that Vietnam take a more active role in the region’s defenses, and that the Vietnamese cooperate with their regional neighbors – notably Japan and Australia – to assure that all shipping in the region remains secure from pirates, terrorists or bully states. (Fourth Rail, WRMead in LAT)  Despite the wrongs, the lingering memories (LGF) and open wounds, the chapters of history that the US and Vietnam wrote together in war are largely completed.  The caravan of history has moved on; and oil, as always, must flow. (QN)"

The US is forging new and innovative alliances in Asia while strengthening core relationships such as with Japan and Australia.  This is all good news for the long-term security and economic interests of both of our nations.

A View of America from Abroad (Part I)

The Pew Global Attitudes Project has released their annual survey on world opinions regarding the United States.  This annual survey over the past 3 years (the survey has run longer) has sampled anywhere from 6 to 44 nations ranging 5,520 responses to as many as 38,263.  This year's survey sampled 16,766 people from 16 nations.

The nations included are predominately from Europe with China and India representing the non-Muslim Asian countries and a collection of Muslim countries from the Middle East to Pakistan and Indonesia.

The responses are an improvement from last year's survey, but not by much.  However, there is significant data to be mined in the study.

India

US diplomacy in South East Asia is paying off.  Even with the US sale of F-16s to Pakistan, 71% of Indians had a favorable view of the United States.  This is striking given their multi-religious emerging democratic society and bodes well for future relations between to the two countries.  Additionally, US support after the December 2004 tsunami left 54% of India's citizens with a more favorable view of the US as well.

The survey also looked at three overall positive attributes of the United States (along with 4 negative traits) and ranked perceptions.  81% of India's population view Americans as "Hardworking" (5th highest view), 86% as "Inventive" (1st of 16) and 58% as "Honest" (2nd of 16). 

With respect to the negative attributes, India sees America as significantly less "Greedy" than Americans do at 43% vs. 70%.  Only 39% of India sees Americans as "Violent" compared to 49% in the States.  For being "Rude," India's people thought Americans rude at 27% compared to domestically at 35%, a rather good outcome, especially considering all of the India call centers that have to deal with frustrated Americans regularly.  On "Immorality" the Indian consensus was 36% to 39% in America.

The highest result for a foreign nation believing that US foreign policy is concerned about others was from India with 63% answering in the affirmative compared with only 26% who answered "no". 

The only country to name the US as their top rated foreign country to go to "to lead a good life" was India, with 38% of respondents opting for the States, a higher percentage overall than any other destination for any nation's respondents.

Strikingly, Indians and Americans have almost identical views in what influences American foreign policy, ranking them in order for both nations: 1) News Media (40% US - 36% India), 2) Business/Corporations (23% -21%), 3) the Military (7% - 6%), 4) Jews (1% - 2%), 5) Conservative Christians (6% - 5%), 6) Liberals (2% - 2%) and 7) Ordinary Americans (13% - 4%) the largest difference. 

On the issue of Iraq, India topped the list as the country that most believed that the world was safer without Saddam, 45% to 26%, ahead of even American views.

On protecting the environment, Indians gave the US its highest ranking from foreign nations.

While most of the responses from the Indians were pro-US, this one statistic stands in sharp contrast.  Would the world be better if "Another Rivaled U.S. Military Power"?  81% of Indians said "yes" while only 15% said "no".  This could be in large part to a history of US support of Pakistan that has only been further highlighted because of the War on Terror.  Additionally, 45% of Indians believe that China becoming a military rival to the US is a positive development.  This could be explained from two perspectives, the first being that Indians are comfortable with growing Chinese power in the region.  However, I suspect a second perspective is a more realist approach from the Indians.  A rising China only increases the value of a strategic US-Indian partnership that would cover economic, military and political areas of mutual support that would further India's strategic and economic importance. 

Overall, the study does point to Bush Administration successes in reaching out to India. 

In my next part of this series I will address US and French views of each other.  They are not what would be expected and point to some positive areas of diplomatic growth in the relationship.

Balance of Power in Europe

The fallout from the French and Dutch votes against the EU Constitution is growing.  Small fractures in the union have grown and are visible for the world to see.  The recent failed EU summit, chaired by strong EU supporter Jean-Claude Juncker, the Prime Minister of Luxembourg, prompted Mr. Juncker to describe the union as being in "a deep crisis".

What should have been a summit to think about and discuss the demise of the constitution was instead focused on the 2007-2013 EU budget, which has until next year to be worked out.  Mr. Chirac, handed a huge personal defeat during the constitution voting, looked not to heal the European divide his government partially caused but to shift blame elsewhere.  There are two conflicting economic systems competing for primacy in the EU: the United Kingdom, with an economic model closer to American capitalist standards of competition, and the current Franco-German socialist model.  The philosophies are so different that it is extremely difficult to build an EU budget and formulate policy among the 25 member nations, that have widely different views of the world and economics.  Winning the heart of this debate in favor of the United Kingdom model is vital to Europe's future prosperity and security.  Mr. Chirac coldly attacked the British rebate in the EU, a deal that Margaret Thatcher cut with a smaller EU in 1984.  The British rebate compensates the UK for its disproportionate payments into the EU budget and grows annually.  The rebate is expected to be about 4.5 billion euros ($5.5 billion) this year. 

Mr. Chirac's attack was clever on several fronts.  There is no love lost between Mr. Chirac and Mr. Blair, who have clashed on issues regarding the leadership of Europe and, more noticeably, the Iraq war, where France effectively blocked UN support for the war against a strong British desire.  PM Blair was not willing to give up or renegotiate the rebate unless the French were willing to revise their own generous subsidy in the form of the Common Agricultural Policy (CAP).  Mr. Chirac, not willing to give an inch, ruled it out.  A proposal from Luxembourg would have ended the British rebate and left open the French CAP benefits to discussion midway through the next budget.  This proposal could not be taken seriously by the English. 

What was so clever in Mr. Chirac's attack is where it put the English with their allies in Eastern Europe.  Towards the end of the failed summit, Poland and the other Eastern European nations proposed paying more into the EU budget so the British rebate could be preserved.  Mr. Chirac effectively drove a public wedge between the UK and "New Europe". 

Why didn't PM Blair cut a deal?  Mr. Chirac likes to think big in the long term but conducts policy in the short term, which explains his 24% approval rating.  He is not willing to make long-term political choices that are painful and instead is working to detract attention from his failed policies and wound his neighbor across the channel. 

Mr. Blair, who is set to take over the EU presidency for 6 months, thinks long term as well but is willing to make painful short-term moves to accomplish long-term change.  Mr. Blair, sensing a weak Mr. Chirac and an even weaker German leader, likely to be replaced by a more friendly Angela Markel, is willing to wait to reform Europe.  In order to do that, Mr. Blair must work out a framework for Europe not in an 11th hour room in Brussels, but by building an alliance with New Europe along with Germany to push the EU in a more competitive and US-cooperative direction. 

That type of vision takes time and dedication.  Mr. Chirac will continue to play the obstructionist.  But if the Europeans want a "closer union", they would be wise to follow the Blair model.

Suggested Reading for more insight:

1. The Economist "Europe's identity crisis deepens"
2. The Guardian "Blair defends rebate stance to MPs"
3. The New Zealand Herald "French press put boot into Chirac"
4. Financial Times "Blair takes diplomatic line over EU budget"
5. Der Spiegel "EU Summit Collapse is 'Historic Failure'"

Operation Spear

Operation Spear began today in Iraq.  I highly recommend Bill Roggio's piece at Winds of Change.  The whole piece is well worth reading to get a good grasp of this important assault near the Syrian border.  However, this portion of his analysis speaks volumes as to how the US and Iraq are progressing in dealing with the insurgent terrorists:

"The operations in Anbar must also be looked at from a political perspective as well. The coalition struck a serious (but not fatal) blow to al Qaeda with the capture of Abu Talha. The terrorists continue to lose their appeal with the Iraqi people. The Iraqi Assembly has successfully completed negotiations with the Sunnis to participate in creating the Constitution, generously ceding 15 seats on the committee to a party that boycotted the elections. Negotiations with Sunni groups at the national level and the local level (particularly in Anbar) are accelerating, as the government attempts to offer the Sunnis an option to end the violence and participate in the government. The Iraqi Army is making the long, uphill climb towards becoming an effective fighting force, and is increasing its participation in combat operations against the insurgency."

This type of summary is often missing in the mainstream media.  There is progress in Iraq.  Operations such as Spear, Matador and New Market are further diminishing the insurgents' ability to kill Iraqis and terrorize the citizens of the cities they corrupt. 

Our prayers and support are with the US and Iraqi forces, who are engaged in an important battle.

Kissinger Warns Against Chinese Containment (Part II)

Part II of my review of Dr. Henry Kissinger's piece on "China: Containment Won't Work" will look at his view of US-Sino relations with respect to Taiwan and his prescription for more constructive bilateral relations.

The Problem of Taiwan

"The problem of Taiwan is an exception and is often invoked as a potential trigger. This could happen if either side abandons the restraint that has characterized U.S.-Chinese relations on the subject for over a generation. But it is far from inevitable. Almost all countries -- and all major ones -- have recognized China's claim that Taiwan is part of China. So have seven American presidents of both parties -- none more emphatically than George W. Bush. Both sides have managed the occasional incongruities of this state of affairs with some skill. In 1972 Beijing accepted a visit by President Nixon, even while the United States recognized Taipei as the capital of all of China, and by another president -- Gerald Ford -- under the same ground rules in 1975. Diplomatic relations were not established until 1979. Despite substantial U.S. arms sales to Taiwan, Sino-American relations have steadily improved based on three principles: American recognition of the one-China principle and opposition to an independent Taiwan; China's understanding that the United States requires the solution to be peaceful and is prepared to vindicate that principle; restraint by all parties in not exacerbating tensions in the Taiwan Strait.

The task now is to keep the Taiwan issue in a negotiating framework. The recent visits to Beijing by the heads of two of Taiwan's three major parties may be a forerunner. Talks on reducing the buildup in the Taiwan Strait seem feasible."

Dr. Kissinger outlines several key points.  His first observation is that both the US and China have historically exercised restraint over Taiwan.  While this is true, it must also be viewed in the context of the period of each country's relative power.  During the Cold War, the US Navy, especially in the mid '80s, was rapidly approaching a 600-ship navy.  The world conducted relations in a multi-polar world of two superpowers, one whose remnants border China.  The other consideration is the significant lack of military power that China had at its disposal to project power abroad.  While the Chinese military threat is a hot topic in think tanks, defense ministries and conferences, it was up until recently that Taiwan held a substantial military advantage over China.  China exercised restraint not out of a benevolent power position but out of a weaker position than it now finds itself in. 

This is reflected in the recent "anti-secession" law that authorized "non-peaceful means" to reunify China under the much beloved "One China" policy.  While the past is important, it is vital to examine China's future motives and US goals in Asia before assuming that history will repeat itself for the good.

Dr. Kissinger lays out three requirements for peace over Taiwan:

1. American recognition of the one-China principle and opposition to an independent Taiwan
2. China's understanding that the United States requires the solution to be peaceful and China being prepared to vindicate that principle
3. Restraint by all parties in not exacerbating tensions in the Taiwan Strait

The US has kept to the first position and has reaffirmed, as Dr. Kissinger points out, during 7 US presidencies the One China policy.  China has shown an ability to peacefully integrate Hong Kong; though its slow erosion and reinterpretation of the Basic Law and personal freedoms remains worrisome.  The "Anti-Secession" law, however, does not support point two for the Chinese.  Both sides have not done an exceptional job on point three. Consider the clear message President Bush has given in interviews regarding America's commitment to defend Taiwan against an invasion, Sec. Rumsfeld's speech in Singapore, and continued diplomacy to attempt a Cold War style containment of China.  China's massive military buildup, including up to 1,000 missiles aimed at Taiwan, inviting Taiwanese opposition party candidates to China to divide them politically and provoking legislation, are all steps that are against Mr. Kissinger's third principal.

I agree that it would be beneficial for the three concerned parties to have a frank dialogue and conduct negotiations for reducing the militarization of the Taiwan Strait.  It is possible that Dr. Kissinger is privileged in knowing about discussions that have taken place.  However, it is not publicly known if the US, China and Taiwan are discussing some form of arrangement to reduce tensions.

As China's military power and economic might grow, Taiwan will continue to be an issue.  Additionally, as the anti-Japanese riots demonstrated, the ruling Communist party is not so restrained as to not use nationalism as a foreign policy tool against its neighbor's ambitions, whether they be a UN Security Council seat or independence.  As the middle class grows in China, the demand for personal freedoms and accountability will increase.  Nationalism is the best influencer other than outright reform that the Communist party has to deflect criticism elsewhere and hold fast to power.

Tomorrow, I will examine Dr. Kissinger's views about the balance of power in Asia and whether the US and China will work cooperatively together or move more aggressively into rival positions.

Kissinger Warns Against Chinese Containment (Part I)

Dr. Henry Kissinger, the modern day embodiment of realpolitik, wrote in the Washington Post an article titled "China: Containment Won't Work".  Former Sec. of State Kissinger was the instrument by which the Nixon administration opened the door on relations with Communist China through secret diplomacy in 1971. (For an excellent review of released State Dept. correspondence of the events, see George Washington University's analysis here).

Dr. Kissinger states what many readers of this blog have commented on and what is becoming common wisdom:

"The rise of China -- and of Asia -- will, over the next decades, bring about a substantial reordering of the international system. The center of gravity of world affairs is shifting from the Atlantic, where it was lodged for the past three centuries, to the Pacific. The most rapidly developing countries are in Asia, with a growing means to vindicate their perception of the national interest."

This shift is reinforced by the atrophy of European defense investments and the anemic economic performance of France and Germany.  Asia's growth in defense, trade and investment is in sharp contrast to Europe.  The US, which borders both the Atlantic and Pacific, is geographically well positioned to play a pivotal role in emerging strategic relationships.

Dr. Kissinger, who wrote his doctoral dissertation on the Concert of Europe, focusing on Bismark's elaborate structured diplomacy, writes:

"China's emerging role is often compared to that of imperial Germany at the beginning of the 20th century, the implication being that a strategic confrontation is inevitable and that the United States had best prepare for it. That assumption is as dangerous as it is wrong. The European system of the 19th century assumed that its major powers would, in the end, vindicate their interests by force. Each nation thought that a war would be short and that, at its end, its strategic position would have improved.

Only the reckless could make such calculations in a globalized world of nuclear weapons. War between major powers would be a catastrophe for all participants; there would be no winners; the task of reconstruction would dwarf the causes of the conflict."

While this is the first example I have read of a comparison between US-Sino relations and the Concert of Europe diplomacy, it is an interesting straw man.  Europe, pre-World War I, was a world based on a balance of power, realpolitik structure.  US-Sino-Asian relations is not based on such a system.  US foreign policy is driven, because of the threat of WMD, to an Idealist goal of expanding liberty by realpolitik (Realist) means in an effort to increase our own security. Dr. Kissinger argues against a US policy of containment on the following grounds:

"It is unwise to substitute China for the Soviet Union in our thinking and to apply to it the policy of military containment of the Cold War. The Soviet Union was heir to an imperialist tradition, which, between Peter the Great and the end of World War II, projected Russia from the region around Moscow to the center of Europe. The Chinese state in its present dimensions has existed substantially for 2,000 years. The Russian empire was governed by force; the Chinese empire by cultural conformity with substantial force in the background. At the end of World War II, Russia found itself face to face with weak countries along all its borders and unwisely relied on a policy of occupation and intimidation beyond the long-term capacity of the Russian state."

This argument appears to have has several flaws.  First, the Chinese government has been a Communist regime for the past 60 years, and Communism as a form of government had not existed prior to Marx in the late 1800s.  Linking the current communist regime to 2,000 years of prior Chinese rule seems inconsistent.  But more striking is Dr. Kissinger's failure to point to the Tiananmen Square massacre in 1989 that left conservatively 400-800 Chinese dead by the ruling government and its military, hardly an argument for "conformity with substantial force in the background."  China has relied on a policy of intimidation with neighbors, including India, Vietnam, Mongolia, Taiwan, and the Philippines, not to mention Tibet, much like his contrasting Russian state.

Next Dr. Kissinger appears to respond to Sec. of Defense Donald Rumsfeld's comments in Singapore questioning the massive increase in Chinese military expenditures when no threat is apparent to the Chinese.

"The strategic equation in Asia is altogether different. U.S. policy in Asia must not mesmerize itself with the Chinese military buildup. There is no doubt that China is increasing its military forces, which were neglected during the first phase of its economic reform. But even at its highest estimate, the Chinese military budget is less than 20 percent of America's; it is barely, if at all, ahead of that of Japan and, of course, much less than the combined military budgets of Japan, India and Russia, all bordering China -- not to speak of Taiwan's military modernization supported by American decisions made in 2001. Russia and India possess nuclear weapons. In a crisis threatening its survival, Japan could quickly acquire them and might do so formally if the North Korean nuclear problem is not solved. When China affirms its cooperative intentions and denies a military challenge, it expresses less a preference than the strategic realities. The challenge China poses for the medium-term future will, in all likelihood, be political and economic, not military."

It is the Secretary of Defense's job to "mesmerize" the Pentagon with the Chinese military buildup because of China's acquisition of weapon systems that are designed for two purposes:  the invasion of Taiwan and the defeat of the US navy in the Pacific.  While the US military budget is structured around the US projecting its power around the globe and defending numerous allies and influencing regions, China's military goals are more focused, regional, and less expensive.  China's potential threat to the United States is greater than what would appear by sizing up the military budgets and concluding China is one-fifth that of America's.   The Chinese have been exceptional students of asymmetrical warfare and strategic modernization of key defense technologies, such as cruise missiles, anti-ship weapons, and sophisticated Russian fighters, along with increased heavy-lift air capability.

While I am a great admirer of Dr. Kissinger, his opening arguments do not appear compelling.  I will look at his comments on Taiwan, North Korea and US foreign policy in my concluding post tomorrow.

UPDATE: (6/16/05) Drudge Report has a link to this Sky News video of how a Chinese protest dispute is broken up by force.  Possibly another example of "cultural conformity"?

Why France's Self Destruction Matters

I have received comments and email when I have posted on European matters, such as the rejection of the EU Constitution, that question the relevance of these issues to US foreign policy.  Many view the European project as an enterprise of long conversations with little change.  Europe, long now weak on "hard" power, is becoming even softer in the "soft" power category, many rightfully charge.

However, while following power is important, the reverse is also true.  Where there is a vacuum, changes usually occur, and oftentimes radical ones at that.  From the turn of the 20th Century sick man of Europe, Turkey (of the late great Ottoman Empire) to the Soviet Union's disintegration a power, vacuum creates great uncertainty and often leads to shifting alliances with major powers.  Fourteen years after the fall of the Soviet Union, many of the former Soviet states are actively pursing a policy that aligns them with the West and in the good graces of the US foreign policy and military establishments. 

The Franco-German alliance

The Franco-German alliance, centered around a socialist, non-US world centric view, attempted to take the European nations (both East and West) in a direction that reflects their economic and strategic priorities.  The Iraq War was a clear case in point.  Gerhard Schroeder's siding with Mr. Chirac and turning away from the US, a historic ally, and Great Britain helped him secure his party's narrow reelection.  His chance of beating Ms. Markel, with no anti-US sentiment to again rally his people, is grim come September. 

Mr. Chirac's 24% approval ratings (almost half that of the world-hated Mr. Bush's approval ratings) and his defeat over the EU Constitution led him to elevate Mr. Dominique de Villepin (the chief French "Non" at the UN against the US position) to be Prime Minister.

Double-digit unemployment in both Germany and France are the chief reasons for their citizens' discontent.  What remaining soft power the Franco-German alliance retains in the EU is draining away as their economies continue to sputter.  This example from the Economist of Mr. de Villepin's prescription for handling the unemployment problem looks like a short-term solution with long-term problems.

"It relies heavily on subsidised municipal job creation. The scheme could dent the unemployment figures, which show that 10.2% of the workforce is without a job. But it will do little to free up the labour market. And its expansion will come at a price—an extra €4.5 billion ($5.5 billion) in 2006, said Mr de Villepin. He added that, as all extra money had to be dedicated to jobs, he would have to suspend Mr Chirac’s promised income-tax cuts. Even so, Eric Chaney, chief European economist at Morgan Stanley, says he is raising his budget-deficit forecast for 2006 from 3% to 3.5%."

Rather than take on structural reform of the powerful French unions, 35-hour work weeks, or 60-year retirement age that France cannot continue to afford, the government will pay large government contracts to unions through public debt and set aside already promised tax relief that would have encouraged new business.

The French solution is far from it.  Handing out benefits to the portions of their economy they most need to reform will continue to eat away at French soft power as they become an economic embarrassment to Europe, especially when viewed against Great Britain with a 4.8% unemployment rate. 

A British-German alliance?

With Tony Blair heading up the EU and being pro-American, and former East German Angela Markel likely to win Mr. Schroeder's job, the Franco-German alliance of the big three powers in Europe will collapse and with it, the dream of a European "third way" apart from the US.  France will find itself isolated further within Europe.

However, a weak Germany and a continued weak France, while cynically amusing to those in the US who supported the Iraq war and promoting democracy in the Middle East, is not in the long-term interests of the US.

An EU focused on economic growth, good structural policy, and a desire to invest in their military capability is in the US interest.  A British-German alliance within the EU would go a long way towards increasing Europe's relevance and promote stability not only on their continent but in the Middle East, Africa (as seen in the recent G8 debt relief) and Asia as well.

UPDATE:The Scotsman has an interesting article that leads "Blair aims to split Franco-German alliance" and opens:

"TONY BLAIR yesterday launched his strategy to isolate Jacques Chirac - by building an alliance with the woman expected to replace Gerhard Schröder as chancellor of Germany.

The Prime Minister's first stop when he arrived in Berlin was not to the Germany chancellery, but to visit Angela Merkel, the right-winger expected to come to power if the country's elections go ahead in September as planned.

While he was rebuffed by Mr Schröder yesterday, Ms Merkel gave a speech where she attacked Mr Chirac - and said that Britain's European Union budget rebate was fully justified, as it pays so much in taxes. Mr Blair spent half an hour in talks with Ms Merkel, and is understood to have presented her with an argument for a root-and-branch reform of the EU which would punish French farmers and reward eastern Europe."

1st Combat Engineer Battalion

I had the opportunity, along with my wife, to go to the 1st Combat Engineer Battalion picnic at Camp Pendleton today.  This Battalion has a storied history spanning Guadalcanal, Inchon, Chosin Reservoir, Da Nang, the Gulf War, Somalia and Operation Iraqi Freedom.

The have had been to Iraq on two tours and are back in the States until some of them likely deploy again in August.  It was an honor to share a meal and talk about their hometowns and what their plans were after their service.

They, like many in the service, have experienced a great deal in Iraq, from Al Anbar Provence to Ramadi.  The battalion has lost 11 soldiers in Iraq.  It was nice to see them home, enjoying a day by the beach, with friends and family.  I pray that all of our servicemen and women abroad get to celebrate their safe return and a job well done.  For those that have given the ultimate sacrifice, I want to express my deepest gratitude.