Peter L. Berger's Blog, page 554

Germans Spied on Allies, NGOs

How do you say schandenfreude in German again?

It turns out that the bitter, even nasty criticism of allies—particularly the United States—by Germany has been revealed as hypocritical drivel. The German government has been spying on allies, including the U.S.—and much more intensively than has so far been admitted. Spiegel:

Three weeks ago, news emerged that Germany’s foreign intelligence service, the Bundesnachrichtendienst (BND), had systematically spied on friends and allies around the world. In many of those instances, the BND had been doing so of its own accord and not at the request of the NSA. The BND came under heavy criticism earlier this year after news emerged that it had assisted the NSA in spying on European institutions, companies and even Germans using dubious selector data.

SPIEGEL has since learned from sources that the spying went further than previously reported. Since October’s revelations, it has emerged that the BND spied on the United States Department of the Interior and the interior ministries of EU member states including Poland, Austria, Denmark and Croatia. The search terms used by the BND in its espionage also included communications lines belonging to US diplomatic outposts in Brussels and the United Nations in New York. The list even included the US State Department’s hotline for travel warnings.The German intelligence service’s interest wasn’t restricted to state institutions either: It also spied on non-governmental organizations like Care International, Oxfam and the International Committee of the Red Cross in Geneva. In Germany, the BND’s own selector lists included numerous foreign embassies and consulates. The e-mail addresses, telephone numbers and fax numbers of the diplomatic representations of the United States, France, Great Britain, Sweden, Portugal, Greece, Spain, Italy, Austria, Switzerland and even the Vatican were all monitored in this way. Diplomatic facilities are not covered under Article 10 of Germany’s constitution, the Basic Law, which protects German telecommunications participants from such surveillance.

Americans can be excused if they indulge in a certain amount of gloating here. It’s always nice to see the neighborhood scold exposed as a hypocrite.

But scoring tit-for-tat points isn’t the goal here. Germany and the U.S. need each other these days. Both countries have common interests in the successful development of Europe and the furthering of peace and prosperity in Asia, as well as in successfully tackling the crises smoldering to the continent’s south and east. Perhaps these revelations can serve as the basis for a new and deeper conversation between Americans and Germans about how we can work together better, with less finger pointing and more serious purpose.

The Uberization of Finance

This weekend’s essay in the Wall Street Journal provides a glimpse into a future that’s coming a lot faster than most think. The scene-setting opener:

Imagine that you want to buy a home. You might find a real-estate agent to show you around, which is a very 20th-century way of doing things. Or you might go 21st century and use the Web to research prices and available properties and to take a few virtual tours.

When it comes time to buy, however, you will probably revert to procedures that were created in your grandparents’ era. You will assemble financial documents and present them to a loan officer at a bank, who will take weeks to determine what you can borrow and at what rate and then present you with a narrow menu of costly options.Imagine instead a simple online interface that could generate a tailored credit score for you, taking into account your future earning potential based on your education and location. It would connect you to lenders ranging from banks and credit unions to pools of individuals who want to lend privately at a negotiated rate for whatever duration you agree on. You could shop around, combine different types of financing and arrange a mortgage package that best suits you, all within a few hours.We aren’t quite there yet, but we may be soon. Over the next decade, the familiar 20th-century modes of banking and investing will give way to something very different. We are on the verge of the Uberization of finance, which will bring multiple new opportunities but also a range of new risks.

The essay is a helpful tour d’horizon of the kinds of ideas the Silicon Valley disintermediators are playing with. From democratizing loans to revolutionizing venture capital to making stock ownership more accessible to more people by eliminating the fees associated with traditional brokerages, a brave new world of finance appears to be emerging.

Complicated regulatory issues will no doubt emerge, but reducing the drag of our expensive and heavily mediated financial sector, while getting more money into the hands of entrepreneurs faster and at less cost, will be vital for the development of the new economy.

UN Rushes Climate Fund Projects Ahead of Paris Summit

Desperate to score a rare win for the international climate treaty process less than four weeks before the big summit in Paris, the UN’s Green Climate Fund (GCF) green-lit its first eight projects today, appropriating $168 million of the $10.2 billion so far amassed. In doing so, the UN hopes to demonstrate the developed world’s commitment to financially supporting poorer countries as those countries mitigate and adapt to climate change.

But on closer examination there’s still plenty to be concerned about. For one, the numbers involved are laughably low for a process that, when it was set up in Copenhagen in 2009, was meant to dole out $100 billion annually. The fact that it took six years to spend just 1.6 percent of that annual budget will be a major point of contention in Paris, as will the fact that the GCF remains, well, un-funded. With just $10.2 billion in the coffers so far, it’s clear that rich countries haven’t been paying up, and the developing world has taken notice.But that’s not the only issue with this baby step. As Reuters reports, the process of approving these projects has been criticized as being rushed through in order to build momentum for the rapidly approaching conference in France:

Some civil society groups that participated in the GCF approval process said it was rushed ahead of the Paris summit and lacked transparency. Cheikhrouhou disagreed and said the GCF provided expansive documentation “well in time.”

The eight-project shortlist had been narrowed down from 37 applications and published on the GCF website on Oct. 15. The GCF board’s approval meeting in Zambia started Nov. 2.This left little time for board members, including non-government organisations, to review the projects, said Liane Schalatek, associate director of the Heinrich Boell Foundation North America.“You have to be extremely careful that you are not setting bad precedents with the first couple of projects that you are looking at,” she said.

It says something about international policy efforts that it took six years to create a shortlist of developing world green projects worth investing in, and the fact that these projects were rubber stamped without leaving more time for a proper review of their merit fairly reeks of desperation. This sets a precedent that will terrify the developed world, which doesn’t want to write blank checks to projects they have no way of verifying or monitoring.

We know exactly why this was rushed through. As South African climate delegate and spokesperson for the G-77+ China Nozipho Joyce Mxakato-Diseko recently put it, “whether Paris succeeds or not will be dependent on what we have as part of the core agreement on finance.” The UN wants these first eight projects to be seen as a sign of good faith, but they only expose how meager the GCF’s efforts have been thus far, and how little regard the organization holds for careful oversight of how that money is being spent.

East Asia 2015 Is Not Europe 1914

The Next Great War: The Roots of World War I and the Risk of U.S.-China Conflict

Richard N. Rosecrance and Steven E. Miller, eds.MIT Press, 2015, 320 pp. The Improbable War: China, the United States, and the Logic of Great Power Conflict Christopher CokerOxford University Press, 2015, 240 pp.

In June the U.S. government accused the Chinese government of hacking into OPM’s personnel files and vacuuming up data on millions of employees and contractors, a charge repudiated by Chinese authorities. China’s efforts to create islands of dredged sand in the South China Sea prompted public rebuke from Secretary of Defense Ashton Carter, including a public warning that the United States and its allies “would not be deterred” from exercising rights of sovereignty and freedom of transit. The Deputy Secretary of State, Anthony Blinken, compared China’s efforts to pursue territory in the South China Sea with Russia’s territorial aggression against Ukraine, a rather forced comparison given that sand bars in the middle of the ocean are not member states of the United Nations, and that China is not the only country in Asia trying to create facts on the (newly dredged) ground. Thankfully, there was one bit of levity about the story. The very week that Blinken excoriated the Chinese for their island-making aggression, CCCC Dredging, the Chinese company that built the islands and is quite proud of its technology, announced that it would soon go public, which means we could all have a piece of the new island market in the Pacific.

Whatever you might think about China’s sandy archipelago, the Chinese are up to their eyeballs in global trade and finance and fully integrated into today’s globalized world, while the Russians pursue an economic policy that skitters between mercantilism and crony capitalism. The Chinese have slowly acknowledged that their security and prosperity are interdependent with those of other nations; the Russians under Putin still seem to believe that somehow they are not a part of the globalized world and that their irresponsibility will not affect their bottom line.This matters for thinking about China as a rising power and what kind of threat it may pose to international order. In the literature on Great Power relations, it matters greatly whether a rising challenger is a reformer that accepts the status quo but wants greater influence and benefits from it, or is a revolutionary that wants to overturn the existing order. If you want a rule of thumb for thinking about rising powers today, it is this: Governments that understand that their security, prosperity, and most importantly, their governmental legitimacy are interdependent with other nations’ will be status quo powers.Robert Peston, Economics Editor for the BBC, tells a story about interviewing Hank Paulson for a documentary on China. Paulson was recounting his experience of working with China during the 2008 financial crisis. Foreigners held $1.7 trillion in Fannie Mae and Freddie Mac securities, and it was crucial that they didn’t begin to dump them on the market while he was trying to cajole Congress to come to the rescue. China held the biggest amount of the securities along with $1.1 trillion in U.S. Treasuries and paper. Paulson worked the phones daily, reassuring the Chinese and asking that they give him time. The Chinese pledged that they would work with him. The next week, they shared some disturbing news with Paulson: The Russians had proposed to the Chinese that they sell their holdings in Fannie and Freddie together. The Russians hoped to tank the market and escalate the crisis. The Chinese declined.Paulson retells the story in his new book, Dealing with China, in a chapter that reveals the lengths to which he went to coordinate his actions with the Chinese.1 The book should leave no doubts about the importance of Chinese actions in saving the global economy in 2008, and should impress upon anyone that Beijing’s role in the current world order is huge. For the Chinese in 2008, “responsible stakeholder” was not a slogan, but an essential role to fulfill through deliberate policy decisions.Although China’s island creation set off alarm bells and contributed to a growing China-is-the-enemy chorus, Beijing’s actions regarding food, energy, and currency are much more crucial to the question of whether its rise will be peaceful. In those areas, China is coming to grips with the fact that the wild economic success it has enjoyed over the past two decades means that its survival, and the survival of the Communist Party that leads it, are interdependent with the fate of others. China has awakened from a dream of self-sufficiency to recognize this fact of life. Its very ability to stoke its economy and feed its people depends on others, the inevitable result of choices it made to embrace international trade and finance and to use economic growth as a springboard to major power status.As it happens, these commitments to globalization are deeply unsettling and a source of great insecurity for much of the party. Perhaps the current senior leadership regrets the path that China has taken, but it cannot do much about it now without wreaking vast damage upon itself. Nor do I mean to suggest that the U.S. relationship with China is without tension, competition, and rivalry. China may have an enormous stake in sustaining the international order, but the United States has a history of searching for enemies, with its media often obliging by holding the spotlight. The major U.S. outlets, including the New York Times in particular, have presumed the worst of every Chinese policy directive of the past year. One need only compare the coverage of the Financial Times and the New York Times on China’s efforts to stabilize its currency while taking baby steps to liberalize it to see that the American paper envisions hostility and chicanery behind every policy. Just recently at the UN’s special session on peacekeeping, chaired by President Obama, Xi Jinping pledged a new $100 million stand-by force for the UN and African Union. Jane Perlez, the New York Times reporter, tweeted that the new force “offered by Xi for African Union can help protect China’s resources on the continent.”Scholars of foreign policy have long warned against the dangers of historical analogy in decision-making. Analogies provide an escape from thinking hard about what to do in a complex current situation. They instead substitute lessons derived from another historical context usually only superficially similar to the one confronting policymakers in the here and now. The choice of analogy is often driven by what psychologists call an availability heuristic; policymakers often reach for the analogy that is closest on the shelf in terms of personal and national history, or recent experience. Policymakers may also choose the analogy that recommends the policy response they want. For much of the past forty years Vietnam stands as an analogy for anyone who opposes U.S. military intervention anywhere. Likewise, Munich, the 1930s, and British appeasement still stand as the analogy of choice for those who advocate strong military response in any situation, or simply want to taint leaders with the folly of weakness. A hilarious piece in New York magazine earlier this year revealed that William Kristol has invoked Hitler, Churchill, Chamberlain and variations on the theme of appeasement no less than 42 times in his writings since President Obama’s election in 2008.The past 18 months prove that historical centennials increase the popularity of certain analogies. The run up to August 2014 produced a smattering of editorials and articles discussing the relevance of the origins of World War I for today. Recently, commentators have appropriated the analogy of sleepwalking and 1914 from Christopher Clark’s excellent book, The Sleepwalkers, and applied it to any kind of potential catastrophe. Within a two-week span in June, Paul Krugman and Lawrence Summers both invoked the folly of 1914 to warn European policymakers against the exit of Greece from the Eurozone. This October it was Zbigniew Brzezinski’s turn. He gratuitously prefaced an otherwise smart take on Russia and the United States in Syria with a shout out to the strategic errors of 1914.If you are a fan of prudence in diplomacy, 1914 is your analogy. Who doesn’t enjoy warning leaders of the dangers of hubris, risk-taking, bellicosity, and the belief in the inevitability of war? The most frequent use of the claim that “we could only be a Sarajevo away from World War III” has cast the South or East China Sea in the role of Sarajevo. In this version, China plays the German role of the rising power challenger and the United States plays Britain as the upholder of the international order. Many, if not all, follow the same trope: “Little did the leaders know as they enjoyed the summer’s halcyon days that the world was going to erupt in a violent cataclysm that would destroy empires and forever change the world…”All of this strikes me as a wee bit silly. Whatever you think of the leadership of the Chinese Communist Party today, they are not buffoons in plumed haberdashery who enjoy playing soldiers, as most of Europe’s aristocracy was in 1914. And the structure of rivalries and alliances in today’s Asia doesn’t resemble Europe’s interlocking, unstable, and uncertain alliances of the 1900s. If anything, scholars today believe that the great power/rising challenger dynamic at play at the outbreak of World War I involved a settled Germany fearful of a rising Russia.Which leaves today’s China and the United States where exactly in the historical comparison?The year 1914 may offer general lessons for good diplomacy, but it has little to say about today’s international order and the challenge that China poses. The year’s lessons are generic and timeless; they are the diplomatic equivalent of “don’t drop a hammer on your toe”, “don’t let children play with guns”, and “don’t let your friends get you into trouble.” World War I more broadly, stretched out to November 11, 1918, supplies an endless amount of such nuggets, too: “don’t let the military dominate politics”, “don’t let your allies do harmful things to your interests”, and “beware the cult of the offensive.”There is, however, one dangerous pseudo-lesson from World War I. Some international relations scholars believe that August 1914 is simply another piece of data confirming the inevitability of war between established great powers and rising challengers.The Next Great War, an edited collection by Richard Rosecrance, a long-time international relations scholar, and Steven Miller, the director of the Belfer Center at the Kennedy School at Harvard, takes aim at this pseudo-lesson. The book takes advantage of the interest in the centennial of 1914 to explore the utility of the World War I analogy in understanding China’s rise and the challenges it poses for the United States. It asks whether we are truly in a 1914 moment today and whether war between China and the United States is inevitable. The answers, thankfully, are no and no.Chapters in the book explore the origins of World War I and speculate on the relevance of the historical analogy to today. Several are terrific. Jack Snyder reprises earlier work of his on the importance of beliefs, especially the cult of the offensive, in structuring the deadly interactions of 1914. T. G. Otte, author of one of the best of the recent books on 1914, provides an impressive survey of the role that domestic politics played in driving the August crisis, and Etol Solingen carefully outlines the major differences in the international economic systems of 1914 and today, showing that the Chinese government and important domestic coalitions are much more invested in economic interdependence than their German or Russian counterparts of a century ago. Joseph Nye, in his typical clear, eloquent style, warns that a belief in inevitability was an important factor in driving the governments of 1914 to war. His warning rings loud and clear: “Among the lessons that scholars and policymakers should take away from this history of a century ago is to beware of Greeks, Europeans, or analysts bearing analogical gifts, particularly if they have a whiff of inevitability.”The Next Great War gets a little wobbly in a middle section, “Debating the Thucydides Trap”, when it veers off historical course and travels from Sarajevo to ancient Greece. The authors intend it to address the belief in the inevitability of war during transitions of international power. Former international relations majors may relish the opportunity to ponder what amounts to an “Intro to International Politics” final exam question: “Thucydides stated that what made war between Athens and Sparta inevitable was Sparta’s rise and the fear it provoked in Athens. Does this mean that war between China and the United States is inevitable?” Others will scratch their heads at the ahistorical nature of the exercise and wonder whether anyone really believes such truisms can travel so lightly across the millennia.Graham Allison’s contribution to the section is exemplary of what used to be called a “gentleman’s C” (although it’s probably a B+ at Harvard now). His chapter dutifully repeats the exam question and states that in 15 major power transitions in world history, 11 have ended in war. He provides no list or table of the cases, and no citation for the evidence; perhaps the reader is supposed to take it as a challenge to figure out all of the major power transitions in history and which ones ended peacefully. Or perhaps Allison has reached the status where he is beyond having to provide evidence. In any case, having suitably alarmed us, Alison asks whether China and the United States will end up in a war. He answers the question by seeking Lee Kuan Yew’s opinion. In a page of quotes from Lee one finds such gems as: “The size of China’s displacement of the world balance is such that the world must find a new balance in 30­–­40 years. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world.”After revealing that Lee expects China to bide its time until it is stronger, at which time it will challenge the United States, Allison justifies this rather strange approach to answering the question: “Lee’s judgments and forecasts may be right or they may be wrong. At a minimum, they are bracing and almost certainly closer to the mark than the judgments and forecasts of others.”The chapter borders on editorial and scholarly malpractice. Publishing the section, however, does allow for the inclusion of a no-holds-barred takedown of the misuse of Thucydides by David K. Richards. Richards, who passed away this past spring, was an investment fund manager who served on many Harvard committees and the Board of the RAND Corporation, and perhaps only someone who was not a member of the international relations professoriate would seek to demolish the belief that Thucydides’s insights are fundamental to all of international relations for all time:

In fourth-century B.C.E. Greece, war was, if not continual, almost an annual occurrence. The political and economic dynamics of ancient Greece were fundamentally unstable and considered as such by those then living. Thucydides’ idea that war was inevitable was not terribly profound.

The Next Great War has a tacit theory about the value of historical analogies for policymakers, which would have made the book stronger had the editors stated it explicitly: The relevance of and guidance received from any historical analogy for policymakers should rest on similarity in context. In applying the lessons of past episodes of power transition to today, three similarities should matter most: The international power structure, norms, and institutions then should be roughly the same as now; the Great Powers in the analogy should roughly have the same capacities, constraints, and goals as the ones they are being compared with today; and there should be rough confidence that the process of action and response that held in the historical case will likely obtain today.

When so considered, the 1914 analogy’s relevance for today falls apart. Today’s international system differs from that of a century ago in key ways. First, as Richard Cooper points out in his chapter, today’s globalized order is much more economically interdependent than it was in 1914, and such interdependence creates great disincentives to war. Cooper resurrects Norman Angell, who warned in 1912 that economic interdependence would make war catastrophically costly and therefore should dissuade leaders from choosing war. But as Cooper notes, Angell was primarily writing about England and Germany. Russia, which many scholars now contend was instrumental in starting the war, was much less engaged economically with other Great Powers; its economy was still largely self-sufficient.Second, today’s economic interdependence is institutionalized to a historically unprecedented level. International rules and institutions on trade, banking, finance, and movement of goods and persons create formal channels and procedures for international cooperation. These institutions in turn demand domestic legislation and legal frameworks that serve to lock in international commitments and strengthen the hand of domestic constituencies for globalization. Arrangements such as the G-7 and the G-20 create forums for financial coordination. If anyone doubts the importance of these institutions for global order, they should read Daniel Drezner’s recent book, The System Worked.Third, as Nye points out, nuclear weapons matter. An international system where security is obtained through nuclear deterrence is different from one where the Great Powers can engage in fantasies of short wars with low costs, or major wars in which triumph will have meaning. The destructiveness of nuclear weapons, and the risk that any Great Power war could put planetary survival at risk, creates a calculus of war much worse than the most pessimistic strategist could have imagined in 1914.And what of China as the prototypical rising power? Here one wishes that The Next Great War said more. The domestic coalitions for globalization in today’s China are dramatically stronger than those coalitions in 1914 Germany or Russia; the Chinese military does not have the political decision-making weight that the Prussian or Russian military had in 1914. China’s economic fate depends on the overall global economy in ways that make it a strong benefactor of the globalized order. One piece that would have been useful is a comparison of the demographic profiles of China with that of Germany and Russia in 1914. By 2050 or about the time that Lee Kuan Yew predicts that China will challenge America, its median age will be about 55, and Chinese octogenarians will outnumber the current population of Germany. No rising power in history has the demographic profile that China currently does, and it is not a threatening one. Indeed, as China grows more prosperous and older, its stake as a status-quo power will increase, not decrease.If war does break out between China and the United States this century, it will be all Steven Pinker’s fault. This is the underlying argument of Christopher Coker’s The Improbable War: China, The United States, and the Logic of Great Power Conflict. According to Coker, Normal Angell’s argument about the economic irrationality of war was a primary cause of World War I. If the diplomats of 1914 were sleepwalkers, it is because Angell lulled them to sleep with his dreamy talk of the impossibility of war. Since Coker believes that Steven Pinker and his ilk are doing the same now, he writes in order to sound the alarm.This is either one of the worst books on war published in the past several years or it is one of the greatest parodies about war and peace since The Good Soldier Svejk. Coker admittedly is an expert neither on World War I nor on China. Despite the title of the book, he does not seem to be a logician either. He claims to be a political scientist, but most of those include data in their books these days. Coker seems to believe that if you quote enough people, then whatever you say must be true. Almost every paragraph contains at least one sentence of the “as so and so asserts (writes, acknowledges, shows, observes)” variety. The author projects a donnish authenticity, which one must, I suppose, if there are no footnotes or page references in your book.The problems with Coker’s book begin with the title. It refers to a book edited several years ago by Holger Afflerbach and David Stevenson, well-known historians of World War I. That book, An Improbable War, looks to European culture before 1914 to balance the interpretation that structural conflict dynamics had over-determined the outbreak of war. The Afflerbach and Stevenson book is a serious academic study, but it and Coker’s book suffer from the ambiguity of the title word. Improbable is not a scientific term in the sense that it is clear what degree of unlikelihood we are discussing. Does it mean a 20 percent chance of war, a 2 percent chance of war, or less? If there were a specific value attributed to the word, we might be able to have a meaningful conversation about the likelihood of war in 1914 versus the likelihood of war today, although it turns out that policymakers and regular citizens don’t understand objective probabilities very well. It’s worse, though, when there is no objective marker. A famous study of NATO officers asked them to assign objective probabilities to subjective assessments such as unlikely, likely, very good chance, probably, almost certainly, and so on. “Improbable” elicited from the officers a range of certainty between 2 and 40 percent. “Probable” was worse: The officers’ beliefs on its meaning ranged from 25 to 90 percent likely to happen.2Regardless of the cultural forces that made war in Europe improbable, politics and the use of coercive diplomacy in the decade before World War I did feature conflict-escalatory dynamics. The fact that crises had not produced a general war may have generated false confidence among some statesmen that brinksmanship would not result in war, but at the same time the losers of these limited conflicts quietly seethed and promised that in the future they would not back down. 1914 may have been about diplomatic sleepwalking, but what it made it such a debacle is that they had all pitched their beds on a 20,000-foot cliff.So we have a deeply unsatisfying word—improbable—which, because of the lack of objective referent, can easily be a weasel word, a subjective evaluation dressed up in scientific garb. Coker lapses into scientific irresponsibility early on: “If a Sino-American war were to break out, I would estimate that it would do so within the next ten years. But it is also entirely possible that such an event will be avoided.” I would estimate that the author has no objective basis for this pseudo-scientific pseudo-certainty.Perhaps Coker’s initial assertion that Norman Angell helped cause World War I tainted my interpretation of everything that follows. Since general readers may not know the current historiography of the causes of the war, it might help to have a scorecard. Three of the most widely praised recent books by academic historians seeking to explain the origins of the World War—Sleepwalkers by Christopher Clark; July Crisis: The World’s Descent into War, Summer 1914 by T.G. Otte; and Sean McMeekin’s July 1914—reference Norman Angell a total of zero times in books that are more than 1,200 pages combined. The standard text on 1914, Hew Strachan’s 1914: To Arms (2003), also does not reference Angell at all. Afflerbach and Stevenson’s book, discussed above, does not mention Angell either, despite its focus on European political and intellectual culture and its relationship to the war. In other words, Coker, the non-historian of World War I, has a truly exceptional explanation of the war’s origins.If you believe that reading about a war that happened a hundred years ago will help you understand the likelihood of whether the United States and China will fight a horrendous war in the next thirty years, then choose the Next Great War. Unlike with Coker’s book, one can read chapters written by individuals who are actually experts on World War I and experts on China, as well as by former policymakers who have had to grapple with the challenges of sustaining the current international order. But you might also marvel that so many experts went through such trouble to disprove the claim that war between China and the United States is inevitable. It seems like an enormous effort to discredit several international relations scholars who have no compunction about wildly speculating about real world problems without any understanding of context or environment, except for maybe counting on their fingers how many great powers there are.But why dilute potential insight with an historical detour that can obfuscate as much as illustrate? If you really want to understand the likely trajectory of U.S.-China relations and the potential for war, take your insight neat and read Thomas Christensen’s The China Challenge, or Henry Paulson’s Dealing with China. You may still be confused about the U.S.-China relationship, but you will have read experts with real knowledge of and experience with what makes China tick, how the United States can best compete with China while seeking its cooperation on a host of tough problems, and why at the end of the day the Chinese are unlikely to overthrow the current international order. And you won’t have to put up with a lot of wooly nonsense about the origins of World War I.

1Henry M. Paulson, Dealing with China: An Insider Unmasks the New Economic Superpower (Grand Central Publishing, 2015).

2Katherine Hibbs Pherson and Randolph H. Pherson, Critical Thinking for Strategic Intelligence (Sage and Congressional Quarterly Press, 2013), p. 187.

WH Admits Failure in Peace Process

According to White House officials, President Obama has resigned himself to the fact that there will be no peace agreement between Israel and Palestine before he leaves office. From the Washington Post:

They said that the administration has become “realistic” that there might not even be negotiations between Israeli and Palestinian officials before Obama leaves office. In September, Palestinian Authority President Mahmoud Abbas said his government would no longer consider itself bound by the Oslo peace agreements in effect for two decades, charging that Israel had failed to live up to its obligations.

Rob Malley, the National Security Council’s senior director for the Middle East, said that for the first time in two decades, an American administration “faces the reality” that a solution to the Israeli-Palestinian conflict “is not in the cards for the remainder” of a presidency. That, he said, has “led to a reassessment not only of what we can do but of what the parties can do.”

We’re not surprised by Obama’s failure to end the impasse, and we have our criticisms of his approach. But we certainly wish he’d had more success. Dennis Ross, formerly an advisor to Secretary of State Hillary Clinton, had a front-row view of the Israeli-Palestinian negotiations led by the Obama Administration. To understand why President Obama once had high hopes for meaningful progress on this perennially difficult problem, you should read his essay.

Of Death and Pensions

The economists Anne Case and Angus Deaton—authors of a groundbreaking new study showing that middle aged whites without college degrees are dying at far faster rates in America than in other developed countries—were generally cautious about attributing causality to their widely discussed findings. However, as the Atlantic‘s write-up highlights, they did speculate about whether America’s ongoing shift from defined-benefit pensions to a defined-contribution retirement model has something to do with the apparent agony of the white working class:

The United States has moved primarily to defined-contribution pension plans with associated stock market risk, whereas, in Europe, defined-benefit pensions are still the norm. Future financial insecurity may weigh more heavily on US workers, if they perceive stock market risk harder to manage than earnings risk, or if they have contributed inadequately to defined-contribution plans.

We don’t claim to know what did or didn’t cause the shocking uptick in mortality that Case and Deaton demonstrate, but we think it would be a grave mistake to read the paper and conclude that a return to the defined-benefit pension model is the answer to America’s social ills. This system was sustainable in midcentury “blue model” America, but it is not suited to the realities of the American economy today, for two reasons that Walter Russell Mead articulated in an essay last month.

First, defined-benefit pension programs strongly favor long-term workers. In the heyday of this retirement model, a worker’s pension size was determined by the number of years he spent at a company, and he needed to stay for a certain number of years to be eligible for any retirement benefits at all. The reality of the 21st-century American economy, where even the most established companies are under intense pressure from globalization and technological innovation, is that workers need to have the flexibility to move from one job to another. This is much more difficult under a defined-benefit system.Second, defined-benefit pension plans are only as strong as the companies that guarantee them. This might have been tolerable in blue model America, where a handful of giant, stable companies dominated each industry, and it might still be tolerable in European countries, which a gigantic regulatory state blocks or slows American-style creative destruction. But in a post-blue American economy at the forefront of global innovation where companies rise and fall at the blink of an eye, a defined-benefit pension system is a risky bet, and could cause many people to lose everything.None of this means that the shift away from defined-benefit pensions has not been painful for many workers—it has. And as the post-blue economy takes shape, companies and policymakers must think about ways to make the transition easier. Among the changes that should be considered: auto-enroll programs, where companies automatically deduct from employees’ paychecks and place money in 401(k)s; an increased focus on financial education in public education, so that workers can invest retirement plans more effectively; and more intelligent regulation of the part of the financial service industry that deals with 401(k) plans.The decline of the post-blue economy has created its share of challenges, including greater financial security among less-skilled workers. But the right answer is not to double down on a system that is on its way out, but to develop new institutions and policies that will allow Americans to thrive in the twenty-first century.

A Plague on Egypt’s Tourism

Bomb or no bomb? UK flights have started to transport back to Britain some of the 20,000 British tourists who were stranded at the Egyptian resort of Sharm el-Sheikh on the Red Sea after intelligence emerged that the Russian plane that crashed over the Sinai over the weekend was likely brought down by an explosive device. But at the same time, Russia has now stopped all Russian flights bound for Egypt, a sign that the country is increasingly taking seriously the possibility that a bomb caused the crash. That coheres with the U.S. intel; replying to calls for caution from the Egyptian foreign minister about jumping to conclusions, a senior U.S. intelligence official said, “He hasn’t seen the information we have.”

As the belief that a bomb was the cause of the crash grows, and as investigators sift the debris and listen to the black box recordings (and as we think of the families of the victims), it’s worth thinking about what the crash could mean for Egypt and the world—because trouble in Egypt could be more consequential than many people understand.The disruptions to UK travel to the popular resort will be felt in Cairo: 900,000 British tourists travel to Sharm el-Sheikh each year. In addition, Russian tourism—cheap package tours allowing Russians to get away from the gloom of winter—will be heavily affected, and tourism from the rest of the world will be taking a major knock on the head. Tourists shun places where tourists end up getting killed, and Egypt has never needed tourists more than it does now (the tourism industry in Egypt makes up about 11 percent of its GDP, and indirectly employs around 11.5 percent of the country’s workforce). And unfortunately for Egypt, international investors shy away from violent, unstable parts of the world.Egypt does not have a lot of options for economic growth. The region is beset by wars in Libya, Syria and across the Red Sea in Yemen, and Egypt itself is embroiled in the aftermath of the overthrow of the Morsi government, including the harsh crackdown that followed Morsi’s fall. And even before the Morsi government fell, Egypt was already wounded by the instability under that government and permanently weakened by the old, corrupt nexus of clientelism and rent-seeking at the heart of Egypt’s political economy. All of that means there is not a lot of give in this fragile system on which millions of people depend.Moreover, Egypt cannot expect much more help from abroad. The country is almost an afterthought in the West today, where the chief debate is over how much we should indulge our own narcissism by making meaningless and inconsequential gestures of moral disapprobation in the direction of its president and his very tough regime. That’s a mistake. The West was wrong to allow itself to be distracted from the much more consequential disaster in Syria by the relatively unimportant crisis in Libya (thereby contributing to the collapse of both countries into misery); it would be just as dangerous now to forget just how important Egypt is to the region—and how fragile the structure of Egypt’s society really is. If anarchy, chaos, widespread unrest, and terrorist ideology surge across Egypt, the resulting problems would dwarf anything we’ve seen in Syria.Think, for example, of the migration flows if ordinary Egyptians—and the 8 million Christians among them—became so insecure that they felt the need to flee. Or think of the involvement of world powers seeking stability over the flow of commerce through the Suez Canal, and the panic in the Gulf as one of the remaining pillars of regional order crumbles. In addition, the consequences for Israel if the Sinai’s descent into chaos and jihadi control continues would be huge—as would be the human suffering, the growth in terror, and the impact on world oil prices of inexorably increasing regional disorder. Finally, there is the Humpty Dumpty problem: It would be very difficult to restore order in a country as large as Egypt if a true breakdown comes.Fortunately, there are forces that hold Egypt together. Its people have a sense of national identity and common culture that most of its post-colonial, hastily stitched together neighbors lack. Bound together by 5,000 years of history and the waters of the Nile, Egyptians have a deep sense of collective identity; the same orientation toward a powerful state that hampers economic development also supports political stability. So Egypt is not fragile in the way that Syria, Lebanon, Jordan, Libya, Iraq and, yes, Iran are fragile.Even so, it is nowhere written on tablets of stone that Egypt can bear every burden and withstand every blow. As in much of the non-oil rich Middle East, the capacity of the Egyptian state to provide its people with acceptable conditions for life has been diminishing over time. The Muslim Brotherhood network became so powerful in part because state institutions were doing such a terrible job alleviating poverty, promoting educational opportunity, offering decent and affordable health care, and generally providing a safe and favorable environment for daily life. The Brotherhood could win friends by establishing parallel institutions that did what the state could not. But now those institutions have been thoroughly disrupted—and the state’s capacity has not grown.Western governments, the Americans very much among them, lost a lot of credibility in the Mubarak and Morsi years. In bed with a crooked dictatorship for many years, we dumped the dictator when times got rough—thereby demonstrating to everyone in the region that when you need friends most you can count on the Americans and their Western allies the least. We are still paying for that. We then embraced an illusory “transition to democracy” and spent lots of money and political capital promoting something that did not exist. The liberals we wanted to help failed, as they were doomed to do given their disorganization, lack of experience, and lack of support in popular opinion and culture. We then collaborated with a Muslim Brotherhood government that we neither trusted, understood, nor knew how to help—and as the situation headed out of control we showed ourselves to be clueless. Finally, when their hour of need came, we were as useless for our Muslim Brotherhood “partners” as we had been for Mubarak when his dark hour came.It was a thoroughly incompetent performance, pretty much from start to finish, and left Egypt under a government that neither likes nor trusts us very much—and over which we do not have a lot of influence, whether on human rights issues or for other purposes.None of this changes the reality that we need Egypt to succeed (or at least not to fail catastrophically) and that Egypt needs us and our allies if the worst is to be avoided and perhaps a bit of progress to be made. Some of the positive change will have to wait for a change of administration—the arc of failure from President Obama’s soaring hopes and rhetoric in his Cairo speech to the miserable floundering and fumbling of his Administration’s subsequent record is too stark, too striking, and too recent to be fully set to one side. But there are still things that can and should be done now that will support Egypt’s economy, preserve what is left of its civil society, and begin the development of stronger educational, health, and welfare institutions—as well as lay the foundation for better times, in Egypt as a whole and in U.S.-Egyptian relations.The tragic crash of the Russian airliner should serve as a wake-up call. Egypt matters, and we take it for granted at our peril.

Obama Cracks Down on College Accreditors

In an attempt to force colleges to produce better outcomes for students, the Obama administration announced today that it would require federally sanctioned accrediting agencies to start cracking the whip more aggressively. Inside Higher Education reports:

The Obama administration is trying to ratchet up already growing pressure on accrediting agencies to focus more intently on whether colleges are graduating students with the skills they need to get jobs and repay their loans.

Officials on Friday unveiled a package of “executive actions” aimed at cracking down on college accreditors, which the administration argues are not holding colleges to high enough standards when it comes to evaluating the success of students.The actions are far less aggressive than many accreditation experts had anticipated, and the administration said that it was significantly constrained by a Congressional ban on the Education Department setting specific accreditation standards involving student outcomes. But the relatively limited actions were accompanied by a much more aggressive set of proposals on the administration’s legislative wish list.

It’s easy to understand why this administration—like the Bush administration before it—is taking this approach to improving higher education quality. After all, far too many students graduate from expensive degree programs without the skills they need to stay afloat after college—especially when you add in the weight of their student loan debts. Toughening accreditation requirements seems like it could force colleges to up their game.

But efforts like this are likely to only improve quality on the margins, if at all. The primary effects of the existing accreditation system are to protect existing institutions, shut alternative educational delivery methods out of the marketplace, and hike tuition costs by forcing campuses to comply with onerous and often irrelevant requirements.The existing system could surely be tweaked or improved, as the administration is trying to do—but a far better alternative would be to break the federal monopoly on accreditation altogether. As of now, only federally approved agencies can accredit educational programs. Allowing private institutions (including companies and nonprofits) to credential individual courses would give students more flexibility to pick an educational path that suits their needs and inject competition into an industry where it is sorely needed.

EU Projects Three Million Refugees and Migrants in 2016

A total of three million refugees and migrants are headed to Europe next year, according to new EU estimates. The Independent reports:

In 2015 around 700,000 people have come to Europe seeking sanctuary or jobs so far this year, overwhelming reception centres and border authorities.

The Commission, the bloc’s executive, says that  “overall, an additional 3 million persons is assumed to arrive in the EU over the forecast period” and that numbers are unlikely to slow before 2017.

If this is true, Europe will explode. This is triple the 2015 yearly rate of about a million (which itself was an over three-fold increase from the 282,000 that came in 2014). That current rate has already led to the rise of the far right, serious stresses on national and local governments, and the partial breakdown of the Schengen system. So far, many of these stresses have been manageable and perhaps reversible—but if things get three times as bad as they are right now, that will all change. Strong polls for the far right will likely become an election (or elections) in which a party like the Sweden Democrats or Front National takes office; Schengen hiccups could become an outright collapse of the system; and both inter- and intra-national tensions will skyrocket.

The majority of immigrants are streaming to Germany and Sweden, with the Germans expecting to accept this year 800,000 newcomers or more into a nation of 80 million. As we have noted before, that’s about the same rate as the U.S. took in during the “Great Wave” of immigration, our historic peak, in 1880-1924. That wave eventually resulted in a popular backlash in the U.S. that shut down immigration almost completely for two generations. If Europe, which is far less culturally, legally, economically, and popularly prepared to take in immigrants than the United States was then, is hit by a rate triple that, expect politics as the Continent knows them to change dramatically.What’s perhaps most worrying is that the Continent’s leaders by and large still seem to be in a bubble on the issue. On November 3, Swedish Prime Minister Stefan Löfven simultaneously asked the rest of Europe for help redistributing immigrants and accused Eastern European leaders of lacking “European values” and being bigoted against Muslims for not wanting to accept a redistributed share. But as Lithuania’s Deputy Chancellor has pointed out, the immigrants don’t want to be redistributed: No refugees in Italy or Greece would accept Lithuanian offers of resettlement because they all wanted to go to Sweden. Given this reality, it will impossible to offer the refugees both fully integrated citizenship status, to maintain the Schengen system, and and to enact redistribution at the same time. Fully integrated European citizens have the right to travel and resettle where they like within the Schengen zone, so either redistribution will be an empty letter, or the migrants will be treated as second class citizens, with the measures required to enforce this (i.e. a border patrol) likely in part to kill the Schengen agreement.As for the countries that don’t share Lithuania’s helpful attitude, it’s hard to believe that more refugees will have a salutary, calming effect on their politics, no matter how much Mr. Löfven might tut. As Andrew Stuttaford has dryly observed, it’s rich for Sweden, which “has, in some senses, acted as a magnet for immigration into the EU [… to ask] other countries to absorb some of those it has attracted.” If south-eastern Europe sees a tripling of refugees transiting through next year, plus a substantial increase in redistribution, Orbanism will spread like wildfire.And Löfven isn’t the only one intent on pressing ahead with pro-refugee policies, regardless of these consequences. Angela Merkel has waged war on her own coalition to prevent “transit zones” from being set up to screen newcomers at the border. Instead, in a victory for the Chancellor’s “refugees welcome” policy, migrants will be interviewed near the border and refugees will be rerouted to reception centers further inland. There are plans to detain and deport economic migrants, but since, as we’ve noted before, this is a hybrid refugee-migrant crisis (particularly when it comes to immigrants from Africa), this will likely prove quite tricky in practice.Perhaps the most troubling signal from European leaders came in the form of economic projections, given in the same EU report that accompanied the revised estimate of three million arrivals in 2016:

In its autumn economic forecast released Thursday, the European Commission predicted the influx of migrants would help boost the bloc’s gross domestic product by 0.2-0.3 percent by 2020.[..]

“I think you have to say we are not quite sure about the figures,” Moscovici said. “So we can’t say the influx of the refugees is likely to have a negative impact or some kind of kicking people out of the labor market.”He said the positive economic impact was dependent on “public policy that gives incentives and helps people and integrates them,” while the forecast also said growth depended on the skill sets of the new arrivals.

In other words, if we just spend a whole bunch on welfare for the newcomers, presto, we’ll have an economic uptick in a few years. This prediction likely buys into rosy notions about the newcomers education that, as TAI Editor Adam Garfinkle has pointed out, completely ignores the reality of education in the Middle East and Africa. It also misses out on Europe’s economic realities—which is to say, this is a Continent already beset with a stagnant economy and high levels of structural unemployment. Because Europe is badly under-prepared for the digital age economy, these problems are likely to grow, not shrink.

But most of all, the thinking from Brussels ignores European political realities. Refugees are coming without popular support and not much in the way of legal sanction. Europe is poorly set up to receive them, culturally as much as economically, and European citizens can see that the line of people in Africa as well as the Middle East who would like to get into Europe stretches as far as the eye can see. If Europe’s leaders do not present their constituents with a credible plan to address popular concerns, things are going to get very, very ugly in 2016.

The Death of Keystone

Senior Administration officials say that Secretary of State John Kerry will advise President Obama not to approve the Keystone XL pipeline this morning, and the President is expected to put a nail in the beleaguered project’s coffin later today.

President Obama’s expected rejection will be done with one eye (or maybe both) on his climate legacy, as the pipeline has become one of the environmental movement’s core issues during its seven years (!) in regulatory limbo. Its rejection just weeks away from the start of the COP21 climate summit in Paris will undoubtedly be intended as some sort of signal of America’s seriousness when it comes to green issues.But as we wrote earlier this morning (before this latest news broke), Keystone isn’t a green issue, it’s just a piece of infrastructure. The State Department’s own analysis showed that the project would have a negligible effect on global emissions by virtue of the simple fact that the Canadian crude it would be transporting from Alberta’s oil sands down to Gulf coast refineries is going to be drilled with or without a pipeline through the United States. Oil is too valuable a commodity for it to stay in the ground, and blocking one of its possible routes to market won’t be enough to overcome that economic imperative.That doesn’t mean that Canada won’t feel this rejection acutely. Just this week the new Liberal government reiterated Canada’s hope that the U.S. would approve Keystone, a rare moment of agreement with the Conservative administration it displaced. True, Canada has alternatives (which is why the green argument against it doesn’t hold water), but Keystone made the most sense. Killing it will set back relations between the U.S. and its largest trading partner.The facts of the debate say that Keystone should have been summarily approved, but those facts haven’t mattered for years. Instead, the Keystone controversy has at once been a political football, an issue of optics, and a stand-in metric for how seriously the President takes climate change. Greens will claim its rejection as a great victory, but any sort of closer inspection reveals how hollow this “win” really is. The only positive takeaway from today’s news: at least this sorry saga is over. Maybe now greens can devote time and effort towards more serious causes. Oh, who are we kidding…