Two new books discuss how Washington should fight the wars of tomorrow -- and pay for them. But to balance the conflicting demands of strategy and finance, the next president ought to take a page from Eisenhower's playbook.
Bringing the newly market-oriented countries of Asia, Latin America and Eastern Europe into the global economy would harness the productive capacity of some three billion people. But increased resistance to free trade has cut the supply of political tolerance for another global trade round anytime soon. An expansion of regional trading areas such as the European Union and NAFTA promises the greatest progress, but international e»orts must keep regional blocs from becoming protectionist and ensure they are compatible with the global trade regime.
The basis of US military and diplomatic power is its economic power, and the USA's single most important security objective is now economic self-repair. "Unless the United States reinvigorates in this decade the economic roots of its international power, it risks an erosion of self-confidence and of its international leadership at the turn of the century. With a weak economy and a society in conflict over how to allocate slowly growing resources, this nation would find it increasingly difficult to achieve its essential global objectives".
The postwar division of Europe is slowly eroding. This is partly a consequence of the thaw in relations between Washington and Moscow. But it would not be possible without the powerful influence of a resurgent and increasingly self-confident European Community. The West Europeans themselves have become the engineers and chief architects reshaping Europe, with economic forces driving the process. The growing unity and prosperity of the EC exert a magnetic force on Eastern Europe, setting in train a process by which the two halves of the continent are steadily reducing barriers to the movement of goods, ideas and people-and largely on terms that support Western values and interests.
The year 1985 saw progress on several important fronts. The American recovery entered its fourth year; inflation continued its impressive decline and interest rates fell significantly. Washington took a more constructive approach toward the resolution of international economic problems. In much of Europe, wage and price increases were further slowed, business profitability was improved, budget deficits were cut and cumbersome regulations were loosened. Japan took new steps to liberalize trade and finance. The United States joined with Britain, France, Japan and West Germany to reduce exchange rate misalignments and bring greater order to the international monetary system. Growth picked up in some Latin American countries, and the world's two most populous nations, China and India, substantially increased market incentives.