The Pandemic Depression
The Global Economy Will Never Be the Same
PRESENT, AGAIN, AT THE CREATION
Among the many underlined passages in my copy of James Chace's new biography of Dean Acheson is the following:
The problems that bedeviled American foreign policy were not like headaches, [Acheson] wrote -- when you "take a powder and they are gone." Instead, "They will stay with us until death. We have got to understand that all our lives the danger, the uncertainty, the need for alertness, for effort, for discipline will be upon us. This is new to us. It will be hard for us. But we are in for it and the only real question is whether we shall know it soon enough."
Acheson's generation had just survived war and Holocaust, only to be confronted -- as the nuclear age dawned -- by the rise of a new and ominous totalitarian threat. For leaders then, the relief of victory was quickly supplanted by the burden of new responsibilities, from containing the Soviet Union to nurturing fledgling international financial institutions. We should always be grateful that these responsibilities were so gloriously fulfilled.
Today is different. Aside from the six weeks of the Gulf War, Americans have known peace for longer than the interval between Versailles and Pearl Harbor. For the first time since the early 1930s, we face no single powerful enemy to concentrate the mind. To most Americans, the success or failure of U.S. foreign policy no longer seems a matter of life and death. We invest fewer resources in defense, diplomacy, and development. Since nations no longer need our protection from the Soviet Union, our international leverage, despite our strength, is not what it was in Acheson's day.
Unfortunately, the demands upon us have not lessened. Like a kaleidoscope, the patterns of world affairs shift with each spin of the globe. Rising dangers replace receding ones; old problems reemerge. As Acheson warned, no matter what the medicine is, the headaches do not go away. The test of our leadership, although far different in specifics, is essentially the same as that confronted by Acheson's postwar generation. One way or another, we are in for it, and the only real question is whether we will realize it in time.
ORGANIZING THE PEACE
President Clinton and I, as well as other members of our team, have spoken often about the goals of American foreign policy. Boiled down, these have not changed in more than 200 years. They are to ensure the continued security, prosperity, and freedom of our people. Rather than elaborating on these goals here, I will discuss the means we use now to move toward them, step by step, day by day.
Foreign policy, unlike baseball, has no world championship; there are no permanent victories and no 70th home runs. In our era, moreover, neither the adversaries, nor the rules, nor even the location of the playing field are fully fixed.
Still, if our dynamic world were to stop for a snapshot today, it would be possible, very generally and imperfectly, to discern four basic categories of countries: full members of the international system; those in transition, seeking to participate more fully; those too weak, poor, or mired in conflict to participate in a meaningful way; and those that reject the very rules and precepts upon which the system is based.
This division carries with it a corresponding four-part challenge. First and foremost, we must strengthen the bonds between and prevent ruptures among the leading nations. Today, these nations are at peace and increasingly share a community of interests. This serves America by contributing to stability, fostering vibrant economic relationships, and having partners available to respond to regional and global problems. This state of affairs is, however, not inherently self-sustaining. Russia is wrestling with severe economic and political challenges. China's course, despite hopeful signs, is uncertain. And we must work hard to maintain fully productive partnerships even with our closest friends, for history warns us of the risk to alliances once the threat that brought them together has disappeared. Our top priority remains cementing key relationships and harnessing them to constructive ends -- including collaboration with Europe in strengthening NATO and building peace in Bosnia; cooperation with Korea, Japan, and China in talks aimed at lasting peace on the Korean peninsula; and using the Summit of the Americas to forge a hemispheric consensus supporting democracy and the rule of law.
Second, we must fortify the international system by helping transitional or otherwise troubled states become full participants. This is essential to maintain the momentum of democracy's recent advances and create more anchors of regional stability and growth. To this end, we are encouraging rivals in areas such as the Middle East and South Asia to settle their differences peacefully. We are helping our friends in central Europe and the newly independent states of the former Soviet Union navigate financial minefields, fend off criminals, rebut communist backsliders, and position their societies for entry into key regional institutions. Worldwide, we are urging every nation to move toward democracy and abide by global norms.
Third, we must give a boost to weaker states that are most willing to help themselves. In this era, there are no geographic barriers to full participation in the global economy or, more generally, in world affairs. But burdens of debt, poverty, unresolved disputes, and ineffective institutions leave many nations at the margins. Accordingly, we are trying to help Haiti overcome divisions and build its young democracy. From the Caucasus to the Congo, we are engaged with regional leaders and international organizations trying to end destructive conflicts. And we have urged Congress to enact the Africa Growth and Opportunity Act, which emphasizes trade as a complement to aid, rewards reform, and heralds a more self-reliant and prosperous Africa.
Finally, we must repel threats to the system of laws and relationships that affect the security of all nations. We have created monitoring and inspection regimes to prevent the spread of nuclear weapons and poison gas while imposing penalties on those who violate global standards. We are working hard to halt the proliferation of advanced missile technologies while developing theater and national missile defense systems to defend ourselves. In the Balkans and elsewhere, we are supporting the advocates of moderation and tolerance against the ruthless exploiters of ethnic hatred. And we are seeking, through relentless diplomacy and tough law enforcement, to create a multilayered web of agreements, laws, inspectors, police, and military power to deny weapons and operating room to terrorists, criminals, and aggressors.
On an official level, the threads that tie the international system together range from the simplest bilateral understanding on law enforcement cooperation to the most complex agreement governing global trade. These arrangements are reinforced by the blossoming of nonofficial contacts between and among peoples that occur on almost every level, covering almost every subject, almost everywhere. We can help build an even stronger international system. But our capacities, although great, are not unlimited.
To guard against overextension, we must insist that others do their share. We must differentiate between the essential and the merely desirable. We must skillfully use every available foreign policy tool, from the mildest demarche to the use of force. We must exercise patience. And we must recognize and capitalize on the linkages between democracy, stability, and economic growth.
To protect our interests, we must take actions, forge agreements, create institutions, and provide an example that will help bring the world closer together around the basic principles of democracy, open markets, law, and a commitment to peace. If we succeed, the American people will benefit from a world economy that has regained its footing and resumed broad-based growth. We will find it safer, easier, and more rewarding to trade, travel, invest, and study abroad. And our armed forces will be called upon less often to respond to urgent and deadly threats.
In such a world, more people in more nations will recognize their stake in abiding by the international rules of the road and seeing that others follow suit. Nations will be more likely to work together to respond to new dangers, prevent conflicts, and solve global problems. A salutary consensus about what is fair and unfair on trade and what is right and wrong on human rights will grow. Although the most we can hope for, in our time, is to build a solid foundation for such a world, that is nevertheless a tall order. Filling it will require that we pass some rigorous tests, both as a government and a people.
The first test is that much-abused term, vision. Certainly proclaiming a vision is no particular challenge ("I see a world where the strong are just, the weak are helped, the hungry are fed," etc.). Nor is it enough simply to sketch a conceptual framework for foreign policy. Such a framework can tie the disparate strands of policy to interrelated core goals and set priorities so our emphasis on responding to security threats, building a healthy world economy, and promoting democracy is not lost in the blur of daily events. In any case, we should not claim too much for such formulations. Implementing a framework is far tougher than designing one.
In the years ahead, we are sure to see sudden leadership changes in key countries, stunning acts of violence, devastating natural disasters, and yet more startling technological advances. We cannot foresee everything, but we can maintain our sense of balance. That requires keeping one eye on the horizon and the other on the next step in the right direction. In our dealings with Russia, for example, it means focusing on security priorities such as reducing arms stockpiles, disposing of bomb-usable plutonium, and preventing the transfer of nuclear and advanced missile technologies while deepening our commitment to help Russia over the long term, provided Russia is prepared to help itself.
It means insisting that Iran abide by international norms on proliferation and terror while exploring a potentially historic opportunity to lower the walls of mistrust that have long separated our two countries.
It means responding to peacekeeping emergencies as they arise while grappling with the larger, unresolved questions of how best to structure international institutions and security forces for this purpose.
It means looking beyond the cheap gas and plentiful oil of the present to plan for long-term energy security based on conservation, imports from diverse and reliable sources, and the worldwide promotion of technologies harnessing renewable power sources.
And it means tending to short-term development needs while planning for a 21st century in which competition for scarce resources can be expected to grow ever more dangerous: 60 percent of humanity will live in large cities (up from 5 percent in 1900), 95 percent of population growth will be in the developing world, and average life expectancy in the nations hit hardest by aids may plummet to levels not seen in centuries.
Virtually every aspect of our foreign policy requires us to deal with the world based not only on what we know but on what we anticipate. To succeed, we must continually change the ways and means of U.S. diplomacy. That is why we are consolidating and restructuring our foreign affairs agencies, training our people to use new technologies, creating incentives for them to acquire expertise on global issues, and encouraging them to interact with ever-more-important nongovernmental organizations.
Nowhere is vision more important than in our ongoing effort to respond, with others, to the international financial crisis that began in Asia and is now sweeping the globe. President Clinton has called this the biggest challenge to the international financial system since the reconstruction of the global economy following World War II. The crisis also has far-reaching social and political consequences. In some nations, a quarter-century's progress toward developing a middle class has been all but wiped out. Millions of families have seen their hopes for a better future dashed. The danger looms of a widespread backlash, tinged with anti-Americanism, against free markets.
The president has outlined a plan for restoring confidence while laying the groundwork for sustained long-term growth. The administration is urging the World Bank and the International Monetary Fund to assist innocent people who have lost jobs or savings in the turmoil, while pressing Congress to fund America's share of the IMF and multilateral development banks.
Unfortunately, the problems many countries now face have no quick or simple solutions. Success in the global economy requires a foundation of clean and transparent financial systems, good governance, and the rule of law. It is no accident that the nations that have suffered least in the current crisis have these attributes. Nations with more deeply rooted problems must develop broad-based and accountable democratic institutions to curb corruption and create an environment in which both domestic and foreign investors can have confidence. Helping nations prepared to undertake these reforms is in America's interest.
To maintain the consensus for an open global economy that is essential to long-term growth, we must expand our dialogue to include the full range of those affected by the crisis, including governments, business, labor, and environmental representatives. We must ensure that international financial institutions operate and are seen to operate in ways that benefit broad segments of the world's population. Through the World Bank and other mechanisms, we must devote more attention and resources to developing strong social safety nets. We must enhance technical assistance in the areas of democracy-building, financial sector management, and commercial law. And we must help our international financial institutions become more effective instruments for predicting, preventing and minimizing economic crises.
The second foreign policy test is that of pragmatism. Are we getting results? Or are we so wrapped up in how we sound that we forget that the purpose of public policy is not dialogue but deeds?
Much of our energy at the State Department is spent encouraging foreign governments to act for what we perceive to be the common good -- dissuading regional rivals from provocative acts, promoting economic reform, blocking destabilizing transfers of arms and technologies, urging the release of political prisoners, and advocating the development of democratic practices and institutions. We do this to prevent conflicts, build prosperity, and strengthen the forces of freedom. But to succeed, we must convince foreign leaders that the common good is good for them as well and that our own agenda is aboveboard. Obviously, we do not use the same approach with an established modern power that we use with a government whose authority is weak and institutions wobbly. We consider the domestic pressures that may be affecting a government along with the proclivities and capacities of its leaders. And in any relationship, we refer constantly back to our basic principles and goals. For example, there has been much debate about whether we are more likely to influence the actions of ornery foreign governments by using the carrot of engagement or the stick of sanctions. The answer, of course, is that it depends.
Neither China nor Burma is democratic, and both take a dim view of dissent. Yet we are engaged in a strategic dialogue with China while maintaining far tougher sanctions, including an investment ban, against Burma. Some accuse us of having a double standard. In reality, we have a single standard based on our assessment of the approach most likely to achieve results that serve U.S. interests and ideals.
In Burma's case, a repressive military regime has rebuffed repeated appeals for talks with the democratic opposition led by Nobel Peace Prize-winner Aung San Suu Kyi. Under the junta, Burma has become, with official connivance, the world's leading source of heroin and, with official neglect, the epicenter of a regional aids crisis. Many of its increasingly desperate people are fleeing to neighboring countries. The democrats, who overwhelmingly won Burma's last free elections, have called for a halt to foreign investment and many categories of aid. Political change is essential if Burma is to transform itself into a source of stability in Southeast Asia. Sanctions may well work. Having driven the economy into the ground, the regime desperately needs foreign investment, loans, and aid. By denying these benefits -- and encouraging others to do the same -- we may eventually persuade Burmese leaders to rethink where their own best interests lie.
America's stake in China is far deeper and broader than in Burma. Asian security, nonproliferation, and economic health cannot be won without Chinese cooperation. Our task is to encourage China to become a full and fully constructive participant in the international system. Our approach is to engage in a dialogue with Chinese leaders while encouraging the broad exchange of information and ideas between American and Chinese citizens.
Unlike Burma, China is changing rapidly. The government is committed to economic reform. On proliferation, China has progressed from advocating the spread of nuclear weapons to signing the Nuclear Nonproliferation Treaty, the Comprehensive Test Ban Treaty, and the Chemical Weapons Convention while agreeing to tighten controls on sensitive exports. In the political sphere, China has placed a new emphasis on the rule of law, permitted somewhat more open public discussion of political reform, released several prominent dissidents, and ratified one international human rights convention while promising to sign another this fall. In contrast to Burma, many Chinese reformers welcome Western political and commercial engagement with their government as a spur to further openness and change. Moreover, the Dalai Lama, among others, has praised the U.S.-China dialogue as an appropriate way to express American support for preserving the cultural, linguistic, and ethnic heritage of Tibet.
Critics are right to say that this progress is not good enough. That is why President Clinton spent much of his time during the Beijing summit working on the hard issues: urging China to do better on nonproliferation and political prisoners, pushing for more open markets, stressing that our improved relations cannot come at Taiwan's expense, and making the case for democracy directly and compellingly to the Chinese people.
It would be presumptuous to suggest that our engagement alone will cause democracy in China to blossom. China's future will be determined by the Chinese. But our engagement can contribute to an environment in which the Chinese people have more access to information, more contact with the democratic world, and less resistance from their government to outside influences and ideas.
It is too early to draw definitive conclusions about the success of our policy toward China or Burma. In both cases, we hope for progress; in neither do we expect miracles. Toward these countries and others where we hope for change, we must be patient and persistent. And we must design our policies not with a cookie cutter but with the special characteristics of each in mind.
All this argues for flexibility. There has long been tension between the executive branch and Congress over mandated sanctions, prohibitions, restrictions, earmarks, and other restraints on foreign policy. Having worked in both branches, I know that this tension is inevitable and, at times, constructive. When I meet with foreign officials, referring to pressure from Congress can help to spur action. What is not helpful is the growing tendency to view entire relationships through the prism of a single issue or to enact laws that deprive the executive of the leverage needed to bargain effectively.
The true challenge of diplomacy does not reside in the beauty of our goals. Foreign policy is practical, not aesthetic. It requires persuading others to agree to new policies and actions based on new understandings. That may entail simple logic, economic incentives, technical assistance, new commitments, information-sharing, coercion, the threat of coercion, sanctions, the threat of sanctions, or any combination of the above -- and it may require a different mix of those elements tomorrow than it does today. To do his job well, the president must be able to pick and choose. You would not ask a carpenter to build a house with only a hammer. We should not expect our chief executive to construct a successful foreign policy without a full box of tools.
Diplomacy requires vision and pragmatism. It also requires spine, which dictates that we honor our commitments, back our words with actions, bear essential costs, and take necessary risks. More broadly, it requires that leading nations act firmly and cooperatively to contain and repel threats to international security and peace and keep new threats from arising. Bosnia, during the first half of this decade, is an example of what happens when that responsibility is not met. Bosnia, since NATO truly began to assert itself in the summer of 1995, is an example of what happens when it is.
In early October, as this article is written, new tests of international will and American leadership loom. First, nations must unite in the struggle against terror. There is no acceptable middle ground. Terrorists today are more wealthy, mobile, sophisticated, and deadly than ever before. As President Clinton's resolute response to the African embassy bombings shows, the nation whose finest planted the flag at Iwo Jima and plunged into hell at Omaha Beach will not be intimidated by the murderers who have chosen to make our nation their enemy. We will maintain our presence wherever we are needed or have interests to defend. We will strive to protect and defend our people. We will support those from other nations who are targeted or victimized. We will use all appropriate judicial, diplomatic, economic, and military means to counter terrorism. We will hunt down those who attack our citizens. And we will never falter.
Second, the U.N. Security Council must deal firmly with Saddam Hussein's game of threats and defiance. In refusing to cooperate with U.N. weapons inspectors, Saddam's goal is to divide the Security Council, isolate the United States, and count on enforcement fatigue to weaken support for the sanctions regime. Thus far, his plan has backfired. The Security Council has voted unanimously to suspend reviews of the sanctions. Without sanctions relief, Saddam's dream of rebuilding his military and regaining regional influence will never be realized.
Our strategy is to exert steady diplomatic pressure on Baghdad to comply with Security Council resolutions and cooperate with U.N. weapons inspectors while maintaining a robust military presence to deter it from threatening regional security or vital U.S. interests. If Iraq tries to break out of its strategic box, our response will be strong and sure. We have not taken any option off the table. But we will act on our own timetable, not Saddam's.
Third, we must be resolute in our dealings with North Korea. The regime in Pyongyang hardly inspires trust. It has often acted with reckless disregard for international norms and broken its word. Its advanced weapons programs, self-imposed isolation, and lack of transparency threaten regional stability. In partnership with the Republic of Korea, close consultation with Japan, and cooperation with China and others, we have sought to move North Korea toward a less belligerent and more open approach to the world. It serves everyone's interest to proceed with the Agreed Framework, resolve ongoing concerns about the North's troublesome weapons activities, and respond to humanitarian needs. As we vigorously explore this path, no one should doubt our determination to defend our allies, troops, and vital interests on the Korean peninsula.
Fourth, we must continue to stand firmly behind implementation of the Dayton Accords. In Bosnia last year, to admonish those who still harbored separatist dreams, I said that the United States would not countenance the revision of Dayton or the partition of Bosnia. When I returned this summer, I said the same thing, but for a different reason. Virtually all of Bosnia's leaders have now pledged to support Dayton, and each of those I met -- Croat, Muslim, and Serb -- urged America's continued public commitment to that goal.
The positive changes in Bosnia were reflected in September's elections, which were the freest and most competitive ever held in that nation. Although Serb leader Biljana Plavsi,c lost, moderates gained in every part of the country, engendering hope that multiethnic national institutions will function more effectively. Our policy remains the same: it is up to Bosnia's people to choose their leaders, but we will continue to help only those who are helping to implement Dayton.
Firmness is also needed in Kosovo, where we have been working with others on three tracks -- diplomatic, humanitarian, and military -- to end the violence, halt Serb repression, address the needs of displaced persons, and encourage a negotiated solution that protects the rights of the Kosovar people.
Finally, the international community must redouble its efforts to prevent the spread of weapons of mass destruction. This requires a convergence of purpose from Washington to Moscow, Paris to Beijing, and points in between. Nonproliferation does not just happen. Nations must be quick to detect and share information about illicit activity. They must apply real pressure to countries violating nonproliferation standards or helping others to do so. They must give unreserved backing to international weapons inspection regimes. And they must not sell sensitive arms and technologies to suspect customers. No contract is so important and no profit so large that it is worth endangering the world.
These challenges highlight the importance not only of American will but also of the collective will of the world's leading nations. In this sense, America often serves as a catalyst and coalition-builder. We can sound the trumpet, frame the issues, and point the way, but if global standards are to be enforced, many nations -- not just the United States -- have indispensable roles to play. Those international leaders who insist that the world is or should be multipolar have an obligation to see that their particular pole stands up to its responsibilities. At the same time, the United States cannot persuade others to act if we are not willing to do so ourselves. Effective coalitions are a consequence of, not an alternative to, U.S. leadership.
Assume that we have the vision to know when to act, the pragmatism to know how to act, and the spine to take on hard but necessary tasks. This is still not sufficient. We also need the resources -- the people, expertise, equipment, and money -- to get the job done. Unfortunately, today our foreign policy is living hand-to-mouth.
We allocate only about one-fourteenth of the portion of our wealth that we did in Secretary of State Marshall's time to support democracy and growth overseas. Among industrialized countries, we rank dead last in such contributions relative to the size of our economy. We are the number one debtor to the United Nations and the multilateral development banks. For the past decade, we have been cutting foreign policy positions, closing diplomatic posts, and shutting U.S. Agency for International Development and U.S. Information Agency missions. We lack the funds to provide full security for our people overseas. And under the current budget agreement, we face a further reduction in buying power of at least 12 percent over the next 5 years.
All this has consequences. It reduces our influence as a force for peace in the world. It detracts from our leadership on global economic issues at a time when American workers, farmers, business people, and investors have an enormous stake in the health of economies overseas. It makes it harder for us to exert leverage on the contributions of others. And it requires that we walk
away from problems that could be solved. This is not a test the administration can pass on its own. The executive, Congress, and the public must agree that, in striving to shape world affairs, America must be more than a status quo country. For whether the challenge is building a security fence, easing a financial crisis, or preventing a regional rivalry from erupting into violence, America cannot lead without resources, and we cannot be secure unless we lead.
The ultimate test of our foreign policy is how well our actions measure up to our ideals. The American people are practical and understand that there are limits to what we can accomplish. We are not -- most of us -- crusaders. But we are proud that America is not just another country, and we want our foreign policy to reflect our status as the globe's leading champion of freedom.
Today, for the first time in history, electoral democracy is the world's predominant form of government. Yet many democracies are fragile and their people only partly free. As our own history reflects, building democracy is hard. Even the best-intentioned leaders of new democracies face daunting challenges. Often, the economies they inherit have been distorted by decades of centralized planning or graft. Habits of cronyism and privilege must be changed. Ethnic grievances that may have simmered for generations must be cooled. And serious environmental and social problems, including upsurges in crime, may have to be confronted.
It is by now a truism that democracy requires far more than elections. It requires legal structures that provide justice, political parties that offer a choice, markets that reward initiative, police that are professional, and a press that is free to make its own judgments about what is news.
A second truism is that democracy must find its roots internally. But outsiders can help to nourish those roots -- which, within the limits of available resources, is precisely what the United States is doing. From Asia to Africa to the Andes, U.S. agencies and nongovernmental organizations are training judges, drafting commercial law codes, teaching the rules of parliamentary procedure, supporting efforts to protect children and empower women, fostering the development of independent media, and otherwise helping friends to assemble the nuts and bolts of freedom. Although the specifics of our approach vary with country and circumstance, the fundamental goal is the same: to encourage the development of democratic institutions and practices.
Some call us unrealistic for insisting that democracy can take hold in less-developed nations or hegemonic for trying to promote democratic values. We understand well that democracy must emerge from individuals' desire to participate in the decisions that shape their lives, but we see this yearning in all countries and among all peoples. Surely there is no better way for us to show respect for the uniqueness and autonomy of others than to support their right to shape their own destinies and elect their own leaders. This is why, unlike dictatorship, democracy is never an imposition. It is, by definition, always a choice. We should neither yield to the critics nor grow disillusioned by the sea of troubles that fledgling democracies face. During the Cold War, after all, we spoke up for freedom where democracy's cause seemed without hope. It would be unforgivable if America's commitment to democratic principles were now to wane because there is no superpower rival to spur us, because we lack patience, or because democracy's imperfections have caused us to forget the far greater flaws of every other form of governance.
Freedom is America's purpose. Like other profound human aspirations, it can never fully be achieved. Liberty is not a possession; it is a pursuit. And it is the star by which American foreign policy must continue to navigate during the remaining years of this century and throughout the next.
Through the more than six decades I have been alive, the world has looked to America for leadership in countering aggression, promoting prosperity, and opposing injustice in all its forms. In that time, the American people have responded not in accordance with any single foreign policy theory but rather in a way that reflects the steadfast qualities of courage and pride, pragmatism and principle that comprise the American character. As we contemplate future uncertainties and cope with present headaches, we know that these qualities will be tested over and over again. As Acheson warned, the need for alertness, for effort, for discipline will ever be upon us.
The challenges we face, compared to those confronted by previous generations, are harder to categorize, more diverse, and quicker to change. But the stakes have not changed. The success or failure of the American people's foreign policy remains the single greatest factor in shaping our own history and the future of the world.