The Pandemic Depression
The Global Economy Will Never Be the Same
Fifty years ago, the Cuban missile crisis brought the world to the brink of nuclear disaster. During the standoff, U.S. President John F. Kennedy thought the chance of escalation to war was "between 1 in 3 and even," and what we have learned in later decades has done nothing to lengthen those odds. We now know, for example, that in addition to nuclear-armed ballistic missiles, the Soviet Union had deployed 100 tactical nuclear weapons to Cuba, and the local Soviet commander there could have launched these weapons without additional codes or commands from Moscow. The U.S. air strike and invasion that were scheduled for the third week of the confrontation would likely have triggered a nuclear response against American ships and troops, and perhaps even Miami. The resulting war might have led to the deaths of 100 million Americans and over 100 million Russians.
The main story line of the crisis is familiar. In October 1962, a U.S. spy plane caught the Soviet Union attempting to sneak nuclear-tipped missiles into Cuba, 90 miles off the United States' coast. Kennedy determined at the outset that this could not stand. After a week of secret deliberations with his most trusted advisers, he announced the discovery to the world and imposed a naval blockade on further shipments of armaments to Cuba. The blockade prevented additional materiel from coming in but did nothing to stop the Soviets from operationalizing the missiles already there. And a tense second week followed during which Kennedy and Soviet Premier Nikita Khrushchev stood "eyeball to eyeball," neither side backing down.
Saturday, October 27, was the day of decision. Thanks to secret tapes Kennedy made of the deliberations, we can be flies on the wall, listening to the members of the president's ad hoc Executive Committee of the National Security Council, or ExComm, debate choices they knew could lead to nuclear Armageddon. At the last minute, the crisis was resolved without war, as Khrushchev accepted a final U.S. offer pledging not to invade Cuba in exchange for the withdrawal of the Soviet missiles.
Every president since Kennedy has tried to learn from what happened in that confrontation. Ironically, half a century later, with the Soviet Union itself only a distant memory, the lessons of the crisis for current policy have never been greater. Today, it can help U.S. policymakers understand what to do -- and what not to do -- about Iran, North Korea, China, and presidential decision-making in general.
WHAT WOULD KENNEDY DO?
The current confrontation between the United States and Iran is like a Cuban missile crisis in slow motion. Events are moving, seemingly inexorably, toward a showdown in which the U.S. president will be forced to choose between ordering a military attack and acquiescing to a nuclear-armed Iran.
Those were, in essence, the two options Kennedy's advisers gave him on the final Saturday: attack or accept Soviet nuclear missiles in Cuba. But Kennedy rejected both. Instead of choosing between them, he crafted an imaginative alternative with three components: a public deal in which the United States pledged not to invade Cuba if the Soviet Union withdrew its missiles, a private ultimatum threatening to attack Cuba within 24 hours unless Khrushchev accepted that offer, and a secret sweetener that promised the withdrawal of U.S. missiles from Turkey within six months after the crisis was resolved. The sweetener was kept so secret that even most members of the ExComm deliberating with Kennedy on the final evening were in the dark, unaware that during the dinner break, the president had sent his brother Bobby to deliver this message to the Soviet ambassador.
Looking at the choice between acquiescence and air strikes today, both are unattractive. An Iranian bomb could trigger a cascade of proliferation, making more likely a devastating conflict in one of the world's most economically and strategically critical regions. A preventive air strike could delay Iran's nuclear progress at identified sites but could not erase the knowledge and skills ingrained in many Iranian heads. The truth is that any outcome that stops short of Iran having a nuclear bomb will still leave it with the ability to acquire one down the road, since Iran has already crossed the most significant "redline" of proliferation: mastering the art of enriching uranium and building a bomb covertly. The best hope for a Kennedyesque third option today is a combination of agreed-on constraints on Iran's nuclear activities that would lengthen the fuse on the development of a bomb, transparency measures that would maximize the likelihood of discovering any cheating, unambiguous (perhaps secretly communicated) threats of a regime-changing attack should the agreement be violated, and a pledge not to attack otherwise. Such a combination would keep Iran as far away from a bomb as possible for as long as possible.
The Israeli factor makes the Iranian nuclear situation an even more complex challenge for American policymakers than the Cuban missile crisis was. In 1962, only two players were allowed at the main table. Cuban Prime Minister Fidel Castro sought to become the third, and had he succeeded, the crisis would have become significantly more dangerous. (When Khrushchev announced the withdrawal of the missiles, for example, Castro sent him a blistering message urging him to fire those already in Cuba.) But precisely because the White House recognized that the Cubans could become a wild card, it cut them out of the game. Kennedy informed the Kremlin that it would be held accountable for any attack against the United States emanating from Cuba, however it started. His first public announcement said, "It shall be the policy of this Nation to regard any nuclear missile launched from Cuba against any nation in the Western Hemisphere as an attack by the Soviet Union on the United States, requiring a full retaliatory response upon the Soviet Union."
Today, the threat of an Israeli air strike strengthens U.S. President Barack Obama's hand in squeezing Iran to persuade it to make concessions. But the possibility that Israel might actually carry out a unilateral air strike without U.S. approval must make Washington nervous, since it makes the crisis much harder to manage. Should the domestic situation in Israel reduce the likelihood of an independent Israeli attack, U.S. policymakers will not be unhappy.
CARROTS GO BETTER WITH STICKS
Presented with intelligence showing Soviet missiles in Cuba, Kennedy confronted the Soviet Union publicly and demanded their withdrawal, recognizing that a confrontation risked war. Responding to North Korea's provocations over the years, in contrast, U.S. presidents have spoken loudly but carried a small stick. This is one reason the Cuban crisis was not repeated whereas the North Korean ones have been, repeatedly.
In confronting Khrushchev, Kennedy ordered actions that he knew would increase the risk not only of conventional war but also of nuclear war. He raised the U.S. nuclear alert status to DEFCON 2, aware that this would loosen control over the country's nuclear weapons and increase the likelihood that actions by other individuals could trigger a cascade beyond his control. For example, NATO aircraft with Turkish pilots loaded active nuclear bombs and advanced to an alert status in which individual pilots could have chosen to take off, fly to Moscow, and drop a bomb. Kennedy thought it necessary to increase the risks of war in the short run in order to decrease them over the longer term. He was thinking not only about Cuba but also about the next confrontation, which would most likely come over West Berlin, a free enclave inside the East German puppet state. Success in Cuba would embolden Khrushchev to resolve the Berlin situation on his own terms, forcing Kennedy to choose between accepting Soviet domination of the city and using nuclear weapons to try to save it.
During almost two dozen face-offs with North Korea over the past three decades, meanwhile, U.S. and South Korean policymakers have shied away from such risks, demonstrating that they are deterred by North Korea's threat to destroy Seoul in a second Korean war. North Korean leaders have taken advantage of this fear to develop an effective strategy for blackmail. It begins with an extreme provocation, blatantly crossing a redline that the United States has set out, along with a threat that any response will lead to a "sea of fire." After tensions have risen, a third party, usually China, steps in to propose that "all sides" step back and cool down. Soon thereafter, side payments to North Korea are made by South Korea or Japan or the United States, leading to a resumption of talks. After months of negotiations, Pyongyang agrees to accept still more payments in return for promises to abandon its nuclear program. Some months after that, North Korea violates the agreement, Washington and Seoul express shock, and they vow never to be duped again. And then, after a decent interval, the cycle starts once more.
If the worst consequence of this charade were simply the frustration of being bested by one of the poorest, most isolated states on earth, then the repeated Korean crises would be a sideshow. But for decades, U.S. presidents have declared a nuclear-armed North Korea to be "intolerable" and "unacceptable." They have repeatedly warned Pyongyang that it cannot export nuclear weapons or technology without facing the "gravest consequences." In 2006, for example, President George W. Bush stated that "the transfer of nuclear weapons or material by North Korea to state or nonstate entities would be considered a grave threat to the United States, and North Korea would be held fully accountable for the consequences." North Korea then proceeded to sell Syria a plutonium-producing reactor that, had Israel not destroyed it, would by now have produced enough plutonium for Syria's first nuclear bomb. Washington's response was to ignore the incident and resume talks three weeks later.
One lesson of the Cuban missile crisis is that if you are not prepared to risk war, even nuclear war, an adroit adversary can get you to back down in successive confrontations. If you do have redlines that would lead to war if crossed, then you have to communicate them credibly to your adversary and back them up or risk having your threats dismissed. North Korea's sale of a nuclear bomb to terrorists who then used it against an American target would trigger a devastating American retaliation. But after so many previous redlines have been crossed with impunity, can one be confident that such a message has been received clearly and convincingly? Could North Korea's new leader, Kim Jong Un, and his advisers imagine that they could get away with it?
A similar dynamic may have emerged in the U.S. economic relationship with China. The Republican presidential candidate Mitt Romney has announced that "on day one of my presidency I will designate [China] a currency manipulator and take appropriate counteraction." The response from the political and economic establishment has been a nearly unanimous rejection of such statements as reckless rhetoric that risks a catastrophic trade war. But if there are no circumstances in which Washington is willing to risk a trade confrontation with China, why would China's leaders not simply take a page from North Korea's playbook? Why should they not continue, in Romney's words, "playing the United States like a fiddle and smiling all the way to the bank" by undervaluing their currency, subsidizing domestic producers, protecting their own markets, and stealing intellectual property through cybertheft?
Economics and security are separate realms, but lessons learned in one can be carried over into the other. The defining geopolitical challenge of the next half century will be managing the relationship between the United States as a ruling superpower and China as a rising one. Analyzing the causes of the Peloponnesian War more than two millennia ago, the Greek historian Thucydides argued that "the growth of the power of Athens, and the alarm which this inspired in Sparta, made war inevitable." During the Cuban missile crisis, Kennedy judged that Khrushchev's adventurism violated what Kennedy called the "rules of the precarious status quo" in relations between two nuclear superpowers. These rules had evolved during previous crises, and the resolution of the standoff in Cuba helped restore and reinforce them, allowing the Cold War to end with a whimper rather than a bang.
The United States and China will have to develop their own rules of the road in order to escape Thucydides' trap. These will need to accommodate both parties' core interests, threading a path between conflict and appeasement. Overreacting to perceived threats would be a mistake, but so would ignoring or papering over unacceptable misbehavior in the hope that it will not recur. In 1996, after some steps by Taipei that Beijing considered provocative, China launched a series of missiles over Taiwan, prompting the United States to send two aircraft carrier battle groups into harm's way. The eventual result was a clearer understanding of both sides' redlines on the Taiwan issue and a calmer region. The relationship may need additional such clarifying moments in order to manage a precarious transition as China's continued economic rise and new status are reflected in expanded military capabilities and a more robust foreign posture.
A final lesson the crisis teaches has to do not with policy but with process. Unless the commander in chief has sufficient time and privacy to understand a situation, examine the evidence, explore various options, and reflect before choosing among them, poor decisions are likely. In 1962, one of the first questions Kennedy asked on being told of the missile discovery was, How long until this leaks? McGeorge Bundy, his national security adviser, thought it would be a week at most. Acting on that advice, the president took six days in secret to deliberate, changing his mind more than once along the way. As he noted afterward, if he had been forced to make a decision in the first 48 hours, he would have chosen the air strike rather than the naval blockade -- something that could have led to nuclear war.
In today's Washington, Kennedy's week of secret deliberations would be regarded as a relic of a bygone era. The half-life of a hot secret is measured not even in days but in hours. Obama learned this painfully during his first year in office, when he found the administration's deliberations over its Afghanistan policy playing out in public, removing much of his flexibility to select or even consider unconventional options. This experience led him to demand a new national security decision-making process led by a new national security adviser. One of the fruits of the revised approach was a much more tightly controlled flow of information, made possible by an unprecedented narrowing of the inner decision-making circle. This allowed discussions over how to handle the discovery of Osama bin Laden's whereabouts to play out slowly and sensibly, with the sexiest story in Washington kept entirely secret for five months, until the administration itself revealed it after the raid on bin Laden's Abbottabad compound.
It has been said that history does not repeat itself, but it does sometimes rhyme. Five decades later, the Cuban missile crisis stands not just as a pivotal moment in the history of the Cold War but also as a guide for how to defuse conflicts, manage great-power relationships, and make sound decisions about foreign policy in general.