Why Nobody Invests in Japan
Tokyo’s Failure to Welcome Foreign Capital Is Hobbling Its Economy
Thirty years ago this month, the opening of the Berlin Wall ushered in the last great diplomatic struggle of the Cold War. As cheering crowds danced atop what was left of the Iron Curtain, the fate of Germany hung in the balance. In retrospect, it is easy to see that triumphal moment as part of an inevitable march toward German reunification. At the time, however, the future felt anything but certain.
Germany was the most important strategic prize in Europe. Debates over its reunification and geopolitical alignment had nearly sparked a war on several occasions in the 1950s and 1960s. And as late as October 1989, U.S. officials warned that if Soviet influence in East Germany were threatened, the Soviet Union would “use force to prevent the collapse of a Communist East German State.” When the wall opened just one month later, no one knew how the Kremlin would interpret the end of travel restrictions and the broader challenge this posed to Soviet influence; after all, the higher-ups in Berlin had announced the decision to open the border without Moscow’s explicit approval. A crackdown—perhaps even a war—was a real possibility.
Why, then, did the events in Europe end with a whimper and not a bang? One must give credit where credit is due: after coming to power in the mid-1980s, Soviet leader Mikhail Gorbachev did much to ease tensions with the United States and improve the East-West relationship. But dozens of recently declassified documents reveal that a large part of the story was the care and caution shown by U.S. policymakers. Their restraint created space for the events in East Germany to unfold and enabled the United States to capitalize on the weakness of communist authorities in a remarkable strategic coup: peaceful German reunification within NATO.
Fear of a violent Soviet reaction did not emerge from the ether. The Soviet Union had crushed previous uprisings in Hungary in 1956 and Czechoslovakia in 1968. Those states were less geopolitically important than East Germany—which the U.S. State Department had called the “cornerstone” of the Soviet security posture and “the jewel in their imperial crown.” It was all too easy to imagine a Soviet-led crackdown drawing in West German forces, triggering NATO military protocols, and provoking an all-out conflagration.
Documents at the George H. W. Bush Presidential Library show that already in August 1989, one National Security Council (NSC) official had advised National Security Adviser Brent Scowcroft that “we should restrain the euphoria,” as the “evolution in Eastern Europe is very much at the mercy” of the Soviet Union. Picking up this theme, the CIA warned in mid-October that “despite scattered hints . . . that Soviet thinking on intra-German relations is evolving, we believe Moscow remains fundamentally opposed to German reunification.”
The Soviet Union had crushed previous uprisings in Hungary in 1956 and Czechoslovakia in 1968.
U.S. President George H. W. Bush, Scowcroft, and other senior officials recognized the danger. They responded to the imminent collapse of East German authority not by immediately calling for reunification but by arguing that the German people should be allowed “self-determination.” Bush also refused to endorse West German Chancellor Helmut Kohl’s plan for the gradual reunification of East and West Germany until after he met with Gorbachev at the December 1989 Malta Summit and the Soviet leader promised “peaceful change.” After all, as the NSC had told the president just before Malta, there were no guarantees that the Soviet empire “would go quietly into the night.” Indeed, the collapse of East Germany risked pushing the Soviets into an “act of desperation” that could well trigger “a European central front war.”
But even Gorbachev’s promise at Malta did not fully alleviate American worries. Soon after the Malta Summit, Soviet forces in East Germany suddenly went on alert. U.S. policymakers were sufficiently concerned that the Soviets might be preparing to forcibly “restore communist rule” that Bush dispatched his secretary of state, James Baker, to meet with the Soviet, British, and French foreign ministers in Berlin to defuse the situation. Given what Scowcroft called “the significant Soviet military presence in Europe,” U.S. leaders were willing to grant the Soviet Union a wide berth, using dialogue rather than economic pressure or military showmanship.
Early in 1990, however, the caution and circumspection that had dominated NSC decision-making in 1989 seemed to evaporate and U.S. policy abruptly changed. Within a span of weeks, American and West German officials crafted a plan to reunify Germany under NATO. By the spring, this process was sufficiently far advanced that even Soviet objections could not dissuade the United States.
A number of developments likely factored into this shift. Mounting social and political upheaval in East Germany and the resulting pressure for German reunification created stress within the United States to respond to developments within the Soviet sphere of influence. But even more important was the collapse of the Soviet military position throughout Eastern Europe following the revolutions of 1989. With Eastern European populations mobilized and governments in the region rapidly moving away from communism, the Soviet Union’s ability to maintain a military presence in the region and to credibly threaten its use was diminishing by the day.
American policymakers knew this and called the Soviets’ bluff. By late January, NSC analysts concluded that Bush could simply “remind Gorbachev that his troops are fast being pushed out of the region” and that his best bet was to cooperate with the United States on whatever terms it offered. Condoleezza Rice—who at the time was the NSC’s senior Soviet analyst—argued that “the Soviet Union is probably unable to reextend its tentacles into Eastern European” countries. As the Soviet threat receded, U.S. ambitions expanded—enabling German reunification inside NATO and the peaceful end of the Cold War.
American policymakers called the Soviets’ bluff.
Bush and his team have been rightly praised for their tactfulness and diplomatic caution. More than that, however, they understood power politics. Rather than charging headfirst into the breach once the Berlin Wall opened, they calibrated U.S. policy to the facts on the ground—avoiding crises, exploiting opportunities, and linking ends and means to advance U.S. interests. Of course, the push to reunify Germany within NATO by exploiting Soviet weaknesses may have later contributed to the progressive collapse of U.S.-Russian relations starting in the early years of the twenty-first century. Still, at a time when the foundations of the post–Cold War system are shaking, great-power politics are back, and current American leaders seem determined to throw the United States’ weight around against friends and foes alike, strategists would do well to recognize that circumspection and restraint are often the keys to victory.
How He Changed the Policy Process Forever