Foreign Policy, the Headlines, Reality, Europe and China

Besides any job creation impact and economic efficiencies created by an U.S./ EU trade pact, essentially a win win, the pact will enable the U.S. and Europe's economy to be more integrated in order to balance China's growing power in world trade.
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It seems that every time I turned on the national news or read a news report concerning American foreign policy during the past several weeks, it was not about foreign policy, but about Senator McCain doing his best to imitate King Lear. Seething over past disagreements with Senator Hagel or berating the administration on its Syrian policy. A policy, which actually has its roots in the sage historic advice of Secretary of States John Quincy Adams when he said, "But she [the United States of America] goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own"

Possibly because it lacked the theatre of recrimination, what made only short-term headlines and mainly in the business-related press were two statements in President Obama's State of the Union, which are the real strategic foreign policy game changers. One was in relation to federal investments in a manufacturing innovation institute as well as basic research, and another the proposed U.S./EU trade pact. Both statements, linked to each other by a world that is forcing the convergence of domestic and foreign policy, could be among the historic defining moments of the Obama presidency.

The question is: What will America's strategy be to secure its economy in the new "Great Game," the triangular game of trading blocs? We are living on one level in a globalized world, but beneath that patina is the reality of historic trading relationships. Relationships made much more complex and more difficult for the United States by globalization's destruction of America's self-assured continental marketplace and the return of China to historic dominance in Asia.

Globalization's success, its ability to move hundred's of millions of people out of poverty, has also caused a reassertion of nationalism and an economic rivalry for markets and raw materials. It has even called into question the ability of the American corporate model to compete globally against the emergence of State owned enterprises.

How the United States deepens its economic relationship with Europe as a balance to China will be a major key to America's future economic well being. In a way this is not so dissimilar to the Nixon/Kissinger strategy of balancing China and Russia. The difference of course is that with globalization, markets have almost the same destructive powers as armies, a concept that Nixon/Kissinger could possibly not have imagined.

China's dramatic economic growth over the past 35 years is not a historic anomaly but brings China back to where it has been for most of history, the dominant economic and cultural power in Asia and one of the wealthiest countries in the world. The historic anomaly was the 150 years of Chinese decline and weakness from approximately 1839 to 1989.

But anomaly or not, trade and economics are opportunistic and do not wait for history to rebalance itself. The Chinese political system, whose non-democratic legitimacy is based on the need for rapid economic growth, whose vested interests pervert internal growth, and whose political culture blames western imperialism as a cause for China's 150 years of decline, now believes it is justified to partake in economic imperialism. While at the same time globalization has enabled China a country of 1.3 billion people, to move beyond Asia in search for markets and raw material.

Real international economics is not so much different from concept of Realpolitik; when a country gains market share, somebody else of course loses, or in expanding markets, has the potential to lose. It is also not far away from the traditional concept of balance of powers, except for the fact that power is judged now as much by markets as by armies.

And that is why the European trade proposal is so historically important. Besides any job creation impact and economic efficiencies created by an U.S./ EU trade pact, essentially a win win, the pact will enable the U.S. and Europe's economy to be more integrated in order to balance China's growing power in world trade. A further integration that makes sense based on singularly shared concepts of democracy, culture, rule of law and finance.

But even with a U.S./EU trade pact, how do American companies compete against China and other semi-capitalist countries and their concept of state-owned enterprises? A corporate formulation where the state has shares in the leading companies, offers them below market financing and other advantages that only the state can provide, so that these companies can become significant players in the global marketplace.

The answer lies in President Obama's statement in reference to manufacturing innovation and basic research. Obama is essentially saying that the federal government should fund basic long-term research that no individual American corporation would find profitable to invest in but will benefit society as a whole. Obviously some of this money will be lost on research that will not pay off. On the other hand some of the research has paid off spectacularly in the past such as the Defense Department's Defense Advance Research Projects Agency (DARPA), which supported the creation of ARPANET, the predecessor of the Internet, despite a lack of interest from the private sector.

So although Syria is important and Benghazi tragic, they are not the foreign policy issues that in the long term will affect the majority of Americans. At best they represent the fact that the Senate Committee system has not adapted to the new realities of foreign policy, where economics and trade are as important as political and military events around the world. At worst, they have become political publicity stunts.

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