KickTheNWO
Might isn't right, after all
Thu Sep 4 16:20:05 2003
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"The US will not be levelling any trade sanctions to "compel" China to change its exchange rate policy." ... "China does indeed generate large trade surpluses in its dealing with the US, but it uses these to finance the US current account deficit. In the first half of this year it bought $US41 billion worth of US Treasury notes. US multinational companies generate annual sales of $US26 billion in China. Further, the US depends on China's help to manage the slow-burning nuclear crisis on the Korean peninsula. So any attempt by Washington to "compel" China to do anything at all would risk the most serious boomerang effects on US vital interests. The interlocking interests of a globalised world make it impossible for the US to mete out any punishment without striking itself."

Might isn't right, after all
Peter Hartcher, Australian Financial Review
September 05, 2003

The announcement that the United States will return to the United Nations to seek help in stabilising Iraq marks the moment that the Bush administration acknowledges the limits to American power.

Almost two years ago George Bush said that, in responding to the terrorist attacks on the US, Washington had to be prepared to conduct a global anti-terror war by itself if necessary:

"At some point, we may be the only ones left. That's OK with me. We are America," he said, according to Bob Woodward's chronicle of the administration's response to the attacks, Bush at War.

After two years of swagger and bluster, the Bush administration has learnt the hard way that just being America is simply not enough.

Its urge to go it alone, the temptation to unilateralism and the Pentagon's barely concealed contempt for the rest of the world have failed the test of reality.

The unilateralists in the Bush administration, the group known as the neoconservatives, "almost exulted in going it alone", says Walter Russell Mead of the Council on Foreign Relations, "but it hasn't really panned out".

The White House's decision, announced yesterday, to ask the UN Security Council for a new resolution creating a multilateral occupation force "seems to be a healthy dose of realism", Mead says.

As the blood of American GIs continues to disappear into the sands of the Iraqi desert, so have the doctrines of hegemony and pre-emption that rolled so easily from the tongues of the neocons who insisted the US could and must invade Iraq regardless of world opinion.

The US accounts for 5 per cent of the world's population, 25 per cent of the global economy and fully half of all military spending worldwide.

Yet it has just learnt that no matter how big its forces or how much violence it employs, it is never enough.

And just as Washington discovers the limits of its military and moral power on one continent, the US Treasury Secretary, John Snow, is learning the limits of its economic and political power on another.

The Chinese government has rebuffed Snow's request that it float its currency, and the US can't do a thing about it.

This is becoming a politically explosive issue in the US, and it is set to detonate in time for the presidential and congressional elections next year. A new lobbying coalition of 82 industry associations, the Coalition for a Sound Dollar, has formed to make sure it does.

Why?

Because, as a bipartisan group of 14 members of Congress wrote to Bush in a letter arranged by the coalition, "June was the 35th straight month of declining jobs in the manufacturing sector, the worst record since World War II".

American manufacturing has lost 2.7 million jobs in this period, and the unstoppable tide of cheap Chinese goods is becoming the culprit of convenience. China is now the biggest source of the US trade deficit.

The Coalition for a Sound Dollar blames China's pricing of its currency, the yuan, which for the past eight years Beijing has held at a fixed exchange rate of 8.28 per US dollar. The US manufacturing sector seethes, saying this is deliberately designed to undercut US products.

Just as Snow was about to leave for Beijing, this coalition arranged for a bipartisan group of four key senators to write urging him to "compel the Chinese government to freely float the yuan" under penalty of trade sanctions.

Snow took pains to phone each of the four yesterday from Beijing to brief them on his meetings there, but could not report success.

Beijing's attitude to floating the currency is the same as its attitude to full participatory democracy - China's government is committed to it as a long-term goal, just not yet.

The US will not be levelling any trade sanctions to "compel" China to change its exchange rate policy.

Even if Washington sought to penalise Beijing, it would be the economic equivalent of the occupation of Iraq - emotionally satisfying but painfully counter-productive.

Why is the hyperpower's might, theoretically so overwhelming, proving in practice to be so sharply limited in two very different realms on two different continents?

The reasons are not new, but our times have made their application more acute.

The great Prussian military strategist Karl Von Clauswitz wrote: "When we speak of destroying the enemy's forces, we must emphasise that nothing obliges us to limit this idea to physical forces: the moral element must also be considered."

The US failed to establish the moral case for its unprovoked invasion of another country. It had a strong army but a weak case.

And so it failed to win legitimacy in the eyes of the world, and legitimacy in the eyes of the occupied people. This translated into feeble support from the rest of the world and fierce resistance in Iraq.

Clauswitz's argument carried weight three centuries ago, but it carries much more weight today. The greater the spread of democracy worldwide, the more important it is for powers, even hyperpowers, to carry world public opinion with them.

The US, as the greatest champion of democracy, should be the country most keenly attuned to this truth. Yet the Bush administration had a tin ear for world opinion, and listened only to the rantings of the angriest faction in its own ranks.

The reason for America's influence over China is the nature of international interdependency, otherwise known as globalisation.

China does indeed generate large trade surpluses in its dealing with the US, but it uses these to finance the US current account deficit. In the first half of this year it bought $US41 billion (about $AU64 billion) worth of US Treasury notes.

US multinational companies generate annual sales of $US26 billion in China. Further, the US depends on China's help to manage the slow-burning nuclear crisis on the Korean peninsula.

So any attempt by Washington to "compel" China to do anything at all would risk the most serious boomerang effects on US vital interests. The interlocking interests of a globalised world make it impossible for the US to mete out any punishment without striking itself.

And, again, as the champion of globalisation, the US should understand this more keenly than any other nation.

So this is the paradox of the success of the US. The more successful it is in exporting its key principles of democracy and open markets, the more deftly it must work with world opinion and interlocking interests.

That puts an ever-growing premium on moral leadership and enlightened self-interest, and a dwindling return on brute force and blind anger.

http://afr.com/articles/2003/09/04/1062548963901.html