Monday, September 29, 2014

My Amazon Review of Henry Kissinger's "World Order"

You can’t be a Kantian in a Hobbesian World

Herr Doktor Professor Kissinger proves that a 19th Century man can offer much needed foreign policy advice for the 21st Century.  Although it would be ideal to bring reason and rationality to bear to solve the world’s problems, we unfortunately live in a world that is an inherently dangerous place. The goal of U.S. foreign policy is to “achieve equilibrium while restraining the dogs of war” while being mindful that “our universal principles don’t necessarily hold in other parts of the world.”

“World Order” is a logical follow-up to Kissinger’s “A World Restored,” his history of The Congress of Vienna and its aftermath and “Diplomacy,” his treatise on the history and craft of international relations of Europe since the middle ages. As always he is a fan of the Westphalian System created in 1648 which gave birth to the modern state. The four principles of the Treaty (ies) of Westphalia are 1) noninterference in the domestic affairs of other states, 2) inviolability of borders, 3) that states are sovereign and 4) encouragement of international law. All these four principles were to be enforced by a balance of power among the various states. When the balance of power was disturbed, war was the result. Further, because Westphalia was value neutral, it did not speak to legitimacy. You have to take the good with the bad.

His heroes are the grandmasters of the Westphalian system. Among them are Cardinal Richelieu, Metternich, Castlereagh, Talleyrand and Palmerston. He also admires Kautilya of ancient India and Theodore Roosevelt. Each and every one of them are foreign policy realists. His greatest disdain is for Woodrow Wilson who placed values, many of them noble, over the need to preserve the peace.

Unfortunately radical Islam, for example, does not play by Westphalian rules. This is especially true because there are so many non-state actors associated with it. Indeed one of the most vexing foreign policy questions we face is whether Iran is a state or an Islamic movement.

“World Order” is up to date in that he discusses the rise of ISIS in Iraq and Syria. Kissinger also devotes an entire chapter to the role of the internet. Here this 91 year old man was tutored by Google’s Eric Schmidt. Would we all be actively learning at that age? He discusses the implications of cyber warfare and the hyper speed of communication that can outrun more deliberate pace of diplomacy. This makes life more difficult and dangerous because when the chips are down states people have to act on limited information.  

You don’t have to agree with all of it and his personal history is far from perfect but, Kissinger has written a book that should be required reading for President Obama, Secretary Kerry and all of the candidates for president in 2016.  We can’t afford the foreign policy disasters of the past dozen years.

Saturday, September 13, 2014

My Amazon Review of T.G. Otte's, July Crisis: The World's Descent into War, Summer 1914"

T.G. Otte, a Professor of Diplomatic History at the University of East Anglia, has written an exhaustive and difficult to read study of the diplomatic maneuvers undertaken by the major powers on the eve of World War I. He covers the period from the assassination of the Archduke Ferdinand on June 28, 1914 to Britain’s entry into the war the following August 4th on a day-by-day basis. The problem for the lay reader is that there are way too many characters and you have to continually update your score card to understand what is going on.

Otte is not interested in the broad historical forces that caused World War I, but rather he focuses in on the flesh and blood human beings who by their actions precipitated the war. His theme is similar to Margaret Macmillan’s “The War that Ended Peace…..” which discusses how the major powers increasingly narrowed their options making war more or less inevitable. Instead of taking 24 years to narrow options, the diplomats in his story take less than six weeks as peaceful option after peaceful option is foreclosed upon.

Otte has a set of clear villains. They are the Austria-Hungary leadership, mainly Foreign Minister Berchtold, who are so narrowly focused on Serbia; they fail to understand the European consequences of their actions. They are the “Sleepwalkers” Christopher Clark writes about. Next are the Germans, Kaiser Wilhelm, Chancellor Hollweg and Foreign Minister Jagow, who issue the “blank check” to Austria on July 5th thereby surrendering their foreign policy to that narrowly focused dying empire.

Other diplomats singled out for blame include Maurice Paleologue, the French Ambassador to Russia, who conveys far more hawkish sentiments than that of his government to his Russian counter-party Foreign Minister Sazanov. Had Paleologue been more discreet and Sazanov less aggressive, the Russian mobilization of July 29th might have been delayed giving more time for diplomacy.

Britain’s Sir Edward Grey comes off the best as he frantically tried to come up with diplomatic solutions to the crisis. This is a different take because many historians blame Grey for not forcefully signaling Germany that Britain would enter the war on the side of France thereby acting a major deterrent. Here Grey is the neutral mediator. I am not sure what to believe. One last point when Otte discusses the role of Eyre Crow an Assistant Under-Secretary in the foreign office rather than being an above the fray civil servant, he fails to disclose that he was the long time anti-German hawk in British foreign policy circles.  

Friday, September 12, 2014

UCLA Anderson Forecast, September 2014

Executive Summary

Growth Ramping to a 3% Economy from a 2% Economy

After declining by 2.1% in first quarter and growing at 4.2% in the second quarter we forecast that real GDP growth will now run at about a 3% over the next few years. Specifically we are forecast growth of 3.2% in the current quarter and 2.9% in the fourth quarter. On annual basis GDP growth will rebound from 2014’s 2.1% to 3.1% and 3.4% in 2015 and 2016, respectively. Payroll job growth should average 230,000/month and by the end of 2016 the unemployment rate will drop to 5.3%.

Instead of Contracting Defense Spending will be on the Rise

In a major change from prior forecasts, we now anticipate that defense spending will increase rather than decline. The rise of ISIL in Syria and Iraq along with the presence of Russian troops in Ukraine will cause a rethinking of the U.S.’s defense posture. We have modeled in an additional $24 billion in defense spending by 2016. For those with a long memory we would note that the Reagan defense build-up started under President Carter in 1979 after the Iranian Revolution and the Soviet invasion of Afghanistan.

Inflation on the Rise

As we discussed in prior forecast we believe that inflation as measured by the headline and core consumer price indices at 2% or higher over the next two years. The main drivers of the inflation will come from rising residential rents and increasing healthcare costs. Thus the core CPI will be rising by about a ½% higher than the overall index.

Fed to Raise Rates in March 2015

In response to declining unemployment and rising inflation we forecast that the Fed will increase interest rates at its March 2015 meeting. Thereafter we expect a gradual increase in the Federal Funds rate to about 3% by the end of 2016.

Growth Leaders to be Housing, Nonresidential Construction and Investment in Equipment and Software

Despite the housing recovery being slower than we anticipated we forecast that housing starts will rise from this year’s estimated 1.025 million units to 1.32 million and 1.47 million units in 2015 and 2016 respectively.  Because of continuing investment in energy production and a revival in commercial construction, non-residential construction will start to increase rapidly in mid-2015. In 2016 investment in nonresidential construction is forecast to expand at a robust 8.2%. Continued strength in equipment and software spending will continue to buoy the economy.

Monday, September 1, 2014

From No Drama Obama to No Strategy Obama

“We don’t have a strategy yet.”
President Obama, Press Conference, August 28, 2014

From Bagdad on the Tigris to Kiev on the Dnieper U.S. foreign policy is in disarray. At his press conference President Obama noted that he was awaiting a strategy from the Pentagon to deal with ISIL. Wrong!! It is the civilian leadership who makes strategy. Therefore it is up to the Pentagon to come up the appropriate military response to achieve the political ends dictated by the strategy. Simply put the President has it backwards.
Secretary of Defense Chuck Hagel, hardly a hawk, referred to ISIL “as sophisticated and well- funded as any group that we have seen…beyond anything we have seen.” If that is anywhere close to being the case then a clear and present danger exists to the national security of the United States. Up to now the President has authorized air strikes in Iraq, but not in the ISIL heartland of Syria. I fear that will not be nearly enough and that both air strikes in Syria and ground combat troops will be necessary as well. ISIL is too well entrenched to be handled by air power alone.

Yes the American people are war weary. But it is up to the President to make the case. Great leaders don’t follow polls they change them and the sooner the President lays the groundwork for action the sooner it will happen. He has to remember he is President first and party leader second.

He has to spend the time to do the hard work of coalition building that will be necessary to dislodge and ultimately neuter ISIL.  President Bush ’41 was successful at it, but it took real work internationally to create it and he also had to overcome real opposition in Congress. In order to this the President will have to spend less time on the golf course and schmoozing political contributors and more time with foreign leaders and members of Congress.

Meantime Russia has all but formally invaded Ukraine and is now talking about a creating and independent state in the eastern part of the country. Such an open act of aggression must not go unpunished. It is now time for very real and very hard sanctions on Russia that would end all technology transfers and their access to the western banking system. Further NATO should send advanced weaponry to the Ukraine so that the can defend their homeland against the onslaught of Russian tanks and artillery. Hopefully there will be the will at the upcoming NATO meeting in Wales.

The White House has become a theme park of strategic indecision. The President has to snap out of it quickly because we do not have the luxury of waiting more than two years for a new president. The locomotive of history waits for no one. Just as reminder 75 years ago today, after several years of watching Britain and France vacillate, the German army crossed into Poland starting World War II.