Your humble blogger has spent the better part of his trip to Seoul at a conference co-sponsored by the Republic of Korea's Ministry of Foreign Affairs and the East Asia Institute. The topic was "New Strategic Thinking:  Planning for Korean Foreign Policy," and I got invited because I edited this a few years ago. I hope that the Korean Foreign Ministry benefitted from it. I certainly learned a few things: 

1) No one knows what the f**k the North Koreans are doing. There were representatives from the United States, United Kingdom, China, Japan and South Korea on the panels. I talked to a lot of them informally during breaks and meals as well. No one had any clue why Pyongyang had ratcheted up tensions to the extent that they did over the past two months. About the only thing approximating a consensus was the belief that the North Koreans were in fact bluffing about starting outright hostilities -- which makes their behavior all the more puzzling. In triggering the shutdown of the Kaesong Industrial Park, the North Koreans cost themselves about $90 million a year that they can't afford to lose.

2) Chinese academics are getting more interesting. As recently as five years ago, my eyes used to glaze over whenever a Chinese academic started speaking at a policy conference. The reason was that there was a 100 percent certainty that the academic would simply repeat standard PRC boilerplate that didn't deviate from official government positions. An academic agreeing with one's government is not a sin, but only parroting official discourse is pretty friggin' useless. 

Something has changed in recent years, however. Maybe I'm being invited to a better class of conferences, but I don't think that's it. Chinese academics are more willing to openly discuss ongoing debates within the Chinese foreign policy community about the wisdom of a certain course of action. At this conference, Qingguo Jia asserted that the Chinese really were rethinking their relationship with North Korea. Now one can debate whether the Standing Politburo is really entertaining such thoughts, but the fact that there's a public conversation about it is pretty interesting. 

3) The best-laid foreign policy plans get destroyed by real-world events. The conference was devoted to how the South Korean government could implement Park Geun-Hye's concept of Trustpolitik that she articulated during her campaign for the presidency. The general consensus was that, at this point, there are very limited ways of building trust with Pyongyang. Furthermore, the likelihood of any confidence-building measures getting scrubbed during the next crisis are very high. 

It is to Park's credit that she seems to recognize this and has yanked ROK workers from Kaesong as a signal of South Korea's resolve. Trustpolitik is a great phrase, but I'm dubious of whether it will accomplish anything. 

4) It's the little things that matter to build mutual goodwill. That's a fancy way of noting the following:  if you are a Caucasian academic in South Korea, can use chopsticks proficiently, and actually like kimchee, your South Korean counterparts will treat you like a god. 

The Wall Street Journal has two great stories on the Federal Reserve's decision to go for QE3 -- a third round of quantitative easing.  First, Jon Hilsenrath documents how Fed chairman Benjamin Bernanke built a consensus among the Federal Reserve governors:

For weeks, Mr. Bernanke made dozens of private calls on days, nights and weekends, trying to build broad support for an unusual bond-buying program he wanted approved during the Fed's September meeting, according to people familiar with the matter....

Fed officials described the Fed chairman's phone calls as low-pressure conversations. Mr. Bernanke sometimes dialed up colleagues while in his office on weekends, catching them off guard when their phones identified his private number as unknown. He gave updates on the latest staff forecasts, colleagues said. He asked their thoughts and what they could comfortably support, they said.

The calls helped Mr. Bernanke gauge how far he could push his committee. It also won him trust among some of his fiercest opponents, officials said. Nearly all of Mr. Bernanke's colleagues described him as a good listener.

"Even if you disagree with him on the programs, you know your voice has been heard," said [Dallas Fed President Richard] Fisher, one of his opponents. "There is no effort to bully."

So Bernanke did a lot of hand-holding, a lot of listening... to the key Fed decision-makers.  What's equally important is who he didn't talk to -- namely, other central bank heads in the rest of the world. 

I bring this up because some of these central bank officials are pretty pissed.  QE3 has caused the yuan to hit its all-time high against the dollar, for example.  Which leads us to the other interesting Wall Street Journal story.  Aaron Back and In-Soo Nam document how South Korea and China have reacted to QE3: 

Chinese and South Korean central-bank officials criticized the U.S. Federal Reserve's latest easing efforts and advocated reducing Asia's dependence on the U.S. dollar.

The comments Thursday, at a joint seminar in Beijing by the two central banks, are the clearest indication yet of a rising backlash in Asia against U.S. monetary policy, suggesting it could speed up the search for alternatives to the dollar as the main global currency.

"The rise in global liquidity could lead to rapid capital inflows into emerging markets including South Korea and China and push up global raw-material prices," said Bank of Korea Gov. Kim Choong-soo. "Therefore, Korea and China need to make concerted efforts to minimize the negative spillover effect arising from the monetary policies of advanced nations."

Chen Yulu, an academic adviser to the People's Bank of China, said Asia needs a "regional core currency" to reduce its dependence on the dollar. China's ultimate goal is for the yuan to be as important as the euro or the dollar, he said.

Whoa, this sounds pretty bad... until you get to the next paragraph: 

But [Chen] acknowledged that will be a slow process, saying it would be possible for the yuan to be fully convertible by 2020, and that the overall yuan-internationalization process may last until 2040. China strictly controls its currency, though it has made small moves to broaden its use globally in recent years and has also allowed a little more flexibility in its movements (emphasis added).

As I've said before, the dollar ain't going away anytime soon, and whatever leverage analysts believe China possesses with its dollar holdings is vastly overstated.   

Furthermore, it's worth noting that the international bitching and moaning about QE3 seems much less than the "currency war" rhetoric that QE2 triggered.  Why?  Based on my half-assed blog analysis I'd speculate that there are three reasons: 

1)  The global economy is in a more sluggish state in 2012 than in 2010, so it's hard to argue that expansionary monetary policy is inappropriate now. 

2)  The United States was not the only major economy to go the quantitative easing route in the past few months.  Both the European Central Bank and the Bank of Japan have made similar -- if uncoordinated -- moves. 

3)  The central bank heads have learned frrom QE2 that the bitching and moaning won't accomplish anything.  It didn't stop QE2 and it won't stop QE3. 

Am I missing anything? 

Your humble blogger has been banging on about how China's weaknesses are significant and its strengths have been badly overestimated.  So you would think I'd be happy to read this Edward Wong front-pager for the New York Times:

After the economies of Western nations imploded in late 2008, Chinese leaders began boasting of their nation’s supremacy. Talk spread, not only in China but also across the West, of the advantages of the so-called China model — a vaguely defined combination of authoritarian politics and state-driven capitalism — that was to be the guiding light for this century.

But now, with the recent political upheavals, and a growing number of influential voices demanding a resurrection of freer economic policies, it appears that the sense of triumphalism was, at best, premature, and perhaps seriously misguided. Chinese leaders are grappling with a range of uncertainties, from the once-a-decade leadership transition this year that has been marred by a seismic political scandal, to a slowdown of growth in an economy in which deeply entrenched state-owned enterprises and their political patrons have hobbled market forces and private entrepreneurship.

“Many economic problems that we face are actually political problems in disguise, such as the nature of the economy, the nature of the ownership system in the country and groups of vested interests,” said Zhang Ming, a political scientist at Renmin University in Beijing. “The problems are so serious that they have to be solved now and can no longer be put off.” 

Wong didn't even delve into the state of China's big banks, which Bloomberg's Jonathan Weil examines and concludes that they're facing a world of hurt, or China's civil-military conundrum, which I blogged about earlier in the week. 

So China is doomed, right?  The bubble is gonna pop big time, right? 

Well... maybe.  Whenever I get too bearish on Beijing, two things drag me back from the brink:  1) China's sheer size means it can muddle through and still increase its relative power; and 2) it's possible for China to experience a severe downturn and still recover quite nicely.  As I pointed out a few years ago:

[I look] at China and see the parallels with America's rise to global economic greatness during the late 19th and early 20th centuries. From an outsider's vantage point, America looked like a machine that could take immigrants and raw materials and spit out manufactured goods at will. By 1890, the U.S. economy was the largest and most productive in the world. As any student of American history knows, however, these were hardly tranquil times for the United States. Immigration begat ethnic tensions in urban areas. The shift from an agrarian to an industrial economy led to fierce and occasionally violent battles between laborers, farmers, and owners of capital. With an immature financial sector, recession and depressions racked the American economy for decades.

It is not contradictory for China to amass a larger share of wealth and power while still suffering from severe domestic vulnerabilities.

China-watchers tend to be divided between the Bubblers and the Extrapolators.  I'm still more sympathetic to the Bubblers, but if the "China is doomed" meme goes mainstream, I might have to defect. 

Your humble blogger has been underwhelmed with Mitt Romney's foreign policy pronouncements to date.  Sure, I thought what he was saying was far better than most of the rest of the GOP 2012 field, but that's like complimenting Moe on being the smart Stooge. 

The past month or so have not helped matters.  During this period, Romney has continued to harp on Obama's non-existent "apology tour", published an op-ed on China that the Hulk could have drafted, and labeled a dysfunctional and demographically dying state our number one geopolitical foe. 

In fairness, the Romney campaign has a tough task.  Obama's foreign policy has been far from perfect, but he's hit the key notes reasonably well.  U.S. standing abroad has risen considerably, Osama bin Laden is dead, U.S. grand strategy has pivoted towards the most dynamic region in the world, and his Secretary of State is a badass texter.  There are angles where Romney could try to hit Obama - the Iraq withdrawal, the planned drawdown in Afghanistan -- except that the American public overwhelmingly endorses these moves.  That ground is not fertile.  This has reduced the Romney campaign to do little but shout "Iran is dangerous!  Israel is getting thrown under the bus!!" a lot.  The fact that the Obama White House seems delighted to highlight this stuff is not a good sign for the Romney folk. 

This is a shame.  Foreign policy might actually matter in this campaign, and it would be nice if there was a genuine debate.  For that to happen, however, the Romney campaign needs to actually mount a substantive critique as opposed to a purely oppositional one.  They need to seize on an issue and show how it represents the flaws of Obama's foreign policy approach. 

Might I suggest North Korea?  From today's New York Times front-pager by Mark Landler and Jane Perlez: 

With North Korea poised to launch a long-range missile despite a widespread international protest, the Obama administration is trying to play down the propaganda value for North Korea’s leaders and head off criticism of its abortive diplomatic opening to Pyongyang in late February....

[T]he administration’s options are limited. The United States will not seek further sanctions in the United Nations Security Council, this official said, because North Korea is already heavily sanctioned and Washington needs to preserve its political capital with China and Russia to win their backing for future measures against Syria and Iran. The more likely scenario at the United Nations is a weaker statement from the Council president.

With North Korea telling reporters that it had begun fueling the rocket, the launching appeared imminent, confronting the Obama administration with a new diplomatic crisis after an agreement that American officials had hoped would open a new chapter with a traditionally hostile and unpredictable nation.

White House officials moved aggressively to deflect criticism of that deal, which offered North Korea food aid in return for a pledge to suspend work on its uranium enrichment program and to allow  international inspectors into the country.

Unlike the administration of President George W. Bush, this official said, the Obama administration did not give the North Koreans anything before they violated the agreement by announcing plans to go ahead with the satellite launching. And, he added, the administration expects the North Koreans to abide by the other terms of the deal if it hopes, as it has said, for a fuller diplomatic dialogue.

Still, for President Obama, who prided himself on not falling into the trap of previous presidents in dealing with North Korea, the diplomatic dead end has been a frustrating episode: proof that a change in leadership in Pyongyang has done nothing to change its penchant for flouting United Nations resolutions, paying no heed to its biggest patron, China, and reneging on deals with the United States.

This is an issue that the Romney campaign should be all over.  The administration's policy of "strategic patience" followed by "let's make a deal with Kim the Younger" has not worked well.  The DPRK highlights the Obama administration's reluctance to talk tough with China and the ways in which its nonproliferation policy seems to be... troubled.    This is taking place in the most strategically interesting part of the world.  In other words, this is an issue where Obama's record has been radically imperfect and a solid critique should resonate.  Sure, there's no magic solution or anything, but attacking Obama on this issue is at least a way for Romney to articulate exactly what he means when he signals his hawkishness. 

So let's see how the Romney campaign responds.  Disappointingly, North Korea was not even mentioned in the Romney foreign policy team's open letter to Obama, and it's nowhere on Romney's campaign  blog.  If that doesn't change by the end of this week,  then I'll know I don't really need to take his foreign policy pronouncements all that seriously. 

I'm daring you, Mitt Romney.  I'm double-dog-daring you.  Let's see if and your team have got the foreign policy goods or not. 

Walter Russell Mead has not been the biggest fan of the current president, so it's worth quoting at length what he said in a recent blog post about Obama's Pacific Rim trip: 

The cascade of statements, deployments, agreements and announcements from the United States and its regional associates in the last week has to be one of the most unpleasant shocks for China’s leadership — ever.  The US is moving forces to Australia, Australia is selling uranium to India, Japan is stepping up military actions and coordinating more closely with the Philippines and Vietnam in the South China Sea, Myanmar is slipping out of China’s column and seeking to reintegrate itself into the region, Indonesia and the Philippines are deepening military ties with the the US: and all that in just one week. If that wasn’t enough, a critical mass of the region’s countries have agreed to work out a new trade group that does not include China, while the US, to applause, has proposed that China’s territorial disputes with its neighbors be settled at a forum like the East Asia Summit — rather than in the bilateral talks with its smaller, weaker neighbors that China prefers.

Rarely has a great power been so provoked and affronted.  Rarely have so many red lines been crossed.  Rarely has so much face been lost, so fast.  It was a surprise diplomatic attack, aimed at reversing a decade of chit chat about American decline and disinterest in Asia, aimed also at nipping the myth of “China’s inexorable rise” in the bud....

[I]t was as decisive a diplomatic victory as anyone is likely to see.  Congratulations should go to President Obama and his national security team.  The State Department, the Department of Defense and the White House have clearly been working effectively together on an intensive and complex strategy.  They avoided leaks, they coordinated effectively with half a dozen countries, they deployed a range of instruments of power.  In the field of foreign policy, this was a coming of age of the Obama administration and it was conceived and executed about as flawlessly as these things ever can be.

You know it was a good foreign policy trip when Politico runs the "Obama will soon miss his foreign policy successes as he returns to the Washington mire" storyline upon his return. 

The standard line among the press and expert analysts is that the combination of speeches and actions represents a dramatic foreign policy "pivot" to East Asia.  This elides some prior speeches that suggested this was under way for some time, but still -- what does it mean? 

I'd suggest three things.  First, it's an interesting moment to highlight some macro trends that are relatively favorable to the United States.  In comparison to, say, China or Europe, the United States looks to be in decent shape.  Over the longer term, trends in both energy and manufacturing suggest that the United States will continue a time-honored tradition and emerge from a crisis of its own making in a stronger relative position than before.  If the administration is smart, it will marry its recent successes to these longer-term trends as a way of constructing a more optimistic strategic narrative. 

Second, China is likely to pursue a more accommodating posture in the short run.  As Mead notes, the official Chinese reaction has been muted.  The unofficial reaction has ranged from the hyperbolic to the inscrutable.  Still, as I've pointed out repeatedly, China's behavior in 2009 and 2010 was a giant honking invitation for the rest of the Pacific Rim to cozy up to the United States.  And that's what should worry Beijing.  It's not that the United States is interested in maintaining its presence in East Asia -- that interest has not wavered.  What has changed is the eagerness with which the countries in the region, ranging from Australia to Myanmar, have reciprocated. 

Third, while the Obama administration deserves credit for this foreign policy swing -- and for some fun, compare and contrast coverage of this trip with Obama's Pac Rim swing from two years ago -- the "pivot" language is badly misplaced.  A pivot implies that the United States will stop paying attention to Europe or the Middle East and start paying attention to East Asia.  While I'm sure that's what the Obama administration wants to do, it can't.  Europe is imploding, as are multiple countries in the Middle East.  The United States can't afford to ignore these regions, since uncertainty there eventually translates into both global and domestic problems.  A European financial meltdown or an Egyptian political meltdown will have ramifications that simply can't be ignored. 

Talking about a United States "pivot" in foreign policy is meaningless.  The US, like an overstuffed couch, is simply too big to pivot. 

What do you think? 

I see that The Powers That Be at FP are highlighting my foolhardy unconventional wisdom about China's rise on their splash page.

Given the Hu-Obama summit and subsequent flurry of China commentary this week, it's worth highlighting the most absurd data point I cited in that article -- Forbes' magazine's decision to name Chinese President Hu Jintao the world's most powerful individual. Their explanation:

Paramount political leader of more people than anyone else on the planet; exercises near dictatorial control over 1.3 billion people, one-fifth of world's population. Unlike Western counterparts, Hu can divert rivers, build cities, jail dissidents and censor Internet without meddling from pesky bureaucrats, courts.

With these two sentences, the editors at Forbes managed to demonstrate an even shallower analysis of domestic politics than their Dinesh D'Souza cover story on Obama, which I didn't think was possible.

Let's review just a smattering of coverage about Hu Jintao's current ability to exercise iron-willed control over the Chinese bureaucracy, shall we? First, Gordon Chang in The New Republic:

Hu is sometimes called the world's most powerful person -- Forbes magazine gave him that accolade in November -- but he is a weak leader back home. Just how weak was revealed in two startling incidents within the past three weeks. On Tuesday, after the state-run Chengdu Aircraft Design and Research Institute performed the first flight test of the J-20 stealth fighter -- an unmistakable slap in the face of Defense Secretary Robert Gates, who was visiting Beijing at the time -- Hu professed not to know that the test had occurred....

If the Chinese leader was telling the truth, the test flight reveals a remarkable defiance of civilian authority by the flag officers of the People's Liberation Army, an obvious attempt to undermine the military cooperation Hu said he wanted to foster. Or if, as is more likely, Hu did in fact know about the timing of the test, he nonetheless said something that made himself appear inept. One has to wonder about a political system that creates incentives for its top leader to publicly imply that he is both ignorant and weak.

Either way, the unmistakable impression is that Hu seems to have much less influence than is often assumed. This could be due to the fact that China is in the middle of a transition to the next generation of political leaders -- led by Xi Jinping -- who are gaining in power as Hu loses his in the long run up to the actual handover.

Next, the Economist:

China's new raw-knuckle diplomacy is partly the consequence of a rowdy debate raging inside China about how the country should exercise its new-found power. The liberal, internationalist wing of the establishment, always small, has been drowned out by a nativist movement, fanned by the internet, which mistrusts an American-led international order.

Then there's Drew Thompson in -- hey, it's FP!!

China's national security decision-making process is opaque, and so this worrisome disconnect -- who knew what when -- is difficult to ascertain with certainty. It is highly improbable that Hu was unaware of the development of this major military advancement. His role as chairman of the Central Military Commission ensures that he is well briefed about major programs, and he doubtlessly approves their large budgets. What is not known is how much oversight and control the central government leadership in Beijing had over the PLA's decision-making process that lead to highly visible tests at the Chengdu air base just as Gates was visiting China.

And, finally, David Sanger and Michael Wines in the New York Times:

China is far wealthier and more influential, but Mr. Hu also may be the weakest leader of the Communist era. He is less able to project authority than his predecessors were -- and perhaps less able to keep relations between the world's two largest economies from becoming more adversarial.

Mr. Hu's strange encounter with Defense Secretary Robert M. Gates here last week -- in which he was apparently unaware that his own air force had just test-flown China's first stealth fighter -- was only the latest case suggesting that he has been boxed in or circumvented by rival power centers....

President Obama's top advisers have concluded that Mr. Hu is often at the mercy of a diffuse ruling party in which generals, ministers and big corporate interests have more clout, and less deference, than they did in the days of Mao or Deng Xiaoping, who commanded basically unquestioned authority....

"There is a remarkable amount of chaos in the system, more than you ever saw dealing with the Chinese 20 years ago," Brent Scowcroft, the former national security adviser and Mr. Gates's mentor, said Saturday. "The military doesn't participate in the system the way it once did. They are more autonomous -- and so are a lot of others."

Now, to be fair, it's possible that China is learning how to play the authoritarian equivalent of the two-level game. Even if that's true, however, China is playing that game very badly -- and they're playing it in policy arenas that are guaranteed to trigger a balancing coalition rather than accommodation.

There are a lot of other areas where your replacement-level American commentator is vastly exaggerating China's power. But Forbes' editors easily win the... the....

OK, contest for readers -- name the award that I want to give to writers who vastly exaggerate China's rise!

North Korea has spent the past week demanding that someone pay attention to them.  In response, online policy recommendations have ranged from Thomas P.M. Barnett's doubling down on strategic patience to Glenn Reynolds recommendation that the U.S. nuke North Korea "if they start anything."  

The IR wing of the blogosphere is pretty pessimistic about the current situation.  Rob Farley concludes:

North Korean behavior has vexed Presidents Bill Clinton, George W. Bush, and now Barack Obama. The difficulty doesn't lie with the delusions or incompetence of any American administration, although the United States has suffered from its fair share of both. Rather, reaching a conclusive agreement with North Korea is simply beyond the capabilities of the United States. Under current circumstances, North Korea cannot be "solved"; it can only be managed.

In a follow-up post, Farley is even more pessimistic:

The best we can do now is hope for change internal to North Korea, which need not necessarily take the form of full-scale regime change. I suspect that Kim Jong Il needs to be dead before any meaningful change can happen, not necessarily because he’s particularly crazy or irrational, but rather because the impending succession crisis makes any diplomatic maneuver more difficult for North Korea. I should hasten to add that I don’t support military action in the service of regime change; the costs are virtually incalculable. I do think that military response is one necessary managerial tool for the relationship, but it is critically important that any response to specific provocations is measured, limited, and spearheaded by South Korea.

 Dan Nexon looks at the strategic calculus and concludes that escalation won't happen:

[N]one of this suggests an alteration in the basic factors that restrain Seoul:

a)  Before they collapse, North Korean forces will kill a lot of South Koreans and do a lot of damage to South Korea's economy;

b)  The United States has no appetite for taking part in an additional large-scale military conflict;

c)  Uncertainty surrounding Beijing's likely actions in the event of a conflict; and

d)  The significant challenges that would come from assuming control of North Korean territory if the conflict leads to ROK victory in a full-blown war. 

These four factors--two of which aren't particularly manipulable--make significant escalation unlikely.

Erik Voeten notes that if the reason for the current dust-ups are internal rather than external, then escalation would be a bad move:

If this is a provocation as usual, then new negotiations and concessions may "work" in the sense that they will quiet the North Koreans until they feel the need to provoke again. If [Victor] Cha is right, then the North Korean leadership may actually want to see a limited military response that they can defend themselves against in some heroic fashion.

Finally, here at FP, both Michael Green and Steve Walt recommend that the U.S.not play into Pyongyang's hands by overreaqcting, and try reach some accord with China over what to do with the preoblem child of Northeast Asia.  Aidan Foster-Carter argues that... er... well, to be honest, I'm not entirely sure what he's arguing.  He starts by saying that there's no way Beijing is going to rein in its bestest ally, but then he observes that since China is North Korea's only ally, "if [North Korea's leaders] have an ounce of sense, they must know the old game is up. Militant mendicancy won't cut it any more; no one will buy that old horse again."  So damned if I know what he's saying.

Speaking for myself, the artillery barrage, although scary, is not what scares me about the stituation.  No, the guided tour of their new light water nuclear reactor facility is the real game-changer on the Korean penunsula, because it undercuts the U.S. policy of strategic patience.  See, 18 months ago, I wrote:

I think maybe, just maybe, the international community has found a status quo that makes the North Koreans less comfortable than everyone else.  Assuming that the interdiction and sanctions regime works well -- which is a robust but not entirely unreasonable assumption -- then North Korea gets nothing for thumbing its nose at the world except some more weapons-grade fissile material. 

That's not nothing, but it's not all that much either.  Pyongyang already has a deterrent to prevent invasion.  It can't threaten nuclear blackmail all that persuasively, because it's a pretty hollow threat on their part.  And if they can't sell their technology to other countries, then there's no profit in it for them either.  Which means they're stuck, wallowing in their own barren dirt.

The fast development of a light-water reactor -- during a period when the DPRK leadership has been kinda busy with an uncertain leadership transition -- changes the strategic calculus.  It suggests that North Korea has not been contained; instrad, Pyongyang has been able to ramp up a technologically sophisticated prograqm during the time period when that task should have been fantastically difficult.   

How did this happen?  At least one of the following things must be true:

1)  North Korea has developed an indigenous group of nuclear researchers with sufficient brainpower and access to resources to move forward in the nuclear arena;

2)  Despite the best efforts of everyone involved, the sanctions/interdiction regime is leaking like a sieve.

3)  Elements of the Chinese leadership are saying "f*** it" and assisting the DPRK in their nuclear program. 

4)  The entire Chinese leadership is saying "f*** it"  and assisting the DPRK in their nuclear program. 

If (1)  or (4) are the problems, they can't be fixed.  North Korea won't stop, and telling the Chinese to act contrary to their own perceived interest isn't a viable strategy.  I'm not really sure that (2) is the problem, but ramping up Proliferation Security Initiative efforts does force Beijing to sit up and pay notice, since it really means a lot more unfriendly warships in its backyard, which might affect (3) or (4).  It probably won't cause the Chinese to change their mind, however.  (3) might be fixable, but I doubt it.  Beijing's slow-motion response to the latest contretemps suggests that if the problem is a divided foreign policy leadership in Beijing, then it's a problem that won't be going away anytime soon.  Meanwhile, the sanctions regime will falter. 

So, for now, I'd advocate increasing the PSI presence surrounding North Korea while demonstrating a receptivity to talks if/when Pyongyang drops the  brinksmanship routine.  Very reluctantly, I'm beginning to wonder if it's time to call the North Koreans in their game of Crazy No Limit Texas Hold 'Em.  Voeten hypothesizes that a low-level military attack would be just the thing Kim the Older would need to boost support for Kim the Younger.  A more costly military attack -- say, the Yongbyon facility -- might have the reverse effect, however. 

Of course, the problem with that option is that the North Koreans could respond by ramping up the retaliation.  This is why I'm only beginning to wonder about this possibility.  There really is a point, however, after which Pyongyang doesn't want this to escalate -- because in an all-out war, North Korea really does lose. 

The question is whether that point can be located without a Second Korean War breaking out as a result.  That risk is what gives me serious pause about considering any military option. 

Increasingly, however, I don't think the status quo can hold. 

Brilliant and original policy ideas are welcomed in the comments section. 

Hey, remember last week, when I was blogging about how China was threatening Japan with a rare earth ban because the Japanse government had a Chinese boat captain in custody?  And remember how I said that, "given the spate of flare-ups between Japan and China as of late, the last thing Tokyo will want to do is back down in the face of Chinese economic coercion"?

Ummm..... whoops:

Japanese prosecutors have released the captain of a Chinese fishing boat, two weeks after a collision in disputed waters sparked a dramatic deterioration in ties between Beijing and Tokyo....

Prosecutors on the southern Japanese island of Okinawa, where Zhan was detained, said they would monitor both governments' response to their decision before deciding whether to indict him, but that course of action is looking increasingly unlikely.

They said the row caused by Zhan's detention and the possible impact on Japan-China ties had been a factor in their decision....

Japanese officials had earlier warned that the swift deterioration in bilateral ties posed a threat to the economies of both countries.

China was Japan's largest trading partner last year and Japan was China's third largest. Bilateral trade reached $147bn (£93.6bn) in the first half of this year – a jump of 34.5% over the same time last year, Japanese figures show.

"A cooling of relations between Japan and China over the Senkaku problem would be bad for Japan's economy, but it would also be a minus for China," Japan's finance minister, Yoshihiko Noda, said.

"It's desirable that both sides respond in a calm manner."

A few commentors to my last post took this opportunity to tell me to go suck a lemon the errors of my ways.  To which I must respond....  not so fast. 

I had four points to make in that post: 

 A)  Japan was unlikely to bow to economic pressure from China;

B)  China's use of a rare earths export ban was not likely to have much leverage;

C)  China was overestimating its overall ability to translate economic power into political leverage; and

D)  Because of these actions, the rest of the Pacific Rim was going to start getting much closer to the United States. 

Now, let's go through these in the context of this Associated Press story about the latest in this Sino-Japanese kerfuffle:  

Tension between China and Japan bumped back up a notch Monday when Tokyo asked Beijing to pay for damages to patrol boats hit by a Chinese fishing vessel in disputed waters, countering China's demand for an apology over the incident.

The diplomatic back-and-forth shows that nationalistic sentiments stirred up by the incident — and the territorial dispute behind it — are not fading even after Tokyo released the ship's captain Friday amid intense pressure from China.

Welcoming the skipper home as a hero, China stunned Japan over the weekend by demanding an apology and compensation over his arrest, a move that reflects Beijing's growing self-confidence and its attempts to test the resolve of key neighbors like Japan, Washington's closest ally in the region.

Criticized at home for caving in to Chinese pressure, Prime Minister Naoto Kan's government responded by issuing its own demand for compensation and calling on Beijing to decide whether it wanted to repair frayed ties.

"At this point, the ball is now in China's court," said Chief Cabinet Secretary Yoshito Sengoku....

Some experts saw China's demand for an apology as overreaching — and bad publicity in a region where neighbors are already concerned about the nation's expanding military and political clout. China is embroiled in several other territorial disputes.

"Beijing has scored an own-goal here. It really reflects badly on them," said Jeff Kingston, director of Asian studies at Temple University's Tokyo campus. "All that smile diplomacy, reassuring regional neighbors that the rise of China is unthreatening, has just gone up in smoke."

More broadly, the dispute and others like it has created openings for greater U.S. engagement in Asia as China begins to vie with the U.S. for dominance in the region.

On Friday, President Barack Obama and Southeast Asian leaders sent China a firm message over territorial disputes, calling for freedom of navigation and peaceful resolution of disputes in seas that China claims as its own. Obama said the U.S. plans to "play a leadership role in Asia."

Hmmm.... well, Japan did hand over the captain, so it seems that I was pretty wrong on (A).  That said, this story also suggests I'm a little right on (A) and very right on (C) and (D).  China overreached -- again -- in demanding compensation and an apology (though looking past this latest episode, there are some indications that China recognizes its overreaching vis-a-vis the USA).  This caused Japan to dig in its heels.  And, finally, all of this is pushing the region closer to the United States.   

[What about the rare earth lever?--ed.]  Damien Ma knows more about this than I do:

Given the expansive universe of Japanese high-tech sectors, Japan depends on China for the bulk of its RE supplies. Now, China produces roughly 95% of global RE supplies, but has only about 1/3 of the world's total reserves. Having such immense control over a particular resource naturally leads to suspicion, especially among buyers, that China could wield "supplier leverage" to manipulate prices and supplies, much like how a cartel would behave....

China's supply dominance was driven by market dynamics in the first place. Other RE mines closed production, in part because of environmental issues, while China continued to produce at a low price. Now that price is rising in China, it might be more cost-effective to start mine development elsewhere. If China really is trying to be the "OPEC" of rare earth elements, then global markets would react to cartel-like behavior, probably by accelerating development, eventually undermining Chinese monopoly on supply. Problem is, development takes time, so for now, it's tough to get off Chinese supply.

At worst, I was slightly wrong on (B) in the short term -- and this doesn't get into Japan's stockpiling of rare eaarths.  Furthermore, I am going to be much less wrong about this over time.  China's market power over rare earths is clearly temporary.  Regardless of whether they were trying to use their monopsony power to extract concessions from Japan, the perception of China's economic statecraft is going to encourage a lot of countries to subsidize their domestic supply. 

So, to sum up:  I was more right than wrong.  I hereby dare my thoughtful and cantankerous readers to go suck two lemons demonstrate the error of my interpretation yet again in the comments section.

One of the occupational hazards U.S. foreign policy wonks possess in abundance is the tendency to forget that domestic politics is really important.  Regardless of ideology, most members of the foreign policy community despair of how little time the President devotes to foreign affairs -- because he cares about things like "getting re-elected" or "maintaining popular support" or "responding to public opinion." 

I'd like to think that I'm at least aware of this failing, and remind myself on a daily basis that Tip O'Neill had a point. 

So, with that bias acknowledged, it's still worth pointing out that Barack Obama has foolishly decided to blow off the most dynamic region in the globe -- again:

President Obama canceled his trip to Australia, Indonesia and Guam late Thursday night as oil continued to stream into the Gulf of Mexico in what he has called the worst environmental disaster in American history.

His decision came as officials reported progress containing the oil leak at the bottom of the Gulf of Mexico.

Mr. Obama is to visit the Gulf Friday to assess the situation and meet with officials responding to the crisis. While the White House statement offered no reason for scratching the Asia trip this time, officials in recent days had grown increasingly convinced that it was untenable for the president to leave the country for a week with the oil spill still unchecked....

This was the second time Mr. Obama has scrubbed the trip to Australia and Indonesia. He was originally scheduled to travel there in March but canceled at the last minute to stay in Washington to lobby for passage of his health care legislation. He also had passed up a trip to Indonesia in connection with a regional summit meeting held in Singapore in November 2009 (emphasis added).

Correct me if I'm wrong, but for the past month President Obama has been in the country, making many, many pronouncements about the oil leak.  You know what effect that has had on the spill?  Absolutely zero.  There is no policy reason whatsoever for Obama to stay in the country because of the spill (at this point, I'm not even sure there's a political reason, but will defer to commenters on that question). 

What's particularly frustrating is that Peter Baker's story contains the seeds that contradict Obama's justification for staying in the country: 

White House officials said they will not let the focus on the oil spill detract from the rest of the president’s economic, legislative and foreign agenda, pointing out that he still seems likely to sign fiunancial regulation reform by next month, push through his Supreme Court nominee and win sanctions against Iran at the United Nations Security Council.

“The American people don’t elect somebody, I think, that they don’t believe can walk and chew gum at the same time,” Robert Gibbs, the White House press secretary, told reporters earlier Thursday. “Sometimes it feels like we walk and chew gum and juggle on a unicycle all at the same time. I get that.”

But, he added, “there’s a whole lot of people working on a whole lot of things in the White House, and we’re able to do more than several things at once.”  (emphasis added)

That's great, Bob -- except that there are certain things that only a President can do.  Unless he has some engineering expertise that he's been keeping under wraps, there's very little that Obama can do by staying in the countrry to focus on the spill.  On the other hand, Obama's comparative advantage has been to help improve U.S. relations with the rest of the world.  Australia and Indonesia are vital supporter states, and yet this president has just given them the cold shoulder -- for the second time, remember -- in order to focus on domestic politics. 

The Obama administration has dealt with North Korea as best they could, and after some stumbles have moved down the learning curve in handling the China portfolio.  Their approach to the rest of the Asia/Pacific region, however, has gone from sclerotic to just plain awful.  The United States needs good relations with these countries -- but this administration has plainly revealed its preferences on this issue.  If you look at the Obama administration's behavior, in their minds, the Pacific Rim simply doesn't count. 

Question to readers:  is the Gulf spill such a political crisis that it requires the Obama administration to blow off allies? 

That's the question that's being asked at a UCLA conference I'm attending today.  I'll blog some of the more interesting answers I hear if I get a chance. 

In the meanwhile, however, there's no reason that readers can't answer that question on their own in the comments. 

I'm late to this party, but two quick thoughts on Obama's Tokyo speech: 

1.  Last week a sharp foreign policy observer -- and a former campaign advisor for Obama -- made an interesing lexicographical observation to me about the Obama administration's foreign policy rhetoric to date.  They use the word "partnership" a hell of a lot more often than they use the word "alliance."  That's not terribly surprising, given their emphasis on talking with adversaries, forming great power concerts, etc.  Still, there are times when it's important to reach out more to one's allies than one's rivals. 

The Tokyo speech was one of those occasions, and I'm happy to report that Obama used "alliance" 12 times and "partnership" only 9 times.  Perhaps this says more about the lay of the land in the Pacific Rim than anything else, but it does suggest that the adminstration is sensitive to regional nuances.

2.  That said, I was underwhelmed with the trade outreach of the speech.  Some reports suggest that Obama announced that the U.S. would join the Trans-Pacific Partnership, an APEC trade forum comprising, at the moment, of Brunei, Singapore, Chile and New Zealand (with Vietnam and Australia thinking about joining). 

What Obama actually said, however, was:  

The United States will also be engaging with the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.

So what exactly does that mean?  Helene Cooper points out the ambiguities of that language in the New York Times: 

Although Mr. Obama did open the door during his speech in Tokyo on Asia policy, he did not explicitly say that the United States would join the pact. A formal announcement that the United States is beginning negotiations would undoubtedly kick off criticism from free-trade opponents in the United States and pushback from Congress.

Mr. Obama spoke, instead, of “engaging the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.”

That line left many trade envoys already in Singapore scratching their heads: did Mr. Obama mean that the United States would begin formal talks to join the regional trade pact, which presently includes Singapore, Brunei and New Zealand, and could later include Vietnam — an addition that could lead to more Congressional pressure at home?

Many regional officials have been waiting for the United States to join the initiative as a demonstration that Washington will play a more active role in the region. But the Obama administration has yet to establish a firm trade policy, as it is still reviewing its options.

White House officials were not much clearer on what Mr. Obama meant when they were pressed on this after the speech. Michael Froman, an economics expert on the National Security Council, said that what Mr. Obama meant was that he would engage with the initiative “to see if this is something that could prove to be an important platform going further.”

Wow, that's some real enthusiasm coming from the G-20 sherpa.... not. 

For an administration that likes to pride itself as savvy in the ways of foreign policy subtleties, I still don't think they grasp the fact that trade policy is now embedded into foreign policy in the Asia/Pacific Region. 

Throughout the course of the Bush administration, a constant irritant in the Asia/Pacific region was Bush's tendency to place antiterrorism at the top of the queue in Asia/Pacific Economic Cooperation (APEC) discussions.  Not that anti-terrorism wasn't important, but APEC was not the proper forum for that -- APEC is all about regional economic integration.  China, by wanting to talk about trade, made a lot of diplomatic headway by distinguishing itself from the United States.

I bring this up because, according to the FT's Edward Luce, it looks like the Obama administration's policy malaise on trade is not winning it any allies in East Asia: 

In a meeting with President Barack Obama last week, Lee Kuan Yew, the veteran former prime minister of Singapore, said he felt privileged to meet the US leader at a “time of renewal and change in America and during a period of transition where the world order is changing”.

At private meetings around Washington, however, Mr Lee’s message was rather more blunt.

“You guys are giving China a free run in Asia,” he told Fred Bergsten, the director of the Peterson Institute for International Economics. “The vacuum in US policy is enabling the Chinese to make the running.”

Mr Lee’s timing was apposite. On Wednesday Mr Obama leaves for Tokyo for a regional tour that will include China, South Korea and Singapore, where Mr Lee’s government is hosting a summit of the Asia Pacific Economic Co-operation (Apec) forum this weekend. Surveys in each country show that Mr Obama’s popularity has helped to restore the battered US standing in the region.

But the views of Asian governments do not always chime with those of their public. Across the region, concern is rising about the absence of US leadership on trade since Mr Obama took office. Few believe that he has the will or power to restart the Doha round of global trade talks – and he has not asked Congress for a renewal of the presi- dent’s fast-track negotiating authority.

Fewer still believe that he will be able to ratify the landmark 2007 US-South Korea free-trade agreement in the face of strong hostility in Congress....

while globalisation gets steadily less popular in the US, other parts of the world are moving ahead. South Korea recently concluded a free-trade deal with Europe. Japan is holding similar talks with the European Union. Ironically, the EU broached the talks as a way of protecting itself against the trade-diverting effects of the now moribund US-Korea deal.

US business lobby groups are hoping Mr Obama will be able to achieve some kind of a breakthrough in Seoul next week. Given that it would be futile for him to send the free-trade agreement back to Capitol Hill, any new steps would have to include a renegotiation of the deal to include better market access for US cars.

“It is really important to understand just how badly the US is screwing itself on trade,” said Mr Bergsten. “By having an inactive trade policy, others are rushing to fill the vacuum.”

For an administration that claims it wants to have better relations with its allies, Obama and his foreign policy team have been remarkably tone-deaf when it comes to trade policy. 

At every major summit meeting since he's come to office, Obama has heard complaints about the lack of U.S. leadership on the trade front.  This administration has demonstrated that it's not afraid to tackle multiple, complex challenges at the same time -- and yet they've been either mute or worse when it comes to trade. 

Barack Obama's decision to put trade policy in a lockbox and throw away the key is utterly appalling -- and, from a foreign policy perspective, completely counterproductive. 

Following up on my dollar post from earlier this week, I see that Paul Krugman is talking a related issue in his New York Times column today -- the refusal of the renminbi to depreciate against the dollar:

Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now.

Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere.

But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

Krugman then goes on to excoriate the U.S. Treasury department for not upbraiding the Chinese more on this. 

Fair enough, but the thing is, the United States is not the country that's hurt the most by this tactic.  It's the rest of the world -- particularly Europe and the Pacific Rim -- that are getting royally screwed by China's policy.  These countries are seeing their currencies appreciating against both the dollar and the renminbi, which means their products are less competitive in the U.S. market compared to domestic production and Chinese exports. 

This leads to the title of this post.  Krugman presumes that the U.S. has the strongest incentive to talk to China about this issue.  If one thinks of the U.S. acting as the hegemon, that's possibly true.  As a matter of direct economic interest, however, why haven't the Europeans and East Asians been screaming bloody murder about this?  China's policies are forcing them to take actions they don't want to take -- so why aren't they complaining more loudly about this? 

Why?