There's a lot that's happened over the past week with respect to Chen Guangcheng's status, and your humble blogger could write a 5,000 word essay on it if someone wanted to pay me gobs and gobs of cash because I'm remodeling my home I had the time.  I don't however, so I have one big thought on the matter.

Before I begin, given the rapid real-time developments in the Chen case, I'm operating on the assumption that China's last Foreign Ministry statement suggests the denouement:  Chen and his family will be able to go to the United States to study, and he then may or may not be allowed back into the country.   

My Big Thought:  contrary to just about every headline I've seen in the past three days, I think Chen's case demonstrates the surprising resilience of the Sino-American relationship.  Recall what I wrote earlier in the week: 

The fact that both Beijing and Washington have kept their mouths shut on Chen is a pretty surprising but positive sign about the overall stability/resilience of Sino-American relations. Bear in mind that according to the latest reports, much of the leadership in Beijing takesan increasingly conspiratorial view of the United States. As for the mood in Washington, well, let's just call it unfriendly towards China. Both sides are in the middle of big leadership decisions, making the incentive to cater to nationalist domestic interests even stronger than normal. With the rest of the Pacific Rim trying to latch themselves onto the U.S. security umbrella, this could have been the perfect match to set off a G-2 powderkeg.

Despite all of these incentives for escalating the dispute, however, it hasn't happened. Kurt Campbell was dispatched to Beijing, talks are ongoing, and neither side appears to be interested in ramping up domestic audience costs. That escalation hasn't happened despite massive political incentives on both sides to let it happen suggests that, contrary to press fears about Chen blowing up the bilateral relationship, there are powerful pressures in Washington and Beijing to find a solution that saves as much face as humanly possible for both sides.

Now, in the three days since I wrote that post, Chen has been released, calling every Chinese dissident, U.S. congressman and international reporter with a phone/recording device/Twitter account and is loudly and frantically describing the intimidation he and his family have experienced.  The man has asked to be flown out on Hillary Clinton's plane as she departs from the Strategic and Economic Dialogue.  In other words, everything that has transpired in the past three days has given a black eye to both the Chinese and American governments' handling of this case. 

Despite the near-overwhelming incentive to ramp up bilateral tensions, however, it really hasn't happened.  China's Foreign Mnistry has issued a couple of garden-variety press statements demanding a U.S. apology that won't be forthcoming.  There have been no leaks or anonymous criticisms of the United States otherwise, despite the fact that this entire case is a burr in China's saddle at veery awkward moment.  None of the U.S. State Department statements or press leaks have been terribly critical of the Chinese side either.  Indeed, as the Washington Post observes:

Neither Clinton nor her Chinese counterparts mentioned Chen in their formal remarks at the end of their two-day meeting, saying instead that U.S.-Sino differences on human rights issues must not disrupt the broader relationship between the two world powers.

State Councilor Dai Bingguo, China’s top foreign policy expert, said his country and the United States still have “fundamental differences” on human rights issues. “Human rights should not be a disturbance in state-to-state relations,” Dai said. “It should not be used to interfere in another country’s internal affairs.”

Clinton promised to “continue engaging with the Chinese government at the highest levels” on the “human rights and aspirations” of all people.

This is pretty extraordinary.  Even more extraordinary is the possiblity that despite Chen's outspokenness, he actually could be able to leave the country with his family. 

Now, as the Post shrewdly observes, "China’s Foreign Ministry said the self-taught lawyer would have to apply 'through normal channels ... like any other Chinese citizen' — which would mean returning home to the village where he has been confined and beaten, in order to obtain a passport."  Still, if the rhetoric between the U.S. and China on this boils down to Clinton asking the Chinese government to "expeditiously process" Chen's visa application, then this is a really big dog that didn't bark.   

For other big thoughts on the matter, read these posts by Sam Crane, as well as this assessment by Walter Russell Mead.

What do you think?

Your humble blogger has been silent on the ongoing Chen Guangcheng case in China.  To be fair, however, I was merely copying what the Chinese and U.S. governments were doing:  furiously not commenting on the case as the next Strategic and Economic Dialogue between Washington and Beijing commences. 

Since other people are starting to say really stupid things comment on it, however, I'm required by the International Brotherhood of Foreign Policy Pundits to weigh on the matter.  So, a few random thoughts:

1)  My expectation on how this will play out:  unless Wen Jiabao has a lot more authority than I think, this ends in a year or so when Chen leaves China.  Chen wants to stay in China.  Given that he was under some kind of extralegal confinement rather than house arrest, one could envision Wen using this as a way of expanding on the "crush Bo" campaign currently emanating from Beijing.  In other words, Wen could use this to clamp down on abuses by out-of-control regional governors.  But, to be honest, I doubt Wen has that much authority -- in which case this ends with Chen out of China in a way that embarrasses Beijing the least. 

2)  The fact that both Beijing and Washington have kept their mouths shut on Chen is a pretty surprising but positive sign about the overall stability/resilience of Sino-American relations.  Bear in mind that according to the latest reports, much of the leadership in Beijing takes an increasingly conspiratorial view of the United States.  As for the mood in Washington, well, let's just call it unfriendly towards China.  Both sides are in the middle of big leadership decisions, making the incentive to cater to nationalist domestic interests even stronger than normal.  With the rest of the Pacific Rim trying to latch themselves onto the U.S. security umbrella, this could have been the perfect match to set off a G-2 powderkeg. 

Despite all of these incentives for escalating the dispute, however, it hasn't happened.  Kurt Campbell was dispatched to Beijing, talks are ongoing, and neither side appears to be interested in ramping up domestic audience costs.  That escalation hasn't happened despite massive political incentives on both sides to let it happen suggests that, contrary to press fears about Chen blowing up the bilateral relationship, there are powerful pressures in Washington and Beijing to find a solution that saves as much face as humanly possible for both sides. 

3)  Mitt Romney has been vocal about Chen's case, concluding:  "Any serious U.S. policy toward China must confront the facts of the Chinese government’s denial of political liberties, its one-child policy, and other violations of human rights." 

To which I say... good for him!!  It's the job of the opposition party in the United States to bring up questions about China's human rights problem.  It's the job of the opposition party because the moment the opposition takes power, all those structural pressures I alluded to previously kick in, and the human rights rhetoric from the campaign trail inevitably fades away.  So Republicans who expect a President Romney to be all over the human rights issue will be sorely disappointed.  That said, even someone like myself who is more realpolitik-friendly nevertheless would be sorely disappointed if human rights faded away completely (it's also worth noting that after the Obama administration's first year in office, they seemed to find their rhythm with respect to talking about human rights towards China). 

Am I missing anything? 

So it turned out that this was the week that both the Romney campaign and the Obama campaign decided that foreign policy was an important thing to talk about during election season.  Speaking personally, this is great!! I seem to have moved up in the Rolodex of those covering the campaign.  Expect lots of juicy quotes in the months to come, and readers are warmly encouraged to proffer useful metaphors that I can provide in soundbite fashion  over the next six months.

Unfortunately for the Romney campaign, this was not a great week to ramp up attacks along this line.  The reasons is that, all told, the Obama administration had a pretty good foreign policy week.  Not all, or even most of this, was of its own doing, but consider the following: 

1)  Iran has signaled a genuine willingness to talk compromise on its nuclear program in order to avoid the EU oil embargo kicking in.  That might just be rhetoric, but it's interesting to note that even senior Israeli officials are starting to talk down the Iranian threat.  The less Iran becomes a thing, the lower gas prices can fall better for the administration. 

2)  The United States has maybe, just maybe, eliminated a major thorn in bilateral relations with Japan by finally reaching agreement on moving U.S. troops from Okinawa.  We'll see if this holds -- everyone assumed that a 2006 agreement had put this problem to rest before successive Japanese governments shot themselves in the foot raised it again,  but this is the thing on this list for which the administration deserves the most credit.  As an added bonus, the administration  actually got some nice words from John McCain on comity with the Senate.

3)  For some reason China seems to be in a more productive mood in their dealings with the United States, and Mark Landsler and Steven Lee Myers have taken notice in the New York Times: 

For years, China  stymied efforts to pressure Iran. Now, in addition to  throwing its weight behind the sanctions effort, officials say,  Beijing is also playing a more active role in the recently revived nuclear talks between Iran and six world powers — the United States, China, Russia, Britain, France and Germany. While in past negotiations, Beijing has followed in lockstep the positions taken by Russia, this time Chinese diplomats are offering their own proposals.

“One of the key elements of making this work is unity among the major powers,” said a senior administration official, who spoke on condition of anonymity to discuss diplomatic exchanges. “The Chinese have been very good partners in this regard.”

There are also signs of new cooperation on Syria. Only weeks after Secretary of State Hillary Rodham Clinton called China’s veto of a United Nations Security Council resolution “despicable,” China is supporting Kofi Annan’s peace plan for the strife-torn country and is deploying monitors to help oversee it. Even on North Korea, which China has long sheltered from tougher international action, the Chinese government quickly signed on to a United Nations statement condemning the North’s recent attempt to launch a satellite.

And there is progress on the economic front: American officials said China recently loosened trading on its currency, the remninbi, which could help close a valuation gap with the dollar that has stoked trade tensions between China and the United States during an election year.

To some seasoned observers of China, these developments are less a harbinger of a new era of cooperation between Beijing and Washington than evidence that, at least for now, the interests of the two countries coincide in some important areas.

The administration will nevertheless be happy to pocket the policy dividends.

4)  Staying in Northeast Asia, it turns out that the big bad North Korean ICBMs are little more than a pipe dream -- and western analysts are starting to say that Kim Jong Un is naked in the public square:

North Korea tried to flex its military might with an extravagant parade on April 15, just three days after it admitted that its missile test had been a failure, but analysts now say that the new intercontinental ballistic missiles on display in the meticulously choreographed parade were nothing more than props.

The analysts studied photos of the six missiles and came to their conclusion for three primary reasons: 1. The missiles did not fit the launchers that carried them. 2. The missiles appear to be made out of both liquid-fuel and solid-fuel components that are unable to fly together. 3. The casings on the missiles undulate which suggests the metal is not thick enough to hold up during flight.

"There is no doubt that these missiles were mock-ups," Markus Schiller and Robert Schmucker, of Germany's Schmucker Technologie , wrote in a paper recently posted on Armscontrolwonk.com. "It remains unknown if they were designed this way to confuse foreign analysts, or if the designers simply did some sloppy work."

If the U.S. government can claim progress on Iran, China, North Korea, and Japan in one week, that's a good foreign policy week.  Of course, for a lot of these issues, the administration is the beneficieary of circumstances rather that pro-active policies.  Still, the administration deserves some credit for some of these development.

It's just one week, though.  And I fear the most memorable statement about American foreign policy is this rather unfortunate choice of words: 

NOTE TO WHITE HOUSE/CAMPAIGN SPEECHWRITERS:   In the future, avoid having Biden utter any of the following:  "big stick", "hard power", "pounding the enemy",  "won't take no for an answer", and "smooth-talking his adversaries".

Am I missing anything?

Last Wednesday Thomas Friedman wrote a very silly column in which he called for Michael Bloomberg to enter the presidential race because he had an annoying experience at Union Station he thinks the United States needs a real leader: 

[W]ith Europe in peril, China and America wobbling, the Arab world in turmoil, energy prices spiraling and the climate changing, we are facing some real storms ahead. We need to weatherproof our American house — and fast — in order to ensure that America remains a rock of stability for the world. To do that, we’ll have to make some big, hard decisions soon — and to do that successfully will require presidential leadership in the next four years of the highest caliber.

This election has to be about those hard choices, smart investments and shared sacrifices — how we set our economy on a clear-cut path of near-term, job-growing improvements in infrastructure and education and on a long-term pathway to serious fiscal, tax and entitlement reform. The next president has to have a mandate to do all of this.

But, today, neither party is generating that mandate — talking seriously enough about the taxes that will have to be raised or the entitlement spending that will have to be cut to put us on sustainable footing, let alone offering an inspired vision of American renewal that might motivate such sacrifice. That’s why I still believe that the national debate would benefit from the entrance of a substantial independent candidate — like the straight-talking, socially moderate and fiscally conservative Bloomberg — who could challenge, and maybe even improve, both major-party presidential candidates by speaking honestly about what is needed to restore the foundations of America’s global leadership before we implode.

The Twitterati and blogosphere reaction to Friedman's argument tended towards the scathing, and now we're beginning to see the responses elaborated to op-ed length.  This smart essay, for example, makes the very trenchant point that in a political structure with so many veto points , so much political polarization and so many entrenched interests, the ability of any one leader to reform the system on the scale that Friedman proposes  is next to impossible: 

A system with as many checks and balances built into it as ours assumes — indeed requires — a certain minimum level of cooperation on major issues between the two parties, despite ideological differences. Unfortunately, since the end of the cold war, which was a hugely powerful force compelling compromise between the parties, several factors are combining to paralyze our whole system.

For starters, we’ve added more checks and balances to make decision-making even more difficult — such as senatorial holds now being used to block any appointments by the executive branch or the Senate filibuster rule, effectively requiring a 60-vote majority to pass any major piece of legislation, rather than 51 votes. Also, our political divisions have become more venomous than ever....

A system with as many checks and balances built into it as ours assumes — indeed requires — a certain minimum level of cooperation on major issues between the two parties, despite ideological differences. Unfortunately, since the end of the cold war, which was a hugely powerful force compelling compromise between the parties, several factors are combining to paralyze our whole system.

For starters, we’ve added more checks and balances to make decision-making even more difficult — such as senatorial holds now being used to block any appointments by the executive branch or the Senate filibuster rule, effectively requiring a 60-vote majority to pass any major piece of legislation, rather than 51 votes. Also, our political divisions have become more venomous than ever....

We can’t be great as long as we remain a vetocracy rather than a democracy. Our deformed political system — with a Congress that’s become a forum for legalized bribery — is now truly holding us back.

Congratulations to present Thomas Friedman -- for effectively refuting past Tom Friedman. 

It's the last day of the International Studies Association annual meetings.  I'm sleep-deprived, hung over, moderately sunburned, and pretty sick of international relations theory.  While this throwback to my college days is moderately nostalgic, it is usually not a good state for blogging.  Trying to tackle or critique the finer points of a nuanced argument takes energy and analytic skills, and after losing Twitter Fight Club 2012, I'm feeling wanting in both.

But, just when it seems like there's nothing I'm capable of blogging about in such a state, along comes Donald Trump. 

When we last left The Donald in the world of foreign policy, he was uttering such inane, ignorant statements that I even invented an award in his honor.  Today, Politico reports that Trump offered the following opinion on Laura Ingraham's radio show: 

I happen to think that the President is going to start a war with Iran. I think it will be a short-term popular thing to do, and I think he’s going to do that for political reasons, if you want to know the truth. I don’t know if anyone says this as openly, but I think he’s going to start a war with Iran. And, that will be short-term popular. If you remember Bush, Bush was unbeatable for about two months, and then all of the sudden the world set in when he attacked Iraq. And he went from very popular to not popular at all. But I think that Obama will start in some form a war with Iran, and I think that will make him very popular for a short period of time. That will make him hard to beat also.

Now I could go on a long-winded rant about Trump's stupidity, but I think it's more fun to treat this as a challenge to my readers.  See, it's not just that Trump makes a few errors in that paragraph, it's that with one partial exception, every single statement he just said was factually wrong. 

So, rather than ask my readers to point out the myriad ways in which Donald Trump is in error, here's my challenge -- what sentence in the above paragraph contains the most truth value? 

Get to it, dear readers -- while I go search for Advil.

UPDATE: So I see that Trump has said other controversial things today. I will leave it to readers to judge whether the veracity of his later comments are greater than his foreign-policy musings.

It's hard to believe, but ten years ago Robert Kagan published "Power and Weakness" in the pages of Policy Review.  Coming on the heels of the invasion of Afghanistan and the start of the Iraq debate, Kagan's essay seemed to crystallize the state of the transatlantic relationship back in the day. 

To celebrate it's 10th anniversary, Policy Review has come out with a special issue devoted to the essay, asking a variety of smart people to weigh in.  Oh, and me.  As I put it in my essay, "I come to praise Kagan's insights -- and then to bury them."  You'll have to read the whole thing to see what I mean. 

Check out the rest of the essays as well.  With the passing of a decade, it's pretty easy to point out the ways in which Kagan's analysis breaks down (and, to be fair, the ways in which it doesn't).  To his credit, Kagan himself is painfully aware of how his essay has aged: 

Ten years ago, when I wrote the original essay, it would not have occurred to me that anyone would be commenting on it a year later, let alone a decade later. As Tod knows, I only wrote the essay because he had invited me to speak at a conference, and I had to deliver something. No doubt the other contributors will recognize the experience. Therefore from the beginning I have been acutely aware of the essay’s limitations — and have had the good fortune to have all those limitations pointed out to me frequently, in many languages, with greater or lesser kindness over the years, and now again at the scene of the crime a decade later.

I remember talking with Kagan when the original essay came out and blew up, and I can aver that he was just as surprised as anyone else about its impact.  Let this be a lesson for policy wonks everywhere.  Sure, most of the time when you write something it disappears into the ether, to be forgotten almost immediately.  But on occasion, serendiptity or fortuna strikes, and you've suddenly got a major essay on your hands.  Always write with that in mind -- because if your essay does blow up, you better be ready, willing and able to defend every paragraph of it. 

ABC News reports on a "hot mic" moment between President Obama and Russian President Dmitry Medvedev: 

At the tail end of his 90 minute meeting with Russian President Dmitri Medvedev Monday, President Obama said that he would have “more flexibility” to deal with controversial issues such as missile defense, but incoming Russian President Vladimir Putin needs to give him “space.”

The exchange was picked up by microphones as reporters were let into the room for remarks by the two leaders.

The exchange:

President Obama: On all these issues, but particularly missile defense, this, this can be solved but it’s important for him to give me space.

President Medvedev: Yeah, I understand. I understand your message about space. Space for you…

President Obama: This is my last election. After my election I have more flexibility.

President Medvedev: I understand. I will transmit this information to Vladimir.

Now, compared to past "hot mic" moments, this certainly seems less, well, profane.   Nevertheless, it has gotten the Washington Post's Jennifer Rubin all hot and bothered about the hidden Obama that will emerge in 2013:

It’s helpful to have a vivid illustration of this, but is there anyone who thinks Obama, should he get a second term, wouldn’t run wild with policies and positions that the majority of the electorate oppose? Otherwise, he’d roll them out now, of course....

Elections are taken as mandates by elected officials and the media (even if the message is less clear than the winner would have us believe).

In sum, the election is not simply a referendum on President Obama’s actions to date; it’s essentially a blank check for the president’s second term. Romney should be asking wary independent and moderates: Is there a scintilla of a chance that Obama would be less liberal in a second term?

Rubin's logic seems pretty clear:  Obama is really a liberal, and free of political constraint -- particularly on the foreign policy remit -- he'll revert to type.  There's just one problem:  based on recent evidence, there's an excellent chance Obama will be less liberal in the second term. 

Consider the last three two-term presidents:  Reagan, Clinton, and Bush 43.  I'll grant this is a very small sample, but bear with me.  Did their second-term policies look different from their first-term? 

You bectha.  Reagan tacked in a decidedly liberal direction with respect to the Soviet Union, switching from rhetoric about the "evil empre" to  cutting substantive arms control agreements with the Soviet Union.  Clinton, on the other hand, tacked in a more conservative direction.  After being enamored of multilateralism and leery of using fore in his first term, he became more comfortable with using force and using it outside of UN strictures in his second term.  Finally, Bush 43's second terms was decidedly more liberal.  In his first term, he declared an "Axis of Evil" and invaded Iraq without UN support.  In his second term, however, the Bush administration was decidedly more dovish, working through the UN on both Iran and North Korea, demonstrating a willingness to directly negotiate with the Iranians, and refusing to use force in Syria.  This, by the way, is why claiming a continuity between Bush 43 and Obamas is not quite as much of a political jab as people like to claim.  The dfifferences between Bush in 2003 and Bush in 2008 were massive. 

Now, these narratives are not really as clean as the last paragraph suggests.  Reagan also embraced Iran/Contra in his second term.  In Clinton's second term he pushed hard to address US arrears to the UN.  And Bush had some elements of compasionate conservatism liberalism in his first term, what with PEPFAR and a refusal to declare a clash of civilizations following the 9/11 attacks. 

What's striking, however, is that recent second-termers have not reverted to their ideological bliss point -- if anything it's been the reverse, they've tacked away from their starting point.  Part of this is circumstances.  Reagan had, in Gorbachev, a real negotiating partner in his second term.  Bush had to be more circumspect on Iran and North Korea after the cost and constraint of military operatons in Iraq and Afghanistan.  All three presidents had less favorable legislatures in their second term than their first.

Still, it's not all about circumstances.  What gives?  I'd argue that precisely because presidents have fewer foreign policy constraints than dometic ones, they feel free to pursue their preferred set of policies from day one.  Reality, however, quickly determines which ideas are working and which do  not have any staying power.  Over time, therefore, presidents change tack until they hit on a more successful formula.  This usually means overcoming one's personal ideology and embracing new ideas. 

I've argued that this is exactly what Obama has done in his first term -- and I'm hardly the only one.  And, so, yes, contra Rubin, I think the notion that a second-term of President Obama will be the second coming of the Kellogg-Briand Treaty requires a willful misreading of Obama's first term of foreign policy -- as well as ignorance of the last thirty years of American foreign policy. 

Am I missing anything? 

Barack Obama addressed AIPAC yesterday in anticipation of Israeli PM Benjamin Netanyahu's visit to Washington, which has led to some interesting responses.  There's something in Carol Lee and Jay Solomon's Wall Street Journal write-up that is worth considering in more detail, however: 

Mr. Obama's efforts to recalibrate the administration's position—cooling talk of war while nodding to the concerns of hawks such as Israeli Prime Minister Benjamin Netanyahu—won some applause, including from the Israeli leader. Some of Israel's strongest backers on Capitol Hill weren't appeased, however.

"I have said that when it comes to preventing Iran from obtaining a nuclear weapon, I will take no options off the table, and I mean what I say," Mr. Obama said Sunday at the annual conference of the American Israel Public Affairs Committee, Washington's most powerful pro-Israel lobbying group....

By clarifying the administration's willingness to use force, the White House also hopes to lessen the chance Mr. Netanyahu will order a unilateral strike.

Mr. Netanyahu, who arrived in Washington on Sunday, praised Mr. Obama's speech and said it was an important step in unifying the U.S. and Israeli positions on Iran. "I appreciated the fact that he said that Israel must be able to defend itself, by itself, against any threat," he said in a written statement.

Rep. Eric Cantor, the No. 2 Republican in the House of Representatives, said the speech was "a step in the right direction," but that "we need to make sure that this president is also going to stand by Israel and not allow his administration to somehow speak contrary to what our ally thinks is in its best interest." (emphasis added)

Now, this bolded part of the quote is quite extraordinary, if you think about it.  Apparently, Cantor's standard with respect to American policy towards Israel is that the U.S. government cannot and should not contradict anything that Israel's government says.  What's good for Israel's national interests -- as defined solely by Israel -- serves American interests as well. 

Step back for a second and ask yourself if this is true of any other U.S. ally.  A NATO member?  Nah, we disagree with them all the time.  Japan?  Nope, there was a pretty bruising fight with that country's government on Okinawa bases just a few years ago.  Canada?  Hell, Mitt Romney pretty much made it clear that the U.S. is gonna get Canada's oil and I heard nary a peep of criticism from the GOP foreign policy establishment.  I can't think of a Latin American, Pacific Rim or Central Asian ally that meets this criteria. 

A few months ago, I asked whether, in the eyes of some, Israel was now the most super-special ally we have.  I think statements like Cantor's are an excellent signal that the answer appears to be yes.  So I hereby propose the following definition:  if a prominent U.S. official or foreign policy commentator proposes a standard for U.S. policy towards Israel that would never be used for any other U.S. ally or treaty partner, then they have gone the full Cantor. 

With the AIPAC conference going on this week, I hereby summon my readers to alert me to any further statements or criticisms that suggest the U.S. alliance with Israel is in a super-special, unique category that No Other Allies can join.   

Mitt Romney's op-ed in today's Wall Street Journal is devoted to China policy.  Let's take a read, shall we? 

Barack Obama is moving in precisely the wrong direction [on responding to China's rise]. The shining accomplishment of the meetings in Washington this week with Xi Jinping—China's vice president and likely future leader—was empty pomp and ceremony.

President Obama came into office as a near supplicant to Beijing, almost begging it to continue buying American debt so as to finance his profligate spending here at home. His administration demurred from raising issues of human rights for fear it would compromise agreement on the global economic crisis or even "the global climate-change crisis." Such weakness has only encouraged Chinese assertiveness and made our allies question our staying power in East Asia.

Now, three years into his term, the president has belatedly responded with a much-ballyhooed "pivot" to Asia, a phrase that may prove to be as gimmicky and vacuous as his "reset" with Russia. The supposed pivot has been oversold and carries with it an unintended consequence: It has left our allies with the worrying impression that we left the region and might do so again.

The pivot is also vastly under-resourced. Despite his big talk about bolstering our military position in Asia, President Obama's actions will inevitably weaken it. He plans to cut back on naval shipbuilding, shrink our Air Force, and slash our ground forces. Because of his policies and failed leadership, our military is facing nearly $1 trillion in cuts over the next decade.

This is interesting because it's the first time I've seen a GOP candidate try to respond substantively to the "pivot".  And, in my book, the criticism that Obama was too much of a supplicant to China in the first part of his term is actually a fair one.  Unfortunately, things fall apart after that. 

First, Asian allies were worried about the U.S. presence in the region because of the priority the Bush administration placed on the global war on terror, followed by the 2008 financial crisis.  Obama had little or nothing to do with it.

Second, it's important and revealing that Romney only talked about the narrow, military part of the pivot.  Left unmentioned were the diplomatic components (joining the East Asia Summit, interceding on the South China Sea, warming relations with Myanmar, tripartite between the U.S., Australia and India) as well as the economic components (ratifying the FTA with South Korea, signing the framework agreement for the Trans-Pacific Partnership).  This is important, because any U.S. strategy in the Asia-Pacific region has to be a full-spectrum approach, while Romney seems peculiarly obsessed with shipbuilding. 

Third, the primary message Obama has been sending to Xi has been saying that China "don't play by the rules."  Which, coincidentally enough, is exactly the same thing Romney says in the op-ed. 

In the economic arena, we must directly counter abusive Chinese practices in the areas of trade, intellectual property, and currency valuation. While I am prepared to work with Chinese leaders to ensure that our countries both benefit from trade, I will not continue an economic relationship that rewards China's cheating and penalizes American companies and workers.

Unless China changes its ways, on day one of my presidency I will designate it a currency manipulator and take appropriate counteraction. A trade war with China is the last thing I want, but I cannot tolerate our current trade surrender.  (emphasis added)

The bolded section represents the only portion of the op-ed in which Romney even hints that he might cooperate with China.  The rest of it is pretty silly.  It's ludicrous for Romney to claim he doesn't want a trade war in the same breath that he promises "day one" action against China.  No wonder conservatives are labeling Romney's China policy as "blaringly anti-trade." 

To be blunt, this China policy reads like it was composed by the Hulk.  Maybe this will work in the GOP primary, but Romney and his China advisors should know better. 

Eight months ago, the German Marshall Fund asked your humble blogger to be part of an "eminent persons group " to examine the future of the transatlantic economic relationship. 

Now, I'm not gonna lie, I've always coveted the title of "eminent person."  If I'm required to age, there should be some perks, and I thought this would be a big one: 

SNOOTY MAN WITH CLIPBOARD:  I'm sorry, this dance club is full

ME:  You don't understand, I'm an.... Eminent Person!!  (flashed secret Eminent Person card)

SNOOTY MAN:  An Eminent Person?!  Oh my... take that velvet rope down NOW!!

As it turns out, being on an eminent person task force mostly means dialing into conference calls.  Still, the results are now out.  Here's the GMFUS press release: 

The U.S. and the EU should remove all barriers in the transatlantic market for goods, services and investment. As a first step, custom duties should be eliminated on trade in goods. Services trade should be substantially liberalized. Regulatory divergences that impede trade and investment should be reduced through strengthened regulatory cooperation. Such reforms would not only boost economic growth and jobs; they would also create new positive tensions in global trade negotiations, encouraging other countries to agree on new liberalisation of trade and investment.

In light of experience in the Doha Round of multilateral trade negotiations, future deliberations should be decentralised, both in geographic and substantial terms. New agreements should be based on “coalitions of the willing”. The market access openings in such plurilateral agreements should initially be confined to the participating countries, in order to avoid free-riding. The agreements should, however, remain open for other countries to join, thus extending the benefits from trade liberalization. Strategic sectors, notably services and the digital economy, should be the focus of these negotiations.

Bilateral trade agreements are now the centerpiece of European and American trade strategy. To maximize the benefits from such efforts, the EU and the U.S. should integrate, harmonise and modernise their preferential trade agreements (PTAs) with third countries. In this way, the broadest benefits of such trade liberalization can be extended to more countries by reducing the bureaucratic differences between these agreements.

There is a need for a modern narrative about trade. Traditional perceptions of trade as a zero-sum game involving only im­ports and exports of goods no longer reflect the growing importance of investment and trade in services, the rise of multilateral firms, the globalization of supply chains, and the expansion of the digital economy.

Read the whole thing -- needless to say, there's not a ton of enthusiasm for another multilateral round via the WTO. 

Hey, remember how the new Al Qaeda was going to be more networked and more capable of inspiring home-grown terrorism?  Remember how today's threat enviroment was supposed to be worse than the Cold War? 

Bear these points in mind when considering two news items that crossed my screen today.  In the first, courtesy of Micah Zenko, a Pentagon official suggests that maybe, just maybe, the U.S. overrestimated Al Qaeda's capabilities: 

With the benefit of more than a decade of hindsight, America may have misjudged the true threat posed by al-Qaeda in the immediate aftermath of the 2001 terrorist attacks, a top Pentagon official said Tuesday.

“Al-Qaida wasn’t as good as we thought they were on 9/11,” said Michael A. Sheehan, the assistant secretary of defense for special operations and low intensity conflict.

“Quite frankly, we, the American people, were asleep at the switch, the U.S. government, prior to 9/11. So an organization that wasn’t that good looked really great on 9/11,” Sheehan told a room full of special operators in Washington who were attending an annual Special Operations, Low Intensity Conflict Planning Conference.

“Everyone looked to the skies every day after 9/11 and said, ‘When is the next attack?’ And it didn’t come, partly because al-Qaida wasn’t that capable. They didn’t have other units here in the U.S. … Really, they didn’t have the capability to conduct a second attack.”

The true limitations of al-Qaida are one of two key reasons that America has not suffered a major terrorist attack since 2001.

“The other reason is that we actually responded … and crushed al-Qaida immediately after 9/11, and continually for the last 10 years,” Sheehan said. “We are better than we often give ourselves credit for. We have a very polarized political system and it’s very difficult for anybody to actually give credit or receive credit for how good we are.”

Well, sure, Al Qaeda abroad has been weakened, but this homegrown thing, I mean, that's probably a really big-- hey, what is Scott Shane reporting about in the New York Times? 

A feared wave of homegrown terrorism by radicalized Muslim Americans has not materialized, with plots and arrests dropping sharply over the two years since an unusual peak in 2009, according to a new study by a North Carolina research group.

The study, to be released on Wednesday, found that 20 Muslim Americans were charged in violent plots or attacks in 2011, down from 26 in 2010 and a spike of 47 in 2009.

Charles Kurzman, the author of the report for the Triangle Center on Terrorism and Homeland Security, called terrorism by Muslim Americans "a minuscule threat to public safety." Of about 14,000 murders in the United States last year, not a single one resulted from Islamic extremism, said Mr. Kurzman, a professor of sociology at the University of North Carolina (emphasis added).

Digging a wee bit into the actual report -- and read the whole thing, it ain't long -- I'll just reprint the closing two paragraphs below: 

Repeated alerts by government officials may be issued as a precaution, even when the underlying threat is uncertain. Officials may be concerned about how they would look if an attack did take place and subsequent investigations showed that officials had failed to warn the public. But a byproduct of these alerts is a sense of heightened tension that is out of proportion to the actual number of terrorist attacks in the United States since 9/11.

This study’s findings challenge Americans to be vigilant against the threat of homegrown terrorism while maintaining a responsible sense of proportion. (emphasis added)

Now, I'm sure that the reason for this lull is that Al Qaeda's remaining assets in the United States are focusing their energies on getting all turkeys to become halal or something.  That said, I'm going to continue to insist that the United States faces a much less threatening threat environment now than it did fifty years ago.   Oh, and that I don't need to listen to Representative Peter King when he opens his mouth on national security issues. 

In my experience, pundits tend to be risk-averse in calling out a very rich person on their economic or financial analyses.  There's a couple of intuitive logics at work here: 

1)  Most pundits don't know much about economics, and so are leery of entering those waters;

2)  The really rich person likely became really rich because they demonstrated a shrewd understanding of the markets -- therefore, who is the low-six-figure-or-less-earning pundit to challenge such high-yielding wisdom;

3)  Most pundits refuse to admit that they don't understand something that reads like gobbledgook, because they're afraid this makes them look like an idiot.

Well, your humble blogger has never been afraid of looking like an idiot... which brings me to PIMCO's Bill Gross.  I'll occasionally read his monthly newsletter when a link to it pops up in my Twitter feed.  Every time, I'm amazed at the florid, rambling, not-really-related-to-his-main-point way he opens these little essays. Sometimes I find the analysis afterwards useful, sometimes I find it eerily similar to what someone says after spending too much time with Tom Friedman.  I gather he's had better years as an analyst than he did in 2011, but everyone has down years and bad predictions. 

Here's the thing, though -- I can't understand a word of his latest Financial Times column:  Here's how it opens: 

Isaac Newton may have conceptualised the effects of gravity when that mythical apple fell on his head, but could he have imagined Neil Armstrong’s hop-skip-and-jumping on the moon, or the trapping of light inside a black hole? Probably not. Likewise, the deceased economic maestro of the 21st century – Hyman Minsky – probably couldn’t have conceived how his monetary theories could be altered by zero-based money.

Things get a little clearer towards the end of the op-ed... but not much.  His February 2012 newsletter appears to be an expanded version of this op-ed (plus the usual wacky opening), so let's go there to see what he's trying to say: 

[W]hen rational or irrational fear persuades an investor to be more concerned about the return of her money than on her money then liquidity can be trapped in a mattress, a bank account or a five basis point Treasury bill. But that commonsensical observation is well known to Fed policymakers, economic historians and certainly citizens on Main Street. 

What perhaps is not so often recognized is that liquidity can be trapped by the “price” of credit, in addition to its “risk.” Capitalism depends on risk-taking in several forms. Developers, homeowners, entrepreneurs of all shapes and sizes epitomize the riskiness of business building via equity and credit risk extension. But modern capitalism is dependent as well on maturity extension in credit markets. No venture, aside from one financed with 100% owners’ capital, could survive on credit or loans that matured or were callable overnight. Buildings, utilities and homes require 20- and 30-year loan commitments to smooth and justify their returns. Because this is so, lenders require a yield premium, expressed as a positively sloped yield curve, to make the extended loan. A flat yield curve, in contrast, is a disincentive for lenders to lend unless there is sufficient downside room for yields to fall and provide bond market capital gains. This nominal or even real interest rate “margin” is why prior cyclical periods of curve flatness or even inversion have been successfully followed by economic expansions. Intermediate and long rates – even though flat and equal to a short-term policy rate – have had room to fall, and credit therefore has not been trapped by “price.” 

Even if nodding in agreement, an observer might immediately comment that today’s yield curve is anything but flat and that might be true. Most short to intermediate Treasury yields, however, are dangerously close to the zero-bound which imply little if any room to fall: no margin, no air underneath those bond yields and therefore limited, if any, price appreciation. What incentive does a bank have to buy two-year Treasuries at 20 basis points when they can park overnight reserves with the Fed at 25? What incentives do investment managers or even individual investors have to take price risk with a five-, 10- or 30-year Treasury when there are multiples of downside price risk compared to appreciation? At 75 basis points, a five-year Treasury can only rationally appreciate by two more points, but theoretically can go down by an unlimited amount. Duration risk and flatness at the zero-bound, to make the simple point, can freeze and trap liquidity by convincing investors to hold cash as opposed to extend credit (emplases in original).

And... sorry, I still don't get it.  I get why zero interest rates are bad for bondholders like PIMCO.  I get that flat yield curves + high amounts of economic uncertainty = cash hoarding.   What I don't get is that:

A)  Gross himself acknowledges that the yield curve ain't flat;

B)  Low interest rates allow for private-sector deleveraging, which is a prelude to stimulating market demand;

C)  Low interest rates prevent today's government binge from being even more expensive than it would be in normal times (by keeping financing costs down);

D)  If uncertainty is decreasing -- and that appears to be the case with the U.S. economy -- then low interest rates should spur greater entrepreneurial investments. 

So, at the risk of threatening my status in the International Brotherhood of Serious Global Political Econmy Bloggers That Talk Seriously About Economics, I hereby ask my commenters to explain Bill Gross' concerns to me. Because I don't get it -- and I'm beginning to wonder if I'm not the only one.

The AP breathlessly reports that Punxatawney Phil saw his shadow today, which means another six weeks of winter.  Based on recent data, I'm wondering if Syria's Bashar al-Assad can say the same thing. 

Earlier this week the U.S. intelligence heads testified on Syria, and offered some surprising assessments:

Syrian President Bashar al Assad will not be able to maintain his grip on power in the wake of a wave of opposition that has dragged on for almost a year, America’s top intelligence officials told Congress today.

“I personally believe it’s a question of time before Assad falls,” James Clapper, director of National Intelligence, told the Senate Permanent Select Committee on Intelligence.  CIA Director David Petraeus added, “I generally subscribe to that as well.”

Clapper said “it could be a long time” before the Assad regime falls because of “the protraction of these demonstrations” and a Syrian opposition that remains fragmented.  Despite that, Clapper said “I do not see how long he can sustain his rule of Syria.”

Hey, remember how, a year ago, Clapper got into trouble for being honest about the state of affairs in Libya despite his honesty being a political inconvenience?  This is precisely why I find his testimony so credible. 

Recent facts on the ground buttress Clapper's assessment -- as does the Financial Times' David Gardner's reportage, which is chock-full of interesting facts about the Assad regime's constrained ability to repress:

The [Assad] regime believed it could crush the uprising, which began in mid-March after revolutions in Tunisia and Egypt, by the end of April and then in the summer Ramadan Offensive. It failed.

These operations revealed its reliance on two dependable units -- the 4th Armoured Division and the Republican Guard, made up of Alawites, the heterodox Shia minority that forms the backbone of the regime, and commanded by Mr Assad’s volatile younger brother, Maher. Whenever the Assads deployed units with a rank-and-file reflecting Syria’s 70 per cent Sunni majority -- as they had to if their offensives were to cover more than the hot spots of the moment -- defections ensued.

Even more interesting is Gardner's take on the evolving Russian position:

Russian diplomats…despite their rhetoric, have been talking to Syrian opposition figures and, according to the latter, carefully considering the Arab League proposals. As a veteran U.S. diplomat puts it, “there is a squishiness to where they [the Russians] are now”.

Russia does have a commercial interest in Syria, and arms the regime but the value of this depends on whether it will get paid, by a government running out of cash. It is only six years since Moscow had to write off more than $10bn in unpaid Syrian debts from the Soviet era.

Its real interest is in retaining its base facilities at the port of Tartus, its last naval asset in the Mediterranean. For that it will eventually need to reach an understanding with Syria’s future, not hold on to its past. Tartus is a long-term strategic asset. The Assads are no longer a long-term proposition.

This is new and interesting information, and does appear to track multiple reports that the negotiations in Turtle Bay will lead to an actual Security Council resolution on Syria. If Russia cuts a deal with the opposition and removes its veto from multilateral action, how long can Assad hold out? 

What do you think? Will Assad be out of power in Syria inside of six weeks or not?

Developing…

The term "inflection point" has become one of those overused bits of meaningless jargon in political discourse.  I'm rather more fond of the notion of a "focal point" -- that is to say, an event or cluster of events in which everyone that cares about a particular problem focuses on the same set of stylized facts -- after which, they conclude that, gee, maybe the status quo set of policies ain't working so well and there should be a new status quo. 

The fall of 2008 was one such focal point, during which there was remarkable consensus that a Keynesian boost in public spending was the only way to avert another Great Depression.  At the fiirst G-20 leaders summit in  Washington, there was consensus on expansionary fiscal policy.  Oh, sure, there were grumblings about "crass Keynesianism," but even Germany reluctantly went along. 

The Greek sovereign debt crisis was another such focal point.  Greek profligacy seemed to be a synecdoche for excessive government borrowing and lax fiscal discipline.  With the global economy seemingly still in the doldrums, a lot of Europrean governments climbed on the "expansionary austerity" bandwagon.  By the Toronto G-20 summit in June 2010, the consensus had switched from Keynesian stimulus to fiscal rectitude.  Oh, sure there were mutterings about "short-term austerity makes no macroeconomic sense whatsoever in a slack economy" but even Barack Obama started talking about slashing government spending. 

Are we at another focal point?  Consider the following:

1)  According to the New York Times' Stephen Castle, European leaders now seem to recognize that austerity on its own ain't working: 

Bowing to mounting evidence that  austerity alone cannot solve the debt crisis, European leaders are expected to conclude  this week that what the debt-laden, sclerotic countries of the Continent need are a dose of economic growth.

A draft of the European Union summit meeting communiqué calls for ‘‘growth-friendly consolidation and job-friendly growth,’’ an indication that European leaders  have come to realize that austerity measures, like those being put in countries like Greece and Italy,  risk stoking a recession and plunging fragile economies into a  downward spiral.

2)  The data is starting to come in on governments that have embraced austerity whole-heartedly, and it's pretty grim.  Cue Paul Krugman on Great Britain:

Last week the National Institute of Economic and Social Research, a British think tank, released a startling chart comparing the current slump with past recessions and recoveries. It turns out that by one important measure — changes in real G.D.P. since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British G.D.P. had regained its previous peak; four years after the Great Recession began, Britain is nowhere close to regaining its lost ground.

Nor is Britain unique. Italy is also doing worse than it did in the 1930s — and with Spain clearly headed for a double-dip recession, that makes three of Europe’s big five economies members of the worse-than club. Yes, there are some caveats and complications. But this nonetheless represents a stunning failure of policy.

And it’s a failure, in particular, of the austerity doctrine that has dominated elite policy discussion both in Europe and, to a large extent, in the United States for the past two years.

3)  Even commentators who would be tempermentally sympathetic with austerity are starting to bash Germany question whether it's a solution.  Consider Walter Russell Mead: 

It takes some truly talented screw ups to come up with a worse plan for Greece than the one the Greeks have developed for themselves, but the Germans have risen to occasion in fine form....

Deep reform is needed if Greece is to stay in the euro, and so far the Greek political establishment — firmly backed by public opinion — is digging in its heels.  Much whining, much talk, many promises and precious little action seems to be the favored Greek approach to the crisis.  On the other hand, the austerity policies the Germans favor are hopelessly biased in favor of German banking interests and are aimed more at the preservation of the reputations of German politicians than at helping Greece.

The German political establishment seems willing to destroy Europe to avoid telling German voters the truth about how stupid it has been. 

[UPDATE:  For exhibit B of this trend, see this Niall Ferguson interview with Henry Blodget.  My favorite part of the interview is this quotation:  "I think the reason that I was off on that was that I hadn't actually thought hard enough about my own work.... My considered and changed view is that the U.S. can carry a higher debt to GDP ratio than I think I had in mind 2 or 3 years ago."]

4)  U.S. 4th quarter data reveals that, consistent with GOP criticisms, the government has been the real drag on the U.S. economy.  Not quite consistent with GOP criticisms:  the reason why the government is dragging down the U.S. economy.  Cue Mark Thoma: 

[P]remature austerity -- cutting spending before the economy is ready for it -- is taking a toll on the recovery. The fall in government spending reduced fourth-quarter growth by 0.93 percent; if government spending had remained constant, GDP growth would have been 3.7 percent, rather than 2.8 percent. 

This is the opposite of what the government should be doing to support the recovery. We need a temporary increase in government spending to increase demand and employment through, for example, building infrastructure. That would help to get us out of the deep hole we are in. Instead, the government seems to be trying to make it harder to escape.

We do need to address our long-run budget problems once the economy is healthy enough to withstand the tax increases and program cuts that will be required. But the idea of "expansionary" austerity has failed. Austerity in the short-term simply makes it harder for the economy to recover and delays the day when you can finally address budget issues without harming the economy. The lesson is that government needs to support the recovery, not oppose it through a false promise that contraction of one sector in the economy will be expansionary.

5)  Central banks are acting more gung-ho on expansionary monetary policy.  The unspoken quid pro quo in Europe seems to the that the ECB will expand its balance sheet and turn on the monetary taps in return for some kind of fiscal compact.  The U.S. Federal Reserve announced a zero-interest rate policy for the next three years.  Even China is showing (halting) signs that its reverted back to monetary easing. 

Given that the United States has been the country to move the slowest on austerity, and given that the United States is doing the best job among the OECD economies (an admittedly low bar) of restoring confidence among investors and paying down non-governmental debt, have we reached another focal point? 

One could argue that Krugman and Thoma are just biased in favor of Keynesianism, that Greece and the other Club Med countries haven't really embraced austerity, that the Euromess is dragging down British economic growth, and that the long-term numbers on developed country debt are really very scary.  There are some large grains of truth in many of those statements. 

It doesn't necessarily matter, however.  Greece was not a genuine harbinger of the fiscal problems of large markets -- but it was a useful hook for austerity advocates to spread their gospel.  What matters now is not whether these perceptions about the failure of austerity are 100% accurate, but whether they are accurate enough to become the new conventional wisdom. 

What do you think?