Thinking Global http://blogs.reuters.com/thinking-global Tue, 21 May 2013 15:44:36 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 The growing Franco-German schism http://blogs.reuters.com/thinking-global/2013/05/13/the-growing-franco-german-schism/ http://blogs.reuters.com/thinking-global/2013/05/13/the-growing-franco-german-schism/#comments Mon, 13 May 2013 22:22:32 +0000 http://blogs.reuters.com/thinking-global/?p=336 Germany’s Chancellor Angela Merkel talks with France’s President Francois Hollande (R) at the European Union leaders summit in Brussels March 15, 2013. REUTERS/Laurent DubruleTaxicab2

Occasionally a public opinion survey surfaces that signals a seismic event. That is the case with a new report from the Pew Research Center that measures the widening tremors of a political earthquake now shaking Europe.

Although the report leads with evidence that  Europeans are increasingly losing faith in the European Union (which I wrote about here), the more troubling problem is the fast-growing divide between France and Germany. This schism is ripping apart the bonds that have held Europe together for 60 years – just when they are most urgently needed.

There is  a second, powerful underlying message: Germany has more economic weight and political will to determine Europe’s future than it has had since World War Two. Now, though, it lacks a partner that can replace France’s pivotal importance. Beyond that, Germans are increasingly out of step with most other Europeans in their economic optimism, their faith in their national political leadership and their continued support for European institutions.

Some 75 percent of Germans consider their economic situation good or very good, despite Germany’s recent economic slowdown. At the same time, more than two-thirds of those surveyed in seven other countries – Britain, France, Italy, Spain, Greece, Poland and the Czech Republic – are dissatisfied with their economies.

“The increasing alienation of Germany from the rest of Europe is quite striking,” said Bruce Stokes, director of global economic attitudes at the Pew Research Center. “The Germans seem to be living on a different continent than the French. Or perhaps it would be more accurate to say they are living on a different planet.”

The relationship hasn’t just broken down at elite levels, beginning with the much-publicized personal and ideological differences between French President Francois Hollande and German Chancellor Angela Merkel. The French and Germans are increasingly divided in their attitudes toward their leaders, their economic futures and the very value of the European project.

“That is unprecedented and profoundly challenging,” said Stokes. “It may mean that the Europeans have to find a new glue if they are to hold Europe together, and find a new motor to advance the European cause.”

Some argue that if September’s German elections produce a Social Democratic government or if Europe experiences sustained economic growth, the picture will be altered. Yet Europe’s economic prospects are for slow growth for several years. And no German electoral shift can change stark realities that mark a reordering of the European continent between a French-led south and German-led north.

By almost every economic measure, the gap between Germany and France is growing, underscoring their differences in global competitiveness.

France’s share of government spending as a percentage of the overall economy has ballooned to 56 percent, compared with 45 percent in Germany. French unemployment is 11 percent, more than double Germany’s 5.4 percent.

France’s trade deficit widened to $87.7 billion in 2012,  while Germany posted a trade surplus of $246 million billion. France’s deficit is near historic highs, as is Germany’s surplus.

What all this means is that France, the traditional “connector” between the European south and the north (think Germany), is heading south – literally and figuratively.

As Pew laid it out:

France has always bridged Europe’s north and south. French language and culture has Latin roots, but France has historically been considered in the same economic and political league as Germany and Britain. And in their public attitudes the French were neither Northerners nor Southerners, but a hybrid of the two. Now, measured by a number of indicators, the French look less like Germans and a lot more like the Spanish, the Italians and the Greeks.

The Franco-German relationship has never been easy. After all, the driving purpose behind the creation of the European Coal and Steel Community in 1950, compelling the two countries to pool their means of war, was to ensure they could never engage in such hostilities again.

The high-water mark in their relations was probably 1984, as then-West German Chancellor Helmut Kohl and then-French President Francois Mitterrand clasped hands for several minutes, a moment captured in an iconic photograph taken during a rain-soaked commemoration at the World War I battlefield at Verdun, where the two sides suffered more than 700,000 casualties.

The two men signed a declaration there that read:

France and German have learnt lessons from our history. Europe is our common fatherland. We are heirs of a grand European tradition. That is why, 40 years ago, we ended our fratricidal war and began to build our future together. We were reconciled, we came to an agreement, we became friends, European unification is our common goal.

Now the two sides are exchanging fusillades of press leaks.

Le Monde published a leaked French Socialist Party document that brands Merkel as “the chancellor of austerity” and says her actions were driven by “selfish intransigence” and a desire to protect German savings.

Handelsblatt, the German business paper, published a leaked document from the German Economics Ministry that derides declining French competitiveness, noting France has the second-lowest annual working hours in the EU.

The outcome of this new divide won’t be war. But it’s jhard to imagine Hollande clasping hands with Merkel.

It seems almost inevitable that the next European fireworks – and the next test of the durability of the French-German relationship – will come when financial markets turn their firepower on Paris.

 

PHOTO (Insert A): Germany’s Chancellor Angela Merkel at the European Union leaders summit in Brussels October 19, 2012. REUTERS/Christian Hartmann

PHOTO (Insert B):Helmut Kohl (R) stands hand in hand with former French President Francois Mitterrand (L) during their visit to the former Verdun battlefields, September 22, 1984. REUTERS/File Photo

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Is Europe losing faith in the EU? http://blogs.reuters.com/thinking-global/2013/05/07/is-europe-losing-faith-in-the-eu/ http://blogs.reuters.com/thinking-global/2013/05/07/is-europe-losing-faith-in-the-eu/#comments Tue, 07 May 2013 22:49:09 +0000 http://blogs.reuters.com/thinking-global/?p=307 A wall of photos of European Union citizens outside the EU Commission building during the celebration for the Council of Europe in Brussels May 4, 2013. REUTERS/Yves Herman

Happy Europe Day!

If you don’t know May 9 is Europe Day, then you find yourself in good company with a majority of Europeans. Even in the most buoyant time, this holiday – marking the Schuman Schuman Declaration, presented by French Foreign Minister Robert Schuman in 1950, that launched the European Coal and Steel Community – doesn’t come with the transcontinental fireworks of America’s July 4.

It does, however, provide occasion to reflect on the growing perils to Europe, and the enormous risks they pose to both the United States and the global future. For all the talk of Europe’s fiscal deficits, or the “democracy deficit” that leaves European Union institutions lacking accountability and legitimacy, the most dangerous deficit is one of Europeans.

Last week, no less an authority than Jose Manuel Barroso, the Portuguese politician who is president of the European CouncilCommission, lamented in a speech that the European dream was under threat from a “resurgence of populism and nationalism” across the 27 countries and 500 million people of the European Union. Barroso said:

“At a time when so many Europeans are faced with unemployment, uncertainty and growing inequality, a sort of ‘European fatigue’ has set in, coupled with a lack of understanding. Who does what? Who decides what? Who controls whom and what? And where are we heading? … And, let us be clear, the indifference of many pro-Europeans is also a risk.”

The percentage of European nationals who distrust the European Union is growing with alarming speed, according to the Eurobarometer, a public opinion service of the European Commission.  In November 2012, some 72 percent of Spaniards said they “tended not to trust the EU,” compared to just 23 percent five years earlier. In Italy, the figure has spiked to 56 percent from 41 percent.

Concern should be greatest in Germany, where public opinion toward Europe could be most decisive to the continent’s future. Europeanism was long a welcome identity for a country that after World War II was more than happy to embrace an alternative.

That attitude has eroded with increased distance from the country’s Nazi past and growing doubts about Europe’s future – as well as  the economic cost to Germans of the euro zone crisis.

Though Germans by a 75 percent majority still prefer remaining in the euro, some 56 percent have no trust in the EU, and fewer than a third have a positive image of the EU. German Chancellor Angela Merkel dare not ignore the emotion behind the emergence of Germany’s first anti-euro party, the Alternative for Germany. Though its support in September elections is likely to be small, its ideas are influencing the public debate.

A senior German policymaker told me recently that Merkel is an even more passionate European than is commonly understood, and that she would never abandon the euro. “But it is increasingly difficult,” this official said, “to keep the German electorate with her.”

In a European Council on Foreign Relations paper, experts Jose Ignacio Torreblanca and Mark Leonard wrote:

What is striking is that everyone in the EU has lost faith in the project, both creditors and debtors … In southern European countries, the EU looks like the IMF [International Monetary Fund] did in Latin America: a golden straitjacket that is strangling the space for national politics and emptying their national democracies of content … In northern European countries, the EU is increasingly seen to have failed as a controller for the policies of the southern rim. The creditors have a sense of victimhood that mirrors that of the debtors.

Key Obama administration officials have come to recognize the enormous stakes for the United States and the world of European unity and effectiveness. The United States, with just 19 percent of global gross domestic product, can only shape the future global system through closer collaboration with its most important European allies.

It isn’t just that the European Union is the world’s largest economy, it has also been the world’s most effective force in extending democracy and free markets over the past 20 years – embracing 15 new member states in a manner that has expanded rule of law and reduced ethnic conflict.

Geostrategic purpose is perhaps the most important motivator behind President Barack Obama’s decision to highlight the Transatlantic Trade and Investment Partnership negotiations in his State of the Union message.

Former National Security Adviser Zbigniew Brzezinski told Globsec, an annual security conference in Bratislava,  that, though the agreement will be hard to negotiate and implement:

Eventually, it can create additional transatlantic bonds that will dramatically alter the geopolitical realities of the world as a whole. It can shape a new balance between the Atlantic and the Pacific Oceanic regions, while at the same time generating in the West new vitality, more security and greater cohesion.

The larger problem, Brzezinski said, had to do with the nature of today’s Europe.

Europe needs leaders who can personalize and dramatize the historic mission of a more united Europe in closer intimacy with America. In Western Europe today there is a dearth of historical imagination and of global ambition. There is no Churchill, nor De Gaulle, nor Adenauer. Current political discourse is dominated by narrower perspectives and by the more immediate preoccupations of their constituents. But in the process the inspirational vision that is expected of democratic leaders is absent.

European leaders are aware enough of their problem that they dubbed 2013 as “The European Year of Citizens.” For its part, the European Commission has released this Europe Day video.  But PR won’t solve the problem, any more than a banking union could.

Without a rediscovery of moral, historical and global purpose, the deficit of Europeans will grow. We will all suffer the consequences.

 

PHOTO (Insert A): Euro banknotes are seen in this picture illustration taken in Prague January 21, 2013. REUTERS/David W Cerny

PHOTO (Insert B): Germany’s Chancellor Angela Merkel gestures during a news conference after an emergency European Union leaders summit in Brussels March 1, 2009.  REUTERS/Sebastien Pirle

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Seeking to avert cyber war http://blogs.reuters.com/thinking-global/2013/04/15/seeking-to-avert-cyber-war/ http://blogs.reuters.com/thinking-global/2013/04/15/seeking-to-avert-cyber-war/#comments Mon, 15 Apr 2013 20:30:24 +0000 http://blogs.reuters.com/thinking-global/?p=285

Amid the buzz in Washington about new North Korean nuclear threats, President Barack Obama late last week summoned 15 of America’s top financial leaders to the White House to discuss what his administration considers to be threats that are more pervasive, more persistent and less manageable ‑ cyber risks.

“The president scared the hell out of all of us, and we’re not easy to frighten,” said one member of the group, which included Goldman Sachs’s Lloyd C. Blankfein, JPMorgan Chase’s Jamie Dimon and Bank of America’s Brian T. Moynihan. “This isn’t like the nuclear threat, where it was really governments facing down governments. The American financial sector is a new battleground, and we’re going to have to invest millions of shareholders’ dollars to protect ourselves from what are essentially national actors.”

In this new world, cyber conflicts have already begun. But no one has written the rules of how they should be managed between government and private-sector responsibility.

Unlike typical national security crises, the private sector controls most of the levers that can decisively resolve cyber conflicts. Government maintains overall responsibility for national cyber defense, yet it hasn’t haven’t developed doctrines of response. Officials remain too constrained by internal processes, competing interests and lack of experience in settling national security problems in collaboration with the private sector.

By coincidence, a few blocks down Pennsylvania Avenue from the White House meeting, a group of leading cyber strategists was engaged in a harrowing simulation that showed why Obama is so worried. It illustrated how quickly a cyber conflict could escalate in coming weeks were tensions with Iran over its nuclear weapons’ ambitions to heighten. The session, convened by the Atlantic Council (of which I am president) and the private company SAIC, demonstrated how government officials and the private sector often fail to communicate effectively or act collaboratively to address a national security threat they can only master together.

The simulation pivoted off the apparently Iranian “denial of service” cyber attacks on U.S. financial institutions earlier this year. Those followed attacks last summer by a group calling itself “The Cutting Sword of Justice,” again most likely of Iranian origin, that used malware to erase data on some 30,000 Saudi Aramco computers.

From there, the simulation escalated into fictitious, but plausible, territory, which media reports declared the “first, all-out cyber war.” These were set off by real-world incidents: a renewed wave of assassinations against Iranian nuclear scientists and Iranian officials toward the end of May 2013, and then an Iranian presidential election in June that produces a hard-line winner, a veteran of the Revolutionary Guard.

This new Iranian regime quickly declares before the United Nations that Iran will suffer no more humiliations at the hands of the Americans, Europeans and Israelis. It condemns sanctions, assassinations, the West’s Stuxnet cyber-attack on Iran’s nuclear centrifuges and other “outrages.” The Iranian Cyber Army (a patriotic hacker group that really does exist) announces a large-scale cyber operation to disrupt Western targets.

What follows, in the simulation, are greatly increased attacks on the U.S. finance sector, denial-of-service attacks and Web page defacement of government, commercial and critical infrastructure targets. Iranian groups rent massive “botnets,” widespread Internet-connected programs normally used by Russian organized crime, to join in the attacks. Pressured by extremist religious websites, hackers in many other countries participate, including groups associated with Hezbollah and Hamas.

War games are nothing new to Washington, but they are usually classified and conducted far from prying eyes. With a script written by former U.S. government officials involved in cybersecurity, and then acted out by former White House, Pentagon and intelligence officials, this filmed and on-record event was the stuff of Hollywood – and will be studied by government and business leaders alike.

One telling moment came when Dmitri Alperovitch, an information security specialist, complained that a White House official had threatened the fictitious company he was representing with criminal prosecution if it took the law into its own hands and conducted aggressive measures against the identified source of a cyber attack.

On the other hand, the government refused to take steps to help the company defend itself from the attacks. Purely defensive measures weren’t enough, as the attacker was always finding new targets and means. “We’ve been doing this for six months,” Alperovitch said, “and it’s really a whack-a-mole situation.”

The outcome of such U.S. restrictions on private-sector responses, said Alperovitch, was that some companies would turn to security providers outside the United States, which could act with impunity. The danger in all this is that lack of effective government response was resulting in the ceding of a government responsibility ‑ namely, to protect American citizens against foreign attack ‑ to individual companies.

All too often, government wants to solve cyber conflicts itself, as they do most other national security crises. But as this scenario showed, it is the private sector that holds most of the cards. Indeed, few cyber conflicts in the past 25 years have been decisively resolved by governments as Jason Healey, the director of the Atlantic Council’s Cyberstatecraft Initiative, writes in his forthcoming history of cyber conflict.

Healey, who moderated last week’s simulation, argued that the private sector has the agility and expertise to solve most cyber crises, and since it is elbow-deep in cyberspace, its also usually has access to the means to do so. The government lacks these strengths, though only it knows the overall context of the attack and has massive intelligence gathering resources and funding, and controls traditional economic, diplomatic and military power levers.

These past months have shown that such discussions are not theoretical. Obama’s message to the financial sector was clear: Before matters become even more serious, the government and private companies together must do more to prepare for the inevitable cyber conflicts to come.

PHOTO (Top): A man types on a computer keyboard in this February 28, 2013 illustration file picture.  REUTERS/Kacper Pempel/Files

PHOTO (Insert A): An analyst looks at code in the malware lab of a cyber security defense lab at the Idaho National Laboratory in Idaho Falls, Idaho September 29, 2011. REUTERS/Jim Urquhar

PHOTO (Insert B): Giant wall monitors provide information for analysts at the Department of Homeland Security’s National Cybersecurity & Communications Integration Center just outside Washington in Arlington, Virginia on September 24, 2010. REUTERS/Hyungwon Kang

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Making history at the Vatican http://blogs.reuters.com/thinking-global/2013/03/12/making-history-at-the-vatican/ http://blogs.reuters.com/thinking-global/2013/03/12/making-history-at-the-vatican/#comments Tue, 12 Mar 2013 17:20:02 +0000 http://blogs.reuters.com/thinking-global/?p=263

I have covered far happier times for the Vatican. I reported on John Paul II’s pilgrimage through his native Poland some three decades ago, and I have been thinking about this while watching the Catholic Church’s 115 cardinal electors pray for divine inspiration on this historic day in Rome’s Sistine Chapel.

The cardinals will need every ounce of God’s help to determine who among them has the leadership and managerial wherewithal to both fix their scandal-ridden church and inspire a needy world. They can take some solace from the 1978 papal conclave held after John Paul I’s sudden death following just 33 days in office.

Electors then took eight ballots and two days to select Cardinal Karol Wojtyla, then the archbishop of Krakow, as the first non-Italian pope since 1523 and a man who over time would become one of the great leaders of the 20th century. John Paul II was beatified in 2011, in no small part for the role he played in liberating his homeland and ending Communist rule over most of Eastern Europe.

No elector then could have known the chain of events he had set in motion. Consider, I filed the dispatch below to my editors at the Wall Street Journal from Czestochowa, Poland, where the pope had come to celebrate the 600th anniversary of the icon of the Black Madonna. The Black Madonna had been acclaimed for everything from stopping Swedish invaders to healing the disabled, and John Paul II credited her with saving his life after he took an assassin’s bullet two years earlier. I wrote:

It was Polish Woodstock staged around religion instead of rock music.

Masses of young people with backpacks and blankets started gathering two days before their Polish pope would arrive. By the time he climbed the grand altar atop the Jasna Gora Monastery’s majestic hill top, they easily numbered a million and stretched for nearly a mile at his feet … The crowd greeting him here was packed so tight that even crossing oneself at mention of the Trinity proved awkward.

Surveying the spectacle closely, I watched John Paul II’s face radiate the profound warmth and joy that, during his seven-day journey to Poland, would restore the spirit of a nation broken by martial law. Communist leaders had imposed these harsh restrictions two and a half years earlier, seeking to snuff out the Solidarity movement, a nationwide democratic revolution that threatened the Soviet empire.

The Polish pope, amplified so all could hear, spoke to his faithful in a voice that moved them to action – but also counseled against violence. “My dear young friends,” he said. “[Mary] knows your sufferings, your difficult youth, your sense of injustice and humiliation, the lack of prospects for the future that is often felt, perhaps the temptations to flee to some other world.”

The crowd repeatedly broke up his sentences with applause, thanking their pope for voicing their tribulations. “On you depends tomorrow …,” John Paul II said. “I pray for you every day.”

This story is a reminder of how messy had been the choice of this man, the second-longest-serving pope in history, who served until his death in 2005. Yet when that 1978 conclave began, electors were divided between Giuseppe Siri, the conservative archbishop of Genoa, and Giovannni Benelli, the liberal archbishop of Florence. Wojtyla was the late-entry, compromise candidate. He was put forward by Franz König, the Austrian cardinal, only when it became apparent that neither candidate could attain the two-thirds majority required and that a third Italian candidate refused to serve.

Yet the 20th century might have turned out differently had the electors that day not chosen a man who, at age 58, was athletically energetic, uniquely charismatic and historically relevant as a son of a captive Poland. Pope John Paul II’s 1979 and 1983 trips to his homeland first inspired a national awakening and then revived it – laying the groundwork for the Berlin Wall’s fall, Soviet collapse and the Cold War’s peaceful end.

There is, however, a cautionary lesson to the John Paul II story. By remaining pope beyond the point of his physical and mental capabilities, his legacy is mixed. Almost all the financial and sex scandals that have bedeviled the Catholic Church metastasized because of the Polish pope’s inattention during his final years.

It was that reality that likely drove the decision of Pope Benedict XVI to resign his papacy at age 85 on Feb. 28, citing a “lack of strength of mind and body.” He was the first pope to step down since Pope Gregory XII in 1415, and the first to do so voluntarily since Pope Celestine V in 1294.

No one knew the two stages of Pope John Paul II’s papacy better. Benedict XVI witnessed both the remarkable man who had shaped history and the declining individual who presided haplessly over the Catholic Church’s growing difficulties. Instead of perhaps suffering a similar fate, Benedict XVI decided to determine his own destiny – and provide the electors today their historic opportunity.

Whoever the cardinals choose will face a more complex challenge than John Paul II confronted during the Cold War’s final decade. No one man in the conclave today could likely possess both the personality and oratory gifts to wow the world and the managerial talents and temperament to galvanize and reform a globalized church of 1.2 billion followers at a time of paralyzing scandals.

Perhaps the most important lesson of the Polish pope is that history won’t be made in the Sistine Chapel today – but in the years that follow.

 

PHOTO (Top): Pope John Paul II waves to worshippers as he walks onto the altar at the bottom of the ski jump area prior to a holy mass in the village of Zakopane in southern Poland, June 6, 1997. REUTERS/Pool

PHOTO (Insert A): Cardinals attend a mass in St. Peter’s Basilica, in a picture released by Osservatore Romano at the Vatican March 12, 2013. REUTERS/Osservatore Romano

PHOTO (Insert B): A small girl kisses the hand of Pope John Paul II during the first communion as the Holy Father visited the Holy Family Church in Polish mountain resort of Zakopane June 7, 1997. REUTERS/Pool

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The Reichstag fire: Lessons for today http://blogs.reuters.com/thinking-global/2013/02/28/the-reichstag-fire-lessons-for-today/ http://blogs.reuters.com/thinking-global/2013/02/28/the-reichstag-fire-lessons-for-today/#comments Thu, 28 Feb 2013 00:04:16 +0000 http://blogs.reuters.com/thinking-global/?p=230

This week marks the 80th anniversary of the German Reichstag fire of February 27, 1933. That arson blaze ignited one of history’s ugliest stories of a fragile democracy gone tragically bad — and its generational consequences.

Adolf Hitler, leader of the Nazis, elected Germany’s dominant party six months earlier, had exploited the fire – which he claimed was set by a half-blind, disabled, Dutch communist bricklayer – to transform Germany into a militarized dictatorship. This set in motion the Third Reich, World War II, the Holocaust, the destruction of Europe and the deaths of 60 million people, 2.5 percent of the global population.

History doesn’t repeat itself, as Mark Twain famously said, but it does rhyme.

“Perhaps the most powerful parallel between 1933 and 2013 is the political and economic weakness of the West and our self-absorption and tendency toward isolationism,” said Carl Gershman, president of the National Endowment for Democracy. Now, as then, democracy’s most prominent global representatives in the United States and Europe are in political and economic disarray. At such times, Western elites often turn inward and lose confidence – disengaging from global responsibility and underestimating the potential ripples from democratic setbacks in faraway places.

In 1933, Washington was distracted by the Great Depression, which bankrupted 40 percent of U.S. financial institutions. As President Franklin Delano Roosevelt stated, a third of Americans were ill-fed, ill-housed and ill-clothed. Now, with Syria in flames and nascent Middle Eastern democracies threatened, what then-Secretary of State Madeline Albright described as “the indispensable nation” is otherwise engaged with debt, deficits and the political inability to address them.

What strikes Gershman is less the similarities and more the differences between 1933 and 2013.  The Muslim Brotherhood, he said, “is not a democratic party, but it won even greater support than the Nazis in the 2011 elections, and thus far there has been no Reichstag fire; nor has it employed Hitler-like terror actions against its opponents.” It appears to Gershman that modern times and societies place greater constraints on would-be authoritarians.

“Evil hasn’t been rooted out of the human psyche and soul,” Gershman says. “It’s still there. But what’s missing is the totalitarian ideology of the 20th Century. I don’t see the sort of menacing forces like Stalin and Hitler in the world today, nor do I see the same Utopian urge that helped create them, though jihadism is a danger. The modern world is constraining these new leaders.  It’s much harder to impose a system of total control.  Moreover, authoritarian countries like China, Russia and Cuba are preoccupied with their own problems. They don’t today pose the same threat as Hitler and Stalin once did.”

That may be true. But no one disputes that global democracy is in recession due to authoritarian leaders’ shrewd, often violent, backlash to the emergence of popular movements around the world – particularly in the Middle East.

Freedom House, in its annual report on political rights and civil liberties, said the number of countries ranked as free in 2012 was 90, an encouraging gain of 3 from the previous year. But 27 countries showed significant declines in freedom, compared with only 16 that showed notable improvements.

Arch Puddington, Freedom House’s vice president for research, noted in the report’s opening essay:

…events in the Middle East dramatized two competing trends: demands for change pushed forward by popular democratic movements, and an authoritarian response that combines intransigence with strategic adaptability.

The ambiguous nature of these developments, combined with either instability or authoritarian retrenchment in other regions, had a significant impact on the state of global freedom. …This marks the seventh consecutive year in which countries with declines outnumbered those with improvements.

Freedom House criticizes both the Obama administration and its Republican opposition for failing to recognize the warning signs and do something about them. “The reluctance to provide that leadership,” Freedom House wrote, “represents a rare case of bipartisan agreement.” It noted President Barack Obama’s determination to focus on domestic concerns and many Republican leaders’ ambivalence about America’s role in the world.

Gershman is encouraged that, despite worrying trends and the West’s distractions, the world is experiencing a democracy recession but not yet a depression as in the 1930s.   He worries, however, that the recession could turn worse if the United States doesn’t address its troubling mixture of complacency, partisanship, growing isolationism and failure to deal with its own domestic problems.

In the 1930s, when much of Europe failed, the United States emerged as the fail-safe backup. “If we don’t solve our own problems, don’t bring our deficit and debt under control,” Gershman said, “we will be in the shape of European countries. And this time there will be no backup after the United States.”

PHOTO: Firemen work on the burning Reichstag building in Berlin on February 1933.  REUTERS/National Archives/Handout

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Obama’s chance for a legacy http://blogs.reuters.com/thinking-global/2013/02/19/obamas-chance-for-a-legacy/ http://blogs.reuters.com/thinking-global/2013/02/19/obamas-chance-for-a-legacy/#comments Tue, 19 Feb 2013 19:52:18 +0000 http://blogs.reuters.com/thinking-global/?p=215 President Barack Obama devoted just one sentence in last week’s State of the Union address to call for a new transatlantic trade and investment deal. However, if negotiated with sufficient ambition and presidential engagement, it is Obama’s best chance yet at leaving a positive foreign policy legacy.

The other global issues Obama catalogued in his speech were largely about avoiding the worst: North Korea, cyber threats, Iran, Syria and other Middle Eastern upheavals.  Achieving what Obama called “a Transatlantic Trade and Investment Partnership,” however, has all the makings of grand strategy.

It is about nothing less than combining the world’s two largest economies and communities of common interest in a manner that could reshape all global trade and investment standards. It would also reinvigorate the Cold War’s victors, known then as “the Free World,” at a new inflection point of history. Only through common cause can the United States and Europe ensure they continue to write global governance rules even as they lose relative power and influence to countries that are less committed to democratic rights and free markets.

The magnitude of U.S.-EU economic relations still has no rival. Despite the euro zone crisis and slow U.S. growth, the United States and the European Union still account for roughly 50 percent of the world’s gross domestic product and enjoy more than $3 trillion in cross-foreign direct investment. U.S.-EU trade in goods and services accounts for 40 percent of the world total, or $636 billion in 2011. The U.S. Chamber of Commerce reckons that figure could increase by $120 billion in the next five years  — if the two sides can eliminate tariffs.

Yet numbers don’t tell the whole story. A far-reaching trade and investment agreement would mark a transatlantic recommitment ceremony of historic significance, reversing a dangerous drifting apart.

Former U.S. ambassador to the European Union Boyden Gray has called the prospect of such a U.S.-EU accord “an economic NATO.” His point isn’t that anyone wants to create another cumbersome transatlantic bureaucracy. Rather, the deal could harness the economic attraction of the world’s largest and most robust trade and investment relationship at a time when falling defense budgets and Afghan troop withdrawals endanger the North Atlantic Treaty Organization.

What makes an U.S.-EU accord so crucial is its timing. The National Intelligence Council, in its quadrennial report on global trends, described this era as similar to 1815, 1919, 1945 and 1989  — times when the actions of political leaders shaped history in ways good and bad.

In 1815, Austria’s Metternich and others at the Congress of Vienna redrew borders. They created the Concert of Europe and provided nearly undisturbed peace for almost 40 years.

In 1919, President Woodrow Wilson and others laid the tracks for World War II by signing the Versailles Treaty after World War I.

After 1945, President Harry S. Truman and his allies performed better, giving birth to the global and transatlantic institutions that set the stage for Cold War victory  — and still provide the glue for world governance.

Then in 1989, President George H.W. Bush, German Chancellor Helmut Kohl and Soviet leader Mikhail Gorbachev ended the Cold War without a shot, unified Germany, expanded Europe and ushered in a new era of globalization that has embraced China and others.

The world now faces the most dramatic shift in political and economic power and influence since the 19th century. With its relative economic size and influence in decline (the American share of global GDP has fallen from 50 percent in 1945 to 18.9 percent now), the United States needs Europe more than ever if it is to shape global outcomes.

Obama will have to grasp the historic stakes, however, and be fully engaged with European leaders if he is to overcome the obstacles that lie before one of history’s most complex trade and investment agreements. Vice President Joe Biden at the Munich Security Conference in early February warned that a new U.S.-EU agreement had to be done “on a single tank of gas,” and U.S. and EU leaders have vowed to conclude their negotiations within two years.

As Obama decides how much political capital to invest in the process, he needs first to grasp the enormous stakes. He framed the agreement narrowly in his State of the Union address as something that would help the United States create jobs and growth. But failure to reach agreement will increase the likelihood that China and others will set the rules for the 21st century.

The United States and Europe are still the largest trading blocks. So there is a window of opportunity to reach an accord that could become the standard for other bilateral and regional arrangements. Thus Washington and Brussels must ground their agreement on core principles of nondiscrimination — meaning that others would be allowed improved access to the giant U.S.-EU market if they adopt the same standards. Emerging markets would then be more likely to adopt rather than undercut Western best practices.

The agreement could also reinvigorate a transatlantic relationship that is vital across a great many other issues. U.S.-European cooperation, for example, has given teeth to the sanctions against an Iran seeking nuclear weapons. Close transatlantic collaboration will also be necessary to address Middle Eastern upheavals, particularly now in Syria, and the spread of al Qaeda associates to Northern Africa and elsewhere  — where the French have been disappointed by what they consider Washington’s limited and reluctant support.

There was much fanfare when U.S. officials announced their “pivot to Asia” in November 2011. But the concept caused consternation in China, which feared Washington was seeking to contain its rise, and in Europe, where U.S. allies worried about abandonment.

An Obama administration pivot back to Europe has no such downsides. But it can only succeed if the president seizes the historic moment and makes it his legacy.

 

PHOTO (Top): President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington, February 12, 2013. REUTERS/Kevin Lamarque

PHOTO (Insert): After the chaos of the Napoleonic wars, the 1815 Congress of Vienna brought Europe a peace that lasted almost 40 years. [The Congress of Vienna by Jean-Baptiste Isabey, (1819)] COMMONS

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Obama’s Afghan test http://blogs.reuters.com/thinking-global/2013/02/01/obamas-afghan-test/ http://blogs.reuters.com/thinking-global/2013/02/01/obamas-afghan-test/#comments Fri, 01 Feb 2013 20:35:55 +0000 http://blogs.reuters.com/thinking-global/?p=201

Munich – For America’s friends and allies, who will welcome Vice President Joe Biden to the annual Munich Security Conference this weekend, President Obama’s second inaugural address was notable for its single-minded focus on U.S. domestic issues even as global challenges proliferate. It was the clearest sign yet that Obama intends to build his historic legacy at home.

No one quibbles with Obama’s conviction that America’s global role can best be sustained through a period of “nation-building at home.” The problem is the world is unlikely to hit the pause button as America gets itself off the fiscal cliff, reforms its immigration system, modernizes its infrastructure, fixes its education system and focuses on other long-neglected home chores.

Rude reality inevitably intrudes.

Even if Washington weren’t facing a world of escalating trouble spots – Syria, Iran, North Korea, Yemen, North Africa, and the disputed waters around China (for starters) – U.S. allies would be looking to Afghanistan as the leading indicator of how Obama 2.0 will balance domestic priorities against his global commitments.

With 50 countries still providing 102,052 troops in Afghanistan, how Obama manages his accelerated withdrawal of 66,000 forces by 2014 – and negotiates the mission and size of the residual force due to remain – is of more than academic interest. One senior diplomat of an allied country, who recently returned from a long stay in Afghanistan, worries that Obama administration officials are so focused on getting troops out that they haven’t fully studied the dramatically changed context for the few thousand left behind to look after what remains the world’s most dangerous region.

The Afghanistan debate is still conducted through a rear-view mirror, focusing either on wasted U.S. resources or unappreciated blood sacrifices. Zero Dark Thirty is in theaters, glorifying the killing of “Geronimo,” Osama bin Laden, in Pakistan, through a Navy Seal mission that was launched from eastern Afghanistan. Yet a glance at the road ahead suggests a new debate about the shifting context for allied engagement is urgently required.

Most important, an era has ended when the U.S. could comfortably apply military force to address dangers here – and elsewhere. In Iraq and now Afghanistan, U.S. officials have concluded they had reached the limits of what conventional force can accomplish. In the decade ahead, operations are more likely to be limited to discreet, covert anti-terrorist assaults and drone strikes – ending the broader counter-insurgency operations that require more boots on the ground.

That thinking will shape whatever residual force the U.S. seeks to leave behind in Afghanistan after 2014. In talks so far, Washington and Kabul have steered away from the “zero option” of complete U.S. troop withdrawal, thus avoiding the pattern of Iraq. President Hamid Karzai has personally committed to Obama that he will act this year to provide immunity guarantees for the remaining U.S. troops.

The rumored number of troops left behind ranges from 3,000 to 15,000. But a more interesting question may be whether Washington will try to negotiate the maintenance of and access to a number of Afghan bases, built at considerable U.S. taxpayer cost. These could prove useful for a host of new contingencies going forward.

One major concern is that Pakistan is facing a serious problem of radicalization. As he determines what presence the U.S. military may want in Afghanistan, Obama may need to consider what force he may need in a region where the worst-case scenario is Pakistan losing control of its nuclear weapons to extremists – through insurgency, instability or the ballot box.

The good news in Pakistan is that General Ashfaq Parvez Kayani, the country’s military commander, is reshaping his military mission around the conclusion that home-grown, violent extremism is a bigger threat to his country’s stability than India. The bad news, however, is radicalization continues to seep into so many parts of Pakistan that internal security forces fear their country could reach the point of no return. Though U.S. drone attacks kill militants effectively, they also feed the tribal revenge lust that feeds extremism, and worrying reports of conflicts between government forces and Pakistan Taliban are increasing.

At the same time, Iran is posing new challenges from Afghanistan’s East. Facing setbacks to its interests in Syria and Lebanon, Tehran has escalated its engagement in Afghanistan. In addition to dissuading Afghan leaders from agreeing to a long-term U.S. troop presence, it is preparing to fill the security vacuum following American withdrawal.

One Afghan leader has complained in Washington that Iran is “buying” Afghan parliamentarians and ministers to build opposition to any future basing agreement. It is also arming and training local groups, to create the sort of fifth column of support that it has already set up in Iraq, Syria, Palestine, Eastern Saudi Arabia and Bahrain.

The Obama administration now takes justified credit for degrading Bin Laden’s al Qaeda, killing some 17 of the top 23 leaders (as well as many mid-level leaders). The sad truth that events in Mali and Algeria have driven home, however, is that the al Qaeda network of affiliates has never been stronger. It is now active in Pakistan, Yemen and Somalia, and controls areas about the size of Texas in North Africa. Al Qaeda’s relative absence in Afghanistan is likely temporary.

In Munich this weekend, U.S. allies and friends will want to hear Biden’s views on Afghanistan’s future. Sadly, though, their list of concerns will only begin there.

PHOTO (Top): First Sargent Buddy Hartlaub with the Army’s 1-320 Field Artillery Regiment, 101st Airborne Division stands before a memorial to a dead soldier at Combat Outpost Terra Nova in the Arghandab Valley north of Kandahar, July 20, 2010.  REUTERS/Bob Strong

PHOTO (Insert): Afghan girl washing clothes in a river looks at a U.S. Army soldier of the Battle company, 1-508 Parachute Infantry battalion, 4th Brigade, 82nd Airborne Division, in the town of Senjaray, Zahri district of Kandahar province, southern Afghanistan May 29, 2012. REUTERS/Shamil Zhumatov

 

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Obama’s team of mentors and his legacy http://blogs.reuters.com/thinking-global/2013/01/14/obamas-team-of-mentors-and-his-legacy/ http://blogs.reuters.com/thinking-global/2013/01/14/obamas-team-of-mentors-and-his-legacy/#comments Mon, 14 Jan 2013 17:36:39 +0000 http://blogs.reuters.com/thinking-global/?p=196 President Barack Obama has been commander-in-chief for four years, but the world only now will see the full flower of Obama foreign policy unfold. It likely will have less to do with any grand ambition to shape an increasingly dangerous world, and instead will be focused on avoiding new wars as he focuses on what he has called “nation building” at home.

In the past week, the president has provided important clues about how he views his historic legacy through nominating a national security team that more closely reflects his own personal preferences and through the underlying message he sent last Friday to visiting Afghan President Hamid Karzai. The two men agreed most U.S.-led combat operations in Afghanistan would end this spring, signaling an accelerated end to the second war Obama inherited from President George W. Bush.

First term nominations often involve a complex political calculus that doesn’t entirely reflect a president’s policy and personal priorities, and that was also the case with Obama. Though Hillary Clinton has won global praise for her performance as secretary of state, Obama’s motivation in picking her was driven more by politics than policy. Former Secretary of Defense Robert Gates, though one of the finest leaders to ever serve in the Pentagon, was a Bush administration holdover and often disagreed with White House decisions.

A flurry of misplaced criticism has welcomed Obama’s national security nominations for Term Two: Senator John Kerry for secretary of state, former Republican Senator Chuck Hagel for secretary of defense and trusted White House adviser and counter-terrorism specialist John Brennan as director of the Central Intelligence Agency. Critics’ current focus is on how this group of entirely white men – add now his nominee for treasury secretary Jack Lew – fail to reflect the diversity of the rainbow coalition that got the president re-elected.

Yet we choose our presidents to lead us according to the policy directions they’ve set for the country, not to achieve gender and ethnic balance in their choices of senior officials. On that score, our first African-American president is being true to his voters. What unifies this group is that they are far closer to the president who has nominated them than were his first term choices, both in the policies they represent and in their personal closeness to a president whose inner circle is historically small.

Beyond that, Kerry and Hagel are unified by their close relationships with Joe Biden, a man who has become one of the most influential vice presidents in history. Michael Hirsh in National Journal recounts how Senator Hagel, during a 2008 trip to Afghanistan with Obama, advised the then-presidential candidate Obama to pick Biden as his running mate, saying, “He understands governance better than anyone else. In particular, he understands Congress. He understands how it fits together like no one else you could get. He’s got the political piece. He’s got the policy piece. There’s nobody in his league.”

Hirsh writes:

During the 2008 campaign, then-candidate Barack Obama spoke of his admiration for President Lincoln’s ‘Team of Rivals’ approach to picking his cabinet, referring to the book by Doris Kearns Goodwin… But what Obama is now assembling is more of a Team of Mentors, a group of old lions of the Senate who, along with Biden, helped to shape Obama’s world view during his brief stint as a freshman senator before he ran for president.

That said, no one has grown closer to the president, among this emerging “team of mentors,” than Brennan. Foreign Policy Magazine called Brennan “the Lethal Bureaucrat” and “Obama’s high priest of targeted killings,” and he likely has shaped the president’s approach to intelligence matters and terrorism response more than any other individual. Brennan was one of the earliest to back Obama as a presidential candidate, joining the campaign’s foreign policy team in 2007.

Micah Zenko of Foreign Policy Magazine writes:

Brennan plays the essential role in shaping and implementing Obama’s vision for protecting the United States, its allies, and its interests from politically motivated violence… Under Bush there were roughly 50 targeted killings; under Obama there have been 343 in less than half the time – 95 percent of them by Predator or Reaper drones.

National security involves dealing with the unexpected, so predicting what outcomes these appointments might shape is difficult in a world where crises percolate across so many borders – Iran, Syria, North Korea, Pakistan, the South China Sea… Beyond that, a terrorist strike at home with horrendous consequences remains the fondest goal of America’s terrorist enemies.

Both Kerry and Hagel, Vietnam veterans with five Purple Hearts between them, will set the bar high for any new military conflict, yet neither are pacifists. (Disclosure – Senator Hagel has served for the past four years as chairman of the board of directors of the Atlantic Council, the bipartisan, public policy organization I lead as president and CEO).

Hagel does not, as he is accused, oppose sanctions against Iran for its efforts to acquire nuclear weapons. Instead, he favors tough multilateral sanctions and exploring all diplomatic alternatives so as to avoid a war launched on the basis of “flawed assumptions and flawed judgment.” At the Atlantic Council in 2010, he warned that once one starts with Iran, “you’d better be prepared to find 100,000 troops, because it might take that.”

As Peter Beinart put it in the Daily Beast, what some Republicans fear:

….is that with Hagel as secretary of defense, it will be impossible for Obama to minimize the dangers of war with Iran, as George W. Bush minimized the dangers of war with Iraq. Hagel would be to the Obama administration what Dwight Eisenhower was in the 1950s, what Colin Powell was in the 1990s … The military man who bluntly reminds his colleagues that war, once unleashed, cannot be easily controlled.

Credit Obama for giving voters what he’s promised, a like-minded team that will help him avoid unnecessary war so that he can focus on strengthening America. However, what may be even more important is the team’s ability to deal with the unexpected. The greatest certainty of the next four years is uncertainty.

PHOTO: Former U.S. Senator Chuck Hagel (R) walks past U.S. President Barack Obama (L) after Obama announced the nomination of Hagel to be his new Secretary of Defense, at the White House in Washington January 7, 2013. REUTERS/Kevin Lamarque

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America’s second chance at global leadership http://blogs.reuters.com/thinking-global/2012/12/11/americas-second-chance-at-global-leadership/ http://blogs.reuters.com/thinking-global/2012/12/11/americas-second-chance-at-global-leadership/#comments Tue, 11 Dec 2012 21:37:16 +0000 http://blogs.reuters.com/thinking-global/?p=190 Read between the lines of the U.S. intelligence community’s quadrennial global trends report, a document released this week that has significant influence on White House thinking, and the message to President Obama is clear.

First, the United States is at a far more crucial juncture of human history than most Americans realize – reminiscent of 1815, 1918, 1945 and 1989. Second, the United States has something that is unprecedented among the world’s great powers, a second chance to shape the international economic and political system.

Read more deeply, and you’ll find a stark warning for the president within the National Intelligence Council’s 140-page “Global Trends 2030: Alternative Worlds” report.  The world may suffer severe consequences – ranging from economic slowdown and environmental catastrophe to violent conflict and global anarchy – if the U.S. fails to act, escape the fiscal cliff, restore its political effectiveness, revive its economic competitiveness, and engage China and a host of other rising actors.

The NIC lays out the stakes clearly for the U.S.:

How the U.S. evolves over the next 15-20 years – a big uncertainty – and whether the U.S. will be able to work with new partners to reinvent the international system will be among the most important variables in the future shape of the global order. Although the United States’ (and the West’s) relative decline vis-à-vis the rising states is inevitable, its future role in the international system is much harder to project: the degree to which the U.S. continues to dominate the international system could vary widely.

The challenge for U.S. leaders is that their margin of error is much smaller than it was after World War II. Then, America’s share of global GDP was 50% – more than twice what it is today. A mixture of post-war devastation and American economic and military dominance empowered the U.S. to construct, with friends and allies, a global institutional architecture that included the United Nations, the International Monetary Fund, the World Bank, the North Atlantic Treaty Organization and a host of others.

Today, the relative decline of U.S. political and economic power, an ongoing euro zone crisis that saps key allies’ energies and confidence, and the rise of China weaken American leverage. According to the NIC report, by 2030, Asia will surpass North America and Europe “in terms of global power.” The factors are a combination of economic size, population, military spending and technological investment. The NIC says China will pass U.S. GDP in the 2020’s.

Though dampened, America’s ability to lead remains significant through 2030 due to its unique economic, social and military assets and the lack of any single or group of powers willing to supplant its global role.

Beyond that, many of the trends outlined by the NIC report may be uniquely favorable to U.S. prospects, including new energy extraction and manufacturing technologies that could in the best case help underpin average economic growth for the U.S. by as much as 2.7 percent per year through 2030.

The NIC also focuses on technology-driven “individual empowerment” as the first of four megatrends that will reduce poverty and double the size of the global middle class through 2030. The report calls it a “tectonic shift” that means “for the first time, a majority of the world’s population will not be impoverished.” This is not a guarantee of a move toward greater democracy or western values, but middle class populations make greater demands for accountable, responsible, transparent governance. Individual empowerment, however, has a darker side that means individuals and small groups will have greater access to lethal and disruptive technologies, “enabling them to perpetrate large-scale violence – a capability formerly the monopoly of states.”

The NIC, which serves as the intelligence community’s center for medium and long-term analysis, does not have a mandate to recommend policy from its findings. That is left to organizations like the Atlantic Council, a Washington-based think tank and public policy group. (Disclosure: I am president of the council and, in its non-government capacity, it has convened many of the global workshops that contributed to the NIC report).

The Atlantic Council’s report – “Envisioning 2030: US Strategy for a Post-Western World,” proposes an approach that starts with President Obama recognizing the magnitude of the moment and the likelihood that his actions now will have consequences that will be felt for generations.

President Obama has been right to focus on “nation-building at home.” U.S. economic and innovative strength is the foundation for any global leadership role. However, even a revitalized U.S. economy won’t be enough to secure the future.

The U.S., with less absolute power, must act more creatively and collaboratively. What one already sees in the Arab Awakening in the Middle East is that national power will compete with new, multifaceted and amorphous networks – enabled by technology and instant communication.

At the same time, the U.S. must safeguard its longest standing alliance, NATO, and its most important strategic asset, Europe, by helping its allies manage the euro zone crisis while promoting a transatlantic free trade, investment and economic cooperation agreement.

The Obama administration must also deepen U.S.-Chinese cooperation, the most important single factor shaping the international system. A broad array of issues are at stake, such as multilateral institutions, the global financial system, the nuclear future, cyber security, climate change and global resource scarcity.

The Obama administration also has an immediate need to address  instability in the greater Middle East, from North Africa to Pakistan, where potential threats include nuclear-armed regional powers, failed nuclear states and terrorists armed with weapons of mass destruction.

Perhaps the most powerful message to President Obama from the NIC report is the following: Getting re-elected was the easy part. How he manages this juncture in human history, a much more difficult task, will determine his legacy.

U.S. President Barack Obama gestures as he delivers remarks on the economy to employees at the Daimler Detroit Diesel plant in Redford, Michigan, December 10, 2012. REUTERS/Jason Reed

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America’s geopolitical gusher http://blogs.reuters.com/thinking-global/2012/11/26/americas-geopolitical-gusher/ http://blogs.reuters.com/thinking-global/2012/11/26/americas-geopolitical-gusher/#comments Mon, 26 Nov 2012 20:29:37 +0000 http://blogs.reuters.com/thinking-global/?p=160 ISTANBUL — Fatih Birol, the International Energy Agency’s chief economist, is not prone to hype. So industry executives listen when he calls the surge of U.S. oil and gas production “the biggest change in the energy world since World War II.”

“This is bigger even than the development of nuclear energy,” said Birol in an interview just minutes after he had briefed dozens of the world’s leading energy players and policy makers over breakfast at the fourth annual Atlantic Council Energy and Economic Summit here on the IEA’s World Energy Outlook 2012. “This has implications for the whole world.”

Where Birol lingered longest in his briefing was on a slide, projected for dramatic effect on a giant overhead screen. It was history by PowerPoint, first showing U.S. energy production through 2030 from conventional sources. That scenario left America as a middling producer requiring imports as far as the eye could see. The next two overlays added shale gas and “tight oil” – products of hydraulic fracking, horizontal drilling and America’s God-given geology. According to IEA projections, the U.S. will overtake Russia as the world’s top gas producer by 2015 and will pass Saudi Arabia as the No. 1 global oil producer by 2017. By 2035 the U.S. is likely to be energy self-sufficient and an exporter of oil and liquefied natural gas. Experts are only now beginning to absorb a gusher of geopolitical consequences.

 

Just when it seemed America’s global influence might be ebbing, the world’s leading military and economic power was adding unconventional energy weapons to its arsenal. The Obama administration – confronting fiscal cliffs, Middle Eastern conflagrations and China’s rise — is only now beginning to understand how to leverage this energy windfall as the president shifts his efforts from re-election to historic legacy.

Those who have despaired about American decline – either relative or absolute — in a world where less democratic and benevolent powers are rising, now hope for an American comeback. Those less inclined toward U.S. leadership worry that this fossil-fuel blessing might reverse the tide toward a more politically humble and environmentally conscious America.

Some of the greatest benefits of the boom could be transatlantic in nature. Several European countries thought to be rich in shale gas resources – Ukraine, Poland, Romania and Bulgaria – have paid a considerable commercial and political price for their continued dependence on Russian gas at a time when a European Union anti-trust action against Gazprom has only deepened tensions. That said, Europe has been slow to embrace unconventional gas and oil extraction; France has a moratorium on fracking, and environmental groups are slowing development elsewhere.

Here’s where concerted U.S. government and private-sector support could pay rich dividends, diversifying Europe’s energy sources and winning new markets for U.S. extractive and environmental technologies. David Goldwyn, a former U.S. State Department special envoy for international energy, wrote in the New York Times that the U.S. “should assist others who want to develop their own resources … by helping their governments put in place the fiscal, environmental and safety regimes necessary to facilitate the growth of robust domestic markets.”

Gulf Arabs are particularly concerned about the potential impact of an energy-self-sufficient America on their interests. Despite Obama administration reassurances, they doubt whether the U.S. will be as reliable a provider of security if its energy dependence shrinks even while risks proliferate: nuclear-fueled Iranian expansionism, simultaneously growing Shiite and Sunni extremism, Egyptian democratic fragility and rising Israel-Palestinian violence.

The IEA projects that U.S. oil imports from the Mideast will decline to virtually nothing over the next decade, while China’s dependence expands rapidly. By 2035, some 90 percent of Mideast exports will land in Asia, the IEA projects. Over time, Beijing will question the wisdom of relying entirely on the U.S. to secure its energy shipping lanes from the Gulf, and U.S. taxpayers will question why they are paying for the Fifth Fleet to do the job. Energy interests have a tendency to redefine military alliances.

Yet the Chinese dimension goes further than that. China has shale gas reserves equal to or larger than those of the U.S., though they haven’t yet been exploited. Following an agreement reached by Obama on his first trip to China in November 2009, the U.S. is helping the Chinese in areas ranging from exploration to environmental protection. At the same time the China National Offshore Oil Corp. is purchasing Canada’s Nexen Inc. for $15.1 billion, an acquisition aimed at acquiring shale gas technology, and other Chinese companies are following suit.

The most immediate impact of the shale-gas bonanza has been on America itself. “Most important, it means that the many people who had written off the U.S. economy have made a big mistake,” says Birol. “The U.S. current account deficit is declining, there will be downward pressure on inflation and the dollar will strengthen.”

As Daniel Yergin wrote in the Financial Times, these new energy sources have created more than 1.7 million U.S. jobs, and by 2020 those numbers could grow to 3 million. New taxes and royalties could amount to more than $110 billion by that time, providing urgently needed resources for cash-strapped governments. At the same time, historically low U.S. natural gas prices, which are a third of those in Europe and Japan, are prompting billions of dollars of investments in U.S. advanced manufacturing – thus fueling a new export economy.

During the U.S. election campaign, Australian Foreign Minister Bob Carr famously said America “was one budget deal away from restoring its global preeminence.” Factor energy into that picture, and President Obama has all the makings for a historically successful second term.

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