Thinking Global

Now that all the high-cost, mud-slinging drama of the U.S. presidential campaign is over, the world can focus on another political transition of potentially greater consequence: China’s 18th Communist Party Congress, which began today.

Don’t be misled by the choreographed orderliness of the moment when China’s new leaders parade on stage in order of seniority; the selection process this time has been marred by the murder of a British businessman and the purge of the provincial party boss Bo Xilai, punctuated by a blind political dissident seeking refuge in the U.S. embassy, and soiled by corruption charges and a New York Times report on the estimated $2.7 billion wealth of Premier Wen Jiabao’s family.

Beyond the unusually public Chinese drama, the ripples from China’s congress, known as Shí Bā Dà — or “the 18th Big” — could be of much greater historical significance even than the re-election of America’s first African-American President. This is because this new generation of Chinese leadership, following the almost certain transition from President Hu Jintao to Vice President Xi Jinping, will be unable to avoid fundamental and structural decisions about the direction of China’s economy, foreign policy and political structure.

It would seem coincidence that two most important global powers of their day — the United States and China — are choosing their leaders only days apart, leaders who will define the world’s most decisive bilateral relationship for the next generation. In truth, the Chinese have controlled the calendar and opted to go second, after toying for some time with the possibility of an early congress. They only announced the date of the congress at end-September.

Given the high stakes and the uncharacteristically public messiness of the run-up to the Chinese congress, it is possible that party bosses reckoned they needed the extra time to ensure order. Perhaps they also concluded that by waiting for all the American balloons to drop, they could draw greater global attention to their transition, and perhaps instill greater discipline among party ranks who had just witnessed America’s 57th peaceful presidential election in 223 years.

Bob Schieffer of CBS News struck the right note when he opened this week’s presidential debate on foreign policy by reminding viewers it was “the 50th anniversary of the night that President Kennedy told the world that the Soviet Union had installed nuclear missiles in Cuba, perhaps the closest we’ve ever come to nuclear war.” He called it “a sobering reminder that every president faces at some point an unexpected threat to our national security from abroad.”

After setting the stage, however, Schieffer missed an opportunity to ask an important follow-up: As commander-in-chief, what lessons would President Barack Obama and Governor Mitt Romney draw from the Cuban missile crisis? Did they agree with Graham Allison — whose Essence of Decision is one of the most popular books on the crisis — that today’s effort to prevent a nuclear-armed Iran is “a Cuban missile crisis in slow motion”? Allison said recently in an NPR interview that we are heading “inexorably toward a confrontation at which an American president is going to have to choose between attacking Iran to prevent it becoming a nuclear weapons state or acquiescing and then confronting a nuclear weapons state.”

The wrong conclusions drawn from the Cuban missile crisis, perhaps the most studied foreign policy event in American history, have misguided U.S. leaders ever since the Kennedy administration.

America’s friends around the globe are watching the presidential elections with a mixture of horror and hope. They are dismayed by the expense, the duration and the self-indulgence of an election campaign that does more to entertain and polarize Americans than to enlighten and galvanize them. Despite that, they hope the U.S. once again will confound its critics and produce the leadership and political will to confront a historic pivot point that is as crucial as World War Two’s immediate aftermath.

It is obvious to me, after recent trips to the Middle East and Europe, that despite all the talk about America’s decline, the world’s thought leaders consider the U.S. vote in November to be of great global significance – even though much of that was absent from President Obama and Governor Romney’s first debate last week.

This significance stems partly from the backlog of crucial issues that is growing too large for any U.S. President to easily manage. More important, however, the election coincides with generational shifts – geopolitical, geo-economic, technological and societal – that add up to the biggest change in political and economic influence and power since the revolutions of the 18th century, which produced America’s rise in the first place.

Abu Dhabi – The United Arab Emirates has always been a good place to watch shifting geopolitical sands. From its days as a pearl-rich, British protectorate in the 19th century to its oil-rich reality today, assured by a robust U.S. defense presence, the region has had many backgrounds.

Now leaders throughout the monarchical states of the Middle East Gulf are bracing for the sandstorm of what they fear may be a “post-Western era.” That is, potentially decades to come of regional upheavals and realignment shaped by reduced U.S. engagement, a dysfunctional Europe and the influence of less-enlightened state actors and emboldened extremist groups.

The past week’s wave of anti-American rage across the Middle East and North Africa has sharpened the reality that the region is facing an escalating double threat: that of a nuclear-charged, expansionist Shiite Iran and the spread of Sunni, jihadist extremism from Somalia to Syria and from Cairo to Benghazi. Particularly troubling are the death of the U.S. ambassador in Libya and the torching of an American-run school in Tunisia. The events took place in two countries where Arab Spring hopes have burned brightest, where U.S. and European engagement has been welcome and where democratic change has been most promising.

In private conversations with visiting U.S. business leaders, Russian officials close to President Vladimir Putin have recently referred to President Barack Obama as “your Gorbachev.” And they haven’t meant it positively.

For the West, former Soviet leader Mikhail Gorbachev was the visionary leader who tackled the economic and political failings of the Soviet Union’s authoritarian system, with Perestroika and then Glasnost, introducing an era that ended Communist oppression, brought down the Berlin Wall, ended the Cold War and expanded Europe’s community of democracies.

For President Putin, who returned to the Kremlin among violent demonstrations last May, Gorbachev’s legacy was national humiliation and Soviet collapse, which the Russian leader has called the “greatest geopolitical catastrophe of the century.” When the members of his inner circle compare Obama to Gorbachev, they betray a conviction that the U.S. is in a state of decline under a leader who is accelerating that trajectory through his efforts at reform.

America deserves better.

If only this year’s presidential candidates were as focused on global competitiveness as are America’s business leaders, the world’s most important economy and democracy would already have become the “Comeback Kid,” portrayed on this week’s Economist cover as a muscle-bound Uncle Sam.

We are witnessing the most expensive and one of the most negative presidential contests in U.S. history. Thus far it is serving little purpose aside from enriching  the advertising industry.

With global economic growth waning, the euro zone imploding and America approaching a fiscal cliff, President Barack Obama and Governor Mitt Romney remain on the low road of ad hominem attacks that badly serve Americans and the world.

To help illustrate Germany’s historic dilemma as it calculates the risks of rescuing Europe, Ronald Freeman, a London banker friend, conjured up an image of Chancellor Angela Merkel as a weary mountaineer leading a perilous rock climb. Still some distance from safety, Merkel alternates between shouting instructions to those hanging behind her on a taut and fraying rope, and wondering whether to take out her knife and cut loose some of the burden.

What Merkel must calculate, says Freeman, a former European Bank for Reconstruction and Development first vice-president, is how to get everyone to the top of Mt. Europe without imperiling herself. “Until Germany agrees to switch from specific and inadequate bail-outs of over-indebted sovereigns to the unlimited back-up that only the European Central Bank can provide, the crisis will not end,” he says, leaving countries like Greece, Spain and Italy dangling below an ambivalent Germany.

Investors last week applauded Germany’s agreement to provide weaker climbers the equivalent of a temporary ledge to stand upon: access to Europe’s permanent bailout fund to provide capital directly to troubled banks anywhere in the euro area. In return, governments agreed to give banking oversight to European authorities so that they could supervise and potentially dismantle banks.

If the euro is saved, the much-maligned power of global financial markets will deserve much of the credit.

The conventional wisdom among many on the intellectual left is that unbridled financial players threaten to destroy the European Union, one of history’s noblest, war-ending projects. The truth, however, is something else. To be sure, speculators lack noble motives, and global capital is a blunt instrument that tends to overshoot. But markets are forcing European leaders to fix their fatally flawed monetary union, a union that can only last with deeper economic integration and greater political (and democratic) legitimacy.

Last weekend’s agreement by Spain to accept a bank bailout, based on a European aid package of $125 billion, is a dramatic case in point. Senior Obama administration officials, in a series of urgent conversations with their European counterparts, warned that Spain posed the possibility of a “Lehman moment,” with global reverberations that no one could predict. If European leaders didn’t demonstrate to markets that they would pool their resources to address the banking meltdown of Europe’s fourth-largest economy, the contagion could have spread, what remained of U.S. and global growth could have evaporated, and the European Union itself would have been endangered.

MADRID – What brought me to Spain during the most threatening week of the country’s recent history was an invitation to speak about one of Europe’s darkest hours a half-century ago, pegged to the Spanish-language publication of my book Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth.

One of Spain’s most senior government officials was quick to make the connection between 1961, when Germany’s postwar division was deepened by the Berlin Wall, and the historic moment today, when a reunified Germany, acting from its most powerful European perch since the Third Reich, will determine whether the continent will be newly divided – this time along North-South lines, with Spain outside the euro. But more sharply, this official – who won’t speak for attribution as he must deal daily with German counterparts – believes Germany’s actions (and, more frequently inactions) have put the euro and the European Union project itself at risk.

It is in that context, he said, that Spain has put forward an urgent plan for a European banking union, complete with a pan-European deposit guarantee fund and banking supervisor. The idea has now been endorsed by the European Commission, European Central Bank President Mario Draghi, Italy, Ireland and others. German Chancellor Angela Merkel has not followed suit. Spanish officials are lobbying hard for this idea because they believe it’s urgently needed, but also because they hope to force Germany’s hand in a manner that would move markets and reverse Spain’s downward spiral. So that his purpose couldn’t be missed, Spanish Prime Minister Mariano Rajoy over the weekend surprisingly called for centralized control of national budgets in the euro zone – teeing up a crucial auction of Spanish treasury bonds this Thursday.

CHICAGO — As measured from President Obama’s re-election campaign perspective – the White House’s litmus test for foreign policy issues through November – last weekend’s G-8 and NATO Summits were bell ringers.  Obama campaign strategists couldn’t have scripted their outcomes better – perhaps because they did script them.

Given the potential for dissent, President Obama could be satisfied that his guests adhered (mostly) to the desired story line. At Camp David, President Obama was the jobs-and-growth champion. In hometown Chicago, with leaders of some 60 countries arrayed around him, he was the president who would wind down an unpopular war. (That his Chicago White Sox trounced the Cubs during NATO Night at Wrigley Field, in a game that opened with an honor guard carrying flags from the 50 countries engaged in Afghanistan, was an added benefit.)

The only problem with this pretty picture is that getting the campaign message right is a long way from getting the world right. What really connected the G-8 and NATO meetings was a growing realization that the biggest threat to the alliance – and, for that matter, to Obama’s re-election hopes – is the euro zone crisis. That risk comes at a time when U.S. debt and political dysfunction makes the West far less resilient. So for all the talk in Chicago about common purpose in Afghanistan, NATO’s most existential danger now comes from within, and its root causes are economic.