Saturday, June 30, 2007

David and Gordon: New British Prime Minister and the Atlantic Alliance

Former Prime Minister Tony Blair has stepped down on 27 June. Chancellor of the Exchequer Gordon Brown has succeeded Blair’s position.

Who is Gordon Brown? Let me review his personal history briefly. He is very smart and well versed with economic policy. At the age of 16, he was admitted to enroll the University of Edinburgh, a top college in Scotland from where Charles Darwin and Arthur Conan Doyle graduated. As a member of the Blair cabinet, he was the No. 2 and chief economic policymaker. Britain has been enjoying booming economy since Tony Blair took office. Today, its per capita GDP is above that of Japan’s. Through his economic policy, Britain can satisfy both ends meet: American styled open and flexible markets and European commitment to social safety net (“Britannia Redux”, February 1, The Economist).

As a politician, Gordon Brown no star appeal as Tony Blair does. He is good at striking a subtle balance rather than trumpeting idealistic values (“Brown May Loosen Ties to Bush”, May 11, Washington Post). This is traditional to British leaders from Elizabeth Ⅰ, William Pitt the Elder and the Younger, to the Marquess of Salisbury. Britain succeeded in managing power games among European Great Powers. However, good sense of balance does not always help this job. Arthur Balfour was smart, but did not have convictions.

Some British Prime Ministers played a leading role to prevail universal ideals throughout the world, such as Lord Palmerston, the Earl of Rosebury, Winston Churchill, and Margaret Thatcher. Consistency is very important to be a great leader, as well as sense of proportion. Sometimes, Gordon Brown is criticized for inconsistency, as seen in the debate on nuclear possession. In the past, he was a leading advocate for British denuclearization. Today, as a member of New Labour cabinet, Brown supports Trident replacement for continual nuclear deterrence.

Gordon Brown defeated a hard left candidate John McDonnell for Labour leadership. However, this does not necessarily mean that centrist New Labour is deep rooted. Soft left rebellions against Blair’s public service reform reflect sentiments among Labour MPs in general, according to the Economist (“How much is Left the Left?”, May 17). As it happened in the Trident debate, they constrain Brown’s leadership within the party.

With Brown’s some weakness, can the Conservative Party roll back under David Cameron? He has not articulated his policy stances, although Norman Lamont, Chancellor of the Exchequer under the Thatcher administration urged him to do so. As I mentioned in a previous post, “Green Conservatism”, David Frum at the American Enterprise Institute criticizes Cameron’s policy, and label it “empty conservatism.” Actually, Cameron is nicknamed David the Chameleon, because of his inconsistency. Cameron explored election partnership with leftist Liberal Democrats, just in order to defeat Labour majority. In the Old Testament, David won against Goliath. In real politics today, Gordon is in much better position than David.

Speaking of foreign policy, I need to say another David, new Foreign Secretary David Miliband. BBC comments that Miliband’s critical stance to the Iraq War and commitment to greenhouse gas reduction implies that Brown will not likely to act closely with the Bush administration as Blair did (Profile: David Miliband, 28 June). But I don’t think it matters so much, because no one knows who the next US president is. As Britain shares vital agendas with the United States, such as missile defense in Europe and R & D of the Joint Strike Fighter, it is unlikely that the new administration undermine this relationship. Rather, it is noteworthy that BBC mention the appointment of Secretary Miliband suggests Brown’s willingness to explore closer ties with Asia and Africa.

Brown will be prudent enough not to provoke negative sentiments with the United States by suggesting early withdrawal from Iraq. He is regarded as Euro-skeptic, because of his stance against single European currency and Brussels legal authority on criminal justice, according to the Economist (Gordon Brown and Foreign Affairs, June 14). To the contrary, Dick Leonard, former Member of Parliament and columnist of the European Voice, argues pragmatist Brown will commit to Europe furthermore in order to defend vital British interests (Foreign Policy Centre, Article 371).

Gordon Brown is expected to play crucial roles between America and Europe. Issues range from Iraq, Iran to common European security. Also, his policy to Asia and Africa needs more attention. In domestic politics, Cameron’s Conservative Party will not pose much challenge to new prime minister for the time being. Can Brown manage soft lefts within the Labour Party? For Britain and the World, everything remains to be seen.

Sunday, June 24, 2007

At Tokyo Legal Affairs Bureau

As I mentioned in a previous post, entitled “At Tokyo Metropolitan Government Office”, I am considering seriously establishing a formally accredited advocacy group. I went to the Metropolitan government again, since then.

At first, I thought of applying for the status of “special non-profit incorporation”, which is the standard category for non-profit organizations. However, Metropolitan government officials told me that my objective of founding an advocacy group is too political. Usually, they say, welfare-oriented organizations are likely to be accepted for special non-profit incorporation by Metropolitan government executives. Most of civic organizations for public interest focus on non-political agendas, like human rights, gender, environment, empowerment, development, and so forth.

Instead, they advised me to apply for “intermediate incorporation”, which is between “special non-profit incorporation and foundational incorporation. In this case, it is not necessary to have 10 signatories. Nor, do I have to host a general assembly to establish the incorporation. Everything is quicker and easier than establishing a special non-profit incorporation.

In order to consult more in detail about intermediate incorporation, I went to the office of Tokyo Legal Affairs Bureau near my residence. I do not have a law degree, thus, administrative procedure is extremely complicated. I come across many technical jargons. I would like to manage these difficulties, and succeed in establishing an intermediate incorporation, in order to reinforce advocacy activities.

Sunday, June 17, 2007

Carnegie Report on Economic Growth and Rural Society in China

Today, I would like to review a recent report on Chinese economy and its rural society, released from the Carnegie Endowment for International Peace. This report, entitled “China’s Economic Fluctuations and Their Implications for Its Rural Economy”, is written by Senior Associate Albert Keidel, in collaboration with Dr. Liu Jianxing of the International Cooperation Center in National Development and Reform Commission, China. This is a considerable advantage of this report, because China is so gigantic, old, and complicated that it is difficult to understand this country solely from American, Japanese, or European point of view.

According to this report, China’s economic growth is driven by domestic demand, even though its trade surplus has expanded rapidly. Also, Keidel says that Chinese economic policy has systematically disadvantaged rural society. Let me review this report more in detail.

This Report discusses the history of Chinese economic policy since the post-Mao era. After Mao Zedong had passed away in 1976, President Hua Guofeng made the post-Mao strong investment program. In 1978, the Chinese government launched market reforms, international openings, and agricultural price reforms. Keidel’s report focuses on analysis of the causal relations behind China’s economic cycles since the 1978 reform and its implications to rural economy, rather than policy recommendations.

Albert Keidel points out that Chinese economy has been experiencing the cycle of fast growth and slow growth phases since then. Unlike other rapidly developing East Asian economies, China’s economic growth has been driven by domestic expansion. During the period of “dot com” boom of US economy in late 1990s, China suffered from slow growth. On the other hand, China enjoyed rapid growth in 2002 when the United States and export-oriented Asian economies slowed down. Trade and Foreign investments are important to transfer foreign technologies and management skills into China, but they are not engine for its economic growth.

The report has four chapters. Chapter 1 introduces basic economic cycles. With graphical set panels, readers can compare basic trends and fluctuations of fast growth and slow growth phases. Chapter 2 talks of methodology to explain origins of economic cycles. With this methodology, Keidel investigates macroeconomic cycles thoroughly in Chapter 3.

Based on statistical and historical evidence, the author tells that China’s 30 year economic expansion cannot be explained by foreign investment, trade, or other external factors. Albert Keidel classifies the phase as the following.

1978 ~ 1982: Post-Mao Spending, Price Reform, and Restructuring
The combination of overly ambitious investment programs, a border war with Vietnam, and rural reforms raising agricultural prices played the dominant roles in first-fueling overheating. Then, official reaction to overheating brought on the slow period, using reductions in government spending and administrative investment cutbacks. Drought and crop failure in northern China had no overall significant national impact.

1983 ~ 1987: Land Reform and New Factory Management
The period exhibits overheated growth, monetary expansion, inflation, and subsequent sharp credit tightening along with other administrative measures to cool off the economy. As becomes increasingly the case in later cycles, the independent power of market forces and sources of macroeconomic instability grow in significance compared with the direct influence of government and Communist Party policy.

1987 ~ 1990: Inflation, Bank Panic, Credit Cutoff, and Severe Slump
Unexpected economic market forces made the cyclical extremes much more serious. Inflation this time, however, in 1988, was more severe than earlier bouts in the reform era, and it provoked an energetic late-1988 program to cut credit for investment and bring inflation down in a two-year period, targeting 1989–1990. The tightening was particularly unpopular in urban areas, requiring strenuous implementation in 1989. By late 1989, output had slumped; and by 1990, both output growth and inflation were low. In late 1990, with the two-year target period over, the top leadership made the decision to reinvigorate the economy. Despite the cycle’s short duration, its various fluctuations had been severe.

1991 ~ 2000: Urban Price Reform, Layoffs, and Growth Slump
This phase is perhaps the most interesting for exploring cycles themselves and the role played by domestic demand, including household consumer demand. It witnessed the explosion in FDI starting in the early 1990s, conclusion of the earlier incomplete price reforms, a severe bout of overheated inflation (1993–1994), a delayed boom in rural China, and then dramatic enterprise reforms and layoffs in the later 1990s. Rural participation in the cycle was also fundamental, but it will be the subject of additional analysis in the remainder of the report.

2001 ~ 2005: SARS Investment Boom and Export Surge
The 2001-2005 surge is still continuing today. As shown in figure 3.13 on page 50, the combination of domestic and foreign demand contribution to GDP articulates that China’s economic expansion is not export-oriented. Keidel suggests that domestic capital formation can be responsible for rapid economic expansion today. In his analysis, neither domestic consumption nor domestically sourced investment accounts for rapid growth in 2001. He estimates that increase in inventories caused high growth. Though SARS epidemic hit the economy in 2003, the Chinese government overcame the crisis by stimulating investments.

In Chapter 4, the author argues that the role of rural economy is beyond providing food, raw materials, and inexpensive labor. He discusses this from the following points.

1. Does the rural economy have an independent dynamism of its own?
2. Has the impact of China’s fast and slow periods since 1978 been more difficult for the rural economy than for the rest of the country?
3. How much did national and urban policies and fluctuations directly cause fluctuations in the rural economy?
4. Did the rural economy have its own independent influence on the national economy?

Having reviewed these questions, Keidel concludes that rural economy was a passive responder to national economic policy until 1990s when it began to exert some independent stimulus on national trends. A failure to appreciate the role of rural economy can result in, or has resulted in excessive macroeconomic volatility as it happened in 1990s. Keidel insists that Chinese leaders learn from this lesson.

Albert Keidel is a professional economist who has worked for US Treasury and World Bank Office in Beijing. This report is recommended for those who have advanced knowledge in economic policy. Cool headed analysis and well arranged charts are helpful to understand Chinese economy in depth.

Sunday, June 10, 2007

US Foreign Policy after George W. Bush

As the presidential election is coming next year, Foreign Affairs publishes a special series of articles, entitled “America’s Next Foreign Policy”, in July/August issue. Republican candidate Mitt Romney and Democrat candidate Barack Obama contribute essays to this series. Despite the Iraq divide, both Republican and Democrat leaders believe that the United States assumes the special role for world peace and security. Let me review articles by both presidential candidates.

In the article, “Rising to a New Generation of Global Challenges”, Republican candidate Mitt Romney insists that Americans must overcome the Iraq divide, and the whole nation unite for bold action to make a strong America and a safer world. Also, Romney insists on revitalizing relations with US allies. He discusses the following points.

Regarding foreign policy divide in Washington, Romney says it is meaningless to label some groups idealistic “neoconservative” and others prudent “realist.” Neoconservatives understand necessity of reality grounded policymaking, while realists admit US soft power stemming from its values and ideals. He argues that the Unites States and its allies must shape global strategy based on common understandings to resolve new generation challenges, without biases of specific ideologies.

Today, the world faces new challenges, including terrorism, nuclear proliferation, authoritarian leaders, epidemics like AIDS, the rise of China, and so forth. Romney argues that the United States be actively involved with managing these challenges as leaders in World War Ⅱ and the post war era did. He mentions extensively on threats posed by Islamic radicals, and warns that failure in defeating them in Iraq and Afghanistan will invigorate terrorists. As to the Iraq debate, Romney says “we cannot let current polls and political dynamics drive us to repeat mistakes the United States has made at critical moments of doubt and uncertainty about our role in the world. Twice in the last several decades, following the end of U.S. military involvement in Vietnam and the end of the Cold War in the 1990s, the United States became dangerously unprepared.” For new challenges, Romney maintains the following four points.

First, Romney insists on more spending on defense, at least 4 % of GDP. He criticizes massive military cut under the Clinton administration, by quoting Charles Krauthammer’s comment that we took a holiday from history. The United States must be well-prepared for extensive operations against terrorists and dangerous states throughout the world. In order to maintain strong military power, the United States should boost its economy through smaller government, better welfare system, more investment in R & D, and free trade promotion. Also, values and moral leadership are important, he insists.

Second, Romney insists on energy independence from oil producing states like Iran, Russia and Venezuela. Energy independence will require more efficiency in energy use and R & D for alternative energy source. Romney says this will be a great help for national defense, foreign policy, economy, and the environment.

Third, Romney argues that the United States improve its civilian capability to design and implement security policy beyond bureaucratic sectionalism. The Goldwater-Nicolas Act in the Reagan era enabled US military to act effectively under joint commands. Civilian sectors need the same level of reform.

Fourth, Romney insists on revitalizing the alliance to meet 21st century challenges. He understands why Americans are skeptic to multilateralism. For example, UN Human Rights Commission condemns democratic Israel, while keeps silent on repressive regimes in Cuba, Iran, Myanmar, North Korea, and Sudan. But this sort of incapability to manage new generation challenges does not legitimate go it alone policy. Instead, Romney argues that the United States push reforms in such organizations. Also, he says, Americans need to work with Muslim friends to defeat Islamic radicalism.

In conclusion, Romney advocates that America keep involved with world peace and security, despite continual hardships in Iraq. As Simon Perez commented, the United States is a unique nation without taking land from Germany and Japan. No other nations can assume the leading role to manage challenges in this century.

On the other hand, in “Renewing American Leadership”, Democrat candidate Barack Obama insists that America explore common security for common humanity, and move beyond Iraq, in order to renew American leadership in the world. Just as Mitt Romney, Obama lauds American leaders during the wartime and the postwar era. However, he criticizes the Bush administration’s approach to post 9/11 world, because it responded to unconventional attack by terrorists with conventional thinking of state-centric military solutions. As a result, he argues that current administration wastes dollars and manpower in the War on Terror. Therefore, he insists on renewing American leadership in the world. For this purpose, Obama says that the United States must bring the Iraq War to a responsible end. As the United States cannot impose a military solution to religious and ethnic conflicts in Iraq, Obama insists that it should apply the pressure of phased withdrawal of troops to local stakeholders. Eventually, he says that only Iraqis can manage their own problem.

Also, the United States must make a broader security framework of the Middle East. Obama advocates US-Iranian talks while sponsoring Iranian civil societies and preventing nuclear proliferation. He insists on US initiatives for Israeli-Palestinian peace dialogues. Also, Obama argues that the United States need to pressure Syria to move toward moderate direction. To renew American leadership in the world, Obama sets the following agendas.

First, the United States must revitalize military power. US forces must be well prepared for various global operations. Simultaneously, Obama talks of smart use of military power, and he does not hesitate to send troops if necessary. Although he is ready to act beyond self-defense, he stresses the need for multinational action as Bush Senior did in the Gulf War. He criticizes current Iraq War from this point.

Second, the United States must lead to stop nuclear proliferation, which poses an immediate threat to the global community. Obama is concerned with terrorist attack with nuclear bombs. To prevent such a disaster, he insists on close partnership with Russia, though he believes in strong push for liberal democracy against Kremlin. Furthermore, he says global coalition against Iran and North Korea is necessary.

Third, in the combat against global terrorism, Obama emphasizes how important it is to refocus US policy on Afghanistan and Pakistan where Al Qaeda activists lurk. He is willing to endorse Indo-Pakistani dialogues and extensive security framework from Central Asia to the Indian subcontinent. In addition to military measures, Obama insists on comprehensive terrorist strategies such as empowering citizens.

Fourth, Obama talks of rebuilding the alliance, and making it more effective partnership. The alliance should transform from a Cold War security structure into a partnership for peace. Also, Obama insists on effective partnership with emerging powers like Brazil, India, and South Africa.

Fifth, Obama advocates America’s commitment to building secure democratic societies, which is common goal of human-beings. Poor societies and failed states are breeding grounds for disease, terrorism, and conflicts, he says. Therefore, Obama regard it as America’s national security interest to curb poverty, promote welfare, and assist democracy in such societies.

Through these ways, Obama argues that America must restore trust from its allies and the global community.

Mostly, both candidates share common agendas and understandings on US foreign policy for the next term. There are some gaps in evaluating Iraq policies, but both Romney and Obama endorse American leadership in the world. More importantly, both candidates are on the track of the Bush legacy after 9/11. Right or wrong, George W. Bush has set the direction of US foreign policy in this century. America has come back from historical holidays under the Clinton administration. Whoever comes next, the President cannot escape from the Bush legacy. America must be involved with world affairs. America should not repeat the same mistake as it did after the Vietnam War. No more Jimmy Carter after the Iraq War.

Monday, June 04, 2007

Britain and America after Tony Blair

British Prime Minister Tony Blair is on his final global tour, now. He will step down on June 27, and Chancellor of the Exchequer Gordon Brown is likely to succeed the position. Will Blair’s legacy continue in the next administration? I would like to review Tony Blair’s political achievements. Also, I have to mention this: contrary to popularly believed, Blair is not a poodle to Bush, but he acted out if his own conviction.

In order to assess Tony Blair’s political achievements in general, I would like to refer to two articles in the Economist, entitled “The Great Performer Leaves the Stage” and “Tony Blair’s Farewell” on May 10. It is widely believed that Tony Blair’s New Labour is Tory in disguise. However, Blair has a background of urban middle-class and baby boomer, and his supporters are hostile to Tory establishments. In domestic policy, Blair succeeded in shedding the reputation Labour incompetence to govern. The economy has boomed, and the Blair administration succeeded in creating jobs and reducing unemployment. Also, Blair admitted autonomy to Scotland and Wales. As the Economist says, his achievements in domestic policy deserve credit.

Blair’s economic and social policy owes much to Margaret Thatcher. He improved public services through market-oriented competition, which won a widespread support among the middle class. Both Chancellor Gordon Brown and Conservative Party leader David Cameron are likely to imitate Blair’s Thatcherite social and economic policy. His New Labour was not so new in Britain, because Blair was not required to change British politics and society unlike Margaret Thatcher and Clement Atlee.

It is foreign policy that makes Blair’s performance controversial. Particularly, some media and left-wingers attack Britain’s commitment to the Iraq War, and they scorn Tony Blair a poodle to George W. Bush. Apparently, they do not understand fundamental ideas of Blair’s liberal interventionism. Also, it is necessary to think about his role in Iraq.

Regarding liberal intervention policy under the Blair administration, Mark Leonard, Director at the European Council on Foreign Relations, pointed out the following at the event which was sponsored by the Foreign Policy Centre and the Prospect, and chaired by Michael Portillo, former Defence Secretary in the Major administration.

Blair shares the European attachment to a rule based world order, but I think he knows that in order for it to work, that order has to be underpinned by power, and the only power that can do that at the moment is American power. Therefore the legitimacy of that world order is umbilically tied to the legitimacy of the United States which means that if the American government wants to undertake an action which is destabilizing, Europeans are faced with two very stark choices: either you stand aside and condemn it and thereby undermine the legitimacy of the internationalist project which is sponsored by the United States, or you support it and try to apply it with at least fig leaf of legitimacy and then try behind the scenes or in front of the camera to eliminate the most erogenous bits which you don’t want to be associated with or you think will do the most damage. Put like that the answer for Britain the past has always, always, been to go along with the Americans. If you keep the question in that form, the answer for Blair will almost certainly be to still go along with the Americans. (“Liberal Intervention: The Empire’s New Clothes”, p. 18, 26 July 2003)

Leonard refuted popularly believed idea that Blair joined US-led Iraq War just in order to bolster Britain’s position in the world through forging the alliance with the United States. Rather, Prime Minister Blair was motivated by the above mentioned principle.

In addition to what Leonard mentioned at the panel, Britain has been involved with global peace and security beyond its own national interest, which is based on liberal imperialist tradition by Lord Palmerston and Earl of Rosebery.

Richard Perle, Resident Scholar at the American Enterprise Institute, points out that Tony Blair played much more important role than just acting with George W. Bush in the Iraq War and the War on Terror. He says that Blair has been frequently ahead of Bush in designing strategies against terrorism. This is apparent in his speech at the Foreign Policy Centre. As mentioned in “In the News.” (Blair: Global intervention is vital, 21 March, 2006), Blair insists that the fight against terrorism and extremism is beyond the clash of civilization but a threat to the global community. Tony Blair articulates that this is the ultimate reason why he decided to intervene into Iraq and Afghanistan.

Also, Perle mentions that Blair urged Bill Clinton to send troops to Kosovo as it was necessary to resolve the problem by force. This is what happened between Margaret Thatcher and George H. W. Bush in face of Saddam Hussein’s invasion to Kuwait.

Certainly, Blair acted with Bush to topple Saddam Hussein. However, Blair insisted on fighting against Iraq under UN resolution, while Bush was reluctant. Tony Blair has been acting with his own conviction, but poorly informed critics miss this point quite often.

Those who regard Blair a blind follower to the United States must keep Richard Perle’s comment in mind: “The interactions of British and American foreign policy are far more complex and subtle than Blair's critics imagine.”

At this stage, it is difficult to tell how Britain’s relationship with the United States will change under Gordon Brown. He has extensive personal contacts in American political corridors. His personal network ranges from Republican Paul Wolfovitz to Democrat Edward Kennedy. However, the Washington Post warns that bilateral relations could tone down in the article, entitled “Brown May Loosen UK Ties to Bush” on May 11. Mark Leonard commented "The Labor Party does expect some clear blue water between Brown and Blair in order to start the healing process after Iraq, but Brown will have a subtle balancing act in the near term. He's not going to be a poodle; he is going to assert British interests. But there will be no open breach with the White House."

According to Professor Anthony King at the University of Essex, Gordon Brown is not the man of idealism, and “His pronouncements on Iraq are deliberately vague; you're not meant to know what he thinks. He makes the Sphinx look voluble."

On the other hand, Opinion Journal presents more optimistic viewpoint, saying that “A strong Britain is vital to both Europe and America. As much as Continentals don't like to hear it, the British economy is a model for the European Union.” The article concludes as the following.

London will also remain Washington's most trusted interlocutor with the Old World. For all the anti-Americanism in the British press, Britain is still spiritually closer to the U.S. than Angela Merkel's Germany or Mr. Sarkozy's France. The popular branding in Britain of Mr. Blair as President Bush's "poodle" willfully misrepresents the bipartisan esteem for the special relationship in Washington.

Thanks to Gordon Brown's reticence, no one knows how well he'll meet this challenge. He did have an excellent instructor for the past 10 years, assuming Mr. Brown was paying attention.
(“Britain after Blair”, Opinion Journal, May 10)

For success in the war against terrorists and tyrants, it is vital to maintain staunch Anglo-American alliance. Therefore, I would like to talk about Chancellor Gordon Brown and his rival David Cameron more in detail in a forthcoming post.