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Alan Isenberg
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We've been down this road before: A crisis threatens global security, and the international community is not coming together to deal with it. Hawks in the U.S. administration see the Europeans as too timid to use force and reliant on diplomacy to a fault, while many Europeans see the United States as trigger-happy and too impatient with negotiated settlements. This lack of cohesion damaged the legitimacy of the American-led war in Iraq and left U.S.-European relations in tatters. A similar disunity jeopardizes current attempts to manage Iran's nuclear aspirations, even though both sides agree that the threat posed by a nuclear Iran is grave and real.

Departing Deputy Secretary of State Richard L. Armitage positively spun the divergent U.S. and European approaches to Iran: "The [diplomatic] incentives of the Europeans," he said, "only work against the backdrop of the United States being strong and firm on this issue. In the vernacular, it's kind of a good cop/bad cop arrangement. If it works, we'll all have been successful." The problem with Armitage's hopeful outlook is that the good cop/bad cop strategy works only if pursued consciously and in coordination, and the U.S. and European approaches do not reflect that yet. In fact, they seem headed in opposite directions.

The good cops--Britain, France and Germany--recently persuaded Iran to suspend all uranium enrichment-related activities until they reach a final accord. If the mullahs cooperate, they will receive numerous economic carrots, including possible membership in the World Trade Organization (the U.S. would have to agree) and improved trade relations.

In October 2003, when the International Atomic Energy Agency was prepared to take its negative report on Iran's nuclear program to the U.N. Security Council, the mullahs cut a similar deal with the Europeans, promising to suspend all enrichment-related activities. But Iran soon grew impatient with the agreement and resumed efforts to produce the gas that feeds uranium enrichment. It similarly rushed to make as much of that gas as possible before the latest accord's deadline, undercutting confidence in the deal on both sides of the Atlantic. In another bad-faith move, Iran announced last week that it wanted to keep operating uranium-enrichment equipment for research purposes, backing off its pledge to freeze all such activities.

Enter the bad cop--the United States. It has pushed to refer the question of Iran's nuclear aspirations to the Security Council. When Secretary of State Colin L. Powell steps down, the hawkish voices in his department will probably intensify and gain influence, especially if the mullahs break the newest deal.

Armitage might be right that the discordant U.S.-European approaches will push the mullahs to hold to the deal. But the U.S. will be uncomfortable with an agreement that does not insist on any means of enforcement or verification, as is the case with the latest accord.

Iran knows that the war in Iraq colors U.S. conduct toward it. The worse Iraq gets, the less Iran worries--and the mullahs don't seem too worried at the moment. But if they break the accord with the Europeans and the Europeans respond timidly and U.S. resources are freed up as a result of an improving situation in Iraq, the U.S. could take on Iran alone--to everyone's detriment. To avoid this risk, the U.S. and Europe need to harmonize their approaches and develop a coordinated strategy for Iran. The best way to accomplish this is to agree in advance on the consequences Iran will face if it violates its commitments. For example, if the mullahs renege on the latest deal, frustrate the monitoring and verification efforts of IAEA inspectors or fail to ratify an addition to the Nuclear Non-Proliferation Treaty that allows for more invasive inspections, the U.S. and Europe should go to the Security Council, impose economic sanctions or, in the worst case, take military action.

Fortunately, diplomatic disunity over Iran does not run as deep as it did over Iraq, where even the nature of the threat was a bone of contention. Both the U.S. and Europe are worried about a nuclear Iran, and they feel strongly about enforcing the rules of nonproliferation. In June 2003, European foreign ministers required only 45 minutes to approve a document that endorsed U.N.-sanctioned use of force as a last resort against proliferators, as well as "political and diplomatic preventative measures."

If the Europeans agree to leave all responses on the table and to act decisively at the first sign of Iranian mischief, the United States would be foolish not to form a partnership with them. (It's also important that the U.S. set a better example as a member of the nonproliferation community by abandoning plans to build new mini-nuclear weapons and ratifying the Comprehensive Test Ban Treaty.)

The role the U.S. forges for itself in dealing with Iran will have significance beyond reinvesting in international order or responding to the mullahs' nuclear ambitions. Iran's despotic regime will collapse some day, and there will be a "morning after" similar to that in Iraq, where reconstruction efforts have floundered because U.S. planners underestimated the challenge of nation-building and the need for international support to make it work. When Iran makes its move toward a better government, the U.S. should be in a position to lead a coherent, collective international effort to help it get off the ground.

Yet since the severing of U.S.-Iranian ties in 1980, the U.S. has been slack in developing a viable Iran policy. Iran's nuclear ambition should be motive enough to reverse this inattention. U.S. policy toward Iran must cease to be reactive, as it is now.

In addition to working with the Europeans to curb the mullahs' nuclear efforts, the U.S. should begin crafting a strategy to work toward--and then with--a democratic Iran. Supporting a government that complies with its international obligations is certainly preferable to containing one that thwarts them. By getting involved now, the U.S. can do much to show Iranians that it will be a friend to a free Iran. A democratic Iran may still want a nuclear bomb as a matter of national pride. But a less threatening, pro-diplomacy U.S. would be in a stronger position to argue the benefits of membership in the nonproliferation community rather than life as a rogue power.

Participating in a multilateral approach to Iran's nuclear program is a great place to start. In doing so, the U.S. will signal to Iranians that its aggressive position does not reflect a desire to remake Iran in its own image but rather a desire to achieve, alongside Europe, a substantial victory for nonproliferation and international security.

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"Taiwan's Democratization, American Democracy Diplomacy and China's

Democratic Future"

Sheng-Chung "Jeffrey" Hsiao, Shorenstein APARC Visiting Fellow from the Ministry of Foreign Affairs, Taiwan

and

"A Rhetorical Analysis of U. S. Foreign Policy Towards Taiwan"

Pingshen "Benson" Wang, Shorenstein APARC Visiting Fellow from the Ministry of Foreign Affairs, Taiwan

Okimoto Conference Room

Sheng-Chung "Jeffrey" Hsiao APARC Visiting Fellow from the Ministry of Foreign Affairs Taiwan
Pingshen "Benson" Wang APARC Visiting Fellow from the Ministry of Foreign Affairs Taiwan
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Richard Bush is a Senior Fellow at the Brookings Institution and Director of its Center for Northeast Asian Policy Studies. The Center serves as a locus for research, analysis, and debate to enhance policy development on the pressing political, eco-nomic, and security issues facing Northeast Asia and U.S. interests in the region.

Bush came to Brookings in July 2002, after serving almost five years as the Chairman and Managing Director of the American Institute in Taiwan (AIT), the mechanism through which the United States Government conducts substantive relations with Taiwan in the absence of diplomatic relations.

Dr. Bush began his professional career in 1977 with the China Council of The Asia Society. In July 1983 he became a staff consultant on the House Foreign Affairs Committee's Subcommittee on Asian and Pacific Affairs. In January 1993 he moved up to the full committee, where he worked on Asia issues and served as liaison with Democratic Members. In July 1995, he became National Intelligence Officer for East Asia and a member of the National Intelligence Council (NIC), which coordinates the analytic work of the intelligence committee. He left the NIC in September 1997 to become head of AIT.

Richard Bush received his undergraduate education at Lawrence University in Appleton, Wisconsin. He did his graduate work in political science at Columbia University, getting an M.A. in 1973 and his Ph.D. in 1978. He is the author of a num-ber of articles on U.S. relations with China and Taiwan, and of At Cross Purposes, a book of essays on the history of America's relations with Taiwan.

Co-hosted with the Hoover Institution.

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Richard C. Bush Senior Fellow and Director, Center for Northeast Asian Policy Studies The Brookings Institution
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%people1%, a postdoctoral fellow at the Center for International Security and Cooperation, won the American Political Science Association's 2004 Helen Dwight Reid Award for the best doctoral dissertation in international relations, law and politics. Kinsella received the award at the association's annual meeting Sept. 2-5 in Chicago. Her dissertation, The Image Before the Weapon: A Genealogy of the "Civilian" in International Law and Politics, examines the ways in which Western societies have distinguished civilians from combatants during key periods of armed conflict from the 11th to 20th centuries. One of Kinsella's important findings, as the award committee noted, is "that the laws of war have, from their very origin, served as much to justify war--to make it morally possible, and even to claim the moral high ground for one's side--as to limit it." Kinsella concluded her dissertation with a discussion of its relevance to recent U.S. actions and rhetoric toward Iraq.
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Gayle Smith is a renowned expert on African politics and economics. She has worked on failed states, post-conflict management, and transnational threats in Africa for over 20 years. She served as Special Assistant to the President of the United States and Senior Director for African Affairs at the National Security Council under the Clinton Administration. Smith negotiated a ceasefire between Uganda and Rwanda in 1999 and won the National Security Council's Samuel Nelson Drew Award for Distinguished Contribution in Pursuit of Global Peace for her role in the negotiated peace agreement between Eritrea and Ethiopia. She has travelled extensively in active war zones and published pioneering analyses of political emergencies and humanitarian interventions in Africa in particular.

Encina Basement Conference Room

Gayle Smith Center for American Progress
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Australian Prime Minister John Howard's government has strongly reaffirmed the ANZUS (Australia-New Zealand-US) alliance and his country's cultural ties to Europe. Critics have replied that these policies impede the development of Australian relations with Southeast Asia, especially now that the US is so unpopular in much of the region. How valid is the critique? And how will likely trends in Southeast Asia and the outcome of the American presidential election affect Australia's search for a balance between its proximity to Asia and its alliance with America? In addition to addressing these questions, Dr. Engel will argue that in making foreign policy, identity politics need not be sacrificed to or precluded by pragmatic interest. In Southeast Asian international relations, rhetoric and realism hardly rule each other out.

Dr. David Engel's responsibilities at the Australian Embassy in Washington include policies toward Southeast Asia. He has directed the Indonesia section of the Department of Foreign Affairs and Trade (2001-03) in Canberra, served in Jakarta (1998-2001) and Phnom Penh (1993-95), and worked on Australia's relations with Vietnam and Laos as well. He received his PhD from the University of Edinburgh in 1989.

This is the Forum's 1st seminar of the 2004-2005 Academic Year

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David Engel Political Counselor Embassy of Australia, Washington, D.C.
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C. Kenneth Quinones has been involved with Northeast Asia since 1962 as a soldier, scholar and diplomat. He has lived and worked in South and North Korea; ten years in the South and nearly one year in the North, and in Japan for three years. As a U.S. dip-lomat, he witnessed South Koreas struggle to democratize during the 1980s and then, during the 1990s, played a role in the opening of North Korea to the outside world. After retiring from the U.S. Foreign Service in 1997, he worked with U.S. humanitarian organizations to arrange educational and agricultural exchanges between the United States and North Korea.

Dr. Quinones is the director of Korean Peninsula Programs at the recently organized International Action (successor to International Center), a non-profit Washington, D.C. research institute. He recently organized a new forum on the internet, the International Forum for Innovative Northeast Strategy, to encourage international dialogue about innovative strategies to promote a durable peace in Northeast Asia.

A buffet lunch will be available to those who RSVP by 5:00 p.m., Monday, November 1 to Debbie Warren at dawarren@stanford.edu or at 650-723-8387.

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C. Kenneth Quinones Director Korean Peninsula Programs, International Action
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Former U.S. Secretary of Defense Robert McNamara urged the elimination of nuclear weapons, in an address to CISAC members and supporters Oct. 18 at Encina Hall. Human infallibility introduces too much risk in maintaining nuclear weapons, he argued, adding that the weapons do not present a viable military strategy in any event.

Forty-two years ago this week, the United States and the Soviet Union came within a hair's breadth of unleashing nuclear destruction upon one another during the Cuban missile crisis, Robert McNamara, defense secretary under the Kennedy and Johnson administrations, recounted to scholars and others gathered at a dinner Oct. 18 organized by the Center for International Security and Cooperation.

In post-Cold War meetings between principal players in the crisis, including Soviet generals and Fidel Castro, it became clear that the decision-making process of all three governments had been distorted by misinformation and misjudgment, he said. "Events will always slip out of control," McNamara said as he repeated one of the lessons delineated in the 2004 documentary Fog of War: The indefinite combination of human fallibility with nuclear weapons leads to human destruction. "The only way to eliminate the risk is to eliminate nuclear weapons," he said.

The current weapons policy of the United States and the North Atlantic Treaty Organization is folly, the 88-year-old McNamara said. In 45 years of working on nuclear weapons issues, "I've never seen a document outlining a plan that shows how we would benefit by using nuclear weapons," he said. To use such weapons against a nuclear state is suicide, to use them against a non-nuclear state would be politically unwise and morally repugnant, he added.

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Authors
Ronald I. McKinnon
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Are federal fiscal deficits accelerating deindustrialisation in the United States? APARC's Ronald McKinnon considers the problem.

Are federal fiscal deficits accelerating deindustrialisation in the United States? For four decades, employment in U.S. manufacturing as a share of the labour force has fallen further and faster than in other industrial countries. In the mid-1960s, manufacturing output was 27 per cent of gross national product and manufacturing's share of employment was 24 percent. By 2003, these numbers had fallen to about 13.8 percent and 10.5 percent respectively. Employment in manufacturing remains weak, with an absolute decline of 18,000 jobs in September shown in the Labor Department's payroll survey.

At the same time, the orgy of tax-cutting, with big revenue losses, continues unabated. On October 6, House and Senate negotiators approved an expansive tax bill that showers businesses and farmers with about $145bn in rate cuts and new loopholes -- on top of what were already unprecedented fiscal deficits. These are principally financed by foreign central banks, which hold more than half the outstanding stock of US Treasury bonds. Moreover, meagre saving by American households is forcing US companies also to borrow heavily abroad.

The upshot is a current account deficit of more than $600 billion a year. America's cumulative net foreign indebtedness is about 30 percent of gross domestic product and rising fast. How will this affect manufacturing? The transfer of foreign savings to the US is embodied more in goods than in services. Outsourcing to India aside, most services are not so easily traded internationally. Thus when U.S. spending rises above output (income), the net absorption of foreign goods -- largely raw materials and manufactures -- increases. True, in this year and last the high price of oil has also boosted the current account deficit. However, since the early 1980s, the trade deficit in manufactures alone has been about as big as the current account deficit -- that is, as big as America's saving shortfall (for more detail, see http://siepr.stanford.edu).

If U.S. households' and companies' spending on manufactures is more or less independent of whether the goods are produced at home or abroad, domestic production shrinks by the amount of the trade deficit in manufactures. The consequent job loss depends on labor productivity in manufacturing, which rises strongly through time. If the trade deficit in manufactures is added back to domestic production to get "adjusted manufactured output", and labor productivity (output per person) in manufacturing stays constant, we get projected manufacturing employment. In 2003, actual manufacturing employment was just 10.5 percent of the US labor force, but it would have been 13.9 percent without a trade deficit in manufactures: the difference is 4.7m lost jobs.

In the 1980s, employment in manufacturing began to shrink substantially because of the then large current account deficit attributed to the then large fiscal deficit: Ronald Reagan's infamous twin deficits. With fiscal consolidation under Bill Clinton, the savings gap narrowed but was not closed because personal saving weakened. Now under George W. Bush, the fiscal deficit has exploded while private saving is still weak. The result is heavy borrowing from foreigners and all-time highs in the current account deficit. The main component remains the trade deficit in manufactures, intensifying the shrinkage in manufacturing jobs.

Is there cause for concern? Note that I do not suggest that the trend in overall employment has decreased, but only that its composition has tilted away from tradable goods -- largely manufactures. In the long run, growth in service employment will largely offset the decline in manufacturing. However, the rate of technical change in manufacturing is higher than in other sectors. It is hard to imagine the US sustaining its technological leadership with no manufacturing sector at all.

More uncomfortably, more Congressmen, pundits and voters feel justified in claiming that foreigners use unfair trade practices to steal U.S. jobs, particularly in manufacturing, and hence in urging protectionism. The irony is that, if imports were somehow greatly reduced, this would prevent the transfer of foreign saving to the United States and lead to a credit crunch, with a possibly even greater loss of US jobs.

The answer is not tariffs, exchange rate changes or subsidies to manufacturing that further increase the fiscal deficit. The proper way of reducing protectionist pressure and relieving anxiety about U.S. manufacturing is for the government to consolidate its finances and move deliberately towards running surpluses -- in short, to eliminate the U.S. economy's saving deficiency.

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I am a child of the Cold War. As such, my thinking for decades was conditioned by the great issue of that era: How to maintain freedom in the face of our perceptions of Soviet ambitions for world domination?

For the first few decades of the Cold War, the United States strategy for achieving this objective was containment backed up with a powerful nuclear deterrence. But as the nuclear arms race heated up, it became increasingly clear that this strategy risked precipitating a nuclear holocaust. Thus, by the late sixties, nuclear arms control had become the overriding security issue - certainly it dominated my thinking on security during that era.

But with the ending of the Cold War, the threat of nuclear holocaust receded and arms control, as we had practiced it during that era, was no longer the dominant security issue. The most serious threat to the United States became nuclear weapons in the hands of failed states or terrorists - used not in a standard military operation, but in extortive or apocalyptic ways. Therefore, in the present era, preventing the proliferation of nuclear weapons replaces arms control as the organizing principle for our security. Certainly it has dominated my thinking on security for the last decade.

Oksenberg Conference Room

William J. Perry
Lectures
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