CISAC's Paul Kapur and Sumit Ganguly of Indiana University discuss the importance of probing the sources of the violence in Mumbai, and consider the attacks' implications for regional security in South Asia.

Security officials and cleanup crews are now combing through the carnage in Mumbai, following last week’s terrorist attacks in the city. As the citizens of this vast metropolis seek to restore some semblance of normalcy to their lives, it is important to probe the sources of the violence in Mumbai, and consider the attacks’ implications for regional security in South Asia.

How and why did the Mumbai attacks occur? Information at this stage is still incomplete. Nonetheless, a few points seem clear.

There is considerable evidence that Pakistan-based entities were behind the Mumbai attacks. The sole surviving terrorist is Pakistani. He claims that the attackers trained with the militant group Lashkar-e-Taiba for months inside Pakistan prior to launching their assault. And Indian officials have determined that the terrorists took a boat from Karachi to the Mumbai coast, leaving behind cell phones that had been used to call Pakistan.

None of this directly implicates the Pakistani government in the Mumbai attacks. It does, however, suggest that Pakistan bears some measure of responsibility for recent events; the Pakistani government is either unable or unwilling to prevent its territory from being used to launch terrorist attacks against India.

In fact, Pakistan has a long history of supporting anti-Indian militancy. For example, during the 1980s, the Pakistani Inter-Services Intelligence Directorate (ISI) began to provide training, arms, and financial and logistical support to insurgent groups fighting Indian rule in Kashmir. This transformed what had been a mostly spontaneous, local uprising into a low-intensity Indo-Pakistani war. Despite repeated Indian diplomatic entreaties and military threats, Pakistan has never fully ended its support for such groups.

These outside links notwithstanding, the complexity and organization of the Mumbai attacks suggest that they also employed local Indian support. Thus, even if the operation originated in Pakistan, the terrorists may well have had the assistance of disaffected Indian Muslims.

Since independence, many Muslims have thrived in India, availing themselves of educational opportunities, achieving high levels of prosperity, and blending into the country’s vast, pluralistic society. On a day-to-day basis they have faced little religious discrimination.

Less affluent segments of the Muslim community, however, have not been so fortunate. They have long endured discrimination in aspects of everyday life ranging from employment to housing opportunities. Past generations acquiesced in these humiliations. Today’s lower middle class Muslims, however, are better educated and more politically aware than their predecessors, and thus less prone simply to accept their fate.

Against this social backdrop, two incidents have helped to spur a process of Islamist radicalization within India. The first was a spate of anti-Muslim riots that swept across much of northern and western India after Hindu zealots destroyed the Babri Mosque in 1992. Hundreds of Muslims died at the hands of Hindu mobs while the police looked on. The second episode was a 2002 pogrom in the state of Gujarat that occurred after Hindu pilgrims died in a train fire allegedly set by Muslim miscreants. Few, if any, individuals involved these incidents have been prosecuted. Not surprisingly, these two episodes helped to radicalize a small but significant minority of Indian Muslims.

The Indian government has failed to devise a set of policies to address these social roots of Islamist zealotry. In addition, many of India’s state-level police forces have not mustered the requisite intelligence, forensic and prosecutorial tools necessary to suppress the resulting violence. Instead they have resorted to the random arrests of young Muslims, employed tainted evidence, and abused draconian anti-terrorist laws. Such actions have only worsened the situation, making it easier for foreign militants to recruit domestic sympathizers inside India.

What are the Mumbai attacks’ implications for South Asian security? The Manmohan Singh government has sought to avoid confrontation with Pakistan in the wake of several recent terror attacks with potential Pakistani links. Instead, it has preferred to maintain regional stability in hopes of achieving continued economic growth. The Mumbai attacks, however, undercut this rationale for restraint; by attacking international targets in India’s financial hub, they threaten to inflict significant harm on the Indian economy. Also, considerable domestic political pressure for strong anti-Pakistani action is likely to emerge, both from the opposition Bharatia Janata Party (BJP), which has long accused the government of being soft of Pakistan, and from ordinary voters outraged by the attacks.

In 2001, a failed assault on the Indian parliament by Pakistan-backed militants managed to kill only five people and was over in the space of a morning. In response, India mobilized roughly 500,000 forces along the Indo-Pakistani border, triggering a major militarized crisis with Pakistan. The Mumbai attacks killed and wounded hundreds, and lasted for nearly three days. Given the scale of the violence, as well as the economic and domestic political factors discussed above, the Indian government will be hard-pressed to avoid a reaction similar to 2001 – particularly if the evidence from Mumbai continues to point toward Pakistan. Given that both India and Pakistan possess nuclear weapons, the stakes in any ensuing confrontation will be enormous. Nuclear weapons will give both sides strong incentives to behave at least somewhat cautiously, in order to prevent a crisis from escalating too far. But they will also leave less room for error, making the costs of miscalculation potentially catastrophic.

Will a serious Indo-Pakistani crisis emerge from the Mumbai attacks, or will the Indian government manage to continue its policy of restraint, even in the face of such a brazen provocation? The pieces would appear to be in place for a serious regional confrontation. But only the coming days will tell for sure.

Sumit Ganguly is the director of research at the Center on American and Global Security at Indiana University, Bloomington, and an adjunct senior fellow at the Pacific Council on International Policy in Los Angeles.

Paul Kapur is an associate professor of National Security Affairs at the Naval Postgraduate School in Monterey, California, and an affiliate at Stanford University’s Center for International Security and Cooperation.

President-elect Barack Obama will inherit an Iraq that has experienced substantial improvements in security, but remains rife with unresolved internal issues. If not handled carefully, Iraq's fragile progress could dissolve and the country could become a dangerous foreign policy minefield for yet another American president. Here are the top 10 issues the next administration must address:

1. Determination of Objectives: The Bush administration invested vast resources in the hopes of achieving maximalist aims in Iraq. Though the results in Iraq have clearly fallen short of those aims, the Obama administration needs to formulate a policy that is more comprehensive and nuanced than "end this war." What can the U.S. realistically achieve? What are the outcomes that the U.S. can or cannot live with? How does Iraq fit in to a cogent strategy for the broader region, including Afghanistan, Pakistan, and Iran?
2. Approach to Withdrawal: The Status of Forces Agreement moving forward between the U.S. and Iraqi governments, combined with the urgent need for reinforcements in Afghanistan, will shape the contours of withdrawal. But what if Baghdad wants to change the schedule? Will changing conditions on the ground affect the pace and process of withdrawal? Is Washington willing to extend or accelerate the current "time horizon" if the security situation significantly deteriorates?
3. Management of the Security Transition: Earlier attempts to transfer security responsibility to Iraqi forces in 2006 encountered many problems. Do current assessments of when provinces will be ready for transition accurately reflect conditions on the ground? Can the U.S. effectively "thin out" its forces, while maintaining robust enabling capabilities (intelligence, air support, medical evacuation) in critical areas?
4. Development of the Iraqi Security Forces (ISF): America must help the Iraqi forces foster competence and professionalism and prevent the reemergence of sectarianism in the ranks. To make this happen, U.S. military advisors will likely be needed for years to come, particularly to help develop support capabilities that the Iraqis currently lack. Is this advisory effort effective as currently organized and prepared? How will advisors be allocated to meet growing demands in Afghanistan as well as Iraq? Can the Defense Department accelerate its Foreign Military Sales program to provide the ISF with badly-needed equipment?
5. Sunni Reintegration: The Sunni Awakening and Sons of Iraq groups are facing an uncertain future as they transition from American control to Iraqi payroll and command structures. How can the U.S. help ensure that Sunnis are reintegrated into Iraqi society so they have a stake in the political system and do not return to the insurgency?
6. Status of Kirkuk: Kirkuk, the oil-rich city of northern Iraq claimed by both Kurds and Arabs, will be a flashpoint for continued conflict. What role can the U.S. play to minimize the potential for re-escalation of Arab-Kurd violence over Kirkuk? Should U.S. policy emphasize indefinite postponement of this issue, broker a territorial compromise, or encourage Iraqis to "give" the city to one side and focus instead on sharing oil revenues?
7. Dealing with Iranian influence: As Iraq's neighbor, Iran has a natural interest in influencing Iraq's domestic affairs. However, Tehran's political obstructionism and support for militants ultimately undermines Iraqi as well as American interests. How much and what types of Iranian influence in Iraqi affairs can the U.S. tolerate? How can the U.S. help Iraqis counter the most destabilizing and pernicious Iranian influences?
8. Future of Political Relations with Iraq: How does the U.S. envision its relations with an emerging sovereign Iraq that is likely to exhibit erratic behavior on the international stage? How and to what extent should America insert itself in Iraqi politics? Should the U.S. government actively seek a balance of power between Iraq's major factions, so as to spread the risk and avoid linking itself to the fortunes of any one group? Or should it remain on the sidelines, so as to extricate ourselves as best we can?
9. Economic Development: Iraq's economy is currently 90 percent dependent on oil exports, resulting in substantial volatility in revenue. How can the U.S. help Iraq diversify its economic base? How can the U.S. encourage greater foreign investment in the Iraqi economy beyond the energy sector? What incentives could Baghdad provide provincial and local officials to improve transparency and revenue sharing mechanisms?
10. Return of Refugees: Huge numbers of Iraqis fled to Jordan and Syria to escape sectarian violence. Does Baghdad owe those nations financial aid? As refugees return, what is the best way to handle this influx? Is America committed to reestablishing the mixed-sect districts that existed prior to 2006? Is a level of sectarian separation necessary to keep the peace?

No panacea exists for Iraq's remaining ills, and no amount of planning will account for all of its complex and sometimes contradictory dynamics. But with America's direct influence likely to wane as its troop presence diminishes, it is increasingly important to anticipate the full spectrum of difficult issues and choices ahead, in order to devise the best way forward for the United States and Iraq.

Brian M. Burton is a research assistant at the Center for a New American Security and a graduate student at the Georgetown University Security Studies Program. John Paul Schnapper-Casteras is a predoctoral fellow at Stanford University's Center for International Security and Cooperation.

"How grievous are the wounds the rule of law has sustained over the past seven and one-half years?" FSI Director Coit D. Blacker asked at the beginning of FSI's fourth annual conference, Transitions 2009. This year's conference, coming on the heels of the U.S. presidential election, focused on opportunities for change offered by historic transitions at home and abroad. The Nov. 13 invitation-only event was attended by 370 Stanford scholars, outside experts, policymakers, diplomats, and leaders from business, medicine, and law, bringing together some of the sharpest minds in the country to formulate and discuss recommendations for U.S. President-elect Barack Obama and other world leaders.

The day-long conference was structured around a morning and an afternoon plenary, with a luncheon address by Oxford professor and Hoover Institution senior fellow Timothy Garton Ash. In his address, "Beyond the West? New Administrations in the U.S. and Europe Face the Challenge of a Multipolar World," Garton Ash urged concerted action on four projects of visionary realism: global economic order; development, democracy, and the rule of law; energy and the environment; and banishing nuclear weapons. Garton Ash also called for relaunching a strategic partnership among the United States and the 27-member European Union, not as a partnership against other nations, but as an alliance that would reach beyond the West to develop new and effective communities of shared purpose.

The morning plenary, "U.S. Transition 2009: Where Have We Been? Where Are We Going?" brought FSI Director Blacker together with Stanford President Emeritus and constitutional law scholar Gerhard Casper, Center on Health Policy/Center for Primary Care and Outcomes Research Director Alan M. Garber and FSI senior fellow and former State Department policy planning director Stephen D. Krasner. Their varying but esteemed backgrounds allowed for a truly interdisciplinary discussion of the policy challenges, priorities, and prospects facing the new American president. "We have just lived through the most extraordinary claims to unbound power since the days of Richard Nixon," said Casper. "This rejection of the rule of law, just like the images of Abu Graib, will be present in the minds of many with whom we have to deal the world over."

The afternoon plenary, "Power and Responsibility: Building International Order in an Era of Transnational Threat," featured Stephen J. Stedman, FSI senior fellow and director of the Ford Dorsey Program in International Studies; Bruce Jones, director of the Center on International Cooperation at New York University; and Carlos Pascual, director of Foreign Policy Studies at the Brookings Institution. The three discussed their ambitious new project, Managing Global Insecurity Project (MGI) (MGI), which aims to provide recommendations and generate momentum for the next American president, the United Nations, and key international partners to launch a strategic effort to build the global partnerships and international institutions needed to meet 21^st century trans-border challenges and threats. One key recommendation is to expand the current G-8 to a G-16 of established and rising powers by including China, India, Brazil, Mexico, South Africa, and major Muslim nations such as Indonesia, Turkey, and Egypt.

Interactive breakout sessions in the morning and afternoon allowed participants to engage in debate with Stanford faculty and outside experts. Breakouts covered such diverse topics as combating HIV in low-resource countries, rethinking the war on terror, leveraging the EU to promote democracy and human rights, whether the U.S. should promote democracy, transitions in African society, working in a global economy, and overcoming barriers to nuclear disarmament.

America's standing in the world has been damaged by eight years of unilateralism and it must cooperate with rising powers to tackle emerging transnational threats, according to a major research project to be unveiled Thursday, Nov. 13, at a conference hosted by Stanford's Freeman Spogli Institute for International Studies (FSI).

The directors of "Managing Global Insecurity Project (MGI)" (MGI) from Stanford's Center for International Security and Cooperation (CISAC), New York University and the Brookings Institution will use the conference to present their "plan for action" for the next U.S. president.

"President-elect Obama should take advantage of the current financial crisis and the goodwill engendered by his election to reestablish American leadership, and use it to rebuild international order," said CISAC's Stephen J. Stedman. "Part of that is to recalibrate international institutions to reflect today's distribution of power. If you could find a way for constructive engagement between the G-7 and Russia, China, India, Brazil and South Africa-that reflects the reality of world power today-you could actually animate a lot of cooperation."

Stedman, Bruce Jones from New York University's Center on International Cooperation and Carlos Pascual from Brookings will discuss concrete actions for the incoming administration to restore American credibility, galvanize action against transnational threats ranging from global warming to nuclear proliferation and rejuvenate international institutions such as the United Nations.

"You find in American foreign policy a blanket dismissal of international institutions, especially regarding security," Stedman said. "But if you eliminate them, you don't have a prayer of recreating the kind of cooperation that exists in the U.N. There actually is a pretty good basis of cooperation on which to build."

The nonpartisan project also will be presented Nov. 20 at a high-profile event at the Brookings Institution that will feature leaders such as former Secretary of State Madeleine Albright and Brookings President Strobe Talbott. That in turn will take place on the heels of the upcoming G-20 emergency summit to discuss measures to stave off a global recession and give a greater voice to developing nations. MGI's "plan for action" includes a series of policy papers on hot-button topics such as economic security.

"The big thing we talk about is if you institutionalize cooperation with the existing and rising powers you can hope to build a common understanding of shared long-term interests," Jones said. "If you approach issues only through the lens of the hottest crises, you will find different interests in the very short term on how [problems] are handled."

Transitions 2009

The 20-month-long project, which incorporated feedback and direction from nonpartisan U.S. and international advisory boards, dovetails closely with the theme of FSI's fourth annual conference: "Transitions 2009."

"There has rarely been a moment more fraught with danger and opportunity, as new administrations in the United States and abroad face the interlocking challenges of terrorism, nuclear proliferation, climate change, hunger, soaring food prices, pandemic disease, energy security, an assertive Russia and the grave implications of failed and failing states," FSI Director Coit D. Blacker said. "This conference will examine what we need to do to prepare our own citizens for the formidable challenges we face and America's own evolving role in the world."

Timothy Garton Ash, an Oxford professor and Hoover Institution senior fellow, will deliver the conference's keynote address, titled, "Beyond the West? New Administrations in the United States and Europe Face the Challenge of a Multi-Polar World."

Blacker, who served in the first Clinton administration; Stephen D. Krasner, who worked in the current Bush administration; medical Professor Alan M. Garber; and Stanford President Emeritus Gerhard Casper will open the conference with a reflection on the past and future and the watershed moment presented by Obama's presidency. The conference also will include breakout sessions with FSI faculty such as "Rethinking the War on Terror," led by Martha Crenshaw of CISAC; "Toward Regional Security in Northeast Asia," chaired by former Ambassador Michael J. Armacost, acting director of the Shorenstein Asia-Pacific Research Center; and "Is African Society in Transition?" led by economist Roz Naylor of the Program on Food Security and the Environment.

Long-term security

For MGI project leaders Stedman, Jones and Pascual, the zeitgeist of the moment is America's relationship with the emerging powers. "The good news from an American perspective is, despite the financial crisis, despite everything else, sober leadership in China, India, Brazil and elsewhere understand, in the immediate term, there is no alternative to American leadership, as long as [it] is geared toward cooperation and not 'do as you please-ism,'" Jones said. "On the other side, the financial crisis highlights that U.S. foreign policy has to come to terms with the fact that it does not have the power to dictate outcomes. It has to build cooperation with emerging powers, with international institutions, into the front burner of American foreign policy." More broadly, international cooperation must be built on what Stedman calls the principle of "responsible sovereignty," the notion that sovereignty entails obligations and duties toward other states as well as to one's own citizens.

In addition to MGI's "plan for action," the three men have coauthored Power and Responsibility: International Order in an Era of Transnational Threats, to be published in 2009. The book criticizes both the Bush and Clinton administrations for failing to take advantage of the moment of U.S. dominance after the fall of the Soviet Union to build enduring cooperative structures. "We're in a much tougher position than we were five years ago and 10 years ago," Jones said. "There still is an opportunity, but time is getting away from us."

If revitalizing international cooperation fails, Jones said, transnational threats will gain the upper hand. "We will not be able to come to terms with climate change, transnational terrorism, spreading nuclear proliferation," he said. "U.S. national security and global security will deteriorate. [We] have a moment of opportunity to do this now."

David Straub, the acting director of Korean Studies Program, argues that Obama administration will finally give diplomacy a chance to deal with the North Korean nuclear problem. He stresses that Senator Obama understands the difficulties of dealing with North Korea and will proceed carefully. If North Korea does not respond to this more nuanced American approach, he concludes, the international community is likely to be more supportive of U.S. efforts to constrain North Korean behavior.

Among conservatives in Korea and other American allied countries, there seems to be some anxiety about the election of a relatively unknown, young African-American liberal as the next American president. Typically, when a new U.S. president is elected, American diplomats seek to reassure allies by telling them that the incoming president will pursue fundamentally the same policies as the outgoing president. However, President Obama clearly will adopt a significantly different foreign policy than President Bush, including toward North Korea.

Obama’s soaring rhetoric has led to a widespread (and correct) impression of him as idealistic, but the long presidential campaign also revealed him to be a disciplined politician and a skillful manager. His foreign policy will be much closer to the prudent realpolitik of President Bush’s father than it will be to the “neo-con” approach of President Bush himself.
And while it is true that Obama does not have deep experience in foreign affairs, his youthful years spent in Indonesia and Hawaii, taken together with his successful navigation of American society as a young African-American man, have given him a genuine empathy for different peoples and cultures. He has the self-confidence and intelligence to listen with an open mind to others and then carefully to make his own decisions.

President Obama’s policy toward North Korea will defy stereotypes of the past. In some ways he will be “softer” on North Korea than President Bush; in other ways, he will be “tougher.”  Like President Bush and his predecessors, President Obama will take the position that he can never accept a North Korea with nuclear weapons. On the other hand, Obama will not engage in bluster such as “all options are on the table,” which most South Koreans reject and which only plays into the DPRK’s hands.

Instead, Obama will finally give diplomacy a fighting chance. Even during the past couple of years, President Bush remained very reluctant to engage fully in negotiations with North Korea. President Obama will order that a policy review be conducted expeditiously, and he will probably appoint a very senior special envoy to take charge of negotiations with North Korea. While maintaining the framework of the Six-Party Talks and consulting very closely with the Republic of Korea and Japan, he will also authorize meaningful bilateral negotiations with North Korea. If those negotiations bear real fruit, he may even visit Pyongyang himself if he is confident that he will be able to strike a deal completely ending North Korea’s nuclear ambitions.

President Obama will probably offer North Korea a “more for more” deal. In other words, compared to President Bush he will propose a much more detailed and concrete series of steps to be taken by North Korea, the United States, and other members of the Six-Party Talks. The aim will be agreement on an early end to North Korea’s nuclear weapons programs.

The North Koreans should not think that President Obama will be “easier” than President Bush. If, as may well be the case, the North Koreans reject President Obama’s approach or drag their feet in responding to it, he, unlike President Bush, will have the international credibility to work more effectively with other members of the Six-Party Talks and the international community to limit North Korea’s options.

Moreover, as a hardheaded domestic politician, President Obama will be careful to avoid situations in which the Republican opposition could credibly criticize him as being naïve about North Korea. Indeed, Obama’s team recognizes clearly that, having declared itself a nuclear weapons state and tested a nuclear device, North Korea may not be prepared to verifiably give up its nuclear weapons ambitions.

In formulating and conducting his policy toward North Korea, President Obama will have access to many trusted experts on North Korea, beginning with Vice President Biden and his staff. Obama is also advised by a number of experienced officials from the Clinton administration, from former Defense Secretary Bill Perry to former career diplomat Jeffrey Bader.

U.S. relations with the Republic of Korea are key to any successful American policy toward North Korea. Obama and his team fully appreciate the importance of U.S.-ROK relations and the security alliance. They will coordinate very closely with the Lee Myung-bak administration and never sacrifice the interests of the Republic of Korea, which is immeasurably more important to the United States than the DPRK is or ever will be.
 
President Obama will support the implementation of the agreements President Bush reached with the Republic of Korea on the realignment of U.S. Forces of Korea and the transfer of wartime operational control, as befits the ROK’s military and economic might.
 
Under President Obama, the United States will also aim to approve, with some adjustments, the U.S.-ROK Free Trade Agreement, although it may take a year or so to do so as he perforce deals first with the global financial and economic crises and wars in Iraq and Afghanistan.  President Obama must be cognizant of the viewpoint of leading congressional Democrats and the constituencies they represent. It may be counterproductive if the ROK pushes too hard, too fast for U.S. approval of the FTA.
 
Obama’s inauguration will also open up new possibilities for U.S.-ROK coordination and cooperation on global issues. Unlike President Bush, whose early unilateralist mindset and specific policies caused dismay among international friends and foes alike, President Obama begins with a vast reservoir of sympathy and respect throughout the world. That will make it easier, and more useful, for the Republic of Korea to cooperate globally more with the United States.
 
In short, South Koreans should be reassured, not that President Obama’s foreign policy will be like that of President Bush, but that it will be different. Perhaps South Koreans will even begin to feel that their alliance with the United States is not just one that they feel they must have for their country’s long-term interests – but also one of which they can feel proud.

Although Iraq dominates the headlines, the situation in Afghanistan may be more decisive to longterm international security, said Sarah Chayes, who has lived in the country since 2001 after covering the last stand of the Taliban for National Public Radio (NPR).

Chayes, an American who directs Arghand, a cooperative in Kandahar that produces soap from local plants and fruits as an alternative to opium production, spent Wednesday, Nov. 5, at Stanford. During several talks with CISAC faculty, staff, students and donors she discussed regional security, the future of democracy in Afghanistan and the stresses of everyday life in the ancient city of Kandahar, where she lives and where civilians must carry firearms to protect themselves. 

Chayes strongly criticized efforts to negotiate with the Taliban, which has fought a protracted guerilla war against the Afghan government since 2004. The extremist movement ruled the country from 1996 to 2001, when the Northern Alliance and NATO forces removed its leaders from power. "There is no intrinsic support from the population for the Taliban," Chayes said. "The Taliban want all, they understand they won't get all so they are trying to get what they can. Negotiating with the Taliban [offers] zero benefit."

Instead, according to Chayes, Afghanistan needs to experience the "real substance of democracy," not simply elections. It also needs a surge of non-military volunteers trained to mentor leaders working in civil society. "Thirty years of combat undoes a lot of structure" in society, she said. "People get things done as fast as possible because they might be shot in the next 50 seconds."

Chayes is the author of The Punishment of Virtue: Inside Afghanistan after the Taliban. In 2006, she was awarded The Bulletin of the Atomic Scientists' inaugural Ruth Adams Award for her work explaining the impact of U.S. policy on Afghanistan after 9/11. The prize recognizes journalists who translate complex issues of peace and security into everyday language and images. Chayes left NPR in 2002 to help rebuild Afghanistan. Initially, she served as field director for Afghans for Civil Society, a non-profit founded by the brother of Afghan President Hamid Karzai. She founded Arghand in May 2005.

Professor Phillip Lipscy discusses the current international financial crisis and provides insight for future reforms. "The IMF and World Bank should be reformed to better reflect the interests and concerns of rising economic powers. Voting shares need to be further redistributed to reflect underlying economic realities. Decision making rules should be modified to give greater weight or agenda-setting authority to regional actors -- the US may have a strong interest in loans to Mexico, but Japan may have a greater stake in Indonesia. Assignment of the top positions should be made truly competitive. Core functions should be decentralized -- both institutions are headquartered in Washington, impeding employment of top talent from Asia and limiting intellectual exchange."

Major international crises often produce tectonic shifts in international relations. Under pressure from key European counterparts, President Bush has agreed to a "new Bretton Woods" summit on Nov. 15.

It would be hard to overstate the potential significance of this meeting. The first Bretton Woods, in 1944, set the rules for monetary relations among nations, and it created the International Monetary Fund (IMF) and the World Bank.

While European leaders are pushing for greater regulation and a major overhaul of the international financial order, US policymakers have been lukewarm, emphasizing the preservation of free-market capitalism. This transatlantic drama has obscured the more fundamental problem—how to accommodate the historic shift of economic power away from the West toward Asia.

Including India, broader East Asia encompasses more than half of the world's population. The region already accounts for about one-third of global economic output, oil consumption, and CO2 emissions, and this is only likely to grow in the future. Over the course of the 21st century, Asia's economic and geopolitical weight in the world will, in all likelihood, come to rival that of Europe in the 19th century. Asian problems will become increasingly indistinguishable from global problems.

In the face of such dramatic change, the IMF and World Bank are becoming relics of a bygone era. At the time of their creation, by US and European negotiators, the major challenge was to get capital flowing from the US to war-ravaged Europe. The days of the US as creditor state are long gone—our massive current account deficit is financed by importing nearly $1 trillion in foreign capital every year. Major US banks are being rescued by sovereign wealth funds and financial institutions from the Middle East and East Asia. China and Japan alone held over $600 billion of securities issued by Fannie Mae and Freddie Mac, making the bailout of those institutions a major foreign policy issue.

Despite these changed realities, both Bretton Woods institutions remain dominated by the West. By convention, the IMF is led by a European, the World Bank by a US national. The US is the only country with veto power over important decisions in either body.

My analysis of voting shares in the IMF indicates that the Allied powers of World War II have been consistently overrepresented compared to Axis powers despite the passing of more than 60 years since the end of that war. Studies show that IMF lending is biased in favor of recipients with strong economic and diplomatic ties to the US and key European states at the expense of other members.

This unbalanced representation had real consequences during the Asian Financial Crisis of 1997-98, when the IMF, as part of its rescue operation, implemented policies widely viewed as contrary to Asian interests. During the crisis, Japanese financial authorities proposed an Asian Monetary Fund as a potential alternative source of liquidity. This proposal was rejected by US officials, who feared dilution of IMF authority. However, over the past decade, East Asian states have stockpiled foreign currency reserves and developed regional cooperation that may eventually develop into a credible alternative to the IMF.

The IMF and World Bank should be reformed to better reflect the interests and concerns of rising economic powers. Voting shares need to be further redistributed to reflect underlying economic realities. Decisionmaking rules should be modified to give greater weight or agenda-setting authority to regional actors—the US may have a strong interest in loans to Mexico, but Japan may have a greater stake in Indonesia. Assignment of the top positions should be made truly competitive. Core functions should be decentralized—both institutions are headquartered in Washington, impeding employment of top talent from Asia and limiting intellectual exchange.

An international financial architecture that fragments or remains centered on the West as Asia rises will probably prove grossly ineffective. Europe attempted much the same during the turbulent period between the two World Wars, resurrecting a system based on British hegemony even as Britain was in relative decline. Those were scary times, with free riding and beggar-thy-neighbor policies feeding mutual distrust and economic catastrophe.

This will not be the last financial crisis we face. Next time, ad hoc cooperation by the US and Europe may prove insufficient. Franklin Roosevelt had the foresight to include China on the United Nations Security Council long before that nation became a geopolitical heavyweight. Similar foresight should be brought to bear as world leaders debate the future of the international financial architecture.