"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."

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.

The civilian nuclear cooperation deal between the United States and India, which President George W. Bush signed into law last week, has been controversial from the moment it was first outlined in New Delhi about three years ago. It would allow Washington to trade nuclear technology with New Delhi despite the fact that India is a de facto nuclear weapons state outside of the Nuclear Non-Proliferation Treaty (NPT).

Critics of the deal insist, fairly convincingly, that doing so would cause irreparable harm to the nonproliferation regime, leaving the non-nuclear weapon states that abide by the NPT to question what tangible benefits exist for dutifully assuming their treaty obligations and submitting to NPT restrictions. Conversely, supporters of the deal legitimately point out that the benefits of a good relationship between India and the United States outweigh any potential harm. As with most things, the truth is probably somewhere in the middle--it's unlikely that the nonproliferation regime would remain unscathed, but it's quite possible that the damage could be contained.

A major sticking point for critics is that the deal actually makes it easier for India to continue producing fissile material for its nuclear weapons program by allowing New Delhi access to the world market in nuclear fuel for its power reactors, thereby freeing its scarce uranium resources for the production of weapons-usable plutonium in dedicated reactors that are exempt from any international safeguards. Moreover, India's breeder reactor program--another potential source of weapon-grade plutonium--is also free from safeguards. It's hardly encouraging that India would have the capability to increase its stock of weapon materials, but in reality, this doesn't much matter--probably the main reason why India got away with keeping that capability. There seems to be a worldwide consensus that once New Delhi crossed the nuclear threshold, the amount of weapons in its arsenal is unimportant. In fact, in some important aspects this is exactly the case--beyond its symbolic value India's nuclear arsenal hardly provides any security for the country. Indeed, if the U.S.-India nuclear deal helps strengthen this understanding, it provides some silver lining to the nuclear arrangement's drawbacks.

The deal could also provide a much needed incentive for a critical review of some of the current nonproliferation regime's assumptions. One such assumption is implicit in Article VI of the NPT--nuclear weapon states and their close allies have control over nuclear technologies. This is still largely true for advanced commercially viable technologies, but the monopoly on weapon-relevant technology is firmly in the past. An idea that emerged during discussion of the U.S.-India nuclear deal was to ban the transfer of enrichment and reprocessing technologies to India, supposedly to limit its ability to ramp up production of weapon materials. Limiting production of weapon-grade materials is a reasonable goal, but if the only approach is to deny a country access to advanced centrifuges or reprocessing plants, that battle is already lost.

Similarly, much ink has been spilled over the effort to have India commit to a moratorium on nuclear testing as part of the deal. The intent behind the idea was certainly laudable. But if the threat of cutting off the supply of fuel for nuclear reactors is our best hope to prevent India from nuclear testing, the effort to prevent new nuclear tests is in big trouble.

Without a doubt, the U.S.-India nuclear deal presents a serious challenge to the NPT. But it also presents an opportunity to strengthening the regime and its most important, relevant elements. In particular, for all of its problems and challenges, the NPT has successfully established a norm that assumes that countries shouldn't have nuclear weapons. The official signing of the U.S.-India nuclear deal is a good time to remind New Delhi that if it wants to be a responsible partner in the nuclear trade, it must assume the obligations that come with this norm--even if India never signed the NPT. Of course, this would require the nuclear weapon states to get serious about their NPT obligations and responsibilities as well. And that's not such a bad thing either.

In an article published by UPenn's Center for the Advanced Study of India (CASI), PESD research fellow Dr. Varun Rai reports on the positive impact that India's major energy policy reforms have had since 1998. Rai asserts that these policies are the right platform for India's energy future: they will provide enough transparency and the right economic signals leading to the emergence of an efficient energy system in India. He also draws particular attention to the organizational instability facing the operationally-constrained state-owned firms that are exposed to market competition and to the dangers of decision-making without due consideration of the global dimensions of energy.