The coming debate over American ‘strength’ abroad

By David Ignatius, Wednesday, January 25, 7:36 PM
The Washington Post

The foreign-policy theme that should dominate this year’s presidential campaign is “American renewal.” Each candidate claims to have a strategy for halting the nation’s decline, but their versions often amount to “more of the same” — which ain’t gonna work.

For a bracing discussion of what a revival of U.S. power would actually require over the next few decades, I recommend a new book, “Strategic Vision” by Zbigniew Brzezinski, the former national security adviser to President Jimmy Carter. Though he worked for a president who came to symbolize U.S. “malaise” in the late 1970s, Brzezinski has always been on the hawkish, “realist” side of his party, and in this book, he is especially critical of status-quo policies.

A wake-up line in Brzezinski’s book is that there are “alarming similarities” between America today and the Soviet Union just prior to its fall, including a “gridlocked governmental system incapable of enacting serious policy revisions,” a back-breaking military budget and a failing “decade-long attempt to conquer Afghanistan.”

The gist of Brzezinski’s strategy is that America must become strong enough to act as “a responsible partner to the rising and increasingly assertive East.” He sees a future U.S. role as a “balancer” and “conciliator” among Asian nations that, left to themselves, will get into messy fights.

To achieve this revival, Brzezinski argues that the United States needs to work closely with a democratizing Russia and Turkey (assuming they continue on that path) to build what he calls a “larger West.” If the United States tries too boldly to go it alone or too meekly to accommodate the rising powers, it’s headed for trouble.

Here we come to the heart of the political debate in this presidential campaign: What does American “strength” mean in the 21st century? Is it a recovery of the kind of power and prerogative the United States had, say, in the Ronald Reagan years? Or is it something more aligned with changes in the global balance? Brzezinski would favor the latter, but let’s look at what the candidates are saying.

In every GOP debate, you hear insistent calls for a restoration of U.S. power from the front-runners, Mitt Romney and Newt Gingrich. They evoke a lost Arcadia and suggest that the United States can reclaim its exceptional status as a “city on a hill,” towering above other nations.

The specific GOP prescriptions mostly involve muscle-flexing: more military pressure on Iran; more CIA covert action against Iran, Syria and other rivals; tougher trade policies toward China. The implicit theme is that President Obama’s efforts to mend fences with allies and work through the United Nations are signs of weakness — and that a strong America must lead from the front.

The problem with the GOP version is that America is already muscle-bound to a fault. To exercise power effectively, it needs good allies. If Brzezinski is right and a “larger West” requires cooperation with Russia and Turkey, then some of the GOP rhetoric about exceptionalism is counterproductive — little more than vain boasting. Obama has actually begun the job of cultivating these new partners, with his 2009 “Russia reset” and his patient diplomacy with Turkey.

The GOP candidates sometimes seem disdainful of global realpolitik, and they voice the romantic, go-it-alone ethos of the neoconservative wing of the party. Romney, for example, dismissed the idea of negotiating peace with the Taliban — a position even some of his own advisers reject. On the Middle East, Gingrich disdains the two-state solution that every other major nation (including Israel) favors — calling the Palestinians an “invented” people who, presumably, don’t deserve a state. That kind of rhetoric is so far outside the mainstream that it’s the strategic equivalent of walking off the plank.

As for Obama’s strategic vision, he talks a better game than he plays. He understands that the U.S. economy needs rebuilding, but despite the ringing agenda he laid out once more in Tuesday’s State of the Union address, he hasn’t enacted the strong policies that would deal with debt, decaying infrastructure and bad public education.

Blaming congressional deadlock isn’t a strategy, it’s an excuse. Obama was elected to make government work again. If he can’t do it, someone else should try.

A similar criticism applies to Obama’s foreign policy. He raised hopes at home and abroad because he proposed to resolve festering problems, such as the Palestinian issue. In reality, he flopped. His Afghanistan policy is a muddle, and that’s being charitable. In this campaign, Obama needs to explain how he will lead America past the old slogans and status-quo policies into an era of genuine national revival.

davidignatius@washpost.com

Economic Potholes Add Dangers on Egypt’s New Political Path

January 24, 2012
NYT
By DAVID D. KIRKPATRICK and MAYY EL SHEIKH

CAIRO — After a year of unending turmoil and military rule, Egypt faces an acute financial crisis that could undermine its political transition and pose a defining challenge to Islamists now coming to power.

With mounting debts, negligible economic growth and dwindling foreign reserves, the military rulers and the new Islamist-led Parliament now confront some difficult choices, beginning with an all but inevitable further devaluation of Egypt’s currency that could send the prices of food and other goods soaring.

The government may also soon be forced to overhaul the vast system of energy subsidies that now account for a fifth of government spending. Increases in food prices and reductions of subsidies have provoked riots here in the past.

“The situation is dire,” said Magda Kandil, executive director of the Egyptian Center for Economic Studies, who called some of the recent indicators “alarming.”

In a sign of the situation’s severity, the ruling military council last week reversed itself and reopened talks with the International Monetary Fund over the terms of a $3.2 billion loan. The generals previously rejected the same deal as an affront to national sovereignty, but officials of the military-led government now say they may seek an even larger loan.

Moreover, the Muslim Brotherhood, the long-outlawed Islamist group that controls half the seats in the new Parliament, also indicated its openness to the financial lifeline in its separate meeting with the I.M.F. representatives — an even more stunning reversal after eight decades of denouncing Western colonialism and Arab dependency.

Leaders of the Brotherhood readily acknowledge that steering Egypt through the crisis will be a formative test of their ability to govern. Activists focused on forcing Egypt’s military rulers to give up power, meanwhile, say the economic malaise has become a major obstacle to their cause because so many Egyptians have come to crave a return to stability.

Others note with dismay that the bread-and-butter frustrations that helped fuel the protests that ousted President Hosni Mubarak one year ago have grown only more acute since then, especially for the legions of jobless or underemployed young people.

Nowhere is the economic distress more evident than in the business of Egyptian weddings, which are a costly rite of passage here that marks the graduation into adult life and which generate revenue that rivals the annual American aid budget for Egypt.

In one hard-pressed Cairo neighborhood, wedding planners say couples have cut back on events that may have cost $300 before the revolution because they can now pay only about $100. Jewelry stores say the average amount that grooms spend on the traditional gifts of gold for their brides has fallen sharply, and disc jockeys say they now perform at just 2 or 3 weddings a month, down from an average of 10 before the revolution.

“Nobody is getting married after the revolution,” said Amr el-Khodary, 37, who was forced to close his shop that rents cars for wedding parades.

Ibrahim Mohamed, a 26-year-old cab driver with a college degree, is a case in point. A steep decline in fares, he said, has prevented him from saving up the roughly $7,000 for an apartment, furniture, a small wedding and the customary gift of jewelry that he says he needs to marry.

“If it weren’t for the revolution,” he said, “I would have been able to get married.”

The reasons for his plight have been piling up all year: a virtual cutoff of foreign investment, a 30 percent decline in tourist visits and the stagnation of economic growth. The official unemployment rate is 12 percent, but among young people the real rate of unemployment is at least double that figure.

The military rulers have also presided over a period of financial turmoil. Inflation has surged into double digits, and the exchange rate for the currency, the Egyptian pound, is under heavy pressure. Foreign exchange reserves have plunged, as the government is spending about $2 billion a month in a losing battle to prop up the pound. Foreign currency reserves have fallen to about $10 billion, after certain obligations, from about $36 billion before the revolt.

Economists say Egypt’s military rulers contributed to the strain by shunning the planned loan from the I.M.F. last June, when it could have provided badly needed hard currency and a financial seal of approval that might have helped reassure foreign investors and aid donors.

Instead, the ruling military council has tried to sustain the government’s growing deficits by borrowing internally, while businesses struggle to get the loans they need to expand and revive the economy.

Now the military government appears to have used up its domestic sources as well. On Monday, the government managed to sell Egyptian banks only about a third of a planned bond offering valued at $580 million, even at yields that reached a new peak of nearly 16 percent.

“Continued borrowing from the domestic markets is a bankrupt policy, literally,” said Ragui Assaad, an Egyptian economist at the University of Minnesota who is now in Cairo.

Even with new sources of foreign currency from the I.M.F., he said, Egypt would soon be forced to capitulate to a further decline in the exchange rate — gradually, if the government is lucky.

“Of course it is going to hurt,” Mr. Assaad said. “But there is going to be no choice but to devalue the currency.”

Fears of runaway inflation are already acute. “Nobody puts their money in the bank because they are afraid it won’t be worth anything later,” said Hamdy Shaaban, 40, a mechanic. “Why would I put money in a bank? I don’t know what is going to happen next.”

But the other solution that many economists favor — overhauling the policies that have Egypt spending more than $15 billion a year on energy subsidies — appears for now to be politically impossible. It is a regressive system that most benefits those who drive sport utility vehicles and live in air-conditioned villas, and other countries with similar systems have successfully replaced them with more targeted subsidies for the needy.

But most Egyptians cherish the subsidy as a birthright, and few believe that the transitional government has the credibility or legitimacy to push through a major change. “Someone has to be able to convince people that they are going to get compensated,” Mr. Assaad said.

Still, many economists contend that Egypt can navigate around a potential collapse. They note that the military-led government has recently announced plans to trim nearly $4 billion from the yawning deficit of over $30 billion, or more than 10 percent of gross domestic product. Among other things, it has begun to trim the energy subsidies to heavy industry, perhaps in preparation for changes the monetary fund might require.

In addition, Ahmed Galal, managing director of the Economic Research Forum, based in Cairo, said economists were increasingly optimistic about the policies of the Muslim Brotherhood. The group has made it clear that it supports free markets, and it has already begun talking about the urgency of subsidy reform. Its lawmakers began drawing up proposals to tackle the issue when they were members of the opposition minority under Mr. Mubarak.

“These guys want to succeed,” Mr. Galal said of the Brotherhood’s lawmakers. “They are really singing songs that are quite moderate, quite civic, quite inclusive, and they are looking at countries like Turkey rather than Iran or Afghanistan.”