THE subtext of Barack Obama’s first presidential visit to Asia is that the United States is seeking to re-engage with the region after a Bush presidency that became obsessed with its war on terror. An extension of that campaign was to characterize North Korea as part of the administration’s simplistic “Axis of Evil”, and confront it outside of the six-party talks on its nuclear ambitions. Unfortunately, like virtually every other Bush foreign policy initiative, this was a spectacular failure. Obama, the listening president comes with a very different agenda. In Japan Saturday, he used his first speech to set the tone for his weeklong visit, which will take him to Singapore, Shanghai, Beijing, and Seoul. In particular, he went out of his way to say that the United States does not regard China as a threat, but was looking instead for deeper economic cooperation.
The Chinese, however, will be examining carefully what the president has to say both publicly and in the private talks he will have with the leadership in Beijing. China is currently funding a large part of America’s substantial domestic debt through its purchase of US Treasury bills. In one respect, this is a repeat of the way Japan financed the US during the heavy deficit years of “Reaganomics”. Since both countries run trade surpluses with the world’s biggest customer, they need to keep it solvent. But there is a big difference between the US investments of China and Japan. There was never a suggestion that the Japanese yen would supplant the US dollar as the world’s reserve currency, even though it was then and remains the world’s second largest economy.
There is, however, a growing view that the Chinese currency, the renminbi, should end the dominance of the dollar. This year China has negotiated a series of currency swaps with countries including Argentina. Malaysia, South Korea and Belarus which allow these nations to pay for Chinese exports in its own currency. Beijing, however, appears divided about the wisdom of allowing the renminbi’s use in world trade to grow. It is clear that the Chinese are dissatisfied with the dollar’s international role but so far they have only promoted the idea of using the International Monetary Fund’s Special Drawing Rights (SDR) as the unit of international account.
For the Americans, long used to the dollar’s hegemony, a changing world currency order is profoundly alarming. Whatever the economic rationale behind a reduced role for the dollar, the psychological impact of even contemplating such a change is considerable. The United States may still be the world’s leading economic and military superpower but its days of dominance are already numbered. Before Wall Street thrust the world into financial meltdown, its investment bankers were busy telling the Chinese how to run their own banks and financial system. Come the crash, a high-powered advisory team from the collapsed Lehman Brothers could not even pay their Beijing hotel bills. The hubristic lesson is clear. America steered the world into recession. It is China that is going to be leading it out.
Key Afghan problem
US President Barack Obama is ultimately right to demand that the strategy for stabilizing Afghanistan must be clear (and a realistic troop exit scenario laid out) before more troops can be committed, said The Independent in an editorial. Excerpts:
Ambassadors are supposed to be diplomatic. But, by all accounts, there was nothing particularly sensitive about the opinions outlined in the leaked memo from US Ambassador to Afghanistan Karl Eikenberry. In the note to the White House, Eikenberry is said to have articulated grave concerns about Hamid Karzai’s government and argued against sending more US troops to the country. As a former military commander in Afghanistan, Eikenberry’s opinion will have particular weight in Washington. And this dramatic intervention clearly represents another serious challenge to the case, made by the US commander Gen. Stanley McChrystal, for a further 40,000 US troops to be dispatched to Afghanistan. Yet a danger lies in an exclusive focus on the issue of troop reinforcements. Still more important is the need for an overhaul of the Western strategy in the country, which is plainly foundering. Any dreams of turning Afghanistan into a model democracy need to be set aside. Any opportunity to build a new nation was lost when the US and others turned away from the country in the direction of Iraq after the toppling of the Taleban in 2001.
The objective now must be to stabilize Afghanistan with a view to withdrawing Western troops in the medium term. If more boots on the ground can help to achieve this — as Gen. McChrystal argues they would — there remains a strong case for sending them. And Western leaders must be clear with their domestic publics that stabilization is now their collective “war aim”.
But the future of this mission will not simply hinge on the number of troops. What matters is how these forces are used. There are two tasks which they need to prioritize. The first is to protect the Afghan population from attacks. The second is to build up the Afghan state’s capacity to take care of its own security. No one disputes that the Afghan police are woefully inadequate. And confidence in them has been severely dented by the killing of five British soldiers by an Afghan policeman last week. Yet there is no alternative to training up the Afghan security forces. A sudden pullout of Western forces is not a realistic prospect.
