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Surviving Slow Growth

HOW TO SURVIVE SLOW GROWTH

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 Volume 95, Number 2

HOW TO SURVIVE SLOW GROWTH

The Age of Secular Stagnation 2
What It Is and What to Do About It
Lawrence H. Summers

Can Central Banks Goose Growth? 10

Bold Action Is Needed to Fight the Next Downturn
J. Tomilson Hill and Ian Morris

The Demographics of Stagnation 18

Why People Matter for Economic Growth
Ruchir Sharma

Middle-Class Heroes 25
The Best Guarantee of Good Governance
Nancy Birdsall

Eurasia’s Coming Anarchy 33

C OV E R P H O T O: I TAL IA N EST RO

The Risks of Chinese and Russian Weakness

Robert D. Kaplan

Is Innovation Over? 42
The Case Against Pessimism
Tyler Cowen

March/April 2016
I N T E R N A T I O N A L M O N E T A R Y F U N D

Inequality and
Fiscal Policy
edited by Benedict Clements,
Ruud de Mooij, Sanjeev Gupta, and
Michael Keen

“The IMF recognizes that its

policies can have huge distributive
consequences and so this book will
be important not only for guiding
its own work, but for scholars and
policymakers seeking to further
enhance our understanding of the
determinants of inequality and
devising policies that might reduce it.”
Joseph E. Stiglitz
Professor, Columbia University

Imfbookstore.org/fama6
 Learning to Love Stagnation 47
Growth Isn’t Everything—Just Ask Japan
Zachary Karabell

The Good News From Google 54

A Conversation With Ruth Porat

ESSAYS
Fight or Flight 62
America’s Choice in the Middle East
Kenneth M. Pollack

ISIS Goes Global 76

Fight the Islamic State by Targeting Its Affiliates
Daniel Byman

Can China’s Companies Conquer the World? 86

The Overlooked Importance of Corporate Power
Pankaj Ghemawat and Thomas Hout

The Lost Art of Economic Statecraft 99

Restoring an American Tradition
Robert D. Blackwill and Jennifer M. Harris

The Study-Abroad Solution 111

How to Open the American Mind
Sanford J. Ungar

ON FOREIGNAFFAIRS.COM
Kelly Greenhill on Michael Kazin on Michael Levi on the
demographic bombing. Donald Trump. geopolitics of cheap gas.

March/April 2016
Photo by Jeff Goldberg/Esto
 Japan’s New Realism 125
Abe Gets Tough
Michael Auslin

The Next Front on Climate Change 135

How to Avoid a Dimmer, Drier World
Veerabhadran Ramanathan, Jessica Seddon, and David G. Victor

REVIEWS & RESPONSES

What Rome Can Teach Us Today 144
Ancient Lessons for Modern Politics
Michael Fontaine

Hunger Games 150

A History of Famine
Douglas Gollin

Diplomacy Disrupted 156

Foreign Policy in a Decentralized World
Cameron Munter

A Feminist Foreign Policy 162

Hillary Clinton’s Hard Choices
Suzanne Nossel

Recent Books 168

Letters to the Editor 192

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March/April 2016 · Volume 95, Number 2
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CONTRIBUTORS
The son of two economists and the nephew of two Nobel
laureates in economics, LAWRENCE SUMMERS seemed
destined from birth to become an economist. And indeed,
after a short stint as a physics major at MIT, he soon
switched to “the dismal science,” gaining tenure at Harvard
at 28. Since then, he has served as chief economist at the
World Bank, U.S. treasury secretary, president of Harvard,
and director of President Barack Obama’s National Eco-
nomic Council. In “The Age of Secular Stagnation” (page 2),
Summers argues that governments must increase public
investment to address the root causes of slow global growth.

NANCY BIRDSALL has worked in international development

since 1969, starting at the American Council on Education’s
Overseas Liaison Committee fresh out of college. Two
decades later, she became the director of policy research at
the World Bank; a decade after that, she co-founded the
Center for Global Development, a nonprofit where she
serves as president. In “Middle-Class Heroes” (page 25),
she argues that economic development in a slow-growth
world depends on a healthy global middle class.

SANFORD UNGAR has been the Washington editor of The

Atlantic, a host of National Public Radio’s All Things Consid-
ered, and the dean of the School of Communication at
American University. At Voice of America, which he directed
from 1999 to 2001, he oversaw programs broadcast in 53
languages to more than 90 million listeners every week. He
then became the president of Goucher College, in Maryland,
a post he held until 2014, where he made foreign study
mandatory for all students. In “The Study-Abroad Solution”
(page 111), Ungar argues that a successful U.S. foreign policy
depends on Americans’ exposure to the rest of the world.

After college, SUZANNE NOSSEL went to South Africa to work

for a group transitioning the country away from apartheid.
Over the decades that followed, her work in international law,
foreign policy, and human rights brought her to leadership
roles at various nongovernmental organizations and to the
U.S. State Department, where she served from 2009 to 2011
as a deputy assistant secretary under Secretary of State
Hillary Clinton. Now the executive director of PEN
American Center, in “A Feminist Foreign Policy” (page 162),
Nossel evaluates Clinton’s record on women’s rights abroad.
HOW TO SURVIVE SLOW GROWTH
T
he first decade of the twenty-first
century was a time of unprec-
edented economic growth. The
rich world got richer, and the developing
world raced ahead: by 2007, the emerging-
market growth rate had hit 8.7 percent,
and economists began to speak of “con-
vergence,” when the impoverished “rest”
would finally catch up to the West. Then
came the fall.
Today, with China slumping, energy
prices collapsing, and nervous consumers
sitting on their hands, growth has ground
to a halt almost everywhere, and econo-
mists, investors, and ordinary citizens are
starting to confront a grim new reality: the
world is stuck in the slow lane and nobody
seems to know what to do about it.
How did we get here? How can we
escape stagnation, and why aren’t the
old remedies working? And what are
the geopolitical implications of this new
economic era? These are the questions
this issue’s lead package tries to answer.
Articles by Lawrence Summers and by
J. Tomilson Hill and Ian Morris kick
things off by explaining why, more than
seven years after the Great Recession
began, the recovery remains so weak.
Summers looks at the causes and conse-
quences of secular stagnation and finds a
remedy in expansionary fiscal policy.
Hill and Morris caution that the road
ahead looks even rougher, as central
banks have already used every tool at
their disposal, leaving the global econ-
omy “without shock absorbers.”
Ruchir Sharma fleshes out the origin
story by highlighting a key problem that’s
often overlooked: radical declines in
population growth around the world.
Nancy Birdsall warns that slow growth
won’t just hurt businesses and investors but
could also end one of the most important
developments of the last three decades:
the steady rise of a global middle class,
which has played an essential role in the
spread of democracy and good governance.
And Robert Kaplan explores the desta-
bilizing effects of slow growth on China
and Russia, two great but struggling
powers that could soon become even
more belligerent and unpredictable as
their economies continue to sour.
It’s not all bad news, however; Tyler
Cowen, Zachary Karabell, and Ruth
Porat all argue that it’s not yet time for
despair. Reviewing Robert Gordon’s
The Rise and Fall of American Growth,
Cowen reminds us that predictions
about growth are notoriously hard to
get right and that breakthroughs, with
all their attendant benefits, often arrive
when least expected. Karabell argues
that slow growth isn’t necessarily so
hard to live with—at least not if costs
are also stagnating, which they are.
Porat, finally, brings us the view from
Google (now Alphabet): a markedly
sunnier take that emphasizes the ability
of technology and innovation to empower
and energize people and make the world
a better place for everyone. Let’s hope
she’s right.
—Jonathan Tepperman, Managing Editor
 The main constraint on the
industrial world’s economy
today is on the demand side
rather than the supply side.
—Lawrence Summers

The Age of Secular Stagnation Eurasia’s Coming Anarchy

Lawrence H. Summers 2 Robert D. Kaplan 33

Can Central Banks Goose Growth? Is Innovation Over?

J. Tomilson Hill and Ian Morris 10 Tyler Cowen 42

The Demographics of Stagnation Learning to Love Stagnation

Ruchir Sharma 18 Zachary Karabell 47
I TAL IA N EST RO

Middle-Class Heroes A Conversation With Ruth Porat 54

Nancy Birdsall 25
 Return to Table of Contents

expand their balance sheets by more

The Age of Secular than $5 trillion. Had economists been
HOW TO SURVIVE SLOW GROWTH

told such monetary policies lay ahead,

Stagnation moreover, they would have confidently
predicted that inflation would become a
What It Is and What to Do serious problem—and would have been
shocked to find out that across the United
About It States, Europe, and Japan, it has gener-
ally remained well below two percent.
Lawrence H. Summers In the wake of the crisis, governments’
debt-to-gdp ratios have risen sharply, from

A
s surprising as the recent 41 percent in 2008 to 74 percent today in
financial crisis and recession the United States, from 47 percent to
were, the behavior of the world’s 70 percent in Europe, and from 95 percent
industrialized economies and financial to 126 percent in Japan. Yet long-term
markets during the recovery has been interest rates are still remarkably low, with
even more so. ten-year government bond rates at around
Most observers expected the unusu- two percent in the United States, around
ally deep recession to be followed by an 0.5 percent in Germany, and around
unusually rapid recovery, with output and 0.2 percent in Japan as of the beginning
employment returning to trend levels of 2016. Such low long-term rates suggest
relatively quickly. Yet even with the U.S. that markets currently expect both low
Federal Reserve’s aggressive monetary inflation and low real interest rates to
policies, the recovery (both in the United continue for many years. With appropriate
States and around the globe) has fallen caveats about the complexities of drawing
significantly short of predictions and inferences from indexed bond markets,
has been far weaker than its predecessors. it is fair to say that inflation for the
Had the American economy performed entire industrial world is expected to be
as the Congressional Budget Office close to one percent for another decade
fore­cast in August 2009—after the and that real interest rates are expected
stimulus had been passed and the recov- to be around zero over that time frame.
ery had started—U.S. gdp today would In other words, nearly seven years into
be about $1.3 trillion higher than it is. the U.S. recovery, markets are not
Almost no one in 2009 imagined that expecting “normal” conditions to return
U.S. interest rates would stay near zero for anytime soon.
six years, that key interest rates in Europe The key to understanding this
would turn negative, and that central situation lies in the concept of secular
banks in the G-7 would collectively stagnation, first put forward by the
economist Alvin Hansen in the 1930s.
LAWRENCE H. SUMMERS is President The economies of the industrial world,
Emeritus and Charles W. Eliot University in this view, suffer from an imbalance
Professor of Economics at Harvard University. resulting from an increasing propensity
He served as U.S. Secretary of the Treasury
from 1999 to 2001 and Director of the National to save and a decreasing propensity to
Economic Council from 2009 to 2010. invest. The result is that excessive saving

2 f o r e i g n a f fa i r s

acts as a drag on demand, reducing
growth and inflation, and the imbalance
between savings and investment pulls
down real interest rates. When signifi-
cant growth is achieved, meanwhile—
as in the United States between 2003
and 2007—it comes from dangerous
levels of borrowing that translate excess
savings into unsustainable levels of invest-
ment (which in this case emerged as a
housing bubble).
Other explanations for what is hap-
pening have been proposed, notably
Kenneth Rogoff ’s theory of a debt
overhang, Robert Gordon’s theory of
supply-side headwinds, Ben Bernanke’s
theory of a savings glut, and Paul Krug-
man’s theory of a liquidity trap. All of
these have some validity, but the secular
stagnation theory offers the most com-
prehensive account of the situation and
the best basis for policy prescriptions.
The good news is that although devel-
opments in China and elsewhere raise
the risks that global economic conditions
will deteriorate, an expansionary fiscal
policy by the U.S. government can help
overcome the secular stagnation problem
and get growth back on track.
STUCK IN NEUTRAL
Just as the price of wheat adjusts to
balance the supply of and demand for
wheat, it is natural to suppose that interest
rates—the price of money—adjust to
balance the supply of savings and the
demand for investment in an economy.
Excess savings tend to drive interest
rates down, and excess investment demand
tends to drive them up. Following the
Swedish economist Knut Wicksell, it
is common to refer to the real interest
rate that balances saving and investment
at full employment as the “natural,” or
The Age of Secular Stagnation
“neutral,” real interest rate. Secular
stagnation occurs when neutral real
interest rates are sufficiently low that
they cannot be achieved through
conventional central-bank policies.
At that point, desired levels of saving
exceed desired levels of investment,
leading to shortfalls in demand and
stunted growth.
This picture fits with much of what
we have seen in recent years. Real inter-
est rates are very low, demand has been
sluggish, and inflation is low, just as one
would expect in the presence of excess
saving. Absent many good new invest-
ment opportunities, savings have tended
to flow into existing assets, causing asset
price inflation.
For secular stagnation to be a plau-
sible hypothesis, there have to be good
reasons to suppose that neutral real
interest rates have been declining and
are now abnormally low. And in fact, a
number of recent studies have tried to
look at this question and have generally
found declines of several percentage
points. Even more convincing is the
increasing body of evidence suggesting
that over the last generation, various
factors have increased the propensity
of populations in developed countries
to save and reduced their propensity to
invest. Greater saving has been driven
by increases in inequality and in the
share of income going to the wealthy,
increases in uncertainty about the length
of retirement and the availability of
benefits, reductions in the ability to
borrow (especially against housing),
and a greater accumulation of assets by
foreign central banks and sovereign
wealth funds. Reduced investment has
been driven by slower growth in the labor
force, the availability of cheaper capital
March/April 2016 3
Lawrence H. Summers
goods, and tighter credit (with lending
more highly regulated than before).
Perhaps most important, the new
economy tends to conserve capital.
Apple and Google, for example, are
the two largest U.S. companies and are
eager to push the frontiers of technol-
ogy forward, yet both are awash in cash
and are under pressure to distribute
more of it to their shareholders. Think
about Airbnb’s impact on hotel con-
struction, Uber’s impact on automobile
demand, Amazon’s impact on the con-
struction of malls, or the more general
impact of information technology on
the demand for copiers, printers, and
office space. And in a period of rapid
technological change, it can make sense
to defer investment lest new technology
soon make the old obsolete.
Various studies have explored the
impact of these factors and attempted
to estimate the extent to which they
have reduced neutral real interest rates.
The most recent and thorough of these,
by Lukasz Rachel and Thomas Smith at
the Bank of England, concluded that for
the industrial world, neutral real interest
rates have declined by about 4.5 per-
centage points over the last 30 years
and are likely to stay low in the future.
Together with the current price of
long-term bonds, this suggests that the
kind of Japan-style stagnation that has
plagued the industrial world in recent
years may be with us for quite some time.
DIFFERENTIAL DIAGNOSIS
Not all economists are sold on the
secular stagnation hypothesis. Building
on the monumental history of financial
crises he wrote with Carmen Reinhart,
for example, Rogoff ascribes current
difficulties to excessive debt buildups
4 f o r e i g n a f fa i r s
and subsequent deleveraging. But
although these surely contributed to
the financial crisis, they seem insuffi-
cient to account for the prolonged slow
recovery. Moreover, the debt buildups
theory provides no natural explanation
for the generation-long trend toward
lower neutral real interest rates. It seems
more logical to see the debt buildups
decried by Rogoff as not simply exogenous
events but rather the consequence of a
growing excess of saving over investment
and the easy monetary policies necessary
to maintain full employment.
Gordon, meanwhile, has argued for
what might be called supply-side secular
stagnation—a fundamental decline in
the rate of productivity growth relative
to its golden age, from 1870 to 1970.
Gordon is likely right that over the next
several years, the growth in the potential
output of the American economy and
in the real wages of American workers
will be quite slow. But if the primary
culprit were declining supply (as op-
posed to declining demand), one would
expect to see inflation accelerate rather
than decelerate.
For a decade, Bernanke has empha-
sized the idea of a savings glut emanat-
ing from cash thrown off by emerging
markets. This was indeed an important
factor in adding to excess saving in the
developed world a decade ago, and it
may well be again if emerging markets
continue to experience growing capital
flight. But both the timing and the scale
of capital export from emerging markets
make it unlikely that it is the principal
reason for the major recent declines in
neutral real interest rates.
Krugman and some others have
sought to explain recent events and make
policy recommendations based on the

Investors wanted: a vacant house in Newark, New Jersey, May 2014
old Keynesian concept of a liquidity
trap. As Krugman has emphasized, this
line of thinking is parallel to the secular
stagnation one. But most treatments of
the liquidity trap treat it as a temporary
phenomenon rather than a potentially
permanent state of affairs, which is what
the evidence seems to be showing.
Perhaps the most comforting alterna-
tive view is that secular stagnation may
have indeed occurred in the past but is
no longer operating in the present.
With the unemployment rate down to
five percent and the Fed embarked on a
E D UAR D O M U N O Z / R E U T E R S
tightening cycle, the argument runs,
indicators will start returning to earlier,
higher growth trends. Perhaps. But
markets are betting that the Fed will
not be able to tighten monetary policy
nearly as much as it expects, and if
another recession starts in the next few
The Age of Secular Stagnation
years, cuts will soon bring interest rates
back down to the zero lower bound.
LET’S GET FISCAL
Up to the 1970s, most economists
believed that if governments managed
demand properly, their countries’
economies could enjoy low unemploy-
ment and high output with relatively
modest inflation. The proper task of
macroeconomists, it followed, was to use
monetary and fiscal policy to manage
demand well. But this thinking was
eventually challenged from two direc-
tions—in theory, by Milton Friedman,
Robert Lucas, and others, and in prac-
tice, by the experience of high inflation
together with high unemployment.
The emergence of such “stagflation”
in the late 1970s led to general accep-
tance of the natural-rate hypothesis,
March/April 2016 5
Lawrence H. Summers
the idea that abnormally low unem-
ployment causes inflation to accelerate.
According to this view, since policymak-
ers would not accept permanently rising
rates of inflation, economies would tend
to fluctuate around a natural rate of
unemployment, determined by factors
such as labor flexibility, the availability
of benefits, and the effectiveness of
hiring and job searches. By skillfully
managing demand, policymakers could
aspire to reduce the amplitude of the
fluctuations—and although they could
determine the average rate of inflation,
they could not raise the average level
of output.
By the mid 1980s, once inflation had
been brought down from double-digit
levels, a consensus on macroeconomic
policy emerged. The central objective
of policy, most mainstream economists
believed, should be to achieve a low and
relatively stable rate of inflation, since
there were no permanent gains to be
had from higher inflation. This could
best be accomplished, it was thought,
by firmly establishing the political
independence of central banks and by
setting inflation targets in order to
control expectations. Fiscal policy,
meanwhile, was not considered to have
a primary role in managing demand,
because it was slow acting and might
push interest rates up and because mon-
etary policy could do what was needed.
Seen through the lens of the secular
stagnation hypothesis, however, all
these propositions are problematic. If
it were possible to avoid secular stagna-
tion, then it would indeed be possible to
increase average levels of output sub-
stantially, raising the stakes for demand
management policy. The danger in
monetary policy, moreover, lies not in
6 f o r e i g n a f fa i r s
politicians eager to inflate away problems
but in bankers refusing to generate enough
demand to bring inflation up to target
levels and permit reductions in real
interest rates. And fiscal policy, finally,
takes on new significance as a tool in
economic stabilization.
As of yet, none of these principles
has been fully accepted by policymakers
in the advanced industrial world. It is
true that central banks have sought,
through quantitative easing, to loosen
monetary conditions even with short-
term interest rates at rock bottom. But
they have treated these policies as a
short-term expedient, not a longer-term
necessity. More important, these policies
are running into diminishing returns
and giving rise to increasingly toxic side
effects. Sustained low rates tend to
promote excess leverage, risk taking,
and asset bubbles.
This does not mean that quantita-
tive easing was mistaken. Without such
policies, output would likely be even
lower, and the world economy might well
have tipped into deflation. But monetary-
policy makers need to acknowledge
much more explicitly that neutral real
rates have fallen substantially and that the
task now is to adjust policy accordingly.
This could include setting targets for
nominal gdp growth rather than infla-
tion, investing in a wider range of risk
assets, making plans to allow base rates
to turn negative, and underscoring the
importance of avoiding a new recession.
When the primary policy challenge
for central banks was establishing cred-
ibility that the printing press was under
control, it was appropriate for them to
jealously guard their independence. When
the challenge is to accelerate, rather than
brake, economies, more cooperation with

domestic fiscal authorities and foreign
counterparts is necessary.
The core problem of secular stagna-
tion is that the neutral real interest rate
is too low. This rate, however, cannot be
increased through monetary policy.
Indeed, to the extent that easy money
works by accelerating investments and
pulling forward demand, it will actually
reduce neutral real rates later on. That
is why primary responsibility for address-
ing secular stagnation should rest with
fiscal policy. An expansionary fiscal policy
can reduce national savings, raise neutral
real interest rates, and stimulate growth.
Fiscal policy has other virtues as
well, particularly when pursued through
public investment. A time of low real
interest rates, low materials prices, and
high construction unemployment is the
ideal moment for a large public invest-
ment program. It is tragic, therefore,
that in the United States today, federal
infrastructure investment, net of depre-
ciation, is running close to zero, and net
government investment is lower than at
any time in nearly six decades.
It is true that an expansionary fiscal
policy would increase deficits, and many
worry that running larger deficits would
place larger burdens on later generations,
who will already face the challenges of
an aging society. But those future genera-
tions will be better off owing lots of
money in long-term bonds at low rates
in a currency they can print than they
would be inheriting a vast deferred
maintenance liability.
Traditional concern with fiscal
deficits has focused on their impact in
pushing up interest rates and retarding
investment. Yet by setting yields so
low and bond prices so high, markets
are sending a clear signal that they want
The Age of Secular Stagnation
more, not less, government debt. By
stimulating growth and enabling an
inflation increase that would permit a
reduction in real capital costs, fiscal expan-
sion now would crowd investment in
rather than out. Well-intentioned
proposals to curtail prospective pension
benefits, in contrast, might make matters
even worse by encouraging increased
saving and reduced consumption, thus
exacerbating secular stagnation.
The main constraint on the industrial
world’s economy today is on the demand,
rather than the supply, side. This means
that measures that increase potential
supply by promoting flexibility are
therefore less important than measures
that offer the potential to increase demand,
such as regulatory reform and business
tax reform. Other structural policies
that would promote demand include
steps to accelerate investments in renew-
able technologies that could replace
fossil fuels and measures to raise the
share of total income going to those
with a high propensity to consume, such
as support for unions and increased
minimum wages. Thus, John Maynard
Keynes, writing in a similar situation
during the late 1930s, rightly emphasized
the need for policy approaches that both
promoted business confidence—the
cheapest form of stimulus—and increased
labor compensation.
TO HANGZHOU AND BEYOND
If each of the countries facing secular
stagnation today were to confront it
successfully on its own, the results
would be very favorable for the global
economy. But international focus and
coordination have crucial additional
roles to play.
Secular stagnation, after all, increases
March/April 2016 7
Lawrence H. Summers
the contagion from economic weakness.
In normal times, if the rest of the world
economy suffers, the United States or
any other affected economy can offset
the loss of demand and competitiveness
through monetary easing. With mon-
etary policy already at its lower limit,
however, additional easing is impossible
(or at least much more difficult), and so
each country’s stake in the strength of
the global economy is greatly magnified.
Secular stagnation also increases
the danger of competitive monetary
easing and even of currency wars.
Looser money, starting with near-zero
capital costs, is likely to generate
demand primarily through increases
in competitiveness. This is a zero-sum
game, since currency movements
switch demand from one country to
another rather than increase it glob-
ally. Fiscal expansions, in contrast,
raise demand on a global basis. Inter-
national coordination is thus necessary
to avoid an excessive and self-defeat-
ing reliance on monetary policy and
achieve a mutually rewarding reliance
on fiscal policy to address problems.
Movements in commodity prices in
recent months have shown that events
in emerging markets, especially China,
can have significant impacts globally.
It now appears likely that more capital
will flow out of emerging markets and
less will flow in than has been the case
in recent years. These capital outflows
and the consequent increases in net
exports will further reduce demand
and neutral real rates in the developed
world, thereby exacerbating secular
stagnation. Policies that help restore
confidence in emerging markets,
therefore, will also strengthen the
global economy.
8 f o r e i g n a f fa i r s
These issues were recognized at
the successful G-20 summit in Lon-
don in April 2009 (although the prob-
lems were misdiagnosed as cyclical
and temporary rather than secular
and enduring). The common commit-
ments undertaken there to engage in
fiscal expansion, strengthen financial
regulation, resist trade protection,
and enhance the capacity of interna-
tional financial institutions to respond
to problems in emerging markets were
effective in halting the collapse of the
global economy. Unfortunately, subse-
quent G-20 summits returned to their
traditional lethargy and misguided
preoccupation with fiscal austerity,
monetary normalization, and moral
hazard, ending up missing opportuni-
ties to accelerate the recovery.
This year, the Chinese will host a
G-20 summit in September. If China
chooses to recognize how important
global growth is for its economy, and
how important its economy is for global
growth, it could perform a great service
by reinvigorating international eco-
nomic cooperation. The key priority in
Hangzhou—as it was in London back in
2009—should be increasing global
demand and making sure that it picks
up particularly in those countries where
there is the most economic slack.
In this regard, China’s decisions
about its own economic affairs will be
crucial. To date, the international
community has joined Chinese financial
officials in urging China’s political
leadership to pursue financial liberaliza-
tion. This is surely correct for the long
run. But it may well be in China’s and
the global interest that the liberalization
process proceed more gradually than is
currently envisioned, so that capital
 The Age of Secular Stagnation

outflows from China do not threaten type of alternator in a car engine, he

China’s own financial stability and noted that the economy had what he
spread weakness to the global economy called “magneto trouble.” A car with a
at large. broken alternator won’t move at all—
As the euro has declined sharply, yet it takes only a simple repair to get
meanwhile, any recovery that Europe it going. In much the same way,
has achieved has come largely from secular stagnation does not reveal a
increases in competitiveness that reduce profound or inherent flaw in capital-
growth elsewhere. Germany now leads ism. Raising demand is actually not
the world with a trade surplus equal to that difficult, and it is much easier
a whopping eight percent of gdp. The than raising the capacity to produce.
global community should encourage The crucial thing is for policymakers
Europe to generate domestic demand to diagnose the problem correctly and
as it seeks to expand its economy. make the appropriate repairs.∂
One more priority in Hangzhou
should be promoting global infra-
structure investment. In this regard,
the Chinese-led Asian Infrastructure
Investment Bank is a valuable step
forward, and it should be strongly
supported by the global community,
even as it is encouraged to respect
international norms and standards
relating to issues such as environmen-
tal protection and integrity in pro-
curement. And efforts to support
infrastructure investment elsewhere,
such as the Obama administration’s
Power Africa initiative, should be
carried forward.
Secular stagnation and the slow
growth and financial instability associ-
ated with it have political as well as
economic consequences. If middle-
class living standards were increasing
at traditional rates, politics across
the developed world would likely be
far less surly and dysfunctional. So
mitigating secular stagnation is of
profound importance.
Writing in 1930, in circumstances
far more dire than those we face today,
Keynes still managed to summon some
optimism. Using a British term for a

March/April 2016 9
 Return to Table of Contents
Can Central Banks
HOW TO SURVIVE SLOW GROWTH
Goose Growth?
Bold Action Is Needed to
Fight the Next Downturn
J. Tomilson Hill and Ian Morris
I
n the years since the global financial
crisis of 2008 engulfed the world
and the United States fell into the
Great Recession, the panic has subsided
and Western economies have recovered
to varying degrees. But the downturn’s
effects have proved profound and lasting,
and serious risks persist for the global
economy. The recovery has been slow,
inflation levels remain below the targets
set by central banks, and total debt
levels are much higher than before the
crisis began.
Worst of all, at least two dozen
countries—some with developed econo-
mies, others with emerging markets—
find themselves either at or very close to
the so-called zero lower bound, meaning
that their short-term nominal interest
rates hover around zero. At the zero
lower bound, central banks struggle to
stimulate growth, since the simplest way
for them to do so—dropping interest rates
even further—becomes nearly impossible
when rates are already (almost) as low as
they can go. The U.S. Federal Reserve
has recently begun to raise interest rates
J. TOMILSON HILL is President and CEO of
Blackstone Alternative Asset Management and
Vice Chair of Blackstone.
IAN MORRIS is a Senior Managing Director at
Blackstone.
10 f o r e i g n a f fa i r s
because the American economy has
sufficiently improved, a step that has
moved the United States slightly away
from the zero lower bound. But Japan,
the countries of the eurozone, and many
others are still stuck with weak economies
and interest rates at or close to zero.
Central banks have already applied
almost every traditional policy tool, as
well as some unconventional and even
radical ones, and yet economic outlooks
everywhere remain uncertain. In a sense,
then, the global economy is traveling
without shock absorbers. Another down-
turn—even a relatively ordinary one—
would require central bankers to once
again turn to experimental and seem-
ingly risky monetary policies, as they
did in response to the financial crisis.
Traditional tax cuts and spending pack-
ages would help but would likely prove
insufficient: debt is already very high,
and intense political opposition to
increasing it exists in many countries.
Many investors, and even some
economists and analysts, have grown
complacent in recent years as the global
economy has continued to recover. But
history suggests that no one should get
too comfortable. Since World War II, the
U.S. economy has fallen into a recession
every five years, on average. The longest
measured U.S. economic expansion
lasted ten years, from 1991 until 2001.
The current round of growth has already
lasted almost seven years—so even if it
matched the previous record-holder, it
would still end sometime in 2019.
Of course, records can be broken, and
U.S. economic history is not necessarily
definitive; Australia, for example, has
avoided a recession for nearly 25 years
now, and the Netherlands racked up
almost 26 years of growth before 2008.

But if historical patterns hold true, a
recession (lasting at least six months
to a year) will probably hit the United
States before 2020—and given the
central role the country plays in the
world economy, the slowdown will
likely become global.
Should it arrive, such a recession,
coming hard on the heels of the anemic
recovery, would strongly suggest that
the current stagnation is secular—that
is, indefinite—rather than merely cyclical
or temporary. So rather than moving
past the crisis and into a period of nor-
malization, the world might instead be
only part of the way through an era
defined by very slow growth and shaped
by previously unthinkable and far-fetched
policies to improve things—including
an embrace of negative real interest
rates in the long term.
The good news is that a few bold,
even radical policies could shield the
global economy from the worst effects
of the next downturn. The bad news is
that it remains uncertain whether policy-
makers will use them aggressively enough
when the time comes.
A TROUBLED RECOVERY
It isn’t difficult to find evidence of just
how weak and tentative the recovery
has been. In the third quarter of 2015
(the most recent period for which statis-
tics are available), U.S. real gdp was
around 13 percent lower than forecasts
issued in 2007 (including those made
by the International Monetary Fund)
predicted it would be. That amounts to
a shortfall of $15 trillion. The situation
is even worse in the eurozone, where
overall gdp grew by 16 percent less
between 2007 and 2015 than the same
forecasts predicted, ranging from an
Can Central Banks Goose Growth?
eye-popping 21 percent less in Spain to
a much lower but still significant seven
percent less in Germany.
Meanwhile, inflation has also fallen
below expectations in Japan, the United
States, and the eurozone, a sign that weak
economic conditions are keeping demand
low. And from 2007 to 2014, total global
debt (including public and private borrow-
ing) increased by $57 trillion, according to
the corporate consulting firm McKinsey,
owing primarily to large government
deficits. In advanced economies, the
ratio of private debt to gdp has leveled
off, but government debt continues to
rise sharply, which would cause trouble
if interest rates were ever to normalize,
since debt-servicing costs would then soar.
Employment statistics present a more
mixed picture, because the postcrisis
stagnation has come in two varieties:
jobs poor and jobs rich. Southern Europe
still suffers from mass unemployment.
In contrast, many northern European
countries are close to full employment,
despite being at the zero lower bound.
The same holds true in Japan. Similarly,
U.S. unemployment has fallen by half
over the past five years or so, to about five
percent—an impressive improvement.
But unemployment rates alone don’t
tell the whole story, especially in the
United States. Consider that even as
unemployment has plunged, U.S. gdp
growth has averaged just two percent a
year. What is more, the percentage of
American adults participating in the
labor force has fallen to its lowest point
in nearly four decades, which suggests
high levels of “shadow unemployment”—
large numbers of people who are unem-
ployed and have stopped trying to find
work, dropping out of the labor force
altogether and thus no longer factoring
March/April 2016 11
J. Tomilson Hill and Ian Morris
into official unemployment statistics.
That change is not merely the result
of demographic shifts, such as baby
boomers reaching retirement age; in
fact, the proportion of Americans of
prime working age (25 to 54 years old)
who are currently working is significantly
smaller than the proportion of Germans,
Japanese, Swedish, and Swiss of that
age who are now employed. This sug-
gests that although unemployment may
be low, the U.S. labor force is neverthe-
less underutilized.
SUPPLY OR DEMAND?
To figure out how to boost stagnant
growth and employment rates, it’s crucial
to determine whether the global economy
suffers primarily from weak demand or
from weak supply. The fact that inflation
has remained below target rates strongly
suggests the problem is weak demand,
since if supply were weak, the combina-
tion of that and easy money (owing to
low interest rates) would have produced
much more inflation than has actually
occurred. Many governments seem to
have overlooked this fact, however, and
have pursued remedies better suited to
treating supply problems than demand
ones. These include labor reforms that
make it easier to hire and fire workers
and measures meant to introduce more
competition into traditionally sheltered
sectors of the economy.
European governments, in particular,
have found such reform programs attrac-
tive. In the wake of the crisis, states in
the eurozone found it difficult to stimu-
late growth by cutting government budget
deficits; so-called austerity measures
did not produce the hoped-for boost in
private-sector confidence. And because
they all use the euro, countries in the
12 f o r e i g n a f fa i r s
eurozone also could not simply devalue
their currencies—a conventional way
of dealing with weak demand. So aside
from the quantitative easing that the
European Central Bank launched last
year—flooding the eurozone with money
by buying government bonds—few
good options seemed to exist for stimu-
lating demand. Hence, some economists
and analysts have championed reforms
aimed at cutting inefficiencies on the
supply side, arguing that such steps will
raise expectations for more growth and
employment in the long term. The theory,
in other words, is that supply reforms
can stimulate demand.
In practice, however, that has not
panned out. Of course, eliminating red
tape is useful in good and bad times
alike. And there’s no doubt that govern-
ments can boost demand by making it
easier and faster for businesses to obtain
licenses, project approvals, and utility
grid connections; by ensuring that govern-
ment agencies pay their bills promptly;
and by nudging court systems to resolve
commercial disputes more efficiently.
Simpler, smarter bank regulations can
also encourage growth by making it
easier for businesses to borrow, and tax
reforms can encourage investment and
entrepreneurship.
But in the postcrisis period, pro-market
reforms have not corresponded with
strong economic recovery. Consider
three useful measures of supply-side
reform: the “product market regulation”
scorecard published by the Organization
for Economic Cooperation and Develop-
ment, which ranks countries based on
the extent to which their regulatory
environments affect competition; the
oecd’s Employment Protection Legis-
lation Index, which assesses the flexibil-

Bank on it: U.S. Federal Reserve Chair Janet Yellen in Washington, D.C., June 2014
ity of countries’ labor markets; and the
World Bank’s Ease of Doing Business
Index. If champions of supply-oriented
reforms were right, then high marks on
those three indexes should correlate with
real growth and recovery. In fact, no such
correlation exists. Ireland and Finland
had some of the best scores before the
crisis, but Ireland went bust, and Finland
has stagnated during the recovery. Mean-
while, Greece and Portugal boast some
of the biggest postcrisis improvements
in all three measures, yet they are suffering
some of the worst stagnation in Europe.
IT’S A TRAP
J O NAT HA N E R N ST / R E U T E R S
The trouble is that even if one accepts
that demand-oriented problems require
demand-oriented solutions, the zero
lower bound problem seems an insur-
mountable obstacle. Should countries
suffer another downturn, they would
have few ways to stimulate demand.
Can Central Banks Goose Growth?
Central banks have already established
nominal interest rates at or close to
zero, and further quantitative easing
might prove ineffective owing to what
economists call “the liquidity trap.”
That condition, which is related to the
zero lower bound problem, occurs
when an increase in the money supply
(such as one produced by quantitative
easing) fails to persuade people to
spend more because they come to see
cash and bonds as equivalent. Consider
a scenario in which people were initially
inclined to hold government bonds at a
yield of just above zero but then find
themselves holding more cash because
the central bank has purchased their
bonds to facilitate quantitative easing.
In a liquidity trap, those people don’t
spend the cash—even though they can,
since it is liquid—because they view the
cash as being basically the same as the
bonds they had before.
March/April 2016 13
J. Tomilson Hill and Ian Morris
Should economies fall into that trap,
the only way to escape it (aside from a
large and thus politically difficult fiscal
stimulus) would be to allow real interest
rates to fall further, into negative terri-
tory, in order to discourage excessive
saving and boost investment. Under-
standably, investors and policymakers
dislike such conditions. Negative rates
feel strange and somehow wrong: Why
would anyone invest in a bond that
not only doesn’t pay them returns but
actually loses them money? Yet the
so-called portfolio theory, developed
by the economist Harry Markowitz in
the 1950s and later advanced by others,
shows that under certain circumstances,
investors should in fact seek assets with
negative expected returns, as long as
doing so helps diversify their holdings.
That is because at certain difficult times,
such as a recession, when stock prices
dive, bonds with negative yields can
represent a good investment, since the
value of other assets might plummet
and interest rates might fall even further
into negative territory, which would
raise the prices of those bonds.
But with nominal interest rates already
at or near zero, how can central banks
engineer sufficiently negative real interest
rates? The only way to do so is to create
expectations that inflation will increase.
If the nominal interest rate is zero and
expected inflation is two percent, then
the real interest rate equals negative two
percent; likewise, at a nominal interest
rate of zero, expected inflation of four
percent results in a real interest rate of
negative four percent.
But most central banks have proved
unwilling to raise inflation targets,
because they have spent most of the
past three and a half decades wringing
14 f o r e i g n a f fa i r s
undesirably high inflation from their
economies and they worry that setting
higher inflation targets would amount
to playing with fire. In reality, they are
fighting yesterday’s war, but such firmly
entrenched views and preferences are
difficult to overcome.
Other factors have also held down
inflation. Recent economic growth in
developed economies has not benefited
all groups equally, and growing income
inequality has led many middle-class
Americans and Europeans to feel and
behave as they would during a recession:
saving more, spending less, and thus
preventing inflation from rising. Slow-
ing population growth in two major
developed-world economic hubs, the
eurozone and Japan, has also reduced
spending in those places. Meanwhile,
in China and other countries with
emerging economies, people continue to
save a high proportion of their incomes
because they fear that government-
funded social safety nets will prove
inadequate when they retire or should
they fall ill. Finally, since the financial
crisis, all kinds of investors, including
large institutional players such as
pension and insurance funds, have
shown a preference for safe assets. That
has lowered overall demand for invest-
ment and added to the downward
pressure on inflation.
At some point, as older people in
developed economies begin to cash out
their investments in order to fund their
retirement years, spending will increase,
which should stimulate inflation. That
effect will be offset, however, because
by selling assets (houses, stocks, and so
on) in order to pay their bills, retirees
will push down asset prices, which will
have a deflationary effect.
 AD_121004_Kent_Oxford_IR Mag_BSIS_Bulletin 19/01/2016
ACCENTUATE THE NEGATIVE
With traditional approaches exhausted
and so many factors contributing to
stagnation, officials need to be ready ADVANCED
to consider an array of more unconven-
tional options for protecting the global
INTERNATIONAL
economy when the next downturn STUDIES IN
inevitably arrives. THE CAPITAL
The first step would be relatively OF EUROPE
straightforward: governments should
cut taxes and engage in more stimulus Postgraduate education in
spending, including on critical infrastruc- international affairs taught
ture, which would help boost demand. in English by world-leading
But it’s doubtful that that kind of fiscal academics and experienced
policy would prove sufficient: it’s un- practitioners.
likely that governments would be able • Conflict and Security
to overcome political opposition to a • EU External Relations
stimulus that would add to already high • International and Human Rights Law
debt levels. So central banks will have • International Migration
• International Relations
to act boldly—for starters, by cutting • Political Economy
short-term rates into negative territory. • International Development
This has already happened in Denmark • Political Strategy and Communication
and Switzerland, where central banks have • Two Capitals Programme
set rates as low as negative 0.75 percent, Flexible study options – choose one
and the moves have not sparked panic: or two specialisations for full or
there have been no bank runs, and Danish part-time study.
and Swiss citizens have not started hoard-
Brussels based with internship
ing their cash under their mattresses. That and networking opportunities.
said, there is a limit to just how far below
zero short-term rates can go—perhaps T: +32 2 641 1721
negative three percent. Past that level, E: bsis@kent.ac.uk
bank runs might become a possibility. www.kent.ac.uk/brussels
Central banks should also take mea-
sures, such as more quantitative easing,
to reduce long-term rates. But at this
point, even another $1 trillion of quantita-
tive easing might not do much. So central
banks should also announce interest-
rate ceilings for long-term government
securities: perhaps a limit of 0.5 percent
for ten-year bonds. Setting a ceiling would
leave a greater supply of such bonds in
the market, because a credible plan for a
rate ceiling would itself drive down the

15
J. Tomilson Hill and Ian Morris
interest rate without the central bank
having to actually buy many bonds. And
during an economic contraction, a greater
supply of such bonds would be helpful
because uncertainty would likely pro-
duce a lot of demand for them. If rates
were already very low on long-term
securities, central banks could even
set negative rate ceilings on them.
Another fairly radical step would be
to embrace “helicopter money drops,” the
term that the economist Milton Friedman
coined to describe direct transfers of
cash from central banks to consumers.
Such transfers would likely be more
effective than quantitative easing at
boosting demand because they would
cut out the middlemen—banks—and
the need to wait for them to turn bank
reserves into loans, which might not
even materialize in the face of weak
demand for loans. Some would object
that such “money printing” would be
inflationary. But if deflation were the
problem, that effect would be a benefit,
not a cost. And should inflation threaten
to rise beyond a desirable level, central
banks could easily raise interest rates.
Central banks should also get over
their reluctance to establish higher
inflation targets, because doing so is the
most logical way to reduce real interest
rates. A growing chorus of economists
now recommend that some central banks
take this step, arguing for a target of
around four percent. But that’s easier
said than done. The economist Willem
Buiter rightly worries about central
banks “spitting in the wind”: setting
inflation targets that would amount to
little more than empty promises, not
backed up by any evidence that demand
will actually boom and cause inflation
to rise. There is a Catch-22 quality to
16 f o r e i g n a f fa i r s
the problem as well, since a widespread
belief that inflation will rise would itself
be necessary to reduce real interest rates
and so cause a boom.
Another problem is that if the
inflation targets are not high enough,
then real interest rates cannot go low
enough to push inflation higher; as a
result, the economy would disappoint,
and inflation undershoot. Japan faces
this risk now. It raised its inflation
target to two percent in 2013, but to
judge from actual inflation, which has
been persistently much lower than
two percent over the past few years, it
seems possible that Japan did not set
the target high enough.
Once a central bank picks an infla-
tion target, however, there are things
the bank can do to help the economy
reach it. Among them is a quantitative-
easing debt-buyback program to reduce
the government’s debt-to-gdp ratio.
In the event of a deflationary recession,
government debt might rise high enough
to create uncertainty, depress confidence,
and significantly weaken economic
conditions. In the United States, for
example, a severe recession could raise
government debt to 150 percent of gdp.
Japan’s government debt has already
risen to almost 250 percent of gdp. If
central bankers believed that debt reduc-
tion would aid economic recovery by
boosting confidence, they could announce
a plan to explicitly reduce outstanding
debt on a permanent basis by purchasing
debt equal to, say, 50 percent of gdp
over five years, spread equally among
securities that matured after six to ten
years. As the bonds matured, the central
bank would give the proceeds back to the
treasury. This would be the equivalent
of the treasury not paying back its debt.
 Can Central Banks Goose Growth?

It would represent a form of monetary country made the switch, the faster
financing, which could push inflation its economy recovered.
expectations up, therefore reducing real A similar dynamic might emerge in
interest rates, raising inflation expecta- the years ahead. Developed economies
tions further, and encouraging growth. are recovering from the financial crisis
The perceived downside to this strategy and the Great Recession, but at least two
is that the central bank’s assets would dozen countries face the zero lower bound
decline as the bonds matured. Financial problem or might soon, and the global
markets wouldn’t be thrilled, but the economy remains dangerously vulnerable
benefits of a debt buyback would likely to negative shocks. Eventually—probably
outweigh that cost. during the next downturn—stagnation
A final idea that governments should will force one or a few countries to dig
consider is a “deflation insurance” plan even deeper into the unconventional
to protect consumers and companies toolbox. There will be no easy fixes. But
from the increase in their real debts that armed with new ways to speed growth
deflation would cause, even if their and a willingness to experiment, some
nominal, actual money debts did not countries will get it right, and then others
change. In the event of a severe defla- will follow as success breeds success.
tion, consumers and companies would Policymakers all over the world should
include claims for deflation insurance do everything they can to prepare now
payments with their tax filings. The so they can be early adopters and avoid
government could insist that the pay- getting left behind.∂
ments be used only for debt reduction.
Some might object that the companies
and consumers with the most debt
would receive the most compensation;
to address such concerns, policymakers
could place limits on how much any one
firm or household could claim.
Such a plan would cost the govern-
ment nothing during normal times,
because there would be no deflation.
And the mere existence of such a scheme
would likely lower the risk of deflation,
because people would know the insurance
exists and so would be less likely to pull
back from investing and taking on debt.

STAYING AHEAD OF THE CURVE

Sometimes, changes in the global econ-
omy require drastic steps. In the 1930s,
many countries abandoned the gold
standard in order to escape stagnation.
And the move worked: the earlier a

March/April 2016 17
 Return to Table of Contents

savings in money and time generated

The Demographics by new technologies, from superfast
HOW TO SURVIVE SLOW GROWTH

Internet connections to artificial

of Stagnation intelligence. But it is hard to deny
that the growth in the size of the
labor force—which is driven mainly by
Why People Matter for increases in the number of working-
Economic Growth age people, those between the ages of
15 and 64—has slowed across the
Ruchir Sharma world.
Between 1960 and 2005, the global
labor force grew at an average of 1.8

I
n every single region of the world, percent per year, but since 2005, the rate
economic growth has failed to return has downshifted to just 1.1 percent, and
to the rate it averaged before the it will likely slip further in the coming
Great Recession. Economists have come decades as fertility rates continue to
up with a variety of theories for why decline in most parts of the world. The
this recovery has been the weakest in labor force is still growing rapidly in
postwar history, including high indebt- Nigeria, the Philippines, and a few other
edness, growing income inequality, and countries. But it is growing very slowly
excess caution induced by the original in the United States—at 0.5 percent per
debt crisis. Although each explanation year over the past decade, compared
has some merit, experts have largely with 1.7 percent from 1960 to 2005—and
overlooked what may be the most impor- is already shrinking in some countries,
tant factor: the global slowdown in the such as China and Germany.
growth of the labor force. The implications for the world
One way to calculate the world’s economy are clear: a one-percentage-
potential growth rate is to add the rate point decline in the population growth
at which the labor force is expanding to rate will eventually reduce the economic
the rate at which productivity is rising. growth rate by roughly a percentage
Since 1960, gains in both factors have point. A collapse in the growth rate
contributed equally to potential economic of the working-age population was
growth. And in the last decade, the gains already under way before the financial
in both appear to have leveled off. The crisis, and the trend explains a good
difference between these two drivers, chunk of the persistently disappoint-
however, is that there is a debate about ing recovery since. Governments can
whether the decline in productivity offer incentives to boost fertility rates
growth is real. Productivity measure- and lure more adults into the work
ments have arguably failed to capture force—and many already are—but
these half measures can only partially
RUCHIR SHARMA is Head of Emerging offset the larger forces at work. Ulti-
Markets and Global Macro at Morgan Stanley mately, then, the world should brace
Investment Management and the author of the
forthcoming book The Rise and Fall of Nations: itself for slower growth and fewer
Forces of Change in the Post-Crisis World. economic standouts.

18 f o r e i g n a f fa i r s

THE POPULATION PLATEAU
According to un forecasts, the world’s
population will rise from 7.3 billion
today to 9.7 billion by 2050. Alarmists
of all stripes have seized on the predic-
tion: neo-Malthusians fear that agricul-
tural productivity won’t be able to keep
up with all those extra mouths to feed,
neo-Luddites worry that the advent of
the robotic age will leave this exploding
population largely unemployed, and
anti-immigrant forces in the West raise
the specter of a rising tide of what one
British cabinet minister called “desper-
ate migrants marauding around.”
But all these fears are misplaced.
Although 2.4 billion sounds like a lot
of people to add to the planet by 2050,
the figure in fact takes into account a
dramatic slowdown in the population
growth rate—a decline driven largely
by the thinning ranks of working-age
people. Slower population growth reduces
the pressure on the food supply, as does
the aging of the population, because
elderly people consume up to a third
fewer calories than young people. But
such demographic decline is nonethe-
less toxic for the economy. The primary
threat most countries now face, in fact,
is not too many people but too few
young workers.
For much of the postwar era, global
population grew at nearly two percent
per year, which meant that the world
economy could also expect to grow at a
baseline rate of close to two percent a
year—and a couple of percentage points
more than that when output per worker
was also growing. Around 1990, how-
ever, population growth fell off a cliff.
Since then, the rate has halved, to just
around one percent. The difference
between one percent and two percent
The Demographics of Stagnation
may seem small, but if the population
growth rate had stayed at two percent
since 1990, there would be 1.4 billion
more people today, and shrinking work
forces would not pose such a threat to
economic growth.
This demographic shift is the de-
layed result of slow-moving changes in
death and fertility rates over the last
half century. On one side of the ledger,
advances in medicine and nutrition
have extended the average human’s life
span from 50 years in 1960 to 69 years
today, with more progress sure to come.
Already, the majority of global population
growth is a consequence of the expand-
ing share of people over 50, and the
fastest-growing segment of the popula-
tion is, by far, people older than 80.
On the other side of the ledger is the
global baby bust. Since 1960, the average
number of births per woman worldwide
has fallen from 4.9 to 2.5. In part, this
drop-off in the fertility rate owes to
rising prosperity and educational
levels among women, many of whom
decided to pursue careers and have
fewer children—or not have children
at all. But the decline has mostly been
the result of aggressive birth-control
policies adopted in the developing
world in the 1970s. China introduced
its one-child policy in the late 1970s,
and the fertility rate fell from 3.6 in
1978 to 1.5 today. In India, where the
government went so far as to embark
on a forced sterilization campaign in
the late 1970s, the fertility rate plum-
meted, from 5.9 in 1960 to 2.5 in 2015.
Today, more and more countries are
nearing the replacement fertility rate of
2.1, below which the population starts
to shrink. Already, nearly half of all the
people on earth live in one of the 83
March/April 2016 19
Ruchir Sharma
countries—including Brazil, China,
Germany, Iran, Japan, Russia, and the
United States—where the fertility
rate is below that level.
PEOPLE POWER
Because it takes 15 to 25 years for babies
to mature into working-age adults, the
economic impact of falling fertility
rates is only starting to become visible.
To get a better handle on how demo-
graphics will limit national economies
in the future, I looked at population
trends in the 56 cases since 1960 in
which a country sustained economic
growth of at least six percent for a
decade or more. On average, the working-
age population grew at 2.7 percent
during these booms, suggesting that
explosions in the number of workers
deserve a great deal of the credit for
economic miracles. This connection has
played out in dozens of cases, from Brazil
in the 1960s and 1970s to Malaysia in
the 1960s through the 1990s.
As for how fast the working-age
population needs to grow to raise the
likelihood of an economic boom, two
percent per year turns out to be a good
benchmark. In three-quarters of the 56
cases, the working-age population grew
faster than that average during the
duration of the economic boom. As
that suggests, a country is unlikely to
experience a decadelong boom if its
working-age population is growing
slower than two percent annually. Yet
most of the world now fits into that
category. As recently as the 1980s, 17
of the 20 largest emerging economies
had working-age population growth
rates above two percent. In this decade,
by contrast, only two countries do,
Nigeria and Saudi Arabia. The take-
20 f o r e i g n a f fa i r s
away: a world with fewer fast-growing
working-age populations will experience
fewer economic miracles.
To be sure, economic booms don’t
always require population booms: in a
quarter of the cases, the countries did
manage long stretches of strong economic
growth without reaching the threshold of
two percent population growth. Several
of these countries were already relatively
wealthy, such as Chile and Ireland in the
1990s, when some combination of reform
and new investment increased productiv-
ity and compensated for weak population
growth. Others were witnessing a return
to economic calm during a period of
reconstruction, as Japan, Portugal, and
Spain were in the 1960s and as Russia
was a decade after the fall of the Soviet
Union, with an added boost from high
oil prices in the last case. Today, no
country can expect a similar boost, not
when commodity prices are falling and
political unrest is rising.
Still, the probability of an economic
boom is much lower in the absence of
strong population growth, and even in
many parts of the developing world,
population growth is slowing or reversing.
Over the next five years, the working-
age population growth rate will likely
dip below the two percent threshold in
all the major emerging economies. In
Brazil, India, Indonesia, and Mexico,
it is expected to fall to 1.5 percent or
less. And in China, Poland, Russia, and
Thailand, the working-age population
is expected to shrink.
The decline in China is perhaps
most worrying, as the country has long
served as an engine of global economic
growth. In 2015, the growth rate of its
working-age population dipped below
zero for the first time in at least half a

Gone gray: a nursing home in Hanover, Germany, January 2013
century. At the same time, thanks to
the huge strides in health care that
China has made, the elderly’s share of
the population is growing much faster
there than in industrial countries such
as France or the United States. This
rapid aging adds to the list of reasons,
including an unprecedented debt binge,
to doubt that China can keep up its
rapid economic expansion.
Indeed, countries with shrinking
working-age populations have found it
nearly impossible to produce strong
economic growth. Going back to 1960,
there are 698 decadelong periods for
which data on a country’s population
JOANNA NO T T E BROCK / LAI F / RE DUX
growth and gdp growth are available.
In 38 of these cases, the working-age
population shrank. The average gdp
growth rate in these countries was a
measly 1.5 percent. Only three of them
managed to sustain gdp growth rates
of six percent or higher, and all three
were small countries bouncing back
from political turmoil: Portugal in the
The Demographics of Stagnation
1960s and Belarus and Georgia between
2000 and 2010.
This disappointing record suggests
that China’s economy will almost cer-
tainly not grow at six percent in the
coming years. In fact, although China’s
official numbers still put the growth
rate at around seven percent, indepen-
dent estimates show that it has already
fallen below six percent. The implica-
tions for economies elsewhere are dire:
in the last five years, China accounted
for about a third of global economic
growth, a contribution around twice
that of the United States.
Fortunately, in a few other populous
countries, the working-age populations
are still expanding at a rate near or
above two percent a year. This group
includes Bangladesh, Kenya, Nigeria,
and the Philippines. Demographers
expect these populations to keep grow-
ing rapidly for the next decade. But
even these countries have their work
cut out for them. They must avoid
March/April 2016 21
Ruchir Sharma
falling for the fallacy of the demographic
dividend: the idea that population
growth automatically translates into an
economic boom.
The truth is that most of the time, it
doesn’t. More than 60 percent of those
698 cases I looked at had working-age
population growth rates above two
percent, but only a quarter of those
population booms led to average growth
rates of six percent or higher in the
same decade. Today, then, even Nigeria
can’t assume that its booming working-
age population—projected to grow at
three percent a year between 2015 and
2020—will automatically translate into
a booming economy. Leaders still need
to create the conditions necessary to
attract investment and generate jobs.
To see what happens when leaders
fail to capitalize on a potential demo-
graphic dividend, consider the Arab
world. Its working-age population grew
by an average annual rate of more than
three percent between 1985 and 2005—
nearly twice as fast as the rate in the
rest of the world. But the region never
experienced an economic boom. At the
beginning of this decade, many Arab
countries suffered from cripplingly high
youth unemployment rates: around 30
percent in Egypt, Iraq, Saudi Arabia,
and Tunisia, the last being where the
chaos of the Arab Spring began.
It’s not just in the developing world
where economic growth depends on a
rising number of workers. In recent
decades, the United States has earned
a reputation as the most dynamic of
the advanced economies, far more
innovative than Europe, far less hide-
bound than Japan. But much of its recent
success can be traced to something more
mundane: the increase in young people
22 f o r e i g n a f fa i r s
entering the work force. For 30 years,
the working-age population in the
United States has grown much faster
than those of its major industrial rivals:
twice as fast as those populations in
France and the United Kingdom, five
times as fast as that in Germany, and ten
times as fast as that in Japan. No wonder
the U.S. economy has also grown faster.
As in much of the developing world,
population forecasts for the developed
world are discouraging. Looking at the
leading developed economies over the
next five years, the number of working-
age people is expected to remain static
in France, shrink a little in Spain, and
contract at the rapid pace of 0.4 percent
a year or more in Germany, Italy, and
Japan. The forecast for the United States
looks less bleak, with a positive working-
age population growth rate of 0.2 per-
cent, about the same as in Canada and
the United Kingdom. The best news for
advanced economies is confined to the
smaller ones: in Australia and Singapore,
the working-age populations are still
growing at a reasonably fast clip of close
to one percent. But these countries are
too small to compensate for weaker
growth in other rich nations.
ACCEPTING THE INEVITABLE
Governments have already started trying
to fight the population slowdown, begin-
ning with strategies to attack falling
fertility rates. According to the un,
the share of developing countries with
active population-control policies, after
rising sharply in the 1970s and 1980s,
has leveled off at about 60 percent since
the mid-1990s. Lately, some of the biggest
developing countries have reversed
course—most notably, China, which
ended its one-child policy last year.
 At the same time, the share of devel-
oped countries that have implemented
so-called baby bonuses and other policies
to boost fertility rates has risen, from THE
HUNTINGTON
about 30 percent in 1996 to 70 percent
today. In places where the fertility rate

is falling below the replacement level of
2.1, a growing number of governments
are subsidizing motherhood in an effort
to encourage women to have more than
two children. In some countries, such
as Chile and France, the subsidies grow
even more generous with the third,
fourth, and fifth child. But several of the
countries that pioneered these programs,
including Canada in 1988 and Australia
in the last decade, found that they had a
limited impact and later pared them back.
The second set of strategies is aimed
at bringing more adults into the labor
force, including the elderly, foreigners,
and women. In 2007, Germany increased
the retirement age from 65 to 67. Most
other European countries have since
followed suit, and some have started
indexing their retirement ages to rising
life expectancy. In the same vein, before
anti-immigrant movements started taking
off in Europe and the United States in
2015, the competition to attract foreign
workers had been heating up. According
to the un, in 2010, just ten countries
had announced plans to increase the size
of their populations through immigra-
tion; by 2013, 22 had.
Then there are the ongoing efforts to
lift the female labor-force participation
rate, which flatlined at around 57 percent
worldwide after 1990, before slipping to
55 percent this decade. According to the
Organization for Economic Cooperation
and Development, if its member states
eliminated the gender gap in labor-force
participation, they would see their gdps
PRIZE
CALL FOR BOOKS
Students and friends of Samuel
P. Huntington (1927–2008) have
established a prize in the amount of
$10,000 for the best book published
each year in the field of national
security. The book can be a work
of history or political science, or a
work by a practitioner of statecraft.
The prize will not be awarded if the
Huntington Prize Committee judges
that the submissions in a given year
do not meet the high standards set
by Samuel P. Huntington.
The Huntington Prize Committee is
pleased to solicit nominations for
books published in 2015.
Nominations will be accepted until
31 May 2016
A letter of nomination and two copies of the book
should be sent to:
Ann Townes
Weatherhead Center for International Affairs
Knafel Building
1737 Cambridge Street
Cambridge, MA 02138

23
Ruchir Sharma

rise by a cumulative 12 percent over the to be viewed as bogeymen, and the

next 15 years. The group found that the Malthusian nightmare that humanity
biggest gains would accrue to countries won’t be able to feed itself should fade.
in which female participation has tradi- Similarly, neo-Luddite warnings about
tionally been low, including Italy, Japan, robots stealing human jobs could also
and South Korea. Japan already seems to prove beside the point. The automation
have gotten the message. Since coming revolution is in its early stages, but it is
to power in 2012, Prime Minister Shinzo possible that the robots will arrive just
Abe has acknowledged the role that in time to ease the threat posed by
women could play in fixing the coun- depopulation. As the ranks of working-
try’s aging problem, and he has made age humans thin, smart machines could
“Womenomics”—a set of policies aimed do the labor they once did. Regardless,
at getting firms to hire more women— it’s hard to see how the world economy
a centerpiece of his plan to revive the can find enough new workers to grow
economy. as fast in the future as it has in the
Yet none of these strategies can recent past.∂
bring enough adults into the work force
to compensate fully for the decline in
the working-age population. Attracting
immigrants, for example, has proved
impractical on a large scale. One reason
Germany accepted nearly one million
refugees in 2015 was that its leaders
recognized the economic need for new
blood in an aging society, but even the
authors of that controversial policy have
admitted that the country cannot accept
that many newcomers on a regular
basis. (To counter the projected decline
in its working-age population through
2030, Germany would have to accept
roughly 1.5 million immigrants every
year.) Besides, the contest to attract
immigrant labor, particularly skilled
labor, is a zero-sum game among
countries and so does not represent a
viable strategy on a global level. The
most governments can do is muffle
the impact of depopulation; they can’t
defuse it.
In a world with fewer young people,
economic growth will be harder to come
by. But at least the alarmists’ fears may
subside. Immigrants will be less likely

24 f o r e i g n a f fa i r s
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 Return to Table of Contents
Middle-Class
Heroes
The Best Guarantee of Good
Governance
Nancy Birdsall
T
he two economic developments
that have garnered the most
attention in recent years are the
concentration of massive wealth in
the richest one percent of the world’s
population and the tremendous, growth-
driven decline in extreme poverty in
the developing world, especially in
China. But just as important has been
the emergence of large middle classes
in developing countries around the
planet. This phenomenon—the result
of more than two decades of nearly
continuous fast-paced global economic
growth—has been good not only for
economies but also for governance.
After all, history suggests that a large
and secure middle class is a solid foun-
dation on which to build and sustain
an effective, democratic state. Middle
classes not only have the wherewithal to
finance vital services such as roads and
public education through taxes; they
also demand regulations, the fair
enforcement of contracts, and the rule
of law more generally—public goods
that create a level social and economic
playing field on which all can prosper.
NANCY BIRDSALL is Founding President of
the Center for Global Development and former
Executive Vice President of the Inter-American
Development Bank.
The birth of new middle classes all
over the world therefore qualifies as a
HOW TO SURVIVE SLOW GROWTH
triumph of capitalism and globalization.
But it is a fragile victory. For the world
now faces a period of prolonged slow
growth. That is bad news, not only because
it could halt the impressive declines in
poverty but also because it could set
back hopes for better governance and
fair-minded economic policy across the
developing world, harming both middle
classes and the far larger populations of
poorer people in the developing world
who are the chief victims of weak or
abusive governments. The rich world
could lose out, too, since improvements
in governance allow poor countries to
collaborate with the international com-
munity in managing the risks posed by
pandemics, terrorist groups, climate
change, waves of political refugees, and
other regional and global problems.
Governments in the developing world
and in rich countries alike would do well
to nurture and protect the legitimate
interests of the new middle classes.
WHO IS MIDDLE CLASS?
In today’s high-income countries, “mid-
dle class” is a relative measure: most
households earn enough money to place
them more or less in the middle of the
national income distribution. But “mid-
dle class” has always been an absolute
concept as well: to be middle class means
enjoying sufficient material security to
be able to credibly plan for the future.
That definition is particularly important
in the developing world, where economists
increasingly identify a middle-class
household as one with enough income
to survive such shocks as a spell of unem-
ployment, a health emergency, or even
the bankruptcy of a small business
March/April 2016 25
Nancy Birdsall
without a major or permanent decline
in its living standard. Middle-class
citizens deal with plenty of economic
anxiety and stress, but they don’t worry
about being able to pay next month’s
rent, car loan installment, or credit
card bill.
Evidence from Latin America
suggests that reaching middle-class
economic security in that region requires
a daily income of somewhere around
$10 per person, or the equivalent of
around $10,000 a year for a family of
three. That family is likely to include
at least one adult who has completed
secondary school and works in an office,
a factory, or a retail job with a steady
paycheck, as opposed to working in
agriculture or the informal economy.
That $10-per-day threshold, ad-
justed for differences in prices across
countries, can be applied elsewhere as
a rough proxy for middle-class status.
Of course, it’s not a perfect measure: for
example, it puts middle-class house-
holds in developing countries such as
India and Kenya nowhere near the actual
middle of those countries’ income distri-
butions. They’re much closer to the
top: of India’s 1.25 billion people, at
most 100 million enjoy that level of
income. Indeed, for India, where the
median daily income per person is
less than $5, the $10-per-day thresh-
old is probably too high; for Chile,
the richest country in Latin America,
with a median daily income of $14,
it is probably too low. Imprecise as it
may be, however, the absolute $10
figure is nonetheless useful, since it
allows economists to compare the sizes
of middle classes in various developing
countries and to track their growth
over time.
26 f o r e i g n a f fa i r s
BOURGEOIS BENEFITS
The size of a country’s middle class has
significant economic and political impli-
cations. A large middle class increases
the demand for domestic goods and
services and helps fuel consumption-led
growth. Middle-class parents have the
resources to save and invest in their
children’s education, building human
capital for the country as a whole. And
in the developing world, people living
on $10 a day or more are able to take
reasonable business risks, becoming
investors as well as consumers and work-
ers. In all these ways, the emergence of
a middle class drives economic growth.
Having a large middle class is also
critical for fostering good governance.
Middle-class citizens want the stability
and predictability that come from a politi-
cal system that promotes fair competition,
in which the very rich cannot rely on
insider privileges to accumulate unearned
wealth. Middle-class people are less
vulnerable than the poor to pressure to
pay into patronage networks and are
more likely to support governments that
protect private property and encourage
private investment. When the middle
class reaches a certain size—perhaps 30
percent of the population is enough—its
members can start to identify with one
another and to use their collective power
to demand that the state spend their taxes
to finance public services, security, and
other critical public goods. Finally, mem-
bers of a prospering middle class are
unlikely to be drawn into the kinds of
ethnic and religious rivalries that spur
political instability.
Of course, having a large middle
class is no guarantee that a country will
enjoy political stability and democratic
(or even accountable) government. By

Commercial break: at a shop in Istanbul, March 2011
the early 1980s, Venezuela’s middle class
had grown to include around half of the
country’s population, thanks mostly to
the strength of the state-controlled oil
sector. But unlike revenue from tax-
paying middle classes, easy oil income
tends to enrich governments without
forcing them to become more account-
able, and that is precisely what happened
in Venezuela. In recent decades, poor
governance has contributed to economic
decline, and by 2006 (the most recent
year for which data are available), the
REUTE RS / OSMAN O RSAL
middle class had shrunk to 40 percent
of the population. In the past ten years,
it has almost surely shrunk even further. In
2012, more than 50 percent of Thailand’s
population belonged to the $10-per-day
middle class. But the following year, the
Middle-Class Heroes
country boiled over into political chaos
that ended in a military coup. Meanwhile,
under President Vladimir Putin, oil-
rich Russia has developed a big middle
class and a stable government, but
Putin’s regime has successfully resisted
pressure to become accountable. (It’s
also worth noting that a large middle
class is not a prerequisite for stability.
Rwanda, where less than ten percent of
the population belongs to the $10-per-
day middle class, has enjoyed a stable
government and rapid, widely shared
growth for more than two decades under
President Paul Kagame.)
The point is that when it comes to
the middle class, size matters, but it is
not everything. For example, if a middle
class grows large but then feels threatened
March/April 2016 27
Nancy Birdsall
during a major economic downturn, its
members may succumb to demagogic
and populist appeals—from the right
or the left. In Argentina, a decade of
inflation and a debt crisis in 2001–2 paved
the way for the revival of Peronist
populism, which shaped the policies of
Néstor Kirchner, who served as presi-
dent from 2003 to 2007, and of his wife,
Cristina, who succeeded her husband
and served until last year, when she was
defeated in a bid for a third term. This
dynamic is hardly exclusive to the devel-
oping world: a 2015 Pew Research Center
study concluded that the size of the U.S.
middle class and its share of the coun-
try’s income and wealth are shrinking,
which might partly explain the appeal
of “outsider,” nonestablishment candi-
dates in this year’s presidential race.
And in Europe, the fear of slow growth
and worries about a “new machine age,”
in which automation and robots will
eliminate jobs now held by well-educated
members of the middle class, help account
for the growing influence of anti-
immigrant right-wing political parties.
Put simply, to constitute a politically
positive force, a middle class must be
not only large relative to a country’s
other classes but also prospering and
feeling confident. That is not surprising:
behavioral studies show that for most
people, losing ground is more troubling
than never gaining it, a tendency known
as “loss aversion.” Widespread fears of
looming losses undermine the sense of
security and the expectations of a better
future that characterize the middle class.
A MIDDLE-CLASS WORLD
Twenty-five years ago, hardly any
developing countries had large, grow-
ing middle classes. Most people in the
28 f o r e i g n a f fa i r s
world still lived in places where the
distribution of income could be charac-
terized (with only slight exaggeration)
as bimodal: a small elite lived in com-
fort, while the vast majority of people
were poor. There were exceptions,
including Singapore, South Korea, and
a number of Latin American countries
in which industrialization had begun
before World War II. By 1990, South
Korea had experienced 30 years of extraor-
dinary growth. As a result, more than
60 percent of its population earned an
annual household income of $10,000 or
more in today’s U.S. dollars. South Korea
had, in effect, already become a middle-
class society; at the same moment, it was
also completing a transition to democracy
after decades of military rule.
But across most of the developing
world, the $10-per-day middle class
was still tiny. In China, India, and sub-
Saharan Africa, it represented less
than two percent of the population—
and in Africa, that number was probably
made up mostly of civil servants and
the employees of international organi-
zations and Western aid groups. Most
people in Asia and Africa were still
either terribly poor or just getting by.
Then, in the early 1990s, growth
took off across the developing world
and accelerated further during the first
decade of this century, as low interest
rates and a commodities boom benefited
many low- and middle-income countries.
Between 1990 and 2015, around one
billion people escaped poverty, includ-
ing about 650 million in China and
India. During the same period, some
900 million people entered the $10-per-
day middle class.
The most extraordinary middle-
class growth has come in urban areas

of China. In 1990, the $10-a-day middle
class comprised an estimated 0.3 percent
of China’s urban population—about one
million people. By 2010, it had grown to
35 percent of China’s now much larger
urban population—about 220 million
people. By 2015, the figure had reached
an estimated 340 million. China may not
be taking the road that brought South
Korea to democracy in the 1970s and
1980s. But even the Chinese government
has had to become far more responsive
to an economically independent middle
class that is unhappy about problems
such as air pollution and corruption.
Brazil is another place where the
impact of a growing middle class has
been undeniable. In the first decade
of this century, low interest rates and
iron ore exports to China boosted
Brazilian growth and domestic invest-
ment, including in job-intensive sectors
such as construction. Partly as a result,
Brazil’s $10-per-day middle class more
than doubled between 1990 and 2015,
from 20 percent of the population to
almost 50 percent, and began flexing its
political muscles. This newly empow-
ered middle class has lent implicit but
important support to the recent indict-
ment of Brazilian officials accused of
corruption in the Petrobras scandal,
and its members will likely balk at any
policies that might resurrect the
destructive inflation that held the
country back in the 1990s.
In the last two decades, meanwhile,
Chile, Iran, and Malaysia have watched
their middle classes grow to encompass
almost 60 percent of their populations.
And Mexico (close to 40 percent) and
Peru (50 percent) have also witnessed
major gains. This change bodes well for
economic and political stability in all
Middle-Class Heroes
five of those countries—even in Iran,
where President Hassan Rouhani’s
modest but promising opening to the
West has stemmed in part from his
need to win the political support of a
bigger, better-educated middle class.
Middle classes have grown in poorer
countries as well, although they started
from much lower bases and have reached
much smaller sizes. Middle classes still
comprise less than ten percent of the
populations of many countries in South
Asia and sub-Saharan Africa; the same
is true in rural China. Even with healthy
growth, the middle classes will be unlikely
to reach 30 percent of the populations
in those places during the next 20 years.
Among the non-oil Arab countries, only
Morocco and Tunisia have sizable middle
classes; in Egypt, by far the largest Arab
country, just six percent of the population
lives above the $10-per-day threshold.
In a few developing countries, such
as India, Kenya, Nigeria, and Tanzania,
middle classes have appeared but have
not grown nearly large enough to effect
significant political change. In those
places, creating a virtuous cycle of
middle-class growth and accountable
governance remains a long-term devel-
opment challenge. So although it makes
sense to cheer the existence of modern
shopping malls serving new middle
classes in Lagos and Bangalore, it does
not make sense to assume that every
country with a lot of new malls is on a
steady, predictable road to good gover-
nance and liberal democracy.
FIRST THE WEST, NOW THE REST?
The last 25 years have been an excep-
tional period for the developing world
and might eventually prove comparable
to the surge in economic growth in the
March/April 2016 29
Nancy Birdsall
West that began with British industrial-
ization in the nineteenth century and
eventually allowed liberal democracy to
spread throughout Europe and North
America. During the twentieth century,
the West left the rest of the world
behind. The ratio of the median house-
hold income in the rich countries of the
West to that in the rest of the world grew
from about five to one in 1900 to around
20 to 1 in 2000. The West experienced
the twentieth century as one long virtuous
cycle—interrupted by war and depres-
sion, of course—in which economic
growth nurtured middle classes that in
turn fought and paid for the state-led
foundations of continuing growth: the
rule of law, institutions that created the
environment for entrepreneurship and
innovation, and well-regulated markets.
The past few decades might prove to
be an early chapter in a similar story
for the developing world. For one thing,
the globalization of markets may be
speeding up the process. Globalization
has favored the middle class by creating
economies that richly reward educated
workers, making it easier to obtain
mortgage loans and other forms of
credit, and generating manufacturing
and retail supply chains that offer
plenty of good jobs for skilled people.
Meanwhile, advances in communica-
tions technology—the Internet, mobile
devices, and social media—have empow-
ered middle classes around the world
to organize and advocate corporate and
government accountability.
Optimists see those changes as major
factors driving current political trends
in some countries. In Turkey, factions
within the urban middle class have resisted
the creeping authoritarianism of President
Recep Tayyip Erdogan. In Argentina,
30 f o r e i g n a f fa i r s
a large and relatively resilient middle
class contributed to the recent defeat
of former President Cristina Fernández
de Kirchner’s handpicked successor,
rejecting the costs of continued economic
populism. And perhaps it’s no accident
that Tunisia—where about 30 percent
of the population belongs to the middle
class (a very large proportion compared
with most of the Arab world)—is the
only country to have emerged from the
Arab revolts of 2010–11 with something
resembling democratic rule.
SOFT IN THE MIDDLE
The trouble is that the ongoing conver-
sion of economic gains into political
progress requires continued growth,
and the global slowdown now threatens
that process. Middle classes in Brazil,
urban China, and Turkey are big but
still new; the endurance of the political
and social benefits they have provided
depends on their institutionalization
over the long term and the adoption
of customs and rules that take a long
time to harden into habits. A prolonged
downturn in growth will complicate
things in those countries—far more so
than in the United States and western
Europe, where middle classes are suffer-
ing but the institutions built around them
are well established and relatively strong.
In most emerging markets, high
growth during the last decade depended
on commodity exports and low interest
rates. High profits and easy credit created
retail and public-service jobs for gradu-
ates of secondary schools but did not
necessarily raise productivity in manu-
facturing and large-scale agriculture.
The economist Dani Rodrik worries
about what he calls “premature de­
industrialization” in the developing world,

given that manufacturing—the setting
for the productivity increases and struggles
between labor and capital that helped
produce democratic politics in the West—
has already peaked at 15 percent of
employment in Brazil and India, far
lower than the 30 percent level found in
South Korea in the late 1980s. The fear
is that the new middle classes will be hit
hard if it turns out that global growth
was built too much on easy credit and
commodity booms and too little on the
productivity gains that raise incomes
and living standards for everyone.
If the middle class and those struggling
to join it see their incomes stagnate or
fall, they are less likely to support the
economic and regulatory policies that
over time increase the size of the overall
economic pie. Instead, they are likely to
embrace short-term, populist measures
they believe will help them retain their
gains and meet their raised expectations.
In short, slow growth (or, worse, an
economic collapse) could erode middle-
class support for good governance, a
broad social contract, and the economic
reforms that sustain the opportunities
on which the middle class depends.
Brazil might prove vulnerable to that
dynamic. When the economy was grow-
ing rapidly and steadily, the middle
class supported President Luiz Inácio
Lula da Silva’s impressive program of
cash transfers to the very poor. Although
most middle-class families responded to
weak public schooling by sending their
children to private schools, they did not
resist educational reforms to improve
public schooling. In leaner times, how-
ever, a beleaguered middle class might
be less tolerant of programs that benefit
the poor and the working class and might
politically ally itself with the rich instead.
Middle-Class Heroes
A similar shift could occur in every
country with a large but relatively new
middle class.
It takes several decades to develop
and solidify the responsive state institu-
tions that the middle class wants and on
which it relies. And even then, a large
middle class does not guarantee that
democratic institutions can survive hard
times. Germany in the 1920s and 1930s
provides the quintessential cautionary
tale. Devastated by the country’s defeat
in World War I and suffering from
runaway inflation, the German econ-
omy tanked, robbing the middle class
of the sense of security that had bound
it to the common good and opening
the door to dangerous populism, Nazi
demagoguery, and, finally, autocracy
and the genocidal scapegoating of
the Jews.
PROTECTING FRAGILE GAINS
In a hyperconnected global economy,
lower growth in China, Japan, and
Europe and economic fragility in Brazil
and other big emerging markets spell
trouble everywhere. To avoid the worst
outcomes, countries with emerging
middle classes cannot take shortcuts.
That means eschewing irresponsible
fiscal policies and other missteps that
could generate inflation and hurt every-
one. Developing countries should also
consider reforming their health-care,
pension, and unemployment programs,
which underpin citizens’ confidence in a
secure future—not only within growing
middle classes but also among people
who have escaped absolute poverty and
now aspire to middle-class security
and status. Above all, middle classes in
developing countries would benefit
from reforms to educational systems and
March/April 2016 31
Nancy Birdsall

increased investment in infrastructure. world, especially through investment in

Good schools and roads offer high new technologies. Brazil’s huge middle
returns to everyone, but they especially class, concentrated in the country’s
encourage private investment and bring south, is in part the product of public
the productivity gains on which middle and corporate research and investment
classes build and prosper. that dramatically increased the region’s
High-income countries can also play yields of soy, apples, and other crops.
a role in building middle-class societies Mobile technology is helping create
in the developing world. Development middle-class opportunities in poor
aid is not enough, however, as it ultimately countries. And the philanthropist Bill
has a minimal effect in recipient coun- Gates’ recent launch of a $2 billion
tries. Wealthy countries should instead initiative to research and develop clean
focus on removing the obstacles they have energy will indirectly create new green
created to healthy, productivity-driven industries and jobs for middle-class
growth—by cracking down on tax avoid- workers everywhere.
ance and evasion on the part of major None of those steps, of course, will
multinationals, which reduce tax revenue completely offset the ill effects that
in developing countries; by fixing privacy long-term stagnation might have on
laws that have made it too easy to hide the world’s burgeoning middle classes.
stolen assets abroad; by enforcing anti- Only strong growth can do that. But
bribery rules; by ending protectionist doing nothing at all would risk allowing
policies in agriculture and textiles; and the world’s new middle classes—one of
by improving the management of their the most hopeful developments of the
immigration systems. past 30 years—to turn into a source of
The rich world can also lead by division and instability.∂
coordinating responses to collective
problems that no single country has an
incentive to address on its own. The most
immediate danger comes from the risk of
another financial panic that might spread
globally. Such turmoil would do tremen-
dous damage to incipient middle classes
and to the millions of workers on the
verge of moving from low-productivity,
informal jobs into steady and reliable
positions. Even more troubling for the
long run is climate change, which threat-
ens economic development every-
where and will surely go unsolved
without leadership and financing from
wealthy countries.
Rich individuals and corporations
can also do their part by continuing to
create new opportunities around the

32 f o r e i g n a f fa i r s
 “ With GMAP, you do not just learn
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january and JULY.
 Return to Table of Contents
Eurasia’s Coming
Anarchy
The Risks of Chinese and
Russian Weakness
Robert D. Kaplan
A
s China asserts itself in its
nearby seas and Russia wages
war in Syria and Ukraine, it
is easy to assume that Eurasia’s two
great land powers are showing signs of
newfound strength. But the opposite
is true: increasingly, China and Russia
flex their muscles not because they are
powerful but because they are weak.
Unlike Nazi Germany, whose power at
home in the 1930s fueled its military
aggression abroad, today’s revisionist
powers are experiencing the reverse
phenomenon. In China and Russia, it
is domestic insecurity that is breeding
belligerence. This marks a historical
turning point: for the first time since
the Berlin Wall fell, the United States
finds itself in a competition among
great powers.
Economic conditions in both China
and Russia are steadily worsening. Ever
since energy prices collapsed in 2014,
Russia has been caught in a serious
recession. China, meanwhile, has entered
the early stages of what promises to be
a tumultuous transition away from double-
digit annual gdp growth; the stock market
ROBERT D. KAPLAN is a Senior Fellow at the
Center for a New American Security and the
author of In Europe’s Shadow: Two Cold Wars and a
Thirty-Year Journey Through Romania and Beyond.
crashes it experienced in the summer of
2015 and January 2016 will likely prove
HOW TO SURVIVE SLOW GROWTH
a mere foretaste of the financial disrup-
tions to come.
Given the likelihood of increasing
economic turmoil in both countries, their
internal political stability can no longer
be taken for granted. In the age of social
media and incessant polling, even auto-
crats such as Chinese President Xi
Jinping and Russian President Vladimir
Putin feel the need for public approval.
Already, these leaders no doubt suffer
from a profound sense of insecurity, as
their homelands have long been virtually
surrounded by enemies, with flatlands
open to invaders. And already, they are
finding it harder to exert control over
their countries’ immense territories,
with potential rebellions brewing in
their far-flung regions.
The world has seen the kind of anarchy
that ethnic, political, and sectarian conflict
can cause in small and medium-size
states. But the prospect of quasi anarchy
in two economically struggling giants is
far more worrisome. As conditions worsen
at home, China and Russia are likely to
increasingly export their troubles in the
hope that nationalism will distract their
disgruntled citizens and mobilize their
populations. This type of belligerence
presents an especially difficult problem
for Western countries. Whereas aggres-
sion driven by domestic strength often
follows a methodical, well-developed
strategy—one that can be interpreted by
other states, which can then react appro-
priately—that fueled by domestic crisis
can result in daring, reactive, and impul-
sive behavior, which is much harder to
forecast and counter.
As U.S. policymakers contemplate
their response to the growing hostility
March/April 2016 33
Robert D. Kaplan
of Beijing and Moscow, their first task
should be to avoid needlessly provoking
these extremely sensitive and domesti-
cally declining powers. That said, they
cannot afford to stand idly by as China
and Russia redraw international borders
and maritime boundaries. The answer?
Washington needs to set clear redlines,
quietly communicated—and be ready
to back them up with military power
if necessary.
DANGER IN MOSCOW
Partly because Russia’s economic problems
are far more severe than China’s, Moscow’s
aggression has been more naked. After
President Boris Yeltsin’s chaotic rule came
to an end in 1999, Putin consolidated
central authority. As energy prices soared,
he harnessed Russia’s hydrocarbon-rich
economy to create a sphere of influence in
the countries of the former Soviet Union
and the Warsaw Pact. His goal was clear:
to restore the old empire.
But since direct rule through commu-
nist parties had proved too costly, Putin
preferred an oblique form of imperialism.
In lieu of sending troops into the old
domains, he built a Pharaonic network
of energy pipelines, helped politicians
in neighboring countries in various
ways, ran intelligence operations, and
used third parties to buy control of local
media. Only recently has Putin acted
more overtly on a number of fronts,
encouraged no doubt by the lack of a
Western response to his 2008 military
campaign in Georgia. In early 2014,
Russian forces seized Crimea and Russian
proxy militias initiated a war in eastern
Ukraine. And in late 2015, Putin inserted
the Russian military into the Syrian
civil war, specifically to save the regime
of Syrian President Bashar al-Assad but
34 f o r e i g n a f fa i r s
also, more broadly, to restore Moscow’s
position in the Levant—and to buy
leverage with the eu by influencing the
flow of refugees to Europe.
Not coincidentally, these military
adventures have accompanied the sharp
reversal of Russian economic power.
In 2014, the price of oil collapsed, the
countries of central and eastern Europe
continued to wean themselves off Russian
gas, slow global growth further reduced
the appetite for Russian hydrocarbons
and other natural resources, and the
West levied damaging sanctions on
Moscow. The result has been a full-
blown economic crisis, with the ruble
losing roughly half of its value against
the U.S. dollar since 2014. That year,
Russian gdp growth fell to nearly zero,
and by the third quarter of 2015, the
economy was shrinking by more than
four percent. In the first eight months
of 2015, capital investment declined by
six percent and the volume of construc-
tion fell by eight percent.
Russia’s economic problems run deep,
leaving its leaders with few easy options
for fixing them. For decades, Russia has
relied on natural resource production
and a manufacturing sector that makes
consumer goods for the domestic market
(since few foreigners want to buy Russia’s
nonmilitary products). Despite some
pockets of ostentatious wealth, the service
sector has remained underdeveloped.
Because Putin and his camarilla never
built civil institutions or a truly free
market, the corrupt, gangster-led economy
of Russia today exhibits eerie similarities
to the old Soviet one.
Back in the 1980s, when that economy
was hit by a crisis, Mikhail Gorbachev
responded by opening up the political
system—only to be rewarded with

Show of weakness: police officers in China’s Xinjiang Uygur Autonomous Region, May 2014
anarchy and the collapse of Russia’s
empire. Putin learned this lesson well
and is determined to do the opposite:
keep the political system closed while
distracting the masses with displays
of Russian power in the near abroad.
Putin is a former intelligence agent, not
a former apparatchik. Thus, although
he nurses historical grudges concerning
Russia’s place in the world, he is not
deceiving himself about Russia’s inter-
nal problems. As the Russian economy
decays further, Putin surely knows that
for the sake of domestic approval, his
foreign policy must become more cre-
ative and calculating, even deceptively
conciliatory at moments. Over time,
expect him to find new ways to under-
P E TAR K U J U N D Z I C / R E U T E R S
mine nato and the eu, even as he claims
to be helping the West fight the Islamic
State, or isis. For the more chaos he
can generate abroad, the more valuable
the autocratic stability he provides at
home will appear. Russians may know
in the abstract that a freer society is
Eurasia’s Coming Anarchy
preferable, but they fear the risks of
such a transition.
Try as he might, however, Putin will
not be able to shelter his regime from
the fallout of economic collapse. Des-
peration will spawn infighting among a
ruling elite that has grown used to sharing
generous spoils. Given the absence of
strong institutions, as well as the brittle
and highly centralized nature of the
regime, a coup like the one that toppled
Nikita Khrushchev in 1964 cannot be
ruled out; Russia remains Soviet in its
style of governance. The country has
experienced the crumbling of autocracy
followed by chaos before (as during and
after the 1917 revolutions), and it’s possible
that enough turmoil could cause Russia
to fragment yet again. The heavily Mus-
lim North Caucasus, along with areas
of Russia’s Siberian and Far Eastern
districts, distant from the center and
burdened by bloody politics, may begin
loosening their ties to Moscow in the
event of instability inside the Kremlin
March/April 2016 35
Robert D. Kaplan
itself. The result could be Yugoslavia
lite: violence and separatism that begin
in one place and spread elsewhere. As
Moscow loses control, the global jihadist
movement could take advantage of the
vacuum and come to Russia’s outlying
regions and to Central Asia.
Bad as this sounds, things could
still get worse. Back in 1991, the Polish
intellectual Adam Michnik predicted
that future leaders in Russia and eastern
Europe would fill the gap left by the
collapse of communism with “a coarse
and primitive nationalism.” Putin has
adopted just such a nationalism in recent
years. He has slyly backed separatist
movements in Abkhazia, the Donbas,
Nagorno-Karabakh, South Ossetia, and
Transnistria, creating deniable conflicts
that result in warlord-run statelets. In
the years ahead, he may well choose to
provoke more of these so-called frozen
conflicts, but this time in nato’s Baltic
member states (which have sizable
Russian populations and which Moscow
still considers lost provinces). Mean-
while, Putin will try to play on Europe’s
need for Russian support in Syria to
force Europe to acknowledge his annexa-
tion of Crimea and his de facto rule over
eastern Ukraine.
But just when a firm response is
most needed, Europe is looking less
and less likely to be able to provide one.
In some ways, Russia’s current crisis
parallels that of Europe, which is also
dividing into core and peripheral areas.
Despite adjustments by the European
Central Bank and other measures, a
time of slow global growth, coupled
with Europe’s inability to make funda-
mental reforms, means that the Euro-
pean political and economic crisis
will persist. By frightening states into
36 f o r e i g n a f fa i r s
resolidifying their borders, the migrant
and terrorism crises will also exacerbate
the eu’s divisions—and, inevitably,
nato’s as well.
Such disunity will make Europe’s
attempts to confront Russia even more
hesitant and disorganized than they
are today. As nato weakens, the former
Warsaw Pact states will increasingly
look to the United States for their
security. They will also divide into
subgroups: already, Poland, the Baltic
countries, and Scandinavia are forming
an alliance of sorts to withstand Russian
aggression, and the Visegrad Group—
which includes the Czech Republic,
Hungary, Poland, and Slovakia—is
becoming more concrete in terms of
its political and military consultation.
Further sowing division is Nord Stream
2, a proposed second pipeline through
the Baltic Sea that would allow Russia
to bypass central and eastern Europe
when sending gas to western Europe.
In all these countries, slow economic
growth will intensify right-wing and
left-wing nationalist movements, which
prey on unmet economic expectations.
BEIJING ON THE BRINK
Slow growth is also leading China to
externalize its internal weaknesses.
Since the mid-1990s, Beijing has been
building a high-tech military, featuring
advanced submarines, fighter jets, ballis-
tic missiles, and cyberwarfare units. Just
as the United States worked to exclude
European powers from the Caribbean
Sea beginning in the nineteenth century,
China is now seeking to exclude the U.S.
Navy from the East China and South
China Seas. Its neighbors have grown
worried: Japan, which views Chinese
naval expansion as an existential threat,
is shedding its pacifism and upgrading
its forces, and Malaysia, the Philippines,
Singapore, and Vietnam have modern-
ized their militaries, too. What were
once relatively placid, U.S.-dominated
waters throughout the Cold War have
become rougher. A stable, unipolar Journal of
naval environment has given way to a
more unstable, multipolar one.
Cold War Studies
But as with Russia, China’s aggres-
sion increasingly reflects its cresting
power, as its economy slows after decades
of acceleration. Annual gdp growth
has dropped from the double-digit rates
that prevailed for most of the first decade
of this century to an official 6.9 percent
in the third quarter of 2015, with the true
figure no doubt lower. Bubbles in the
housing and stock markets have burst, and
other imbalances in China’s overlever-
aged economy, especially in its shadow
banking sector, are legion.
Then there are the growing ethnic
tensions in this vast country. To some The Journal of Cold War Studies
degree, the Han-dominated state of
features peer-reviewed articles
China is a prison of various nations,
based on archival research in the
including the Mongols, the Tibetans,
and the Uighurs, all of whom have in former Communist world and in
varying degrees resisted central con- Western countries. Articles in the
trol. Today, Uighur militants represent journal use declassified materials
the most immediate separatist threat. and new memoirs to illuminate
Some have received training in Iraq and raise questions about
and Syria, and as they link up with the numerous theoretical concerns.
global jihadist movement, the danger
Published quarterly by the MIT Press for
will grow. In recent years, there has the Harvard Project on Cold War Studies.
been a dramatic upsurge of bombings
linked to Uighur separatism in the region e
of Guangxi, a transit point on the smug- ri b e fo r co m p lete access to th
Subsc issue.
gling route Uighurs take to Vietnam— n lin e ar ch iv e, back to the first
o
proof that terrorism will not be con-
fined to minority areas in China’s west.
Beijing has tried to pacify these move- mitpressjournals.org/jcws
ments with economic development—
for example, proposing the Silk Road

JCWS FA color jan 2016.indd 1 37

1/20/2016 2:27:51 PM
Robert D. Kaplan
Economic Belt in Central Asia in order
to undermine Uighur nationalism
there. But if such immense projects
falter because of China’s own slowing
economy, separatism could explode
into greater violence.
Even more so than Putin, Xi, with
years of experience serving the Com-
munist Party in interior China, must
harbor few illusions about the depth of
China’s economic problems. But that
does not mean he knows how to fix them.
Xi has responded to China’s economic
disarray by embarking on an anticorrup-
tion drive, yet this campaign has primarily
functioned as a great political purge,
enabling him to consolidate China’s
national security state around his own
person. Since decisions are no longer
made as collectively as before, Xi now
has greater autonomy to channel domes-
tic anxiety into foreign aggression. In
the last three decades, China’s leadership
was relatively predictable, risk averse,
and collegial. But China’s internal politi-
cal situation has become far less benign.
China’s ambitions reach further than
Russia’s, but they have generated less
concern in the West because they have
been more elegantly applied. Whereas
Putin has sent thugs with ski masks and
assault rifles into eastern Ukraine, Xi’s
aggression has involved much smaller,
incremental steps, making it madden-
ingly difficulty for the United States to
respond without appearing to overreact.
He has sent his coast guard and merchant
ships (rather than exclusively his navy)
to harass Philippine warships, dispatched
an oil rig into waters claimed by both
China and Vietnam (but for only a few
weeks), and engaged in land-reclamation
projects on contested islands and reefs
(but ones that are devoid of people).
38 f o r e i g n a f fa i r s
And since these acts of brinkmanship
have taken place at sea, they have
caused no hardship for civilians and
practically no military casualties.
Other Chinese moves are less subtle.
Besides expanding its maritime claims,
China is building roads, railways, and
pipelines deep into Central Asia and is
promising to invest tens of billions of
dollars in a transportation corridor that
will stretch from western China across
Pakistan to the Indian Ocean, where
China has been involved in port proj-
ects from Tanzania to Myanmar (also
called Burma). As China’s economic
troubles worsen, the elegance of its
aggression may wear off and be replaced
by cruder, more impulsive actions. Xi
will find it harder to resist the urge to
use Asian maritime disputes to stoke
nationalism, a force that brings a mea-
sure of cohesion to societies threatening
to fragment.
Potentially adding to the danger
are looming crises in the countries of
Central Asia: Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan, and Uzbeki-
stan. The continued stability of these
authoritarian countries has made it easier
for China to control its own Central
Asian minorities, but time may be run-
ning out. Some of these regimes are still
led by the same Brezhnev-era Central
Committee types who have ruled since
the end of the Cold War. These leaders
are now aging, their regimes enjoy
questionable legitimacy, their economies
remain tied to China’s and Russia’s own
slowing engines, and their populations
are growing more Islamic. Central Asia,
in other words, may be ripe for an Arab
Spring–like eruption.
Facing parallel economic slowdowns
and geopolitical threats, China and

Russia may forge a tactical alliance
based on their compatible authoritarian
systems and aimed at managing their
frontier areas and standing up to the
West. To this end, the two of them
finally resolved a long-running border
dispute last November, with Russia
giving up a small tract of land in its
Far East claimed by China. But the
handover caused popular protests in
both countries: ordinary Russians
opposed the Kremlin’s acquiescence,
and many Chinese complained that
they got too little. Here again, public
opinion can constrain dictatorships,
in this case inhibiting their ability to
forge useful alliances.
THE COMING CHAOS
Central control—who has it, who
doesn’t—is the geopolitical issue of
our time. Centralized authoritarian
rule over large areas is inherently
problematic, and all the more so in an
era of intensified ethnic, religious, and
individual consciousness, when elec-
tronic communications can incite
identity-based grievances. No wonder
the map of Eurasia is about to become
more complex.
Policymakers in Washington had
better start planning now for the poten-
tial chaos to come: a Kremlin coup, a
partial breakup of Russia, an Islamic
terrorist campaign in western China,
factional fighting in Beijing, and politi-
cal turbulence in Central Asia, although
not probable, are all increasingly possible.
Whatever form the coming turbulence
takes, it seems certain the United States
will be forced to grapple with new ques-
tions of one sort or another. Who will
control Russia’s nuclear arsenal if the
country’s leadership splinters? How can
Eurasia’s Coming Anarchy
the United States stand up for human
rights inside China while standing by
as the regime puts down an internal
rebellion?
Planning for such contingencies does
not mean planning a war of liberation,
à la Iraq. (If China and Russia are ever
to develop more liberal governments,
their people will have to bring about
change themselves.) But it does mean
minimizing the possibility of disorder.
To avoid the nightmarish security crises
that could result, Washington will
need to issue clear redlines. Whenever
possible, however, it should communi-
cate these redlines privately, without
grandstanding. Although congressional
firebrands seem not to realize it, the
United States gains nothing from baiting
nervous regimes worried about losing
face at home.
In the case of Russia, the United States
should demand that it stop initiating
frozen conflicts. As Putin attempts to
distract Russians from economic hard-
ship, he will find it more tempting to
stir up trouble in his neighborhood.
Lithuania and Moldova probably top
his list of potential targets, given their
corrupt and easily undermined demo-
cratic governments. (Moldova is already
nearing the point of political anarchy.)
Both countries are also strategically
valuable: Moldova could provide Russia
with the beginning of a gateway to the
Balkans, and Lithuania offers a partial
land bridge to the Russian exclave of
Kaliningrad. For Putin, frozen conflicts
carry the advantage of being undeclared,
reducing the odds of a meaningful
Western response. That’s why the
response must be in kind: if Putin
makes behind-the-scenes moves in
Lithuania or Moldova, the West should
March/April 2016 39
Robert D. Kaplan
intensify sanctions against Russia and
increase the tempo of military exercises
in central and eastern Europe.
At the very least, nato must dra-
matically ramp up intelligence sharing
among eastern European countries and
be ready to quickly deploy more aircraft,
ground forces, and special operations
forces to the region. The hundreds of
U.S. soldiers, marines, and sailors sta-
tioned on a rotating basis in frontline
nato states of the former Warsaw Pact
constitute such a small presence that
they are unlikely to deter Russian aggres-
sion; several battalions or even a brigade
is needed. More broadly, the United
States will need to create a military
tripwire—one that deters Russia from
launching a limited strike across its
borders but does so without provoking a
crisis. Thus, the U.S. counter to Russia’s
growing “anti-access/area-denial” capa-
bilities in the highly populated Baltic
region will have to be more fine-tuned
than its response to China’s in the
emptier South China Sea.
Washington also needs to set clear
redlines with China. In the South China
Sea, it cannot allow the country’s land-
reclamation projects to graduate to the
establishment of a so-called air defense
identification zone—airspace where
China reserves the right to exclude
foreign aircraft—as the regime declared
in the East China Sea in 2013. Such
moves form part of a strategy of delib-
erate ambiguity: the more unclear and
complex a military standoff becomes,
the more threatened the United States’
maritime dominance will be. If China
does announce such a zone in the South
China Sea, Washington must respond
by increasing U.S. naval activity in the
vicinity and expanding military aid to
40 f o r e i g n a f fa i r s
regional allies. Already, the U.S. Navy
has begun freedom-of-navigation opera-
tions, however halfhearted, within the
12-nautical-mile boundary of sovereign
authority that China has claimed around
its man-made islands. If these opera-
tions do not become regular and more
explicit, China will not feel deterred.
A TIME FOR STRENGTH
Never before has U.S. President Theodore
Roosevelt’s adage, now a cliché, “Speak
softly and carry a big stick” been more
applicable. A big stick can deter aggres-
sion, whether it originates from strength
or from weakness. But speaking softly
is particularly germane when aggression
arises out of weakness, since harsh
rhetoric can needlessly provoke leaders
who already have their backs against
the wall. Indeed, it is more important
for the United States to increase its own
military presence in the Baltic states
and the South China Sea than it is to
publicly condemn Moscow and Beijing
for their actions in those areas.
A big stick means quickly restoring
the U.S. defense budget after the
devastation of sequestration. The U.S.
Army counted nearly 570,000 soldiers in
2010 and is set to shrink to 450,000 in
2017. The United States now stations
33,000 land forces in Europe, down
from 200,000 during the Cold War.
Compared with ships and planes,
ground troops constitute a more cred-
ible demonstration of U.S. power,
because they advertise the country’s
willingness to shed blood to honor its
commitments. Since war has become
increasingly unconventional, the United
States no longer needs to station as
many ground forces in Europe as it
did during the Cold War, but a larger
 Eurasia’s Coming Anarchy

deployment is still called for. As for the side with the advantage “turns
naval assets, the Baltic Sea is too small plowshares into swords.” Strausz-Hupé
for the optimal use of an aircraft carrier had the Chinese and Soviet Communists
strike group, so the United States should in mind when he wrote those words. Yet
send more submarines to the region. the United States ultimately managed to
Washington should also reassure its fend off those adversaries through the
allies by limiting its rhetoric about trans- policy of containment, which was
national issues such as climate change protracted conflict in its own right.
to settings where it is strictly appropri- Containment wasn’t only about
ate. The president should never expect restraint, as many now like to believe;
Israelis, Poles, and Taiwanese, for exam- it was also about engaging in calculated
ple, to trust him because he is leading aggression and consistently reassuring
on climate change (as he has intimated allies. Throughout the Cold War, U.S.
they should); they want him to high- presidents prevailed while avoiding
light their own geopolitical dilemmas. nuclear war by understanding that
Although pandemics, rising sea levels, rivalry and conflict, rather than peace,
and other global challenges are real, the are normal. Today, as China and Russia
United States can afford the luxury of accelerate down the path of protracted
focusing on them thanks largely to its conflict, future U.S. presidents must
own protected geography. Many U.S. acknowledge that same truth. And
allies, by comparison, live dangerously they, too, must apply the right mix of
close to China and Russia and must strength and caution as they leave
contend with narrower, more traditional behind the comparatively calm decades
threats. Given their own tragic geography, of the Cold War and post–Cold War
Asian nations want to see more American eras and prepare to navigate the anarchy
warships in their waters. As for central of an unraveling Eurasia.∂
and eastern Europeans, they want a
muscular and unambiguous commitment
to their defense. Now more than ever,
because of the way globalization and the
communications revolution have made
geography more interconnected, an
American president risks losing his
reputation for power in one theater if
he fails to respond adequately to aggres-
sion in another.
In 1959, the political scientist Robert
Strausz-Hupé defined “protracted
conflict” as a state of sustained rivalry
that favors the side that is both patient
and able to “thrive upon conflict as the
normal condition of the twentieth
century.” Whereas the Western mindset
“sees only the tools of peace,” he wrote,

March/April 2016 41
 Return to Table of Contents

standards. An economy that grows at

Is Innovation one percent doubles its average income
HOW TO SURVIVE SLOW GROWTH

approximately every 70 years, whereas

Over?
The Case Against Pessimism difference
Tyler Cowen
The Rise and Fall of American Growth:
The U.S. Standard of Living Since the
Civil War
BY ROBERT J. GORDON. Princeton
University Press, 2016, 768 pp.
an economy that grows at three percent
doubles its average income about every
23 years—which, over time, makes a big
in people’s lives.
Some experts, such as the mit econo-
mists Erik Brynjolfsson and Andrew
McAfee, think that the current slowdown
is a temporary blip and that exponential
improvements in digital technologies
are transforming the world’s economies
for the better; others are more pessimistic.
Chief among the doomsayers is Robert
Gordon, a professor of economics at
Northwestern University. His latest

A
lmost seven years after the Great entry into this debate, The Rise and Fall
Recession officially ended, the of American Growth, is likely to be the
U.S. economy continues to grow most interesting and important eco-
at a sluggish rate. Real wages are stag- nomics book of the year. It provides a
nant. The real median wage earned by splendid analytic take on the potency
men in the United States is lower today of past economic growth, which trans-
than it was in 1969. Median household formed the world from the end of the
income, adjusted for inflation, is lower nineteenth century onward. Gordon
now than it was in 1999 and has barely thinks Americans are unlikely to witness
risen in the past several years despite comparable advances again and forecasts
the formal end of the recession in 2009. stagnant productivity for the United
Meanwhile, the U.S. Federal Reserve States for the foreseeable future.
Board and the Congressional Budget Yet predicting future productivity
Office have taken more seriously the rates is always difficult; at any moment,
idea that U.S. productivity, one of the new technologies could transform the
most important sources of economic U.S. economy, upending old forecasts.
growth, may stay low. And such prob- Even scholars as accomplished as Gordon
lems are hardly unique to the United have limited foresight.
States. Indeed, productivity growth
has been slow in most of the developed THE GOLDEN AGE
world for some time. In the first part of his new book, Gordon
In the medium to long term, even argues that the period from 1870 to 1970
small changes in growth rates have was a “special century,” when the foun-
significant consequences for living dations of the modern world were laid.
Electricity, flush toilets, central heating,
TYLER COWEN is Professor of Economics at
George Mason University. Follow him on Twitter cars, planes, radio, vaccines, clean water,
@tylercowen. antibiotics, and much, much more

42 f o r e i g n a f fa i r s

The next big thing: the future, as seen from the 1950s
transformed living and working condi-
tions in the United States and much of
the West. No other 100-year period in
world history has brought comparable
progress. A person’s chance of finishing
high school soared from six percent in
1900 to almost 70 percent, and many
Americans left their farms and moved
to increasingly comfortable cities and
suburbs. Electric light illuminated dark
homes. Running water eliminated water-
borne diseases. Modern conveniences
allowed most people in the United
States to abandon hard physical labor
for good.
In highlighting the specialness of
these years, Gordon challenges the
G R AP H I CA ART I S / G E T T Y I MAG ES
standard view, held by many econo-
mists, that the U.S. economy should
grow by around 2.2 percent every year,
at least once the ups and downs of the
business cycle are taken into account.
And Gordon’s history also shows that
not all gdp gains are created equal. Some
sources of growth, such as antibiotics,
Is Innovation Over?
vaccines, and clean water, transform
society beyond the size of their share
of gdp. But others do not, such as many
of the luxury goods developed since the
1980s. Gdp calculations do not always
reflect such differences. Gordon’s analysis
here is mostly correct, extremely impor-
tant, and at times brilliant—the book
is worth buying and reading for this
part alone.
Gordon goes on to argue that today’s
technological advances, impressive as
they may be, don’t really compare to the
ones that transformed the U.S. econ-
omy in his “special century.” Although
computers and the Internet have led to
some significant breakthroughs, such as
allowing almost instantaneous communi-
cation over great distances, most new
technologies today generate only marginal
improvements in well-being. The car,
for instance, represented a big advance
over the horse, but recent automotive
improvements have provided diminish-
ing returns. Today’s cars are safer, suffer
March/April 2016 43
Tyler Cowen
fewer flat tires, and have better sound
systems, but those are marginal, rather
than fundamental, changes. That shift—
from significant transformations to
minor advances—is reflected in today’s
lower rates of productivity.
Consider the history of aviation.
Gordon notes that a Boeing 707 flight
from Los Angeles to New York took
4.8 hours in 1958, which is actually
somewhat shorter than the time it
takes today. In fact, since the wide-
spread adoption of the Boeing 707,
door-to-door air travel times have
increased due to the contemporary
hassles involved in navigating airports
and all their security. Airplanes have
become much safer, but the aviation
sector has been surprisingly slow to
make other major technological changes.
Indeed, the DC-3, a highly practical,
all-purpose small plane that dates from
the 1930s, still remains in use today,
even in the United States.
Gordon also explores how pensions
and other workplace benefits have
eroded since the 1970s. For instance,
the percentage of workers on a defined-
benefit pension plan fell from 30 per-
cent in 1983 to 15 percent in 2013.
Gordon’s treatment of this topic is a
useful rebuttal to the common claim
that wage stagnation is an illusion
because unmeasured benefits on the
job have improved so much. The truth
is that fewer workers as a percentage
of the labor force now receive significant
benefits from their employers.
FALSE PROPHET?
Gordon’s analysis is fascinating, but he
isn’t quite able to make his startling
revisionist thesis work at book length—
especially a book that’s more than 750
44 f o r e i g n a f fa i r s
pages. He covers a wide range of poten-
tially interesting topics, but few of them
receive much depth or cohere into a useful
narrative. He discusses the Great Chicago
Fire of 1871 and the San Francisco
earthquake of 1906; compares automo-
bile and maritime insurance; explains
why the Homestead Act of 1862 and
similar subsequent legislation passed
in the nineteenth and early twentieth
centuries that opened up millions of
acres of land to settlers at low or no
cost were politically controversial; and
details the role of Philo Farnsworth of
Rigby, Idaho, in developing the televi-
sion set. These are all perfectly interest-
ing set pieces, but they add little to his
argument. The book could have been at
least a hundred pages shorter, with no
loss and some gain.
But the biggest problem with Gordon’s
book is his belief that he can forecast
future economic and productivity growth
rates: specifically, he predicts that both
will remain low in the United States.
He cites the mediocre American educa-
tional system, rising income inequality,
government debt, and low levels of
population growth, among other factors,
as unfavorable headwinds that are buffet-
ing the U.S. economy. But although
these are very real problems, there are
other, more positive factors at play in
the U.S. economy that Gordon is too
quick to dismiss and that make predict-
ing the future of economic and produc-
tivity growth a very difficult business.
Gordon brushes off such complexities
and offers a sustained defense of growth
forecasts: he assures readers that the
French author Jules Verne made some
pretty good predictions back in 1863 and
that a December 1900 article in Ladies’
Home Journal foresaw some important
aspects of the modern world, such as air
conditioning and cheap automobiles. But
Gordon doesn’t mention his own record
as a forecaster, which is decidedly mixed.
In 2000, he argued that the productivity

OPEN
innovations of the time didn’t measure
up to the gains of the past, and the same
year, he published another paper arguing
that the productivity benefits of comput-
ers were not as high as many people were
HOUSE
asserting. So far, so good. Online
What Gordon neglects to mention, Graduate
School
however, is that he is also the author of a
2003 Brookings essay titled “Exploding
Productivity Growth,” in which he Fair
optimistically predicted that productivity
in the United States would grow by 2.2
to 2.8 percent for the next two decades,
most likely averaging 2.5 percent a year;
he even suggested that a three percent March 8, 2016
rate was possible. Yet 2004, just after the
essay was published, was toward the tail
8am to 2pm EST
end of the period of high productivity
growth that had started in the 1990s, and Advance your degree.
since then, this number has tended to be Enrich your career.
closer to one percent. These days,
Gordon is offering forecasts of not much Find your path.
more than one percent for labor produc-
Connect with representatives
tivity growth and below one percent for
median income growth; in essence, he is of top programs in international
chasing the trends he has observed most affairs, public policy, and
recently. global business—all from
In the preface to his book, Gordon the convenience of your home
offers a brief history of the evolution or office and on any device.
of his views on productivity. Yet he
does not mention the 2003 essay, nor
does he explain why he has changed his Admission is free. All attendees
mind so dramatically. He also fails to are eligible to claim a free
cite other proponents of the stagnation six-month subscription to
thesis, even though most of their work ForeignAffairs.com.
predates his book. These precursors
include the economist Michael Mandel, www.foreignaffairs.com/openhouse
the Silicon Valley entrepreneur Peter
Thiel, and me. Mandel and I are rela-

45
Tyler Cowen
tively optimistic about the technological
future of the United States, but we, along
with most informed participants in these
debates, are skeptical about our ability
to forecast rates of economic and pro-
ductivity growth many years into the
future or, for that matter, even a few
years ahead.
A GLASS HALF FULL
Ultimately, Gordon’s argument for why
productivity won’t grow quickly in the
future is simply that he can’t think of what
might create those gains. Yet it seems
obvious that no single individual, not even
the most talented entrepreneur, can
predict much of the future in this way.
Consider just a few technological
breakthroughs we could witness in the
coming years, only a small number of
which Gordon even mentions: significant
new ways to treat mental health, such as
better antidepressants; strong and effec-
tive but nonaddictive painkillers; artificial
intelligence and smart software that
could eliminate many of the most boring,
repetitive jobs; genetic engineering;
and the use of modified smartphones
for medical monitoring and diagnosis. I
can’t predict when such breakthroughs
will actually happen. But it seems there
is a good chance we’ll live to see some or
maybe all of them materialize, and they
could prove to be major advances. And
although Gordon focuses on the demo-
graphic challenges the United States faces,
he never considers that today, thanks to
greater political and economic freedom all
over the world, more individual geniuses
have the potential to contribute to global
innovation than ever before.
It’s also worth remembering that many
past advances came as complete surprises.
Although the advents of automobiles,
46 f o r e i g n a f fa i r s
spaceships, and robots were widely
anticipated, few foretold the arrival of
x-rays, radio, lasers, superconductors,
nuclear energy, quantum mechanics, or
transistors. No one knows what the
transistor of the future will be, but we
should be careful not to infer too much
from our own limited imaginations.
Even during Gordon’s special cen-
tury of 1870–1970, progress was not
evenly distributed. There were pauses,
such as much of the 1920s and 1930s,
between some especially fruitful periods.
Some pauses in advancement today
should therefore not be alarming.
Gordon himself admits that informa-
tion technology was producing some
truly significant advances as recently
as the late 1990s and the very early
years of this century.
Given that economic growth and
technological progress are uneven, there
may well be bumps on the road when it
comes to using computers to significantly
improve human well-being. Surveying
the array of human talent in Silicon
Valley, the advances that have taken
place to date, and the possible potential
uses for new items such as smartphones,
it is difficult to accept Gordon’s assertion
that information technology has run its
course. It seems much more likely that
significant growth still lies ahead.
Gordon’s book serves as a powerful
reminder that the U.S. economy really
has gone through a protracted slowdown
and that this decline has been caused by
the stagnation in technological progress.
But perhaps the book’s greatest contri-
bution to the debate over the world’s
economic future is that it unintentionally
demonstrates the weakness of the case
for pessimism.∂
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 Return to Table of Contents
Learning to Love
Stagnation
Growth Isn’t Everything—
Just Ask Japan
Zachary Karabell
F
rom Wall Street to K Street to
Main Street, pessimism about
the global economy has become
commonplace. The world economy may
have finally emerged from the financial
crisis of 2008, but according to conven-
tional wisdom, it remains fragile and
unsteady, just one disruption away from
yet another perilous downturn.
In October, the International Mon-
etary Fund warned that a return to robust
global growth remained “elusive.” Others
are gloomier. Former U.S. Treasury
Secretary Larry Summers has said that
the world faces looming “secular
stagnation”—a persistent period of low
growth, low inflation, and low interest
rates—as the developed countries remain
caught in a deflationary trap, China
struggles with an uncertain transition
to a consumer economy, and the devel-
oping world reels from the collapse of
commodity prices and the contraction of
global credit. A rising chorus of voices
is also warning of the dangers of income
inequality, and no wonder: middle-class
wages in the United States have been
stagnant for more than three decades,
ZACHARY KARABELL is Head of Global
Strategy at Envestnet and the author of The
Leading Indicators: A Short History of the
Numbers That Rule Our World. Follow him on
Twitter @zacharykarabell.
while the wealth of the top one percent
continues to rise.
HOW TO SURVIVE SLOW GROWTH
Familiar as it is, however, this story
is also fundamentally flawed. It depends
on measurements of economic growth,
such as gdp, that are ill suited for the
modern digital age, and it ignores some
crucial good news: the decrease in the
cost of living across much of the world.
Although global economic and political
institutions tend to focus on maximizing
gdp growth, a future in which economic
growth remains low would not be nearly
as bad as most people assume—provided
that the cost of living also continues
to fall.
This is more than just a problem of
perspective. The view that growth is
stagnating leads to a crisis mentality
that makes policymakers adopt mea-
sures designed to boost growth: stimu-
lus spending, tax cuts, investments in
higher education. Some of these may
be beneficial, but they can also crowd
out other actions that may be more
beneficial: investing in greater efficiency,
developing a leaner bureaucracy, and,
above all, establishing and securing a
baseline minimum standard of living. A
society that followed these steps would
be better off in the long run.
BEYOND GDP
Ever since the Great Depression, which
coincided with the invention of measure-
ments such as gdp, nearly everyone has
considered growth to be the most impor-
tant indicator of an economy’s health.
Governments have risen and fallen
according to their ability to maximize
prosperity as measured by increases in
output and income (which includes
both wages and other sources of money,
such as dividends).
March/April 2016 47
Zachary Karabell
Income, of course, is simply a means
to obtain life’s necessities: food, cloth-
ing, shelter, health care, education, and
leisure. Historically, rising incomes and
wages have been closely connected with
a rise in the quality of life. Last year’s
Nobel laureate in economics, Angus
Deaton, has written powerfully about
this connection, showing that rising
incomes have led to longer life spans,
reduced societal violence, and greater
personal fulfillment.
In theory, however, people can
obtain all of life’s essentials by means
other than income. Such was the prom-
ise of communism, for instance: that
collective ownership of goods would
translate into universal prosperity. Even
though communism failed in practice,
it remains true that expanding gdp is
not the sole way to generate collective
prosperity or well-being. In fact, even
when incomes do rise, inflation, which
increases the costs of goods and services,
can undermine any resulting gains, as
generations of Social Security recipients
have discovered when their cost-of-living
adjustments have failed to keep pace
with their rising household expendi-
tures. On the other hand, falling costs
of vital goods and services can preserve
or even enhance standards of living
during a time of stagnant wages.
Despite these truths, the institutions
that steer modern economies, and the
measures they rely on, typically focus
more on the income side of the economic
ledger and neglect to consider costs.
Both academic and government econo-
mists track cost-of-living indexes and
purchasing power, but only secondarily
to gdp, income, and inflation. Even the
more astute chroniclers of economic
growth, such as Deaton and his fellow
48 f o r e i g n a f fa i r s
Nobel Prize winner Amartya Sen,
exhibit this bias.
During much of the twentieth
century, the costs of goods and services
rose as fast as wages—and often even
faster. Today, however, costs are falling
around the world. Since 2010, global
inflation has mostly hovered around
3.5 percent, roughly equal to the rate
of real global growth and significantly
lower than the over five percent infla-
tion rate experienced during the two
decades preceding 2010. In the devel-
oped world, meanwhile, inflation has
fallen even further, to below two percent.
Technology deserves most of the
credit for this trend. True, automation
may be eroding wages and threatening
many forms of work; the McKinsey
Global Institute recently estimated
that robots could perform as much as
45 percent of all the tasks currently
carried out by human workers, repre-
senting as much as $2 trillion worth
of annual wages. But by making manu-
facturing more efficient, technology is
also driving down the cost of almost
every good in the world, from hamburg-
ers to automobiles. And innovations
such as fracking have reduced the costs
of energy and commodities. Technology
is also driving down the costs of many
essential services. The cost of traditional
higher education, for instance, has been
rising far faster than the rate of inflation,
but the price of online education, with
the rise of moocs (massive open online
courses), is far lower—at times even zero.
Because gdp measures simply the
value of all the goods and services
produced by a country, lower costs can
reduce it; economies that depend on
high prices will contract as prices fall.
That is true both for real gdp, which

The price is right: shopping before Black Friday in Ohio, November 2014
adjusts for price changes and inflation,
and for nominal gdp, which does not.
And this contraction alarms not only
economists, such as Summers, but also
most government officials, whose legiti-
macy has become tethered to their ability
to increase gdp growth.
But gdp growth is no longer an
especially useful way of measuring the
health of modern economies. Many of
the most important developments in
the modern economy contribute little
BLOOM BE RG VIA G ET TY IMAG ES / DANI EL ACKE R
to official gdp figures. Browsing on
Wikipedia, watching videos on YouTube,
and searching for information on Google
add value to people’s lives, but because
these are digital goods that have zero
price, official gdp figures will consistently
downplay their impact. Improvements
in efficiency, which reduce costs, have a
negative impact on gdp. Consider solar
panels: their installation boosts gdp
initially, but thereafter the savings in
oil or gas will reduce gdp.
Learning to Love Stagnation
The combination of lower costs and
less growth can lead to the same end-
point as higher costs and higher growth.
But most economists and central bankers
fear deflation even more than they fear
inflation. They worry about a deflation-
ary trap: if prices fall, people have less
incentive to spend today, as they can
simply wait for cheaper prices tomorrow.
If consumers keep their wallets shut, the
economy will grind to a halt, resulting
in falling prices, and the cycle contin-
ues. To make matters worse, deflation
increases the cost of debt, which can
further depress spending. And deflation
is often taken as a sign that demand is
weak, which in turn is interpreted as a
sign that consumers lack spending power.
But some of these fears are un-
grounded. Although it is true that
deflation offers little relief to those in
debt, it, like income, matters only to the
extent that it affects people’s affluence
and quality of life. Deflation and lower
March/April 2016 49
Zachary Karabell
demand may hobble growth, but they
do not necessarily jeopardize prosperity.
One country knows this better than
most: Japan.
WHAT JAPAN SYNDROME?
For almost three decades, since Japan’s
immense property and asset bubbles
burst in 1991 and growth suddenly
decelerated, pundits from across the
political spectrum have used the country
as a cautionary example of what can
befall economies that become ensnared
in the trap of large amounts of govern-
ment debt, zero inflation, and little to no
growth. Search the Internet for “Japan
syndrome” or “lost decade,” and you’ll
find scores of articles and papers address-
ing the country’s purported malaise and
the lessons it offers to other societies
hoping to avoid its fate.
But the reality is that there is nothing
really wrong with Japan. It may have
negative real interest rates, an undervalued
currency, a debt-to-gdp ratio approach-
ing 250 percent, and an average annual
gdp growth rate over the last decade of
less than one percent. Yet it is also one
of the richest and most stable countries
in the world.
On almost every major metric that
societies use to measure individual and
collective well-being, Japan ranks near
the top. Life expectancy is among the
highest in the world; crime rates are
among the lowest. The Japanese people
enjoy excellent health care and educa-
tion. The un Human Development
Index, the Legatum Institute’s Prosper-
ity Index, and the Better Life Index of
the Organization for Economic Coop-
eration and Development all regularly
give Japan high marks. Income inequal-
ity in Japan has increased in the past
50 f o r e i g n a f fa i r s
decade, as it has in much of the world,
but that shift has not meaningfully
eroded living standards for the bulk of
the population. What’s more, Japan’s
very high level of public debt hasn’t
led to financial collapse.
Economic stagnation, in short, has
had little impact on the Japanese public’s
high quality of life. This realization has
led to a wave of new thinking in Japan
that emphasizes a “degrowth,” or post-
growth, model and focuses on well-
being rather than income or output.
The massive success of the Japanese
author Marie Kondo’s books on how
to pare down one’s belongings to the
essentials, rather than accumulate more
and more stuff in a fruitless attempt to
generate happiness, encapsulates the
emerging Japanese model. And the fact
that her book has sold more than two
million copies worldwide suggests that
the message is popular far beyond
Japan’s shores.
MORE BANG FOR THE BUCK
In the United States, meanwhile, inequal-
ity and income stagnation rank among
voters’ most pressing concerns, according
to recent Gallup polls. Economic lumi-
naries such as James Galbraith, Paul
Krugman, Branko Milanovic, Thomas
Piketty, and Joseph Stiglitz have all
argued that inequality in income and
wealth threatens the country’s very
democracy.
Middle-class wages stopped rising
more than 30 years ago, but it was only
with the financial crisis that this issue
became a pressing economic concern.
Before the crisis, a booming equity
market, low interest rates, a soaring
housing market, and easy credit obscured
the problem, allowing people to bridge
the gap between their stagnant incomes
and their spending. But when the crisis
hit, and credit contracted, that extra Not all readers
source of income evaporated.
But even though wages have flat- are leaders,
lined, so, too, have costs—which has
prevented living standards from declin- but all leaders
ing. Millions of families, of course,
have confronted unemployment and are readers.
falling incomes, and millions have been - Harry S. Truman
unable to meet their basic needs; their
stories rightly dominate the public
discussion. But overall, for a substantial
majority, shrinking costs and a wider SIGN UP for the
range of available goods and services Foreign Affairs
have offset the negative effects of Books & Reviews
newsletter
declining incomes.
Consider some of a family’s most
important expenses: food, energy, and
housing. In 1950, the average U.S.
household spent 30 percent of its income
on food. By the turn of the century, the
figure had fallen to 13 percent, and in
2013, it stood at just ten percent. (Not
surprisingly, that share is much higher
for the poor, but food stamps and other
government programs offset their ex-
penses.) Housing in major cities accounts
for a larger percentage of income than
it did in the mid-twentieth century, but
housing in general does not. And energy
expenditures have tumbled, thanks to
much greater energy efficiency in auto-
mobiles, better insulation for homes,
and, recently, cheap oil and gas.
As for the goods that households and
businesses consume, globalized supply
chains, along with the efficiencies gener-
ated by technology, have pushed down
their relative prices. Even lower-cost
goods imported from China have been
getting cheaper—by more than two
percent in the past three years, according ForeignAffairs.com/newsletters
to the U.S. Bureau of Labor Statistics.

51

Zachary Karabell
The costs of electronics and household
appliances have been plunging for years,
and furniture, clothing, and a host of other
goods are all now becoming less expensive.
That leaves services, which repre-
sent an ever-larger share of spending.
Here, the picture is more complex. The
costs of some services, such as higher
education, continue to rise far faster
than the rate of inflation. Overall health-
care costs have risen only modestly in the
past few years, but certain types, such
as drug prices and insurance premiums,
have skyrocketed. The inefficiency and
complexity of the health-care system
have placed a severe financial burden
on a substantial portion of the popula-
tion. In the case of both education
and health care, however, government
programs and public and private subsi-
dies, such as Medicare, Medicaid, Pell
Grants, and massive student aid pro-
grams, reduce the amount of their own
money that people actually spend.
What’s more, recent disruptive
technologies are driving down the prices
of many services. The car-hailing app
Uber, for instance, has made getting a
ride much cheaper and generated income
for legions of drivers. The ability to
make calls over the Internet, using
applications such as Skype, has driven
down the cost of phone calls close to
zero. And after decades during which
doctors’ house calls were prohibitively
expensive, various smartphone video
applications are making virtual house
calls cheap and easy.
A CHICKEN IN EVERY POT
It’s not just in the United States that
economists worry about slower growth.
For nearly a decade, global growth was
driven by the spectacular surge of China
52 f o r e i g n a f fa i r s
and the accompanying acceleration of
emerging markets, but both these drivers
now appear to have stalled. China’s
economic growth has fallen from its
double-digit highs to seven percent or
less. Meanwhile, the commodity and
energy boom sparked by China’s growth
has also come to an end, with painful
consequences for a number of countries,
from Brazil to Russia to South Africa.
But as in Japan and the United
States, the middle class in these coun-
tries is seeing rising living standards
because the goods and services people
require can be obtained more cheaply
than ever before.
Just look at inflation. For an economy
that was booming, China has been expe-
riencing inflation that is startlingly low,
at least according to official figures, staying
under three percent for the last three
years. In India, inflation is around five
percent. Brazil is the most notable outlier,
with inflation at around ten percent, but
so much of Brazilian economic policy is
idiosyncratic these days, from double-
digit interest rates to the locking in by
constitutional and congressional mandate
of 90 percent of government spending,
that it hardly contradicts the global trend.
Low inflation has also accompanied
very low global interest rates. Such low
rates make debt, which has historically
been one of the heaviest burdens for
both individuals and governments, much
cheaper. As a result, an emerging global
middle class now also has more access
than ever to cheap capital.
BACK TO THE BASICS
In the stagnant 1970s, a chorus of prog-
nosticators who harbored deep skepti-
cism about the value of capitalism and
economic growth issued dire warnings

about the future. A group of experts
called the Club of Rome, for instance,
published a 1972 report titled The Limits to
Growth, which projected several scenarios
of economic and environmental collapse.
Their forecasts proved incorrect, of
course, and global growth picked up in
the 1980s.
Today, the limits of growth should
provoke considerably less anxiety. Growth
is not the sole pathway to prosperity, even
if it has long been the primary one. Slower
growth need not entail the breakdown
of capitalism and consumption. Much
of the drive toward lower costs is a
direct product of capitalist competi-
tion, as companies attempt to maintain
margins and market share. The result-
ing gains in efficiency have allowed for a
level of collective affluence hardly imagin-
able in the past. As technology contin-
ues to substitute for labor and synthetic
solutions such as industrial composites
become more important than raw materi-
als, billions of people will be able to
meet more of their basic needs. Although
the environmental consequences of a
booming global middle class have been
severe, the worst may have passed: in
2015, carbon emissions actually fell.
But the world’s financial and politi-
cal infrastructure remains dependent
on the old model, in which gdp growth
was all-important, and so lower costs,
deflation, and slower economic expan-
sion will continue to concern policy-
makers and central bankers. If there are
no straightforward ways of measuring
the gains from lower costs and only
ways of measuring the harms of lower
growth, then the world’s governments
and economic institutions will continue
to emphasize an unduly pessimistic
view of the global economy and will
Learning to Love Stagnation
continue to make policy prescriptions
based on the misguided pursuit of
economic growth for its own sake.
Rather than start with the assump-
tion that growth is the only viable path
to collective economic security, policy-
makers must first consider what ultimate
goal they are trying to reach. Presum-
ably, it is at least to provide all people
with adequate calories, shelter, health
care, education, clothing, appliances, and
some basic opportunities to improve
their station. This is hardly a new idea.
It is close to what the un’s Universal
Declaration of Human Rights outlined
in 1948.
With that in mind, policymakers
should pay more attention to policies
that can raise living standards—even
if they might lower gdp. These could
include offering more incentives for
companies and individuals to adopt
efficiency technologies, such as longer-
lasting smart appliances and home
energy gauges, which would help de-
crease energy consumption—things
that would be good for the vast major-
ity of people, despite lowering gdp.
A world where growth is lower but
where more people than ever before
have access to life’s essentials is hardly
a dire scenario. In fact, it is just the
opposite. The world may be reaching the
limits of growth, but it has not begun to
reach the limits of prosperity.∂
March/April 2016 53
 Return to Table of Contents
The Good News
HOW TO SURVIVE SLOW GROWTH
From Google
A Conversation With
Ruth Porat
R
uth Porat has taken an unusual
path to the tech world. Before
becoming the chief financial
officer at Google in May 2015 (and then
at Alphabet, Google’s new parent com-
pany, a few months later), she held the
same post at Morgan Stanley, where
among other roles she worked closely
with the U.S. government to sort out
the troubles at the insurance corpora-
tion aig and the mortgage-financing
agencies Fannie Mae and Freddie Mac
during the 2008 financial crisis. On the
shortlist to become deputy treasury
secretary in 2013 (before she withdrew
her name), Porat, who Politico once
referred to as “the most powerful woman
on Wall Street,” is now one of the most
powerful women in Silicon Valley as well.
Some six months into the new job, she
met with Foreign Affairs’ managing editor,
Jonathan Tepperman, in New York to
discuss her move and the global economy.
Tell me about the transition from a
Wall Street bank to the quintessential
Silicon Valley tech firm. Conventional
wisdom holds that banks are stodgier
than companies like Google. Is that
true, and what lessons can Wall Street
learn from Silicon Valley?
The transition was easier than I would
This interview has been edited and condensed.
54 f o r e i g n a f fa i r s
have expected. I stayed at Morgan Stanley
for 27 years because it was fun. I kept
learning. And during the 1990s, when I
ran tech banking, I was working with
great Internet companies right in that
explosive period. So there were a lot of
similarities.
It’s been invigorating being back on
the West Coast, being at Alphabet,
because there is so much innovation.
And the big challenge is, how do you
think about resource allocation and
priorities when you have so many great
options? But wearing jeans instead of
suits and popping into driverless cars
has also been a lot of fun.
But is there anything particular to the
Google approach that the larger busi-
ness community, whether it’s banking or
bricks and mortar, could profit from?
A key framework that we talk about quite
a bit, and that Larry [Page, Google’s
co-founder and now Alphabet’s ceo]
articulated many years ago, is what he
calls “the 70-20-10 framework.” Seventy
percent of our resources should be focused
on our core business, 20 percent on
adjacent emerging areas, and 10 percent
should be moon shots. But as he also very
quickly says, even when you articulate
PAT R I C K T. FA L L O N / B L O O M B E R G V I A G E T T Y I M A G E S
that kind of strategy, it’s still hard to get
people to push out to the 20 and harder
to get them to go out to the 10. But if
you don’t do it, somebody else will.
Another thing he said years ago is
that incrementalism in technology
leads to irrelevance; what you need is
revolutionary change. I think that view
is true across all businesses. It’s easier
to be in your comfort zone; it’s easier to
do modest extensions. But you need to
really force yourself.
Porat in California,
April 2014
The Good News From Google
And have you created an institutional
structure for disruption within Google?
Because this is something that big
institutions struggle with all the time:
people become set in their ways, become
leery of contradicting the boss, and all
that stifles innovation.
That’s a great way to frame why we made
the move from Google to Alphabet.
Structurally, we wanted to give ourselves
the room to not only have that 70-20-10
be our mantra within Google—and it
unequivocally is: within Google we’re
pushing the envelope in a lot of areas,
things like virtual reality, machine
learning, the next billion users. But
beyond that, we wanted the room to think
about the 20s and the 10s in new areas,
like life sciences or driverless cars.
Structurally, this gives us the ability to
focus on the various “other bet” entities,
to be a catalyst and a magnet for great
entrepreneurs, in a way that may have
been more difficult under one umbrella.
One other great contrast between
Silicon Valley and Wall Street is that
the public tends to see tech firms as
being beneficial to society, as creating
things of use, whereas it tends to see
Wall Street as being parasitic. Do you
think that’s fair?
For many decades, the financial services
industry wasn’t viewed that way. Then,
after the financial crisis, banks were
ranked only above Congress in public
opinion surveys. There was clearly a lot
of suffering. We needed to have a learn-
ing moment, where we stepped back
and looked at the fundamental flaws
that enabled the industry to go down a
path that resulted in the crisis.
There were many elements to it:
regulation, strategy, implementation.
56 f o r e i g n a f fa i r s
One thing that frustrated me when I was
in the industry was that we did embrace
regulatory change early, but not everyone
did. And there was a lot of resistance,
and that delay was destructive. And
we’re still slowly coming out of it.
As of today, at least in the United
States, there’s been a fundamental change
in banks. There’s more capital, more
liquidity, and the nature of activity has
changed. [But] it will take some time to
get to a position where people are more
focused on how do you finance growth at
the individual level, at the company level?
Pendulums swing. I think we’re still in
that slow swing, and I think the resistance
to an appropriate response is one reason.
If, on the other hand, you think about
the mission that we and many others in
the tech world have, it’s really about
making the user experience better every
day. In their earliest days, Larry and
Sergey [Brin, co-founder of Google] had
something famously called “the tooth-
brush test.” They wanted us to focus on
improving things that billions of people
use at least twice a day to make their lives
better. And that’s a lot of what we do.
There is a difference. We’re delighting
the user, and we’re seeing tremendous
growth in the over­all enterprise.
The consensus among most prognosti-
cators is that we’re entering a phase of
slow GDP growth around the world. Is
that as big a concern for the tech world
as it is for more traditional industries?
I’ll answer a slightly different way. I’m
often asked, what’s been my biggest
surprise since coming to Google, now
Alphabet? And my answer is how early
stage Google actually is. Given the scale
of the organization today, that’s a pretty
odd thing to say. But we’re riding some

really important secular changes. Mobile
is still in its infancy. As I said, one of
our big strategies is getting the next
billion users online. Look at YouTube
and the importance of the shift in adver-
tising going online. Virtual reality is in
its early days; machine learning is in
its early days. Look what we’re doing
with the cloud and enterprise.
So what’s exciting for me is that
we’re riding incredible tail winds. Of
course you’d rather have a better macro
backdrop, but it’s substantially less
relevant. Many of the things we’re
doing, in particular in the other bets,
provide long-term growth opportuni-
ties, and the macro ups and downs are
therefore much less relevant.
But isn’t the core of your revenue model
still based on advertising? And is that
not sensitive to a secular slowdown?
Advertising is. However, the reason
I’m still defining it as a tail wind is that
more and more advertisers are finding
that you can target and measure more
accurately by advertising online rather
than offline. The migration to online
advertising is still very much in its infancy.
One of the main reasons growth is
thought to be slowing is that productivity
is declining. Do tech firms like yours
have the potential to help developed
countries out of the productivity trap
they seem to be in?
Research suggests that for every tech
job created in a metro area, five addi-
tional jobs are also created. And when
you look at how productive one can be
in the workplace, the leverage you get
from the tools we have operating in the
cloud is pretty extraordinary.
A Conversation With Ruth Porat
You spoke about the multiplier
effect, but a lot of people worry that
technology, especially automation,
is playing a negative role by reducing
employment opportunities and
causing wages to flatline.
It is easier to visualize the jobs that
will be eliminated than it is to envision
the new industries that will come out
of innovation. But when, for example,
you look at the medical field, new tech-
nologies created a whole new set of ana-
lytical roles that needed to be filled. In
banking, the advent of atms created a new
set of jobs in the financial services area.
What I’m concerned about is that at
a macro level, it’s easy to say there’s a
multiplier effect. But you have to make
sure that the quality of work actually does
go up at the individual level. Whether it’s
at the company level or at a macro level,
change is inevitable. It will happen. The
question is, what do we do with the
individuals who are caught in the middle?
How do we offer job training so that they
embrace it and end up also winning?
Another big input into productivity is
new bodies: you need people entering
the labor stream with the right skills.
How worried are you about the growing
antipathy toward immigration not just
in the United States but throughout
the developed world?
I am worried on two levels. It’s not just
inconsistent with our values as a country—
I wasn’t born here; my family came here
[from the United Kingdom] because it
was a land of opportunity—but it’s also
economically unwise. Sixty percent of
the top 25 tech companies were founded
by first- or second-generation Americans.
If you look at the Fortune 500, the figure
is 40 percent. Immigration has been a
March/April 2016 57
The Good News From Google
catalyst for innovation in this country
for as long as one can recall. So I think
it is extremely shortsighted.
How can firms like yours help people
who may not be lucky, gifted, or edu-
cated enough to really engage in the
knowledge economy?
Start with the mission of Google from
its earliest days: to organize the world’s
information, make it as useful and
applicable as possible. We give access to
information in a really powerful way.
Or look at what we’re doing in
schools. Our Chromebooks are highly
affordable and easy to set up, so they
provide teachers with a powerful tool.
We then layer on things like what we’re
doing in virtual reality, for example.
We have something called Cardboard,
which lets you slide your phone into a
very inexpensive, little cardboard pack-
aging and create a virtual reality tool.
Through Google.org, we’re doing a lot
on computer science training for kids,
for women, for underrepresented
groups generally.
Describe the analogous efforts you’re
making internationally to bring more
people into the digital flow.
We started something called Google for
Entrepreneurs to help entrepreneurs in
home markets understand how they can
take ideas from inception to launch.
We’re trying to leverage all that we’ve
learned by serving as advisers, helpers,
catalysts—however you want to define it.
The types of products we’re designing
also differ in different markets. The
emerging markets don’t have the band-
width we do here, so we created what we
call Android One, which is a slimmed-
down version of the mobile operating
58 f o r e i g n a f fa i r s
system that’s affordable and works in a
slower-bandwidth environment.
When you look around the globe today,
do you see any bright spots?
Many. I think the most challenging
aspect of my role has been resource
prioritization, given how many exciting
opportunities there are. On a product
level, I haven’t even commented on
what we’re doing in life sciences, for
example. There our approach is to go
from what we call “reactive medical
care” to proactive care: to have continu-
ous diagnostics leveraging off of the
data-computing capacity that we have
within Alphabet. So there are areas like
that where we’re transforming industries.
Another example is driverless cars
and what that means for reimagining
what cities can be.
On a geographic level, I think the
opportunity to help and work with so
many emerging markets where people
are still coming online is pretty extraor-
dinary. And it’s not just about the devices.
For example, we’re looking at ways to
provide connectivity to parts of the
world where it’s hard to implement
the methods we have historically used
in the developed world.
A recent analysis of the tech industry
looked at the 15 biggest firms in the year
2000 and found that they’ve since lost
about 60 percent of their value. Mean-
while, the fourth, fifth, and sixth most
valuable firms today are Alibaba, Tencent,
and Baidu: all Chinese. Do you think the
erosion of U.S. dominance in high tech is
a bad thing or a good thing?
I think the pace of innovation globally is
extraordinary and is a positive thing. We’re
very respectful of the fact that innovation is
occurring around the globe. We’re a global
company, and we want to be a part of it.
It’s an extraordinarily competitive market,
and it puts pressure on us every day.
But the bigger part of your question
is, how do I think about the future? And directory
I think it really goes back to Larry’s
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Whenever a high-level government Employment and

finance post comes open these days,
your name seems to get bandied about.
If you were Fed chair or treasury secre-
tary, what would you do differently from
the current officeholders?
I’ve learned that it’s never wise to second-
guess what people are doing. And I’ve
been head down at Google, now Alphabet,
for the last six months.
But there are a couple of areas that I
was intensely focused on when I was
spending time in Washington. And if
the question is, is there opportunity to
do more? I would say there are two
important issues that really go to
resource optimization.
One that I care immensely about is our
federal student loan program. And the
reason I focused on it is that in many ways
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59

The Good News From Google
it is very similar to housing policy, and I
spent a lot of time working with Treasury
Secretary Hank Paulson on Fannie Mae
and Freddie Mac during the financial crisis.
Home lending, like student lending,
was a well-intentioned social program
that by its design and execution not only
hurt those it was intended to help but has
left taxpayers with the bill. We now have
$1.3 trillion in student loans outstanding,
and many of these kids aren’t actually
getting a relevant education. Sixty-eight
percent of the kids who go to a for-profit
school don’t graduate, so they’re left with
a loan but no degree. I view that as a
prime example of a misalignment of
resources. We can shrink the origination
volume by focusing more on job training
and deploy it the right way.
Another area where I spent a lot of time
in my prior life was infrastructure invest-
ing. There’s a lot of private-sector money
on the sidelines that’s looking for long-
term investments in a low-yield environ-
ment. We clearly have some infrastructure
challenges, whether it’s roads, bridges,
ports, airports, whatever. And the financ-
ing environment seems close to historic
lows. That creates an opportunity to bring
the public and private sectors together to
solve some of our infrastructure needs and
to create jobs as well.
Those might be smart public policies, but
given the political climate in the United
States right now, they’re unlikely to
happen. Do you worry that Washington is
broken? And is there a risk that if this
problem continues, the tech world will
simply start working around government?
The level of polarization in this country
is obviously at historic highs, and that’s
dysfunctional, and we need our leaders
to lead.
60 f o r e i g n a f fa i r s
It is productive to try to solve problems
however one can. If that means doing
things through technology and not
relying on policy, and that’s additive,
that’s a good place to be. But having
spent a lot of time in Washington, I
would say that there are a lot of talented
people there who care immensely.
As the father of a nine-month-old boy, I’m
curious about your argument that parents
shouldn’t think about achieving a work-life
balance and that we should think about
integration instead. What does that mean?
I think work-life balance is a trap, because
I don’t think you can ever be balanced.
If you struggle to keep things perfectly
aligned, you’ll always feel like you’re failing
somewhere, and that’s not a healthy way
to go through life.
What I encourage people to do
instead is think about a mix. Think of
your life like a kaleidoscope. If you had
even amounts of yellow and blue, it’s
pretty boring. What’s important and
what makes life really rich and exciting
is to have lots of different shapes and
colors that change over time.
So sometimes I will be all in work, and
other times I will be all in family. And
then there will be the mix in between,
and it changes throughout life. And if
you don’t give yourself permission to
have it changing constantly, I think you’ll
find that you can’t ever make it work.
I think my kids are proud of what I’m
doing at work. When they’re growing
up, and you’re trying to juggle every-
thing to get it to work, you’ll find that
they understand it. And you’ve got years
to go until you have to worry about it.∂
 SOLUTION D R I V E N
PA C I F I C F O C U S E D
GLOBAL R E S U L T S

“For 20 years, I have written about why

serious climate cooperation is hard to achieve
and why most of what’s been tried was bound
to fail. Paris was different. But success on the road
from Paris is far from assured. It must be earned;
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—GPS Professor David Victor at COP21 (Environment360)

School of Global Policy and Strategy

at the University of California, San Diego
Utilizing breakthroughs in science, technology,
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policy, GPS is shaping better solutions for a
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 ESSAYS
Not since the Mongol
invasions of the thirteenth
century has the Middle
East seen so much chaos.
—Kenneth Pollack

Fight or Flight The Study-Abroad Solution

Kenneth M. Pollack 62 Sanford J. Ungar 111

ISIS Goes Global Japan’s New Realism

Daniel Byman 76 Michael Auslin 125
REUTE RS / LEONHARD FO EG E R

Can China’s Companies Conquer The Next Front on Climate Change

the World? Veerabhadran Ramanathan, Jessica
Pankaj Ghemawat and Thomas Hout 86 Seddon, and David G. Victor 135

The Lost Art of Economic Statecraft

Robert D. Blackwill and Jennifer M.
Harris 99
 Return to Table of Contents

Fight or Flight
America’s Choice in the Middle East
Kenneth M. Pollack

T
he modern Middle East has rarely been tranquil, but it has
never been this bad. Full-blown civil wars rage in Iraq, Libya,
Syria, and Yemen. Nascent conflicts simmer in Egypt, South
Sudan, and Turkey. Various forms of spillover from these civil wars
threaten the stability of Algeria, Jordan, Lebanon, Saudi Arabia, and
Tunisia. Tensions between Iran and Saudi Arabia have risen to new
heights, raising the specter of a regionwide religious war. Israel and
the Palestinians have experienced a resurgence of low-level violence.
Kuwait, Morocco, Oman, Qatar, and the United Arab Emirates have
weathered the storm so far, but even they are terrified of what is going
on around them. Not since the Mongol invasions of the thirteenth
century has the Middle East seen so much chaos.
Moreover, it is unlikely to abate anytime soon. No matter how
many times Americans insist that the people of the Middle East will
come to their senses and resolve their differences if left to their own
devices, they never do. Absent external involvement, the region’s lead-
ers consistently opt for strategies that exacerbate conflict and feed
perpetual instability. Civil wars are particularly stubborn problems,
and without decisive outside intervention, they usually last decades.
The Congolese civil war is entering its 22nd year, the Peruvian its
36th, and the Afghan its 37th. There is no reason to expect the Middle
East’s conflicts to burn out on their own either.
As a consequence, the next U.S. president is going to face a choice in
the Middle East: do much more to stabilize it, or disengage from it much
more. But given how tempestuous the region has become, both options—
stepping up and stepping back—will cost the United States far more
than is typically imagined. Stabilizing the region would almost certainly

KENNETH M. POLLACK is a Senior Fellow at the Brookings Institution.

62 f o r e i g n a f fa i r s
require more resources, energy, attention, and political capital than most
advocates of a forward-leaning U.S. posture recognize. Similarly, giving
up more control and abandoning more commitments in the region would
require accepting much greater risks than most in this camp acknowl-
edge. The costs of stepping up are more manageable than the risks of
stepping back, but either option would be better than muddling through.

MAN, THE STATE, AND CIVIL WAR

Grasping the real choices that the United States faces in the Middle
East requires an honest understanding of what is going on there.

March/April 2016 63
Kenneth M. Pollack

Although it is fashionable to blame the region’s travails on ancient

hatreds or the poor cartography of Mr. Sykes and Monsieur Picot, the
real problems began with the modern Arab state system. After World
War II, the Arab states came into their own. Most shed their Euro-
pean colonial masters, and all adopted more modern political systems,
whether secular republics (read: dictatorships) or new monarchies.
None of these states worked very well. For one thing, their economies
depended heavily on oil, either directly, by pumping it themselves,
or indirectly, via trade, aid, and worker remittances. These rentier
economies produced too few jobs and too much wealth that their
civilian populations neither controlled
The Middle East’s travails nor generated, encouraging the ruling
elites to treat their citizenries as (mostly
began with the modern unwanted) dependents. The oil money
Arab state system. bred massive corruption, along with
bloated public sectors uninterested in
the needs or aspirations of the wider populace. To make matters worse,
the Arab states had emerged from Ottoman and European colonialism
with their traditional sociocultural systems intact, which oil wealth
and autocracy made it possible to preserve and even indulge.
This model clunked along for several decades, before it started
falling apart in the late twentieth century. The oil market became
more volatile, with long periods of low prices, which created economic
hardship even in oil-rich states such as Algeria, Iraq, and Saudi
Arabia. Globalization brought to the region new ideas about the rela-
tionship between government and the governed, as well as foreign
cultural influences. Arabs (and Iranians, for that matter) increasingly
demanded that their governments help fix their problems. But all they
got in response was malign neglect.
By the 1990s, popular discontent had risen throughout the Middle
East. The Muslim Brotherhood and its many franchises grew quickly
as a political opposition to the regimes. Others turned to violence—
rioters in the Nejd region of Saudi Arabia, Islamist insurgents in
Egypt, and various terrorist groups elsewhere—all seeking to over-
throw their governments. Eventually, some of these groups would
decide that they first had to drive away the foreign backers of those
governments, starting with the United States.
The pent-up frustrations and desire for political change finally
exploded in the Arab Spring of 2011, with large-scale protests breaking

64 f o r e i g n a f fa i r s
 Fight or Flight

out in nearly all Arab countries and the toppling or crippling of the
regime in five of them. But revolutions are always tricky things to get
right. That has proved especially true in the Arab world, where the
autocrats in each country had done a superb job of eliminating any
charismatic opposition leader who might have unified the country after
the fall of the regime and where there were no popular alternative
ideas about how to organize a new Arab state. And so in Libya, Syria,
and Yemen, the result has been state failure, a security vacuum, and
civil war.
If the first-order problem of the Middle East is the failure of the
postwar Arab state system, the outbreak of civil wars has become an
equally important second-order problem. These conflicts have taken
on lives of their own, becoming engines of instability that now pose
the greatest immediate threat to both the people of the region and the
rest of the world.
For one thing, civil wars have a bad habit of spilling over into their
neighbors. Vast numbers of refugees cross borders, as do smaller, but
no less problematic, numbers of terrorists and other armed combatants.
So do ideas promoting militancy, revolution, and secession. In this
way, neighboring states can themselves succumb to instability or even
internal conflict. Indeed, scholars have found that the strongest pre-
dictor that a state will experience a civil war is whether it borders a
country already embroiled in one.
Civil wars also have a bad habit of sucking in neighboring coun-
tries. Seeking to protect their interests and prevent spillover, states
typically choose particular combatants to back. But that brings them
into conflict with other neighboring states that have picked their own
favorites. Even if this competition remains a proxy fight, it can still be
economically and politically draining, even ruinous. At worst, the
conflict can lead to a regional war, when a state, convinced its proxy is
not doing the job, sends in its own armed forces. For evidence of this
dynamic, one need look no further than the Saudi-led intervention in
Yemen, or Iranian and Russian military operations in Iraq and Syria.

WITHDRAWAL SYMPTOMS
As if the failure of the postwar Arab state system and the outbreak of
four civil wars weren’t bad enough, in the midst of all of this, the
United States has distanced itself from the region. The Middle East
has not been without a great-power overseer of one kind or another

March/April 2016 65
Kenneth M. Pollack

since the Ottoman conquests of the sixteenth century. This is not to

suggest that the external hegemon was always an unalloyed good;
it wasn’t. But it often played the constructive role of mitigating con-
flict. Good or bad, the states of the region have grown accustomed to
interacting with one another with a dominating third party in the
room, figuratively and often literally.
Disengagement has been most damaging in Iraq. The U.S. with-
drawal from the country was the most important of a range of factors
that pulled it back into civil war. Scholars have long recognized that
shepherding a nation out of a civil war requires some internal or exter-
nal peacekeeper to guarantee the terms of a new power-sharing arrange-
ment among the warring parties. Over time, that role can become
increasingly symbolic, as was the case with nato in Bosnia. The alli-
ance’s presence there dwindled to a militarily insignificant force within
about five years, but it still played a crucial political and psychological
role in reassuring the rival factions that none of them would return to
violence. In the case of Iraq, the United States played that role, and its
disengagement in 2010 and 2011 led to exactly what history predicted.
This phenomenon has played out more broadly across the Middle
East. The withdrawal of the United States has forced governments
there to interact in a novel way, without the hope that Washington
will provide a cooperative path out of the security dilemmas that litter
the region. U.S. disengagement has made many states fear that others
will become more aggressive without the United States to restrain
them. That fear has caused them to act more aggressively themselves,
which in turn has sparked more severe countermoves, again in the
expectation that the United States will not check either the original
move or the riposte. This dynamic has grown most acute between Iran
and Saudi Arabia, whose tit-for-tat exchange is growing ever more
vituperative and violent. The Saudis have taken the stunning step of
directly intervening in Yemen’s civil war against the country’s Houthi
minority, which they consider to be an Iranian proxy that threatens
their southern flank.
Even as the Middle East careens out of control, help is not on the
way. The Obama administration’s policies toward the region are not
designed to mitigate, let alone end, its real problems. That is why the
region has gotten worse since President Barack Obama entered office,
and why there is no reason to believe that it will get any better before
he leaves office.

66 f o r e i g n a f fa i r s
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 Fight or Flight

In his 2009 speech in Cairo, Obama did claim that the United
States would try to help the region shift to a new Arab state system,
but he never backed his speech up with an actual policy, let alone
resources. Then, in 2011, the administration failed to put in place a
coherent strategy to deal with the Arab Spring, one that might have
assisted a transition to more stable, pluralistic systems of government.
Having missed its best opportunities, Washington now barely pays lip
service to the need for gradual, long-term reform.
As for the civil wars, the administration has focused on addressing
only their symptoms—trying to contain the spillover—by attacking the
Islamic State, or isis; accepting some refugees; and working to prevent
terrorist attacks back home. But the history of civil wars demonstrates
that it is extremely hard to contain the
spillover, and the Middle East today is
proving no exception. Spillover from
Even as the Middle East
Syria helped push Iraq back into civil careens out of control, help
war. In turn, spillover from the Iraqi and is not on the way.
Syrian civil wars has generated a low-
level civil war in Turkey and threatens to do the same in Jordan and
Lebanon. Spillover from Libya is destabilizing Egypt, Mali, and Tuni-
sia. The Iraqi, Syrian, and Yemeni civil wars have sucked Iran and the
Gulf states into a vicious proxy war fought across all three battlefields.
And refugees, terrorists, and radicalization spilling over from all these
wars have created new dilemmas for Europe and North America.
In fact, it is effectively impossible to eradicate the symptoms of civil
wars without treating the underlying maladies. No matter how many
thousands of refugees the West accepts, as long as the civil wars grind
on, millions more will flee. And no matter how many terrorists the
United States kills, without an end to the civil wars, more young men
will keep turning to terrorism. Over the past 15 years, the threat from
Salafi jihadism has grown by orders of magnitude despite the damage
that the United States has inflicted on al Qaeda’s core in Afghanistan.
In places racked by civil war, the group’s offshoots, including isis, are
finding new recruits, new sanctuaries, and new fields of jihad. But where
order prevails, they dissipate. Neither al Qaeda nor isis has found much
purchase in any of the remaining strong states of the region. And when
the United States brought stability to Iraq beginning in 2007, al Qaeda’s
franchise there was pushed to the brink of extinction, only to find
salvation in 2011, when civil war broke out next door in Syria.

March/April 2016 67
Kenneth M. Pollack

Contrary to the conventional wisdom, moreover, it is possible for a

third party to settle a civil war long before it might end on its own.
Scholars of civil wars have found that in about 20 percent of the cases
since 1945, and roughly 40 percent of the cases since 1995, an external
actor was able to engineer just such an outcome. Doing so is not easy,
of course, but it need not be as ruinously expensive as the United
States’ painful experience in Iraq.
Ending a civil war requires the intervening power to accomplish
three objectives. First, it must change the military dynamics such that
none of the warring parties believes that it can win a military victory
and none fears that its fighters will be slaughtered once they lay down
their arms. Second, it must forge a power-sharing agreement among
the various groups so that they all have an equitable stake in a new
government. And third, it must put in place institutions that reassure
all the parties that the first two conditions will endure. To some
extent unknowingly, that is precisely the path nato followed in
Bosnia in 1994–95 and the United States followed in Iraq in 2007–10.
History also shows that when outside powers stray from this
approach or commit inadequate resources to it, their interventions
inevitably fail and typically make the conflicts bloodier, longer,
and less contained. No wonder U.S. policy toward Iraq and Syria
(let alone Libya and Yemen) has failed since 2011. And as long as the
United States continues to avoid pursuing the one approach that can
work, there is no reason to expect anything else. At most, the U.S.
military’s current campaign against isis in Iraq and Syria will engineer
the same outcome as its earlier one against al Qaeda in Afghanistan:
the United States may badly damage isis, but unless it ends the con-
flicts that sustain it, the group will morph and spread and eventually
be succeeded by the son of isis, just as isis is the son of al Qaeda.

STEPPING UP
Stabilizing the Middle East will require a new approach—one that
attacks the root causes of the region’s troubles and is backed up by
adequate resources. The first priority should be to shut down the
current civil wars. In every case, that will require first changing the
battlefield dynamics to convince all the warring factions that military
victory is impossible. In an ideal world, that would entail sending
at least small numbers of U.S. combat forces to Iraq (perhaps
10,000) and potentially Syria. But if the political will for even a

68 f o r e i g n a f fa i r s
 Fight or Flight

modest commitment of forces does not exist, then more advisers,

airpower, intelligence sharing, and logistical support could suffice,
albeit with a lower likelihood of success.
Regardless, the United States and its allies will also have to build
new indigenous militaries able to first defeat the terrorists, militias,
and extremists and then serve as the foundation for a new state. In
Iraq, that means retraining and reforming the Iraqi security forces to
a much greater degree than current U.S. policy envisions. In Libya,
Syria, and Yemen, it would mean creating new indigenous, conven-
tional militaries that (with considerable American support) would be
able to defeat any potential rival, secure the civilian populaces, and
enforce the terms of permanent cease-fires.
In all four civil wars, the United States and its allies will also have
to undertake major political efforts aimed at forging equitable power-
sharing arrangements. In Iraq, the United States should take the lead in
defining both the minimal needs and the potential areas of agreement
among the various Shiite and Sunni factions, just as Ryan Crocker,
the U.S. ambassador to Iraq in 2007–9, and his team accomplished as
part of the U.S. surge strategy. That, plus giving material resources to
various moderate Iraqi political leaders and their constituencies
among both the Shiites and the Sunnis, should allow the United States
to hammer out a new power-sharing deal. Such an arrangement should
end the alienation of the Sunni population, which lies at the heart of
Iraq’s current problems. This, in turn, would make it much easier for
the Abadi government and the United States to stand up Sunni military
formations to help liberate the Sunni-majority areas of the country from
isis and help diminish the power of the Iranian-backed Shiite militias.
In Syria, the ongoing peace talks in Vienna provide a starting point
for a political solution. But they offer little more than that, because
the military conditions are not conducive to a real political compro-
mise, let alone a permanent cessation of hostilities. Neither the Assad
regime nor the Western-backed opposition believes that it can afford
to stop fighting, and each of the three strongest rebel groups—Ahrar
al-Sham, Jabhat al-Nusra, and isis—remains convinced that it can
achieve total victory. So until the reality on the battlefield shifts, little
can be achieved at the negotiating table. If the military situation
changes, then Western diplomats should help Syria’s communities
fashion an arrangement that distributes political power and economic
benefits equitably. The deal would have to include the Alawites, but

March/April 2016 69
Kenneth M. Pollack

not necessarily President Bashar al-Assad himself, and it would need to

assure each faction that the new government would not oppress it, the
way the Alawite minority oppressed the Sunni majority in the past.
The turmoil in Libya mirrors that in Syria, except that it is receiving
far less international attention. Thus, the first step there is for the
United States to convince its partners to take on a more constructive
role. If the United States should lead
If the next U.S. president is in Iraq and Syria, then Europe needs to
lead in Libya. By dint of its economic ties
unwilling to commit to and proximity to Europe, Libya threatens
stepping up to stabilize the European interests far more directly
Middle East, the only real than it does American ones, and nato’s
role in the 2011 intervention in Libya
alternative is to step back. can serve as a precedent for European
leadership. Of course, the Europeans
will not take on the challenge if they are not convinced that the United
States intends to do its part to quell the Middle East’s civil wars,
further underscoring the importance of a coherent, properly resourced
U.S. strategy. To aid Europe’s fight in Libya, Washington will
undoubtedly have to commit assistance related to logistics, command
and control, and intelligence, and possibly even combat advisers.
In Yemen, the Gulf states’ air campaign has achieved little, but the
intervention by a small ground force led by the United Arab Emirates
has set back the rebel coalition, creating a real opportunity to negotiate
an end to the conflict. Unfortunately, the Gulf states seem unwilling
to offer Yemen’s opposition terms that would equitably divide political
power and economic benefits, and they seem equally unwilling to
offer security guarantees. To draw the conflict to a close, the United
States and its allies will have to encourage their partners in the Gulf
to make meaningful concessions. If that doesn’t work, then the most
useful thing they can do is try to convince the Gulf states to minimize
their involvement in Yemen before the strain of intervention threatens
their own internal cohesion.
After ending the current civil wars, the next priority of a stepped-
up U.S. strategy in the Middle East will be to shore up the states in
the greatest danger of sliding into future civil wars: Egypt, Jordan,
Tunisia, and Turkey. It is state failure—not external attack by isis,
al Qaeda, or Iranian proxies—that represents the true source of the
conflicts roiling the Middle East today. These four at-risk countries

70 f o r e i g n a f fa i r s
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 Fight or Flight

are all badly in need of economic assistance and infrastructure devel-

opment. But above all, they need political reform to avoid state failure.
Consequently, the United States and its allies should offer a range of
trade benefits, financial incentives, and economic aid in return for
gradual but concrete steps toward political reform. Here, the aim need
not be democratization per se (although Tunisia should be strongly
encouraged to continue down that path), but it should be good gover-
nance, in the form of justice and the rule of law, transparency, and a
fair distribution of public goods and services.
The final piece of the puzzle is to press for reform more broadly
across the Middle East—economic, social, and political. Even if the
United States and its allies succeed in resolving today’s civil wars, un-
less a new state system takes the place of the failed postwar one, the
same old problems will recur. Reform will be a hard sell for the
region’s leaders, who have long resisted it out of a fear that it would
strip them of their power and positions. Paradoxically, however, the
civil wars may furnish a solution to this conundrum. All the states of
the region are terrified of the spillover from these conflicts, and they
are desperate for U.S. help in eliminating the threat. In particular,
many of the United States’ Arab allies have grown frustrated by the
gains that Iran has made by exploiting power vacuums. Just as the
United States and its allies should offer the region’s fragile states eco-
nomic assistance in return for reform, so they should condition their
efforts to end the civil wars on the willingness of the region’s stronger
states to embrace similar reforms.

STEPPING BACK
If the next U.S. president is unwilling to commit to stepping up to
stabilize the Middle East, the only real alternative is to step back from
it. Because civil wars do not lend themselves to anything but the right
strategy with the right resources, trying the wrong one means throwing
U.S. resources away on a lost cause. It probably also means making
the situation worse, not better. Under a policy of real disengagement,
the United States would abstain from involvement in the civil wars
altogether. It would instead try to contain their spillover, difficult as
that is, and if that were to fail, it would fall back on defending only
core U.S. interests in the Middle East.
The Obama administration has done a creditable job of bolstering
Jordan against chaos from Iraq and Syria so far, and stepping back

March/April 2016 71
Kenneth M. Pollack

from the region could still entail beefing up U.S. support to Jordan
and other at-risk neighbors of the civil wars, such as Egypt, Lebanon,
Tunisia, and Turkey. All these countries want and need Western eco-
nomic, diplomatic, technical, and military assistance. But because
spillover has historically proved so difficult to contain, there is a high
risk that one or more of them could still slide into civil war them-
selves, generating yet more spillover.
For that reason, stepping back would also require Washington to
make a ruthless assessment of what is the least the United States can
do to secure its vital interests in the Middle East. And although it
may be a gross exaggeration to say so, in large part, U.S. interests in
the region do ultimately come down to Israel, terrorism, and oil.
As poll after poll has found, a majority of Americans continue to
see the safety of Israel as important to them and to the United States.
Yet Israel today is as safe as the United States can make it. Israeli forces
can defeat any conventional foe and deter any deterrable unconven-
tional threat. The United States has defended Israel diplomatically
and militarily countless times, including implicitly threatening the
Soviet Union with nuclear war during the 1973 Yom Kippur War. The
United States has even taken an Iranian nuclear threat off the table for
at least the next decade, thanks to the deal it brokered last year. The
only threat the United States cannot save Israel from is its own chronic
civil war with the Palestinians, but the best solution to that conflict is
a peace settlement that neither the Israelis nor the Palestinians have
demonstrated much interest in. In short, there is little more that
Israel needs from the United States for its own direct security, and
what it does need (such as arms sales) the United States could easily
provide even if it stepped back from the Middle East.
Perhaps the greatest advantage of a reduced U.S. presence in the Mid-
dle East is that it should mitigate the threat from terrorism. Terrorists
from the region attack Americans largely because they feel aggrieved by
U.S. policies, just as they attack France and the United Kingdom because
those countries are staunch U.S. allies (and former colonial powers) and
have started to attack Russia because it has intervened in Syria. The less
the United States is involved in the Middle East, the less its people are
likely to be attacked by terrorists from the region. It is no accident that
Switzerland does not suffer from Middle Eastern terrorism.
Of course, even if Washington disengaged from the region as much
as possible, Americans would not be entirely immune from Middle

72 f o r e i g n a f fa i r s
 Fight or Flight

Eastern terrorism. The region’s conspiracy-mongers endlessly blame

the United States for things it didn’t do, as well as for what it did, and
so terrorists could still find reasons to target Americans. Besides, even
under this minimalist approach, the United States would maintain its
support for Israel and Saudi Arabia, both of which a range of terrorist
groups detest.
If U.S. interests concerning Israel and terrorism would largely take
care of themselves in the event that Washington further diminished
its role in the Middle East, the same cannot be said for the flow of oil.
The idea that fracking has granted the United States energy indepen-
dence is a myth; as long as the global economy relies on fossil fuels,
the United States will be vulnerable to major disruptions in the
supply of oil, regardless of how much it produces. Since neither global
dependence on oil nor the Middle East’s contribution to the share of
global production is expected to abate over the next 25 years, the
United States will continue to have a critical interest in keeping Middle
Eastern oil flowing.
Yet the United States need not defend every last barrel of oil in
the region. The question is, how much is enough? This is where
things get complicated. Many countries possess strategic reserves of
oil that can mitigate a sudden, unexpected drop in production. And
some, particularly Saudi Arabia, have enough excess capacity to
pump and export more oil if need be. Fracking, likewise, allows
North American producers of shale oil to partly compensate for
shortfalls. Even though oil production in Libya has dropped by over
80 percent since 2011 as a result of its civil war, other producers have
been able to make up for the loss.
Saudi Arabia, however, is in a category of its own. The country
produces over ten percent of all the oil used in the world and contains
the vast majority of excess capacity; even if every country emptied its
strategic oil reserves and fracked like crazy, that would still not com-
pensate for the loss of Saudi oil production. Thus, the United States
will have to continue to protect its Saudi allies. But against what? No
Middle Eastern state (even Iran) has the capacity to conquer Saudi
Arabia, and the modest U.S. air and naval force currently in the
Persian Gulf is more than adequate to defeat an Iranian attack on the
country’s oil infrastructure.
The kingdom’s principal threats are internal. Although no one has ever
made money betting against the House of Saud, the monarchy rules over

March/April 2016 73
Kenneth M. Pollack

a quintessentially dysfunctional postwar Arab state, one that faces daunt-

ing political, economic, and social stresses. The Shiites who make up the
majority of Saudi Arabia’s oil-rich Eastern Province have rioted and
resisted government oppression for decades, and their unhappiness has
grown with the widening Shiite-Sunni rift across the region. The king-
dom skated through the Arab Spring primarily thanks to the far-reaching
(if gradual) reform program of King
Abdullah, coupled with massive cash
Stepping back from the payoffs to the people. But Abdullah died
Middle East means risking in January 2015, and his successor, King
the near-term collapse of Salman, has yet to demonstrate a similar
Egypt, Jordan, Lebanon, commitment to reform. Even as oil prices
remain low, Salman is spending profli-
Tunisia, and Turkey. gately at home and abroad (including on
the expensive intervention in Yemen),
burning through the kingdom’s sovereign wealth fund at $12–$14 bil-
lion per month. At that rate, the fund will be empty in about four years,
but the king will probably face domestic challenges long before then.
How can the United States protect Saudi Arabia from itself? It is
impossible to imagine any U.S. president deploying troops there to
suppress a popular revolution or to hold together a failing monarchy.
Moreover, the longer that civil wars burn on Saudi Arabia’s northern
border, in Iraq, and southern border, in Yemen, the more likely these
conflicts will destabilize the kingdom—to say nothing of the possibility
of a Jordanian civil war. But a strategy of stepping back from the
region means the United States will not try to shut down the nearby
civil wars, and Washington has little leverage it can use to convince
the Saudis to reform. It would have especially little leverage if it swore
off the only thing that the Saudis truly want: greater U.S. involve-
ment to end the civil wars and prevent Iran from exploiting them. In
these circumstances, the United States would have virtually no ability
to save Saudi Arabia from itself if its rulers were to insist on following
a ruinous path. Yet in the context of greater U.S. disengagement, that
is the most likely course the Saudis would take.

NO EXIT
Ultimately, the greatest challenge for the United States if it steps back
from the Middle East is this: figuring out how to defend U.S. interests
when they are threatened by problems the United States is ill equipped

74 f o r e i g n a f fa i r s
 Fight or Flight

to solve. Because containing the spillover from civil wars is so difficult,

stepping back means risking the near-term collapse of Egypt, Jordan,
Lebanon, Tunisia, and Turkey. Although none of these countries
produces much oil itself, their instability could spread to the oil pro-
ducers, too, over the longer term. The world might be able to survive
the loss of Iranian, Iraqi, Kuwaiti, or Algerian oil production, but at a
certain point, the instability would affect Saudi Arabia. And even if it
never does, it is not clear that the world can afford to lose several
lesser oil producers, either.
The great benefit of a policy of stepping back is that it would
drastically reduce the burden that the United States would have to
bear to stabilize the Middle East. The great danger, however, is that
it would entail enormous risks. Once the United States started writ-
ing off countries—shortening the list of those it would defend against
threats—it is unclear where it would be able to stop, and retreat could
turn into rout. If Jordan or Kuwait slid into civil war, would the
United States deploy 100,000 troops to occupy and stabilize either
country to protect Saudi Arabia (and in the case of civil war in Jordan,
to protect Israel)? Could the United States do so in time to prevent
the spillover from destabilizing the kingdom? If not, are there other ways
to keep the kingdom itself from falling? Given all these uncertain-
ties, the most prudent course is for Americans to steel themselves
against the costs and step up to stabilize the region.
That said, what the United States should certainly not do is refuse
to choose between stepping up and stepping back and instead waffle
somewhere in the middle, committing enough resources to enlarge its
burden without increasing the likelihood that its moves will make
anything better. Civil wars do not lend themselves to half measures.
An outside power has to do the right thing and pay the attendant
costs, or else its intervention will only make the situation worse
for everyone involved, including itself. The tragedy is that given the
U.S. political system’s tendency to avoid decisive moves, the next
administration will almost inevitably opt to muddle through. Given
the extent of the chaos in the Middle East today, refusing to choose
would likely prove to be the worst choice of all.∂

March/April 2016 75
 Return to Table of Contents

ISIS Goes Global

Fight the Islamic State by Targeting
Its Affiliates
Daniel Byman

T
he downing of a Russian passenger plane over Egypt’s Sinai
Peninsula last October, for which the Islamic State (also
known as isis) claimed responsibility, may ultimately prove
more consequential than the horrific attacks in Paris and San Ber-
nardino, California, that followed. Western security officials had long
worried that their countries’ own citizens would conduct attacks after
returning home from Iraq or Syria or strike out as “lone wolf” terror-
ists. But the Russian plane crash, which killed 224 people, was caused
by a different beast: neither lone wolves nor isis itself but an isis
affiliate that had pledged its loyalty to Abu Bakr al-Baghdadi, isis’
self-declared caliph. Isis calls these groups wilayat, Arabic for
“provinces.” (The term is borrowed from the seventh century, when
the armies of Islam burst out of the Arabian Peninsula and established
regional governors who ruled in the name of the caliph; isis also uses
wilayat to refer to administrative divisions within Iraq and Syria.) If,
as recent events suggest, isis’ far-flung provinces have begun closely
aligning their actions with those of the group’s core leadership in Iraq
and Syria, then isis’ geographic scope has expanded vastly.
Although alarming, such expansion is not unprecedented. After 9/11,
several of al Qaeda’s affiliates eclipsed that group’s central command in
both size and importance. One of them, al Qaeda in the Arabian Pen-
insula (aqap), has repeatedly tried to down U.S. airplanes and remains
a deadly threat today. Aqap claimed responsibility for the January 2015
Charlie Hebdo attack in Paris, and last May, Michael Morell, a former

DANIEL BYMAN is a Professor at Georgetown University’s Edmund A. Walsh School of

Foreign Service and Director of Research at the Center for Middle East Policy at the
Brookings Institution. He is the author of Al Qaeda, the Islamic State, and the Global Jihadist
Movement: What Everyone Needs to Know. Follow him on Twitter @dbyman.

76 f o r e i g n a f fa i r s
 ISIS Goes Global

deputy director of the cia, said that aqap retained “the ability to bring
down an airliner in the United States of America tomorrow.”
Isis itself also began as an al Qaeda franchise. Following the U.S.
invasion of Iraq in 2003, Abu Musab al-Zarqawi emerged as a leader
of jihadist forces in Iraq. In 2004, he pledged allegiance to Osama bin
Laden and changed his organization’s name from the Organization of
Monotheism and Jihad to al Qaeda in Iraq (aqi). After Zarqawi’s
death, in 2006, the group took on other names, including the Islamic
State of Iraq. When Baghdadi took over in 2010, the organization was
on its last legs. Local Sunnis had turned against it, undermining its
operations. When U.S. forces pulled out of the country in 2011, the
Iraqi government they left behind seemed ascendant.
But Baghdadi’s group rose from the ashes, exploiting the marginal-
ization of Iraqi Sunnis and the Syrian civil war. In 2013, Baghdadi
changed his group’s name yet again, to the Islamic State of Iraq and
al-Sham. In 2014, after his fighters captured the Iraqi city of Mosul,
his ambitions grew further: he declared a caliphate over the Muslim
world, shortening the group’s name to the Islamic State. Now, isis has
eclipsed al Qaeda in size and strength; it has also outpaced its former
master in spawning affiliates, establishing ever-larger numbers of
franchises and supporters throughout the Muslim world.
The provinces pose a serious threat to Western interests: they en-
able isis to expand its reach and make local groups more deadly in
their regional conflicts. Hotbeds of jihad that have not yet exported
terrorism to the West may do so in the future if local groups strengthen
their ties to isis.
Yet the United States and its allies are only just beginning to factor
the provinces into their counterterrorism strategy. In his last major
address on isis, in December, U.S. President Barack Obama focused
on the terrorist threat that the group’s core in Iraq and Syria posed to
the United States, without even mentioning the group’s provinces.
The Pentagon has been taking the danger more seriously and has
considered establishing additional military bases in Africa, Asia, and
the Middle East partly in response. But the United States and its allies
must go further, developing a comprehensive strategy to weaken isis’
various franchises. They should start by taking advantage of the tensions
that will probably arise between isis’ leadership in Iraq and Syria and
its more remote branches. Al Qaeda’s affiliates eventually became a
burden for its core, demanding resources, ignoring its directives, and

March/April 2016 77
Daniel Byman

tarring its name by conducting unpopular attacks. Isis will likely

encounter similar problems. To ensure that it does, the United States
should aim to disrupt communication between the main group and its
provinces and work with allies new and old to target the latter directly.
If the West is ever to defeat isis, it will have to work against the group
as a whole, not just against its most visible part.

GOING BIG
As is well known, the heart of isis lies in the Sunni-populated parts
of Iraq and Syria, and the organization’s core splits its headquarters
between Mosul and Raqqa. Yet isis claims to be the legitimate ruler
of all Muslims, and it operates throughout the Muslim world. It has
already declared wilayat in parts of Afghanistan, Algeria, Egypt, Libya,
Nigeria, Pakistan, Saudi Arabia, Yemen, and the Caucasus. Terrorists
or fighters operating in isis’ name have also conducted attacks in
Bangladesh and Kuwait.
So far, the most worrisome provinces are those in Egypt and Libya.
The Egyptian affiliate, Sinai Province, which used to call itself Ansar
Beit al-Maqdis, pledged loyalty to Baghdadi in 2014. At first, this oath
seemed to mean little, and the group’s fighters continued to focus
their attacks on Egypt’s military and police. But they soon began to
raise their ambitions, going after un targets, beheading a Croatian
expatriate (supposedly in revenge for Croatia’s participation in the
international anti-isis coalition), and attacking the Italian consulate
in Cairo. And then they downed the Russian airliner.
The Libyan province emerged from the strife that followed the
overthrow of the Libyan dictator Muammar al-Qaddafi in 2011. Qaddafi
had faced a jihadist threat for years, and as countrywide unrest turned
to outright conflict, local jihadists became more powerful. As isis
began to grab headlines, its brand became more compelling to local
fighters; a courtship blossomed, and Libyan fighters pledged their
loyalty to Baghdadi in 2014.
Today, the Libyan affiliate poses a particularly serious threat to
Western interests because its fighters, unlike their counterparts in Egypt,
do not face strong government opposition. The group has as many as
3,000 active members, and its fighters have beheaded Ethiopian Coptic
workers and attacked the Moroccan and South Korean embassies.
Although the group’s fighters have not yet mounted an international
attack, they hold the Mediterranean city of Sirte and adjacent towns

78 f o r e i g n a f fa i r s
 ISIS Goes Global

When local goes global: in Paris after the Charlie Hebdo attack, January 2015
along the Libyan coast, where they’ve created a mini-caliphate, dispens-
ing brutal justice and enforcing social codes as the core organization
does in its Iraqi and Syrian heartlands.
Figuring out where exactly isis has established a formal presence and
where local fighters are merely emulating the group can be difficult. In
Bangladesh, isis has claimed responsibility for bombings, stabbings,
and shootings of Shiite and Western targets, but it is unclear if these
attacks are directly linked to the core group. Nigeria’s Boko Haram has
endorsed and sworn loyalty to isis, but the Nigerian extremist group
has multiple commanders, and these claims have not been matched by
any significant change in operations, suggesting that the relationship
between the two groups remains more distant than it may seem.
In places where isis does have a more formal presence, foreign fight-
ers play an important role creating and maintaining ties between the
local group and the core. More than any other modern terrorist group,
REUTERS / GONZALO FU ENTES

isis relies on volunteers from abroad: by the end of 2015, roughly 25,000
foreigners from Arab countries and 5,000 from Western states had
fought with it in Iraq and Syria, and the ranks of outsiders keep grow-
ing. These fighters act as communication channels, bringing local
concerns to isis and Baghdadi’s vision back to their countries of origin
when they return. When the so-called Afghan Arabs, who had fought
with the mujahideen against the Soviet Union in the 1980s, returned

March/April 2016 79
Daniel Byman

home, they spread their ideology to local groups, giving al Qaeda infor-
mal networks throughout the Muslim world. Today, isis is engaged in
similar activity, but more rapidly and on a far more massive scale, even
winning over groups formerly linked to al Qaeda. Many of these groups,
particularly those in North Africa, worked frequently with isis when it
was still an al Qaeda affiliate.
Accepting the isis label often leads local groups to shift their tactics
and ideology. In addition to fighting local government forces and rival
groups as they did before, many affiliates begin making sectarian attacks
and targeting Westerners in the region. In a particularly brutal but
effective form of violent propaganda, they often behead their victims
and carefully choreograph and videotape the executions for broad dis-
semination. When possible, as in parts of Libya, provinces also adopt an
isis-style governance structure, complete with police, courts, and taxes.
Unlike some of al Qaeda’s affiliates, they do not try to form lasting alli-
ances with other rebel groups, and they tend to have little respect for
local authority figures, with tribal leaders an important exception.
So far, however, no isis province has attacked targets in the West.

YOU BELONG WITH ME

Local groups are attracted to isis for many reasons. One of the most
important is the most obvious: genuine conviction. As nauseating as isis
is to most Muslims, it has tapped into the beliefs of an important subset
of Sunni Muslims, particularly young men. Isis trumpets sectarianism,
portraying itself as the defender and avenger of Sunnis worldwide.
Moreover, the group’s slick videos and social media campaigns attract
even young Sunnis who lack real religious knowledge or conviction by
playing into their desires for adventure and a sense of purpose. As
General David Rodriguez, the commander of U.S. Africa Command,
has noted, groups affiliate themselves with isis “to elevate their cause.”
Of course, some groups join isis for more practical purposes, such
as access to financial or technical aid. According to The New York
Times, in Afghanistan, isis offered Taliban fighters several hundred
thousand dollars for their support to gain more territory and recruits.
Isis also helps local groups improve the quality of their propaganda:
after strengthening ties with isis in 2014, for example, Boko Haram
was able to elevate its outreach from grainy videos taken on hand-held
cameras to more polished productions distributed via Twitter. Isis
offers its provinces access to experienced fighters and has sent hun-

80 f o r e i g n a f fa i r s
 ISIS Goes Global

dreds of its troops to Libya (some of whom originally hailed from

there) to help its supporters. Finally, taking on the isis brand allows
local commanders to split from al Qaeda or other existing groups
without provoking a backlash from their followers. It allows aspiring
leaders to mask their power grabs with claims of doctrinal purity.
The provinces offer benefits to the core, too. Adding new affiliates
bolsters isis’ self-image by making the organization seem more pow-
erful and attractive. Shortly after pro-
claiming a caliphate in 2014, Baghdadi
declared all local jihadist groups and
If the West is to defeat ISIS,
emirates subservient to isis. When it will have to target the
new provinces sign up, they appear to group as a whole.
fulfill that vision. They also give isis
strategic reach, allowing it to tap into fighters and networks around
the Middle East. Libya, for example, offers a base for striking nearby
Egypt and Tunisia.
Charles Lister, a fellow at the Middle East Institute, has described
the provinces as part of isis’ “ink spot” strategy. The provinces
themselves are mini Islamic states that will expand through prosely-
tizing and war. As the ink spots expand, the borders will meet up,
forming a larger entity. And as more and more provinces pledge
allegiance to isis, they may encourage other independent groups to
do the same.
The affiliates also give the core group fallback options, creating
potential refuges for its leaders in case isis is defeated or crippled in
Iraq or Syria. In The New York Times, one U.S. Defense Department
official called isis’ heavy involvement in Libya “contingency planning.”
After the death of bin Laden, local al Qaeda affiliates, especially in
Yemen, offered al Qaeda a way to keep itself in the news even as the
core organization found itself on the run; isis’ provinces may serve a
similar function. Although isis today seems unstoppable to many
Westerners, it has lost around 40 percent of its Iraqi territory since
2014, in addition to much of its oil infrastructure and heavy forces.
One resident of Raqqa told The New York Times that isis’ popularity
has diminished because it has “lost its brilliant victories.” Although
isis has hardly been defeated, local setbacks have demoralized some of
its followers. By expanding into new territories, the group continues
to create headlines, allowing it to attract more foreign fighters to its
core organization.

March/April 2016 81
Daniel Byman

GOING TO EXTREMES
As isis grows beyond Iraq and Syria, so, too, does it spread its harsh
brand of religious intolerance. In 2015, the group’s followers attacked
Shiite mosques in Kuwait, Saudi Arabia, and Yemen; beheaded Egyp-
tian and Ethiopian Christians in Libya; and attacked security forces
and Sunni Muslims deemed insufficiently devout. Not only are such
attacks tragic in their own right; they also risk setting in motion a
cycle of retaliation, as has already happened in Yemen. Such cycles,
which lead to revenge attacks against Sunnis, only bolster the group’s
claim to being a defender of the faithful.
Growing sectarianism also threatens the legitimacy of the govern-
ments of Bahrain, Kuwait, Saudi Arabia, and other religiously divided
countries. In Saudi Arabia, for example, the government currently
finds itself in a dilemma: if it fails to stop isis from bombing Saudi
Shiite mosques, it will embolden the extremists and show that it can-
not protect its own people; yet if it cracks down on isis, it will risk
looking like the champion of the country’s unloved Shiite minority,
which could hurt its legitimacy among Sunni chauvinists.
The spread of isis will also worsen the region’s refugee crisis. The group
embraces barbarism as strategy; beheadings, rape, and other grotesque acts
are not byproducts of its wars but deliberate tools to intimidate enemies
and reward supporters. In retaliation for a tribal revolt in Libya in August
2015, isis fighters killed dozens of members of the tribe, crucifying several
of them in a traffic circle—a punishment familiar to anyone following the
group’s parade of horrors in Iraq and Syria. If the provinces expand, many
Muslims and religious minorities will flee rather than endure their rule.
From the West’s perspective, however, the bigger concern is that as isis
grows, it will develop new staging grounds and operatives to use for
international terrorist attacks. Baghdadi has called on Muslims abroad to
travel to Iraq and Syria or to the provinces, if they can; if they cannot, he
has said they should focus on local attacks. Gone are the days when West-
ern governments had to worry about only the foreign fighters traveling
to Iraq and Syria; increasingly, they have to worry about would-be jihadists
traveling to and from other isis bases around the region and beyond.

DOUBLE TROUBLE
Despite all the benefits provinces offer isis, they also come with their
share of trouble. For one thing, they can weaken the jihadist movement
as a whole. Many of them exist because of local rivalries: members of

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 ISIS Goes Global

rival groups spend their time killing one another rather than fighting
their supposed enemies. In Afghanistan, for example, the Taliban and
a renegade faction that has pledged loyalty to isis have warred for
control of Helmand Province, weakening both of them in their fight
against the Afghan government.
Just as al Qaeda did, isis may soon learn that not all affiliates are
obedient servants. When local groups, particularly strong ones, take on
the isis label, they retain their own command structure, personnel, and
parochial goals, and these often fit uneasily with those of the core
group. Time and again, al Qaeda found that many of its regional fran-
chises retained their traditional agendas, continuing to fight the local
fights they always had (although perhaps adding some local Western
targets to the mix). Al Qaeda’s leaders
had particular difficulty controlling aqi, Just as al Qaeda did, ISIS
which they thought spent too much en-
ergy killing ordinary Shiites and Sunni may soon learn that not all
imams and other leaders who opposed affiliates are obedient
the group. When aqi bombed three servants.
hotels in Amman, Jordan, in 2005, kill-
ing some 60 people, roughly 200 Islamic
scholars from 50 countries condemned the group, calling the killing of
noncombatants “among the gravest of sins.” The ferocious criticism
tarnished al Qaeda’s brand among many of its Muslim constituents.
As isis absorbs local groups, it will also take on the enemies they
make. Western officials told The New York Times that when the lead-
ers of Sinai Province decided to bomb the Russian plane, they did so
without consulting isis. The move provoked Russia, which until
then had limited its air strikes in Syria to attacks on the moderate
opposition, to launch cruise missiles at isis’ forces and infrastructure
in Deir ez-Zor and Raqqa, among other targets.
This process works both ways; local groups that link up with isis can
also get themselves into trouble, painting bull’s-eyes on their backs.
Again, the experience of al Qaeda is instructive. In 2010, bin Laden
discouraged the Somali militant group al Shabab from declaring alle-
giance to his organization because doing so would give “enemies” an
excuse to mobilize against al Shabab. Something similar is happening
now. Before the extremist groups in Egypt and Libya pledged allegiance
to isis, the United States cared little about them. Now it has zeroed in
on them. In November 2015, for example, a U.S. air strike near the port

March/April 2016 83
Daniel Byman

city of Darnah, Libya, killed an Iraqi who may have been the leader of
isis’ affiliate there. By attacking local governments, the provinces also
risk pushing local regimes into the arms of the anti-isis coalition.
Joining up with isis can also cost affiliates local support. Outside ter-
rorist groups tend to be less in tune with conditions on the ground than
their native-born associates are. In 2003, for example, the al Qaeda
core pushed its Saudi affiliate to launch an insurgency prematurely,
despite local leaders’ warnings that they were not prepared. The result
was a disaster: after the group conducted several terrorist attacks
against Western targets in the kingdom and strikes on Saudi security
forces, the Saudi government cracked down, killing or arresting most
of the group’s members. Because foreign fighters lack grass-roots con-
nections, they also have few incentives to exercise restraint. When isis
tried to set up shop in Darnah in 2014, for example, its brutal behavior
alienated residents, who worked with rival groups to expel it. The
most successful terrorist groups, such as Hamas and Hezbollah, enjoy
close ties with their local populations. They use violence, but they also
carefully moderate their brutality. Isis has yet to learn that lesson.

A NEW STRATEGY
Last year, it did not seem to matter that the United States and its allies
had no clear strategy for dealing with isis’ provinces. Neither Wash-
ington nor its friends were eager to take on yet another messy fight in
the Middle East. Indeed, targeting the provinces appeared counter-
productive: if the groups were locally focused, then bombing them
might just provoke them to attack the West. Yet the attack on the
Russian plane exposed the danger of this line of thinking. Ignoring the
provinces risks allowing isis to grow stronger and more dangerous.
Any strategy aimed at weakening the provinces must include two parts:
severing the link between the core group and the affiliates and attempt-
ing to contain, weaken, and defeat the affiliates themselves. To that end,
the United States and its allies should target provincial command-and-
control centers and locals who have personal relationships with top isis
leaders in Iraq and Syria. Deprived of instruction from headquarters, the
provinces will be forced to go their own way, which could create a world
of new problems for isis’ core, costing them local allies.
To fight isis as it spreads, the United States will need military
bases in many remote parts of the world. Flexibility will be vital, since
it is hard to predict which provinces will expand and demand the

84 f o r e i g n a f fa i r s
 ISIS Goes Global

most attention. (Yemen, for example, was not a major concern for
U.S. counterterrorism officials until 2009, when the so-called under-
wear bomber, who had been based there, nearly downed an airplane
over Detroit.) To gain the right geographic reach and to ease the burden,
the United States should also work with its allies. France, for instance,
is committed to the anti-isis coalition and has a strong military presence
in North Africa. The United States should divvy up responsibilities
and coordinate operations with France there.
The United States and its allies should also seek to weaken the prov-
inces by portraying the core group as out of touch with local grievances
in the news and on social media. This tactic is more likely to work in
countries where anti-foreign sentiment is particularly strong, such as
Somalia, than in places where national identity is weaker, such as Libya.
Washington also needs to strengthen the states where isis affili-
ates have set up shop. It should provide aid and training to military,
police, and intelligence forces in such places. It should also offer to
help these countries improve their administrative capacity through
judicial reform and social service provision and assist them in securing
their borders by building barriers, improving surveillance, and train-
ing border troops. In countries without a functioning government,
such as Libya, the United States may have to work with local militias
and tribes.
Diasporas that are involved in civil wars in their homelands, such
as the Somali diaspora, are also a counterterrorist concern. Until now,
such struggles have been primarily local, and so if a member of the
diaspora felt compelled to take up arms, he often posed little threat to
his host country. If groups such as al Shabab embrace isis, however,
the threat may grow. But diasporas can also provide an opportunity,
since it is far easier to gather intelligence from the members of a diaspora
community than from their brethren back home. In many cases, the
best way to gain leads is to work with the communities themselves;
the less they feel alienated, the more likely they will be to report any
troublemakers in their midst.
In all these ways, Washington must integrate isis’ many provinces
into the overall U.S. strategy against the group. Left unchecked, these
regional affiliates will increasingly threaten the Middle East and the
rest of the world. But with the right policies, the United States and its
allies can do serious damage to both the provinces and their masters,
turning a mutually beneficial relationship into a disaster for both.∂

March/April 2016 85
 Return to Table of Contents

Can China’s Companies

Conquer the World?
The Overlooked Importance of
Corporate Power
Pankaj Ghemawat and Thomas Hout

D
espite China’s recent economic struggles, many economists
and analysts argue that the country remains on course to
overtake the United States and become the world’s leading
economic power someday soon. Indeed, this has become a mainstream
view—if not quite a consensus belief—on both sides of the Pacific.
But proponents of this position often neglect to take into account an
important truth: economic power is closely related to business power,
an area in which China still lags far behind the United States.
To understand how that might affect China’s future prospects, it’s
important to first grasp the reasons why many remain bullish on
China—to review the evidence that supports the case for future Chi-
nese dominance. At first glance, the numbers are impressive. China’s
gdp is likely to surpass that of the United States—although probably
not until at least 2028, which is five to ten years later than most
analysts were predicting before China’s current slowdown began in
2014. After all, China is already the world’s largest market for hun-
dreds of products, from cars to power stations to diapers. The Chinese
government has over $3 trillion in foreign exchange reserves, which is
easily the world’s largest such holding. And China overshadows the
PANKAJ GHEMAWAT is Global Professor of Management and Strategy at New York
University’s Stern School of Business and Anselmo Rubiralta Chair of Strategy and
Globalization at the University of Navarra’s IESE Business School. Follow him on Twitter
@PankajGhemawat.
THOMAS HOUT teaches strategy at the Middlebury Institute of International Studies at
Monterey, the Fletcher School of Law and Diplomacy at Tufts University, and the University
of Hong Kong’s School of Business.

86 f o r e i g n a f fa i r s
 Can China’s Companies Conquer the World?

United States in trade volume: of the 180 nations with which the two
countries both trade, China is the larger trading partner with 124,
including some important U.S. political and military allies. Finally,
China has made steady progress toward its goal of becoming the
investor, infrastructure builder, equipment supplier, and banker of
choice in the developing world. Much of Asia, Africa, and Latin
America now depends on China economically and politically.
Since Chinese share prices tumbled last summer and then again
earlier this year, investors have grown wary of the country’s stock mar-
ket. But that market has been largely irrelevant to China’s economic
growth: from 1990 to 2013, as Chinese gdp grew at roughly ten per-
cent annually, the stock market barely moved. Its recent gyrations
are no more indicative of China’s overall economic well-being than
was its long stagnation. China will likely recover from its current eco-
nomic setbacks just as the United States recuperated after wild stock
market swings and a major depression in the first half of the twentieth
century.
But strong macroeconomic data don’t tell the whole story, and
China’s likely short-term recovery will mean little in the longer run.
The fact is that China’s success to date doesn’t necessarily mean that
it will surpass the United States as the world’s leading economic
power. Metrics such as gdp, trade volume, and financial reserves
all reflect economic power. But they don’t entirely encompass it, for
underneath those numbers lies the real world of corporations and
industries that actually create growth and wealth. And a close look at
the performance and prospects of Chinese firms reveals the obstacles
the country still faces.
In both China and the United States, corporations account for roughly
three-quarters of gdp. More generally, multinational corporations
and their supply chains control 80 percent of global exports and for-
eign direct investment. In other words, economic power rests heavily
on business power.
China’s economy exploded during the last three decades thanks to
the extraordinary performance of its low-cost manufacturers—reliable,
responsive companies that make the apparel and household items that
fill Walmart’s shelves. The Chinese state created the conditions for
such firms to thrive by upgrading China’s infrastructure, attracting
foreign investment, and keeping the value of China’s currency relatively
low. But to succeed, Chinese manufacturers still had to outperform

March/April 2016 87
Pankaj Ghemawat and Thomas Hout

competitors elsewhere—which they did, turning China into a crucial

player on the global economic stage.
If China is ever going to become the world’s most powerful econ-
omy, however, its businesses will have to learn to excel in the much
more competitive capital-goods and high-tech sectors, creating and
marketing sophisticated products such as semiconductors, medical
imaging equipment, and jet aircraft. Those who believe that China
will become dominant often assume that Chinese firms will perform
as well in those second-generation sectors as they have in far less
complex first-generation ones, such as textiles and consumer electronics.
But there are many reasons to question that assumption.
China’s initial economic boom relied on labor outsourcing by U.S.
and European firms and revolved around hundreds of similar com-
panies, many of them foreign-owned, that exported low-tech products.
In contrast, to succeed in capital goods (goods that are used to produce
other goods) and high technology, companies must develop unique
capabilities suited to a small number of clients, master a broad range
of technologies, acquire deep customer knowledge, and manage a
global supply chain. And unlike in the low-cost manufacturing sector,
where Chinese firms have competed primarily with companies in
developing countries, the capital-goods and high-tech industries are
dominated by large, deep-pocketed multinational corporations based
in Japan, South Korea, the United States, and Europe.
Moreover, some of the advantages that China enjoyed during the
past three decades, such as a large labor force, matter less in determin-
ing whether a country succeeds in capital goods and high technology.
For example, jet aircraft production and Internet search are led by
two companies—Boeing and Google, respectively—that are based in
a large country, the United States. But the leading companies in
high-precision bearings (skf) and semiconductor memory chips
(Samsung) are based in much smaller countries: Sweden and South
Korea, respectively. The roots of those companies’ success lie mostly
inside the firms themselves rather than in advantages conferred by
their host countries.
The future of China’s economic power will depend less on when
the country’s gdp passes that of the United States and more on the
progress that Chinese corporations make in manufacturing and selling
capital goods and high technology. Foreign multinationals still domi-
nate China’s home market in advanced capital goods, and China

88 f o r e i g n a f fa i r s
 Can China’s Companies Conquer the World?

But can you make a semiconductor? A factory in Anhui Province, China, May 2015
remains broadly dependent on Western technology. In the areas that
will matter most in the twenty-first century, Chinese companies have
a long way to go, which should give pause to anyone confidently
predicting a not-too-distant era of Chinese economic dominance.

DOWNSTREAM VS. UPSTREAM

Although it is still playing catch-up, China has made some significant
progress in its quest to move into capital goods and high-tech products,
which now account for 25 percent of its exports. Chinese producers
currently control between 50 and 75 percent of the global markets
(including China) for shipping containers, port cranes, and coal power
generation equipment and between 15 and 30 percent of the global mar-
kets for telecommunications equipment, onshore wind turbines, and
high-speed rail systems. Despite rising wages and energy costs, Chinese
firms have used their ability to simplify manufacturing processes to
maintain a ten to 30 percent cost advantage over Western competitors
STR / AF P / G ET TY IMAG ES

in capital goods—even before the recent devaluation of the yuan.

The Chinese government’s trillion-dollar “One Belt, One Road”
strategy, which aims to cover the Eurasia with Chinese-built roads,
rail, and port facilities, gives Chinese producers additional advantages
far from home. The government has also aided local firms by limiting
the amounts of capital goods and services that major Western compa-

March/April 2016 89
Pankaj Ghemawat and Thomas Hout

nies can sell in China and by requiring them to transfer technologies

to Chinese companies. Still, China has yet to become a real player
in the markets for more expensive and complex products, such as
offshore wind turbines, nuclear reactor cores, and large jet aircraft. As
the head of a large Western aviation manufacturer remarked to us
recently, it is one thing to reverse engineer the components of a jet
engine and figure out how to make and sell them, but quite another
to develop the knowledge and skills to make sure those components
actually work together.
Chinese capabilities tend to be oriented “downstream”: absorbing
imported technologies, simplifying manufacturing, and adapting
advanced designs to more basic products at a lower cost. Such tinkering
and innovation at the margins has proved hugely beneficial for busi-
nesses that rely on mature technologies, such as shipping containers
and port equipment. But Western multinationals tend to focus their
energies “upstream”: on developing deep knowledge of customers’
technical needs, designing high-performing products that incorporate
new technologies, and mastering software development and the
efficient management of global supply chains. Those qualities have
allowed Western companies to dominate the markets for nuclear power
reactors, industrial automation systems, and jet aircraft. Chinese com-
panies have been slow to develop upstream skills, which partly explains
why their success in capital-goods and high-tech markets has been
uneven and why it’s unclear how soon they will be able to move from
the lower end to the higher end of those sectors.
Competition from Western firms has slowed the growth in exports
of Chinese-made telecommunications equipment from 25 percent
in 2010 to ten percent in 2014. Meanwhile, China accounts for only
around 15 percent of global exports in infrastructure contractor
services—a number that hasn’t grown in five years. Its overall export
growth slowed from an average annual increase of 17 percent between
2004 and 2011 to an average annual increase of five percent between
2011 and 2015, and the share of exports accounted for by capital goods
has leveled off at 25 percent. China is not transitioning from low-end,
first-generation exports to high-end, second-generation exports as
quickly as Japan or South Korea did. When those countries’ gdps per
capita were at China’s current level, capital goods made up more than
25 percent of their exports, and their performance on capital-goods
exports continued to improve, rather than leveling off as China’s has.

90 f o r e i g n a f fa i r s
 Can China’s Companies Conquer the World?

In addition to their relative lack of upstream skills, Chinese firms

also face challenges when it comes to managing global supply chains.
Chinese companies have typically tried to reduce costs by learning to
manufacture critical components, such as hydraulics for construction
equipment or avionics for jet aircraft, so that they can avoid importing
them. Most Western companies take a different approach, turning to
multiple sources for such parts: suppliers from all over Asia and
Europe provide components for Apple iPhones and Boeing 787s, for
example. These contrasting sourcing patterns reflect different views
of how to create business power and also demonstrate China’s his-
torical preoccupation with self-sufficiency. Chinese authorities invite
more advanced foreign companies into China, learn from them, and
try to replace them, whereas Western multinationals prefer to find
the best available components no matter where they originate. The
difference will allow China to develop a larger production scale,
but its foreign competitors will be able to draw from a bigger, more
competitive pool of partners.

INSPECT THEIR GADGETS

China is a particularly interesting place to look at the head-to-head
competition between Chinese companies and foreign multinationals,
both because it’s the world’s largest market for most products and
because nearly every major company in the world operates there.
Unsurprisingly, out of a representative sample of 44 industries among
those that are open to foreign corporations in China, Chinese com-
panies dominate 25, including solar panels, construction equipment,
and mobile port cranes. But in all of the 19 sectors led by foreign
multinationals, technology or marketing is disproportionately critical
to success. Foreign multinationals operating in China lead in ten of the
13 industries in which R & D costs are greater than six percent of
revenue, including jet aircraft, packaged software, and semiconductors.
And foreign firms lead in four of the six industries in which advertising
costs exceed six percent of revenue, including carbonated beverages,
patented pharmaceuticals, and personal-care and beauty products.
Another striking thing about the Chinese market is how little the
industry leaders have changed over the last decade. During this
period, Chinese companies displaced foreign firms as leaders in only
two of the 44 industries in question: Internet hardware (including a
portion of the wireless telecommunications sector) and wind turbines.

March/April 2016 91
Pankaj Ghemawat and Thomas Hout

And in the latter case, China’s industrial policy tilted the playing field
by limiting foreign producers’ access to the market and by requiring
them to use many Chinese-manufactured parts.
Meanwhile, little evidence supports the widespread notion that
China is the world’s leading exporter of high-tech gadgets. Although
China does lead the world in the export of smartphones and personal
computers, it accounts for only 15 percent of those products’ value
at most. That’s because Chinese companies typically just assemble
and package semiconductors, software, cameras, and other advanced
high-tech components fabricated abroad. Consider the Tianhe-2,
for example. This supercomputer, built by the Chinese firm Inspur
in collaboration with the National University of Defense Technol-
ogy, is the fastest in the world. But it is only Chinese in a very
limited sense, since it is actually composed of thousands of U.S.-
made microprocessors.

PLAYING CATCH-UP
The dominance of Western multinationals in capital goods and
high technology rests on two pillars: open systems of innovation
that result in superior high-performance products and direct foreign
investment in operations that are global in scale but responsive to
local conditions and needs. If they ever hope to challenge the in-
dustry leaders, Chinese firms will have to develop their own versions
of those qualities. Some have taken steps in that direction, but
their lack of experience in designing advanced systems and managing
international supply chains will likely limit what they can do for
many years.
The superior commercial technology currently enjoyed by for-
eign incumbents will be one of the major obstacles China faces. In
2014, China spent $218 billion to import semiconductors, far more
than it spent on crude oil. It also paid $21 billion in royalties for the
use of foreign-owned technologies, a number that has doubled since
2008 and that rankles Beijing. (It hardly helps that the government’s
own information systems are dependent on technology made by
ibm, Oracle, emc, Qualcomm, and other non-Chinese firms, which
many Chinese officials see as a security problem.)
Last year, Beijing launched a serious drive, called “Made in China
2025,” to transform the country into an innovative and environmen-
tally responsible “world manufacturing power” within ten years. The

92 f o r e i g n a f fa i r s
 Can China’s Companies Conquer the World?

program aims to create 40 innovation centers in ten sectors, including

smart transportation, information technology, and aerospace. If the
government follows through, China’s total public and private spending
on R & D may well surpass that of the United States sometime in
the next ten years—a significant milestone even if one takes into
account the high levels of fraud in
Chinese research and the fact that
Chinese government research funds
Barring major errors by
are frequently misallocated to serve Washington, there is no
political agendas. The increase in reason to think the United
funding has already had one easily ob- States will lose its edge in
servable effect: papers published by
Chinese researchers are gaining more technology.
international respect. China’s share of
the papers recognized in Thomson Reuters’ authoritative Science
Citation Index rose from near zero in 2001 to 9.5 percent in 2011,
putting the country second only to the United States.
But R & D spending is far from the only factor that matters.
Succeeding in capital goods and high-tech equipment results from
a long chain of institutional, social, and legal supports. At the front
end of the chain lie high-quality graduate-degree programs, an
open flow of information through peer-reviewed journals, and reliable
protections for intellectual property; at the back end are advanced
product design, innovative engineering, and frequent collaboration
with important customers. The United States excels at each part of
that chain. It boasts superior graduate programs in stem subjects
(science, technology, engineering, and math) that attract the best
students from all over the world, with China and India by far the
largest sources. (Despite all the attention paid to the fact that many
Chinese students return home after getting their U.S. degrees,
stem students from China are actually more likely to stay in the
United States than stem grads from anywhere else.) U.S. federal
nondefense spending on research has been flat for the last ten years,
but American corporations—which fund nearly three-quarters of
total U.S. R & D—increased their research spending by an average
of 3.5 percent annually during the same period. U.S. science journals
produce a steady flow of peer-reviewed findings, and American
scientists—unlike their Chinese counterparts—can profit from the
intellectual property they produce during state-funded research. Many

March/April 2016 93
Pankaj Ghemawat and Thomas Hout

European and Japanese multinationals invest in research facilities in

China, but the high degree of intellectual property protections in the
United States lead them to base their most promising projects there.
To catch up, China is developing innovation and entrepreneurial
hubs in Shenzhen and in Beijing’s Zhongguancun Science Park.
Shenzhen is home to a number of inventive companies, such as Huawei,
Xiaomi, and dji (China’s leading drone manufacturer). But most of
the firms clustered there focus on fast-turnaround, incremental inno-
vations, not on big-ticket capital goods or high-tech products.
Barring major errors by Washington—for example, a failure to
increase U.S. federal research funding—there is no reason to think the
United States will lose its edge in technology. But if U.S. technology
does stop advancing and Chinese competitors catch up, China’s lower
costs could allow it to gain market share. That’s what happened in the
case of equipment used in coal power generation: Chinese firms
began to match their Western competitors in terms of quality and
exploited their lower costs to become leaders in the global market.
And even if Chinese wages continue to rise and the yuan begins to
appreciate at some point, it’s not likely that China will lose its cost
advantage anytime soon. So if the United States wants to stay ahead,
it has to keep winning in technology.

A LONELY POWER
One of the keys to the United States’ economic dominance is its huge
investment in foreign markets. American corporations put $337 billion
into overseas markets in 2014, a full ten percent of what they committed
at home. All told, U.S. firms have directly invested $6.3 trillion over-
seas, which helps explain why the companies listed on the S&P 500 earn
roughly 40 percent of their profits outside the United States. Despite
slow growth at home, companies based in the United States and the
eu have increased their foreign direct investment at an average annual
rate of seven percent over the last ten years, and Japanese firms have
increased theirs at an even faster rate.
After a late start, Chinese multinationals are now following this
model. By the end of 2014, they had cumulatively invested $730 billion,
and that number is projected to nearly triple, to $2 trillion, in the next
five years—an impressive gain, although a figure that would still equal
less than one-third of current U.S. foreign direct investment. Nearly
all of China’s early overseas investments were in oil fields and mines,

94 f o r e i g n a f fa i r s
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 Can China’s Companies Conquer the World?

but recently, Chinese corporations have begun moving up the value

ladder by acquiring established Western companies or by purchasing
and turning around struggling factories, some of them in the U.S.
rust belt. China has made 141 overseas deals worth over $1 billion and
is now home to more multinational enterprises than any country other
than the United States.
But as a late globalizer, China has pursued a riskier foreign invest-
ment strategy than Western countries. Although Australia and the
United States are the top two recipients of Chinese investment, over
half of all Chinese foreign direct investment goes to developing
countries in Asia, Africa, Latin America, and the Middle East. The
riskier the country, the more willing the Chinese seem to be to put
their money there. China is easily the largest foreign investor in
Afghanistan, Angola, and Ecuador, for example—all places where
wars or debt defaults have scared off most Westerners. The political
scientist David Shambaugh has dubbed China “a lonely power,” with-
out close allies, and these investments, along with aid-financed public
works projects and the much-touted Asian Infrastructure Investment
Bank, are part of Beijing’s strategy for changing that picture.
This approach might work. But in the meantime, Western multina-
tionals are the primary investors in stable developing economies with
stronger credit ratings and more democratic regimes, and they are
profiting as a consequence. In 2014, the eu and Japan both invested
more than China in Southeast Asia, and U.S. corporations alone
invested $114 billion just in Asia (excluding Japan) and Latin America.
The result of this strategy is that although China’s bold investments
attract considerable attention, Western and Japanese capital-goods
and high-tech multinationals continue, with less fanfare, to expand
their larger and more powerful global positions. China is a classic “late
follower,” investing in riskier assets and buying up second-tier Western
technology companies. That might be a good way to play catch-up,
but it is not a path to dominance.

A CHINA MODEL?
Those who predict that China will dominate the future often point to
two economic concepts to bolster their case: the product life cycle,
which posits that a product originates in advanced economies but
ends up being made in lower-cost developing economies, and dis-
ruptive innovation, the process by which leading products lose their

March/April 2016 95
Pankaj Ghemawat and Thomas Hout

position to initially inferior, lower-priced products that get better

over time. But emphasizing these two trends overlooks the fact that
incumbent multinationals can prevent those outcomes in capital goods
and high technology by developing a range of products and supply
chains in different regions and then mixing and matching them to
serve different sets of customers around the globe.
Take, for example, Cummins, an Indiana-based U.S. diesel engine
manufacturer that develops and manufactures product families with
varying prices and different features in China, India, Europe, and North
America. Cummins shares the lead in China’s high-performance diesel
engine sector, but its globally distributed production and R & D net-
works allow it to ship more engines into China than it ships out. Such
global operations require cross-border coordination, technical depth in
many locations, and middle managers with international experience.
Few Chinese firms enjoy those advantages. Most Chinese companies
prefer to keep their production at home, use simple lines of organiza-
tion, and maintain autonomy for the heads of individual businesses.
That more stripped-down multinational model worked extremely well
during China’s first-generation boom. But in more recent years, many
Chinese firms have struggled to adapt to globalization. There are excep-
tions, however: Lenovo, for example, passed Hewlett-Packard and Dell
to become the world’s largest personal computer manufacturer in 2013
by relying on an unusual international distribution of responsibilities,
which involves forgoing a traditional global headquarters while central-
izing the company’s marketing operations in Bangalore, India.
Corporate China’s uneven efforts to adapt to the global market
will probably continue into the foreseeable future. In time, China
will produce its share of great companies, just as other major econo-
mies have, but a unique “China model” seems unlikely to emerge,
and it does not appear that the country’s success rate will improve
dramatically anytime soon.

A LONG CLIMB FOR CHINA

Advocates of the view that China will inevitably dominate the global
economy tend to see the United States as strong but slow moving,
owing to its messy free markets and political gridlock, and tend to see
China as a rising power on the march, thanks to its clear planning
and clever strategy. But this simplistic view fails to account for how
corporations and markets change in response to external factors.

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U.S. business power flows from the restless competitiveness of

American culture, the political influence of U.S. corporations, the
research productivity of U.S. universities and government labora-
tories, a U.S. financial system that directs investment to new tech-
nologies and ventures, immigration that brings in talent, laws and
tax codes that reward entrepreneurial activity, the United States’
status as the sole superpower, and the dollar’s role as the world’s
reserve currency.
There are internal factors that can threaten U.S. business power,
of course—for example, right-wing opposition to federal science
spending and activist shareholders’ focus on the short-term profits of
blue-chip firms instead of long-term investment in innovation. But
30 years ago, when some observers believed that Japan was poised
to overtake the United States in terms of economic power, few
predicted the role that tech entrepreneurs and innovative state and
municipal governments would play in creating an era of unrivaled
American dominance.
Chinese business power has different but also strong foundations,
such as farsighted policies favoring investment over consumption,
government encouragement of foreign investment to jump-start
local industries, intrepid entrepreneurs who succeed despite a state-
enterprise system designed to thwart them, a shift in the world’s
center of economic gravity toward Asia, and a massive domestic mar-
ket. Many factors hold China back, too, including a low-performing
state-owned sector that stifles market forces, mounting internal debt
burdens, and a crackdown on the free flow of information.
It’s difficult to predict how external factors might influence the
growth of Chinese economic power. Not many inside or outside China
foresaw the limitations of state-owned enterprises or the rise of
impressive independent firms such as Huawei, Lenovo, and Alibaba.
Looking ahead, it’s hard to know what effect China’s slowing growth
will have on the global competitiveness of its companies: it could
prove deeply damaging, but it could also precipitate bankruptcies and
industry shakeouts that would concentrate power in the hands of
fewer, more capable companies, which could make them a stronger
force in world markets.
More broadly, it’s difficult to know how the rest of the world will
respond to China as it grows. When China became a huge buyer
of natural resources, many analysts fearfully predicted permanent

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Pankaj Ghemawat and Thomas Hout

increases in commodity prices. What happened instead was that

prospectors found new ways to increase supply and governments
and companies found new ways to conserve and improve efficiency.
The global system adapted, and commodity prices overall are lower
today in real terms than they were 20 years ago. In a similar vein,
as Chinese multinationals fight their way into global markets,
Western incumbents will innovate, consolidate, and develop new
sources of demand.
Moreover, the futures of the U.S. and Chinese political systems
are not fixed. Both have experienced remarkable adaptability as
well as self-inflicted wounds, and there is no reason to think that
will change.
Confidence in the inevitability of Chinese economic dominance is
unfounded. China is gaining strength but faces a long climb. The
outcome of the U.S.-Chinese contest is far from clear and depends at
least as much on how well Western multinationals and governments
exploit their existing advantages as on China’s ability to up its game
when it comes to the kinds of products and services that will define
the twenty-first-century economy.∂

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 Return to Table of Contents

The Lost Art of Economic

Statecraft
Restoring an American Tradition
Robert D. Blackwill and Jennifer M. Harris

D
espite boasting the most powerful economy on earth, the
United States too often reaches for the gun instead of the
purse in its foreign policy. The country has hardly outgrown
its need for military force, but over the past several decades, it has
increasingly forgotten a tradition that stretches back to the nation’s
founding: the use of economic instruments to accomplish geopolitical
objectives, a practice we term “geoeconomics.”
It wasn’t always this way. For the country’s first 200 years, U.S.
policymakers regularly employed economic means to achieve strategic
interests. But somewhere along the way, the United States began to
tell itself a different story about geoeconomics. Around the time of
the Vietnam War, and on through the later stages of the Cold War,
policymakers began to see economics as a realm with an authority and
logic all its own, no longer subjugated to state power—and best kept
protected from unseemly geopolitical incursions. International economic
policymaking emerged as the near-exclusive province of economists
and like-minded policymakers. No longer was it readily available to
foreign policy practitioners as a means of working the United States’
geopolitical will in the world.
The consequences have been profound. At the very time that
economic statecraft has become a lost art in the United States, U.S.
adversaries are embracing it. China, Russia, and other countries now
ROBERT D. BLACKWILL is Henry A. Kissinger Senior Fellow for U.S. Foreign Policy at
the Council on Foreign Relations.
JENNIFER M. HARRIS is a Senior Fellow at the Council on Foreign Relations.
They are the authors of War by Other Means: Geoeconomics and Statecraft (Harvard
University Press, 2016), from which this essay is adapted.

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Robert D. Blackwill and Jennifer M. Harris

routinely look to geoeconomics as a means of first resort, often to

undermine U.S. power and influence. The United States’ reluctance
to play that game weakens the confidence of U.S. allies in Asia and
Europe. It encourages China to coerce neighbors and lessens their
ability to resist and gives Beijing free rein in vulnerable states in
Africa and Latin America. It allows Russia to bend much of the former
Soviet space to its will. It reduces U.S. influence in friendly Arab
capitals. It allows poverty to flourish in the Middle East, nourishing
Islamic radicalism. These costs weigh on specific U.S. aims, but they
also risk accumulating over time into a structural disadvantage that
Washington may find hard to reverse. It is long past time for the
United States to restore geoeconomics to its rightful role.

SURVIVAL FIRST
In the years following the American Revolution, the Founding Fathers
understood that the United States could never achieve true indepen-
dence unless it became economically self-sufficient. But more than that,
these early leaders, facing predatory European nations and possessing
little ability to project power abroad, instinctively reached for economics
as their preferred—at times their only—means to protect their young
and vulnerable country. Keenly aware that European states were the
most likely source of threats, Benjamin Franklin suggested that the
United States offer its commerce in exchange for their goodwill. In
Common Sense, Thomas Paine explained how the United States could
insulate itself from Europe’s eighteenth-century power struggles by
turning to geoeconomics: “Our plan is commerce, and that, well
attended to, will secure us the peace and friendship of all Europe;
because it is the interest of all Europe to have America a free port. Her
trade will always be a protection.”
In a rare point of agreement between them, Alexander Hamilton
and Thomas Jefferson shared a basic enthusiasm for economic tools of
foreign policy. Hamilton, the father of American capitalism, stressed
the value of commerce as a weapon, a proposition that few trade policy-
makers would agree with today. Jefferson scored one of the country’s
greatest geoeconomic successes in its history when he oversaw the 1803
purchase of the Louisiana Territory from France, which doubled the
size of the United States for four cents an acre. As much as Jefferson
liked a good deal, his fundamental motivation was geopolitical. In
1801, while the territory was still under Spanish control, he confided

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Mergers and acquisitions: negotiating the Louisiana Purchase, 1803

his fears about its future to James Monroe, writing, “We have great
reason to fear that Spain is to cede Louisiana and the Floridas to
France.” Jefferson knew that if France acquired and held on to these
territories, it would be emboldened to expand its holdings, setting the
United States up for a military confrontation that it almost certainly
could not win.
During the Civil War, the North persuaded the United Kingdom
to stop supporting the South in part through economic intimidation:
it threatened to confiscate British investments in U.S. securities and to
cease all trade, including grain shipments. Later, as the task turned from
war fighting to reconstruction, U.S. leaders pursued geoeconomic
openings that would not merely restore their newly unified country
but also strengthen it beyond its prewar position. Secretary of State
William Seward negotiated the purchase of Alaska from Russia in
1867, increasing the country’s size by nearly 600,000 square miles.
Despite a bargain price of two cents an acre, the deal was derided in
Congress and the press. History would vindicate the purchase Seward
M PI / G ET TY IMAG ES

secured, since it helped propel the United States from a continental

power to an international empire. Indeed, had it not been for “Seward’s
Folly,” his successors would have had a far more claustrophobic Cold
War on their hands.

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TOTAL WAR
World War I profoundly shifted the United States’ relationship with
geoeconomics. At the beginning, the United States clung to its pol-
icy of neutrality in trade. But once Washington entered the war, in 1917,
it enacted draconian economic embargoes. Within months, the United
States pivoted to full cooperation with the Allies’ food blockade of
Germany and then embargoed all exports to the Scandinavian countries
and the Netherlands, all of which had stayed neutral.
The United States’ early geoeconomic pursuits were not without
controversy, but disagreements turned mainly on how, not whether, to
use economic influence. President Woodrow Wilson entered office deeply
opposed to “dollar diplomacy,” his predecessors’ policy of encouraging
overseas investment to further U.S. interests. Yet Wilson took issue
with the ends, not the means. He said he remained “willing to get
anything for an American that money and enterprise can obtain, except
the suppression of the rights of other men.” Sure enough, by 1919, as
the country’s main object in Europe shifted from winning the war to
securing the peace, Wilson advanced a largely geoeconomic solution.
He persuaded the new League of Nations that its best hope of pre-
venting another war was an “absolute” boycott on aggressor countries.
“Apply this economic, peaceful, silent, deadly remedy and there will
be no need for force,” Wilson urged.
Even as isolationist sentiment swelled in the United States after
World War I, the country was still honing its geoeconomic reflexes
around the world. As the United States grew tired of Europe’s military
dilemmas, it turned to facilitating private investment overseas in an
effort to expand U.S. influence. In 1924, for instance, it spearheaded
the Dawes Plan, which allowed U.S. banks to lend Germany enough
money to pay war reparations to France and the United Kingdom.
After President Franklin Roosevelt took office in 1933, his administra-
tion embraced geoeconomics to preempt German encroachment in the
Western Hemisphere. Between 1934 and 1945, the United States signed
29 reciprocal trade agreements with various Latin American countries.
And in Asia, the administration tried to use the Export-Import Bank
to blunt the rise of Japan. Citing a “bare chance we may still keep a
democratic form of government in the Pacific,” Treasury Secretary
Henry Morgenthau, Jr., arranged a $25 million loan to China in 1938.
Then World War II broke out, and Washington’s geoeconomic
policies went into overdrive. In 1941, Congress passed the Lend-Lease

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Act, under which the United States supplied Allied nations with some
$50 billion worth of military supplies (equivalent to about $660 billion
worth today). If the lend-lease policy was, in the words of Secretary
of War Henry Stimson, “a declaration of economic war,” many British
felt that it was directed as much at London as Berlin. Their complaints
were not entirely unfounded: under lend-lease, Washington meddled
in British economic affairs to a degree that is almost unimaginable
today, managing British exports, seeking unilateral control over levels
of British gold and dollar reserves, and extracting British concessions
concerning the terms of the postwar order.
In 1943, the U.S. government even established the Office of
Economic Warfare, an agency charged with safeguarding the U.S.
dollar. Its more than 200 market analysts around the world and nearly
3,000 experts in Washington did so by helping U.S. producers increase
exports and securing vital imports at favorable terms. A year later,
delegates from the Allied countries signed the Bretton Woods agree-
ment. The goal was not trade for trade’s sake but, as Secretary of State
Cordell Hull explained, “a freer flow of trade . . . so that the living
standards of all countries might rise, thereby eliminating the economic
dissatisfaction that breeds war” and imparting “a reasonable chance of
lasting peace.” That goal, of course, would go on to usher in a lasting
peace on the United States’ terms.

THE GOLDEN AGE OF GEOECONOMICS

The United States’ geoeconomic instinct survived World War II,
abetted by U.S. economic dominance and the Soviet Union’s economic
isolation. As a consensus emerged that it was economic crisis that had
led to the rise of aggressive dictatorships and the subsequent war,
U.S. policymakers reached for economic tools to promote peace.
Perhaps the best-known example is the Marshall Plan, for rebuilding
postwar Europe. Although Secretary of State George Marshall never
mentioned communism or the Soviet Union in his 1947 speech out-
lining the policy, its architects were candid about its geopolitical
objectives. As the diplomat George Kennan explained, the plan would
combat “the economic maladjustment which makes European society
vulnerable to . . . totalitarian movements and which Russian com-
munism is now exploiting.” President Harry Truman himself admitted
that “the military assistance program and the European recovery
program are part and parcel of the same policy.” Had Truman failed

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to persuade Congress to spend the $13 billion it ultimately did on the

economic recovery half of his equation, the Cold War could well have
cost the United States far more in blood and treasure than it did.
The first successful Soviet nuclear test, in 1949, and the outbreak
of the Korean War, in 1950, marked the opening scenes of the Cold
War and pulled Washington toward a more assertive strategy of con-
tainment. But the turn did not mark
Once Washington entered any shift away from geoeconomics, at
least not initially. To the contrary, the
World War I, it pivoted to United States overcame stiff Euro-
full cooperation with the pean reluctance to expand the West’s
Allies’ food blockade of embargo on China. In 1953, President
Dwight Eisenhower came into office
Germany. committed to the idea of achieving
both absolute and relative economic
gains through East-West trade, which required easing the embargo
that the United States had levied on the Soviet Union. Like Wilson,
however, Eisenhower did not object to the use of embargoes for
geopolitical ends; rather, he doubted that this particular one would
best serve those ends.
Presidents John F. Kennedy and Lyndon Johnson thought likewise.
For Kennedy, further easing the U.S. embargoes against communist
countries made sense not because they were having no real economic
impact (as many at the time thought) but because doing so might elicit
quid pro quos from the Soviets. In that vein, Johnson seized on a split
between the Soviet Union and Romania, normalizing trade relations
with Romania in 1964 and supplying it with a package of commercial
incentives the following year.
Even as Washington trained much of its attention on Europe
during the early Cold War, it never lost sight of Asia. After the
Korean War, the United States guarded against the risk of collapse or
a communist takeover in South Korea by showering the country with
grants and loans. Absent this aid, the United States would almost
certainly face a much tougher geopolitical landscape on the Korean
Peninsula today; at a minimum, Seoul would not be the highly
capable ally it is. The dynamic with Japan was different, since Tokyo
resisted pressure to open its economy and clung to mercantilist trade
and monetary policies that Washington saw as distinctly unhelpful to
U.S. interests. But even in this relationship, geopolitical concerns

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trumped narrow economic interests, with the United States unwilling

to risk an outright trade war with Japan for fear of pushing it toward the
Soviet Union.

FALLING OUT OF FASHION

Over the course of the Cold War, the United States increasingly
construed its policy of containment in military terms. The Vietnam
War was partly to blame; it was perhaps inevitable that armed conflict
involving U.S. troops in Southeast Asia would cause policymakers to
look more toward military force. But that is only part of the story.
During the 1960s, commercial interests gained greater influence in
Washington and complained that the State Department failed to
appreciate U.S. economic concerns. In 1962, congressional leaders even
refused to launch a new round of trade negotiations unless Kennedy
set up a White House office to promote trade.
It was not until Richard Nixon’s presidency, however, that geo-
economics began to fall off the radar. Although Nixon dangled economic
incentives when pursuing the opening to China, he and his advisers
viewed these as secondary in importance. Likewise, they saw détente
with the Soviets as a largely geopolitical exercise with very little
economic content. At that time, the dollar-based system of fixed
exchange rates established at Bretton Woods was eroding, thus under-
mining the anti-Soviet coalition; as the writer Walter Russell Mead
has argued, a more economically inclined administration would have
viewed the threat as “far greater than anything Ho Chi Minh could
ever assemble in the far-off jungles of Indochina.” For Nixon, however,
monetary coordination was hardly the stuff of first-order foreign policy.
“I don’t give a shit about the lira!” he once told his chief of staff.
He underscored the point in 1971, when he abandoned the dollar’s
convertibility into gold, ending the accommodating monetary policy
that the United States had extended to its allies since 1945.
Nixon was not alone in his disdain for geoeconomics. Slowly but
surely, the U.S. government grew less enamored of the practice.
Congress intensified its skepticism of trade as a foreign policy tool,
convening several committees to scrutinize U.S. trade restrictions
against the Soviet bloc and, in 1969, passing a bill liberalizing East-
West trade that went beyond what Nixon and his national security
adviser, Henry Kissinger, wanted. In 1972, U.S. farmers successfully
opposed the hotly debated proposal to hold grain sales to the Soviets

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hostage to political concessions. When the issue came up again a few

years later, Kissinger was not happy about opposition to the policy.
For him, exchanging grain merely for money was “very painful,” since
the asset could have been used instead to extract substantive changes
in Soviet behavior. From that moment on, Washington’s foreign policy
mandarins were put on notice: purely economic interests would pre-
vail over geopolitical ones.
President Jimmy Carter made intermittent shows of geoeconomic
strategy. In the early days of the Iran hostage crisis, in 1979, the U.S.
government froze Iranian assets because, as Carter later wrote about
Iran’s leaders, “I thought that depriving
them of about twelve billion dollars in
In the 1960s, commercial ready assets was a good way to get their
interests complained that attention.” The next year, Carter initi-
the State Department ated a grain embargo against the Soviet
failed to appreciate U.S. Union as punishment for its invasion
of Afghanistan. But the public viewed
economic concerns. the policy as a failure—feeding the view
of economic statecraft as ineffectual—
and President Ronald Reagan repealed it. When the United States
negotiated a new grain agreement with the Soviets in 1983, it explic-
itly forbade the United States from banning exports for reasons of
foreign policy.
After the Soviet Union collapsed, U.S. diplomats occupied
themselves with transitioning the former Soviet countries toward
democratic capitalism, and the economic components of the plan
focused squarely on economic outcomes. Washington pushed for
trade and investment reforms for the sake of deeper, faster, more
efficient, and better-integrated markets. Economists would coin
the term “the Washington consensus” as a shorthand for the mix of
economic measures all market economies in good standing would
have to accept; critics would dub it “the Golden Straitjacket” for the
way it constrained policymakers from deviating from the prescription
even for domestic economic reasons, let alone geopolitical ones.
Even though President Bill Clinton’s first formal articulation of
U.S. national security strategy identified a central goal as “to bolster
America’s economic revitalization,” economic instruments figured
little in U.S. foreign policy during his tenure. The notable exception
was sanctions, which grew in scope and sophistication under Clinton.

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But for the most part, the administration reached first for political
and military tools as it sought to assert U.S. leadership throughout
the world. It was also during this period that U.S. and European gov-
ernments did very little economically to shape the direction of Russia
under Boris Yeltsin—a profound omission that, since it enabled the
rise of Vladimir Putin’s neoimperialism, haunts the world today.
Then came 9/11, which arguably made the shift to an even more
militarized national security strategy inevitable. Although the George
W. Bush administration tried to curtail terrorist financing, al Qaeda
and its affiliates were hardly vulnerable to economic coercion; the war
on terrorism would have to be fought by ground forces, combat aircraft,
and armed drones.

WHAT CHANGED?
Given how adept at economic statecraft the United States once was,
why have policymakers largely forgotten the practice? Part of the
answer lies in the Cold War’s military dimension, which must have
weighed heavily on the minds of decision-makers who faced crisis
after crisis. Material factors were important, too: the onset of eco-
nomic insecurity in the United States in the 1970s and the rise of the
multinational corporation (and, with it, an organized political lobby
for trade). Institutional factors played a role, as well. From the 1980s
onward, bureaucratic momentum shifted from the State Department
to the Pentagon, and the trade office that Kennedy had established in
the White House ballooned into the much larger and more powerful
Office of the U.S. Trade Representative.
But the main reason the United States abandoned geoeconomics
may have less to do with evolving foreign policy habits than with
evolving economic beliefs—in particular, economists’ growing reluc-
tance to see themselves and their discipline as embedded in larger
realities of state power. The standard-bearers of economic thought
during the nineteenth and early twentieth centuries had little problem
using economics as an instrument of state power, whereas their neo-
classical successors thought that markets were best kept free from
geopolitical interference. Their worldview happened to fit the Cold
War well: with the Soviet Union opposed to free trade, a gain for free
trade anywhere was a gain for the West.
The neoclassical economic orthodoxy survived the Cold War, as did
the resulting divide between economists and foreign policy thinkers.

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For two decades, none of this mattered, since the United States faced
no serious strategic challenge and thus had no reason to revisit whether
neoclassical ideas still aligned with the country’s foreign policy goals.
Today, however, tensions between neoclassical economics and U.S.
foreign policy have arisen. Many states now appear entirely comfort-
able employing economic tools to advance their power, often at the
expense of Washington’s. China, for instance, curtails the import of
Japanese cars to signal its disapproval of Japan’s security policies. It
lets Philippine bananas rot on China’s wharfs to protest Manila’s stance
on territorial disputes in the South China Sea. It rewards Taiwanese
companies that march to Beijing’s cadence, and punishes those that do
not. Russia, meanwhile, bans imports of Moldovan wine as Moldova
weighs deeper cooperation with the eu, and Moscow periodically
reduces energy supplies to its neighbors during political disagree-
ments. It dangles the prospect of an economic bailout to Cyprus in
return for access to its ports and airfields, forcing eu leaders to choose
between coming through with a sufficiently attractive bailout of their
own and living with a Russian military presence inside the eu.
Such moves can sit uncomfortably with the tenets of neoclassical
economics, which has difficulty accounting for the geopolitical aims of
adversaries’ economic policies. For U.S. policymakers, recognizing
the geopolitical motivations behind such economic power plays need
not necessarily mean responding in kind. Still, they should recall the
advice of John Maynard Keynes and other economists who saw them-
selves as guided by the prevailing realities of state power—and who
saw a danger in illusions to the contrary.

A NEW BRAND OF STATECRAFT

The time has come for the U.S. foreign policy establishment to rethink
some of its most basic premises about power and economics. Although
reasonable minds can differ on the specifics of a geoeconomic vision,
it is worth ensuring that it derives from the right framework. Four
features are essential.
First, strategists need to think about new tools. A clearer reading of
U.S. history no doubt offers insights into geoeconomics’ rightful role
today, but the world has changed too much for policymakers to revert
to earlier playbooks. Many of Jefferson’s and Marshall’s geoeconomic
feats would be unthinkable today, and some of today’s favored geo-
economic tools, such as state-sponsored cyber-warriors who hack

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foreign companies’ networks, have become available only recently.

Others, such as sanctions or energy politics, although nothing new,
now operate in such vastly different landscapes as to render them
good as new. Any effort to put geoeconomics back in foreign policy
needs to begin with ascertaining what its modern instruments are,
how they work, and what factors make them more or less effective.
That will have to entail a set of debates—stretching across U.S.
universities and think tanks, Congress, and the executive branch—
that begin to set geoeconomics apart as a distinct discipline, endowed
with its own principles that can guide action in specific cases.
Second, the United States needs to figure out its own norms for the
acceptable use of geoeconomics. With the largest economy in the
world, a shale boom that is remaking geopolitical realities around the
world, and a financial sector through which the vast majority of global
transactions must pass, the country still has a lot to work with. But
before choosing to use its economic heft, Washington has to decide
just how comfortable it is doing so.
The task is not easy, since many geoeconomic approaches carry real
tradeoffs. But this is true of every foreign policy option. Too often,
geoeconomic approaches are considered in isolation, unlike those
involving military statecraft, which tend to be debated within the
logic of best-known alternatives. The criticism that a given sanctions
program is misguided because its costs outweigh its benefits, for
example, misses the real question of how these tradeoffs compare to
those of other political or military options. Policymakers also tend to
measure geoeconomic plans by the wrong standards—judging them
by their economic, rather than their geopolitical, impacts.
But even when assessed more logically, certain geoeconomic tools
may simply be out of the question for the United States. This is partly
a result of the country’s beginnings as an experiment in the deliberate
curtailing of state power; democratic constraints prevent a U.S.
president from, for example, suspending private contracts with foreign
governments to gain leverage in a geopolitical dispute. Moreover, as
the world’s leading supplier of public goods—underwriting the world’s
deepest capital markets, issuing the world’s leading reserve currency,
securing maritime trade routes—the United States has a genuine geo-
political interest in keeping shows of economic coercion to a minimum.
For now, however, it is hardly clear that Washington’s discomfort with
geoeconomics reflects anything more than the residual workings of a

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set of assumptions honed in the past several decades. There are no

doubt legitimate debates to be had about the wisdom of various geo-
economic approaches. But these are debates worth having.
Third, the United States needs to work geoeconomics into the
bloodstream of its foreign policy. At a minimum, that will require U.S.
leaders to explain in detail to the American public and U.S. allies what
today’s brand of geoeconomics consists of. When U.S. diplomats meet
with their foreign counterparts, they should devote time to forging a
common understanding about the rightful role of geoeconomic power
in grand strategy. Leaders will also need to call out geoeconomic coer-
cion when it takes place, so as to put countries on notice that it will not
go unanswered, and develop responses to it with like-minded partners.
Fourth, policymakers need to grapple with important questions
about how to allocate resources within the realm of foreign policy,
whatever one thinks of overall spending levels. They need to ask, for
example, what the United States is getting for its post-9/11 military
spending. The answer is, less and less: although military power is of
course still vital, it is yielding diminishing returns. So Congress
should shift the Pentagon’s resources toward the application of economic
instruments to advance U.S. national interests—say, foreign aid or
investment promotion.
In making these policy shifts, the United States would regain its
status as a powerful geoeconomic actor on the world stage. It would
acquire the ability to counter the growing economic coercion prac-
ticed by authoritarian governments in Asia and Europe against their
neighbors and beyond. The leading democracies would gain new tools
for shaping geopolitics in positive ways. And the United States’ system
of alliances would grow stronger, thereby reinforcing regional orders
and the global balance of power.
Of course, none of these measures can be implemented in a day,
and many will take years to be put in practice. Indeed, adopting them
will require a fundamental shift in how the United States defines
foreign policy—an intellectual shift that can come about only with
presidential leadership and sustained congressional support. And so
whether the next administration and Congress digests this compelling
reality will rank among the most important questions of American
grand strategy.∂

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 Return to Table of Contents

The Study-Abroad Solution

How to Open the American Mind
Sanford J. Ungar

I
n the Internet age, the world feels far smaller than it used to. But
many Americans still know little about the rest of the world and
may be more detached from it than ever. Such a lack of awareness
is, in certain respects, understandable. Once the Cold War ended,
some 25 years ago, Congress, perhaps out of a false sense of security,
cut the foreign affairs budget, which led to the closing of some U.S.
overseas posts. The news media, especially the commercial television
networks, took their cue and began to reduce overseas coverage—
responding, they said, to the decline of public interest in such matters,
which conveniently coincided with their own economic woes. Although
the 9/11 attacks and the subsequent wars in Afghanistan and Iraq
stimulated renewed attention to international events, that phenomenon
proved short-lived. Consequently, as new global challenges have arisen
in recent years, American discourse on world affairs has lacked historical
context or deeper understanding. It has become difficult to stir thought-
ful, informed debate on foreign policy issues during congressional—
or even presidential—campaigns. Many politicians who aspire to lead
the country seem not to understand what constitutes a foreign policy
issue, let alone the complexity of dealing with one. A candidate who
speaks a foreign language appears almost suspect.
One symptom of Americans’ new isolation is a sharp contrast
between the positive, even zealous views they hold of the United States
and its role in the world and the anti-Americanism and negative
perceptions of U.S. foreign policy that flourish almost everywhere
else. This gap persists in part because relatively few Americans look

SANFORD J. UNGAR, President Emeritus of Goucher College, teaches at Harvard

University and Georgetown University and is a Fellow at the Lumina Foundation. His work
on this article was made possible, in part, by a residency at the Bellagio Center of the
Rockefeller Foundation. Follow him on Twitter @SanfordUngar.

March/April 2016 111

Sanford J. Ungar

beyond, or step outside, their own borders for a reality check. Less
than 40 percent of Americans hold passports. Compare that figure
with the numbers from other English-speaking countries that are
geographically isolated: 50 percent of Australian citizens hold pass-
ports, as do more than 60 percent of Canadians and 75 percent of
New Zealanders. In the United Kingdom, which is admittedly
much closer to foreign destinations, some 80 percent of citizens
carry passports.
Given the United States’ determination to project its hard and soft
power and preserve its influence in a restless but interconnected
world, the almost universal failure of the broader U.S. public to know
and understand others, except through a military lens, is not just
unfortunate but also dangerous. It severely hinders the creation and
implementation of a rational, consistent, and nuanced foreign policy
that reflects American values and enjoys public support.
Luckily, there exists a disarmingly simple way to help address this
problem and to produce future generations of Americans who will
know more and care more about the rest of the world: massively in-
crease the number of U.S. college and university students who go
abroad for some part of their education and bring home essential
knowledge and new perspectives. The federal government should pass
ambitious legislation, akin in scope and impact to the transformative
National Defense Education Act (ndea) of 1958, that would directly
fund more study-abroad opportunities and create incentives for colleges
and universities to put them in place and for students to pursue them.
Such action would help democratize study abroad by making it more
affordable and accessible, spreading its benefits beyond the relatively
narrow cohort of mostly white and well-off students at a relatively
small number of institutions who tend to take advantage of it today.
To realize the tremendous potential of study abroad to improve
American society and U.S. foreign policy, many more Americans—
and more kinds of Americans—need to take part.

THE BENEFITS OF WORLDLINESS

It is hardly a new discovery that sending young Americans abroad pro-
motes better understanding of global affairs and has other profoundly
positive impacts at home. Many current and past leaders in U.S. busi-
ness, government, science, education, the nonprofit and foundation
sectors, and the arts participated in overseas study, service, or work

112 f o r e i g n a f fa i r s
 The Study-Abroad Solution

experiences at an impressionable stage in their lives. Their time spent

in other countries broadened their perspectives and deepened their
appreciation for the many different ways that other societies approach
common problems. Traditionally, Americans have tended to gravitate
to western European destinations, but many have also spent forma-
tive months and years in Africa, Asia, and Latin America, where they
came to see how the world does not always correspond to American
preconceptions.
The benefits of an overseas experience are difficult to quantify, but
there is little doubt that studying abroad can be beneficial for all
students, regardless of their income level, background, or the school
they attend. Two public institutions that have examined the issue,
Indiana University and the University
System of Georgia, found concrete
results that contradict common misper-
The United States must
ceptions: higher four-year graduation massively increase the
rates among those who studied abroad. number of Americans who
And international education, especially study abroad.
if enhanced by language training, can
open doors and confer lifelong contacts
and interests that a student might not have developed otherwise. Now
that every academic field, profession, and industry has taken on an
international dimension, study abroad increasingly appears to be an
essential element of success, a requirement to compete in the global
marketplace. And there is some evidence that obtaining part of one’s
education overseas likely increases one’s lifetime earning potential—a
further bonus on top of the extra $1 million or so that experts believe
results from an undergraduate degree, on average, depending on the
field of study.
In 2001, when I became president of Goucher College, in Baltimore,
about a third of the college’s undergraduates were already studying
abroad, some in traditional semester- or year-long programs and others
in intensive short-term courses led by Goucher faculty and staff mem-
bers. It was easy to see that the participants returned with new ideas,
stronger personalities, and a better sense of who they were as indi-
viduals and as Americans. They described transformative adventures
that allowed them to see their own country, with all its strengths and
weaknesses, more clearly. They spoke of things they had observed and
experienced abroad that the United States might be able to learn

March/April 2016 113

Sanford J. Ungar

from: the ways that other societies organized urban housing and trans-
portation for the poor, conducted immunization and literacy campaigns,
made cultural events accessible to a broad audience, and—one of the
most frequently mentioned—honored and cared for older generations.
It became clear that if Goucher could dramatically and quickly
increase participation in study abroad, the college would become a dif-
ferent, indeed distinctive, place—a great advantage in the competitive
liberal arts college market. Within a few years, after some gut-wrenching
internal deliberations, Goucher made study abroad mandatory for
undergraduates, provided a stipend to make it more affordable for all,
and turned its little corner of the world alongside the Baltimore Belt-
way into a laboratory for international exploration. Enrollments grew,
horizons broadened, and opportunities beckoned. In every possible
venue, including in the residence halls and over meals, returning
students regaled one another, and those yet to go, with stories of
where they had been and what they had learned. Instructors soon
accommodated these new perspectives, and the campus became a more
welcoming environment for international students, who often found
people at Goucher already aware of their countries and cultures.

INFREQUENT FLIERS
The trouble is that relatively few Americans currently enjoy this kind
of life-changing overseas experience. According to the most reliable
estimates, some 304,000 U.S. students studied abroad for credit during
the 2013–14 academic year, which represented about 1.5 percent of all
American students enrolled in institutions of higher education that
year. The number of Americans studying abroad seems especially low
compared with the flow in the other direction. International students,
for whom the United States has become the top destination of choice,
now make up almost five percent of the total enrollment in U.S. higher
education, split roughly evenly between undergraduate and graduate
programs. According to the Institute of International Education (iie),
the foreign population in U.S. colleges and universities increased by ten
percent in the 2014–15 academic year, to a record high of nearly 975,000
students, over 30 percent of whom were from China. Put simply, that
means that there are more than three times as many foreigners studying
at U.S. colleges and universities as there are Americans studying abroad
altogether, and about the same number of Chinese students matriculate
in the United States as do Americans anywhere in the world.

114 f o r e i g n a f fa i r s
 A number of significant obstacles have long stood in the way of
more Americans heading overseas during college. First, students at
institutions with a core curriculum may find it difficult to complete all
their requirements on schedule if they go away for a substantial period
of time, and few of those colleges and universities have been inclined
to offer core courses or approve their equivalents overseas. Some
advisers to premedical students counsel against education abroad, on
the theory that it could somehow make those students less competitive
for admission to the top U.S. medical schools. Other tightly structured
courses of study, such as teacher-training programs, may also discourage
students from straying down international paths.

March/April 2016 115

Sanford J. Ungar

Believing that any season could become a championship season, the

coaches of highly competitive athletic teams (especially men’s teams)
have been known to warn players that they might miss a once-in-a-
lifetime experience if they go abroad at the wrong time. Students in-
volved in other absorbing extracurricular activities, such as student
government or newspapers and radio stations, may also risk losing their
chance to compete for top positions while away. A lack of advanced
foreign-language skills may make students hesitant to enroll in overseas
programs. And some elite universities, while not explicitly discour-
aging study abroad, perpetuate the subtle message that students could
not possibly learn enough elsewhere to justify sacrificing important
intellectual and practical opportunities on their home campuses (al-
though some of those institutions are now scrambling to get their
study-abroad percentages up). Finally, many colleges and universities
treat overseas education as essentially “pass/fail,” with grades obtained
overseas not appearing on a transcript, and that may make it seem less
important and less desirable.
Another major obstacle to study abroad is cost: concern about
affordability is the number one reason cited in surveys that explore
Americans’ reluctance to study abroad. At public institutions, which
are less likely to have endowed funds to support overseas education,
the concern is often justified; if a public university does not offer its
own international programs or otherwise underwrite the expense of
studying abroad, a student’s semester or year away could add signifi-
cantly to his or her family’s financial burden. And even intensive short
programs, if they are organized outside the standard curriculum
and require additional tuition, can be out of reach for those with
scant resources.
A growing number of study-abroad programs, however, now cost
no more—or even less—than ordinary enrollment, and some colleges
permit students to take financial aid overseas with them for a semester
or two. Cooperative arrangements are emerging, especially among
liberal arts colleges, that should eventually produce economies of scale
and lower costs. Many European countries with excellent universities,
including Finland and Germany, provide students from other nations
the same tuition-free opportunities their own citizens enjoy—and
often in English. U.S. undergraduates of limited financial means who
already qualify for federal Pell Grants may also apply for Gilman
International Scholarships for overseas education; if they are studying a

116 f o r e i g n a f fa i r s
 The Study-Abroad Solution

language on the State Department’s “critical need” list—such as

Arabic, Chinese, or Russian—they may be eligible for a further addi-
tional stipend. Many scholarly associations and foreign governments
also offer grants for language study overseas. And a slowly increasing
number of students are figuring out that they can save money by
enrolling directly in language and other programs overseas, rather than
going through their home institutions.

A BROADER STUDY ABROAD

In addition to the relative paucity of U.S. students who study abroad
and the obstacles that stand in the way of increasing that number,
there exists another problem: a lack of curricular and socioeconomic
diversity among those who do go overseas. According to the iie,
for many years, two-thirds of American students who went abroad
majored in the traditional social sciences, the humanities, or business
and management. Only recently has there been a surge of study
abroad by those in the so-called stem disciplines (science, technology,
engineering, and math), to the point where they now represent 23 per-
cent of the total—an improvement, but still an underrepresentation,
given that 36 percent of all U.S. undergraduates major in stem fields.
Knowledge of the world and of different cultural perspectives is, of
course, important in all fields.
More troubling are gaps that exist when it comes to class, ethnicity,
and gender. “The majority of study-abroad students are white, female
liberal arts majors,” notes Marlene Johnson, executive director and ceo
of the Association of International Educators (commonly referred to
as nafsa). Minority students, particularly African Americans and
Hispanics, tend to study abroad at lower rates than whites, who now
compose less than 60 percent of the overall undergraduate student
population but still make up almost 75 percent of U.S. students over-
seas. In recent years, Johnson says, there has been “some progress on
diversity [in study abroad], but it’s very small.” She blames higher
education administrators for failing to deal adequately with this issue
and for often quietly discouraging study abroad.
If overseas education remains overwhelmingly a pursuit of the
white elite, it cannot realize its potential to stimulate a broad-based
shift in American perceptions of, and dealings with, the larger world.
American elites, especially on the coasts and in major interior cities,
already tend to have broader, more cosmopolitan views on global affairs

March/April 2016 117

Sanford J. Ungar

than other citizens, and studying and traveling overseas no doubt affirms
those attitudes. But if study abroad were to become a more wide-
spread, mainstream experience, it would have far more profound
effects on American society. One of the most basic promises and pur-
poses of U.S. higher education is to broaden elite circles and make
it possible for anyone to aspire to any position, regardless of his or
her background or ethnicity. Expanding participation in study abroad
will be an important part of realizing that ideal.
As it stands, however, many first-generation college students and
children of immigrants likely see study abroad as a luxury or a rite of
passage intended mostly for those from wealthy white families, and
they may consider it more a form of tourism than a serious academic
endeavor. That stereotype is often reinforced in the news media
and in literature and films. But at Goucher, we found that as study-
abroad participation expanded quickly, students from inner-city,
rural, or multicultural backgrounds were among the greatest enthusi-
asts, often adapting far more readily to new environments than their
peers from upper-middle-class suburban families, who might never
even have shared a bathroom as they were growing up. Coincidentally,
studying overseas together sometimes improved relations among
members of different ethnic, social, and religious groups on campus
when they returned.

STEPS IN THE RIGHT DIRECTION

In a tacit recognition of the dangers of isolation from and ignorance
of the rest of the world, since the 9/11 attacks, the U.S. government
has stepped up efforts to encourage young Americans to study over-
seas. Few people contributed as much to that goal as the late U.S.
senator Paul Simon, Democrat of Illinois. For decades, he advocated
federal challenge grants to encourage making overseas experience part
of the academic preparation of every U.S. college student. After
Simon died, in 2003, federal legislators proposed bills in his memory
that would have set an annual goal of enrolling one million U.S.
undergraduate participants in credit-bearing study abroad by the year
2020. At the time, that figure represented about half the total number
of people receiving bachelor’s or associate’s degrees every year. The
Senator Paul Simon Study Abroad Foundation Act—which was never
signed into law—also emphasized the importance of diversifying
the gender, ethnicity, income level, and academic major of those

118 f o r e i g n a f fa i r s
 The Study-Abroad Solution

who study abroad; the variety of institutions sending them; and the
geographic range of their destinations.
Senator Dick Durbin, the Democrat from Illinois who succeeded
Simon, now champions Simon’s cause. In 2005, with the support of
President George W. Bush, Durbin introduced a bill creating the
nonpartisan Commission on the Abraham Lincoln Study Abroad
Fellowship Program, with the long-term goal of building an interna-
tionally educated citizenry. The commission’s report, issued later that
year, urged the establishment of what Johnson, of nafsa, called “a
bold, visionary study abroad program
that will serve our national interests.”
Although the commission recommended
If overseas education
a relatively small federal investment in remains overwhelmingly a
need-based study-abroad scholarships, pursuit of the white elite, it
it issued a clarion call: “Our national cannot realize its potential.
security and domestic prosperity depend
upon a citizenry that understands Amer-
ica’s place in the world, the security challenges it faces, and the opportu-
nities and perils confronting Americans around the world. Responding
to these realities requires a massive increase in the global literacy of
the typical college graduate.”
More than ten years later, the goals of the Lincoln Commission
remain unfulfilled, but new, narrower ones have emerged. In 2010,
Secretary of State Hillary Clinton established the “100,000 Strong”
initiative to increase to that level the number of U.S. students in
China. The Chinese government, supportive of the effort and recog-
nizing that a vast number of Chinese students receive financial aid in
the United States, pitched in with 10,000 scholarships for Americans
who study in China. The goal of increasing the number of U.S.
students in China has proved elusive, however. In fact, the number
has been slowly declining: in the 2013–14 academic year, there were
fewer than 14,000 Americans studying there.
In 2011, U.S. President Barack Obama launched a drive to increase
the number of Americans studying in Latin America (then about
40,000) and the number of Latin Americans studying in the United
States (then about 60,000) to 100,000 annually in each direction.
Progress toward that goal has also been slow, but in the 2013–14
academic year, there was an 8.4 percent increase in the number of
U.S. students in Latin America compared with the prior year. First

March/April 2016 119

Sanford J. Ungar

Lady Michelle Obama got on the bandwagon in 2014 during a trip to

China and in speeches back home, in which she urged that study
abroad be regarded as a key element of U.S. foreign policy and that
more college students participate as “citizen diplomat[s].” She revived
attention to an often-neglected advantage of overseas education: it
helps other societies develop a more favorable view of Americans than
they might otherwise have if all they know of the United States are its
television programs and movies, military interventions, and tourists,
not to mention the anti-American propaganda prevalent in some parts
of the world. Last year, the State Department established the U.S.
Study Abroad Office to facilitate overseas arrangements for students
from all backgrounds; this was mostly a symbolic gesture, but it laid
the groundwork for more official, high-level attention to the matter.
The iie, meanwhile, has inaugurated Generation Study Abroad,
which invokes a five-year plan to double the number of American stu-
dents going overseas through cooperation among colleges and univer-
sities, employers, governments, and civic and professional associations.
As a McKinsey Global Institute report noted in 2012, 40 percent of new
jobs in advanced economies around the world now go to foreign-born
workers because of their superior language skills and cross-cultural
competency. In a 2014 paper outlining its goals, the iie concluded
that study abroad amounts to “basic training for the 21st century.”

MAKE IT HAPPEN
So far, efforts to increase the number of Americans studying abroad
have been piecemeal and only partially successful. The time has come
to establish a clear and forthright U.S. national education policy that
recognizes the importance of international literacy and global aware-
ness for the future of the United States. This will be essential in the
years ahead to ensure U.S. competence and competitiveness in a
rapidly evolving world. It will not be easy to eliminate from U.S.
political discourse the routine invocations of American superiority
and invulnerability, complete with divine blessings, which no longer
have credibility beyond U.S. borders. But at a minimum, it must
become acceptable for presidents and other politicians to acknowl-
edge openly that Americans may find ideas and inspiration abroad.
The United States will need many more civil servants, congressional
staff members, leaders of business and science, and journalists with
international exposure. This is a long-term process that has nothing to

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 The Study-Abroad Solution

do with partisan rivalries or political posturing, and it will take a

generation or more to see progress. But it is essential to begin, and a
good place to start is in U.S. institutions of higher learning.
There are other ways for Americans to learn about the world, of
course. Many who serve overseas in the military come back commit-
ted to global understanding, and a growing number of academics now
frequently conduct joint online courses
and other online exchanges with students
from other countries. Many nontradi-
Within a decade, at least a
tional students simply cannot go abroad third of all American
due to obligations and responsibilities undergraduates should
at home; institutions must find other have access to an affordable
ways to deepen their understanding of
the world. But only through a national study-abroad program.
commitment to encouraging and financ-
ing a dramatic long-term expansion of overseas study by American
students can the United States begin to build a more healthy relationship
with the rest of the planet.
The goal must be ambitious: within a decade, at least a third of all
Americans pursuing an undergraduate education should have access,
without financial hardship, to an academically rigorous study-abroad
experience ranging in duration from a few weeks to a full academic
year. Longer programs are preferable to shorter ones, and opportuni-
ties for immersion in host cultures are better than “bubble” programs,
where Americans are exposed almost exclusively to one another. But
given the degree of most Americans’ ignorance of international issues
and sensibilities, the crucial first step is to cross the threshold of
awareness. Any study-abroad experience is better than none at all.
After 2026, participation in overseas education should continue to
expand annually, with an ultimate goal by midcentury of universal
access among undergraduates and a concerted effort along the way to
include many more students from graduate and professional schools.
To achieve such objectives, study abroad will need significant finan-
cial support from both the public and the private sectors. Congress
should enact a new, modern counterpart to the ndea, providing
federal funding for study abroad as a critical investment in the national
security of the United States, just as the 1958 law was intended by
President Dwight Eisenhower to advance the country’s technological
sophistication. Key officials from the executive and legislative branches,

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Sanford J. Ungar

along with respected leaders of business and higher education, will

have to use their bully pulpits to promote this cause, with major corpo-
rations providing supplemental funds through fellowships, incentive
grants, and research opportunities. Models for such support already
exist: the initiative to increase study-abroad exchanges between the
United States and Latin American countries features the 100,000
Strong in the Americas Innovation Fund, whose contributors include
Santander Bank and the Coca-Cola and ExxonMobil Foundations.
Educators and advocates should also encourage states and cities that
rely on international ties to participate politically and financially, send-
ing their students overseas and inviting their counterparts to the
United States. Existing programs sponsored by the Rotary Foundation
and other service organizations may be another useful model.
To address the immediate obstacles posed by the cost of studying
abroad, the federal government should amend its student loan program
to provide forgiveness of a percentage of a student’s debt if he or she
has had a credit-bearing international experience that meets certain
quality criteria—just as some teachers, law enforcement officers, and
other public service professionals now benefit from such provisions.
Any costs associated with that experience overseas, up to $10,000 a
year, should also be deductible on federal (and perhaps some state and
local) income tax returns; legislators could create a means test for this
deduction, as they have done in other areas.
To increase the diversity of the Americans who study abroad,
municipal and state governments, backed by philanthropic foundations,
should help colleges and universities recruit more of their minority
and lower-income students to go overseas. Pell Grants and Gilman
Scholarships offer useful precedents and guidelines. Institutions of
higher education should also go out of their way—as McDaniel
College, in Maryland, has done, for example—to provide study-
abroad experiences for learning-disabled students who might other-
wise be denied the opportunity. It is not difficult to foresee a day
when colleges and universities compete on the basis of how many of
their students go abroad, as they do now on the percentage of Pell
Grant recipients they enroll and the number of recent alumni who
go on to graduate education.
To give students an extra incentive to study abroad and to increase
the chances that doing so will represent not just a valuable experience
but also a good investment, the federal government, and possibly

122 f o r e i g n a f fa i r s
 The Study-Abroad Solution

some state and local governments, should provide those who have
studied abroad with an affirmative hiring preference for jobs that deal
with international matters, much like the advantages that benefit
military veterans. Meanwhile, the faculties of U.S. colleges and uni-
versities also need to improve their international awareness. The U.S.
Departments of State and Education, working together, should estab-
lish a program of competitive grants to provide for and reward inter-
national experiences for faculty members in all academic fields and
for certain staff members, as well. (Nafsa is already conducting
“global learning colloquia” for faculty, which focus on strategies to help
students develop the knowledge and skills they need to engage with
the wider world.)
The recent paralysis in Congress and the vigorous antipathy of
conservatives toward any proposals for increased government
spending might lead seasoned observers to be skeptical of the pros-
pects for a comprehensive national policy supporting study abroad
and greater international awareness. But both political parties include
an internationalist wing, and a focus on the importance of this issue
to national security could bring them together to support a significant
bipartisan effort.
To defeat violent extremism and surmount other formidable
political and economic challenges in the international arena, Ameri-
cans will have to stop preening and begin trying to understand how
the world looks through others’ eyes—and how determinedly the
rest of the world resists U.S. supervision and dominance. The only
prospect for beginning that transformation lies in broadening the
basic definition of an excellent higher education to include direct
exposure to other cultures and their ways of dealing with shared
problems. As successive generations emerge with this perspective,
their impact will grow; change will become inevitable. The interna-
tional scene will still be full of tyrants petty and grand, and the need
to defend the United States and help others defend themselves will
hardly disappear overnight. But the United States would be able to
function far more effectively if its people and its leaders felt more
comfortable in the world.∂

March/April 2016 123

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 Return to Table of Contents

Japan’s New Realism

Abe Gets Tough
Michael Auslin

L
ast September, tens of thousands of opponents of Japanese
Prime Minister Shinzo Abe gathered outside the National
Diet building in Tokyo, often in torrential rain, holding placards
and shouting antiwar slogans. They were there to protest the imminent
passage of legislation designed to allow Japan’s military to mobilize
overseas for the first time in 70 years—a shift they feared would
undermine Japan’s pacifistic constitution and encourage adventurism.
On September 17, Japan’s normally sedate parliament dissolved into
scuffles as opposition politicians tried and failed to prevent a vote on
the bills, which ultimately passed.
They and the protesters may have failed in their objective, but
they got something right: Japan’s foreign policy is indeed chang-
ing. Since returning to power in September 2012, Abe has pushed
through a series of institutional, legal, diplomatic, and military
reforms that are reshaping Japan’s national security posture and
that promise to enhance Japan’s regional role over the coming decade.
Responding to rapid changes in the region, particularly the dramatic
increase in China’s power, Japan’s prime minister has distanced
his country from its postwar pacifism—which was predicated on a
benign view of the international system—and unveiled a new, more
realist foreign policy.
Japan’s pacifism, which many Japanese see as key to their country’s
postwar identity, dates to 1946. That year, the country, still occupied
by the United States, accepted a U.S.-drafted constitution forbidding
Japan from maintaining a military with the potential to wage war. When
the U.S. occupation ended, in 1952, Tokyo essentially outsourced its
MICHAEL AUSLIN is a Resident Scholar and Director of Japan Studies at the American
Enterprise Institute. He is the author of a forthcoming book on geopolitical risk in Asia.
Follow him on Twitter @michaelauslin.

March/April 2016 125

Michael Auslin

defense to its new ally, Washington. In the decades that followed,

Japanese leaders also put their faith in the liberal international institu-
tions, such as the un, that defined the postwar world.
In recent years, however, Abe has increased the defense budget
and loosened the constitutional restrictions on Japan’s military,
passing laws that allow it to cooperate with partners in limited security
operations. Bidding for a larger leadership role in Asia, he has deep-
ened the country’s engagement with regional groups, such as the
Asia-Pacific Economic Cooperation forum and the Association of
Southeast Asian Nations, and he has strengthened the U.S.-Japanese
alliance. He has also built military ties with other democracies in
Asia, including Australia and India.
Taken together, Abe’s actions, and those of some of his predecessors,
will enable Japan to play a larger role in defending its interests and
contributing to regional stability. Although controversial both at
home and abroad, changes in Tokyo’s foreign and security policies
are a positive step, moving Japan toward a regional posture more
commensurate with its economic strength. They enhance the U.S.-
Japanese alliance and serve as a liberal counterweight to China’s
increasingly assertive challenge to Asia’s rules-based order.

JAPAN GETS REAL

Since the end of the Cold War, Tokyo has expanded the primary goal
of its defense policy from defending the Japanese home islands to
also protecting its far-flung maritime possessions—small, largely
defenseless islands, such as Yonaguni, located just off Taiwan, more
than 1,200 miles from Tokyo. To that end, it has sought to uphold
freedom of navigation and an open, rules-based order in Asia. It
has stepped up its military preparedness and strengthened security
cooperation with an expanding set of partners.
These shifts in Japanese policy can be traced to the uncertainty that
followed the collapse of the Soviet Union in 1991. Almost overnight,
the original rationale for the long-standing U.S.-Japanese alliance
disappeared, and the future of East Asia’s security order—not to
mention the future of the U.S. presence in the western Pacific—
became uncertain. As the United States struggled to craft a post–
Cold War global strategy, the U.S.-Japanese alliance entered a period
of drift, tied in part to questions about Washington’s commitment to
the region in the new era.

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 Japan’s New Realism

Seeing red: Shinzo Abe at the Defense Ministry in Tokyo, December 2015
In August 1990, less than a year after the fall of the Berlin Wall,
Iraq’s Saddam Hussein invaded Kuwait. Washington assembled a
huge military coalition to oust him, but Tokyo refused to send troops,
paying $13 billion instead to help defray the costs. The move failed
to win Japan much credit, however. Critics in the United States and
elsewhere widely derided it, and the episode, which raised new ques-
tions about Japan’s ability to translate its economic might into strategic
clout, tarnished the country’s image as a leading global power.
Then, in 1998, North Korea launched a ballistic missile over the
island of Honshu. This was Tokyo’s “Sputnik moment”: raising Japan’s
sense of insecurity and fears that its key ally might not be able to protect
it from new threats. And Japan suddenly realized that it was facing
what could become an existential threat from a rogue regime known
to be pursuing nuclear weapons.
A final, ongoing reason for Japan’s strategic evolution has been the
steady rise of China as a political, economic, and military power.
Long accustomed to being the major player in Asia, Tokyo has recently
I S S E I K AT O / R E U T E R S

been forced to contemplate a future in which Beijing will dominate

the region.
Together, these shifts have helped erode Tokyo’s commitment to
pacifism and have undermined its leaders’ belief that international
institutions alone can be trusted to shape the future. In response,

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Michael Auslin

Japanese leaders have embraced a sort of classical realism, predicated

on the belief that nations seek power above all else and that the only
way to defend Japan is to forge stronger security partnerships and
pursue a more activist foreign policy.
This new worldview has led Japan to seek closer security coopera-
tion with the United States. After 9/11, then Prime Minister Junichiro
Koizumi surprised many Japanese by agreeing to support the U.S.-led
“war on terror.” Unable to send combat troops, since that would have
violated Japan’s constitutional ban on “the threat or use of force
as means of settling international dis-
Seven decades after World putes,” Koizumi dispatched Japan’s
Maritime Self-Defense Force to the
War II, Japan is once again Indian Ocean to support allied combat
becoming a player of some operations in the region. He also sent
significance in Asia. Japanese reconstruction troops to Iraq
in February 2004 and deployed an Air
Self-Defense Force team to transport
supplies between Kuwait and Iraq. Finally, between 2002 and 2009,
Tokyo pledged $1.4 billion in aid to Afghanistan.
When Abe first became prime minister—he succeeded Koizumi
in 2006—he pushed through a number of laws to allow for greater
security cooperation with Japan’s partners. He also conducted a review
of Japan’s ban on sending troops overseas and proposed the creation
of a national security council and a centralized intelligence organization
to modernize planning.
But just one year into the job, Abe resigned when his ruling Liberal
Democratic Party lost control of the upper house of the Diet. And
when the Democratic Party of Japan (dpj) took over the lower house
in 2009, Yukio Hatoyama, the new prime minister, shelved Abe’s
ambitious security reforms. Hatoyama, who felt that Japan’s future lay
with Asia, not the United States, drove a wedge between Washington
and Tokyo by fighting a plan to relocate a U.S. Marine Corps base on
Okinawa and attempted to reorient Japan toward China and South
Korea. Like Abe, however, Hatoyama lasted only about a year in
office. His successor, Naoto Kan, scarcely did better: overwhelmed by
the 2011 tsunami and the subsequent Fukushima nuclear crisis, he was
forced to resign in September 2011.
The next dpj prime minister, Yoshihiko Noda, adopted a more
conservative foreign policy, reemphasizing close ties with the United

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States and taking a harsh tone toward China, which he identified (along
with North Korea) as Japan’s main strategic threat. Noda agreed to
purchase the F-35 stealth fighter jet and eased a 1960s-era de facto ban
on exporting weapons. Noda also joined negotiations over the Trans-
Pacific Partnership, supporting Washington in its attempt to establish
a free-trade bloc of largely liberal nations that excluded Beijing.
Perhaps most significant, Noda nationalized three islands in the
Senkaku chain (known as the Diaoyu chain in China) also claimed by
China and Taiwan. Since the return of Okinawa to Japanese control in
1972, Japan had administered these privately owned islands, but in
September 2012, to prevent their purchase by the right-wing gover-
nor of Tokyo, Noda had the Japanese government buy them instead.
Although Noda’s move was meant to block an even sharper provoca-
tion, it dramatically worsened Japan’s relationship with China.
Beijing responded by sending private fishing boats and maritime
patrol vessels into the waters around the islands on a regular basis,
and Noda began warning that China sought to undermine Japan’s
administrative control of the Senkakus as a first step toward chal-
lenging its territorial claim. Beijing’s actions raised alarms in Japan
about China’s growing military strength, its presence in the East
China Sea, and the threat China posed to Japan’s southwestern island
chain (which stretches from the southernmost island of Kyushu to
just off Taiwan). The defense of these islands and the seas around
them thus became the focus of Japan’s new strategic vision, which it
would be under Abe as well, when he returned as prime minister in
December 2012.

ABE’S GRAND STRATEGY

Before Abe could set his new policies in motion, however, he had to
dismantle the various postwar restrictions that blocked Japan from
using force abroad. His first move was to get the Diet to approve the
creation of a national security council in November 2013, dusting off
plans from his first term. Abe picked his close adviser Shotaro Yachi
to run the new body and staffed it with personnel from the Foreign
and Defense Ministries. He then directed the council to draw up a
new national security strategy and approve the formal five-year guide-
lines that inform Japan’s defense procurement plans. The National
Security Council also coordinates Japan’s security policy and serves as
a central body for crisis planning and response.

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Michael Auslin

Abe was able to make these institutional changes with relatively

little fanfare. His broader reforms to Japan’s security policies sparked
far more controversy, however—especially his efforts to ease the arms
export ban. The prohibition had long cut off Japan’s defense industry,
whose ten largest companies had only
about $7.25 billion in domestic contracts
Japan will need to play a in 2012, from the global market and the
global role commensurate international research-and-development
with its size and economic community, thus forcing it to produce
strength. products that were often one and a half
times as expensive as comparable for-
eign models, and sometimes more. In
2014, Abe received Diet approval to expand the types of arms Japan
could export and allow Japan to cooperate more closely with the
United States and other partners on defense technology.
Abe’s next move—pushing through laws to allow Japan’s military to
mobilize abroad—sparked even more public outcry. Japan’s constitu-
tional prohibition on collective self-defense had created various
awkward problems for the country over the years; among other things,
it required the Diet to pass a special law every time Japan wanted to
deploy its forces overseas. Now, under Abe’s reform (which was passed
by parliament last September), the government has the right to assist
allies whose forces or territory are under attack and provide logistical
support to countries engaged in military operations that do not directly
concern Japan’s security.
Abe has also begun to boost Japan’s military capabilities. After a decade
of military stagnation, he has gradually increased the defense budget: by
2.9 percent in 2014 and 2.8 percent in 2015. In December 2015, the Diet
passed an increase of 1.5 percent for 2016, which would bring Japan’s total
annual defense spending to a record $42.4 billion. These additions pale
in comparison to China’s $132 billion defense tab in 2014 and double-digit
budget hikes in recent years. Yet they are nonetheless significant. Abe has
reaffirmed Noda’s plan to buy 42 F-35 fighters and has announced his in-
tention to purchase 17 Osprey tilt-rotor aircraft and 52 amphibious assault
vehicles. He has also pledged to build two new destroyers and to increase
Japan’s submarine force to 22 modern diesel boats. Japan’s Ministry of
Defense also intends to buy three top-of-the-line surveillance drones and
around 20 new maritime patrol planes to replace old models, as well as
to upgrade Japan’s ballistic missile warning systems and satellites.

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Tokyo has already bolstered its defenses in the southwestern island

chain, building radar sites on Yonaguni Island, near Taiwan, and
constructing bases on three more key islands in the area. By 2020,
Abe intends to place up to 550 troops on Amami Oshima, the largest
island between Kyushu and Okinawa; he has also started setting up
bases on Ishigaki and Miyako, near the Senkaku chain, to facilitate the
quick deployment of military personnel in a crisis. All told, nearly
10,000 Japanese troops will be stationed on islands in the East China
Sea, along with a network of antiship and antiaircraft missiles there.
And in August 2015, Abe launched the country’s second Izumo-class
helicopter carrier, which has dramatically strengthened Japan’s ability
to project force in its territorial seas.

GOOD FENCES MAKE GOOD NEIGHBORS

As significant as Abe’s domestic security reforms have been, it is his
foreign initiatives that have revealed the true scope of his ambition. Not
content for Japan to keep acting as a sort of international bystander,
Abe has made more than 40 trips abroad since 2013 and has used
visits to Canberra, Singapore, and Washington, D.C., to lay out his
foreign policy vision.
Abe has also attempted to reassure critics that Japan will never
again engage in offensive war. To drive home this message, he has
made nonmilitary diplomacy a large part of his foreign outreach.
His government has raised Japan’s profile in various multilateral
institutions, such as the East Asia Summit and the Association of
Southeast Asian Nations, by raising questions of maritime security,
and in October 2015, it signed the Trans-Pacific Partnership treaty.
Underscoring his growing regional influence, in 2015, Abe also suc-
ceeded in getting a reference to stability in the South China Sea
added to the final communiqué issued by the East Asia Summit,
despite Chinese opposition.
Throughout the Cold War, Japan remained largely isolated in
Asia, with the United States as its only ally. In part because Japanese
relations with China and South Korea have become strained, Abe
has built new relationships with Australia and India and strengthened
ties with Southeast Asia. Abe has also resurrected the political and
security dialogue he began in 2007 with Australia, India, and the
United States, part of an initiative to create a community of liberal
interests in Asia. And unlike his predecessors, who maintained primarily

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Michael Auslin

diplomatic relations with those countries, he has made security coop-

eration a key element of his diplomatic and economic outreach.
Japan’s closest relationship in Asia may be with Australia; Japanese
officials have described it as a “quasi alliance.” In 2014, the two coun-
tries signed an agreement that enhanced the sharing of information and
defense technology. Last November, Tokyo submitted a formal offer to
build advanced submarines for the Royal Australian Navy, which would
allow the two countries’ navies to work together more closely.
Nearly as high on Abe’s list of partners is India. Abe enjoys good
relations with Prime Minister Narendra Modi and has declared a
“special strategic and global partnership” with New Delhi. He also
joined the United States in participating in the Malabar naval exercise
hosted by India in 2015, and India and Japan have discussed the pos-
sibility that New Delhi might purchase Japanese submarines and
search-and-rescue planes, which would help the Indian navy patrol
the eastern Indian Ocean, where Chinese ships increasingly roam.
Tokyo is seeking to play a similar role in Southeast Asia, where a
number of other countries are increasingly finding themselves targeted
by China’s territorial claims. Abe has championed Japan’s role in
maintaining maritime security and freedom of navigation, position-
ing his country as the defender of a liberal, rules-based order in the
region. In 2015, Tokyo signed strategic partnership agreements with
Indonesia, Malaysia, the Philippines, and Vietnam. Abe has also
agreed to give six maritime patrol vessels to Vietnam and sell three to
Indonesia, has loaned Manila the money to purchase ten maritime
patrol vessels, and has announced plans to loan used surveillance
aircraft to the Philippine navy. Last May, Japan and the Philippines
conducted their first joint military exercises, and Vietnam agreed to
joint naval exercises last November.
Abe has also reached out to Europe, attempting to position Japan as
the continent’s main Asian partner. In 2014, he formalized Japan’s ties
to nato by concluding an “individual partnership and cooperation
program” and signaled his interest in joining a nato missile-building
consortium. Abe has also deepened Japan’s bilateral defense ties with
France and the United Kingdom by signing a military equipment
and technology transfer agreement with the former and a defense
equipment cooperation agreement with the latter.
Above all, Abe has taken several moves to strengthen Japan’s most
important strategic relationship: its alliance with the United States.

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In April 2015, Tokyo and Washington upgraded their ties for the first
time since 1997, announcing that they would start cooperating more
closely on maritime security and regional stability. The two nations
also agreed to work together to deal with ambiguous security situa-
tions that fall short of formal conflict and to jointly respond to threats
in space and cyberthreats.

REMAKING ASIA
By slowly eliminating its restraints on security cooperation, by deep-
ening its relationship with the United States, and by emphasizing
more muscular, liberal rhetoric, Abe’s Japan has positioned itself as a
sort of anti-China in Asia and beyond. Yet many of the other restrictions
on Japan’s military remain in place, and these will not be revoked
anytime soon. Japan’s society would not allow its military to play a
more normal role in dealing with foreign crises; the Japanese also
remain highly wary of entangling alliances.
Yet many of Japan’s elites—who are worried about the threats
from China and North Korea and who fear that the United States is
distracted by crises in the Middle East and Ukraine—have embraced
the country’s new realism. Leading thinkers, including the journalist
Yoichi Funabashi, the former diplomat Kuni Miyake, the political
scientist Koji Murata, and the former defense minister Satoshi
Morimoto, are among those writing and speaking about the need for
a more muscular Japanese posture. Indeed, there is a growing com-
munity of academics, policy analysts, and politicians who believe
that Japan must do more to ensure its own security, as well as to help
support the global system that has protected it since the end of
World War II.
As Abe expands Japan’s global role, his policies will include new
activities abroad and entail deeper security cooperation with existing
partners. The more unstable the global environment becomes, the more
Japan will need to play a global role commensurate with its size and
economic strength. That role should take advantage of multilateral
organizations, but it will, realistically, privilege Japan’s security.
After decades of stagnation in Japan’s foreign and security policies,
the new posture will contribute to the maintenance of Asia’s liberal
post–World War II order over the coming decade and beyond.
Abe’s policies, which build on some of those of his predecessors,
are a series of small yet interlinked steps that will enhance Japan’s

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Michael Auslin

security, diplomacy, and economy. In focusing primarily on stemming

the growing threat from China, Abe is attempting a tricky balance:
to prevent the souring of relations between Beijing and Tokyo but
also to keep Asia’s balance of power from tilting too far toward China.
Abe’s plans are controversial, but a healthy democratic tension
between a largely pacifistic populace and an elite that worries about
emerging threats to Japan’s security will likely help Tokyo avoid the
extremes of isolation, on the one hand, and intervention, on the
other. In openly advocating liberal values, Abe is making clear that
he recognizes Japan’s responsibility to preserve stability. Japan’s new
policies are particularly important in ensuring that the U.S.-Japanese
alliance, which remains perhaps the key guarantor of regional peace,
will remain a credible and robust instrument in the coming decades.
Seven decades after the end of World War II, Japan is once again
becoming a military player of some significance in Asia, as well as a
political force. Yet unlike during the 1930s, when ultranationalism
propelled Japan onto a disastrous path of invasion and war against its
neighbors, today Japan is shedding old restraints so as to strengthen
and defend the open, liberal system that has enriched Asia and led
to decades of general stability. In a world where resurgent author-
itarian powers threaten global peace, Japan’s new realism will help
shape the next decade in the Pacific and ensure that no one power
dominates Asia.∂

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 Return to Table of Contents

The Next Front on

Climate Change
How to Avoid a Dimmer, Drier World
Veerabhadran Ramanathan, Jessica Seddon,
and David G. Victor

A
fter dithering for decades, governments finally seem to be pay-
ing serious attention to the problem of global climate change.
Late last year, at the Paris climate conference, they adopted a
major new agreement to limit global warming, beginning a process to
strengthen commitments to reduce greenhouse gas emissions over time.
For many observers, the promises of the Paris conference offer too little,
too late, because emissions are high and still rising and because there will
be major disruptions to the climate even if countries meet their emissions-
reduction pledges. Nevertheless, it had been 18 years since the world’s
governments left a major climate summit with an agreement in hand, so
just getting to yes in Paris has offered climate diplomacy fresh credibility.
Until now, governments have focused on limiting the greenhouse
gases that cause global warming and its attendant hazards, such as rising
sea levels and stronger storms. But there is more to climate change than
higher temperatures. Many of the activities that cause greenhouse gas
emissions—burning coal for power, diesel for transport, and wood for
cooking, for example—also yield ultra-small particles known as aerosols,

VEERABHADRAN RAMANATHAN is Distinguished Professor of Atmospheric and

Climate Sciences at the Scripps Institution of Oceanography at the University of California,
San Diego.
JESSICA SEDDON is Founder and Managing Director of Okapi Research and Advisory
and a Senior Fellow at the Centre for Technology and Policy at the Indian Institute of
Technology Madras.
DAVID G. VICTOR is a Professor at the School of Global Policy and Strategy at the
University of California, San Diego, and the author of Global Warming Gridlock: Creating
More Effective Strategies for Protecting the Planet.

March/April 2016 135

Veerabhadran Ramanathan, Jessica Seddon, and David G. Victor

which blanket vast areas in a haze that blocks and scatters sunlight. By
reducing the solar energy that reaches the earth’s surface, aerosols
reduce evaporation and slow the water cycle that governs where, when,
and how much rain falls.
For years, climate scientists have believed that a warmer world would
be wetter, because higher temperatures hasten evaporation and increase
rainfall. But even when these higher temperatures are accounted for, a
world dimmed by aerosols will in fact be drier in many places—including
some areas, such as the Sahel and other regions in sub-Saharan Africa,
that have long suffered from drought because they rely on rainfall to
sustain subsistence agriculture. According to many of the most reliable
models, such as those produced by the National Center for Atmospheric
Research and Princeton University’s Geophysical Fluid Dynamics
Laboratory, China, North America, and South Asia are also in danger
of more frequent and severe droughts owing to aerosols. Indeed, for
much of the world, aerosol-induced dimming and drying are among the
most immediate dangers posed by pollution.
The good news is that swift action on aerosols is possible, with huge
potential benefits. Many of the tools needed to make rapid cuts to aero-
sol emissions are already available, and policymakers around the world—
notably in Europe and the United States, and also in East Asia—have
shown how to use them. Since aerosols have a short atmospheric life
span, the climatic benefits of emissions cuts would appear quickly, within
only a couple of decades. What is more, speedy action on aerosols would
bring huge global health benefits: roughly seven million people die each
year from causes related to particulate pollution, and cutting down on
aerosols would dramatically reduce the death toll. In light of these
potential benefits, governments around the world should ensure that
aerosols play a central role in their environmental policies by encouraging
the development and deployment of cleaner technologies for power gen-
eration, transportation, and household cooking, heating, and lighting.
Measures to limit aerosol pollution tend to receive less public attention
than the broader campaign against greenhouse gases, but they, too, should
be an essential component of global action against climate change.

DIMMER AND DRIER

Climate scientists have known about the dimming effect of aerosols
since at least the 1970s, but most research has focused on their effects
on temperature. Darker aerosols, such as diesel soot and other kinds

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 The Next Front on Climate Change

Throwing shade: a farmer burns paddy husks in Chandigarh, India, October 2003
of black carbon, absorb sunlight and accelerate warming. But lighter
aerosols, such as the sulfates and nitrates formed from coal, gasoline,
and other fuel emissions, cool the planet by reflecting sunlight back
into space. That explains, in part, why the world hasn’t seen more of a
temperature increase from the greenhouse gases already present in
the atmosphere. (This masking effect is powerful enough that some
advocates of geoengineering have proposed injecting more reflective
aerosol particles into the atmosphere in order to cool the earth.)
Focusing on how aerosols affect temperature, however, has distracted
policymakers from the important and distinct effects that aerosols
have on the water cycle. These effects are most pronounced in the
Northern Hemisphere, which is the source of most of the world’s
aerosols and thus suffers the most dimming from these pollutants.
But because air currents tend to carry pollution, water droplets, and
water vapor far from their origins, aerosols produced in one region
can also affect rainfall far afield.
REUTE RS / KAMAL KISHO RE

Since the 1880s, when reliable record keeping began, global tempera-
tures have increased by about 0.9 degrees Celsius. And as the planet
has warmed, rainfall at latitudes above 45 degrees has generally
increased. But twice since the mid-twentieth century, surges in aerosol
emissions have significantly disrupted this pattern, reducing rainfall
in a number of regions.

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Veerabhadran Ramanathan, Jessica Seddon, and David G. Victor

The first disruption was the result of the sulfur dioxide emissions
produced by the massive combustion of coal and other fuels across
Europe and North America in the mid-twentieth century, driven by
rapid industrial growth after World War II. From the 1950s to the late
1980s, global emissions of sulfur dioxide
In 2010, China and India (which in the atmosphere becomes
sulfate, a reflective aerosol) nearly dou-
received between ten and bled, reducing the amount of sunlight
15 percent less sunlight than reaching the earth’s surface by about
they did in 1970. two percent, on average. As a direct
result of this dimming, average rainfall
in the Northern Hemisphere declined by
between three and four percent over the same period. Indeed, there is
strong evidence that sulfur dioxide emissions in the United States and
western Europe contributed to the Sahelian megadroughts that began
in the 1960s and continued through the 1990s, a period during which
precipitation in the Sahel and some other parts of sub-Saharan Africa
fell by between 25 and 50 percent relative to twentieth-century averages.
Thanks to stringent air pollution laws introduced in the 1970s and
strengthened steadily in the following years, the blanket of aerosols
over Europe and North America has thinned since the 1980s. From 1980
to 2000, the average amount of sunlight that reached the earth’s surface
in these regions increased by about four percent—enough to lift average
annual precipitation on land areas in the Northern Hemisphere by a
similar magnitude.
A second surge in aerosols is now playing out in East Asia and
South Asia. These regions, which have rapidly industrialized over the
past four decades, have seen a two- to fourfold increase in sulfur dioxide
and black carbon emissions since the 1970s. As a result, in 2010, China
and India received somewhere between ten and 15 percent less sunlight
than they did in 1970. As the wind has carried sulfates and black carbon
over thousands of miles, the dimming effect has extended to the atmos­
phere over the Indian Ocean, reducing the evaporation of seawater and
thus weakening the monsoons that bring much-needed water to East
Asia and South Asia every year. From 1950 to 2002, the most recent pe-
riod for which estimates are available, there was a seven percent decrease
in average annual rainfall over the Indo-Gangetic Plain, the fertile belt
of land crossing eastern Pakistan, northern India, and Bangladesh that
is home to more than one billion people, many of them dependent on

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 The Next Front on Climate Change

rain-fed agriculture. Over the same period, summer monsoon rainfall

in parts of northern China decreased by more than ten percent.
The desiccation of China’s north and the region’s recent drought, in
2010 and 2011, have affected not only agriculture but also other water-
dependent activities, such as hydroelectric power generation. The
consequences have worried Chinese authorities to such a degree that
they are building canals and pipelines that will eventually divert some
1.6 trillion cubic feet of water to the region each year. Some of China’s
repressive policies toward water-rich Tibet are motivated by the
Chinese government’s desire to maintain control over the nation’s
fragile water supplies and their hydropower potential.
China has the capacity and the financial means to protect itself from
erratic precipitation by investing in water infrastructure. So do other
relatively wealthy countries, which can also respond to droughts by
importing more water-intensive products and refocusing domestic eco-
nomic activity on crops and industries that are less dependent on
precipitation. Strategies such as these, along with aggressive measures
to improve water-use efficiency, have allowed California, for example, to
grow its economy even as it suffers its worst drought in modern history.
But things are different in much of the developing world, where
water infrastructure and state capacity are more limited and a higher
proportion of the population depends on locally sourced food pro-
duced on rain-fed land. In South Asia, for example, 60 percent of the
agricultural land is rain-fed. That proportion reaches 90 percent in
Latin America and 95 percent in sub-Saharan Africa. Many countries
in these regions can’t easily turn to infrastructure and trade to solve
their food production problems because of limited budgets and
because they lack the capacity to rapidly shift production to new crops
and industries. And many of these countries are particularly dependent
on agriculture: nearly half of all employment in India is in farming,
and even in richer Brazil, agricultural laborers account for 15 percent
of the work force. All told, more than 400 million farmers, along with
their dependents, count on rain-fed agriculture for their livelihoods.
Countries such as Brazil, Colombia, Sudan, and Zimbabwe, which
rely on hydropower for between 60 and 80 percent of their electricity
generation, face additional risks from the dimming.
Forty percent of the world’s population is already expected to live
under severe water stress by 2050. That proportion will likely increase
as aerosol-induced dimming further disrupts the water cycle. And as

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Veerabhadran Ramanathan, Jessica Seddon, and David G. Victor

governments around the world are beginning to realize, water scarcity

is not only an economic and humanitarian challenge but also a geopo-
litical one: as supplies of fresh water dwindle, states will begin to
jockey for access to them, as they already have, for example, in north-
eastern Africa, where Egypt has squabbled with Ethiopia over its
construction of a massive hydroelectric dam on the Blue Nile.

CLEANING THE AIR

Although the costs of aerosol-induced dimming are high, the policies
needed to reduce the pollution that causes it are relatively clear. Cutting
aerosols will require action in three main sectors: electric power gen-
eration, transportation, and household energy services for the poor.
With regard to electric power generation, most of the concern
about aerosols centers on burning coal, which is responsible for more
than 70 percent of the world’s sulfur dioxide emissions. Given its
environmental and health impacts, conventional coal power is in-
creasingly hard to justify. So if coal is to remain part of the global
energy mix in the coming decades, coal-fired power plants will need
to become more efficient and include equipment to remove sulfur
dioxide and other pollutants from their emissions. As the technology
to do so improves, new coal plants will also need to capture and store
carbon dioxide emissions—an expensive prospect. At the same time,
governments and firms will have to invest more in other energy
sources. Natural gas, which emits much lower levels of most pollutants
(including aerosols) than coal does, is one option, and in North
America, the shale boom has dramatically cut the cost of supplying
it. Making gas friendlier for the climate and the water cycle will
require more work to plug leaks in the natural gas supply and trans-
mission system (since those leaks release methane, a potent green-
house gas), and it will require greater frugality in the use of water to
drill and frack shale gas wells. Of course, there are also many options
beyond natural gas, such as nuclear, solar, and wind power.
Regulators in California and the European Union, meanwhile, have
already pioneered policies that cut aerosol emissions from transporta-
tion. They have mandated cleaner fuels and combustion technologies,
such as low-sulfur diesel and exhaust systems equipped with efficient
particulate filters and catalytic converters. Officials elsewhere should
follow their lead, and they should pair these regulations with rigorous
compliance regimes, which are currently lacking in many countries.

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Eliminating combustion altogether, perhaps through electric vehicles,

could be a next step. In the meantime, subsidy reforms can help limit
the use of some of the dirtiest fuels. Changes to India’s fuel-pricing
regime, for example, have encouraged car buyers there to shift from
diesel to gasoline engines, which emit far fewer aerosols. Transition-
ing large commercial and public-transportation vehicles to natural
gas could also help.
Cutting aerosol emissions produced by burning dirty fuels in the
world’s poorest households is another way to reduce global dimming.
Just over one billion people, most of them in the developing world,
rely on kerosene to light their homes, and three billion use solid fuels,
such as crop residue and dung, for cooking and heating. Burning these
fuels with traditional technologies generates aerosols that damage
lungs along with the climate: the particulates emitted by biomass-
based cooking and heating are responsible for about a third of the
dimming in South Asia. Cleaner technologies for cooking, heating,
and lighting, such as energy-efficient cookstoves and solar lanterns,
are readily available, and making them universally accessible would
offer huge health and environmental benefits to the world’s poor. En-
suring such access by 2030 would cost up to $50 billion per year—a
high price, but one that should be manageable if it is shared among a
number of states, including rich countries, which would themselves
benefit from lower aerosol emissions in the developing world.
Since aerosols have a short atmospheric life span, pursuing policies
such as these could significantly reduce global dimming within ten
or 20 years. That would dramatically limit the risk of droughts and
irregular monsoons. It would also heat up the planet by reducing the
atmosphere’s reflective aerosol “mask,” however, so any effort to reduce
global dimming must be accompanied by significant cuts to carbon
dioxide and other greenhouse gas emissions.

ACT FAST
As governments build on what they achieved at the Paris climate confer-
ence, they must set politically feasible targets for future action. Focusing
on aerosols could help. Whereas greenhouse gas emissions will bring
about relatively distant and diffuse dangers, aerosols cause immediate
and localized harm. That should raise the incentives for governments to
act against them, and it should raise the willingness of their constituen-
cies to accept such action. Indeed, in the case of aerosol reductions, the

March/April 2016 141

Veerabhadran Ramanathan, Jessica Seddon, and David G. Victor

parochial interests that have so often stymied broader climate diplo-

macy need not hinder progress. That is why some countries that have
long been reluctant to do much about global pollution—from China and
India to Brazil and the United States—have pursued bolder policies
when it comes to pollutants that have localized effects, such as aerosols.
As states sharpen their pledges to reduce greenhouse gas emissions
in the coming years, they should also make distinct pledges to cut
aerosols. (So far, few states have done so: of the 186 emissions-reduction
pledges submitted before the Paris climate conference, only a handful,
including Chile’s and Mexico’s, mentioned aerosols.) And they should
broadcast the promise of these reductions to build public support for
the policies needed to achieve them. As such policies take hold, they
will generate rapid, tangible benefits, encouraging even more progress
on the changing climate’s other challenges.
Unfortunately, even the most effective climate diplomacy will leave
the world’s poorest states exposed to the higher temperatures, rising
sea levels, and disruptions in rainfall caused by industrial pollution. As
a result, governments will have to work to adapt. Today, the countries
with the highest emissions—among them, China, Japan, the United
States, and the members of the European Union—are on track to raise
around $100 billion per year by 2020, much of which will be used to
help vulnerable states adjust to the dangers of a changing climate.
As for how to spend these funds, a variety of efforts will be needed,
and states should be willing to experiment to determine which programs
work best, sharing the know-how they gain with one another. As
they do so, they should invest in infrastructure and technologies that
address the effects of both warming and dimming, such as irrigation
methods that can better protect farmers from erratic rainfall and
new kinds of drought-resistant crops. Indeed, innovation in water-
conservation technologies remains massively underfunded, despite
their huge promise. Finally, governments should remove protectionist
policies in their countries’ agricultural sectors, which limit the ability
of consumers to access foreign sources of food when erratic rainfall
and higher temperatures harm local production.
The dimming caused by aerosols has already made the world’s water
supplies less secure. It is both economically and technologically feasi-
ble to reverse this process. Doing so will require a concerted global
effort, but failing to do so will compound the risks of drought and
poverty already in store as a result of the world’s changing climate.∂

142 f o r e i g n a f fa i r s
 REVIEWS & RESPONSES
There is plenty to learn from
the Romans—if we have
the courage to entertain the
possibility.
—Michael Fontaine

What Rome Can Teach Us Today A Feminist Foreign Policy

Michael Fontaine 144 Suzanne Nossel 162
TONY GENTILE / REUTERS

Hunger Games Recent Books 168

Douglas Gollin 150
Letters to the Editor 192
Diplomacy Disrupted
Cameron Munter 156
 Return to Table of Contents
What Rome Can
Teach Us Today
Ancient Lessons for
Modern Politics
Michael Fontaine
SPQR: A History of Ancient Rome
BY MARY BEARD. Liveright, 2015,
608 pp.
A
ncient Rome was a village that
grew into a world empire. At
the peak of its territorial reach,
ad 117, it stretched from the British Isles
to Mesopotamia and from the Rhine to
the Sahara. Its history spans more than
a millennium. Before the Western Roman
Empire collapsed in the late fifth century,
Romans enjoyed a standard of living
not seen again in the West until the
mid-nineteenth century. They had flush
toilets, granite countertops, indoor
heating, and even cosmetic dentistry.
The government that safeguarded this
way of life styled itself Senatus Populusque
Romanus, or “the Senate and the People
of Rome.” An advertisement for the link
between Rome’s citizens and its elected
leaders, the abbreviation “spqr” was
proudly displayed everywhere.
Rome’s classical era spanned the last
two centuries bc and the first two centu-
ries ad. At the beginning of that period,
MICHAEL FONTAINE is Associate Professor
of Classics at Cornell University. Follow him on
Twitter @M_S_Fontaine.
144 f o r e i g n a f fa i r s
Rome already commanded a sizable
empire, governed by democratic prin-
ciples. By the end of it, Rome had
become increasingly authoritarian but
was still at peace internally. Engineer-
ing, literature, philosophy, theater, and
the arts flowered; with lasting effects,
Romans crucified Jesus and destroyed
Jerusalem’s Second Temple. The events
and personalities that populated this
age are Rome’s most famous.
Historians usually justify the decision
to write a new account of familiar events
by emphasizing the discovery of sources
that challenge or clarify the conventional
understanding. That is not the case with
SPQR, Mary Beard’s retelling of Roman
history from its origins through the end
of the classical period. What makes Beard’s
effort so compelling nonetheless is the
contemporary, politically charged idiom
in which the Cambridge don recasts an
old story. SPQR is a translation of Roman
history into the English of today—into
the phrases and patterns of thought that
we absorb from mass media and that
bring order and meaning to our lives—
and Beard’s genius is in using this idiom
alone, rather than outright comparison,
to suggest ancient parallels with the
politics and controversies of the twenty-
first century. Her book thus offers insights
into not only Rome’s history but also
the challenges of the present.
ROMANS—THEY’RE JUST LIKE US!
Take Beard’s treatment of Romulus,
Rome’s legendary first king. When his
mother, a virgin priestess, first became
pregnant, she accused Mars, the Roman
god of war, of raping her. When Romulus
and his twin brother, Remus, were born,
their great-uncle, who had seized the
throne from the boys’ grandfather and

feared that they would grow up to
threaten his hold on power, sent gov-
ernment agents to kidnap them and
then abandon them in a reed basket in
the Tiber River. But the government
men botched their job: rather than
dying, the twins were soon discovered
by a she-wolf, who suckled them back to
health. According to legend, Romulus
went on to found Rome, establish its
government, and, on his death, ascend
into heaven.
Beard’s retelling does more than just
conjure up the obvious biblical parallels
with the Virgin Birth, Moses’ reed
basket, and the Ascension. It evokes con-
temporary concerns, such as conten-
tious accusations of rape (Beard uses
that term rather than the euphemisms,
such as “abduction” or “seduction,”
preferred by some historians of Rome)
and the incompetence of government
officials. By describing the layers of
telling and retelling in Roman sources
that obscure the details of the Romulus
story, Beard adopts a detachment from
her subject that invites readers to share
her skepticism. And when she points
out that even many Romans disbelieved
their city’s founding myths, she makes
us wonder whether we today are any
savvier than the men and women who
lived two millennia ago.
Or consider the emperor Augustus’
clever use of institutional reforms toward
the end of the first century bc to disem-
power potential rivals in the military
and the Senate. Beard’s telling evokes
the dangerous consequences of U.S.
military interventions in the Middle
East. “As is often the case in regime
change,” she writes, “the new guard is
more or less forced to rely on a care-
fully reformed version of the old guard,
What Rome Can Teach Us Today
or—as we have seen in recent history—
anarchy can result.” Beard does not
need to explicitly mention Iraq or
Libya to make her point.
Nor does she need to reference
today’s U.S. Congress to make readers
appreciate the subservience of a Roman
senator who, when asked to vote on a
matter in an open ballot by the emperor
Tiberius, responded, “Could you tell
me in what order you will cast your
vote, Caesar? If you go first I shall have
something to follow. If you go last of
all, I fear I might find myself inadver-
tently on the wrong side.” The anecdote
can’t help but make one think of the
servility of some members of the U.S.
Congress to powerful special interests
such as the National Rifle Association.
In similar ways, Beard’s discussion of
the debate over 4,000 “stateless” sons of
Roman soldiers and Spanish women in
171 bc conjures up the rancor surround-
ing so-called anchor babies today, and
contemporary arguments about undocu-
mented immigration lurk just beneath
the surface of her discussion of a speech
that Marcus Tullius Cicero gave in 62 bc
to defend the right of Archias, an ethnic
Greek, to Roman citizenship. We even
hear echoes of the frequent denuncia-
tion of so-called political correctness
by today’s conservatives in comments
made by Cato the Younger the year
before Cicero’s speech, in 63 bc. “Long
ago we lost the real names of things,”
Cato warned. “Giving away other people’s
money is called ‘generosity.’ Flagrant
misbehavior is called ‘courage.’ We’ve
reached the tipping point and it’s killing
our country.”
Not all of SPQR’s contemporary
resonances relate to U.S. politics.
Beard sees Rome’s early kings as
March/April 2016 145
warlords, foreign delegations
to Rome’s imperial adminis-
tration as ethnic lobbies,
triumvirates as juntas,
Rome’s masses as its “99
percent,” and the destruc-
tion of Cicero’s house by his
enemy Clodius in 58 bc as a
retributive demolition. She
even writes about crimes
against humanity—a cat-
egory in which she includes
the atrocities Julius Caesar
committed during his con-
quest of Gaul.
Beard has written a kind
of history as irony that makes
comparisons between Roman
and modern politics inevi-
table. Nowhere is this clearer
than in when she chooses to
start and end her narrative.
Although Rome’s origins
date to the eighth century bc,
Beard begins SPQR in 63 bc,
with Cicero—an Obama-like
political outsider (he was the
first in his family to achieve
high office and was born in
the provinces) with an
Obama-like gift for rhetoric. and joined his paramilitary supporters
That was the year Cicero took office as in Tuscany.
consul of Rome—a political position These events left Rome’s govern-
that resembled the U.S. presidency— ment in a bind. The conspirators had
and then discovered a terrorist plot to confessed, and there was evidence of
assassinate him and his co-consul and their guilt, but because they had been
burn down the city. Relying on the stopped before they could carry out
word of informers, Cicero arrested a their plan, it wasn’t clear what should
group of young men who admitted be done to them. Under Roman law,
their involvement in the conspiracy. they were entitled to a trial, but with an
But despite the arrests, Rome was unknown number of their coconspirators
gripped by panic: no one knew how still at large, there seemed to be no time
far the conspiracy extended, and its for such niceties. The Senate met to
leader, Catiline, managed to slip away discuss its options; the ensuing debate

146 f o r e i g n a f fa i r s
 immediately; that was the best
way for Rome to project strength
and persuade the other conspir-
ators to give up and go home.
The problem with Cato’s idea,
however, was that it was illegal.
If his argument nonetheless
sounds familiar, that’s because it
is. Days before the first anniver-
sary of 9/11, Condoleezza Rice,
then the national security adviser
to U.S. President George W.
Bush, appeared on television to
sell the idea of invading Saddam
Hussein’s Iraq. “The problem
here,” she mused on cnn, “is
that there will always be some
uncertainty about how quickly
[Saddam] can acquire nuclear
weapons. But we don’t want the
smoking gun to be a mushroom
cloud.” Just like Cato’s, her
implication was clear: speedy
preemptive action was the only
way to prevent an irreparable
catastrophe.
Caesar, then a senator,
answered Cato’s proposal with
an objection that should be
equally familiar. “Many mortals
is what Rome’s greatest historian, Sallust, remember only what comes last,
later made the centerpiece of his account and in the case of heinous individuals,
of the episode. “In the case of other they forget their crime and talk only of
offences,” thundered Cato the Younger, the punishment they have received, if it
in the same speech in which he denounced was a little too severe,” he said—lines
his contemporaries’ tendency toward that echo the argument against torture
euphemism, “you can proceed against made by U.S. Senator John McCain in
them after they have been committed; 2005. “Prisoner abuses . . . inevitably
with this, unless you make sure it doesn’t become public,” McCain wrote, “and
happen, there’s no point appealing to when they do they threaten our moral
the laws after it’s happened. Once a city standing, and expose us to false but
has been taken, nothing is left to the widely disseminated charges that democ-
vanquished.” The thing to do, Cato racies are no more inherently idealistic
suggested, was to execute the plotters and moral than other regimes.”

March/April 2016 147

Michael Fontaine
Beard’s endpoint, in the third cen-
tury ad, is also arresting. In 212, only
around 20 percent of the free inhabitants
of the Roman Empire were citizens. That
year, the 24-year-old emperor Caracalla
unilaterally granted citizenship to all those
free subjects who had not yet received
it—without asking old-stock Romans
how they felt about the extension. Two
decades later, Rome descended into a
half century of economic depression,
violence, and political anarchy that
historians call “the crisis of the third
century,” an upheaval that ended when
the warlord Diocletian defeated his
rivals and imposed a new and Orwellian
political order on Rome. Because Beard
alludes to this aftermath only briefly,
it is impossible to know whether she
considers it related to Caracalla’s deci-
sion. Yet the connections among immi-
gration reform, prosperity, and stability
are no less relevant today, and it is pre-
sumably these dynamics that Beard
wants readers to consider.
WHEN IN ROME . . .
In light of ancient Rome’s enormous
influence on the development of Euro-
pean political and cultural thought in
the centuries that followed its collapse,
the study of Roman history can reveal
much about the underpinnings of today’s
West. It should come as no surprise,
then, that in SPQR’s conclusion, Beard
writes that “we have an enormous amount
to learn—as much about ourselves as
about the past—by engaging with the
history of the Romans, their poetry
and prose, their controversies and
arguments.” Yet Beard’s disclaimer in
the same passage, that “I no longer
think, as I once naively did, that we
have much to learn directly from the
148 f o r e i g n a f fa i r s
Romans,” should be judged more
critically. It is true that the distance
between the material and social conditions
of ancient Rome and those of the modern
West is enormous: ancient Romans, for
example, no more contemplated abolish-
ing slavery or enfranchising women than
most twenty-first-century Americans
contemplate abolishing marriage. But
the outsize extent to which republican
Rome’s political system served as a model
for that of the United States never-
theless allows for the application of
lessons from Roman history to the
challenges of the present.
The founders envisioned the young
United States as an heir to the Roman
Republic, and the United States’ system
of checks and balances; its freedoms
of conscience, divorce, and speech; its
competitive elections; its rule of law;
and its enshrinement of peaceful transi-
tions of power are all partly descended
from the Roman example. Like the
Roman Republic did, the United States
governs overseas territories through
republican institutions; like Rome, as
e pluribus unum, the Latin motto on the
U.S. dollar bill, suggests, Washington
prefers national unity to imperial diver-
sity, encouraging assimilation by choice.
Such features are relatively uncommon
in world history, and it is even more
unusual to find them in a single coun-
try. From this point of view, the United
States is more like republican Rome
than it is like many of the past century’s
authoritarian states.
Like the contemporary United
States, Rome was made up of a cultur-
ally and ethnically diverse population,
and like some Americans today, some
prominent Romans doubted the loyalty
of certain minority groups. In the year
 What Rome Can Teach Us Today

111, for instance, Pliny the Younger, gers. And the emperor Theodosius’
then the governor of Bithynia, a Roman decree of ad 380, which required all
province in northwestern Anatolia, Roman subjects to believe in the
encountered the adherents of a strange Christian Trinity and led inevitably to
and relatively new religion called the persecution of religious dissidents,
Christianity, then still illegal under should remind us to be wary of politi-
Roman law. Pliny felt bound to subject cians who seek to prohibit the expres-
the Christians to loyalty trials, and he sion of an unpopular belief or mandate
wrote a letter to the emperor Trajan the acceptance of a popular one.
asking whether the ad hoc procedures There is in fact plenty to learn from
he had adopted, among them making the Romans—if we have the courage to
use of an anonymously provided list entertain the possibility. Viewed in this
of alleged local Christians, were accept- light, SPQR is a broad introduction to
able. The emperor’s reply was remark- the best thousand years of Roman history
able. The Christians “must not be hunted that proves why, as Beard writes on its
out,” he wrote. “If they are brought before first page, “Rome is important”—and
your court and the case against them is reminds us why it is particularly
proved, they must be punished. . . . important now.∂
But anonymous lists must not have any
place in the court proceedings. That
would set a terrible precedent. It’s
un-Roman.” Despite Rome’s official
intolerance of Christianity, Trajan’s
lesson is worth remembering: strong
state values can be invoked to avoid
setting particularly disastrous prec-
edents in the treatment of marginalized
minority groups. Nor is this the only
lesson that Roman history offers the
present. Rome’s difficult campaign
against the North African kingdom
of Numidia in the second century bc
illustrates that protracted wars against
distant, poorly understood enemies often
bring military victories with crippling
costs in blood, treasure, morale, and
military overexpansion. The aftermath
of Rome’s final victory over Carthage,
in 146 bc, is a reminder of the challenges
of hegemony in a newly unipolar world:
in Rome, domestic strife filled the void
opened up by the disappearance of an
external enemy, and minor threats took
on the appearance of existential dan-

March/April 2016 149

 Return to Table of Contents
Hunger Games
A History of Famine
Douglas Gollin
Eating People Is Wrong, and Other Essays
on Famine, Its Past, and Its Future
BY CORMAC Ó GRÁDA. Princeton
University Press, 2015, 248 pp.
N
early 3,000 years ago, according
to the Old Testament, an army
of Arameans, led by King
Ben-hadad, besieged the West Bank city
of Samaria. Cut off from its agricultural
hinterlands, the city soon ran out of food.
In desperation, many people appear to
have resorted to consuming barely edible
sources of nutrients, including “dove’s
dung” and the scraps of flesh that they
could scavenge from donkeys’ skulls.
Eventually, even those grew scarce, and
the Bible recounts that the starving
inhabitants of the city turned to killing
and eating their own children.
Such a grotesque story could be
written off as the result of authorial
license or historical error. But as the
economic historian Cormac Ó Gráda
writes in his new book, Eating People
Is Wrong, evidence of famine-induced
cannibalism abounds, even in the past
century. Separating truth from fiction
can be difficult, and narratives of canni-
balism are inevitably subject to political
bias, but Ó Gráda is a careful investigator,
DOUGLAS GOLLIN is Professor of Develop-
ment Economics at the University of Oxford.
150 f o r e i g n a f fa i r s
closely examining history for what he
refers to as “famine’s darkest secret.”
In truly desperate times, Ó Gráda
writes, people’s animal instincts can
overcome even the sturdiest veneer of
civilization. Cannibalism appears to
have reared its head in the massive
Soviet famines of the 1920s and 1930s
in Belarus, Moldova, Ukraine, and
elsewhere, which have been detailed in
many places, including in the historian
Timothy Snyder’s book Bloodlands:
Europe Between Hitler and Stalin.
Cannibalism may headline Ó Gráda’s
book, but it is the subject of only his
first essay. The rest of the collection
ranges widely, exploring the root causes
of food shortages and investigating how
to prevent them. One essay examines
how famines can arise from government
negligence; another highlights the impor-
tance of defining and understanding
famine as distinct from chronic hunger.
Taken together, the essays offer fresh
and provocative insights. The book is
uneven—some chapters will be dense
for a reader without a background in
economics or statistics; other chapters
are more accessible. The book does not
aim to be comprehensive or to present
a unifying theoretical or analytic frame-
work. Yet this new work still adds signifi-
cant value. Ó Gráda argues persuasively
that famines can result from bad data
and government inaction in addition to
political malfeasance. He emphasizes
the importance of gathering accurate
information on crop yields and food
consumption. He also warns that aid
agencies and relief organizations some-
times conflate famines with the more
systemic problem of food insecurity,
which makes aid less effective in both
cases. His book is especially relevant

Empty bellies: drought victims in the Indian state of Orissa, 1977
today. As climate change and population
growth place global food systems under
increasing stress, a thorough understand-
ing of the causes and consequences of
famines will arguably be more important
than ever.
HOW FAMINES START
Ó Gráda argues that some very poor
economies are especially vulnerable to
famines. In places where the level of
food consumption is already low, even
small shocks—a shortfall in food pro-
DINO DIA PHOTOS / G ET TY IMAG ES
duction, for example, or a disruption
in the supply chain—can lead to a
full-scale crisis.
This may seem like an obvious point,
but it represents a small yet significant
departure from the influential scholarship
of the Nobel Prize–winning economist
Amartya Sen. In Poverty and Famines,
one of the most important books on the
Hunger Games
subject, Sen’s great contribution is to
point out that supply shortfalls do not
automatically lead to consumption
shortfalls and that famines cannot easily
be explained by production failures.
Sen’s argument is based on the observa-
tion that many people do not actually
grow their own food, even in largely
agrarian economies. People instead
acquire food through many other chan-
nels. Some purchase it in the market;
others acquire it through family net-
works or transfers from others in their
community. Governments, too, can play
a role in distributing food, as can non-
governmental organizations of various
kinds. Sen argues that for a famine to
occur, there must be a widespread break-
down that leads to the simultaneous
failure of multiple mechanisms of food
acquisition. In other work, Sen and the
economist Jean Drèze have argued that
March/April 2016 151
Douglas Gollin
famines represent a failure of state and
political institutions; well-functioning
polities do not allow famines to occur.
But that argument assumes that
governments have the capacity to move
food from areas of abundance to areas
of scarcity or to move people from areas
of shortage to areas of plenty. Yet both
frequently prove difficult or impossible.
As Ó Gráda points out, food is heavy,
bulky, and often perishable. Markets do
a good job, generally, of moving food
from farms to cities, albeit with high
transportation costs. But when food
supplies dwindle, famine relief involves
moving food in the opposite direction,
from city warehouses to rural villages,
with costs escalating as the food moves
to more remote areas. This kind of relief
effort is expensive, and it also demands
a high degree of logistical expertise, as
governments try to figure out how much
food to move to different locations.
When it comes to moving people,
governments face different costs—and
different obstacles. Many of the most
vulnerable people, such as the elderly
and the disabled, cannot move easily.
And introducing large numbers of poor
and hungry people to places of relative
abundance risks stoking class tensions
and social unrest.
To be successful, famine relief thus
requires a significant commitment of
resources and political effort. Govern-
ments also need accurate information
about the food supply and demand,
and those in power must be willing to
recognize and act on that information.
Even when governments have the right
intentions, policies may fail if the data
are poor or if policymakers are blinded by
ideology. To be sure, there are cases in
which governments have used starvation
152 f o r e i g n a f fa i r s
as a weapon. But Ó Gráda identifies
a number of instances in which the
blame for a particular famine lay less
with government malevolence than
with negligence.
Consider the great Bengal famine
of 1943. Sen has characterized this
event as a “boom” famine, in which
market forces pulled supplies of food
away from the rural poor and toward
richer urban dwellers whose incomes
had risen, in part due to a wartime
economic expansion.
Ó Gráda does not directly dispute
Sen’s account, but his focus lies else-
where. Ó Gráda argues that the failure
of the policy response to the famine
was due in large part to the unwilling-
ness of British officials to acknowledge
that food supplies were dwindling as a
result of a modest shortfall in produc-
tion. Relying on a belief that markets
would rectify localized shortfalls, policy-
makers chose deliberate inaction. In
Ó Gráda’s account, state and national
leaders maintained that any shortages
were due to hoarding by speculators
rather than to low production. Officials
apparently feared that acknowledging
any production shortfalls would induce
speculators to increase their stores of
grain in the expectation of rising prices.
As a result, the government continued to
trumpet the sufficiency of the food supply
even as the famine began to take hold.
Ó Gráda points out that it was also
politically convenient for the British to
believe that the food supply in Bengal
was adequate, as recognizing shortages
might have required them to divert
shipping and food that were going to
the war effort elsewhere in Asia. There
may also have been an ideological
component to their inaction, as many
believed in the power of markets to
move food from areas of surplus to
those of deficit. Thus, a conjunction
of poor data, political convenience, and
flawed theory shaped the government’s
response. Ó Gráda concludes that the
famine was “the product of the wartime
priorities of the ruling colonial elite.”
Ó Gráda paints a similar picture of the
famine during the Great Leap Forward,
which afflicted China from 1959 to 1961.
Blinded by misleading reports of massive
agricultural surpluses, Chinese govern-
ment officials believed the country had
entered a new era of abundance. In 1958,
according to the economists Gene Hsin
Chang and Guanzhong James Wen,
Chinese leaders predicted that the
Communist Party’s economic and social
initiatives would nearly double grain
production within the year, thanks to
unprecedented (not to mention biologi-
cally impossible) crop yields. Provincial
officials, not to be outdone by rival
regions, raced to show that the produc-
tivity increases in their own regions
matched the national reports, producing
ever more inflated statistics and obscuring
the warning signs of famine.
Other famines have followed a similar
pattern, and often indifference or out-
right antipathy toward poor people has
compounded the problem. During the
Russian famine of 1891 and 1892, for
example, Leo Tolstoy wrote that elites
believed “that the masses [were] poor
because they [were] lazy and drunkards.”
No wonder the tsar’s government was so
slow to act.
A DEARTH OF DATA
In some cases, the problem is simply
that the relevant data do not exist.
Some governments do not collect data
153
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Douglas Gollin
that could help identify the warning
signs of famine, and many of those that
do are reluctant to publicize or share
the information due to political sensi-
tivities. The North Korean government,
for example, has long been reluctant
to make data on hunger and starvation
publicly available, at least outside the
country. In India, the world’s largest
democracy, the Nobel Prize–winning
economist Angus Deaton has pressed
the government for greater transparency
on data and methodologies related to
the calculation of living standards and
poverty levels. “My work shows how
important it is that independent research-
ers should have access to data, so that
government statistics can be checked,
and so that the democratic debate within
India can be informed by the different
interpretations of different scholars,”
Deaton wrote in an October 2015
op-ed in The Hindu. But such data
remain highly sensitive.
In other parts of the world, the dearth
of data owes less to government opacity
than to the logistical difficulty of collect-
ing information. In many African coun-
tries, systematic data on food production
and availability are limited and often of
poor quality. Many countries report crop
yields using crude estimates based on
isolated and anecdotal reports instead of
deriving their figures from exact measures
taken at harvest time from a represen-
tative sample of farms. Of course, the
logistical and technical capacity required
for such calculations should not be
underestimated: they would necessitate
collecting samples during the harvest
from hundreds of farm plots across
the country.
In the absence of reliable data,
famine monitoring involves finding
154 f o r e i g n a f fa i r s
ways to measure food availability
indirectly, using price data, for example
(although prices can vary due to non-
food-related factors, such as transporta-
tion costs). Although new technologies—
such as cell phones, which can be used
to survey market traders as a way to
spot food shortages and price spikes—
offer some promise, the evidence is
not yet clear on whether they can
reliably identify production shortfalls
or food shortages.
FAMINE VS. CHRONIC HUNGER
The dearth of data poses significant
challenges for governments and inter-
national organizations as they seek to
gauge the scale and significance of food
shortages. But those players are them-
selves part of the problem. Ó Gráda
points out that over the past several
decades, aid agencies and relief organi-
zations have tended to overstate the
severity of food shortages in Africa
and have consequently conflated
chronic hunger and food insecurity
with acute crises and famines.
The distinction between famine and
chronic hunger is not merely semantic.
Famines call for the rapid provision of
relief services and food aid; chronic
hunger requires longer-term invest-
ments in development and agricultural
productivity. Citizens of rich countries
tend to be more sympathetic toward
famine relief than toward long-term
development aid, Ó Gráda notes,
spurring the growth of a development
industry that has financial incentives
to blur the distinction between the two.
But fuzzy thinking has the potential
to lead to bad outcomes. As Ó Gráda
writes, most economists believe that
food aid can be a valuable tool in crisis

situations and for famine relief—but
that it can have a negative effect if it
becomes institutionalized and begins
to undercut the incentives for domestic
food production.
If the development industry continues
to confuse chronic hunger with famine,
humanitarian organizations may misal-
locate resources—to tragic effect. Instead
of bolstering efforts to improve agricul-
tural productivity or to create employment
opportunities outside of farming, devel-
opment spending may go toward short-
term fixes and short-lived projects that
do not address the deeper, structural
causes of hunger and food insecurity.
Funding for aid depends on the
willingness of ordinary people to spend
money—either directly or through their
government—for the benefit of people
and communities they will never directly
encounter. The outpouring of charitable
giving in rich countries in response to
famines, natural disasters, and other crises
represents a triumph of civic morality
and a reflection of the power of commu-
nications technology. But this charitable
impulse is fragile, as is clear from surveys
that suggest that people remain deeply
suspicious of foreign aid and routinely
overestimate how much their government
spends on it.
In the meantime, governments and
relief organizations must deepen their
evidence base on food production and
food availability. The challenge is not
new. In fact, Tolstoy identified it as
far back as 1892, in a report on the
Russian famine:
If our education and learning is of
any avail to us, what greater good
can it do than avert such a universal
calamity as is the present one?
Hunger Games
To figure out how much corn is
needed for the support of those who
have none in this present year, and
how much corn there is in Russia,
and if there is not enough of it to go
around, to order the necessary corn
from abroad,—all that is our direct
duty. . . .
. . . Is this really so difficult? We,
who know how to figure out how
many different kinds of bugs there
are in the world, how many microbes
there are in a given area, how many
millions of versts it is to the stars,
and how many pounds of iron and
of oxygen there are in each star,—
shall we not be able to figure out how
much people must eat in order not to
starve, and how much has been
harvested . . . ?
As the world struggles to adapt to
a changing climate, and as the global
population heads toward nine billion,
the need for accurate data, clearheaded
analysis, and deep thinking about food
availability and famine will increase
dramatically. Ó Gráda’s book offers a
sobering reminder of the importance of
making judgments based on good data
and unhindered by ideological filters.∂
March/April 2016 155
 Return to Table of Contents
Diplomacy
Disrupted
Foreign Policy in a
Decentralized World
Cameron Munter
Worldmaking: The Art and Science of
American Diplomacy
BY DAVID MILNE. Farrar, Straus and
Giroux, 2015, 624 pp.
L
ast December, during a debate
among the Republican candidates
for the U.S. presidency, Senator
Ted Cruz attacked the idea that the
United States should pursue regime
change in Syria. If Washington tries to
topple Bashar al-Assad, Cruz warned, the
jihadists of the self-proclaimed Islamic
State (also known as isis) “will take over
Syria, and it will worsen U.S. national
security interests.” Cruz suggested a
different plan: “Instead of being a Wood-
row Wilson democracy promoter, we
ought to hunt down our enemies and kill
isis rather than creating opportunities
for isis to take control of new countries.”
Americans are often faulted for their
indifference to (or ignorance of) history.
Yet a disparaging reference to Wilson,
who served as U.S. president a century
ago, can still score points during a
political campaign.
CAMERON MUNTER is President and CEO of
the EastWest Institute and was U.S. Ambassa-
dor to Serbia from 2007 to 2009 and U.S.
Ambassador to Pakistan from 2010 to 2012.
156 f o r e i g n a f fa i r s
Indeed, Wilson’s ideas are particularly
relevant and contentious today. In the
years before Wilson came to power, many
American elites subscribed to the views
of the influential naval theorist and
strategist Alfred Thayer Mahan, who
argued that the United States should focus
narrowly on keeping its borders safe, its
commercial interests unchallenged, and its
navy dominant while avoiding ambitious
overseas interventions. Wilson ultimately
came to champion a stark alternative to
that view. After the catastrophe of World
War I, he pronounced interest-based
approaches such as Mahan’s to be morally
bankrupt and instead sought to remake
the world in the democratic, capitalist
image of the United States. Wilson’s
foreign policy ended in disappointment
with the failure of his brainchild, the
League of Nations. Yet as the post-9/11
era has demonstrated—and as Cruz’s
dismissal highlighted—Wilsonianism is
still very much alive.
The legacy of such ideas is the subject
of Worldmaking: The Art and Science of
American Diplomacy, a fine new history
of U.S. foreign policy and diplomacy
from the late nineteenth century to
the present by the British diplomatic
historian David Milne. “U.S. foreign
policy is often best understood as
intellectual history,” writes Milne. To
grasp the United States’ actions in the
world, Milne argues, it is essential to
understand the differing philosophies,
competing academic disciplines, and
varied life experiences that have in-
formed the advice its policymakers
have dispensed.
Milne’s book assesses the ideas and
actions of nine thinkers, from Mahan to
President Barack Obama and including
figures such as the journalist Walter

Lippmann and the former secretary of
state Henry Kissinger. The book’s careful
historical accounts are rich in insight
and provide extraordinary contextual
breadth. But its subtitle is misleading:
Milne focuses far more on foreign policy
than on diplomacy, and the two are not
at all the same thing. Lippmann never
delivered a démarche, nor did Mahan
ever approve a visa. And although the
ideas of elite policymakers in Washing-
ton have undoubtedly been important
in the course of U.S. history, other
streams of thought and action flow
outside the nation’s capital.
This is especially true now. A new,
decentralized diplomacy has emerged,
driven by mass communications, eco-
nomic change, and the expanding global
reach of institutions as varied as busi-
nesses, charities, and crime cartels.
Officials and policymakers no longer
have a monopoly on information. Advo-
cacy organizations, consulting firms,
and philanthropic foundations perform
many traditional diplomatic functions.
In the future, the beliefs and preferences
of a handful of advisers and leaders will
not shape American diplomacy (or
foreign policy, for that matter) quite
as profoundly as in previous eras.
Diplomacy has broken out of its
traditional restrictions and become more
creative, flexible, and democratic. It has
become easier for dissidents to under-
mine the grand schemes of elites. Official
diplomats will have to adapt to this new
world if they wish to be effective in
years to come.
ARTISTS AND SCIENTISTS
Worldmaking begins in 1949 with the
debate over whether the United States
should develop the hydrogen bomb in
Diplomacy Disrupted
response to the Soviet detonation of
an atomic device. George Kennan, the
director of policy planning at the State
Department, argued against it, drawing
on history, literature, and ethics to make
his recommendation; his deputy, Paul
Nitze, disagreed, basing his view on
“science and strategic balance.” Nitze’s
advice carried the day.
Milne uses this debate to distinguish
between foreign policy “artists” and
foreign policy “scientists.” The artists,
who include Mahan, Lippmann, Ken-
nan, Kissinger, and Obama, are drawn
primarily to literature, philosophy, and
history. They are cautious in the face
of complexity, dismissive of abstract
theorizing, and skeptical of the extent
of their power. They confront the world
as it actually is.
The scientists, who include Wilson,
Nitze, and former Deputy Secretary of
Defense Paul Wolfowitz, favor theory,
like to analyze underlying patterns rather
than surface phenomena, and are more
inclined to try to remake the world.
This art-versus-science dichotomy
runs throughout Milne’s account, but
it’s a somewhat artificial organizing
device. Numerous other binaries recur—
including the long-running split between
idealists, who often draw inspiration
from Wilson’s robust and morally engaged
internationalism, and realists, who share
Mahan’s belief that states should seek
to maximize their power in an anarchic
world. Still, Milne readily admits that
no category is absolute, and one of the
strengths of his book is the way it
demonstrates how historical context,
human nature, and the propensity of
individuals to change their minds
frustrate all attempts to confine policy-
makers to one category or another.
March/April 2016 157

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158
For instance, Kennan, a statesman
commonly identified as a realist and
whom Milne dubs “the consummate
foreign-policy artist,” called for collec-
tive action at the end of the Cold War
to rid the world of nuclear weapons
and to respond to the threat of environ-
mental devastation. During testimony
before the Senate in 1989, he stated,
“I was long skeptical about Wilson’s
vision. . . . But I begin today . . . to
think that Wilson was way ahead of his
time in his views about international
organization.” This was a far cry from
the realism of Kennan’s famous 1947
“X” article, in which he outlined the
strategy of containment.
And Milne’s categories create
unlikely alliances. He groups Wilson
with Nitze, who was hardly a progressive
internationalist, because both sought
to understand the underlying causes of
historical events and applied U.S. foreign
policy to remake significant parts of the
world. Wilson’s belief that the United
States could make fundamental changes
to the structure of world affairs owed
much to a conception of foreign policy
as a science; so, too, did Nitze’s idea of
the “correlation of forces,” the study of
the ratio between the United States’
military capabilities and those of its
competitors. And although figures such
as Kissinger believe that history is the
discipline that sheds the most light on
international events, for Nitze, “too
much history leads to amateurism.”
Milne’s chapter on Wolfowitz illustrates
how these typologies transcend ideologi-
cal lines. In Milne’s view, Wolfowitz, who
served as deputy secretary of defense in
the George W. Bush administration, is a
“scientist” like Wilson and Nitze (he has
a Ph.D. in political science), although

Have your people talk to my people: diplomats at the UN in New York, September 2015
unlike Wilson, he is no lover of collec-
tive security. But he shares Wilson’s belief
that democracy is the best guarantor of
stability. Milne describes how, even after
the 9/11 attacks, Wolfowitz steadfastly
downplayed the threat of nonstate actors
such as al Qaeda and pushed for a U.S.
invasion of Iraq to overthrow Saddam
Hussein and create a new U.S. ally in
the Middle East. Just as the United
States had built lasting democracies in
Germany and Japan after World War II,
Wolfowitz argued, so, too, could Washing-
ton create a democratic beacon in Iraq.
Obama has gone to great lengths to
reject the ideas of Wolfowitz and other
Bush-era neoconservatives and to outline
MIKE SEGAR / REUTERS
a more restrained view of U.S. power.
In 2006, Obama stated that he would
follow “a strategy no longer driven by
ideology and politics but one that is
based on a realistic assessment of the
sobering facts on the ground and our
Diplomacy Disrupted
interests in the region.” Obama recog-
nizes that there is evil in the world,
citing the theologian Reinhold Niebuhr
as an influence, but argues that “we
should be humble and modest in our
belief we can eliminate those things.”
Here was the ultimate pragmatist:
reason and principle would triumph
over passion, ideology, and politics.
But this has opened Obama up to the
criticism that he lacks the will to employ
U.S. power. The accusation, fair or not,
sets Obama apart from everyone else in
Milne’s book: either Obama is the only
judicious character, or he is the only one
who doesn’t know how to flex American
muscle. And yet even Wolfowitz cheered
when Obama made the “gutsy” decision
to take out Osama bin Laden. The quali-
ties that best describe Obama—his
comfort with complexity, his careful
examination of problems, and his ability
to balance contradictions—are necessary
March/April 2016 159
Cameron Munter
to understand the twenty-first-century
world. But it is too soon to tell whether
they will be sufficient for him to be
anointed a foreign policy success.
DECENTRALIZED DIPLOMACY
Milne’s accounts of some of the most
important U.S. foreign-policy makers of
the last century are rich and insightful.
But the book focuses almost exclusively
on discussions of national security, rather
than the actual practice of diplomacy,
which involves on-the-ground assessments
of events, implementation of policy,
and honest reporting, both secret and
public. Milne offers a few glimpses of
high-level diplomatic activity—Wilson’s
meetings with other leaders at Versailles
in 1919, Kissinger’s outreach to China
and the Soviet Union in the 1970s—
but he mostly omits the nuts and bolts
of statecraft.
Moreover, with few exceptions, Milne
limits his focus to Washington insiders.
Yet much of the world’s diplomatic
activity happens outside of capitals
and beyond the confidential meetings
of high officials. In private exchanges,
in boardrooms, and on far-flung fron-
tiers, other people have an impact, too.
When it comes to carrying out foreign
policy and dealing with other countries,
officials and policymakers are not the
only ones who must confront the big
questions, such as whether to embrace
realism or idealism or whether to seek
the roots of problems or focus on their
manifestations.
This is more true than ever today. A
new diplomacy is emerging, as global
challenges become ever more complex
and diverse. Government-to-government
contacts, important as they are, cannot
keep up with the penetration of infor-
160 f o r e i g n a f fa i r s
mation, capital, and independent players
into areas traditionally reserved for
statesmen and diplomats.
Contemporary diplomacy is shaped
by the work of nongovernmental players
such as equity investors, major private
donors, and nonprofit advocacy and
research groups. In the past, diplomats
and intelligence analysts were the most
important sources of inside information
about business trends abroad or power
struggles in foreign governments. But
today, organizations such as the strategic
consulting firm McKinsey, which boasts
over 100 offices all over the world and
some 11,000 consultants and researchers
who together speak hundreds of lan-
guages, are powerhouses of information.
McKinsey and other such consulting firms
make contacts, build trust, and above all
provide assessments and predictions that
carry the kind of authority once enjoyed
almost exclusively by government officials.
The last two-plus decades, since the end
of the Cold War, have seen a tremendous
increase in the influence of private organi-
zations and civil society groups on
relations between and among states.
McKinsey is not alone. Organizations
such as the Cohen Group hire former
government officials to provide clients
with contacts and advice on how to get
things done overseas. Private intelligence
firms such as Stratfor allow clients to
keep track of Turkish troop movements
near Mosul or the Australian navy’s
deployments in the South China Sea.
Then there are the advocates, such as
Human Rights Watch and Amnesty
International, which can mobilize public
opinion and pressure governments.
And of course, there are the increasingly
powerful multinational businesses, often
a force unto themselves.
 Diplomacy Disrupted

An ambassador in the field today The French prime minister Georges

sees representatives of these groups Clemenceau is said to have claimed that
every day, and he ignores them at his “war is too important to be left to the
peril. A wise ambassador cultivates generals”; diplomacy, in the modern era,
them not only to increase his own seems to have become too important to
influence but also to learn from them. be left to the diplomats. This need not
He does so knowing that he is surren- be a bad thing. Modern challenges such
dering some of the mystique of high as climate change and migration will
officialdom, but the payoff—deeper take the concerted efforts not just of
knowledge and denser networks—is governments but also of whole societies,
worth it. and so wider society should be more
Of course, back channels have long involved in the diplomatic process. But
been part of diplomacy. People in power diplomats will have to adapt to this
have used unofficial messengers to test changing world if they are to succeed.
ideas or discreetly make proposals. Milne’s nine figures were at the
Consider Benjamin Franklin in London, center of things when the center of
as he tried to raise support for American things was U.S. state power. But it
independence, or the U.S. businessman will take a different kind of book to
Armand Hammer in Moscow, who served help the United States respond to the
as a go-between for the White House world in the unsettled and complex
and the Kremlin in the 1970s. But such days ahead.∂
unofficial, often self-appointed middle-
men used to be rare. Not anymore: today,
so-called track-two talks proliferate,
thanks to modern communications and
the ease of travel. Retired generals talk
to journalists, retired basketball players
talk to dictators, and former heads of
state and businesspeople pass messages
to each other in the shadows. It can be
hard to know who represents whom,
but these conversations are not mere
background noise. There are simply
some suggestions that are best avoided
by those whose pronouncements are
official—but which can ultimately play
a significant role in solving problems
around the world. The Iran nuclear deal,
for instance, would not have come about
without well-connected private citizens
and former officials making inquiries,
relaying messages, and finding common
ground to prepare the way for govern-
ments to talk.

March/April 2016 161

 Return to Table of Contents

lives could be saved and improved,”

A Feminist she proclaimed.
There are some women who sur-
Foreign Policy mount gender stereotypes but then do
little to help others confront that chal-
lenge. Clinton is not one of them.
Hillary Clinton’s Hard Having faced sexism throughout her
Choices long career in public life, she has shown
an uncommon determination to use
Suzanne Nossel her official positions and influence to
promote opportunities for women in
the United States and abroad.
The Hillary Doctrine is a painstaking
The Hillary Doctrine: Sex and American examination of Clinton’s efforts to advance
Foreign Policy the status of women during her tenure
BY VALERIE M. HUDSON AND as secretary of state, from 2009 to 2013.
PATRICIA LEIDL. Columbia Its authors, Valerie Hudson, a professor
University Press, 2015, 456 pp. of international affairs at Texas A&M
University, and Patricia Leidl, a com-
munications specialist, credit Clinton

W
hen Hillary Clinton’s career with bringing women from the periph-
as a lawyer first drew media ery to the center of U.S. foreign-policy
attention during the 1992 making by recognizing and institution-
presidential campaign of her husband, alizing the link between the status of
Bill Clinton, she mused that she could women and the attainment of national
have skipped law practice to stay at home security objectives.
and bake cookies. The comment led to Yet Clinton’s work remains unfinished.
a now-famous cookie bake-off between Although she managed to transform the
Clinton and Barbara Bush, which the way U.S. foreign-policy makers approach
upstart Arkansas governor’s wife handily gender issues, measured in near hind-
won. Eighteen years later, as secretary sight, Clinton’s power, political acumen,
of state in the administration of U.S. and passion for the advancement of
President Barack Obama, Clinton sup- women yielded only modest tangible
ported an ambitious effort to put energy- results abroad. Among the obstacles
efficient, environmentally friendly cook- Clinton faced were the sclerosis of the
stoves in the kitchens of 100 million poor U.S. policymaking bureaucracy and the
women around the world. “By upgrad- opposition and indifference of foreign
ing these dirty stoves, millions of governments. Perhaps most difficult
of all, however, was the challenge of
SUZANNE NOSSEL is Executive Director of
determining in which cases to push for
PEN American Center and former U.S. Deputy women’s rights, when doing so might
Assistant Secretary for International Organiza- risk angering U.S. allies and incurring
tions. She is a volunteer adviser on human rights
issues to Hillary Clinton’s presidential cam- significant political and economic costs.
paign. Follow her on Twitter @SuzanneNossel. Faced with such challenges, Hudson

162 f o r e i g n a f fa i r s

and Leidl write, Clinton picked her
battles, looking for openings to make
progress and occasionally holding back
from public advocacy to avoid derailing
other U.S. interests. Yet they persuasively
argue that Clinton deserves recognition
for making such hard calls. Hudson and
Leidl’s attempt to assess the impact of
Clinton’s work to advance the status of
women so soon after her time in office
is premature, but their incisive analysis
will nevertheless set a useful standard
for other scholars measuring future
progress in this relatively new area of
U.S. foreign policy.
GOING BIG IN BEIJING
Beginning in the 1970s, as the feminist
movement gained steam in the United
States, the U.S. foreign policy establish-
ment gradually began to put women’s
concerns on its agenda. Hudson and
Leidl give the administration of U.S.
President Jimmy Carter passing credit
for establishing the defense of human
rights as a foreign policy pillar and for
setting up an office dedicated to the role
of women in development at the U.S.
Agency for International Development
(usaid). But the real turning point, they
argue, came in 1995, when Clinton, then
the first lady, traveled to Beijing for the
United Nations’ Fourth World Confer-
ence on Women. In a speech intended
as an implicit rebuke of the Chinese
government and its notorious denial
of women’s autonomy and reproductive
freedom, Clinton declared that “human
rights are women’s rights, and women’s
rights are human rights” and called for
a future in which “every woman is treated
with respect and dignity.” Hudson and
Leidl regard the speech as “a watershed
event for the United States and arguably
A Feminist Foreign Policy
for the entire world.” In her address,
they explain, Clinton set out principles—
among them, a condemnation of rape
as a weapon of war, a call to end gender
discrimination, and a demand to stop
violence against women—that in 2000
helped spur the passage of the un Secu-
rity Council’s landmark Resolution 1325,
which recognized the essential role of
women in matters of peace and security,
realms from which they had historically
been excluded. In addition to calling on
countries to integrate women into foreign-
policy making, Resolution 1325 prompted
journalists and activists to scrutinize
whether women were being invited to
participate in major international meet-
ings and negotiations.
During the administration of U.S.
President Bill Clinton, Hillary Clinton,
with the support of U.S. Secretary of
State Madeleine Albright and others,
worked to publicize and punish sexual
violence during the wars in the Balkans
by drawing media attention to the brutal
tactics of the Serbian military and by
holding international symposiums. In
2001, based on groundwork laid by
Albright, the State Department inaugu-
rated its annual Trafficking in Persons
Report, ranking countries based on their
tolerance of a crime that disproportion-
ately victimizes women.
The administration of U.S. President
George W. Bush maintained the Office
of International Women’s Issues that
Albright had opened at the State Depart-
ment in 1994—an important illustration
of how timely and reasonable policy
initiatives can survive major political
and ideological shifts. Indeed, by the
beginning of Bush’s presidency, the notion
that women’s well-being and interests
could feature in U.S. national security
March/April 2016 163
Suzanne Nossel
policy had become entrenched. And
in 2003, as U.S. officials planned for
the aftermath of the U.S. invasion of
Iraq, Hudson and Leidl write, Deputy
Secretary of State Richard Armitage
reportedly pounded on the table during
a meeting when he learned that no one
had consulted the Office of International
Women’s Issues on postwar policy: he
had personally called Charlotte Ponticelli,
the head of the office, to offer the funding
required for her group’s participation.
When Clinton returned to the execu-
tive branch as secretary of state in 2009,
she elevated the State Department’s
renamed Office of Global Women’s Issues
so that it would report directly to her,
increased its budget tenfold, and installed
Melanne Verveer, a seasoned adviser and
confidante of hers, as its chief, all with
Obama’s support. The same year, Clinton
initiated a strategic plan for the State
Department and usaid known as the
Quadrennial Diplomacy and Development
Review, which wove women into almost
all its policy proposals. “The status of the
world’s women is not simply an issue
of morality—it is a matter of national
security,” the report stated. A long list of
policy initiatives grew out of the review,
related to health, nutrition, violence
against women, data collection about
women, and child marriage. By endorsing
action on such issues, Clinton galvanized
projects aimed at women’s advancement
and strengthened the hand of foreign
diplomats and women’s advocates; she had
given them a model they could invoke in
support of their work.
YOU CAN’T ALWAYS GET WHAT
YOU WANT
Clinton’s claim that women’s advance-
ment is integral to U.S. and global
164 f o r e i g n a f fa i r s
security is not simply an attempt to
frame women’s issues as matters of
life and death to get the attention of
otherwise indifferent policymakers.
Hudson and Leidl present a number
of studies demonstrating that increased
economic participation among women
leads to greater overall prosperity in
most societies, that the oppression
of women often accompanies broader
authoritarianism and state violence,
and even that population imbalances
favoring males—often resulting from
the abortion of female fetuses, as in
China—tend to foster social instability.
Yet as Clinton would likely acknowl-
edge, sexism and patriarchy are deeply
embedded in some societies, making
it difficult for local activists or foreign
leaders to rapidly achieve lasting gains.
It is when Hudson and Leidl assess the
impact of Clinton’s efforts in societies
like these that their book is most ambi-
tious. Take the case of Guatemala, a
country relatively close to the United
States where women have long been
subjected to disproportionate levels
of gender-based violence, from sexual
slavery under Spanish colonizers in
the sixteenth century to mass rapes
committed during the 1960–96 civil
war. In 2012, the country of just 15
million people had the world’s third-
highest murder rate for women; since
then, the rate of so-called femicide
there has increased by around 20
percent per year.
Up against problems as entrenched
and deadly as these, Clinton’s efforts to
protect and elevate Guatemalan women
brought limited successes rather than a
broad transformation. Usaid did help
build a slick new government building
in Guatemala City from which Claudia

Who run the world? Clinton with Afghan women in Bonn, Germany, December 2011
Paz y Paz, the country’s first female
attorney general, investigated rape cases,
prosecuted the murderers of women,
and attempted to hold corrupt officials
and drug lords accountable. Yet Paz y
Paz was ousted by her political opponents
in 2014, before the end of her term, and
after dropping in 2012, crimes against
women and girls in Guatemala rose
again in 2013 (Paz y Paz’s last full year
in office). One lasting innovation devel-
J. S C O T T A P P L EW H I T E / R E U T E R S
oped in Guatemala during Clinton’s
tenure to which Hudson and Leidl give
high marks was a usaid-funded 24-hour
court that provides accessible medical
and psychological assistance and a chance
at justice to victims of domestic violence.
U.S. relations with Saudi Arabia, which
Hudson and Leidl rightly describe as
A Feminist Foreign Policy
“among the worst countries in which to
be born female,” also posed a difficult
challenge for Clinton’s agenda: the
country’s government enforces brutal
laws that limit the economic, political,
and social independence of women, often
through violence, yet Saudi Arabia is an
important U.S. economic and military
partner. In Hard Choices, her memoir of
her time at the State Department, Clinton
describes Saudi Arabia as a place where
embarrassing officials “with public con-
demnation can backfire, making them
dig their heels in deeper.” That tactical
judgment was reflected in Clinton’s
quiet intervention to press the kingdom
to prevent the marriage of an eight-
year-old girl to a 50-year-old man and
in her reluctance to endorse a campaign
March/April 2016 165
Suzanne Nossel
by Saudi women to protest a govern-
ment ban on women driving. Hudson
and Leidl offer a nuanced explanation
for Clinton’s reticence to speak out
publicly about such issues, noting that
at a time when Saudi Arabia was making
incremental progress on women’s rights
(for example, by slowly offering women
greater educational and professional
opportunities), public pressure from
Washington might have caused a backlash,
halting further reform. Their conclusion
is that Clinton’s selective approach to
women’s rights advocacy in Saudi Arabia
reflected not a lack of conviction but
rather a strategic appraisal of just how
much could be accomplished in the
country and what might be put at risk
by pressing too hard for change.
Despite their ardor for women’s
rights, Hudson and Leidl recognize that
the issue will never be the sole consider-
ation in policy decisions and that advo-
cates who cannot see beyond their own
cause will soon find themselves shut
out of decision-making. Indeed, had
Clinton not been occasionally willing
to subordinate women’s rights to other
diplomatic and security interests, she
would not have been considered a cred-
ible candidate for secretary of state, a
position that allowed her to wield more
power than perhaps any other women’s
rights advocate in the world.
The Hillary Doctrine is filled with simi-
larly thoughtful explorations of some of
the other difficult questions surrounding
the eradication of sexism abroad, such as
whether ousting autocrats leaves women
worse off and whether military inter-
ventions are necessarily bad for women.
Hudson and Leidl rightly reject conten-
tions that the United States’ mixed foreign
policy record renders the country an unfit
166 f o r e i g n a f fa i r s
standard-bearer for human rights, recog-
nizing that the United States is singularly
powerful and that no country is free of
mistakes when it comes to international
development and human rights policy.
In their discussions of Afghanistan
and Iraq, where the United States
attempted to advance the status of
women as part of its broader state-
building policies, Hudson and Leidl
sharply criticize usaid, which they
claim has withered into a contracting
agency that funnels billions of dollars to
greedy private firms that ineptly manage
absurd made-in-Washington programs.
Usaid staff members, Hudson and Leidl
write, face intense pressure to spend
immense sums of money to avoid future
budget cuts and to rapidly deliver results
that can be monitored by their skeptical
congressional overseers. In Iraq, for
example, this dysfunction resulted in a
manic effort to recruit local widows to
fill a beekeeping program so that U.S.
officials could create a related Power-
Point presentation to impress their
supervisors. Filtered through inexpert
organizations, pumped up with more
money than anyone knew how to spend,
and pressed with demands for immediate
results, Clinton’s drive to help women
sometimes produced meaningless make-
work with few long-term results. The
most impressive sparks of progress
that Hudson and Leidl cite, such as
the introduction of the U.S. military’s
so-called female engagement teams
in Afghanistan and Colombia, were
achieved by capable and foresighted
individuals who used their knowledge
of local conditions to translate broad
mandates into effective action.
Although Hudson and Leidl fault
usaid bureaucrats for insisting on
 A Feminist Foreign Policy

measurable, rapid results from devel- women’s fates are inextricably inter-
opment programs that are designed twined with those of their societies, the
to work over decades, they commit a mistreatment of women is often a harbin-
similar mistake by searching for demon- ger of authoritarianism and militancy,
strable results from Clinton’s work only and the United States’ national security
a few years after she first made women’s is enhanced when women’s well-being is
rights a U.S. priority. It is sensible to ask secured and their economic and social
how the lofty speechmaking, presidential potential are unleashed.
directives, and bureaucratic attention None of this is to suggest that Clinton
that resulted from Clinton’s leadership doesn’t deserve primary credit for raising
translated into concrete results abroad, women’s rights from a pet initiative to
but the real answers to such questions a policy issue that is taken seriously
will emerge only over time. What is across the U.S. government. But even
more, Hudson and Leidl’s term for as she seeks the presidency and pursues
Clinton’s prioritization of women’s the power to build on her earlier efforts,
rights, “the Hillary Doctrine,” seems we should remember that it will fall to
inimical to the type of long-term change her successors to determine whether
the authors hope for. For starters, it the slow and steady work of reshaping
associates the advancement of women the position of the world’s women is
abroad with a single (and not universally sustained long enough—and executed
popular) individual. And if the fate of well enough—to achieve Clinton’s
other recent “doctrines” (such as the lofty goals.∂
Powell Doctrine, which calls for the use
of overwhelming force in pursuit of
clear military objectives) is any indica-
tion, it also suggests that Clinton’s drive
to advance the status of women was
tailored to particular circumstances
and so has only fleeting utility.
Hudson and Leidl nevertheless make
the case that advancing the status of
women will require giving the issue a
permanent place on the U.S. foreign
policy agenda, one that will long outlast
Clinton. Just as environmental policy,
human rights, and nuclear nonprolifera-
tion have by now become fixed features
of the U.S. policy landscape, with State
Department bureaus of their own befit-
ting that status, so, too, should women’s
advancement take its place as an open-
ended, ever-evolving quest. Women’s
issues are worth permanent prioritization
for all the reasons that Clinton has cited:

March/April 2016 167

 Return to Table of Contents
Recent Books
Political and Legal
G. John Ikenberry
The Conceit of Humanitarian Intervention
BY RAJAN MENON. Oxford University
Press, 2016, 256 pp.
I
n this contrarian book, Menon argues
that the entire “project” of humanitar-
ian intervention is deeply problematic.
His critique is realist. Despite lots of talk
about international norms and human
rights, power and interests still drive
world politics, he asserts. The United
States and European countries waited
three years before intervening in the
Bosnian war, and they finally did so in
part because nato’s credibility was on
the line. And Western powers chose
not to intervene at all as humanitarian
disasters unfolded in Rwanda and Darfur,
because they did not see their national
interests at stake. Menon thinks that the
idea of humanitarian intervention is best
seen as an artifact of the United States’
post–Cold War unipolar moment, when
Russia was in political free fall and China
was only beginning its economic ascent.
He claims that, in reality, no international
community exists that could provide
legitimacy to humanitarian interventions
and argues that such interventions rarely
work anyway; they often create chaos
rather than stability. Despite his searching
critique, Menon is nonetheless unwilling
to argue that the world should simply
turn a blind eye to genocide and mass
killings. So he is left asking the same
168 f o r e i g n a f fa i r s
question that leads many liberals to
support humanitarian intervention:
How should the world respond in the
face of mass killing and large-scale
human suffering?
Why Leaders Fight
BY MICHAEL C. HOROWITZ,
ALLAN C. STAM, AND CALI M.
ELLIS. Cambridge University Press,
2015, 225 pp.
Leaders don’t get much attention from
international relations scholars, who
tend to favor abstract models and struc-
tural theories that discount the person-
alities or experiences of decision-makers.
This important book brings state leaders
back into debates about war and peace.
Drawing on insights from historians and
psychologists, the authors find interest-
ing patterns in the attitudes of leaders
toward risk and the use of force. The
book’s major contribution is its massive
data set, which includes 2,400 leaders
from around the world over the last
century. The authors argue that prior
combat experience seems to dampen
leaders’ enthusiasm for war. However,
those leaders who served in the military
but had no direct experience of combat
have been among the most likely to initi-
ate or escalate military conflict. Gender
does not seem to matter, but age does:
in democracies, young leaders are less
likely to use military force than older
ones—perhaps, the authors speculate,
because older leaders fear they have less
time to make their mark. The book
also documents a positive correlation
between having a troubled childhood
and engaging in risk-prone behavior as
an adult political leader.

The Global Transformation of Time,
1870–1950
BY VANESSA OGLE. Harvard
University Press, 2015, 288 pp.
The second half of the nineteenth
century fascinates global historians.
Rising European power and influence
reached a climax and created an early
form of globalization. For better or
worse, the West and the rest of the
world discovered their interconnected-
ness. As Ogle notes in this fascinating
account of the establishment of “global
time,” an interconnected world required
standard measures of time and space.
Capitalism and a global economy
demanded that large numbers of people
organize and synchronize the prosaic
stuff of a modern industrial life—pro-
duction cycles, work schedules, delivery
dates—across great distances. But Ogle
is more interested in the ways in which
the concept of global time helped create
what she calls a “global imagination,” in
which peoples and societies could be
understood as parts of a single, devel-
oping world system. In this way, Ogle
argues, the standardization of time
reflected and reproduced the world’s
European-led power hierarchies. Inter-
national clocks and calendars united
the world, but they also revealed and
sometimes reinforced its inequities.
The Rise of Democracy: Revolution, War,
and Transformations in International
Politics Since 1776
BY CHRISTOPHER HOBSON. Oxford
University Press, 2015, 256 pp.
With democracies around the world
beleaguered by rising inequality, eco-
Recent Books
nomic stagnation, and political gridlock,
a book on the decline of democracy
might seem more timely than this one.
Yet Hobson’s sweeping narrative of the
rise and spread of modern democracy
provides a useful corrective to the
unrealistic euphoria of the 1990s, when
many saw the spread of democracy as an
unstoppable force, and serves to dispel
today’s unwarranted pessimism about
democracy’s future. Hobson shows that
World War I was the great turning point,
as U.S. President Woodrow Wilson
managed to frame the conflict as a fight
to establish democracy as the global
standard for legitimate political rule.
The ideological stakes were even higher
during World War II and the Cold War,
which pitted liberal democratic ideals
against fascist and communist alterna-
tives. Struggles to create democratic
governments were not just internal
dramas; they played out on a global
stage, where the rules and norms of
the emerging international order were
still up for grabs. Hobson’s emphasis on
the contingent and contested spread of
democracy contradicts idealists’ narra-
tives about the triumph of democracy,
but the book also reminds skeptics of
democracy’s future of just how deeply
entrenched democratic norms are in
international society.
Why Torture Doesn’t Work: The
Neuroscience of Interrogation
BY SHANE O’MARA. Harvard
University Press, 2015, 336 pp.
Critics of the use of torture in interro-
gations have marshaled a sophisticated
body of philosophical, ethical, and legal
arguments to argue against the practice.
March/April 2016 169
Recent Books
This study puts all of that aside and asks
the question, What does the science say?
O’Mara, who is a professor of experi-
mental brain research, concludes that
torture simply is not effective as an
interrogation tactic. The book takes
readers on an extended tour of the
brain and the way it functions under
the “chronic, severe, and extreme stressor
states” produced by forms of torture
such as starvation, thirst, sleep depriva-
tion, and waterboarding. O’Mara looks
at the scientific literature examining
the effects of these grim methods and
determines that information obtained
using them is inherently suspect. Mean-
while, people subjected to severe torture
are likely to sustain permanent damage
to their brains and psychological func-
tioning. The last refuge in the defense
of torture has always been an appeal to
elevate pragmatism and security over
ethics and the law in the face of a “tick-
ing time bomb.” O’Mara’s book reveals
the hollowness of that argument.
Economic, Social, and
Environmental
Richard N. Cooper
The Entrepreneurial State: Debunking
Public vs. Private Sector Myths, rev. ed.
BY MARIANA MAZZUCATO .
PublicAffairs, 2015, 288 pp.
I
t has become fashionable, especially
among some Americans and British,
to believe that the government that
governs least, governs best. In particular,
according to this strain of thought,
170 f o r e i g n a f fa i r s
innovation and entrepreneurship thrive
most when government gets out of the
way. Mazzucato strongly challenges this
view, arguing that the most important
innovations of recent decades can virtu-
ally all be traced back to government
support and often to government initia-
tive. Specifically, the advancing frontiers
of information technology, biotechnol-
ogy, and energy have their origins in
government-sponsored research and
often in direct government investment.
The same holds true for shale gas and
electric automobiles, two innovations
often praised as the fruits of private
initiative. Mazzucato concedes that some
government expenditures on innovation
have been unproductive and even con-
demned as government waste by their
critics. But that is hardly surprising, she
counters: the absence of such mistakes
would imply a lack of healthy risk taking.
Mazzucato supports her thesis with
numerous examples and case studies
and argues persuasively that a successful,
innovative society must draw on symbi-
otic partnerships between governmental
and private entities.
Of Limits and Growth: The Rise of Global
Sustainable Development in the Twentieth
Century
BY STEPHEN J. MACEKURA.
Cambridge University Press, 2015,
343 pp.
Nongovernmental organizations (ngos)
have long been important in shaping
U.S. policy. They have become increas-
ingly important around the world as
well, joining business organizations as
shapers of policy, especially but not only
in democratic societies. This excellent

contribution to contemporary political
history skillfully documents the role of
ngos in pressing governments to pay
more attention to the ecological and
environmental consequences of their
policies and to push for sustainable
development. Such efforts have not
been universally successful, as demon-
strated by worsening air and water
pollution in China and India and by
continuing deforestation in South
America. But ngos have made major
strides in influencing how aid agencies,
international financial institutions, and
the governments of some developing
countries think about development
and in holding them more account-
able for the environmental effects of
their actions.
Climate Change: What Everyone Needs to
Know
BY JOSEPH ROMM. Oxford
University Press, 2015, 328 pp.
The international climate conference
held in Paris last year created a con-
ceptual framework for governments
to address climate change and set an
aspirational target: to limit the increase
in the globe’s surface temperature to
two degrees Celsius above that of the
preindustrial era—which means an
increase of less than one degree from
the current level. Romm provides a
useful primer on the drivers of climate
change, the ways that the world might
achieve that target, and the obstacles
to moving away from business as usual.
It draws on the latest scientific work,
with its many remaining uncertainties,
to assess the current situation and
outlook and examines emerging
Recent Books
“decarbonization” technologies for use
in energy production and agriculture.
The book’s tone is somewhat alarmist,
but it is full of useful information and
accessible analysis.
How the Internet Became Commercial:
Innovation, Privatization, and the Birth of
a New Network
BY SHANE GREENSTEIN. Princeton
University Press, 2015, 488 pp.
The Internet has revolutionized econo-
mies and societies much as electricity
and the chemical industry did a century
ago and the steam engine and railroads
did nearly two centuries ago. How did
it come about? Greenstein has crafted a
detailed history of the Internet, which
began as a U.S. Department of Defense
project in the 1960s, later moved to the
National Science Foundation, and was
ultimately turned over to the private
sector in the early 1990s. Two early
strategic decisions encouraged tremen-
dous innovation “at the edges,” as the
author puts it: the use of the “packet
switching protocol,” which allows net-
works to transmit massive amounts of
data efficiently, and the development
of the “end-to-end principle,” which
dictates that critical Internet nodes
transmit information without altering or
controlling it—a development that would
not have occurred if AT&T had contin-
ued to dominate U.S. telecommunications,
as it did for decades prior to 1984, when
the so-called Bell System was broken up.
Some governments regret the resulting
freewheeling nature of the Internet and
wish to exercise greater control over it,
which pits them against a large community
of Internet providers, users, and activists
March/April 2016 171
Recent Books
who subscribe to a form of technological
libertarianism.
From Silk to Silicon: The Story of
Globalization Through Ten Extraordinary
Lives
BY JEF F REY E. GARTEN. Harper,
2016, 464 pp.
Garten approaches globalization, which
has occurred in fits and starts, through
the biographies of ten people who
powerfully shaped the process—some-
times inadvertently, and often driven by
selfish motives. Among his subjects are
Genghis Khan, John D. Rockefeller, Jean
Monnet, Margaret Thatcher, and Deng
Xiaoping. Each was determined and
single-minded, if not monomaniacal, in
pursuit of his or her objectives. Each
displayed a great mastery of details and
enjoyed an unusual skill for organizing
people; they were doers, not just think-
ers. It is impossible to know whether
they genuinely altered the course of
history, since impersonal forces might
have produced similar effects. But they
were first movers, and their stories and
the immediate consequences of their
actions are thoroughly engaging.
172 f o r e i g n a f fa i r s
Military, Scientific, and
Technological
Lawrence D. Freedman
Shooting Up: A Short History of Drugs
and War
BY LUKASZ KAMIENSKI. Oxford
University Press, 2016, 416 pp.
Light It Up: The Marine Eye for Battle in
the War for Iraq
BY JOHN PET TEGREW. Johns Hop-
kins University Press, 2015, 240 pp.
I
n his profound, troubling, and
deeply informative book, Kamienski
investigates the relationship between
intoxicants and warfare. Military histori-
ans have long understood the role of
alcohol as a source of “Dutch courage,”
but Kamienski focuses on substances
such as hashish, cocaine, and amphet-
amines, explaining their attraction for
those in combat and the dark consequences
of their habitual use. Drugs not only get
soldiers in the mood to fight but also
help them cope with the subsequent stress.
The development of amphetamines in
the first half of the twentieth century
seemed to be an answer to the problems
of fatigue and sleep deprivation in military
forces; the drugs have proved especially
appealing for aircrew members who need
to stay awake and alert for long periods.
With official approval and encourage-
ment, the use of certain kinds of drugs
has become widespread in militaries—and
so, too, have addiction, sluggish and erratic
behavior, and even hallucinations and
paranoia. Kamienski’s rich study starts
with ancient Greece but mostly examines

events from the last few centuries,
including the Opium Wars and the
Vietnam War, which the author dubs
“the first true pharmacological war.”
He examines how Adolf Hitler, al-
though a teetotaler and a vegetarian,
became dependent on amphetamines;
the challenge posed by drugged-up
child soldiers in Sri Lanka; and the
search for safe drugs to produce opti-
mum performance in combat. The
book concludes with a rumination on
the addictive qualities of war itself.
That theme is echoed in Pettegrew’s
book, which considers, among other
things, two very modern sources of
stimulus and addiction: readily available
videos of actual combat (“war porn”)
and video games that seek to replicate the
sensations and demands of war. Pettegrew
examines how these technologies have
affected the training and actual fighting
of U.S. marines. He quotes a marine in
Iraq in 2003: “I was just thinking one
thing when I first drove into that ambush:
Grand Theft Auto: Vice City.” But in
Iraq, unlike in a video game, the stimulus
of combat had to give way to the restraint
of counterinsurgency: marines had to turn
off “the killing switch” and view Iraqis
with empathy rather than as inhuman
targets. Pettegrew’s book is filled with
interesting and thought-provoking
material, but his analysis is on occasion
discursive and self-indulgent.
The German War: A Nation Under Arms,
1939–1945
BY NICHOLAS STARGARDT. Basic
Books, 2015, 760 pp.
Why did the German people stick with
the Nazis despite the terrible things
Recent Books
that were being done in their name—
even as defeat became ever more likely?
That is one of the most puzzling questions
of World War II, and in this enthralling
book, Stargardt avoids simple answers.
Not all Germans believed in Nazism
(although he leaves no doubt that the
fate of the Jews was common knowledge),
nor were they all fooled by Nazi propa-
ganda (although he offers fascinating
insights on how Joseph Goebbels cali-
brated the Nazi Party’s messages to
lift morale and deflect blame away from
Hitler). Instead, Stargardt puts together
a complex portrait of a nation gripped
by patriotism and resentment, thrilled
by early military victories, and proud
of the fighting skills of the Wehrmacht.
Germans blamed American Jews for
food shortages and ferocious Allied
bombing raids and wondered if such
hardships were retribution for what the
Nazis were doing to Europe’s Jews. As
the Allies closed in, the loss of German
life was horrific: Stargardt suggests
that 10,000 Germans died every day, on
average, during the first months of 1945.
Yet until the very end, German teenag-
ers still signed up to fight.
Agincourt
BY ANNE CURRY. Oxford University
Press, 2015, 256 pp.
On the first page of her excellent book
on the Battle of Agincourt, whose publi-
cation marked the battle’s 600th anni-
versary, Curry reminds readers that the
encounter, at which English forces
defeated a larger French contingent,
was not actually decisive in determining
the course of the Hundred Years’ War.
Nevertheless, the battle has never left
March/April 2016 173
Recent Books
British popular imagination. Shake-
speare made Agincourt the centerpiece
of Henry V, surrounding the battle with
noble language and oratory that live on
today (“We few, we happy few, we band
of brothers”). The emotional force of
Shakespeare’s play was well captured in
the film version starring Laurence Olivier,
which reached cinemas just months
after the 1944 Normandy landings. The
battle’s legacy is not one-dimensional,
however: although the British have long
celebrated the skill of the humble English
archers who struck down members of
the French nobility at Agincourt, they
also recall that Henry V rather less
heroically ordered French prisoners of
war to be killed. Throughout the book,
Curry displays extraordinary command
of the sources, from early written chroni-
cles to recent archaeological research.
The United States
Walter Russell Mead
The Wilderness: Deep Inside the Republican
Party’s Combative, Contentious, Chaotic
Quest to Take Back the White House
BY M C KAY COPPINS. Little, Brown,
2015, 400 pp.
W
idely sourced and compel-
lingly written, The Wilderness
offers a rich and entertaining
mix of gossip and political scheming as
it follows one of the largest candidate
fields in modern history through the
early stages of the 2016 U.S. presidential
race. But Coppins’ real subject is the
state of the Republican Party, which
174 f o r e i g n a f fa i r s
was shaken to its core by President
Barack Obama’s 2012 reelection and
which is still riven by disagreement
about the reasons for its defeat. Did
the gop lose because it was too conser-
vative? Because it was too out of touch
with minorities and too tied to the
demographics of the past? Or did it
lose because its nominee, Mitt Romney,
never offered a full-throated defense of
conservative principles that would have
motivated the party’s base? Coppins
holds his readers’ interest by showing
how the flood of 2016 gop candidates
reflects a competition among prescrip-
tions for a Republican recovery, as well
as a battle among outsize egos. Coppins’
book reminds readers that democracy
survives in the postmodern world in
part because it is the most entertaining
form of government. Americans may not
agree on much, but they do seem to enjoy
watching desperately ambitious candi-
dates undergo the endless ordeal that
U.S. presidential politics has become.
The Power of the Past: History and
Statecraft
EDITED BY HAL BRANDS AND
JEREMI SURI. Brookings Institution
Press, 2015, 300 pp.
A large and growing gap divides policy-
makers, who sometimes deal in crude and
shopworn analogies (“another Munich,”
“another Vietnam”), and professional
historians, some of whom, as the histo-
rian Jill Lepore has lamented, believe
that “looking to the past to explain the
present falls outside the realm of serious
historical study.” The historical profession,
Brands, Suri, and their contributors argue
in this strong and stimulating volume,

should engage with the need of poli-
cymakers for useful knowledge, and
policymakers should strive to develop
the kind of “historical sensibility” that
Suri finds in Henry Kissinger. The
volume features a mix of younger
scholars (Brands, Suri, Jennifer Miller,
Michael Cotey Morgan) and senior
figures such as Thomas Mahnken and
James Steinberg. “The Nature of
History’s Lessons,” the closing essay
by Philip Zelikow, a historian who
has also served in government, is a
masterful overview of the subject that
both policymakers and historians
would do well to consult; it is a fitting
conclusion to a book that deserves a
close read.
Washington: A History of Our National City American life. Parini, a novelist who knew
BY TOM LEWIS. Basic Books, 2015,
560 pp.
Lewis’ history of Washington, D.C.,
identifies some important continuities
that have marked life in the nation’s
capital since its establishment in the
1790s. The first is the disparity between
black and white. A center of the slave
trade until the Compromise of 1850
abolished the trade (but not slavery
itself) in the District of Columbia,
Washington harbored slave pens, slave
ships, and slave auction houses that
horrified foreign visitors and inflamed
northern politicians and journalists. The
second continuity is the paradox that
the citizens of the capital of the world’s which are attractively cynical and elegantly
oldest democracy lack genuine represen- Jeffersonian in worldview but offer little
tation in Congress. The cost of that disen- to serious students of international affairs;
franchisement has been high, in terms
of both Congress’ often uncaring and
sometimes racist stewardship of the
Recent Books
district and the blighting of local political
culture. Lewis is most successful when
dealing with the early years of Washing-
ton’s history; the chapters on those years
are authoritative and fresh. As the story
approaches the present, however, the
book becomes less convincing. Oddly,
Lewis ends with a paean to the wonders
of Washington’s subway system, appar-
ently unaware of the low esteem in which
most D.C. residents hold it.
Empire of Self: A Life of Gore Vidal
BY JAY PARINI. Doubleday, 2015, 480 pp.
Through his historical fiction, his reviews,
and his eloquent and acerbic essays on
U.S. foreign policy, Gore Vidal became a
prolific and widely read commentator on
Vidal well, has written a lucid, bracing,
and candid book that is likely to become
the definitive Vidal biography. Vidal was a
successful American who went to the Old
World and scaled the heights of its social
and literary worlds. But his ambitions
went further; he hoped to be recognized
as a major novelist and to become a
significant political figure in the United
States. Parini discounts Vidal’s political
efforts; he ran for both the U.S. House
of Representatives and the Senate but was
never elected. Parini’s critical appraisal of
Vidal’s novels seems just; the best of them
are quite good, but none quite makes it
to the first rank. But Parini is too kind
to Vidal’s essays on U.S. foreign policy,
despite their great wit and charm, they
are unlikely to be consulted much in
days to come.
March/April 2016 175
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The Year of Indecision, 1946: A Tour
Through the Crucible of Harry Truman’s
America
BY KENNETH WEISBRODE. Viking,
2016, 320 pp.
The year 1946 was an odd one, sus-
pended between the end of World
War II and the start of the Cold War.
The U.S. economy was undergoing
an uncertain transition away from the
turbocharged prosperity of the war
years, and it was not yet clear that the
next generation would enjoy steadily
rising living standards and the birth of
an affluent society. The shock of the
atom bomb was still new, China was
not yet communist, and nobody really
knew what the postwar era would bring.
This is fertile terrain, but readers who
do not already have a strong grasp of
the events and chronology of this event-
ful year will be confused rather than
enlightened by Weisbrode’s allusive
and indirect approach to historical
narrative. And readers well versed
enough to follow Weisbrode’s musings
hardly need to be reminded that 1946
was an important year. The book is
thoroughly researched and thoughtful,
but it is overloaded with ruminations
and lacking in narrative clarity, ulti-
mately failing to live up to the promise
of its conceit.
White World Order, Black Power Politics:
The Birth of American International
Relations
BY ROBERT VITALIS. Cornell
University Press, 2015, 288 pp.
In this interesting and important yet
flawed book, Vitalis seeks to bridge the
176 f o r e i g n a f fa i r s
“vast gulf divid[ing] international
relations from Africana studies,” bringing
the “racism [of the discipline of interna-
tional relations] to light.” Conventional
narratives of the field’s history, he argues,
trace it to the rise of realism and national
security concerns in the years around
World War II, adding a few historical
thinkers, such as Thucydides, to claim a
timeless intellectual pedigree. But this
ignores both the extensive mainstream
scholarship of the first decades of the
twentieth century that dealt with colo-
nialism and racial issues and the pioneer-
ing work of African American writers
in what he calls “the Howard School.”
Consigning both to the memory hole,
he says, paints a distorted picture of the
discipline’s origins and nature, obscur-
ing the role that international relations
scholarship has played in the construc-
tion and perpetuation of white Western
dominance.
These are major claims, and some
of them hold up better than others.
Vitalis is correct to shine a spotlight
on the forgotten academic work of the
first third of the twentieth century
and offers a timely reminder of just
how prevalent racialized thinking was
and how central a role imperialism—
as opposed to straightforward great-
power relations—played in global
affairs. Back then, for example, “policy
relevance” in political science often
meant figuring out how to train good
colonial administrators. Vitalis also
provides a service by telling the story
of scholars such as Alain Locke, Ralph
Bunche, and Rayford Logan, enriching
readers’ understanding of midcentury
intellectual debates over U.S. foreign
policy and tracing how racism operated
inside various professional institutions.

Vitalis is less convincing, however, in
casting his analysis as an indictment of
the postwar discipline of international
relations, let alone its contemporary
incarnation. To get there, one has to
share his politics. Vitalis sees a project
of U.S. imperial domination playing
out over the course of the past century,
with the “subjection” continuing today,
“through new-old policies of interven-
tion, tutelage, and targeted killings in
new-old zones of anarchy and civiliza-
tion deficit.” Given such a reading of
U.S. foreign policy, it is not surprising
that he believes “the history of ideas,
institutions, and practices [in the field]
has a constitutive role in their present
forms and functions”—or that he sees
today’s mainstream international
relations scholars as handmaidens of
an evil national security state and as
the direct descendants of their racist
predecessors of a century ago.
Scorning the notion that the postwar
liberal international order represents
anything particularly new or admirable,
Vitalis scores a few points in noting
how long it took for some earlier social
and racial hierarchies, both international
and domestic, to erode. But he refuses
to accept the fact that they have indeed
eroded. One is left wanting more analy-
sis of how and why the attitudes and
patterns of domination Vitalis describes
gave way over time, and how the mid-
century theorists and practitioners of
the liberal international order understood
and handled the paradoxes of its halting
and inconsistent implementation.
gideon rose
Recent Books
Western Europe
Andrew Moravcsik
Europe’s Orphan: The Future of the Euro
and the Politics of Debt
BY MARTIN SANDBU. Princeton
University Press, 2015, 336 pp.
Between Debt and the Devil: Money,
Credit, and Fixing Global Finance
BY ADAIR TURNER. Princeton Uni-
versity Press, 2015, 320 pp.
T
hese two books, the first by a
noted Financial Times commen-
tator and the second by a former
British business leader and financial
regulator, challenge two pillars of
conventional wisdom about Europe.
First, they deny that the so-called euro
crisis had anything to with the euro
itself. Sandbu goes so far as to view
the euro as a sound currency that even
the British should adopt. Rather, they
argue, the debt crisis resulted from the
bad macroeconomic policy choices of
eu member states, namely, a focus on
fiscal austerity, high interest rates, and
debt repayment. Second, both authors
reject the view that the eu will need to
establish a fiscal and economic union
to fully recover. Rather, they claim, eu
governments simply need to spend
more, loosen their monetary policies,
and restructure their debts. This would
be good news for Europe, because the
solution would be so simple, even pleas-
ant, to implement. It would be bad news
for utopian technocrats in Brussels, who
for five years have tried to convince
everyone that the only solution to the
March/April 2016 177
Recent Books
shortfalls of European federalism is
more federalism.
These provocative and insightful
arguments are particularly valuable
at a time when austerity retains its
intellectual luster despite its manifest
failures. Yet Sandbu’s and Turner’s
analyses both omit the politics behind
eu decision-making. Saying that gov-
ernments should pursue different fiscal
and monetary policies is tantamount to
blaming the crisis, albeit indirectly, on
Germany, for not wanting to change
course, and on the eurozone institu-
tions that Berlin deliberately helped
create in its image, for not letting any
other countries adopt alternative poli-
cies, either. As Turner states more clearly
than Sandbu, if Germany will not budge,
it would be better to break up the
eurozone than to tolerate permanent
stagnation in the eu.
The Merkel Republic: An Appraisal
EDITED BY ERIC LANG ENBACHER.
Berghahn Books, 2015, 210 pp.
German Chancellor Angela Merkel
dominates her country’s politics, has
outlasted all competition as the longest-
serving current head of government
in Europe, and bestrides the globe as
the world’s most powerful woman.
Amid the hagiography, however, it is
easy to forget that behind all success-
ful politicians lie the sober electoral
calculations and coalitions that keep
them in power. On the surface, this
collection of essays tells readers more
than they likely want to know about
the German parliamentary elections of
2013. Underneath, however, it reveals
the fascinating intricacies and paradoxes
178 f o r e i g n a f fa i r s
of German political life. One learns
why the German government is consis-
tently headed by center-right parties
even though most Germans vote for
leftist ones, why more and more
Germans throw their votes away on
extremist parties, why Merkel favors
a coalition with the opposition rather
than ruling alone, why Germany can
hold a national election that costs two
percent of what an American one costs,
why Germans disagree so much about
the euro, and much more. Although
uneven, the book is a must-read for
those who seek to get behind the head-
lines about the chancellor.
Margaret Thatcher: At Her Zenith; In
London, Washington, and Moscow
BY CHARLES MOORE. Knopf, 2016,
880 pp.
Moore is a Tory journalist who has
been working on a definitive Margaret
Thatcher biography for 18 years—with
the third volume still to come. The first
volume explored Thatcher the person;
this second one looks more closely at
Thatcher the politician, covering her
time in office from 1979 through her
third election, in 1987. At her best, she
was energetic, committed, and courageous.
She faced down striking coal miners,
imposed privatization, reformed local
government, and negotiated a British
rebate from the eu. She was realistic,
compromising on China’s demands
regarding Hong Kong, the eu’s single-
market initiative, the U.S. invasion of
Grenada, and the conflict in Northern
Ireland. She was visionary, seeing the
Soviet leader Mikhail Gorbachev as a
man with whom she could do business

and, for better or worse, completely
overhauling the British economy. And
she was lucky, as every successful politi-
cian must be, waging and winning the
Falklands War and thus transforming a
prime ministership whose days seemed
numbered into one of the postwar United
Kingdom’s longest. In the end, however,
she could not escape the fate of so many
powerful leaders: the narrowing of vision,
and ultimately paranoia, that comes from
relying on ever-fewer close advisers.
The New Intergovernmentalism: States
and Supranational Actors in the Post-
Maastricht Era
EDITED BY CHRISTOPHER J.
BICKERTON, DERMOT HODSON,
AND UWE PUET TER. Oxford
University Press, 2015, 368 pp.
Most scholarly literature on the eu
gets mired in the weeds of technocratic
policymaking or floats in the clouds of
supranational institutions. So it is a
pleasure to read a book that returns to
the biggest historical puzzle posed by
the evolution of European integration:
How is it possible to have such intense
and deepening cooperation (albeit with
occasional failures) without strong,
authoritative institutions of the type
traditional nation-states possess?
Europe continues to integrate in areas
such as foreign policy, immigration,
and internal security, without delega-
tion to central authorities, but these
authors do not wring their hands.
Instead, they argue that the eu is not
about “ever-closer union.” Rather, the
default setting of the eu is informal
consensual deliberation. This analysis
is not new, and its plausibility rests
Recent Books
on explaining away the powerful Euro-
pean Central Bank and on a blanket
assertion that the eu is in disequilib-
rium and might change. Yet this book
bears close reading as an effort to return
theories of European integration to the
debate about the eu’s future.
Genoa, “La Superba”: The Rise and Fall of
a Merchant Pirate Superpower
BY NICHOLAS WALTON. Oxford
University Press, 2015, 256 pp.
British expats have written so many
books about Italian daily life that I
habitually ignore them when selecting
titles to review. Yet this one caught my
eye. Most such books cover standard
tourist spots or cute country houses,
but this one profiles Genoa, a gritty
port city that once held a privileged
spot on the Grand Tour of the continent
that was a rite of passage for wealthy
Europeans from the mid-seventeenth
to the mid-nineteenth century. Genoa
now attracts few foreigners aside from
those changing trains. Although the
book is filled with the requisite stories
about colorful locals, architectural monu-
ments, and the unique cuisine served
in neighborhood restaurants, it also
dwells extensively on Genoa’s fascinat-
ing history. Even well-read Europhiles
tend to forget about the bold Genoese,
who held their own for centuries through
trading and piracy and also supplied
naval mercenaries to the world, notably
John Cabot and Christopher Columbus.
Walton’s description of the city’s past
and present may convince readers, as
it convinced me, to put Genoa on the
itinerary of a future visit to Italy.
March/April 2016 179
Recent Books
Western Hemisphere
Richard Feinberg
Haiti: Toward a New Narrative
BY RAJU JAN SINGH AND MARY
BARTON-DOCK. World Bank, 2015,
117 pp.
I
n what amounts to a searing, self-
inclusive indictment of the interna-
tional donor community—official
lenders as well as private nonprofits—
this remarkably frank and disturbing
World Bank report paints a bleak
picture of Haiti today. Between 1971
and 2013, despite massive foreign
assistance, Haiti’s per capita income fell
by 0.7 percent every year, on average,
owing to low growth and to a popula-
tion explosion. Nearly 60 percent of
Haitians still cannot meet their basic
needs. In pinpointing causes, the authors
fault Haitian business elites for not
paying taxes and for taking part in
anticompetitive practices. Despite an
abundance of technical assistance from
international institutions, Haiti’s legal
and regulatory frameworks are “dys-
functional,” the country suffers from a
“near total absence” of urban planning,
and the government still cannot perform
many basic functions. Fundamentally,
“a social contract is missing between
the State and its citizens.” And the
future looks grim: the study warns of
the dangers of rising urban violence
among disaffected, undereducated youth.
Nevertheless, the report concludes with
a number of promising policy proposals,
which must be undertaken simultane-
ously to be effective: maintaining
180 f o r e i g n a f fa i r s
macroeconomic stability, improving
the collection and analysis of statistics,
creating better jobs, rebuilding the social
contract, and reducing the vulnerabili-
ties of households to financial shocks
and natural disasters.
The Influence of Small States on Superpowers:
Jamaica and U.S. Foreign Policy
BY RICHARD L. BERNAL. Lexington
Books, 2015, 456 pp.
“You can get it if you really want,” the
Jamaican reggae singer Jimmy Cliff
exhorted listeners in his 1970 song by
that title. To judge from Bernal’s mem-
oir, Jamaicans have taken that message
to heart. Bernal, a former Jamaican
ambassador to the United States, makes
the case that despite being a small,
geopolitically irrelevant island, Jamaica
has often had its way with its much
more powerful neighbor. He recounts
how during his tenure in the 1990s,
on issues such as trade preferences,
foreign aid, debt relief, and counter-
narcotics, Jamaica succeeded in moving
Washington closer to Jamaican prefer-
ences by building a constituency of
Jamaican American immigrants and
influential Americans from Jamaican
families, such as Colin Powell and
Harry Belafonte. Jamaican diplomats
also knew how to work the interagency
process within the remarkably acces-
sible U.S. executive branch, knock on
the right doors in Congress (despite
the “astonishing” ignorance of world
affairs found on Capitol Hill), and
network with think tanks and other
policy entrepreneurs. Bernal also
emphasizes the importance of doing
one’s homework, building trust with
important policy players, and identifying
 Recent Books

mutual interests. Interestingly, Bernal began to defect in the 1990s. Prior to

argues that information technology the revolution, marketing executives
empowers small states by decreasing even weighed the feasibility of estab-
their transaction costs and increasing lishing a major-league expansion team
their capacity to mobilize constituencies.in Havana; had things gone differently,
it’s possible that the franchise that
eventually became the Montreal Expos
Havana Hardball: Spring Training, Jackie might have played in Havana instead.
Robinson, and the Cuban League Today, Cubans remain baseball enthu-
BY CÉSAR BRIOSO. University Press siasts, but it’s not clear whether they
of Florida, 2015, 320 pp. have the purchasing power that U.S.
team owners seek when identifying fan
Sofrito bases. Nevertheless, at the very least, as
BY PHILLIPPE DIEDERICH. Cinco U.S.-Cuban relations thaw, American
Puntos Press, 2015, 304 pp. teams will likely resume exhibition games
and establish more routine channels for
As Cuba and the United States tenta- the recruitment of Cuban talent.
tively move past decades of hostility Sofrito, a debut work of fiction,
and normalize relations, nostalgia is tells a familiar tale of a noncommittal
in the air. Havana Hardball conjures a American man who finds love in the
colorful era of baseball that predated arms of a sensual, warm-hearted Cuban
big-money sports, and Sofrito cel- woman. This particular version of the
ebrates traditional Cuban cuisine, story also involves a search for a myste-
which might soon be under assault if rious, top-secret recipe. In the novel, a
American fast-food chains begin to famous restaurant in Havana offers
litter Havana. roast chicken marinated in an unknown
In 1947, just weeks before the Brook- combination of local spices, and the
lyn Dodgers called Jackie Robinson up story’s protagonist, an American of
to the major leagues, he played in spring Cuban heritage, sets out to discover
training in Havana, where baseball was the tasty ingredients for use in the
already racially integrated and where struggling restaurant he owns in New
many greats, including Ty Cobb and York City. Along the way, he stumbles
Babe Ruth, had played exhibition games. on family secrets shrouded in the early
Much of what Brioso recounts in Havana days of the Cuban Revolution. Sofrito,
Hardball has been recorded elsewhere, named after a classic Cuban marinade,
but his timely retelling reminds readers explores the anger and alienation of
of how closely integrated the U.S. major many older Cuban Americans while
leagues were with Cuban teams prior suggesting that the assimilated younger
to the revolution in 1959, after which generation would do well to rediscover
Fidel Castro abolished for-profit profes- their Cuban roots. Diederich renders
sional sports and Washington and Havana Cuba as a complex country whose
both imposed travel restrictions that people are frustrated and poor but also
prevented individual Cubans from joining authentic and proud.
American teams, at least until a handful

March/April 2016 181

Recent Books
Autocracy and Redistribution: The Politics
of Land Reform
BY MICHAEL ALBERTUS. Cambridge
University Press, 2015, 366 pp.
In this masterful contribution to eco-
nomic history and political theory,
Albertus resurrects the often overlooked
role of land reform as a major driver of
modernization. In Latin America alone,
Albertus calculates, 128 million hectares
of land were expropriated and redis-
tributed from 1930 to 2008. He care-
fully distinguishes between three types
of land reform: radical redistribution
without compensation; land negotiation
with market-based compensation; and
colonization, whereby state lands are
transferred to settlers. Drawing on a
large database of comparative cases and
well-focused country studies (mostly,
but not exclusively, from Latin Amer-
ica), Albertus concludes that radical
redistribution—his main interest—is
most likely to occur when divisions
exist between national elites and few
institutional constraints prevent the
adoption of the policy. Albertus also
contends that land reforms that perma-
nently redistribute assets can be more
effective than progressive taxes in
correcting inequalities in wealth and
power. One surprising finding of his
challenges much of the established
literature on this subject: radical land
reform is more likely in an autocracy,
where power is concentrated, than in
a democracy, where vested interests
enjoy many channels through which
they can stymie reform.
182 f o r e i g n a f fa i r s
Eastern Europe and Former
Soviet Republics
Robert Legvold
The Great Departure: Mass Migration
from Eastern Europe and the Making of the
Free World
BY TARA ZAHRA. Norton, 2016, 400 pp.
A
mericans, many of whom
descend from the 50 million
eastern Europeans who came
to North and South America from the
mid-nineteenth century to the mid-
twentieth century, cherish the simple,
heartening idea that nearly all those
immigrants fled persecution or hard-
ship and shared in the American dream.
Zahra, in wave after wave of detail,
makes plain that the story is not so
simple. Many who came found the
New World harsh, unwelcoming, and
alien, and a third of them returned
home, even though during the late
nineteenth century, many European
governments sought to rid their societies
of minorities and “undesirables”—in
the Russian case, 2.7 million Jews and
Polish and German speakers. Other
countries fought against emigration as
a threat to their national projects. By
the turn of the century, however, some
governments and nationalist move-
ments sought to aid their kinsmen in
foreign lands or saw them as the spear
of colonizing efforts, at least in Latin
America. Zahra handles this immensely
complicated and multidimensional
history with remarkable clarity
and feeling.

In Europe’s Shadow: Two Cold Wars and a
Thirty-Year Journey Through Romania and
Beyond
BY ROBERT D. KAPLAN. Random
House, 2016, 336 pp.
Kaplan is infatuated with Romania and
has been ever since his first serious
encounter with the country, in the early
1980s. That infatuation drives this book’s
historical explorations and philosophi-
cal reflections, which Kaplan merges
with travel accounts to form a panorama
including Romania’s origins and identity,
its political idiosyncrasies, its people’s
sense of victimhood, and the striking
insights of its intellectuals. He organ­
izes the book around three visits he
made to the country: first in 1981, when
Romania was still stuck in the sterile,
crushing Ceausescu era; then in 2013,
when the country was poised between
the modernizing effects of its new pro-
Western orientation and the deeply
carved traces of its intricate past; and
finally in the spring of 2014, after the
upheaval in Ukraine had rewritten the
script shaping Romania’s geopolitical
hopes. Kaplan moves seamlessly from
sights, sounds, and conversations to
the resonance of history: Roman,
Byzantine, Ottoman, and Soviet. Along
the way, he considers works that he
treasures from the underappreciated
canon of Romanian literature and
music. In Kaplan’s hands, Romania
emerges as no mere footnote, but as a
historical and political pivot.
Recent Books
Trafficking Justice: How Russian Police
Enforce New Laws, From Crime to
Courtroom
BY LAUREN A. M C CARTHY. Cornell
University Press, 2015, 304 pp.
Russia has a human-trafficking problem.
Since the collapse of the Soviet Union,
the scale of sex, labor, and child traffick-
ing inside Russia has soared. But Russia
also is itself a human-trafficking prob-
lem, because it serves as a supplier for
illicit networks far beyond its borders.
McCarthy describes the nature and
dimensions of the problem with as much
detail as possible, given the patchiness of
the statistical record on the phenomenon.
Only in 2003 did Russian legislators
pass a law to deal with this scourge, and
McCarthy focuses on its enforcement—or,
more often, lack of enforcement. In a fine
addition to the literature on how Russian
governance really works, McCarthy traces
this laxity to what she calls “institutional
machinery”: incentives, structures, and
a culture operating within Russian legal
and judicial institutions that militate
against the strenuous enforcement of
new rules that introduce complex choices
and burdensome procedures on law
enforcement agencies. Still, she notes
that, in an oblique fashion, authorities
are making some progress.
Democracy in a Russian Mirror
EDITED BY ADAM PRZEWORSKI.
Cambridge University Press, 2015, 354 pp.
In stark contrast to the recent flood of
strident and often simplistic character-
izations of Russian politics, a group of
Russian and Western scholars engage
March/April 2016 183
Recent Books
the subject on an altogether more subtle
and thoughtful basis. They often disagree,
particularly with Andranik Migranyan’s
opening argument that in Russia, only
an authoritarian regime can create the
order needed to build democracy. But
their arguments with one another probe
the genuinely complicated issues of how
democratic or authoritarian Vladimir
Putin’s Russia has become, the likely
direction the country will take, and how
Russia stacks up against the realities (as
opposed to the self-images) of democra-
cies, including the United States. Some
of the arguments center on chicken-or-
egg questions: Which comes first, a
strong state as a prerequisite for democ-
racy or progress toward democracy as
the prerequisite for an effective state?
A number of essays also explore Russia’s
political trajectory: Is the current system
simply a stage in an ongoing evolution—
and if so, toward what? Or is it a rela-
tively stable endpoint? Above all, the
book forces the reader to ponder not
merely Russia’s political course but
also the idea of democracy itself.
The Right Wrong Man: John Demjanjuk
and the Last Great Nazi War Crimes Trial
BY LAWRENCE DOUGLAS. Princeton
University Press, 2016, 352 pp.
John Demjanjuk was a Ukrainian con-
centration camp guard who, after the
war, made his way to Ohio. Thirty years
later, he was discovered and prosecuted
in the United States, Israel, and, ultimately,
Germany. He died before he could appeal
a five-year German prison sentence for
the crime of “accessory to the murder of
at least 28,060 Jews at the Sobibor death
camp.” Behind this story lies a fraught
184 f o r e i g n a f fa i r s
web of issues that Douglas untangles with
exceptional skill. These begin with the
challenge posed to legal systems by the
immensity of the Holocaust, a crime that
no punishment could requite. Ideally,
Douglas argues, atrocity trials should act
as “didactic exercises.” Demjanjuk’s 1987
trial in Israel failed that test; his convic-
tion was overturned because the Israeli
prosecutors had wrongly identified him
as a particularly monstrous figure from
the Treblinka death camp. The book is a
tour de force owing to Douglas’ piercing
analysis of all the legal complexities:
denationalization (which was the limited
recourse the United States sought in
Demjanjuk’s case), the impact of the Cold
War on this and other trials, and, above
all, the hopeless inadequacy of German
law, which was partially redressed by the
court’s innovations in prosecuting the
Demjanjuk case.
Imperial Gamble: Putin, Ukraine, and the
New Cold War
BY MARVIN KALB. Brookings
Institution Press, 2015, 230 pp.
Kalb, a veteran television journalist, does
here what he does best, placing the details
of the crisis over Ukraine in a broader
political and historical context, allowing
his book to flow like a well-crafted docu-
mentary. The story and its telling are at
once accessible and biting. And although
he covers a great deal of history, the
historical details are not merely decora-
tion but vital to his analysis. He feels
no tenderness toward Russian President
Vladimir Putin, nor does he condone
what Putin and his country have done
in Ukraine. But mindful of the deep and
complex history of Russia’s relationship

with Ukraine and the stakes Russia has in
the outcome of the current impasse, he
underscores in blunt and unsentimental
terms how Russia, for all its failings and
vulnerabilities, still holds the upper hand.
Any deal struck to end the crisis should be
between Russia and Ukraine alone and will
have to hew more closely to Russia’s terms
than to those of Ukraine or its well-wishers
in western Europe and the United States.
Middle East
John Waterbury
The Sunni Tragedy in the Middle East:
Northern Lebanon From al-Qaeda to ISIS
BY BERNARD ROUGIER. Princeton
University Press, 2015, 288 pp.
R
ougier masterfully guides readers
deep into the complex terrain of
northern Lebanese politics. It is a
wondrous, if difficult, voyage. He argues
that the convoluted politics of the Sunni-
dominated northern part of the country
and its capital city, Tripoli, serve as a
paradigm for the plight of Sunnis through-
out the Levant. In 1982, during the
Lebanese civil war, Syria asserted control
over the region, but it withdrew its forces
in 2005 after the assassination of Lebanon’s
Sunni prime minister, Rafiq Hariri. Soon
thereafter, Hariri’s son Saad tried to assert
what Rougier calls “institutional” Sunni
control over the north but was humiliated
when the Shiite militant group Hezbollah
took over several neighborhoods in West
Beirut in 2008. In the absence of strong
Sunni political leadership, hard-line Salafi
sheiks filled the void, and the Islamic State
Recent Books
(also known as isis) later began to pitch
its international jihadism to the region’s
youth. Today, northern Lebanon repre-
sents a vital strategic arena for the pro-
tagonists in Syria’s civil war. Control of
the Tripoli-Qalamoun-Qusayr corridor
is existentially important for the alliance
formed by Syrian President Bashar
al-Assad, Hezbollah, and Iran and also
crucial for the Sunni jihadist groups that
seek to overthrow Assad. The struggle for
control has produced a crucible of political
intrigue and religious zealotry. Through-
out the region, this Sunni-Shiite rivalry
is unfolding with equal viciousness.
Iran’s Political Economy Since the
Revolution
BY SUZANNE MALONEY. Cambridge
University Press, 2015, 588 pp.
Maloney covers Iran’s political economy
since the fall of the Qajar dynasty in 1921,
with a heavy emphasis on the years since
the Iranian Revolution of 1979. She begins
with an unsurprising premise: economic
crises have driven Iranian politics. Inflation
helped bring down the shah; the unravel-
ing of the economy during the Iran-Iraq
War brought in a “pragmatic” president,
Ali Akbar Hashemi Rafsanjani; and
economic mismanagement under
Mahmoud Ahmadinejad, combined
with effective international sanctions,
set the stage for the election of President
Hassan Rouhani in 2013. Maloney
stresses the constant tussle pitting
redistributionists in the parliament,
who have been a thorn in the side of
every Iranian president, against the
more economically orthodox Guardian
Council. Two important takeaways
emerge from her analysis: the Islamic
March/April 2016 185
Recent Books
Republic is surprisingly plural, although
not democratic, and remarkably resilient.
After the revolution, gdp dropped by 32
per­cent, three million skilled Iranians left
the country, three million Afghan refugees
came in, and Iraq initiated an eight-year
war with devastating consequences.
Subsequent decades have not been much
kinder, but the regime has survived.
ISIS: Inside the Army of Terror
BY MICHAEL WEISS AND HASSAN
HASSAN. Regan Arts, 2015, 288 pp.
Weiss and Hassan capture the complexity
of the Iraqi and Syrian imbroglios that
gave rise to the Islamic State (or isis)
in this thorough and accessible book.
Isis resulted from a merger of sorts
between remnants of Iraqi President
Saddam Hussein’s Baathist regime and
followers of the Shiite-hating Jordanian
jihadist Abu Musab al-Zarqawi. The
authors suggest that isis’ ability to
control territory, gather intelligence,
and smuggle oil stems mainly from the
experience and know-how of the former
Baathists. After a revolt broke out in
Syria in 2011, the beleaguered president,
Bashar al-Assad, abetted isis’ spread and
even cut deals with the group in order to
bolster his claim that his enemies were
irredeemable terrorists. While the book
does not alter the consensus narrative of
the rise of isis, it does provide fascinat-
ing details about the 2007 anti-jihadist
Sunni uprising in Iraq and about jihadist
groups’ use of U.S. prisons as recruiting
grounds. In this portrait, isis emerges
as a strategic organization playing a
long game; counterterrorist raids and
bombing runs will not defeat it.
186 f o r e i g n a f fa i r s
Gulf Security and the U.S. Military:
Regime Survival and the Politics of Basing
BY GEOF F REY F. GRESH. Stanford
University Press, 2015, 280 pp.
The United States maintains more than
2,000 military bases or installations in
other countries. What determines
whether those countries agree to host
them? Gresh seeks to answer this ques-
tion by focusing on a half century of
negotiations that Bahrain, Oman, and
Saudi Arabia—all of which host U.S.
forces—have conducted with the United
States. Gresh argues that if a foreign
government perceives internal security
threats as paramount, it will be reluctant
to host U.S. bases. But when external
security threats prevail, governments
will tolerate (and even welcome) the
presence of American forces. His analy-
sis does not sufficiently address the fact
that some threats are both internal and
external: consider, for example, Iran’s
support for Shiite minorities in the Gulf
Arab kingdoms and Yemen. Gresh also
does not explore the dilemmas faced by
Washington caused by establishing U.S.
bases in places such as Bahrain, where
repressive regimes abuse segments of
their own populations—perhaps because
that kind of political liability does not
seem to trouble the American electorate.
Sponsoring Sufism: How Governments
Promote “Mystical Islam” in Their
Domestic and Foreign Policies
BY FAIT MUEDINI. Palgrave
Macmillan, 2015, 232 pp.
This book does not do justice to its
important subject. Muedini focuses on
the political uses of Sufism in Algeria,

Chechnya, Morocco, Pakistan, the
United Kingdom, the United States, and
Uzbekistan—leaving out the bulk of the
Islamic world, in which Sufism is nearly
ubiquitous. He seems to have conducted
no original research and consulted only
English-language sources. His main
thesis is unassailable. Sufism’s goal is to
provide mystical union with God, often
through the mediation of a “saint.” Sufi
orders are not organized for conventional
political action; this apparent apoliticism
makes them attractive to autocrats with
Muslim constituencies, who use Sufism
to counter radical Islam and Islamist
violence. Unfortunately, readers do not
hear from Sufis themselves. It would
have been helpful to learn how they see
their mission and their adversaries and
to know whether they believe they are
perpetually doomed to serve as pawns
in abusive systems or whether they
think they could broker dialogue
between autocrats and mobilized
Muslim constituencies.
Asia and Pacific
Andrew J. Nathan
The Pakistan Paradox: Instability and
Resilience
BY CHRISTOPHE JAF F RELOT.
Oxford University Press, 2015, 672 pp.
P
akistan is torn by many forces:
feuding ethnolinguistic groups,
warring political parties domi-
nated by the rival Bhutto and Sharif
families, competing military and civilian
power centers, and sectarian rifts.
Recent Books
Jaffrelot describes this bewildering tangle
in historical depth and forensic detail
but also uncovers a central dynamic
beneath it: the effort of an aristocratic
Urdu-speaking landed elite to preserve
its quasi-feudal social privileges. Mem-
bers of this elite have exploited security
threats from Afghanistan and India and
relied on a version of Islamic orthodoxy
to bolster their legitimacy while conduct-
ing round after round of power struggles
among themselves. Their too-clever-by-
half cultivation of jihadists as proxy
warriors in Afghanistan and Kashmir,
however, has fostered destabilizing
domestic extremism that feeds on social
discontent. Yet Jaffrelot finds the country
paradoxically resilient: the very fractious-
ness of the political system hinders any
radical departure from the status quo.
Maoism at the Grassroots: Everyday Life
in China’s Era of High Socialism
EDITED BY JEREMY BROWN AND
MAT THEW D. JOHNSON . Harvard
University Press, 2015, 480 pp.
A new generation of Chinese and
Western scholars is enriching the history
of Mao Zedong’s China with material
from discarded personnel files, diaries,
and unpublished manuscripts purchased
from paper recyclers, as well as from
recently opened local archives. Their
view from below challenges the clichéd
images of regimented masses fanatically
loyal to the revolution. In reality, Chinese
society under Mao was turbulent in
many of the same ways it is today. The
most interesting chapters in this volume
describe young people trying but failing
to internalize official ideology, local party
cadres ignoring orders to ban community
March/April 2016 187
Recent Books

rituals, and millenarian religious sects The Oxford Handbook of Indian Foreign Policy
and ethnic uprisings boiling under the EDITED BY DAVID M. MALONE,
surface of Maoist homogeneity. But C. RAJA MOHAN, AND SRINATH
these new insights do not contradict RAGHAVAN . Oxford University Press,
the established view that Mao’s regime 2015, 700 pp.
exercised a terrifying degree of surveil-
lance and control. As India has become more engaged in
the global economy and faced strategic
competition from China, it has tried to
Divided We Govern: Coalition Politics in strengthen its relations with countries in
Modern India East Asia, Southeast Asia, and the Middle
BY SANJAY RUPARELIA. Oxford East and to improve its ties with major
University Press, 2015, 480 pp. powers. But as this collection of concise
and authoritative essays shows, New Delhi
A secular, left-leaning “third force” has has been unable to establish the close ties
long struggled to cultivate the political with its immediate neighbors that would
space between the upper-caste-based provide a steppingstone for exerting
Congress party, which ruled India for significant influence farther away. Nor
most of its history as an independent does it engage effectively with interna-
country, and the Hindu nationalist tional institutions in the areas of trade,
movement, whose party controls the finance, arms control, or climate change.
government today. But the left has The country’s policymaking apparatus is
constantly splintered along ideological, dysfunctional. The foreign ministry is
caste, and regional lines. On the three understaffed and works without significant
occasions when it came to power, it oversight from political parties, parlia-
ruled in coalition governments that held ment, the business community, media,
together for less than a full parliamentary or academia. The military lacks strategic
term each. Ruparelia notes the achieve- direction from the civilian authorities, and
ments of the leftist-led governments but its service branches barely coordinate with
pays special attention to their factious one another. The nuclear weapons pro-
politics, which he attributes partly to gram runs on autopilot, and the domestic
poor political judgment and partly to arms agency has failed to produce high-
India’s “federal party system,” in which end indigenous weapons. Covering all
large, ethnolinguistically defined states these topics, the book opens up many
spawn distinctive political subsystems fascinating areas for future research.
that are shaped by local, rather than
national, cleavages. His analysis explains
the dynamics of the leftist coalitions but An Economist in the Real World: The Art
does not make clear how they differed of Policymaking in India
from the other coalition governments BY KAUSHIK BASU. MIT Press, 2015,
that have led India since 1989, some of 256 pp.
which did serve full terms.
This book offers fewer anecdotes about

188 f o r e i g n a f fa i r s

the politics of policymaking than one
would expect given its title. But Basu,
who was the chief economic adviser to
the government of India under Prime
Minister Manmohan Singh from 2009 to
2012 (and who is now chief economist of
the World Bank), provides lucid discus-
sions, suitable even for non-economists,
of issues as varied as inflation manage-
ment, taxes, and poverty alleviation.
His main argument is that simplistic
policies produce unintended conse-
quences as market actors respond in
their own ways to new incentives. But
he argues that India in recent decades
has gotten economic policy more right
than wrong. The country’s initial “costly
investment” in democracy has paid
dividends by generating an inclusive
policymaking process, which may be
unwieldy but maintains social stability
even in the midst of profound change.
He believes that if Indian governments
put a few more smart reforms in place,
the country can enter a “high-growth
path” that will continue for decades.
Africa
Nicolas van de Walle
Making Refuge: Somali Bantu Refugees
and Lewiston, Maine
BY CATHERINE BESTEMAN. Duke
University Press, 2016, 352 pp.
A
s a doctoral student in the late
1980s, Besteman spent two
years in Banta, a small village
in southern Somalia. In a curious turn
of events, over a decade later, refugees
Recent Books
from the Somali civil war began to settle
in Lewiston, Maine, a short distance
from Colby College, where Besteman
had become a professor of anthropology.
Amazingly, a number of the refugees
were from Banta, and Besteman was able
to reconnect with them. This remarkable
book is the product of that coincidence.
It presents a vivid account of Somalis
who survived their village’s collapse into
ethnic violence and escaped by foot to
Kenya, where they spent a decade in a
dreadful refugee camp. Some were then
lucky enough to be accepted for resettle-
ment in the United States. Many of those
were sent to Lewiston, where their
attempts to make a new life were some-
times undermined by a careless U.S.
bureaucracy, their own poverty and lack
of education, and discomfort among
locals grappling with the unexpected
influx of several thousand illiterate
Africans into their small New England
town. Besteman eschews social science
jargon to tell her story with great insight
and empathy. Her book should be
required reading for policymakers
currently debating what to do with
refugees from Syria.
Taxation, Responsiveness, and
Accountability in Sub-Saharan Africa: The
Dynamics of Tax Bargaining
BY WILSON PRICHARD. Cambridge
University Press, 2015, 308 pp.
Political scientists generally assume
that citizens who pay more taxes are
more likely to demand that govern-
ments respond better to their needs.
Yet as Prichard notes, the actual details
of this bargain have rarely been care-
fully documented. This finely crafted
March/April 2016 189
Recent Books
book examines the politics of taxation
in Ethiopia, Ghana, and Kenya and shows
clearly that in each case, increases in
taxation have indeed been accompanied
by greater government accountability
to citizens, although there were sub-
stantial differences in how this actually
happened. Open public resistance to
increased taxation in Ghana, for instance,
put pressure on the government to link
the taxes to specific improvements. In
Ethiopia, in contrast, a long tradition
of authoritarian rule reduced the scope
of protests when the government levied
new taxes. An array of other factors also
shape tax bargaining, including the
overall stability of the government, the
fiscal pressures it faces, and the amount
of influence exerted by the business
community and civil society. Prichard’s
fine book is aided by his analytic acumen
and the richness of the empirical data
he has gathered.
Understanding Contemporary Ethiopia:
Monarchy, Revolution, and the Legacy of
Meles Zenawi
EDITED BY G ÉRARD PRUNIER AND
ÉLOI FICQUET. Hurst, 2015, 416 pp.
Ethiopia’s 100 million people make the
country Africa’s second most populous,
after Nigeria. But it remains a poorly
understood place. Prunier and Ficquet’s
excellent collection of essays is thus
welcome, and it provides a great intro-
duction to the country’s people, history,
and politics. Ethiopia’s Orthodox
Christian roots stretch back to at least
the fourth century, but today, more than
a third of the population adheres to
Islam, and the fastest-growing religions
may well be the evangelical Protestant
190 f o r e i g n a f fa i r s
and Pentecostal denominations to which
perhaps a fifth of the population now
belongs. The book’s historical sections
compellingly narrate Emperor Haile
Selassie’s failed attempts at moderniza-
tion and the disastrous revolution of
1974 that overthrew him and resulted in
the Marxist regime of Mengistu Haile
Mariam. Mengistu himself was deposed
in 1991 by the guerilla leader Meles
Zenawi, whose subsequent regime was
characterized by more comprehensive and
relatively successful attempts at modern-
ization and economic development.
Rebels in a Rotten State: Understanding
Atrocity in the Sierra Leone Civil War
BY KIERAN MIT TON. Oxford
University Press, 2015, 256 pp.
Contemporary theories about the origins
of civil war often emphasize the ratio-
nality of rebel leaders, who organize
violence in order to achieve certain
political and economic aims. At first
glance, the civil war in Sierra Leone
in the 1990s seems to fit this pattern.
Guerrilla groups such as the Revolu-
tionary United Front (ruf) used the
fighting to gain access to power and
diamonds. But as Mitton persuasively
argues, such theories fail to explain
the acts of wanton and dehumanizing
violence that rebels perpetrated, includ-
ing the often coerced savagery of child
soldiers. He advances psychological
explanations, showing how feelings of
shame and disgust motivated individual
acts of violence. Mitton’s key insight is
that by the middle of the civil war, the
ruf was led by men who had been them-
selves brutalized and terrorized and were
thus driven less by the organization’s
 Recent Books

initial strategies than by their various Education and Empowered Citizenship in

mental illnesses. Mitton has produced Mali
a useful addition to the burgeoning BY JAIMIE BLECK. Johns Hopkins
literature on civil wars, enriched by his University Press, 2015, 232 pp.
detailed knowledge of the war in Sierra
Leone and his numerous interviews What should we expect from the dramatic
with men who committed atrocities. increase in school enrollment across
Africa in the last two decades? Through
a nuanced analysis of Mali in compara-
The Politics of African Industrial Policy: tive context, Bleck persuasively argues
A Comparative Perspective that schools can teach students the tools
BY LINDSAY WHITFIELD, OLE of political participation and allow parents
THERKILDSEN, LARS BUUR, AND to connect with the state. Carefully
ANNE MET TE KJAER. Cambridge reviewing the effects of three types of
University Press, 2015, 356 pp. Malian schools—public, private Franco-
phone, and Islamic—she finds that all
This book amounts to an impassioned three increase political knowledge. Higher
plea for African industrial policies built levels of education do not, however,
around a proactive and interventionist increase one’s propensity to pursue
state, which the authors consider to be a “easy” forms of political participation,
prerequisite for successful development such as voting: when citizens doubt the
in Africa’s low-income economies. The state’s effectiveness, abstaining might
aim would be to create export-oriented become an educated person’s way of
manufacturing sectors, like the ones that expressing discontent. But education
have lifted economies in East Asia. The does encourage more “difficult” forms
book’s best chapters examine industrial of participation, such as contacting
policy in Ghana, Mozambique, Tanzania, government representatives, volunteering
and Uganda, places where the develop- on campaigns, and running for office.
ment of industrial subsectors has often Still, doing those things often requires
been undermined by some combination the ability to speak the official language,
of divisions within the elite, weakness French. And since French is transmitted
in the private sector, and antidevelop- through public and private Francophone
ment pressures on the government. But schools much more than through Islamic
these accounts are surprisingly pessimistic schools, which focus on teaching Arabic,
about the ability of the four governments Bleck suspects that Islamic students will
to carry out the policies the authors face obstacles to political participation
view as necessary. In their conclusion, at the highest levels.∂
the authors suggest more hopefully, if ericka a. albaugh
rather vaguely, that the right political
conditions could emerge over time to
enhance the prospects for the develop-
ment strategies they espouse.

March/April 2016 191

 Return to Table of Contents
Letters to the
Editor
MAKING THE GRADE
To the Editor:
Alexander Cooley and Jack Snyder
(“Rank Has Its Privileges,” November/
December 2015) condemn the ratings
produced by organizations such as the
World Bank and Freedom House for
what they describe as methodological
inconsistencies and oversimplifications.
Yet the alternatives Cooley and Snyder
propose underscore the many virtues of
the current ratings system.
The authors’ recommendation that
raters “ground their evaluations in nu-
anced theories of conditional and interac-
tive effects,” for example, would transform
ratings from imperfect but accessible tools
into overly complex reports. There is
already a glut of such reports and no need
for new ones; current ratings are useful
because they distill such reports’ contents.
And the authors’ suggestion that ratings
“be based on proven causal relationships”
ignores the role of ratings in the kinds of
analysis used to understand those causal
relationships in the first place.
Cooley and Snyder argue that the
World Bank’s Ease of Doing Business
Index should be eliminated and replaced
with “data reflecting each country’s
performance on specific indicators.”
Here, too, they err: those seeking specific
indicators can already turn to the
hundreds of other data series the World
Bank and other organizations produce
each year. The authors’ suggestion that
the Ease of Doing Business Index harms
the public policy debate wrongly assumes
that researchers and policymakers use it
192 f o r e i g n a f fa i r s
as the single source for their judgments,
rather than as one of many.
joseph w. sullivan
Research Associate, American Enter-
prise Institute
RUSSIA’S REBALANCE?
To the Editor:
Fu Ying (“How China Sees Russia,”
January/February 2016) argues that in the
triangular relationship among China,
Russia, and the United States, the points
representing Moscow and Washington are
farthest apart. This is certainly true in
eastern Europe and, to a lesser extent,
the Middle East. Yet in the Asia-Pacific,
Russia and the United States have few
outstanding differences and a long history
of collaboration against third-party threats.
Russia and the United States both face
challenges from an increasingly powerful
and nationalist Chinese state. As Wash-
ington’s main geopolitical competitor for
primacy in the Asia-Pacific, China poses
a clear challenge to the United States.
For Russia, the challenge is more subtle:
China’s deepening economic hold on
Russia’s eastern territories could lead to
Moscow’s long-term irrelevance in Asia.
Chinese-Russian business deals in
energy, mining, finance, power generation,
and cross-border transportation, struck
mostly in the wake of the Western sanc-
tions imposed in reaction to the Ukraine
crisis, have advanced this prospect. Russia’s
current relative economic isolation offers
Beijing the opportunity to achieve a major
geoeconomic goal: joining the resource-
rich Russian Far East and China’s indus-
trial northeast into what Chinese Vice
President Li Yuanchao has called a “single
economic integration zone,” closely coordi-
nated with China’s industrial preferences.
To be sure, Russia’s bond with China
has provided Moscow with a much-needed
 Letters to the Editor

economic lifeline and a measure of and to accurately assess perceived

independence from the West. Yet threats. But that does not mean that
China’s tightening embrace also presents policymakers should abandon strategiz-
potential political costs, such as the ing. Similar challenges pervade domestic
erosion of Moscow’s sovereignty over state-level government planning and
its Asian territories, the diminishment the corporate sector, where the value of
of its influence in East Asian affairs, and planning has long been recognized.
some loss of status as a Eurasian power. Having facilitated planning in the
Should Russia become China’s depen- public and private sectors, I have seen
dent partner, it would add to China’s much good come from even less-than-
regional and global power; that, along perfect processes. Large-scale strategizing
with Chinese domination of the Russian forces bureaucracies to communicate
Far East, would pose all kinds of strate- more consistently with one another
gic complications for the United States. and with the public. And an improved
Moscow and Washington should be understanding of risk leads policymakers
mindful of the costs of the Ukraine crisis to sharpen and revise their initiatives.
for both countries’ interests in the Asia- Instead of abandoning strategy, as
Pacific. A more productive dialogue on the Edelstein and Krebs suggest, we should
crisis and on other areas of disagreement reform it. For example, the U.S. president
could lead the West to relax economic should be required to issue a national
sanctions against Russia. That would help strategy document within the first year
Moscow gain greater access to the foreign of his or her term and then review it every
businesses that could assist in developing other year. And the strategy should take
the Russian Far East. This would signify a broader view of threats to the United
not a U.S.-Russian entente but rather a States. U.S. President Barack Obama took
shift in the points of the strategic triangle a step in the right direction in 2010, when
connecting China, Russia, and the United his National Security Strategy recognized
States that would lead to a more equidis- the importance of domestic policy to the
tant and stable relationship. nation’s security: “We have not adequately
rensselaer lee advanced priorities like education, energy,
Senior Fellow, Foreign Policy Research science and technology, and health care—
Institute all of which are essential to U.S. com-
petitiveness, long-term prosperity, and
FIX IT, DON’T DITCH IT strength,” the document read.
To the Editor: Plans can and should adapt to changing
David Edelstein and Ronald Krebs conditions on the ground. But these are
(“Delusions of Grand Strategy,” Novem- reasons to build an agile planning process,
ber/December 2015) rightly point out not a reason to abandon planning.
that in planning for national security, it debra k. decker
is difficult to calculate costs and benefits Senior Adviser, Stimson Center
Foreign Affairs (ISSN 00157120), March/April 2016, Volume 95, Number 2. Published six times annually (January, March, May, July,
September, November) at 58 East 68th Street, New York, NY 10065. Print subscriptions: U.S., $54.95; Canada, $66.95; other
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March/April 2016 193

Who’s Afraid of Slow Growth?
Foreign Affairs Brain Trust
We asked dozens of experts whether they agreed or disagreed that most of
the world’s major economies are facing a sustained period of slow to no
economic growth—and there’s nothing that governments can do about it.
The results from those who responded are below:

Strongly Agree Disagree

“Two things could rescue
us from a slow-growth
future: major entitlement-
related budget reforms
that would bring long-
term deficits under
control and a resurgence in
entrepreneurship.”
ROBERT E. LITAN is a Nonresident
Senior Fellow at the Brookings Institution.
“If the largest economies
were to take steps to open
their markets and begin to
harmonize their
regulations, it would
unleash additional
stimulus. These things probably won’t
happen, at least in the near term, and
none constitutes a silver bullet.”
CARLA A. HILLS is Co-Chair of the
Council on Foreign Relations and Chair
and CEO of Hills & Company.

See the full responses at ForeignAffairs.com/SlowGrowth

Addressing the critical issues
facing Asia in the 21st century
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brought experts from Bangladesh, the Philippines, Thailand and Vietnam to South
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from grassroots to government—including a visit to the Smart Grid Information Center.
The Asia Foundation works across the region to advance progressive change on
major environmental challenges including disaster risk management, climate
change adaptation, and green growth.

READ MORE AT ASIAFOUNDATION.ORG

 Study With
Purpose
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growth, poverty, governance,
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persist as central questions of
global affairs, the demand for
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