Following Up: More on the Trump Tariffs

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aluminum, Australia, Canada, David J. Lynch, Defense Department, defense manufacturing base, downstream industries, European Union, Following Up, George W. Bush, Gordon Hanson, James Mattis, Kentucky, manufacturing, Mitch McConnell, multiplier, Paul Krugman, Paul Ryan, steel, steel-consuming industries, tariffs, terrorism, The New York Times, Trade, Trump, U.S. Business and Industry Council, United Kingdom, Washington Post, Wisconsin

I could spend all day today rebutting ignorant, biased, and simply inane commentary on President Trump’s Thursday announcement that stiff tariffs will be imposed on U.S. imports of steel and aluminum (along with watching the plethora of college hoops on TV today!). Instead, I’ll offer some follow-on thoughts to the tariff talking points I posted yesterday.

>The European Union in particular seems outraged by the Trump decision, and has threatened to retaliate with tariffs on its own on a wide range of products, including some from Wisconsin and Kentucky. These of course happen to be the home states of House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. It’s an understandable, and certainly clever, impulse, and in 2003, something like it succeeded in convincing former President George W. Bush to lift steel tariffs he had imposed 18 months earlier.

Of course, Bush 43 was no Trump. He was a committed free trader and globalist, and/or agent of of America’s powerful corporate offshoring lobby. But here’s something that needs to be considered by Messrs Ryan, McConnell, and other lawmakers at whom the Europeans or other powers may take aim: What if, shortly after September 11, Osama Bin Laden had threatened to destroy major targets in their home states or districts unless the United States withdrew militarily from Afghanistan and left him alone. Would the affected legislators have run to the White House to plead for an abandonment in the war on terror? Not likely.

I know that war and economics are different (although given the importance of economic strength as a source of military strength and overall national success, the similarities and overlap are widely overlooked). But don’t doubt for a minute that American politicians’ reactions to these European threats will be watched closely in all the world’s capitals, and that signs of weakness will be factored into foreign decisions to abide by or violate current trade agreements at the U.S.’ expense, or take other measures to gain advantage in their own, American, or third-country markets that clash with free market and free trade norms.

So here’s hoping that American Members of Congress and Senators will show some backbone, and make clear to the nation’s trade partners that they won’t permit themselves and the country at large to be hanged separately.

>Speaking of hanging separately, quite naturally, U.S. steel- and aluminum-consuming industries are concerned that their global competitiveness will be harmed if they’re forced to use more domestic metal in their products. They need to keep two considerations in mind. First, if foreign governments are permitted by Washington’s inaction to dump major American industries like aluminum and steel out of existence, consuming sectors would be next in line. 

Second, there is indeed no inherent reason to make the consuming industries pay any penalty at all. When I was at the U.S. Business and Industry Council, which represented many steel-consuming companies and industry groups, we persuaded them that the best solution would be tariff protection for them as well. The tariff complaints coming from such sectors today reveals that the Trump administration hasn’t put this possibility on the table. That’s a major missed opportunity, and the President should realize that such offers not only can build support for the steel and aluminum tariffs. They can also expand the constituency for broader America First trade policies. (New Trump statements on possible auto tariffs make clear exactly the types of steps needed, although as is usually the case, they work best when applied across-the-board.)   

>Speaking of missed opportunities, here’s another (big) one – the handling of some allied countries’ indignation about being treated as threats to America’s national security because of their steel and/or aluminum shipments. In several major cases, these complaints could have been prevented had the administration recognized that Australia, Canada, and the United Kingdom are defined by American law as part of the nation’s defense “technology and industrial base.”

I’m not necessarily a supporter of this policy, but since it exists, these countries have an entirely legitimate point regarding their possible inclusion in the metals’ tariff regime. And the Trump administration should have explained to them that they were of course being exempted. Moreover, the Defense Department should have told the rest of the administration about the legal and legislative situation. Yet Pentagon chief James Mattis’ memo to his administration colleagues outlining his department’s position on the tariffs never mentioned it.

Not that these allied countries are entirely blameless for the row. They could have raised the issue when the prospect of sweeping U.S. tariffs was first raised. But all indications are that they preferred to grandstand.

>As should now be expected, the media coverage of the tariff controversy has often veered off into economics and policy La-La Land. Two of the funniest examples I’ve seen so far (and they’re nearly identical): criticizing the announced tariffs because they only boast the potential of bringing back high-value manufacturing to the United States instead of lots of industrial jobs.

Think I’m kidding? Here’s Washington Post correspondent David J. Lynch: “If tariffs prompt companies to move production back to the United States, they would likely opt for highly automated plants that require fewer workers. Trump’s tariffs ‘would bring back 21st-century factories where we lost 20th-century factories,” [economist Gordon] Hanson said this week at the National Association for Business Economics conference in Washington.”

Here’s no less than Nobel Prize-winning economist and New York Times columnist Paul M. Krugman: “[T]he tariffs now being proposed would boost capital-intensive industries that employ relatively few workers per dollar of sales; these tariffs would, if anything, further tilt the distribution of income against labor.”

What both authors are somehow missing is how manufacturing is valuable for much more than high wage employment. It’s long been the nation’s leader in productivity growth. It generates nearly 69 percent of private sector American spending on research and development. And don’t forget its high employment and output multipliers – which mean that each dollar of manufacturing output punches far above its weight in generation production and jobs elsewhere in the economy.

That last point is particularly relevant to Krugman’s claim about labor’s low share of national incomes. The manufacturing employment multiplier tells us that adding to industry in America – including capital-intensive industry – will promote employment in related sectors like logistics, plus revitalize the retail and other service sectors of the towns and cities and counties where the new factories are built. Those jobs may not pay as well as the manufacturing jobs lost. But they’re sure better than the economic death that often results when communities lose their factories.

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(What’s Left of) Our Economy: Intel – & Often China – Inside Your Hackable Electronics

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China, computers, counterfeits, cyber-security, Defense Department, electronics, globalization, hacking, Intel, microchips, semiconductors, smart phones, technology, Trade, {What's Left of) Our Economy

OK, who out there has an electronic device like a computer or a smartphone? I thought so. And who uses them like…nearly all the time? And engages in lots of financially or personally sensitive activity on-line? Thought so again. And you no doubt weren’t thrilled to find out yesterday that the computer chips vital to the operations of virtually all of these devices have some big security flaws that make them eminently hackable.

Well, here’s worse news: There’s an excellent chance that the hackers could be working for the Chinese government. And for that, you can thank decades of stupefyingly boneheaded American trade and globalization policies.

I can’t tell you how excellent the chances are, because one of the completely unnecessary failures of these policies has been pre-Trump Washington’s complete lack of interest, from either major political party, in tracking and letting the American public know how dependent they and their economy have become on products from potentially dangerous countries.

But I feel confident in claiming that the chances are at least pretty excellent. The reason? Private sector specialists have published detailed studies on subjects like the Chinese electronics industry. Thanks to them, it’s well established that, although China has yet to become a top global player in manufacturing semiconductors, and especially cutting-edge microchips, it’s a powerhouse in what’s known as “back end” semiconductor production – relatively low-tech phases of the process that involve activities like packaging, assembling, and testing.

So many U.S. and other non-Chinese information technology companies do so much of this activity in China that, according to a report from the consulting firm PwC, in 2015 (the latest available data) China-based facilities accounted for 44.6 percent of total global revenues from these back end operations. That’s up from just 20.3 percent in 2009. In other words, Chinese employees of these companies have ample opportunity to insert all sorts of bugs in them, and these opportunities have been growing rapidly.

Think I’m paranoid? Or just anti-Chinese? Then you need to learn that the Defense Department had admitted that, over a recent two-year period, its weapons systems had been studded with some 1 million counterfeit electronics parts and components – some 70 percent traceable to China. DoD now claims it’s solved much of the problem with a “trusted supplier” program. But good luck reliably inspecting the gargantuan Chinese electronics production complex over any serious length of time.

Longstanding American trade and globalization policies deserve most of the blame because, through priorities like indiscriminately expanding U.S. commerce with and export-oriented investment in China, they actively encouraged much of the world’s electronics industry to migrate to the People’s Republic.

The world’s current Number Two semiconductor producer, likes to tout “Intel Inside” a huge share of the world’s electronics devices. Maybe it, and others, should start to advertise “China Inside”?

Our So-Called Foreign Policy: At the WTO, Europe Claims a Right to Free Ride

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Airbus, alliances, Boeing, Charles Dickens, Defense Department, EU, European Union, foreign policy establishment, free-riding, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, subsidies, Trade, trade law, Trump, World Trade Organization, WTO

Charles Dickens famously observed that the law can be an idiot. Last week’s World Trade Organization (WTO) ruling on U.S. and European Union (EU) aerospace subsidies reminds that American alliance policy can be idiotic – and in a key respect has been for decades. The fault here lies not with the WTO – which is hardly beyond criticism. Instead, the problem entails an American approach to international security relationships that continues a decades-long record of enabling brazen free-riding even under the current U.S. administration – which so far has decried this practice only rhetorically.

Interestingly, the WTO decision last Friday looks like a big win for American aerospace giant Boeing and a big loss for its EU rival Airbus. The trade body ruled as still illegal only one of the original 28 subsidies provided Boeing by Washington state and the federal government that were challenged by Airbus. According to Airbus, the WTO agreed with its allegation that some of the other 27 means of Boeing support were subsidies, but Boeing says that since the ruling determined that these payments had not harmed Airbus, they can remain in place. Airbus disagrees, so expect more litigation.

But here’s what’s completely outrageous. Some of the subsidies Airbus successfully challenged – at least on paper so far – were U.S. Defense Department subsidies. It’s jaw-dropping enough to recognize that Airbus gets military support, too. What’s worse is that so much of the Pentagon money handed over to Boeing (and other defense contractors) has been spent on weapons and other military systems that the United States would not need at all or in such quantity either if Washington hadn’t taken on any role in protecting Europe for decades, or if the Europeans bore anything like an appropriate burden for the own defense.

And don’t forget: For decades, even most U.S. Presidents and other foreign policy establishmentarians who have assign supreme value to continuing current transatlantic security arrangements agree that too many European members of the North Atlantic Treaty Organization (NATO) have been shirking. Talk about biting the hand that shields you.

It’s important, however, to keep in mind who’s mainly to blame. It’s clear that the Europeans deserve no high marks for either gratitude or loyalty. But it’s also clear that their actions can be reasonably portrayed as legitimate efforts to maximize their own self interests – reflecting the equally reasonable judgment that these gambits long have been good bets to succeed.

What the American public needs to ask is (a) why their leaders have handled alliance relationships so ineptly as to have created expectations of free-riding that the WTO case shows are now seen as nothing less than a right to free-ride; and (b) whether the avowedly transactional Trump administration will view the EU defense subsidy charges as a long overdue opportunity to say enough’s enough.

Our So-Called Foreign Policy: An Asia Grand Strategy that Still Looks Like America Last

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Asia, Barack Obama, China, Defense Department, export controls, John McCain, military spending, neoconservatives, Our So-Called Foreign Policy, pivot, technology transfer, The Wall Street Journal, Trump

It looks like the Trump administration is going All Neocon on its Asia grand strategy. Or is it All Obama? Interestingly, both approaches have shared the same main features, and depressingly, both are dangerously incoherent and disturbingly resemble the course that Mr. Trump apparently has chosen to follow. .

The essence of neoconservative strategy in Asia consists of bloviating about the risks to America’s national security from China in particular, pushing for a stronger American military response, and with equal vigor backing economic policies that inevitably boost China’s military strength. And the quintessential example is Republican Senator John McCain of Arizona.

McCain has voted for his entire career in favor of the U.S. trade policy decisions that have enabled China to amass literally trillions of dollars worth of trade surpluses with the United States, and therefore finance an enormous military buildup that he himself has warned directly threatens American interests in Asia. He’s periodically voiced concerns about the lax U.S. export controls that have enabled China to secure some of America’s best defense-related technology. But he’s never sponsored any steps capable of solving this problem.

What McCain has focused on has been boosting military spending and stationing more of these forces, in large part to counter burgeoning Chinese ambitions. And recent Trump administration moves make clear that the president and his top advisers have been listening. As The Wall Street Journal reported earlier this month:

“The Pentagon has endorsed a plan to invest nearly $8 billion to bulk up the U.S. presence in the Asia-Pacific region over the next five years by upgrading military infrastructure, conducting additional exercises and deploying more forces and ships….The proposal, dubbed the Asia-Pacific Stability Initiative, was first floated by Sen. John McCain (R., Ariz.) and has been embraced by other lawmakers and, in principle, by Defense Secretary Jim Mattis and the head of U.S. Pacific Command, Adm. Harry Harris. Proponents haven’t developed details of the $7.5 billion plan.”

The Journal account goes on to remind readers that the Obama administration had pursued its own military “pivot” to Asia, but that it was “disparaged by critics as thin on resources and military muscle.” And of course, the former president refused to respond effectively to China’s predatory trade practices, and only very late in his second term began rethinking flood of advanced defense-related knowhow to the PRC.

President Trump has of course spoken repeatedly of acting forcefully to overhaul America’s China trade policies. But his administration’s actions so far have fallen far short of this mark.

The mind-blowing upshot: In a military conflict with China, the United States forces could find themselves fighting against, and taking casualties from, Chinese units and weapons that have been paid for and researched by their enemy. Is that the kind of first so many Americans voted for?

Im-Politic: Flynn & Abe Reveal the Price of a Thinly Staffed Trump Administration

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Defense Department, Gary Cohn, Im-Politic, James Mattis, Japan, Michael Flynn, National Economic Council, National Security Council, Shinzo Abe, Stephen Miller, Steve Bannon, Trade, Trump

During the last presidential campaign, the Mainstream Media ran so many stories about the Trump campaign being in various stages of “disarray” at various times that some skepticism was in order when such articles resumed popping up following Mr. Trump’s presidential victory and inauguration. In addition, I kept asking myself why any official with any loyalty to Mr. Trump would even speak with mainstream reporters like The New York Times‘ Maggie Haberman, who was so hostile to their boss for so long that she was considered a “surrogate” by top aides to candidate Trump’s main general election rival, Hillary Clinton.

At the same time, as so often remarked, running for office is hardly the same as serving in office, especially when the presidency is involved. And the resignation of an official so high level as national security adviser Michael Flynn after only about three weeks into an administration is a glaring sign that the president is well behind the curve in getting his organizational act together. Unless he raises his game dramatically very soon, his thick teflon coating could start wearing very thin, and even at this early stage, “failed presidency” claims will look disturbingly on target.

But even if the transition to a post-Flynn presidency goes relatively smoothly, and no other fiascoes break out, this latest episode vividly reminds of a big challenge President Trump will keep facing throughout his time in office, and one that I’m not totally confident he’ll solve in a satisfactory way.

Why not? Because he’s never had a large cadre of high-quality advisers capable of staffing even the very top levels of a new administration. Nor is one is likely to appear any time soon. For nationalist critics of recent American trade, broader globalization, and foreign policies have never attracted anywhere near the kind of funding that’s needed to create the kind of counter-establishment that can nurture a big enough core of knowledgeable specialists representing that perspective.

In fact, the nationalists’ performance stands in stark and sad contrast to that of other interests in years past. The leading example is mainstream conservatism – which recognized the need for such institutions to overthrow or at least modify what they saw as a dangerously liberal policy consensus reigning in Washington and in national politics during the post-New Deal decades.

As a result, if Mr. Trump is to halt an powerful downward spiral in his presidency, he may well need to rely even more heavily than at present on cabinet and key sub-cabinet and other aides who hold much more conventional views than his – and those of his base – on key issues like trade and immigration that largely vaulted him into the Oval Office. Just look at the president’s recent summit with Japanese Prime Minister Shinzo Abe for evidence of how this dilemma has already affected U.S. policy in ways that Trump backers can’t possibly support.

Precisely because Japan has been a leading predatory trading power for so long, its economy-wide trade barriers and other mercantile practices had drawn Mr. Trump’s ire during the campaign. In addition, Japan was (rightly) portrayed as a classic defense free-rider – a country that was able to skimp on its own military spending because of its guarantee of American protection. And candidate Trump went even further than most critics in questioning the bilateral security relationship, suggesting that because of the mounting nuclear threats from both China and North Korea, Washington’s decades-old promise to defend Japan against any and all attacks posed increasingly alarming nuclear risks to the United States.

Japan clearly was so worried about President Trump’s views that Abe rushed to the United States right after the November vote and became the first foreign leader to meet President-elect Trump in person. Abe’s trip last week, moreover, made him the second foreign leader to see President Trump in person once his term began. (Britain’s Theresa May was the first.)

Judging not only from the official record of the visit, but from the judgment of a group of Japan policy specialists that convened in Washington yesterday, Abe achieved both of his major objectives – and then some. President Trump pledged to continue the policy of defending Japan through thick and thin (“100 percent”), and Abe successfully deflected significant U.S. trade pressure – at least for the time being.

As made clear by Abe’s detailed and decisive statements during his visit, one main reason for his triumph was preparation – always an urgent necessity for Tokyo since, despite all the traditional American establishment boilerplate about interdependence, the United States has always been much more important to Japan than vice versa. But three other main reasons bring us back to the “Flynn problem.”

First, Abe plainly was able to fill a policy vacuum created both by the Trump administration’s growing pains and its thin staffing. Second, the American preparations made for the Abe meetings, including putting together briefing materials, were dominated by holdover bureaucrats who overwhelmingly support the longtime status quo in U.S.-Japan relations. And third, many of the top aides Trump has selected strongly support the status quo, too. These include Secretary of Defense James Mattis and National Economic Council Chair Gary Cohn. The former is general recently retired from an American military with a big vested psychological and bureaucratic stake in maintaining massive U.S. forward deployed forces in East Asia. The latter is a former senior executive at Wall Street mainstay Goldman Sachs.

Not that this kind of gloom and doom scenario (from a Trump-ian standpoint) is inevitable. Although high quality nationalist policy specialists are hardly abundant, they can be found. Moreover, it’s possible that President Trump could make clear to his more establishment-oriented advisers that he expects them to reflect his own iconoclastic leanings. In addition, aides that plainly represent his campaign positions (and of course contributed substantially to formulating them) could be given the whip hand bureaucratically, in order to drive this message home.

But of course this approach’s success will depend largely on the establishment figures following this lead – and not walking away from jobs that most of them plainly don’t need financially or or professionally. At the same time, even if Mr. Trump’s more conventionally minded advisers stay on in this atmosphere, would there be enough loyalists, and enough competent loyalists, to discipline them effectively? I don’t know if the aides most strongly supportive of the president’s vision, chiefly White House policy chief Stephen Miller, and chief strategist Steve Bannon, are grappling with these issues. I do know that they’ll need to if the Trump presidency is to achieve its promise.

Following Up: Washington’s Still Covertly Exposing America to Asia Nuclear Threats

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2016 election, Asia, Defense Department, deterrence, Following Up, missile defense, North Korea, nuclear weapons, presidential debates, South Korea

There’s a good news-bad news way to report the latest development in the U.S. government’s ongoing efforts to cope with the surging nuclear threat posed by North Korea. Too bad the bad news weighs much heavier on the scale.

On the one hand, it’s good news that Washington is finally acknowledging with deeds as well as words a danger that RealityChek has been highlighting for years: Kim Jong Un’s regime keeps making impressive strides towards building nuclear weapons capable of neutralizing America’s commitment to defend South Korea and Japan with its own nuclear weapons. The reasons? As I’ve noted, the North’s weapons are nearing the point at which they can hit U.S. territory. And just as frighteningly, Pyongyang is learning how to boost greatly the odds that at least some of these weapons will be able to survive an American strike to knock them out before they can be used – either before a military conflict begins on the Korean peninsula, or while one’s underway.

As a result, the North can be increasingly confident that Washington won’t use its own nuclear weapons to stop any invasion it mounts of the South, and therefore increasingly confident that its superior conventional forces (with or without nuclear help) would power it to victory.

And a special bonus for the United States: Because 28,000 U.S. troops remain in South Korea even though the Cold War has been over for nearly 30 years, a North Korea invasion could well confront an American president with this agonizing choice: Use the nukes, and risk losing one or more U.S. cities, or acquiesce in major American casualties. Those North Korean nuclear forces could take out America’s 49,000 soldiers and sailors in Japan, too.

As known by RealityChek regulars, in the most immediate sense, the United States is in this predicament to begin with because neither South Korea nor Japan has fielded powerful enough conventional militaries to defeat North Korea without American help. In large measure, Japan has skimped on defense because Washington doesn’t want it to become a major military power once again – for fear the Japanese will revert back to their aggressive early 20^th century ways. But no such pressure has been exerted on Seoul. For decades, however, American leaders have decided that both a nuclear Japan and South Korea would be calamitous.

And worst of all, the entire U.S. foreign policy establishment – including the Mainstream Media – has worked overtime to hide these scary realities from the American people.

So what’s the good news? As reported in this Bloomberg piece, the United States will continue to develop a missile defense system aimed at protecting U.S. territory from the North’s nukes. Indeed, a new round of tests is “tentatively” scheduled for early next year.

But here’s the (really) bad news: Washington is nowhere near developing a missile defense system that can actually work. To be sure, Defense Department officials are expressing optimism that they’ve figured out how to fix the problems responsible for recent test failures. But even if this next test – and follow-ons – succeed, and even if their targets actually do approximate “real-world threats” (which they haven’t so far), defining success is awfully tricky given how much damage even one warhead striking the United States can do.

All of which means that, for the indefinite future, it will be American policy to keep the U.S. homeland exposed to a non-negligible threat of nuclear attack in order to protect countries more than wealthy enough to defend themselves. As I’ve acknowledged, there are some theoretically justifiable reasons for this strategy (e.g., both countries are vital trade partners, or a nuclear-armed Japan really would go berserk, or Washington is striking the right balance between deterring aggression and preserving peace in Asia and keeping Americans themselves safe). But it also remains clear that U.S. leaders refuse to acknowledge the real stakes – because they recognize that no benefits of protecting Asia can possibly exceed the harm of a nuclear warhead (or two, or three) exploding above U.S. territory, and that public opinion would explode in outrage if the truth were told.

We’ve still got some presidential debates – and a vice presidential face-off – coming up before Election Day. Is anyone confident that this issue will receive remotely as much attention as Alicia Machado?

Following Up: On the Middle East, the “Serious” Candidates are Less Serious Than Ever

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2016 elections, air strikes, allies, burden sharing, coalition, Defense Department, Following Up, free-riding, Iran, Iraq, ISIS, Kurds, Middle East, Pentagon, Saudi Arabia, Sunnis, Syria, terrorism

A recent RealityChek post explained why the label “serious” shouldn’t be used for presidential candidates (in either party) who claim that the United States can create a meaningful anti-ISIS military coalition. More recently, a report from the Pentagon itself further mocks the idea that office-seekers – or anyone else – believing that America’s allies will share much of the burden of defeating the terrorist group have any significant knowledge of the Middle East or world affairs generally. As my post noted, most of the presidential hopefuls in both parties fall into this category – including all of the “mainstream” or “establishment” figures, along with President Obama .

The Defense Department report tallied by country the number of air strikes carried out against ISIS as of January 19, and here are the findings. Overall, of the 9,782 such attacks conducted on targets in Syria and Iraq, the United States has been responsible for 7,551, or more than 77 percent. By target countries, U.S. war planes have carried out nearly 69 percent of the anti-ISIS strikes in Iraq, and just under 94 percent of these operations in Syria. (These counts don’t include Russian activity, or the more than 65,000 “sorties in support of operations” in the two countries, like reconnaissance and targeting missions.)

DoD doesn’t break down the non-U.S. figures by country; according to CNN, one reason is that these various governments define and count “air strike” in many different ways. But given the focus in the United States on local Middle East countries, and the expectation that their own gut level self-interest in will motivate them to practically lead the fight against a group they say is a literally mortal threat, it seems reasonable to surmise that Saudi Arabia et al are dropping the ball.

It’s important to point out that one reason that the United States has dominated the air war against ISIS is that the United States is the world’s dominant military power. At the same time, the U.S. air power is deployed all around the world in order to handle threats in nearly every region. America’s Middle East allies have no military responsibilities beyond their neighborhood.

Moreover, if these countries aren’t all-in for the air war, how realistic is it to expect them to charge into a major ground war against ISIS? The answer: It’s the height of inanity – and ignorance. And the reason is pretty simple: As has repeatedly been the case since the end of World War II, the United States needlessly has made itself vulnerable to the free-rider phenomenon. Under Democratic and Republican presidents alike, Washington has been so infatuated with exercising “global leadership,” and has so loudly advertised its conclusion that America’s own security depends on the security of every corner of the globe, that its European NATO allies, Japan, and South Korea have understandably assumed that the United States would protect them no matter how modest their own efforts.

In the impossibly byzantine Middle East, the free-rider syndrome has been exacerbated by all the other items on the security agendas of countries ranging from Saudi Arabia (like countering Iranian ambitions in the region, and supporting lots of Islamic radicalism itself) to Turkey (like preventing Iraq’s anti-ISIS Kurds from becoming strong enough to create an independent state that would attract Turkey’s own Kurdish minority).

The failure of the “serious” presidential candidates to recognize the coalition delusion shows that accumulating “experience” in making national security policy in Washington by no means proves that they’ve accumulated wisdom or even developed simple common sense. The same of course holds for the establishment media, which keeps clinging to and parroting the same off-the-mark convictions.

Following Up: Defense-Related Tech Keeps Flowing to China While Obama Fiddles

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China, cyber-security, Defense Department, Following Up, forced technology transfer, hacking, IBM, Obama, technology, The New York Times

It’s great to report that at least some of the Mainstream Media’s biggest guns are finally waking up to the dangers posed to U.S. national security by decades of the nation’s most advanced and militarily-relevant know-how being transferred to China by many of America’s leading technology companies. (The main examples can be seen here, here, and here.) Less great is having to report that the Obama administration still too often seems asleep at the switch.

Let me start with a little personal story. Thirteen years ago, while visiting IBM’s software-research lab in Beijing, I observed dozens of Chinese employees moving about seemingly free of any security-related limitations. I asked the lab’s manager two questions – and told him his answers would be on the record, for attribution for an article I was thinking of writing. He confidently assured me that would be OK.

The questions were: “Do you have any way of knowing whether any of your Chinese staff is also working for the Chinese government?” and “Do you have any way of knowing whether any of your Chinese staff is a spy?” The manager unhesitatingly answered “No” to both. He hastily added, “But you can be sure that we at IBM work very hard to protect our core intellectual property.” I responded, “I think you at IBM would turn cartwheels trying to make the Chinese government happy and keep it as a customer,” and he declined to comment.

But the story didn’t quite end there. The next day, the lab manager called me and let me know that he had changed his mind about his answers being on the record. I told him that’s not the way it works in journalism when the ground rules have been set in advance, but offered to negotiate with him in exchange for further info from him. When he waxed indignant about ungentlemanly behavior, I wished him a good day – but never felt compelled to use his name, and possibly ruin his career.

And a few weeks later, when I mentioned this incident to U.S. officials in China, they noted that the resources at their disposal for monitoring the tech transfer situation in the People’s Republic were hopelessly inadequate.

Thirteen years later, the situation looks far worse. As I detailed in a 2013 Bloomberg article, U.S. tech companies spent much of the decade showering Chinese entities – all of whom have relations of some kind or another with the Chinese government – with all the knowledge they would need to set up world-class cyber-hacking operations. And more generally, China’s overall high tech prowess has burgeoned as Beijing repeatedly has extorted advanced knowhow, along with capital, from American-owned and other firms all too eager to serve their crown jewels in exchange for market access. I can’t think of any remotely comparable historical precedent for one great power so energetically strengthening the defense-related capabilities of a likely rival.

And if you think about it, U.S. tech transfer policy these days has become worse still. For during most of the time since I was in China, China was acting only like a “likely rival.” Between its recent hacking offensive and expansionism in the South China Sea, it’s now acting like an unmistakable rival.

But according to the two recent New York Times reports cited above, the Defense Department is staying mum on a new report – from a firm that government agencies rely on for “classified military analysis and intelligence” – charging that IBM’s tech partnerships with China are “endangering the national and economic security of the United States, risking the cyber-security of their customers globally, and undermining decades of U.S. nonproliferation policies regarding high-performance computing.”

Just as disturbing: The Times is no doubt right in observing that “There is nothing to suggest that the partnerships have broken American laws,” and that many aspects of IBM’s operations in China “have been vetted and approved by the United States government, which is empowered through a review process to decide whether American tech companies are giving away too much advantage to military rivals.” As one wag once cracked, what doesn’t violate the law in Washington is often more disturbing than what does.

Meanwhile, back on the hacking front specifically, the Obama administration has both been deferring to the export-happy tech industry in developing new rules for controlling the sale overseas of hardware and software for on-line surveillance, and apparently doesn’t realize that these eavesdropping-focused products are indistinguishable from those that can penetrate a wide range of critical computer and internet systems. Moreover, the focus of the administration’s new efforts seems to be out-and-out rogue states like Iran, North Korea, and Syria. Super-hacker China apparently isn’t even on the screen. (That particular Times piece didn’t give it much attention, either).

Because the Mainstream Media plays such a big role in setting official Washington’s agenda, its improved coverage of China and other tech transfer-related security issues is genuinely good news. But it’s no substitute for a government that’s genuinely, or even minimally, vigilant.

Our So-Called Foreign Policy: A Miss and a Possible Hit for the New Pentagon Strategy Statement

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China, cyber-security, Defense Department, ISIS, Martin Dempsey, multinational corporations, National Military Strategy, national security, Our So-Called Foreign Policy, Pentagon, Putin, QDR, Quadrennial Defense Review, Russia, technology transfer

It’s always hard to know how seriously to take the national security and military strategy documents periodically issued by the White House and Defense Department. On the one hand, it’s clear that they’re the products of lots of person-hours and resources; a few years ago, in fact, I was honored by an invitation to participate in a skull session held in connection with one of the Quadrennial Defense Review reports.

On the other hand, it’s difficult to contend that these exercises result in any meaningful change. Sure, points of emphasis come and go – the new National Military Strategy (NMS) document just published by the Pentagon (the first since 2011) generated some news coverage (and complaints from Moscow) by pointing to a growing threat from Vladimir Putin’s Russia. And of course, it was the first such statement that mentioned ISIS. But the new NMS seems dominated by the usual declarations that the United States has global security interests (not its authors’ fault – setting the broader national security strategy is the job of elected and appointed political leaders, not them) and that the nation will defend and advance these wide-ranging functional and geopolitical objectives with whatever kinds of American and allied military forces and related resources are needed.

Nonetheless, two features of the NMS are arguably newsworthy:

>First, judging by the NMS, the U.S. military has no clue that the nation needs to start moving aggressively to curb the transfer of advanced militarily relevant technology abroad by American multinational businesses. The document actually leads off by noting, “Complexity and rapid change characterize today’s strategic environment, driven by globalization, the diffusion of technology, and demographic shifts” and then fretting that “When applied to military systems, this diffusion of technology is challenging competitive advantages long held by the United States such as early warning and precision strike.”

As should be clear to anyone educated enough to read a newspaper, cyber-hacking capabilities should be added to this list (and they are later in the NMS). In fact, as I’ve noted, America’s top military officer, Chairman of the Joint Chief of Staff General Martin Dempsey, has publicly admitted that the United States no longer enjoys superiority in this critical sphere. But what should be even clearer is that when U.S. high tech companies in particular set up labs and training centers in China in particular, or invest in Chinese technology companies, they not only greatly strengthen China’s military, but they just as greatly boost the odds that dangerous devices and knowhow find their way to places like North Korea and Iran. A related problem: U.S. allies, described in the NMS as comprising “a unique strength that provides the foundation for international security and stability,” have often been more reckless than Washington in permitting the spread of these technologies.

Greater efforts at technology denial per se won’t solve this problem – largely because so much of this dangerous cat has been let out of the bag. But good luck with even maintaining a usable American technological edge on the military front if the world’s most advanced creators of high tech products and services remain so largely free to feed the Chinese beast.

>Second, Dempsey’s Foreward to the NMS contains a genuinely remarkable statement that would merit much greater discussion if it received any elaboration in the document. It didn’t, but contrasts so stunningly with the literally universalistic objectives that have dominated American strategy since Pearl Harbor that I need to spotlight it anyway.

According to Dempsey (in a poorly structured sentence), “We are more likely to face prolonged campaigns than conflicts that are resolved quickly…that control of escalation is becoming more difficult and more important….” And then he adds this kicker: “…as a hedge against unpredictability with reduced resources, we may have to adjust our global posture.”

It’s standard for military leaders to warn that the nation’s security commitments are threatening to exceed the resources available to meet them, and the NMS itself pointedly observes that “We will not realize the goals of this 2015 National Military Strategy without sufficient resources. Like those that came before it, this strategy assumes a commitment to projecting global influence, supporting allies and partners, and maintaining the All-Volunteer Force.” But by adding “unpredictability” to simple budgetary uncertainty as a reason for reconsidering the nation’s worldwide objectives, it looks like Dempsey is at least thinking along substantially different lines.

Again, since this statement is a standalone, it’s hard to know how much importance it merits, and whether there will be any follow-up anywhere in the Pentagon. One thing that is certain: Dempsey’s comment about adjusting the nation’s global posture, which I’ve argued is an essential step in strengthening its security, didn’t appear in the NMS by accident.