Our So-Called Foreign Policy: A Welcome Biden Breakthrough on China Tech Policy Coming?

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China, export controls, investment, Michael McCaul, monitoring and enforcement, national security, Our So-Called Foreign Policy, Politico, tech, The Wall Street Journal

A key Republican in Congress recently said that the Biden administration is seriously considering a major and long overdue escalation of its efforts to hamstring a Chinese drive to achieve global technology dominance that gravely threatens U.S. national security. And a recent Wall Street Journal investigation has shown exactly why it’s so overdue.

Last week, Michael McCaul, Chair of the House Foreign Affairs Committee, told Politico that (in reporter Gavin Bade’s words) “The White House is considering new action to block U.S. business with entire swaths of the Chinese tech economy — an investment blockade stricter than previously reported.

As McCaul himself put it, based on conversations he says he’s had with U.S. officials, the administration “is talking about a theory where they would stop capital flows into sectors of the economy like AI [artificial intelligence], quantum, cyber, 5G, and, of course, advanced semiconductors — all those things….They actually want to say, right, you can’t invest in any [Chinese] company that does AI. You can’t invest in any company does cyber” or other similar sectors.”

As I’ve repeatedly suggested, such broad brush measures are vital for two main and closely related reasons. First, there are no Chinese entities (even those laughably classified as “private sector”) in any industry, including tech, that aren’t ultimately under the control of the Chinese government.

So it’s been utterly and dangerously foolhardy to believe – as U.S. administrations long have – that not just capital but knowhow and high tech products that Washington permits to be sent to specific Chinese entities aren’t likely to be made available to or used to benefit any other organization in China. And that includes the government and of course the military.

It’s true that Washington’s national security export control system isn’t totally unaware that such leakage may occur. Therefore, for instance, tech and product transfer requests with clear national security implications are typically approved only for customers that supposedly can be trusted to comply. Efforts to verify their trustworthiness are made as well.

But here we come to the second main reason that much more sweeping bans on doing tech business with China are needed: enforcement is excrutiatingly difficult at best. After all, the Chinese tech sector is enormous, which means that the financial and human resources needed for adequate monitoring would be equally enormous. Even worse, the highly secretive Chinese system boasts an impressive arsenal of tactics aimed evading the controls, and the aforementioned Wall Street Journal article indicates how spectacularly they can succeed.

A Journal investigation has found that “China’s top nuclear-weapons research institute has bought sophisticated U.S. computer chips at least a dozen times in the past two and a half years, circumventing decades-old American export restrictions meant to curb such sales.”

Indeed, because of its nuclear weapons-related work, this institute was one of the first such organizations put on U.S. export control blacklists – and that was back in 1997. So it’s clearly long been the subject of great ostensible American concern. Moreover, in 2020, in order to shrink the opportunities for cheating by the lab, the Trump administration  added “10 entities owned or operated by the academy as well as 17 aliases it uses to the entity list for procuring U.S.-origin items in support of Chinese nuclear-weapon activities.”

How, then, did it manage to obtain these semiconductors? Because in a system like China’s, which is not only highly secretive but totally lacking in independent regulatory systems and even apolitical rule of law, nothing is easier than concocting endless numbers of “aliases” and shell companies and fake arrangements of all kinds. Good luck to any American inspectors trying to keep up. Which is why total U.S. bans on investing in entire Chinese tech sectors would be so welcome.

At the same time, why stop at investment? Similar bans on broad classes of products and tech licensing deals are essential, too – and for exactly the same reasons. China operates nothing less than a vast, government wide mechanism for obtaining advanced tech capabilities from abroad by hook or by crook. Concentrating U.S. countermeasures on specific institutes or entities that can quickly change their identities is simply a fool’s quest. With the widest possible bans, Washington could reap the gains of an approach that’s the secret of success in much of life both inside and outside policymaking: keeping it simple.

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Our So-Called Foreign Policy: Totally Unhinged Establishment Thinking on Taiwan

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Asia-Pacific, China, East Asia, foreign policy establishment, Indo-Pacific, investment, Our So-Called Foreign Policy, semiconductors, Seth Cropsey, Taiwan, tech, The Wall Street Journal, Trade

Because semiconductors are already central to America’s security and prosperity and will only become more important with each passing day, wouldn’t it be great if the United States wasn’t so dependent on Taiwan for supplies – especially of cutting-edge chips – given that the island is located just 100 miles from China?

According to Seth Cropsey, one of America’s most respected military experts and a former national security official, the answer is “No” – because if the United States became much more self-sufficient in semiconductor manufacturing, it wouldn’t have to care so much about…Taiwan.

His January 26 Wall Street Journal article is a wonderful example of a syndrome I’ve long written about (most recently here in the Taiwan context) – the tendency of the U.S. foreign policy establishment, and too many U.S. leaders who have listened to its members’ advice, to use foreign policy measures to solve problems much better dealt with through domestic policy moves whenever possible.

The advantages of using domestic policy should be screamingly obvious. As I’ve also previously pointed out (most recently at length here), American policymakers will almost always have much more control over developments within our borders than without. And when it comes to Taiwan-like situations, rebuilding the nation’s capacity to manufacture semiconductors per se carries absolutely no risk of war with a nuclear-armed China.

What’s particularly bizarre about this Cropsey op-ed is that he completely overlooks two eminently reasonable arguments for concentrating tightly on Taiwan’s security, at least for the time being. The first is one I strongly agree with – regaining the semiconductor prowess the United States needs will take many years. So until then, it’s imperative – and in fact in my opinion vital – that America take whatever steps are needed to prevent China from taking over Taiwan, which it regards as a renegade province that it’s vowed to reabsorb by force if necessary. After all, it should be easy to see how Beijing either could win access to Taiwan’s crucial, world-leading production technology, or deny the United States (and the rest of the world) access to the huge volumes of chips that Taiwan’s factories turn out.

The second argument absent from his column – and which I don’t agree with – is that irrespective of the semiconductors, if China gained control over Taiwan, it would take a huge step toward becoming the kingpin of East Asia, perhaps the world’s most economically dynamic regions, and limit or cut off U.S. access to crucial markets and sea lanes.

I disagree for two reasons. First, leaving the semiconductors out of the picture, the chronic and huge trade deficits run up by the United States with the region show that doing business with East Asia has been a longtime major net loser for America’s domestic economy. Second, and also putting semiconductors aside, East Asia has relied for so long on amassing trade surpluses, especially with the United States, to achieve adequate growth that its countries (including China) simply can’t afford such decoupling.

As I just made clear, opponents of my position can cite valid concerns. But Cropsey never mentions them. Instead, he’s simply worried that the Biden administration’s focus on rebuilding America’s own semiconductor manufacturing mean that Washington “looks to be playing for time—not time to rearm and prepare for a fight, but to reduce Taiwan’s importance to the U.S.” and that this would harm U.S. interests because “An America that no longer needs Taiwanese semiconductors [would be able to]abandon its old friend.”

I admire Taiwan’s economic, technological, and political achievements as much as anyone. But even overlooking the enormous extent to which Taiwan’s massive investments in China’s technology industries (just like America’s) have shortsightedly helped create and magnify the very threat the island faces, the idea that honoring a friendship only for its own sake is remotely as important as minimizing the odds of a nuclear war is just loony. And nothing exempifies the nature of too much American foreign policy discussion for decades as well as a major newspaper’s belief that such arguments deserve to be taken seriously.

Our So-Called Foreign Policy: Two German Tank Decision Mysteries

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Germany, Iron Cross, Leopard, Nazi Germany, Our So-Called Foreign Policy, Panzer, Prussia, tanks, Ukraine, Ukraine War, World War II

Germany has finally decided to send advanced battle tanks to Ukraine (and to allow other countries whose militaries use the weapon to do te same). So ends a period of reluctance that was widely (and in my view, correctly) attributed in large measure to Berlin’s reluctance to suggest that historic German hyper-militarism is on the way back. Even so, I find two related aspects of Germany’s decision puzzling, to say the least.

At the outset, though, let me be perfectly clear: I’ve long advocated major German (and, for that matter) Japanese rearmanent. Believe me, I understand why the Germans (and Japanese) have long resisted such measures, and why Washington has tacitly supported the resulting defense free-riding.

After all, even nearly eight decades after these countries ignited World War II and committed such unspeakable atrocities before and during the conflict, who would support risking a repeat lightly? (At the same time, permitting Germany and Japan to remain military pygmies meant that American leaders would remain the national security and geopolitical kingpins of Western Europe and East Asia long after both countries had regained the economic power that ordinarily would have led to much more influence along these lines and likely greater diplomatic independence from Washington. Why? Because…well…countries with dramatically different historical experiences and geographic locations naturally often view the world differently.)

But because economic strength inevitably produces the ability and therefore the will to assert uniquely national interests, I always believed that this U.S. approach was simply delaying not only the inevitable, but the kind of orderly transition to the point at which these countries (in tandem with their neighbors, in the case of Germany but not so much Japan) would handle their own defense – and greatly reduce the nuclear war risk America was running because of its deterrence and coupling strategy.

And in a purely military sense, I always worried about the prospect of the United States plunging into a major war in Europe or Asia without allies it could count on one hundred percent – either because they stayed so weak or because they didn’t endorse American policy fully.  

Nor did I ever see any significant evidence that America’s determination to conduct these countries’ national securiy strategies for them (which I called “smothering”) generated any benefits for the U.S. economy. If anything, prioritizing alliance relationships typically convinced Washington to allow such allies to continue the protectionist policies that harmed domestic U.S. industry and its workers. (See this 1991 article for a wide-ranging discussion of both alliance-related security and economic issues.)

So again, I strongly support both the German, Japanese, and other allies’ stated intentions to get serious about their own security. But I have two related questions about Germany.

First, if Germany is so worried about even perception that it’s reverting back to its terrible old ways, why since the end of has it chosen the Iron Cross as the symbol of its military? Granted, it’s not the same Iron Cross the Nazis used. But it’s really close. Moreover, this version was used by the 19^th century Prussians, who were pioneers in developing modern militaries and whose leaders in those days had no compunctions about throwing its weight around first to unify Germany and then ensure that it could rival and even surpass the rest of Europe in terms of continental and global clout. (Not that these neighbors were angels themselves.)

And yet, in 1956, when the German army was reconstituted, West Germany’s president designated as its official emblem. Like no other choices were available then, or have been since? (For a brief history of Iron Cross, see here.) 

Second, why would a long-neutered Germany call any of its tanks a “Leopard”? How could such nomenclature fail to evoke the Nazi era in particular? After all, Hitler’s most famous tanks were the Panther (Panzer) and a late variation (the Tiger). Of course, weapons names should convey might and ferocity. But the world isn’t exactly shrt of other animal predators. And animal predator names aren’t the only words that can do the job.

Obviously, I’m not expecting any revival of worrisome German revanchism. But I still view these two military branding decisions as head-scratchers, and because even the weirdest choices rarely come completely out of the blue, I’ll continue to find them mystifying until I see a sensible explanation.    

Our So-Called Foreign Policy: A Wall Street Kingpin Lays a Grand Strategy Egg

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America First, China, climate change, ESG, fossil fuels, globalism, globalization, Immigration, industrial policy, Jamie Dimon, JPMorgan Chase, Our So-Called Foreign Policy, productivity, supply chains, The Wall Street Journal, Ukraine War, Wall Street, woke capitalism

In several senses, it’s not entirely surprising that The Wall Street Journal recently allowed Jamie Dimon to share his thoughts on the domestic and especially global grand strategies the United States should pursue in the post-Ukraine War world.

After all, Dimon heads JPMorgan Chase, the nation’s biggest and most important bank. As a result, he clearly needs to know a lot about the U.S. economy. And as Wall Street’s biggest poohbah, he surely must know a lot about the state of the world overall – in particular since he’s had extensive contacts with the heads of state, senior officials, and business leaders of many countries.

What is somewhat surprising, then, is how little of Dimon’s analysis and advice is new or even interesting, and how much of it could well put America ever further behind the eight-ball.

Dimon’s article wasn’t completely devoid of merit. Since he’s dabbled in some (symbolic) woke-ism himself, it was good to see him seemingly take a shot at what’s become mainstream liberal as well as radical lefty dogma by urging the education of “all Americans about the sacrifice of those who came before us for democracy at home and abroad.”

Given the strong support by the Biden administration and by some finance bigwigs for influential for encouraging and even requiring lenders to take climate change risks into account when extending credit, it was encouraging to read his pragmatic position that “Secure and reliable oil and gas production is compatible with reducing CO2 over the long run, and is far better than burning more coal.”

Dimon showed that, unlike many on Wall Street, he supports some forms of industrial policy to make sure that “we don’t rely on potential adversaries for critical goods and services.”

And he endorsed the larger point that the neoliberal globalization-based triumphalism that undergirded the policies of globalist pre-Trump Presidents needs to be buried for good:

“America and the West can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims—particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if it seems to recede in tranquil times.”

But on most of the biggest issues and just about all specifics, Dimon either punted or retreated into the same globalist territory that proved as profitable for Big Finance as it was too often dangerously naive for the nation as a whole.

For example, he wants Washington to “fix the immigration policies that are tearing us apart, dramatically reducing illegal immigration and dramatically increasing legal immigration.” Completely ignored is the depressing impact the latter would have on wages that have already been falling recently in inflation-adjusted terms, and on desperately needed productivity growth – as a bigger supply of cheap labor is bound to kill many incentives for businesses to improve their efficiency by innovating technology-wise or devising better management approaches.

And on China, Dimon’s clearly determined to talk his company’s book, insisting that “We should acknowledge that we have common interests in combating nuclear proliferation, climate change and terrorism.” and blithely predicting that “Tough but thoughtful negotiations over strategic, military and economic concerns—including unfair competition—should yield a better situation for all.”

But most important, Dimon fully endorses the foundations of the very globalist strategy that for decades perversely ignored the distinctive and paramount advantages the United States brings to world affairs and has thereby created many of the dangers and vulnerabilities with which the nation has been struggling.

The way Dimon seems to see it, there’s no reason to pay any attention to the extraordinary degree of security the America enjoys merely by virtue of its geographic isolation and powerful military; or to its extraordinary degree of economic self-sufficiency thanks to its immense and diverse natural resource base, its technological prowess, and its dynamic free market-dominated economic system. And evidently, it’s just as pointless to concentrate foreign and economic policy on the nation’s equally formidable potential to build on these advantages.

Instead, like other globalists, Dimon flatly rejects the idea that “America can stand alone,” or should seek to maximize its ability to do so. Instead, it should keep defining nothing less than “global peace and order” as “a vital American interest” – the standard globalist recipe for yoking the country’s fate to an agenda of more open-ended military interventions, more hastily approved and usually wasteful foreign aid, and more nation-building in areas lacking any ingredients of nation-hood.

Asa result, it would anchor America’s safety and prosperity on efforts to shape foreign conditions (over which is has relatively little control), rather than on efforts to shape domestic conditions (over which is has much more control). (For a much fuller description of this America First strategy and its differences with globalism, see this 2018 article.) 

In fact, and revealingly, Dimon’s piece was titled “The West Needs America’s Leadership.” If only he and other globalists would start thinking seriously about what America really needs. 

(Full disclosure:  I own several JPMorgan bond and preferred stock issues.)    

 

Our So-Called Foreign Policy: China’s Not Getting Biden’s (Vague) Message

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Asia-Pacific, Biden, Biden administration, China, Indo-Pacific, Japan, national interests, Our So-Called Foreign Policy, Russia, Taiwan, Taiwan Strait, Vladimir Putin, Xi JInPing

Everyone old enough to read this post is way more than old enough to remember all the optimism that emanated from the last summit between President Biden and Chinese dictator Xi Jinping – because it took place just under two months ago.

In particular, as the White House stated, Mr. Biden

“reiterated that [the bilateral] competition should not veer into conflict and underscored that the United States and China must manage the competition responsibly and maintain open lines of communication. The two leaders discussed the importance of developing principles that would advance these goals and tasked their teams to discuss them further. “

In other words, Xi said that he bought in to this idea of a responsibly managed Great Power competition. And this conclusion quickly became the conventiona wisdom about the summit. As The New York Times argued, despite

“the deeply divergent views behind their disagreements, including over the future of Taiwan, military rivalry, technology restrictions and China’s mass detentions of its citizens….with the stakes so high, both Mr. Biden’s and Mr. Xi’s language represented a choice not to gamble on unrestricted conflict but to bet that personal diplomacy and more than a decade of contacts could stave off worsening disputes.”

And the U.S. Institute of Peace, a Congressionally-sponsored “independent” think tank, closely paraphased the President’s main claim: “Despite the differences between both countries, there appears to be a growing openness to the use of diplomacy to manage the relationship.”

Yet it’s already clear – from China – that these contentions aren’t aging so welll. Just consider what’s happened in the last month alone:

>In mid-December, China began stepping up naval and air drills near a chain of southern Japanese islands, including sending a carrier battle group that simulated an attack on this Japanese territory.

>Several days later, the Chinese teamed up with Russia’s Pacific fleet for a week of joint exercises that Moscow said [quoting Reuters here] “included practising how to capture an enemy submarine with depth charges and firing artillery at a warship.”

>On December 21, a Chinese fighter jet flew within 20 feet of a U.S. Air Force reconnaisance plane flying over the South China Sea.

>On Christmas Day, 47 Chinese military aircraft flew across the median line over the Taiwan Strait and into air space claimed by the island. Reportedly, the incursion was the largest in months.

>And on December 30, Xi and his Russian counterpart, Vladimir Putin, held a videoconference in which Xi promised “in the face of a difficult and far from straightforward international situation,” Beijing was ready “to increase strategic cooperation with Russia, provide each other with development opportunities, be global partners for the benefit of the peoples of our countries and in the interests of stability around the world.”

China predictably blamed U.S. provocations and Japan’s recently announced and dramatic military buildup for this dangerous sequence of events, but the more important point by far is this: The Biden administration continues its long-time habit (see, e.g., here) of speaking in terms of processes and procedures that can only reenforce the impression of America defining its interests in the Asia-Pacific region in dangerously vague ways, and China obviously keeps thinking of its objectives in much more specific, concrete ways. In other words, it’s time for much straighter talk from the United States.   

Our So-Called Foreign Policy: A Republican Strategy Guru Who Ain’t

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China, Marc A. Thiessen, Mike Gallagher, national security, neoconservatives, North Atlantic treaty Organization, Our So-Called Foreign Policy, priorities, Republicans, Russia, semiconductors, strategy, Taiwan, Ukraine, Ukraine War

Neoconservative pundit Marc A. Thiessen has just written that neconservative Congressman Mike Gallagher of Wisconsin is the type of Republican who he thinks should “guide the Republican Party into the next era and shape conservative public policy, from national security to health to education to the economy.”

I’m far from convinced, especially on the national security front that’s the focus of this column, since Gallagher’s expressed views seem like a formula for exactly the kind of global over-extension that’s backfired so disastrously on America in the past (Google “Vietnam” or “Middle East.”)

This Wisconsin Republican’s main problem is one that’s dogged not only neocons and their constant exhortations for the United States to play or resume playing globocop indefinitely, but many other American leaders, including those on the Left – who favor similarly open-ended U.S. involvement in all manner of foreign crises and problems but either on the cheap, or with all manner of aesthetically and morally pleasing substitutes for military power, or coercion of any kind.

It’s a failure or an refusal to base American strategy and security and prosperity on the only basis practical even for a superpower – as an effort to (a) secure or defend goals that will promote U.S. interests on net in specific, concrete ways –  like protecting countries or regions with important locations, or that possess needed resources; and (b) propose feasible approaches to generate the wherewithal needed to achieve those goals.

Put simply, a successful U.S. foreign policy needs to set priorities of some kind, and in an interview with Thiessen, Gallagher explicitly rejected these premises, at least when it comes to two current headline overseas challenges.

According to Gallagher,

“[T]his idea that, ‘Well, we can be tough on China, but we have to strike some grand bargain with [Russian President Vladimir] Putin in Europe because our resources are limited.’ I just think that reflects a naive view of the way the world is working right now.”

He did explain that

“for those of us who want to continue to support the Ukrainians and deliver a massive loss to the Russians … we have to do a better job of tying the threat posed by Russia to the threat posed by the Chinese Communist Party. And it’s really teasing out the fact that for at least a decade, if not longer, these countries, who at times have interests that diverged and at times were outright hostile, at least in the present day, have locked arms to wage a new Cold War against the West….”  

As for “the ultimate aim of China in particular”? That’s “to destroy the capitalist system led by the United States and make way for the ultimate triumph of world socialism with, you know, Chinese characteristics.”

I have no quarrel with Gallagher’s assumption of deep and dangerous Chinese hostility to the United States. And he has, in my view correctly and cogently, identifed several branches of China’s strategy that seek to weaken America from within, like propaganda spreading (which – I assume – he understands requires strong, overwhelmingly domestic policy responses).

But the other stuff – if you think about it logically, it simply doesn’t matter. That is, whether or not the Chinese and Russians are in cahoots, and however sweepin their aims, because different countries’ and regions’ importance to the United States varies dramatically (since they’re all so different in their characteristics), it’s inevitable that some of the targets of this “new [joint] Cold War” that they’re supposedly waging will significantly affect America’s fortunes, and some won’t.

And what Gallagher doesn’t come to terms with is 

>(a) all the evidence cited by opponents of current U.S. Ukraine policy (like me), that Ukraine’s fate is irrelevant to America for reasons ranging from its tragic location right next to Russia and its lack of any assets needed by America to the continued refusal of the United States and its allies to admit it into the North Atlantic Treaty Organization (which implicitly acknowledges Ukraine’s  marginality); and

>(b) all the evidence that Taiwan is of vital importance – because of its matchless ability to manufacture the advanced semiconductors that are keys to ongoing U.S. security and prosperity, and therefore to America’s ability to keep fending off Chinese ambitions to control the island and this knowhow.

In Gallagher’s defense, he’s a strong proponent of the much bigger defense budgets that the United States would need to field the forces and weapons needed to resist both Russia’s Ukraine aims and China’s Taiwan aims.

But that higher spending will take many years to shore up American battlefield capabilities further, and Gallagher himself believes that the United States can’t defend Taiwan now, and doesn’t foresee success for another five years.

Worse, in the meantime, it’s being reported, including by a bipartisan Congressional commission, that “[t]he diversion of existing stocks of weapons and munitions to Ukraine and pandemic-related supply chain issues has exacerbated a sizeable backlog in the delivery of weapons already approved for sale to Taiwan, undermining the island’s readiness.”

So current American priorities could well be exactly backwards, and even if not, contrary to Gallagher’s blithe prior assertion, American resources are now in fact severely limited.

To top if all off, Gallagher also told Thiessen that by 2025 (if the Chinese haven’t already invaded), the President then should declare that “defending Taiwan [is] our most urgent national security priority….” But what about Ukraine? By then it’ll be No Big Deal? Or it’s safe to assume that conflict will be over? Nothing from Gallagher on that. But he did add that “by the way, I don’t think [keeping Taiwan secure] would cost that much money.”

Thiessen introduced Gallagher as someone who “has a bachelor’s degree from Princeton, a master’s degree in security studies from Georgetown University, a second master’s in strategic intelligence from the National Intelligence University and a PhD in international relations from Georgetown — all of which mean he’s deeply overqualified for any national security position.”

To me, what he’s really done is unwittingly reveal some of the institutions you want to avoid like the plague if you hope to develop a U.S. foreign policy strategy worthy of the name.

Our So-Called Foreign Policy: Will China Dupe Washington Again?

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Biden, China, energy, Our So-Called Foreign Policy, Paracells, Russia, South China Sea, Spratlys, The New York Times, U.S. Navy, Ukraine, Xi JInPing

Well, that didn’t take long. Just two weeks after President Biden’s face-to-face meeting with Chinese dictator Xi Jinping in Bali, Indonesia raised hopes of improved Sino-American relations, Beijing is acting like it’s determined to dash them.

Not that the expressed hopes were especially high. Mr. Biden himself said he aimed “to ensure that the competition between our countries does not veer into conflict, whether intended or unintended.  Just simple, straightforward competition. It seems to me we need to establish some commonsense guardrails” to “manage the competition responsibly” (as the White House put it in post-meeting statement).

But this morning EST, the Chinese military announced that it had “Organised sea and air forces to follow, monitor, warn and drive away” a U.S. warship that had sailed into waters Beijing claims near a group of islands in the South China Sea.

China’s claim has been rejected by international legal authorities, and the United States Navy regularly sends ships into the area to reflect its “continued commitment to….every nation’s right to fly, sail, and operate wherever international law allow.” The Navy added that “At the conclusion of the operation,” the destroyer “exited [China’s] excessive claim area and continued operations in the South China Sea.”

The point here is that China’s reactions to what the United States calls “Freedom of Navigation Operations” represent exactly the kind of opportunity for a conflict-igniting accident or miscalculation that President Biden’s guard rails idea seeks to avoid – and that China isn’t especially interested.

Also today, China declared its readiness to “forge a closer partnership” on energy with Russia – surely a sign of Beijing’s continued defiance of U.S. and European efforts to deny Moscow resources for financing its invasion of Ukraine.

As also reported by the Associated Press, President Biden “has warned Xi of unspecified consequences if Beijing helps [Russia] evade sanctions,” but this announcement indicates that any “Spirit of Bali” doesn’t extend in Xi Jinping’s eyes to helping end this dangerous conflict. In fact, I suspect it reflects China’s ongoing happiness that Washington is tying up so many military resources to aid Ukraine’s resistance that it’s degrading America’s ability to counter China’s ambitions in Asia – and especially a possible invasion of Taiwan, the global leader in manufacturing the world’s most advanced semiconductors.

Early during the Cold War, then Chinese dictator Mao Zedong devised a strategy called “fight fight talk talk.” As explained by the New York Times,

“The idea was that even as you seek opportunities to make gains on the battlefield, to expand your territory and gain in strength, you keep on negotiating even though you have no interest in a compromise solution and intend to win complete victory. The talk-talk part of the strategy gives mediators the sense that they are doing something useful, while, by holding theoretically to the possibility of a negotiated solution, you deter great- power military intervention in support of your adversary.”

As Times reporter Richard Bernstein explained, when it came to U.S. efforts to negotiate a deal between China’s nationalist forces and the Communists, the strategy was “a brilliant success.” Here’s hoping that President Biden doesn’t ignore the new hints that China is following the same course today – and that Beijing isn’t interested in conducting a “responsible competition.” It’s interested in winning.

Our So-Called Foreign Policy: Europe’s Worrisome Fence-Sitting on China

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alliances, allies, Biden, Bloomberg.com, China, Emmanuel Macron, Europe, export controls, France, free-riding, Mark Rutte, national security, Netherlands, Our So-Called Foreign Policy, semiconductors, technology

Ever since he belatedly admitted their importance (see here and here), a foundation of President Biden’s strategy for dealing with the wide-ranging challenges posed by China has been bringing America’s long-time treaty allies on board.

As the President made clear in a major speech shortly after his inauguration, China is America’s “most serious competitor” and “America’s alliances are our greatest asset” in countering this threat – and dealing with other global threats and crises.”

Mr. Biden seems to be making progress in mobilizing support from America’s Asian allies, both in terms of pushing them to get serious about their military budgets, and by winning meaningful cooperation for U.S. efforts to stay ahead of China in the means to produce ever more advanced semiconductors – which are central to creating the cutting-edge military systems of today and tomorrow.

But on the Europe front, this allies-focused strategy is hitting some serious roadblocks. Specifically, as Bloomberg.com just reported, although the continent’s major economies – especially the Netherlands, home of ASML, the company that makes the world’s most important semiconductor manufacturing equipment – have gone along to some degree with this American campaign, they’ve also warned that their cooperation will be limited in important ways.

Most disturbingly, particularly given U.S. plans to expand its new, sweeping controls on doing advanced semiconductor business with China, the Netherlands trade minister declared that the country “will not copy the American measures one to one. “We make our own assessment….” His remarks came after Chinese dictator Xi Jinping urged Dutch Prime Minister Mark Rutte to “oppose the politicization of economic and trade issues and maintain the stability of the global industrial chain and supply chain.”

Less disturbingly (because his country isn’t nearly as important a link in the global semiconductor supply chain) but disturbingly nonetheless (because it has always spoken with an outsized voice in European councils), France’s President Emannuel Macron told a group of business leaders, “a lot of people would like to see that there are two orders in this world. This is a huge mistake, even for both the US and China. We need a single global order.”

As a foreign policy realist, I can’t possibly criticize these and other countries for prioritizing what they view as their own national interests. Nor should American leaders. (Criticizing the accuracy of these views? That’s another story.) But Washington should call out avowed allies like the Netherlands and France for what looks like another version of long-time European national security free-riding, and make clear that continuing to play the game of what Bloomberg reporters call “carving out a middle ground when it comes to China” will carry severe consequences.

After all, Macron is right that the United States and China are “two big elephants” in a jungle, and that “If they become very nervous and start a war, it will be a big problem for the rest of the jungle.”

By the same token, however, allies that can’t be counted on when such conflicts start aren’t really allies at all, for their uncertainty makes impossible sound military planning, and could lead to dangerously erroneous miscalculation and other decisions.

In 1931, Florence Reece, the wife of a union organizer, wrote the classic protest song “Which Side Are You On?” to decry the notion of fence-sitting during times of conflict like those in Kentucky’s coal fields during that era. It’s a question that American allies like the Netherlands and France soon need to start answering much more clearly as China’s systemic threat to the United States grows ever more serious.

Our So-Called Foreign Policy: For Banning All U.S. High Tech Sales to China

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Biden administration, China, Chips Act, Defense Department, export controls, national security, Our So-Called Foreign Policy, semiconductor manufacturing equipment, semiconductors, tech

Just as my good buddy Ace recently gave me a great idea for a post on U.S. Ukraine policy, my equally good buddy Swifty (a finance guy) yesterday gave me an equally great idea – about how to ensure that U.S. curbs on sales of high tech equipment to China really put the hammer on the semiconductor industry being built in the People’s Republic. And interestingly, it mirrors an idea that I proposed many years ago for America’s human rights policy – government compensation for American-owned firms that lose business due to such limits.

In recent months, Washington has made major – albeit incredibly belated – progress in cutting off such American aid to Chinese tech manufacturers, whose burgeoning capabilities of course will boost China’s military power and potential. Important restrictions on what U.S.- and foreign-owned businesses can supply to China’s microchip entities are contained both in the bill signed by President Biden to boost semiconductor manufacturing in the United States, and in a sweeping set of restrictions on what both U.S.- and foreign-owned firms can supply to China’s microchip entities.

But even if these new policies are adequately enforced – always a big question surrounding American efforts slow China’s tech progress – they suffer two related weaknesses stemming from their tight focus on the highest end semiconductors and the equipment needed to make them. First, the vast majority of chips in use today – including in military systems – are lower-tech, so-called “legacy” chips, and China’s growing presence in the global market for these devices can create dangerous vulnerabilities itself.

Second, any sales of the machinery and software needed to make these legacy chips is bound to wind up helping teach Chinese scientists and engineers how to make their more advanced counterparts.

And this is where Swifty’s idea comes in. As he noted, it needs to be America’s goal to cripple China’s ability to make any type of semiconductor, and to completely shut down its learning opportunities. The big obstacle to imposing the broader controls needed to achieve this goal? The fact that this step would drive U.S.-owned companies that make semiconductor manufacturing equipment out of one of their biggest markets.

Swifty’s recommendation? Compensate them for these losses – at least until they can recoup them by selling to friendly countries to which chip production that’s under pressure from U.S. restrictions moves from China. He adds that such payments would be eminently affordable.

After all, even though the China market is enormously important to these firms, the China revenues they say they’ll lose are drops in the bucket compared with the mammoth scale of overall U.S. government spending, and even of the U.S. defense budget. (For some company-specific figures, see, e.g., here and here.)

That last point is particularly critical. For knee-capping China’s tech prowess is vital to U.S. national security. So think of these payments as defense spending – since it’s at least as important to prevent China from deploying lots of high tech weapons on the battlefield in the first place as to develop ways to fight them on the battlefield.

This national security perspective also matters greatly for dealing with another possible outcome of this greatly escalated U.S. strategy of denial – sabotage by American allies whose tech companies try to take advantage of U.S.-owned firms’ exit from China. Although the Biden administration has given some of them temporary exemptions, so far, the rest seem to be abiding by the new Biden administration rules – even in one case in which a loophole may well exist. But if they balk at wider restrictions, they should be told that their actions could wind up enabling Chinese forces to kill Americans in combat, and that they can’t expect continued U.S. protection if they persist. 

Way back in the early 1980s, I wrote that if the United States was serious about human rights policy, compensation should be paid to American-owned companies that lose foreign business in dictator-ruled countries subjected to U.S. economic sanctions. If Swifty’s similar approach isn’t used for China tech policy, it’ll be difficult to claim that the nation is serious about its national security.        

Our So-Called Foreign Policy: Is Biden Learning the Limits of Multilateralism?

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Afghanistan, alliances, allies, America First, ASML, Biden, Biden administration, Blob, China, Chips Act, Europe, export controls, Japan, multilateralism, NATO, North Atlantic treaty Organization, oil, oil price, OPEC, Our So-Called Foreign Policy, Saudi Arabia, semiconductors, South Korea, Taiwan, Ukraine War

Remember the buzz worldwide and among the bipartisan globalist U.S. foreign policy Blob that Donald Trump’s defeat in the 2020 presidential election heralded the start of a new golden age of America’s relations with its longstanding security allies?

Remember how President Biden himself pushed this line with his claim that “America is back” and that Washington would end the supposed Trump practice of denigrating and even rupturing these relationships, and resume its post-World War II strategy of capitalizing on these countries’ strengths and fundamental agreement with vital American interests to advance mutually beneficial goals?

Fast forward to the present, and it’s stunning how thoroughly these American globalist hopes – and the assumptions behind them – have been dashed.

The latest example has been Saudi Arabia’s rejection of Mr. Biden’s request to delay an increase in oil prices announced by Riyadh and other members of the OPEC-Plus petroleum producers cartel. It’s true that few Americans currently view the Saudis as ideal allies. Continuing human rights abuses and especially evidence that its leaders ordered the assassination of a dissident Saudi-American journalist – and coming on top of revelations of Saudi support for the September 11 terrorists and Islamic extremism more broadly – will do that. Indeed, candidate Biden had even promised to make Saudi Arabia as a “pariah.”

But follow-through? Forget it – largely for fear of antagonizing the Saudis precisely because of their huge oil production and reserves, and because the President evidently still viewed them as a key to countering Iran’s hegemonic ambitions in the energy-rich region.

As for Saudi Arabia, it and much closer allies (including in Europe) were far from enthralled with how Mr. Biden pulled U.S. forces out of Afghanistan – which they charge took them by surprise and seemed pretty America First-y.

Under President Biden, the United States appears to have performed better in mustering allied support for helping Ukraine beat back Russia’s invasion. But look beneath the surface, and the European contribution has been unimpressive at best, especially considering that Ukraine is located much closer to the European members of the North Atlantic Treaty Organization (NATO) than is the United States.

In particular, according to Germany’s Kiel Institute for the World Economy, which has been tracking these developments since the war began, to date,

 “The U.S. is now committing nearly twice as much as all EU countries and institutions combined. This is a meagre showing for the bigger European countries, especially since many of their pledges are arriving in Ukraine with long delays. The low volume of new commitments in the summer now appears to be continuing systematically.”

In fact, European foot-dragging has reached the point at which even Mr. Biden’s Treasury Secretary, Janet Yellen, has just told them (in diplospeak of course) to get on the stick.

Apparently, America’s allies in Asia as well as Europe have hesitated to get behind another key initiative as well: Slowing China’s growing technological progress in order to limit its potential militar power.

In a September 16 speech, White House national security advisor Jake Sullivan confirmed that the United States had officially doubled down on this objective:

“On export controls, we have to revisit the longstanding premise of maintaining “relative” advantages over competitors in certain key technologies.  We previously maintained a “sliding scale” approach that said we need to stay only a couple of generations ahead. 

“That is not the strategic environment we are in today. 

“Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”

And on October 7, the United States followed up by announcing the stiffest controls to date on doing business with Chinese tech entities – controls that will apply not only to U.S.-owned companies, but to other countries’ companies that use U.S.-owned firms technology in high tech products they sell and high tech services they provide to China.

Including these foreign-owned businesses in the U.S. sanctions regime – as well as in parallel efforts to rebuild American domestic capacity and marginalize China’s role in these sectors – is unavoidable for the time being, since the domestic economy long ago lost its monopoly and in some cases even its presence in the numerous products vital to semiconductor manufacturing in particular.

But as the Financial Times reported last month, a year after Washington drew up plans to create a “Chip 4” initiative to work with Taiwan, Japan, and South Korea to achieve these goals, “the four countries have yet to finalise plans even for a preliminary meeting.”

The prime foot-dragger has been South Korea, which fears Chinese retaliation that could jeopardize its massive and lucrative trade with the People’s Republic. But the same article makes clear that Japan harbors similar concerns.

Also unenthusiastic about the U.S. campaign is the Dutch manufacturer of semiconductor production equipment ASM Lithography (ASML). ASML’s cooperation is crucial to America’s anti-China ambitions because it’s the sole global supplier of machines essential for making the world’s most advanced microchips.

So far it’s been playing along. But similar complants about possibly losing business opportunities in China – which may account for nearly half of the world’s output of electronics products along with much of its production of less advanced semiconductors – have already persuaded the Biden administration to give some South Korean and Taiwanese microchip manufacturers a one-year exemption from the new export curbs. Could ASML try to win similar leniency?

In fairness, the Biden administration hasn’t wound up placing all its foreign policy bets on alliances and securing multilateral cooperation. Indeed, its new National Security Strategy re-states the importance of rebuilding American economic strength as a foundation of foreign policy success; the legislation it successfully sponsored to bolster the United States’ semiconductor and other high tech capabilities put considerable money behind that approach; and to its credit, it announced the new China tech curbs even after it couldn’t initially secure adequate allied cooperation – assuming, correctly, that an act of U.S. leadership could bring start bringing them in line.

Hopefully, a combination of these rifts with allies and its recognition of the importance of maintaining and augmenting national power mean that President Biden at least is learning a crucial lesson: that supporting multilateralism and alliances can’t be ends of a sensible U.S. foreign policy in and of themselves. They can only be means to ends. And although they can obviously be valuable in many instances, the best ultimate guarantor of the nation’s security, independence, and prosperity are its own devices.