Pol.Sci. 1o8: The Next Decade by Friedman, G.

THE NEXT DECADE
(Friedman, G. [2012])

THE UNINTENDED EMPIRE
The American president is the most important political leader in the world. The reason is simple: he governs a nation whose eco¬nomic and military policies shape the lives of people in every country on every continent. The president can and does order invasions, embargos, and sanctions. The economic policies he shapes will resonate in billions of lives, perhaps over many generations. During the next decade, who the president is and what he (or she) chooses to do will often affect the lives of non-Americans more than the decisions of their own governments.a

This was driven home to me on the night of the most recent U.S. presidential election, when I tried to phone one of my staff in Brussels and reached her at a bar filled with Belgians celebrating Barack Obama's victory. I later found that such Obama parties had taken place in dozens of cities around the world. People everywhere seemed to feel that the outcome of the American election mattered greatly to them, and many appeared personally moved by Obama's rise to power.

Before the end of Obama's first year in office, five Norwegian politicians awarded him the Nobel Peace Prize, to the consternation of many who thought that he had not yet done anything to earn it. But according to the committee's chair, Obama had immediately and dramatically changed the world's perception of the United States, and this change alone merited the prize. George W. Bush had been hated because he was seen as an imperialist bully. Obama was being celebrated because he sig¬naled that he would not be an imperialist bully.



From the Nobel Prize committee to the bars of Singapore and Sao Paolo, what was being unintentionally acknowledged was the unique¬ness of the American presidency itself, as well as a new reality that Amer¬icans are reluctant to admit. The new American regime mattered so much to the Norwegians and to the Belgians arid to the Poles and to the Chileans and to the billions of other people around the globe because the American president is now in the sometimes awkward (and never explic¬itly stated) role of global emperor, a reality that the world—and the pres¬ident—will struggle with in the decade to come.

THE AMERICAN EMPEROR. The American president's unique status and influence are not derived from conquest, design, or divine ordination but ipso facto are the result of the United States being the only global military power in the world. The U.S. economy is also more than three times the size of the next largest sovereign economy. These realities give the United States power that is disproportionate to its population, to its size, or, for that matter, to what many might consider just or prudent. But the United States didn't intend to become an empire. This unintentional arrangement was a consequence of events, few of them under American control.

Certainly there was talk of empire before this. Between Manifest Destiny and the Spanish American War, the nineteenth century was filled with visions of empire that were remarkably modest compared to what has emerged. The empire I am talking about has little to do with those earlier thoughts. Indeed, my argument is that the latest version emerged without planning or intention.

From World War II through the end of the Cold War, the United States inched toward this preeminence, but preeminence did not arrive until 1991, when the Soviet Union collapsed, leaving the U.S. alone as a colossus without a counterweight.

In 1796, Washington made his farewell address and announced this principle: "The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible." The United States had the option of standing apart from the world at that time. It was a small country, geo¬graphically isolated. Today, no matter how much the rest of the world might wish us to be less intrusive or how tempting the prospect might seem to Americans, it is simply impossible for a nation whose economy is so vast to have commercial relations without political entanglements or consequences. Washington's anti-political impulse befitted the anti-imperialist founder of die republic. Ironically, the extraordinary success of that republic made this vision impossible.

The American economy is like a whirlpool, drawing everything into its vortex, with imperceptible eddies that can devastate small countries or enrich them. When the U.S. economy is doing well, it is the engine driving die whole machine; when it sputters, the entire machine can break down. There is no single economy that affects the world as deeply or ties it together as effectively.

When we look at the world from the standpoint of exports and imports, it is striking how many countries depend on the United States for 5 or even 10 percent of their Gross Domestic Product, a tremendous amount of interdependence. While there are bilateral economic relations and even multilateral ones that do not include the United States, there are none that are unaffected by the United States. Everyone watches and waits to see what the United States will do. Everyone tries to shape American behavior, at least a little bit, in order to gain some advantage or avoid some disadvantage.

Historically, this degree of interdependence has bred friction and even war. In the nineteenth and early twentieth centuries, France and Germany feared each other's power, so each tried to shape the other's behavior. The result was that the two countries went to war with each other three times in seventy years. Prior to World War I, the English journalist (later a member of Parliament) Norman Angell wrote a widely read book called The Great Illusion, in which he demonstrated the high degree of economic interdependence in Europe and asserted that this made war impossible. Obviously, the two World Wars proved that that wasn't the case. Advocates for free trade continue to use this argument. Yet, as we will see, a high degree of global interdependence, with the United States at the center, actually increases—rather than diminishes— the danger of war.

That the world is no longer filled with relatively equal powers easily tempted into military adventures mitigates this danger somewhat. Cer¬tainly the dominance of American military power is such that no one country can hope to use main force to fundamentally redefine its rela¬tionship with the United States. At the same time, however, we can see that resistance to American power is substantial and that wars have been
frequent since 1991.

While Americas imperial power might degrade, power of this magni¬tude does not collapse quickly except through war. German, Japanese, French, and British power declined not because of debt but because of wars that devastated those countries' economies, producing debt as one of war's many by-products. The Great Depression, which swept the world in the 1920s and 1930s, had its roots in the devastation of the Ger¬man economy as a result of World War I and the disruption of trade and financial relations that ultimately spread to encompass the world. Con¬versely, the great prosperity of the American alliance after 1950 resulted from the economic power that the United States built up—undam¬aged—during World War II.

Absent a major, devastating war, any realignment of international influence based on economics will be a process that takes generations, if it happens at all. China is said to be the coming power. Perhaps so. But the U.S. economy is 3.3 times larger than China's. China must sustain an extraordinarily high growth rate for a long time in order to close its gap with the United States. In 2009, the United States accounted for 22.5 percent of all foreign direct investment in the world, which, according to the United Nations Council on Trade and Development, makes it the world's single largest source of investment. China, by comparison, accounted for 4.4 percent.

The United States also may well be the largest borrower in the world, but that indebtedness does not reduce its ability to affect the interna¬tional system. Whether it stops borrowing, increases borrowing, or decreases it, the American economy constantly shapes global markets. It is the power to shape that is important. Of course, it should also be remembered that every dollar the United States borrows, others lend. If the market is to be trusted, it is saying that lending to the United States, even at currently low interest rates, is a good move.

Many countries have impacts on other countries. What makes the United States an empire is the number of countries it affects, the inten¬sity of the impact, and the number of people in those countries affected by these economic processes and decisions.

In recent years, for instance, Americans had a rising appetite for shrimp. This ripple in the U.S. market caused fish farmers in the Mekong Delta to adjust their production to meet the new demand. When the American economy declined in 2008, luxury foods like shrimp were the first to be cut back, a retrenchment that was felt as far away as those fish farms in the Mekong Delta.
Following a similar pat¬tern, the computer maker Dell built a large facility in Ireland, but when labor costs rose there, Dell shifted operations to Poland, even at a time when Ireland was under severe economic pressure. The United States is similarly shaped by other countries, as were Britain and Rome. But the United States is at the center of the web, not on the periphery, and its economy is augmented by its military. Add to that the technological advantage and we can see the structure of America's deep power.

Empires can be formal, with a clear structure of authority, but some can be more subtle and complex.
The British controlled Egypt, but Britain's formal power was less than clear. The United States has the global reach to shape the course of many other countries, but because it refuses to think of itself as an imperial power, it has not created a formal, rational structure for managing the power that it clearly has.

The fact that the United States has faced reverses in the Middle East in no way undermines the argument that it is an empire, albeit an imma¬ture one. Failure and empire are not incompatible, and in die course of imperial growth and expansion, disasters are not infrequent. Britain lost most of its North American colonies to rebellion a century before the empire reached its apex. The Romans faced civil wars in recurring cycles.

While the core of U.S. power is economic—battered though it might seem at the moment—standing behind that economic power is its mili¬tary might. The purpose of the American military is to prevent any nation aggrieved by U.S. economic influence, or any coalition of such nations, from using force to redress the conditions that put it (or them) at a disadvantage. Like Rome's legions, American troops are deployed preemptively around the world, simply because the most efficient way to use military power is to disrupt emerging powers before they can become even marginally threatening.

The map below, in fact, substantially understates the American mili¬tary presence. It does not, for instance, track U.S. Special Operations teams operating covertly in many regions, notably Africa. Nor does it include training missions, technical support, and similar functions. Some U.S. troops are fighting wars, some are interdicting drugs, some are protecting their host countries from potential attacks, and some are using their host countries as staging areas in case American troops are needed in another country nearby. In some cases these troops help sup¬port Americans who are involved in governing the country, directly or indirectly. In other cases, the troops are simply present, without control¬ling anything. Troops based in the United States are here not to protect the homeland as much as to be available for what the military calls power projection. This means that they are ready to serve anywhere the presi¬dent sees fit to deploy them.

As befits a global empire, the United States aligns, its economic system and its military system to stand as the guarantor of the global econ¬omy. The United States simultaneously provides technologies and other goods and services to buy, an enormous market into which to sell, and armed forces to keep the sea-lanes open. If need be, it moves in to police unruly areas, but it does this not for the benefit of other countries but for itself. Ultimately, the power of the American economy and the distribu¬tion of American military force make alignment with the United States a necessity for many countries. It is this necessity that binds countries to the United States more tightly than any formal imperial system could hope to accomplish.

Empires, the unintended consequence of power accumulated for ends far removed from dreams of empire, are usually recognized long after they have emerged. As they become self-aware, they use their momentum to consciously expand, adding an ideology of imperialism-think of Pax Romana or the British "white man's burden"—to empire's reality. An empire gets writers like Virgil and poets like Rudyard Kipling after it is well established, not before. And, as in both Rome and Britain, the celebrants of American empire coexist with those who are appalled by it and who yearn for the earlier, more authentic days.

Rome and Britain were trapped in the world of empire but learned to celebrate the trap. The United States is still at the point where it refuses to see the empire that it has become, and whenever it senses the trappings of empire, it is repelled. But the time has come to acknowledge that the president of the United States manages an empire of unprecedented power and influence, even while it may be informal and undocumented. Only then can we formulate policies over the next decade that will allow us to properly manage the world we find ourselves in charge of.

MANAGING THE IMPERIAL REALITY. Over the past twenty years, the United States has struggled to come to grips with the reverberations of being "last man standing" after the fall of the Soviet Union. The task of the president in the next decade is to move from being reactive to having a systematic method of managing the world that he dominates, a method that faces honestly and without flinching the realities of how the world operates. This means turning the American empire from undocumented disorder into an orderly system, a Pax Americana—not because this is the president's free choice, but pre¬cisely because he has no choice.

Bringing order to empire is a necessity because even though the United States is overwhelmingly powerful, it is far from omnipotent, and having singular power creates singular dangers. The United States was attacked on September n, 2001, for example, precisely because of its unique power. The president's task is to manage that kind of power in a way that acknowledges the risks as well as the opportunities, then mini¬mizes the risks and maximizes the benefits.

For those who are made squeamish by any talk of empire, much less talk of bringing order to imperial control, I would point out that the realities of geopolitics do not give presidents the luxury of exercising virtue in the way we think of it when applied to ordinary citizens. Two presidents who attempted to pursue virtue directly, Jimmy Carter and George W. Bush, failed spectacularly. Conversely, other presidents, such as Richard Nixon and John F. Kennedy, who were much more ruthless, failed because their actions were not directed at and unified by any over¬riding moral purpose.

In bringing order to empire, I propose that future presidents follow the example of three of our most strikingly effective leaders, men who managed to be utterly ruthless in executing a strategy that was nonethe¬less guided by moral principle. In these cases, moral ends did in fact jus¬tify means that were not only immoral but unconstitutional.

Abraham Lincoln preserved the Union and abolished slavery by initi¬ating a concerted program of deception and by trampling on civil liber¬ties. To maintain the loyalty of the border states, he never owned up to his intention to abolish slavery made clear in the great debates of 1858. Instead he dissembled, claiming that while he opposed the spread of slavery beyond the South, he had no intention of abolishing the right to own slaves in states •where owning them was already legal.

But Lincoln did more than prevaricate. He suspended the right to habeas corpus throughout the country and authorized the arrest of pro-secession legislators in Maryland. He made no attempt to justify these actions, except to say that if Maryland and the other border states seceded, the war would be lost and the nation would be dismembered, leaving the Constitution meaningless.

Seventy-five years later, in the midst of another grave crisis for the nation, Franklin Roosevelt also did what needed to be done while lying to hide his actions from a public that was not yet ready to follow his lead. In the late 19305, Congress and the public wanted to maintain strict neu¬trality as Europe prepared for war, but Roosevelt understood that the survival of democracy itself was at stake. He secretly arranged for the sale of arms to the French and made a commitment to Winston Churchill to use the U.S. Navy to protect merchant ships taking supplies to England—a clear violation of neutrality.

Like Lincoln, Roosevelt was motivated by moral purpose, which meant a moral vision for global strategy. He was offended by Nazi Ger¬many, and he was dedicated to the concept of democracy. Yet to preserve American interests and institutions, he formed an alliance with Stalin's Soviet Union, a regime that in moral terms was every bit as depraved as the Nazis. At home he defied a Supreme Court ruling and authorized wiretapping without warrants as well as the interception and opening of mail. Yet his most egregious violation of civil liberties was to approve the detention and relocation of ethnic Japanese, regardless of their citizen¬ship status. Roosevelt had no illusions about what he was doing. He was ruthlessly violating rules of decency in pursuit of moral necessity.

Ronald Reagan also pursued a ruthless path toward a moral purpose. His goal was destruction of what he called the evil empire of the Soviet Union, and he pursued it—in part by ramping up the arms race, which he knew the Soviets could not afford. He then went to elaborate and devious lengths to block Soviet support for national liberation move¬ments in the Third World. He invaded Grenada in 1983 and supported insurgents fighting the Marxist government of Nicaragua. This led to the elaborate ruse of engaging Israel to sell arms to Iran in its war with Iraq and then funneling the profits to the Nicaraguan insurgents, as a way of bypassing a law specifically designed to prevent such intervention. We should also remember Reagan's active support for Muslim jihadists in Afghanistan fighting the Soviets. As with Roosevelt and Stalin, a future enemy can be useful to defeat a current one.

The decade ahead will not be a time of great moral crusades. Instead, it will be an era of process, a time in which the realities of the world as presented by facts on the ground will be incorporated more formally into our institutions.

During the past decade, the United States has waged a passionate crusade against terrorism. In the next decade, the need will be for less passion and for more meticulous adjustments in relations with countries such as Israel and Iran. The time also calls for the creation of alliance sys¬tems to include nations such as Poland and Turkey that have newly defined relations with the United States. This is the hard and detailed work of imperial strategy. Yet the president cannot afford the illusion that the world will simply accept the reality of overwhelming American hegemony, any more than he can afford to abandon the power. He can never forget that despite his quasi-imperial status, he is president of one country and not of the world.

That is why the one word he must never use is empire. The anti-imperial ethos of America's founding continues to undergird the coun¬try's political culture. Moreover, the pretense that power is distributed more evenly is useful, not just for other countries but for the United States as well. Even so, in the decade ahead, the informal reality of Amer¬ica's global empire must start to take on coherent form.

Because a president must not force the public to confront directly realities that it isn't ready to confront, he must become a master at man¬aging illusions. Slavery could not have survived much beyond the i86os, no matter how much the South wanted it to. World War II could not have been avoided, regardless of public leanings toward isolationism. Confrontation with the Soviet Union had to take place, even if the pub¬lic was frightened by those crises. In each case, a strong president created a fabric of illusions to enable him to do what was necessary without causing a huge revolt from the public. In Reagan's case, when his weapons-dealing machinations came to light as "the Iran-contra affair," complete with congressional hearings and indictments and convictions for many of the participants, his well-maintained persona as a simpleminded fel¬low shielded his power and his image from the fallout. The goings-on in Israel, Iran, and Nicaragua were so complex that even his critics had trouble believing that he could have been responsible.

A GLOBAL STRATEGY OF REGIONS. America's fundamental interests are the physical security of the United States and a relatively untrammeled international economic system. As we will see when we turn to the current state of the world economy, this by no means implies a free trade regime in the sense that free-market ide¬ologues might think of it. It simply means an international system that permits the vast American economy to interact with most, if not all, of the world. Whatever the regulatory regime might be, the United States needs to buy and sell, lend and borrow, be invested in and invest, with a global reach.

One quarter of the world's economy can't flourish in isolation, nor can the consequences of interaction be confined to pure economics. The American economy is built on technological and organizational innova¬tion, up to and including what the economist Joseph A. Schumpeter called "creative destruction": the process by which the economy contin¬ually destroys and rebuilds itself, largely through the advance of disrup¬tive technologies.

When American economic culture touches other countries, those affected have the choice of adapting or being submerged. Computers, for example, along with the companies organized around them, have had profoundly disruptive consequences on cultural life throughout the world, from Bangalore to Ireland.
American culture is comfortable with this kind of flux, whereas other cultures may not be. China has taken on the additional burden of trying to adapt to a market economy while retaining the political institutions of a Communist state. Germany and France have struggled to limit the American impact, to insulate them¬selves from what they call "Anglo-Saxon economics." The Russians reeled from their first unbuffered exposure to this force in the 1905 and sought to find their balance in the following decade.

In response to the American whirlpool, the world's attitude, not sur¬prisingly, is often sullen and resistant, as countries try to take advantage of or evade the consequences. President Obama sensed this resistance and capitalized on it. Domestically, he addressed the American need to be admired and liked, while overseas he addressed the need for the United States to be more conciliatory and less overbearing.
While Obama identified the problem and tried to manage it, resis¬tance to imperial power remains a problem without a permanent solu¬tion. This is because ultimately it derives not from the policies of the United States but from the inherent nature of imperial power.

The United States has been in this position of near hegemonic power for only twenty years. The first decade of this imperial period was a giddy fantasy in which the end of the Cold War was assumed to mean the end of war itself—a delusion that surfaces at the end of every major conflict. The first years of the new century were the decade in which the Ameri¬can people discovered that this was still a dangerous planet and the American president led a frantic effort to produce an ad hoc response. The years from 2011 to 2021 will be the decade in which the United States begins to learn how to manage the world's hostility.

Presidents in the coming decade must craft a strategy that acknowl¬edges that the threats that resurfaced in the past ten years were not an aberration. Al Qaeda and terrorism were one such threat, but it was actu¬ally not the most serious threat that the United States faced. The presi¬dent can and should speak of foreseeing an era in which these threats don't exist, but he must not believe his own rhetoric. To the contrary, he must gradually ease the country away from the idea that threats to impe¬rial power will ever subside, then lead it to an understanding that these threats are the price Americans pay for the wealth and power they hold. All the same, he must plan and execute the strategy without necessarily admitting that it is there.

Facing no rival for global hegemony, the president must think of the world in terms of distinct regions, and in doing so set about creating regional balances of power, along with coalition partners and contin¬gency plans for intervention. The strategic goal must be to prevent the emergence of any power that can challenge the United States in any given corner of the world.

Whereas Roosevelt and Reagan had the luxury of playing a single integrated global hand—vast but unitary—presidents in the decade ahead will be playing multiple hands at a highly fragmented table. The time when everything revolved around one or a few global threats is over. The balance of power in Europe is not intimately connected to that of Asia and is distinct from the balance of power that maintains the peace in Latin America. So even if the world isn't as dangerous to the United States as it was during World War II or the Cold War, it is far more com¬plicated.

American foreign policy has already fragmented regionally, of course, as reflected in the series of regional commands under which our military forces are organized. Now it is necessary to openly recognize the same fragmentation in our strategic thinking and deal with it accordingly. We must recognize that there is no global alliance supporting the United States and that the U.S. has no special historical relationships with any¬one. Another quote from Washington's farewell address is useful here: "The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest." This means that NATO no longer has unique meaning for the United States outside of the European context and that Europe cannot be regarded as more important than any other part of the world. Nostalgia for "the special relationship" notwithstanding, the simple real¬ity today is that Europe is not more important.

Even so, President Obama ran a campaign focused on the Europeans.

His travels before the 2008 election symbolized that what he meant by multilateralism was recommitting the United States to Europe, consult¬ing Europe on U.S. actions abroad, and accepting Europe's cautions (now that they have lost their empires, Europeans always speak in terms of caution). Obama's gestures succeeded. The Europeans were wildly enthusiastic, and many Americans were pleased to be liked again. Of course, the enthusiasm dissipated rapidly as the Europeans discovered that Obama was an American president after all, pursuing American ends.

All of which brings us to the president's challenge in the decade ahead: to conduct a ruthless, unsentimental foreign policy in a nation that still has unreasonable fantasies of being loved, or at least of being left alone. He must play to the public's sentimentality while moving policy beyond it.

An unsentimental foreign policy means that in the coming decade, the president must identify with a clear and cold eye the most dangerous enemies, then create coalitions to manage them. This unsentimental approach means breaking free of the entire Cold War system of alliances and institutions, including NATO, the International Monetary Fund, and the United Nations. These Cold War relics are all insufficiently flex¬ible to deal with the diversity of today's world, which redefined itself in 1991, making the old institutions obsolete. Some may have continuing value, but only in the context of new institutions that must emerge. These need to be regional, serving the strategic interests of the United States under the following three principles:

1. To the extent possible, to enable the balance of power in the world and in each region to consume energies and divert threats from the United States.
2. To create alliances in which the United States maneuvers other countries into bearing the major burden of confrontation or conflict, supporting these countries with economic benefits, military technology, and promises of military intervention if required.
3. To use military intervention only as a last resort, when the bal¬ance of power breaks down and allies can no longer cope with the problem.

At the height of the British Empire, Lord Palmerston said, "It is a narrow policy to suppose that this country or that is to be marked out as the eternal ally or the perpetual enemy of England. We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow." This is the kind of policy the president will need to institutionalize in the coming decade. Recognizing that the United States will generate resentment or hostility, he must harbor no illusions that he can simply persuade other nations to think better of us without surrendering interests that are essential to the United States. He must try to seduce these nations as much as possible with glittering, promises, but in the end he must accept that efforts at seduction will eventually fail. Where he cannot fail is in his responsibil¬ity to guide the United States in a hostile world.

REPUBLIC, EMPIRE, AND THE MACHIAVELLIAN PRESIDENT

The greatest challenge to managing an empire over the next decade will be the same challenge that Rome faced: having become an empire, how can the republic be preserved? The founders of the United States were anti-imperialists by moral conviction. They pledged their lives, fortunes, and sacred honor to defeat the British Empire and found a republic based on the principles of national self-determination and natural rights. An imperial relationship with other countries, whether intended or not, poses a challenge to those foundational princi¬ples.

If you believe that universal principles have meaning, it follows that an anti-imperial republic can't be an empire and retain its moral charac¬ter. This has been an argument made in the United States as far back as the 18405 and the Mexican-American war. Today both ends of the polit¬ical spectrum make the argument against foreign adventures. On the left, there is a long tradition of anti-imperialism. But if you look at some of the rhetoric emanating from the right, from libertarians as well as from some in the Tea Party, you see the same opposition to military involvement in other countries. The fear is linked to Dwight Eisen¬howers warning to beware of the "military-industrial complex." If a career military officer and war hero such as Ike could voice this fear, you can see how deeply embedded it is in American political culture. I sus¬pect that this will become a powerful strand in American politics over the next ten years, in a country where, across the political spectrum, the citizenry is weary of foreign involvement.

The fear of imperial ambition is completely justified. The Roman Republic was overwhelmed by empire. Empire created an ambition for money and power that devastated the republican virtues that were the greatest pride of Roman citizenship. Even if that pride wasn't fully justi¬fied, there is no question but that the Republic was destroyed not just by military rivalries that led to a coup d'etat but by the vast amounts of money flowing into the imperial capital from citizens and foreigners try¬ing to buy favor.

The same danger exists for the United States. American global power generates constant threats and ever greater temptations. It has been observed that ever since World War II, the United States has created a national security apparatus so shrouded in official secrecy that it cannot be easily overseen or even understood. This hugely expensive and cum¬bersome apparatus, along with the vast amounts of foreign economic activity—from immense trade to the foreign investments that drive global markets—creates a system that is not readily managed by demo¬cratic institutions and that is not always easily reconciled with American moral principles. It is not unimaginable that together these forces could render American democracy meaningless.

The problem is that like Rome in the time of Caesar, the United States has reached a point where it doesn't have a choice as to whether to have an empire or not. The vastness of the American economy, its en¬tanglement in countries around the world, the power and worldwide presence of the American military, are in effect imperial in scope. Disen¬tangling the United States from this global system is almost impossible, and if it were attempted, it would destabilize not only the American econ¬omy but the global system as well. When the price of anti-imperialism was understood, there would be scant support for it. Indeed, many for¬eign countries are less opposed to the American presence than they are to the way in which that presence is felt. They accept American power; they simply want it to serve their own national interests.

The dangers of imperial power are substantial, and these dangers will become increasingly contentious issues in American politics, just as they are already hotly debated around the world. In retrospect, the non-interventionism of the republic the founders created was rooted in the fact that the republic was weak, not that it was virtuous. The United States of thirteen former colonies could not engage in foreign entangle¬ments without being crushed. The United States of 300 million people cannot avoid foreign entanglements.

Managing the unintended empire while retaining the virtues of the republic will be an important priority of the United States for a very long time, but certainly, in the wake of the jihadist wars, it will be a particu¬larly intense challenge. Most of the discussion will be wishful thinking. There is no going back, and there are no neat solutions. The paradox is that the best chance of retaining the republic is not institutional but per¬sonal, and it will depend on a definition of virtue that violates our com¬mon notions of what virtue is. I don't look to the balance of power to save the republic, but to the cunning and wisdom of the president. The president certainly has a vast bureaucracy that he controls, and that con¬trols him, but in the end it is the Lincolns, Roosevelts, and Reagans we remember, not bureaucrats or senators or justices. The reason is simple. Along with power, presidents exercise leadership. That leadership can be decisive, in the context of a decade or less.

Individual personalities would seem to be a thin reed on which to base a country's future. At the same time, the founders created the office of the president for a reason, and at the heart of that reason was leader¬ship. The presidency is unique in that it is the only structure in which an institution and an individual are identical. Congress and the Supreme Court are aggregations of people who will rarely speak with a single voice.
The presidency is the president alone, the only official elected by representatives of all the people. That is why we need to consider him as the primary agent for managing the relationship between empire and republic.
Let's begin by considering the character of presidents in general. Pres¬idents differ from many other people in that they, by definition, take pleasure in power. They place its acquisition and use before other things, and they devote a good portion of their lives to its pursuit. A president's knowledge and instincts are so finely honed toward power that he under¬stands it in ways that those of us who have never truly had it could not appreciate. The worst president is closer by nature to the best than either is to anyone who has not gone through what it requires to become pres¬ident.

The degree and scope of the power that modern American presidents achieve inevitably make them see the world differently, even in compar¬ison with other heads of state. No other leader must confront so much of the world in so many different ways. In our democracy, the president must achieve this position while pretending to be indistinguishable from his fellow citizens, a thought both impossible to imagine and frightening if true. The danger is that as the challenges of empire become greater and the potential threats more real, leaders will emerge who will need and demand a degree of power that slips beyond the constraints imposed by the Constitution.

It is both fortunate and ironic that in creating an anti-imperial gov¬ernment, the founders provided a possible road map for imperial leader¬ship with republican constraints. They created the American presidency as an alternative both to dictatorship and to aristocracy, an executive that is weak at home but immensely powerful outside the United States. In domestic affairs, the Constitution dictates an executive that is hemmed in by an inherently unmanageable Congress and by a Supreme Court that is fairly inscrutable. The economy is in the hands of investors, man¬agers, and consumers, as well as those of the Federal Reserve Bank (if not by the Constitution, then certainly by legislation and practice). The states hold substantial power, and much of civil society—religion, the press, pop culture, the arts—is beyond the president's control. This is exactly what the founders wanted: someone to preside over the country but not to rule it. Yet when the United States faces the world through its foreign policy, there is no more powerful individual than the occupant of the White House.

Article Two, Section Two, of the Constitution states, "The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States." This is the only power given to the presi¬dent that he does not share with Congress. Treaties, appointments, the budget, and the actual declaration of war require congressional approval, but the command of the military is the president's alone.

Yet over the years, the constitutional limitations that reined in the diplomatic prerogatives of earlier presidents have fallen by the wayside. Treaties require the approval of the Senate, but today treaties are rare and foreign policy is conducted with agreements and understandings, many arrived at secretly. Thus the conduct of foreign policy as a whole is now effectively in the hands of the president. Similarly, while Congress has declared war only five times, presidents have sent U.S. forces into con¬flicts around the world many more times than that. The reality of the American regime in the second decade of the twenty-first century is that the president's power on the world stage is almost beyond checks and balances, limited only by his skill in exercising that power.

When President Clinton decided to bomb Yugoslavia in 1999 and when President Reagan decided to invade Grenada in 1983, Congress could not stop them had it wished to. American presidents impose sanc¬tions on nations and shape economic relations throughout the world. In practical terms, this means that an American president has the power to devastate a country that displeases him or reward a country that he favors. Legislation on war powers has been passed, but many presidents have claimed that they have the inherent right as commander in chief to wage war regardless of it. In practice, they have brought Congress along to support their policies. That is unlikely to change in the next decade.
It is in the exercise of foreign policy that the American president most resembles Machiavelli's prince, which isn't that surprising when you con¬sider that the founders were students of modern political philosophy and that Machiavelli was its originator. Just as we must acknowledge the exis¬tence of an American empire, we must acknowledge the value of his insights and advice for our own situation. That the president's main con¬cern is foreign policy and the exercise of power conforms to Machiavelli's teaching:
A prince, therefore, must not have any other object or any other thought, nor must he adopt anything as his art but war, its institutions and its discipline; because that is the only art befitting one who commands. This discipline is of such efficacy that not only does it maintain those who were born princes but it enables men of private station on many occasions to rise to that position. On the other hand, it is evident that when princes have given more thought to delicate refinements than to military concerns, they have lost their state. The most important reason why you lose it is by neglecting this art, while the way to acquire it is to be well versed in this art.

The fundamental distinction in U.S. foreign policy, and in the exer¬cise of power by U.S. presidents—the distinction discussed by Machi¬avelli—is between idealism and realism, a distinction embedded in the tradition of U.S. foreign policy. The United States was founded on the principle of national self-determination, which assumes a democratic process for selecting leaders, reflected in the Constitution. It was also built on principles of human freedom, enshrined in the Bill of Rights. Imperialism would seem to undermine the principle of self-determina¬tion, whether formally or informally. Moreover, the conduct of foreign policy supports regimes that are in the national interest but that don't practice or admire American principles of human rights. Reconciling American foreign policy with American principles is difficult, and repre¬sents a threat to the moral foundations of the regime.

The idealist position argues that the United States must act on the moral principles derived from the founders' elegantly stated intentions. The United States is seen as a moral project stemming from the Enlightenment ideals of John Locke and others, and the goal of American for¬eign policy should be to apply these moral principles to American actions and, more important, American ends. Following from this, the United States should support only those regimes that embrace American values, and it should oppose regimes that oppose those values.

The realist school argues that the United States is a nation like any other, and that as such it must protect its national interests. These inter¬ests include die security of the United States, the pursuit of its economic advantage, and support for regimes that are useful to those ends, regard¬less of those regimes' moral character. Under this theory, American for¬eign policy should be no more and no less moral than the policy of any other nation.

The idealists argue that to deny America's uniquely moral imperative not only betrays American ideals but betrays the entire vision of Ameri¬can history. The realists argue that we live in a dangerous world and that by focusing on moral goals we will divert attention from pursuit of our genuine interests, thereby endangering the very existence of the republic that is the embodiment of American ideals. It is important to bear in mind that idealism as a basis for American politics transcends ideologies. The left-wing variant is built around human rights and the prevention of war. The right-wing version is built around a neoconservative desire to spread American values and democracies. What these two visions have in common is the idea that American foreign policy should be primarily focused on moral principles.

In my view, the debate between realism and idealism fundamentally misstates the problem, and this misstatement will play a critical role in the next decade. Either it will be resolved or the imbalance within U.S. foreign policy will become ever more evident. The idealist argument constantly founders on a prior debate between the right of national self-determination and human rights. The American Revolution was built on both principles, but now, more than two centuries later, what do you do when a country such as Germany determines through constitutional processes to abrogate human rights? Which takes precedence, the right to national self-determination or human rights? What do you do with regimes that do not hold elections like those in the United States but that clearly embody the will of the people based on long-standing cul¬tural practice? Saudi Arabia is a prime example. How can the United States espouse multiculturalism and then demand that other people select their leaders the way people do in Iowa?

The realist position is equally contradictory. It assumes that the national interest of a twenty-first-century empire is as obvious as that of a small eighteenth-century republic clinging to the eastern seaboard of North America. Small, weak nations have clear-cut definitions of the national interest—which is primarily to survive with as much safety and prosperity as possible. But for a country as safe and prosperous as the United States—and with an unprecedented imperial reach—the defini¬tion of the national interest is much more complicated. The realist the¬ory assumes that there is less room for choice in the near term than there is, and that the danger is always equally great. The concept of realism cannot be argued with as an abstract proposition—who wants to be unrealistic? Coming up with a precise definition of what reality consists of is a much more complex matter. In the sixteenth century, Machiavelli wrote, "The main foundations of every state, new states as well as ancient or composite ones, are good laws and good arms. You cannot have good laws without good arms, and where there are good arms, good laws inevitably follow." This is a better definition of realism than the realists have given us.

I believe that the debate between realists and idealists is in fact a naive reading of the world that has held too much sway in recent decades. Ideals and reality are different sides of the same thing: power. Power as an end in itself is a monstrosity that does not achieve anything lasting and will inevitably deform the American regime. Ideals without power are simply words—they can come alive only when reinforced by the capac¬ity to act. Reality is understanding how to wield power, but by itself it doesn't guide you toward the ends to which your power should be put. Realism devoid of an understanding of the ends of power is frequently another word for thugishness, which is ultimately unrealistic. Similarly, idealism is frequently another word for self-righteousness, a disease that can be corrected only by a profound understanding of power in its com¬plete sense, while realism uncoupled from principle is frequently incom¬petence masquerading as tough-mindedness. Realism and idealism are not alternatives but necessary complements. Neither can serve as a prin¬ciple for foreign policy by itself.

Idealism and realism resolve themselves into contests of power, and contests of power turn into war. To turn once again to Machiavelli: "War should be the only study of a prince. He should consider peace only as a breathing-time, which gives him leisure to contrive, and furnishes an ability to execute, military plans."

In the twentieth century, the United States was engaged in war 17 percent of the time—and these were not minor interventions but major wars, involving hundreds of thousands of men. In the twenty-first cen¬tury, we have been engaged in war almost 100 percent of the time. The founders made the president commander in chief for a reason: they had read Machiavelli carefully and they knew that, as he wrote, "there is no avoiding war; it can only be postponed to the advantage of others."

The greatest virtue a president can have is to understand power. Pres¬idents are not philosophers, and the exercise of power is an applied, not an abstract, art. Trying to be virtuous will bring not only the president to grief but the country as well. During war, understanding power means that crushing the enemy quickly and thoroughly is kinder than either extending the war through scruples or losing the war through sentimen¬tality. This is why conventional virtue, the virtue of what we might call the good person, is unacceptable in a president. Again as Machiavelli put it, "The fact is that a man who wants to act virtuously in every way nec¬essarily comes to grief among so many who are not virtuous."

Machiavelli introduces a new definition of virtue, which instead of personal goodness consists of being cunning. For princes, virtue is the ability to overcome fortune. The world is what it is, and as such, it is unpredictable and fickle, and the prince must use his powers to over¬come the surprises the world will present. His task is to protect the republic from a world full of people who are not virtuous in any conven¬tional sense.

Presidents may run for office on ideological platforms and promised policies, but their presidency is actually defined by the encounter between fortune and virtue, between the improbable and the unex¬pected—the thing that neither their ideology nor their proposals pre¬pared them for—and their response. The president's job is to anticipate what will happen, minimize the unpredictability, then respond to the unexpected with cunning and power.

From Machiavelli's point of view, ideology is trivial and character is everything. The president’s virtue, his insight, his quickness of mind, his cunning, his ruthlessness, and his understanding of the consequences are what matters. Ultimately, his legacy will be determined by his instincts, which in turn reflect his character.
The great presidents never forget the principles of the republic and seek to preserve and enhance them—in the long run—without under¬mining the needs of the moment. Bad presidents simply do what is expe¬dient, heedless of principles. But the worst presidents are those who adhere to principles regardless of what the fortunes of the moment demand.

The United States cannot make its way in the world by shunning nations with different values and regimes that are brutal, all the while carrying out exclusively noble actions. The pursuit of moral ends requires a willingness to sup with the devil.

THE FINANCIAL CRISIS AND THE RESURGENT STATE

Two global events frame the next decade: President Bush's response to September n and the financial panic of 2008. Understanding what happened and why in both cases amplifies our sense of what it means to be an empire and what its price is, especially when we con¬sider how these interrelated events, which began as domestic American concerns, came to engulf the entire world. Let's begin with the financial crisis.

Every business cycle ends in a crash, and one sector usually leads the way. The Clinton boom ended in 2000, when the dot-corns crashed; the Reagan boom of the 19805 ended in spectacular fashion with the collapse of the savings-and-loans. From this perspective, there was nothing at all extraordinary about what happened in 2008.

The reason for such booms and busts is fairly simple. As the economy grows, it generates money, more than the economy can readily consume. When there is a surplus of money chasing assets such as homes, stocks, or bonds, prices rise and interest rates fall. Eventually prices reach irrational levels, and then they collapse. Money becomes scarce, and ineffi¬cient businesses are forced to shut down. Efficient businesses survive, and the cycle starts again. This has been repeated over and over since modern capitalism arose.

Sometimes the state interferes with this cycle by keeping money cheap in order to avoid the crash and the recession that inevitably fol¬lows. Money is, after all, an artifice invented by the state. The Federal Reserve Bank can print as much money as it wants, and it can purchase government debt with it. That's what the Federal Reserve did in the aftermath of September n. The Bush administration didn't want to raise taxes to pay for the war on terror, and the Fed cooperated by financing the war by, essentially, lending money to the government. The result was that no one felt the war's economic impact—at least, not right away.

Bush's reasons were derived both from geopolitics and from partisan domestic politics. He was at war with the jihadists, and he did not want to raise taxes to pay for his military interventions. Instead, he wanted the total revenue from taxes to rise by way of a stimulated economy. The the¬ory was that the combination of military spending, tax cuts, and low interest rates would allow the economy to surge, increasing tax revenues enough to pay for the war. If this supply-side gambit didn't work, Bush reasoned, he would still have the benefit of not undermining political support through tax hikes before the 2004 elections. He also assumed that he could deal with the economic imbalances after the election, as the war wound down. His problem was that the war didn't wind down, and he grossly underestimated how long and intense it would become. As a result, he and the Fed never got around to cooling off the economy, and the war and this economic policy continue to define his presidency. Another element that led to the collapse of 2008 was the cheap money pouring into one particular segment of the economy, the residen¬tial housing market. In part this was an economic calculation. Housing prices tend to rise over time, which gives real estate the appearance of a conservative investment. Government programs also encouraged indi¬viduals to buy homes, and during this era that encouragement extended to a wider segment of the population than ever before. The perception of safety, combined with government policy, brought extraordinary amounts of money into the market, along with speculators and millions of low-income buyers who in ordinary times never would have qualified for the mortgages they took on.
The price of homes had risen for the past generation, but as this chart above shows, that story of steady growth is a bit deceptive. If you adjust home prices for inflation, they have fluctuated in a narrow band between 1970 and 2000. But mortgages don't rise with inflation. So if you bor¬rowed $20,000 to buy a $25,000 house in 1970, by 2000 that house would be worth around $125,000 and you'd have paid off your mortgage. But $125,000 was not much more than $25,000 in real terms. You felt richer because the numbers were higher and because you had paid off your debt, but the truth was that home ownership was not a great way to create actual gains. On the other hand, the record showed that you were not likely to lose money either, and that gave lenders confidence. If worse came to worst, they could always seize the house and sell it, thus getting their money back.

With cheap money enabling more people to buy houses, demand rose, which meant that housing prices took off like a rocket in 2001, then accelerated further after 2004. Lenders kept looking for more and more borrowers for their cheap money, which meant lending to people who were less and less likely to repay these now "subprime" loans. The climax came with the invention of die five-year variable-rate mortgage, which enabled people to buy houses for monthly payments that were fre¬quently lower than rent on an apartment. These rates exploded after five years, but if a buyer could not meet the new payments and lost the house, at least he would have enjoyed some good years and was simply back where he started. If housing prices stayed steady, he could refi¬nance, so all in all, he didn't seem to be taking much of a risk.

Nor did the lenders appear to be risking much, especially given that they made their money on closing costs and other transaction fees, then sold the mortgages (and passed along the risk) to secondary investors in what became known as bundles. In packaging these loans for the sec¬ondary market, lenders emphasized the lifetime income stream, which made the subprime loans appear to be the perfect conservative invest¬ment.

Everyone was making money and no one could get hurt—it was the oldest story in the book. And most people didn't care or didn't want to believe that the bubble could burst.

However, reality began to intrude. New homeowners who never would have qualified for an ordinary loan in ordinary times began to default, and as properties came on the market from forced sale or fore¬closure, prices that had been counted on to keep going up began to fall. During the run-up, small investors had bought multiple houses, fixed them up a bit, and resold them for a quick profit. But as boom turned to bust and speculators were unable to "flip" the houses at profit, they rushed to unload them at whatever price they could, which drove prices further down. By 2007, the mild decline that had begun in 2005 became a rout. In truth, all that happened was that prices returned to the highest level within their prior historic range; the froth was disappearing, but the basic value was still there. Nonetheless, many of the people who had put money into these houses were devastated.

With the collapse of the housing market, the mortgages that had been bundled and sold to investors no longer had a clear value. Because these investors had believed that prices would never fall, they had never looked at what was actually inside their bundles. The more aggressive investors in bundled mortgages, investment banks such as Bear Stearns and Lehman Brothers, had leveraged their positions many times over, and by the time the loan payments were due, the value of the underlying assets was so murky that no one would buy them, or even refinance the loans. Unable to cover their bets, these big players went bankrupt. And since many of the people who had bought these supposedly conservative investments, including the commercial paper issued by the banks, were in other countries, the entire global system went down.

The story of the collapse often focuses on the United States, but the damage was truly worldwide. Residents of eastern Europe—Poland, Hungary, Romania, and other countries—who in normal times had never been able to afford a house had bought in. Austrian and Italian banks in particular, backed with European and Arab money, had wanted to provide mortgages, but interest rates in eastern Europe were high. So the banks offered these new, eager, and unsophisticated buyers loans at much lower rates, only denominated in euros, Swiss francs, and even yen.
The problem was that these homeowners weren't paid in these cur¬rencies but in zlotys or forints. A Polish homeowner essentially paid for his mortgage by first buying yen, then paying the bank. The fewer yen a zloty bought, the more zlotys the homeowner had to spend and the more expensive his monthly payment became. If these zlotys rose against the yen or the Swiss franc, there were no problems. But if the zlotys fell against the yen or the Swiss franc, there were huge problems. Every month, more and more eastern Europeans were buying Euros and other currencies. As the financial crisis deepened, there was a flight to safety; and eastern European currencies plunged. Homeowners were squeezed and broken.

Major expansions always end in financial irrationality, and this irra¬tionality was global. If the Americans went to the limit with subprime mortgages, the Europeans went a step further by enticing homeowners to gamble on global currency markets.

There is a constant refrain that we have not seen such a catastrophic economic event since the Great Depression. That is triply untrue, because similar collapses have happened three other times since World War II. This is a crucial fact in understanding the next decade, because if the financial crisis could be compared only to the Great Depression, then my argument about American power might be difficult to make. But if this kind of crisis has been relatively common since World War II, then its significance declines, and it is more difficult to argue that the 2008 panic represents a huge blow to the United States.

The fact is that such events are common. In the 1970s, for instance, there was a significant threat to the municipal bond market. Bonds issued by states and local governments are especially attractive because they are not subject to federal tax. Such bonds are also considered all but risk-free, the assumption being that government entities will never default on their debts so long as they have the power to tax. In the 19705, however, New York City couldn't meet debt payments and couldn't or wouldn't raise taxes. If New York defaulted, the entire financing system for state and local government would devolve into chaos, so the federal government bailed out New York, making it clear that Washington was prepared to guarantee the market.

During that same period there was a surge of investment in the Third World, primarily to fund the development of natural resources such as oil and metals. Mineral prices were rising along with everything else in the 1970s, and investors assumed that because minerals are finite and irreplaceable, the prices would never fall. Investors also assumed that loans to the Third World governments that usually controlled these resources were safe, given the perception that sovereign countries never defaulted on debt.

In the mid-1980s, the belief in rising prices and stable governments, like most comfortable assumptions, turned out to be misguided. Min¬eral and energy prices plunged, and the extraction industries predicated on high prices collapsed. The money invested—much of it injected as loans—was lost. Third World countries, forced to choose between defaulting and raising taxes (which would further impoverish their citi¬zens and trigger uprisings), opted to default, which threatened to swamp the global financial system. This prompted a U.S.-led multinational bailout of Third World debt. Under George Bush, Sr., Secretary of the Treasury Nicholas Brady created a system of guarantees, issuing what were called "Brady bonds" to create stability.

And then came the savings-and-loan crisis. Savings-and-loan (S and L) institu¬tions, which had been created to take consumer deposits and generate home loans—think Jimmy Stewart in It's a Wonderful Life—were given the right to invest in other assets, which led them into the commercial real estate market. This appeared to be only a small step beyond their tra¬ditional residential market, and the expansion carried the same "conven¬tional wisdom" guarantee that prices would never fall. In a growing economy, or so it was thought, the price of commercial real estate, from office buildings to malls, could only go up.
Once again, the unimaginable happened. Commercial real estate prices dropped, and many of the loans made by the S and Ls went into default. The size of the problem was vast and cut two ways. First, indi¬vidual depositor money was at risk on a large scale. Second, the failure of an entire segment of the financial industry, which had resold its com¬mercial mortgages into the broader market, was poised for catastrophe.

The federal government intervened by taking control of failed S and Ls—meaning most S and Ls—and assuming their liabilities. Mortgages in default were foreclosed, and the underlying property was taken over by a newly created institution called the Resolution Trust Corporation. Rather than try to sell all this real estate at once, thereby destroying the market for the next decade, the RTC, backed by federal guarantees that potentially could have risen to about $650 billion, took control of the real estate of failed savings-and-loans.

The crisis of 2008 was based on the same desire for low risk, and on the same assumption that a certain class of assets was indeed low-risk because its price couldn't fall. It was met with a similar federal govern¬ment intervention to bail out the system, and, just as before, everyone thought it was the end of capitalism. What is important to note is the consistent pattern, including the overstatement of the consequences. To some extent, this is a psychological phenomenon. With pain comes panic, and the management of panic is a question of leadership. Con¬sider how it was managed in the past.

Both Franklin Roosevelt and Ronald Reagan came to power amid economic crises. Roosevelt, of course, faced the Great Depression. Rea¬gan faced the stagflation that overtook die economy in the 1970s—high unemployment combined with high inflation and high interest rates. The economic problems both presidents encountered were part of global economic dislocations, and both posed a profound crisis of confidence in the United States. The crisis in the 19305 prompted Roosevelt's famous line, "We have nothing to fear but fear itself."

Roosevelt and Reagan both understood the psychological element in financial crises. The anticipation of economic hardship causes people to rein in their buying in order to protect themselves. The more they cut back, the worse the economic problems become. As an economic crisis deepens, it calls into question the integrity and leadership of elites, which can create political instability and destabilize society itself. That social uncertainty can in turn make it impossible for a country to act decisively in the world. Roosevelt faced the rise of fascism; Reagan came to power facing what was generally believed to be the growing power of the Soviet Union. Neither could afford the destabilizing consequences of a severe economic crisis, yet neither knew with any certainty how to solve the problem through economic policy. Both attacked the psychol-ogy of the problem, trying to create the sense that, most of all, some¬thing was being done.

In retrospect, Roosevelt's frantic one hundred days of legislation had little effect on the Depression, which was ended by World War II rather than by his economic policies. Reagan also promised actions, although in the end the solution rested not with the president but with the Federal Reserve.
Nonetheless, describing the times as being "Morning in Amer¬ica," a phrase that was part of his 1984 campaign, Reagan, like Roosevelt before him, tried to change the expectations of the public, stabilizing the political situation and buying time for the economy to heal without weakening the state.

Both Roosevelt and Reagan understood that the real threat of an eco¬nomic crisis would be its political impact, with the misery that piled up wrecking the entire system. They understood that their job as leader was not to solve the problem—the president really has little control over the economy—but to convince the public not only that he has a plan but that he is altogether confident of that plan's success, and that only a cynic or someone indifferent to the public's well-being would dare to question him on the details. This is not an easy thing to pull off; it takes a master politician, which is to say a master of illusion.
Roosevelt certainly saved the country from serious instability and, in spite of the lack of recovery, positioned it to fight World War II. Reagan saved the country from the sense of malaise that the Carter administration was known for and set the stage for the reversal of fortunes with the Soviets.

Roosevelt and Reagan did one other thing that was in their power to deal with the crisis. They shifted the boundary between public and pri¬vate, state and the market. Roosevelt dramatically increased the power of the federal government. Reagan decreased it. The problem they were addressing wasn't the economic crisis itself, but a fundamental political crisis. In the 1929 depression, the financial elite had lost the confidence of the public. They appeared not so much corrupt as incompetent. Under Hoover, they were permitted to play out their hand, but then the situation got worse. Roosevelt intervened, shifting some of the power that had been in the hands of the financial elite to the political elite. Had he not done so, the sense that all the country's elites had failed might have prevailed, a sentiment that led to fascism in places such as Italy and Germany.

The reverse happened under Reagan. In the 1980s, the political elite was perceived to be behind the economic crisis, and the public blamed the structure of "big government" left behind by Roosevelt. Reagan shifted the balance between the state and the market back the other way, weakening the state to strengthen the market.

Part of rebuilding confidence has to do with understanding which part of the elite—political, corporate, financial, media—is to be held responsible for the crisis. By essentially putting one set of elites or another into receivership, transferring their authority in many ways to other elites, Reagan and Roosevelt gave the public the sense that the president was acting decisively and taking power away from those who had failed. This eased the sense that everyone was helpless, and indeed cleared the way for at least some reforms that didn't hurt, might have helped, and certainly were needed symbolically. In the end, the crises worked out both because of the underlying power of the United States and because of the resilience of the modern state and corporation, which cannot live apart, yet have trouble living together.

Neither Bush nor Obama was able to manage the national psyche as Roosevelt and Reagan had. Bush lost control of the war and was blind-sided by the financial crisis. He fell behind the curve after Iraq and never caught up. Obama created expectations he could not fulfill, then failed to create the illusion that he was fulfilling them. But of course Reagan ran into similar problems at first. The issue that is unknown but that will affect the next decade deeply is whether Obama can recover and lead. Can he understand that when Roosevelt spoke about fearing fear, he meant that the president's job is to appear to be effective whether or not he is? If Obama doesn't learn that, the nation will survive. Presidents come and go, but this is a fragile time, with the legitimacy of the presi¬dency and the country itself caught between the demands of republic and empire.

When we talk about shifting the boundaries between corporate and political elites and between the state and the market, this inevitably raises ideological issues. For the left, strengthening the corporate elite and the market threatens democracy and equality. For the right, strengthening the political elite and the state threatens individual free-dom and property rights. It is an interesting debate to watch, save that the problem is not moral or philosophical but simply practical. The great distinction that prompts such heated ideological debate just isn't there.

The modern free market is an invention of the state, and its rules are not naturally ordained but simply the outcome of political arrange¬ments. The reason I say this is that the practical foundation of the mod¬ern economy is the corporation, and the corporation is a contrivance made possible by the modern state. The corporation is an extraordinary invention. It creates an entity that the law says is liable for the debts of a business. The individuals who own the business, whether a sole propri¬etorship or a huge publicly held entity, are not held liable for those debts personally. Their exposure can be no greater than their initial invest¬ment. In this way, the law and the state shift the risk from the debtors to the creditors. If the business fails, the creditors are left holding the bag. Nothing like this existed before the birth of "chartered companies" in the seventeenth century. Before that time, if you owned a business, you were liable for all of it. Without this innovation, there would be no stock mar¬ket as we know it, no investment in start-ups, little entrepreneurship.

But this apportionment of risk is a political decision. There is noth¬ing natural in the idea that the boundaries of individual risk are drawn where they are. Indeed, over time, these boundaries shift. The corpora¬tion exists only because the law created it. The political decision to create corporations also means that corporate law, not the law of nature, defines the precise boundaries of risk and liability. There may theoretically be some sort of natural market; but a market dominated by limited liability corporations, from the Fortune 500 to the local plumber, is inherently political.
Since 1933 and the New Deal, the issue of corporate risk has been bound up with the issue of social stability. The structure of risk has been built around the social requirements. During the Roosevelt administra¬tion, the boundaries of state control expanded. Under Reagan, they con¬tracted.

What the 2008 crisis did around the world was redefine the bound¬aries between corporations and the state, increasing state power and the power of politicians, reducing market autonomy and the power of the financial elite. This had minimal impact on China and Russia, where the system was already tilted toward the state. It had some effect on Europe, where state power has always been greater than in the United States. It had substantial effect on the United States, where the market and the financial elite had dominated since Reagan. It also kicked off a political brawl between left and right over whether this shift was justi¬fied. In the United States in particular, the boundaries are always shirting and the argument is always couched in moral terms. In spite of varia¬tions, the strengthening of the state will be one of the defining charac-teristics of the next decade globally.

Along with helping define the boundary between state and corporate control, presidents and other politicians manage the appearance of things, largely by manipulating fear and hope. What made Roosevelt and Reagan great was not only that they readjusted the boundary of state and market to suit the needs of their historic era, but that they created the atmosphere in which this appeared to be not just a technical opera¬tion but a moral necessity. Whether they believed this or not is less important than the fact that they caused others to believe, and through that belief enabled the technical realignment to take place.

The most significant effect of the crisis of 2008 on the next decade will be geopolitical and political, not economic. The financial crisis of 2008 drove home the importance of national sovereignty. A country that did not control its own financial system or currency was deeply vulnera¬ble to the actions of other countries. This awareness made entities such as the European Union no longer seem as benign as they had been. In the next decade, the trend will turn away from limiting economic sover¬eignty and toward increasing economic nationalism.

A similar effect will take place on the political level. An enormous struggle that we can see in China, Russia, Europe, the United States, and elsewhere has broken out between economic and political elites. Because the failure of the market and the financial elite cost the latter credibility, the first round clearly went to the state and political elites. In some coun¬tries, this shift is going to last for a long while. In the United States, the truce that has existed since the Reagan years has broken down and the battle will continue to rage. Rage is the proper word, since that has been the tone of the debate. But American politics have always been operatic, with visions of doom a constant undertone. Still, the world finds politi¬cal uncertainty on such fundamental issues in the United States more than a little unsettling.

Oddly enough, it is on the economic level that the pain of 2008 will have the least enduring effects. It is absurd to compare this downturn to the Great Depression. The GDP fell by almost 50 percent during the Depression. Between 2007 and 2009, the GDP fell by only 4.1 percent. This is not even the worst recession since World War II. That honor goes to the recessions of the 1970s and early 1980s, when we saw the triple hit: unemployment and inflation over 10 percent and interest rates on mort¬gages over 20 percent.

While the current economic crisis is nothing like that, it is still pain¬ful, and Americans have a low tolerance for economic pain. There are even bigger issues on the horizon, beyond this decade, when demo¬graphics shift, labor becomes scarce, and the immigration issue will become the dominant matter facing the United States. But that is still a ways off, and it will not be affecting the coming decade. This decade will not be an exuberant one, and it will strain both individual lives and the political system. But it will not change the fundamental world order much, and the United States will remain the dominant power. Ironically, one measure of U.S. dominance is how much a miscalculation by the American financial elite can impact the world, and how much pain American mistakes can inflict on everyone else.

FINDING THE BALANCE OF POWER

The attack by al Qaeda on September 11 forced the United States into a response that escalated into a two-theater war, lesser com¬bat in a host of other countries, and the threat of war with Iran. It defined the past decade, and managing it will be the focus of at least the first part of the decade to come.
The United States obviously wants to destroy al Qaeda and other jihadist groups in order to protect the homeland from attack. At the same time, the other major American interest in this context is the pro¬tection of the Arabian Peninsula and its oil—oil that the United States does not want to see in the hands of a single regional power. For as long as the United States has had influence in the region, it has preferred to see Arabian oil in the hands of the Saudi royal family and other sheikhdoms that were relatively dependent on the United States. That will continue to be a strategic imperative.

The corollary that frames U.S. options is that only two countries in the region have been potentially large and powerful enough to dominate the Arabian Peninsula: Iran and Iraq. Rather than occupy Arabia to protect the flow of oil, the United States has followed the classic strategy of empire, encouraging the rivalry between Iran and Iraq, playing off one against the other to balance and thus effectively neutralize the power of each. This strategy preceded the fall of the shah of Iran in 1979, when the United States encouraged a conflict between Iran and Iraq, then negoti¬ated a settlement between them that maintained the tension.

After the fall of the shah, the Iraqi government of Saddam Hussein, largely secular but ethnically Sunni, attacked the Islamist and largely Shiite nation of Iran. Throughout the 1980s, the United States shifted its weight between the sides, trying to prolong the war by making sure that neither side collapsed. About two years after the war, which Iraq won by a narrow margin, Saddam tried to claim the Arabian Peninsula, begin¬ning with invading Kuwait. At this point the United States applied over¬whelming force, but only long enough to evict, not invade, Iraq. The United States once again made certain that the regional balance of power maintained itself, thereby protecting the flow of oil from the Arabian Peninsula—Americas core interest—without the need for an American occupation.

This was the status quo when Osama bin Laden tried to redefine the geopolitical reality of the Middle East and South Asia on September II, 2001. With the attacks on New York and Washington he inflicted pain and suffering, but the most profound effect of his action was to entice an American president to abandon America's successful, long-standing strategy. In effect, Bin Laden succeeded in getting an American president to take the bait.

In the long term, Bin Laden's goal was to re-create the caliphate, the centralized rule of Islam that had been instituted in the seventh century and that had dominated the Middle East until the fall of the Ottoman Empire. Bin Laden understood that even to begin to achieve this return to religious geopolitical unity, nation-states in the Islamic world would hive to undergo revolutions to unseat their current governments, then replace them with Islamist regimes that shared his vision and beliefs. In 2001, the only nation-state that shared his vision fully was Afghanistan. Isolated and backward, it could serve as a base of operations, but only temporarily. It might be a springboard to more important nations like Pakistan, Saudi Arabia, and Egypt, but it was too isolated and primitive ever to be more than that.

Bin Laden’s analysis was that many in the Muslim world shared his beliefs in some sense, but that given the realities of power, their support would only be tepid and insufficient to his ends. To begin moving his project forward, he had to trigger an uprising in at least one and prefer¬ably several of the more important Islamic countries. Doing that was impossible as long as the Muslim masses viewed their governments as overwhelmingly powerful and immovable fixtures.

As Bin Laden saw it, this problem was primarily one of perception, because the governments in the region were in fact weaker than they appeared. The apparent military and economic power of Pakistan, Saudi Arabia, and Egypt derived from the relationship of these countries with the Christian world (as he thought of it), and particularly with the lead¬ing Christian power, the United States. But Bin Laden surmised that even with their borrowed power, these governments were still vulnerable. His task was to demonstrate this weakness to the Muslim masses, then set in motion a series of uprisings that would transform the politics of the Islamic world. He failed in this, but his followers have continued this strategy, and their attempts to reshape the politics of the Islamic world, which have been under way since the nineteenth century, will continue to be a significant geopolitical theme of the decade to come.

The short-term goal of the September 11 attacks was to accelerate this process by attacking prominent American targets at the heart of the imperial power structure. Bin Laden's hope was that by exposing the vul¬nerability of even the United States, he could diminish Muslim percep¬tions that their own governments were invulnerable.

The attacks of September 11 were only marginally about the United States, and the exact nature of the American response to Bin Laden's gambit mattered little, because any response could be used to his advan¬tage. If the Americans did nothing, this would confirm their weakness. If the Americans responded aggressively, this would confirm that they were indeed the enemies of Islam.

But while the attacks were aimed primarily at the Muslim psyche, the psychological impact on Americans turned out to be hugely important. The unexpectedness of the attacks, the fact that they were mounted using a fixture of everyday life—commercial airliners—and the fact that casualties were substantial created a sense of panic. How many other teams were in place? Where would al Qaeda strike next? Did al Qaeda possess weapons of mass destruction? Even more than in the wake of Pearl Harbor, Americans emerged from the shock of September n with a sense of personal dread. The possibility that they and their loved ones might be killed next was very real to them. This was a pervasive and pro¬found sense of unease that the government had to address by appearing to take decisive action.

The psychological alarms that went off among the American people served to compound the strategic problem facing the U.S. government. Al Qaeda by itself—unless it did possess weapons of mass destruction— did not pose a genuine strategic threat. It could not shatter the United States. However, if the disruption it initiated had the desired effect in the Islamic world and regimes that were linked to the United States started to fall, ultimately that would have a huge impact on American strategy. If the Egyptian government were overthrown, for example, the position of Israel would change and an American anchor in the region would be threatened. If the Saudi government was endangered, the flow of oil from the region might be interrupted. The strategic danger was not the destruction of America's population centers, economic infrastructure, or military might, but simply al Qaeda's potential political success in the region—and that quite apart from Bin Laden's distant dream of the caliphate.

The United States as well as al Qaeda identified the strategic battle¬field clearly: the hearts and minds of Muslims. But for the president it was American hearts and minds that first needed to be calmed and reas¬sured that actions were being taken to protect the homeland. The FBI moved aggressively to track down anyone even remotely suspected of being associated with al Qaeda, and security was revamped at airports, but neither effort was particularly effective at the time. In many ways, the United States continues to operate under the doctrine of putting enormous resources into security measures of limited effectiveness in order to calm the American public's legitimate fears. Reconciling resources with operational reality and public perception will be a critical task for the next decade.

The assault on America's sense of well-being also demanded that al Qaeda's leaders be captured or killed. In strategic terms this was a ques¬tionable priority, but a president must satisfy not only the desire for reassurance but also the desire for revenge. Here the challenge was com¬pounded by the fact that al Qaeda is a sparse network spread out around the globe, operating without a central headquarters or a conventional chain of command. Al Qaeda encourages sympathizers to strike out on their own and innovate. So while it is possible to carry out acts of retri¬bution against these terrorists, it is impossible to actually destroy al Qaeda, because it isn't an organization in any conventional sense. Because there is no infrastructure and no chain of command, there is no real head to be decapitated.

What did make strategic sense was a minimal infusion offered to dis¬rupt al Qaeda's planning, training, and limited command capabilities. Al Qaeda considered itself safe while operating out of Afghanistan, a land¬locked country with no ports of entry. Bin Laden and his colleagues had some familiarity with American operations, both from observing Opera¬tion Desert Storm in 1991 and from training with Americans in Afghanistan during the Soviet-Afghan war of the 1980s. Desert Storm in particular had showed al Qaeda that even when ports were available, Americans planned obsessively, and planning took time. With winter approaching, al Qaeda's rational estimate was that even if the United States chose to go looking for them in Afghanistan, no action was possi¬ble before the spring. The Pakistani port of Karachi would be essential for an invasion, and negotiations for its use might delay an assault even longer.

The Bush administration, however, calculated that it couldn't wait until spring. The president really did want to decapitate or at least dis¬rupt al Qaeda, but politically he had to respond to demands for an
immediate and highly visible response. The attacks had shaken confi¬dence in America's defenses, and the president had to rebuild that confi¬dence while also building a political base for what could be an extended war. He could ill afford a crisis in confidence about American prosperity at this juncture, so it was in this atmosphere that the war on terror began to affect economic decisions as well. If it took six months to launch American counteraction, the already tenuous political situation would deteriorate, and the president would lose support for the effort even before it was launched. Bush's decision to go ahead was one of those individual judgments that can and do affect the lives of millions over the span of a decade, and certainly the fallout from that decision will con¬tinue to color much of the decade to come.

There was also a legitimate strategic reason for haste: the United States wanted to make certain that regimes in the Middle East didn't fall, or even begin to recalculate their interests. While the United States might have been perceived as a great power, it also was seen as a power that was unprepared to risk a great deal in the region. Ronald Reagan's decision to withdraw from Beirut after the bombing of the Marine bar¬racks, George H. W. Bush's decision not to go on to Baghdad after liber¬ating Kuwait, and Bill Clinton's decision to withdraw from Somalia, followed by his rather anemic response to pre-9/11 al Qaeda attacks, all created an image of a country unwilling to take risks and suffer losses. Meanwhile, Muslim governments saw the very real possibility of being toppled by political unrest fomented by al Qaeda's capable and ruthless covert force, particularly if they collaborated with the United States.

These governments were not about to become jihadists, but neither were they prepared to expose themselves on behalf of the United States. They expected the United States to continue its policy of limited risk taking, so for them, cooperation with the U.S. appeared to pose serious risks with few advantages. The Americans demanded intelligence shar¬ing on al Qaeda, for instance, but these governments, which did not expect the United States to stand by them for the long haul, were reluc¬tant to participate. The longer the United States failed to act, the lower the Muslim countries' propensity to assist.

Al Qaeda miscalculated by focusing too much on the consequences of the attack for the Islamic world and not enough on the political and strategic pressures September 11 created for Bush. There was no doubt that the United States would act aggressively, and for the reasons cited above, sooner rather than later. The target had to be al Qaeda, which meant that the area of operations had to be Afghanistan.

In mid-September 2001, the United States sent in CIA operatives to make deals with local Afghan warlords. At the same time, the United States dispatched Special Operations Forces and paramilitary CIA units to fight alongside anti-Taliban Afghans and to target American air strikes on Taliban positions.
In particular, the United States made a deal with the Northern Alliance, a Russian-backed group of anti-Taliban organiza¬tions. Having been defeated by the Taliban in their civil war in the 1990s, the Northern Alliance now welcomed the opportunity to strike back, and the Russians had no objection. Other warlords were simply bought. The United States also had the active cooperation of Iran.

Afghanistan provided the illusion of an invasion, but what really hap¬pened was the resumption of a civil war, backed by American air power. The fighting that began a month after September 11 was done primarily by Afghans, supported by air strikes from carriers and bombers based in the Persian Gulf and the Indian Ocean. But rather than massing in front of the major cities and becoming targets to be bombed by B-52s, the Tal¬iban, in classic insurgent fashion, dispersed, then regrouped later to resume the battle.
As a result, the Taliban was never actually defeated, but the United States did achieve three of its goals. First, it reassured the American pub¬lic that it was able to protect them by mounting military action any¬where in the world. This wasn't altogether true, but it was true enough to be comforting. Second, it signaled to the Islamic world that the United States was absolutely committed to the conflict. More sophisticated than the American public, Muslim leaders noted that the major American contribution was air power, while the heavy lifting was done by the Afghans. This was not definitive evidence of American commitment; it was, however, better than no action. Third, the action inflicted damage on al Qaeda. Bin Laden and others escaped, but their command-and-control structure was disrupted, which forced the leaders to become fugitives. As a result, they became increasingly isolated and largely irrele¬vant.

Afghanistan was in some ways a sleight of hand, but it achieved what could be achieved. The United States had launched a disruptive spoiling attack—a classic American maneuver. The Bush administration installed and protected a government, knowing that most of Afghanistan was out¬side its reach and that creating a democracy there was not in the cards. Nine years later, Afghanistan is still far from resolved, and it will cer¬tainly be the problem that has to be solved in order to move ahead in the next decade.

From al Qaeda's point of view, however, U.S. actions in Afghanistan and elsewhere in the Middle East served as clear evidence for Muslims that the United States was their enemy. The jihadists waited for uprisings and toppled regimes—an upheaval that never came. The regimes sur¬vived, partly because the Islamic street, as it was called, feared that the security apparatus of their regimes was still brutally effective, and partly because these regimes continued to hedge their bets. They read the U.S. spoiling attack for what it was and held back their own commitment. Both Saudi Arabia's and Pakistan's intelligence sharing remained limited, as neither wanted to commit itself to the United States without clear signs of how far the U.S. was prepared to go. As it became clearer that there would be no uprisings, al Qaeda became more aggressive in the region.

THE IRAQ GAMBIT. The next venture in the U.S. war on terror was the assault on Iraq in 2003. It is easy to argue today that the invasion was an unqualified mis¬take, but it is important to recall the context in which the decision to invade was made. In February 2002, the Saudis ordered American forces off their soil. The Pakistanis, in spite of heavy pressure from both India and the United States, made only modest gestures of commitment in support of the American effort. The general perception was that the United States had done what it was going to do in Afghanistan and was now hoping that other nations would carry the burden for it, both in intelligence and in operations.

Without the full cooperation of the Saudis and Pakistanis, the United States had limited options. It could conduct an intelligence war against al Qaeda, as the Israelis had done with Black September in Europe in the 1970s; but without contributing partners in the region, the U.S. intelli¬gence capability against al Qaeda was extremely constrained.

A second option was for the United States to move into a purely defensive mode, relying on Homeland Security while hoping that the Afghan operation had disrupted al Qaeda's command structure enough to prevent new attacks. Theoretically, the FBI could round up sleeper cells while the borders were protected from infiltration and airports secured against terrorists. Attractive on paper, this plan was impossible in practice. The FBI could never guarantee that there were no more sleeper cells in the country, and points of entry into the United States could never be completely secured. Any illusion of safety this effort gave the American public, and any support it might buy the president for a job well done, would last only until the next terrorist attack, the timing and nature of which were completely unknown. When such an attack came, the question of America's willingness to assert itself and take risks in the Muslim world would surface again, with no clear answer. After Afghanistan, what?

The Bush administration tried to craft a strategy that forced the Saudis and Pakistanis to be more aggressive in intelligence gathering and sharing and that placed the United States in a dominant position in the Middle East, from which it could project power.

These were the underlying reasons for the invasion of Iraq. The mili¬tary action had the immediate result of creating a new strategic reality. It intimidated Saudi Arabia in particular, placing U.S. armor a few days' drive from Saudi oil fields. It also gave the United States control of the most strategic country in the region, Iraq, which borders on Kuwait, Saudi Arabia, Jordan, Syria, Turkey, and Iran. So controlling Iraq achieved the short-term goals of the war on terror, but it violated the principle that the United States does not become a permanent player in any region. The Bush administration had wagered that it could sacrifice this part of U.S. strategy—maintaining regional balances of power through surrogates while holding U.S. forces in reserve—in return for other benefits. It was a bad choice on a menu of worse choices, a point that has to be remembered when we consider the nature of imperial power: it may feel compelled to act even when all options are flawed.

Obtaining those benefits, however, required the United States to suc¬ceed not just in invading but in pacifying Iraq. The invasion succeeded, without a doubt, and the Saudis markedly increased their cooperation on intelligence. But dominating the most strategic country in the region turned out to be impossible. U.S. forces, having rolled into Baghdad with ease, found themselves quickly tied down in an insurgency that required them to focus all their force inward, when the intent had been to use Iraq as a base from which to project force outward.

This failure of the occupation transformed the war. Iraq became an end in itself, and the ultimate goal became not the creation of a new strategic reality in the region but simply the withdrawal of U.S. forces within a reasonable time frame. The best hope was to leave behind a neu¬tral government; at worst, the end result of the invasion would be chaos.

Iraq became decoupled from America's broader strategy and became a case study in the relationship among morality, strategy, and leadership. From a purely moral point of view, eliminating the Saddam Hussein regime could hardly have been faulted. He was a monster and his regime was monstrous. But that was not the moral imperative to which Bush had committed his presidency. His stated moral imperative was to wage a war on terror, and the occupation of Iraq made sense to the American people only to the extent that it served that goal.

In deciding to invade in 2003, George W. Bush placed his moral obsession above the fundamental principle of American strategy: main¬taining a balance in each region without committing substantial num¬bers of troops. There are many regions, and if the United States began deploring occupation forces in each of these, the burden would quickly outstrip American capacity. Moreover, U.S. forces had supplanted Iraq's own forces as the counterweight to Iran, now the largest indigenous power in the region. If at some point the United States simply withdrew from Iraq, Iran would by default dominate the entire Persian Gulf. Whatever the invasion contributed to the war against al Qaeda, the strategic costs of Iraq became too high.

For the invasion of Iraq to be aligned with America's long-standing strategic principles, U.S. forces would have had to occupy Iraq quickly and efficiently and without significant resistance. Then the United States would have had to rapidly construct a viable regime in Baghdad, com¬plete with a substantial military force, to take over the role of balancing its historical enemy, Iran. If this could have been done in, say, five years, Bush would have achieved both his moral and strategic goals. He would have delivered the necessary shock to the Muslim world, intimidated the Saudis, and been able to use Iraq's strategic location to pressure countries in the region. The United States could have then withdrawn, leaving regional players to balance each other once more.

The Bush strategy failed because the premise was faulty: there was resistance that could not be readily suppressed. The greatest intelligence mistake of the war did not concern weapons of mass destruction but rather the failure to understand that insurgency had long been Saddam Hussein's default plan for dealing with an invasion. It also involved a fail¬ure to understand that by trying to destroy Saddam's Sunni-dominated Baathist Party, the United States effectively drove the Sunnis out of gov¬ernment and turned power over to their religious and cultural rivals, the Shiites. Terrified of a Shiite government (which, incidentally, would have some affinity with the Shiite majority that dominated Iran), the Sunnis in Iraq were put in a position where they had nothing to lose and embraced random shootings and roadside bombs.

But Bush's miscalculation ran deeper. He counted on the support of the Shiites in opposing the Sunni establishment, but discounted the degree to which the Iraqi Shiites were intertwined with the heavily Shiite Iranians. The Iranians had no interest in seeing Iraq resurrected under a pro-American government that would once again threaten Iran, so the United States wound up trapped from two directions. The Sunnis went to war against the occupation, and the Shiites, influenced by Iran, did everything they could to avoid the kind of cooperation that would turn them into an American dependency.

Bush violated strategic principles, hoping to return to the main path later, but he got trapped in the local realities, which he could not man¬age. As the situation deteriorated, his credibility with the American pub¬lic declined. He could have survived the fact that his initial justification for the war, the existence of weapons of mass destruction, proved untrue. But he could not survive being trapped in a multisided war with no end in sight.

There were other errors that undermined this president's ability to lead. His second justification for the invasion was the need to create a democratic Iraq. This did not resonate with the American public, which saw no pressing reason for such an effort. This nation-building motiva¬tion was in fact a lie. As we noted in the case of Lincoln, Roosevelt, and Reagan, great presidents often have to lie to serve their greater moral purpose. But Bush failed to convince because his clearly stated moral imperative—defeating terrorism—had diverged from strategic reality to such an extent that his entire foreign policy appeared convoluted and chaotic, which made him appear incompetent. There were too many separate explanations, too many cases of special pleading. The failure to align moral objectives with strategic goals, and both with a coherent myth for popular consumption, crushed him.

In 2007, too late to save his presidency, Bush instituted the surge. This effort had less to do with military strategy than it did with using military force to set the stage for a negotiated settlement with the Sunnis. Once that was put in place, the Shiites, afraid of an American-backed Sunni force, became somewhat more cooperative, and the violence died down.

With Iraq no longer an effective counterweight, the balance of power with Iran broke down completely. An American withdrawal of forces would leave Iran the dominant force in the region, with no local power to block it—a prospect that completely unnerved the Arabian powers, as well as Israel and the United States. It is this imbalance that sets the stage for the regional problems that will continue to face the American presi¬dent in the decade to come.

THE IRANIAN COMPLEXITY. As the second decade of the twenty-first century began, the dual prob¬lem facing the United States in this region was withdrawing its forces without leaving Iran unchecked by a countervailing power. Given that there were no other candidates for the job of blocking Iranian ambitions, it appeared that the United States could not withdraw from Iraq until it had created a government in Baghdad strong enough to restore balance. The Iranians had clearly welcomed the invasion of Iraq. Long before September u, they had done everything possible to induce the United States to step in and eliminate Saddam Hussein. Indeed, much of the intelligence forecasting that American troops would not encounter resis¬tance had come from Iranian sources.

Once American boots were on the ground, Iran began to threaten U.S. interests in Iraq directly by becoming deeply involved with various Shiite factions, then by supplying weapons to the Sunnis to keep the conflict going. Iran had also supported Taliban forces in western Afghanistan, as well as Hezbollah in Lebanon.

The Iranians had expected the United States to create an Iraqi gov¬ernment that marginalized the Sunnis and emerged as primarily Shiite. They anticipated that once the United States withdrew, such a govern¬ment would become an Iranian satellite. They expected the Americans to lean on Iran's Shiite allies to govern Iraq, but the United States threw them a curve by attempting to govern Iraq directly through various insti¬tutions and individuals. Nonetheless, given the protracted difficulty of forming a government and the eventual withdrawal of the Americans, the outcome is likely still to leave Iran in a favorable position.

But these factors are exactly what has proved so dangerous to the government in Tehran. Trapped between trying to govern a rebellious country directly and turning over responsibility to a government pene¬trated by Iranian agents and sympathizers and then withdrawing, the United States had to consider a more radical possibility: an attack that would overthrow Iranian president Mahmoud Ahmadinejad and the regime that his presidency was based on.

With its 70 million people inside mountainous borders, Iran is by virtue of topography an effective fortress. Given that the terrain makes a direct invasion impossible, the Americans have tried multiple times to generate a revolution similar to the ones that toppled governments in the former Soviet Union. Over the years, these attempts have always failed. But after the failures in Iraq, and to the extent that the United States could neither revive the balance of power nor leave Iran the dominant power in the Persian Gulf region, it would be natural enough for the Americans to consider some kind of attack to oust the Iranian govern¬ment. The fact that this regime is split between old clerics who came to power with Ayatollah Khomeini and younger, non-clerical leaders such as Ahmadinejad adds to Iranian worries. But the leaders' primary concern is that they have seen other U.S.-sponsored uprisings succeed, particu¬larly in the former Soviet Union, and they cannot take the chance that the United States won't get lucky again.

The Iranians noted the manner in which North Korea had managed a similar problem in the 1990s, when its government feared that the col¬lapse of Soviet communism would lead to its own collapse. Trying to portray themselves as more dangerous and psychologically unstable than they were, the Koreans launched a nuclear weapons program. To con¬vince people that they might actually use those weapons, they made statements that appeared quite mad. As a result, everyone feared a regime collapse that might lead to unpredictable results. Thus the North Koreans managed to create a situation in which powers such as the United States, China, Russia, Japan, and South Korea tried to coax them to the table with aid. The North Koreans were so successful that they had the great powers negotiating to entice them to negotiate. It was an extraordinary performance.

Playing to America's nuclear phobia, the Iranians have been working on nuclear technology for a decade, a program that has included crafting themselves in the image of North Korea, as unpredictable and danger¬ous. Like the North Koreans, they managed to maneuver themselves into a position where the permanent members of the UN Security Council, plus Germany, were trying to negotiate with them over the issue of whether or not they would negotiate.

The collapse of Iraq had left the United States in an extremely diffi¬cult situation with limited options. An air strike against Iranian nuclear targets would most likely spur a patriotic resurgence that would only strengthen the regime. And Iran had substantial counters, including the ability to further destabilize Iraq and to sortie extent Afghanistan. Iran could also unleash Hezbollah, a far more capable terrorist organization than al Qaeda. Or it could mine the Strait of Hormuz, creating eco¬nomic chaos by blocking the flow of oil from the Persian Gulf.

Thus the violation of America's long-standing policy of regional bal¬ances and limited engagement led to a geopolitical worst-case scenario. Iran was now the dominant native power in the Persian Gulf, and only the United States had the means to counterbalance it, which would fur¬ther violate America's basic strategic principles. Moreover, the unbal¬anced focus on this one region left the United States weak in other parts of the world, trapped off-balance, with no clear counter in sight.

This is the defining geopolitical problem that President Obama inherited and that he and all other presidents of the next decade will have to deal with. Iran has become the pivot on which the Middle East will turn. In many ways, it was always the pivot. But before the United States could deal with Iran, it had to do something definitive about Islamic terror. It devoted its resources to wars it saw as directed against terrorism, which effectively insulated Iran from the threat of American intervention and even enhanced its position in the region.
The economic and geopolitical events of the past decade were inter¬twined. They created a crisis of confidence in the American public as well as drawing American strategic thinking into a series of short-term, tactical solutions. The Iran question is tied up with fears that rising oil prices will crush the economic recovery, as well as with the impact of action on the jihadist war. September 11 and the events of 2008 have combined to create a trap for American strategic thinking. As the United States moves forward into the next decade, it must escape the trap. The economic problem will resolve itself in time. The geopolitical challenge of terrorism requires decisions.

THE TERROR TRAP

President George W. Bush called his response to the al Qaeda attacks of September 11 the Global War on Terror. If he had called the response a war on radical Islam, he would have alienated allies in the Islamic world that the United States badly needed. If he had called it a war on al Qaeda, he would have precluded attacking terrorists who were not part of that specific group. Bush tried to finesse this problem with a semantic sleight of hand, but this left him open to political and strategic confusion.

President Obama dropped the term war on terror, and rightly so. Ter¬rorism is not an enemy but a type of warfare that may or may not be adopted by an enemy. Imagine if, after Pearl Harbor, an attack that relied on aircraft carriers, President Roosevelt had declared a global war on naval aviation. By focusing on terrorism instead of al Qaeda or radical Islam, Bush elevated a specific kind of assault to a position that shaped American global strategy, which left the United States strategically off-balance.

Obama may have clarified the nomenclature, but he left in place a significant portion of the imbalance, which is an obsession with the threat of terrorist attacks. As we consider presidential options in the coming decade, it appears imperative that we clear up just how much of a threat terrorism actually presents and what that threat means for U.S. policy.

According to the Prussian military theorist Carl von Clausewitz, war is a continuation of politics by other means. Victory in World War II did not consist of compelling Japan to stop using aircraft carriers. Victory meant destroying Japan's ability to wage war, then imposing American will—a political end. If a president is to lead a nation into war, he must crisply designate both the enemy and the end being sought. If terror was the enemy after September n, then everyone who could use terror was the enemy, which is an awfully long list. If for political reasons a presi¬dent cannot clearly identify who is to be fought and why, then he must carefully reexamine whether he can win, and thus whether or not he should engage. If the cost of naming the enemy is diplomatically or politically unacceptable, then the war is not likely to go well.

Despite Bush's decision to focus the war on terrorism, the Islamic world knew that the real enemy being targeted was radical Islam. This was the ground that al Qaeda had sprung from, and Bush was not going to fool anyone into thinking otherwise. When he could not truthfully and coherently explain his reason for invading Iraq, the strategy began to unravel.

Bush's semantic and strategic confusion intensified when his war on terror expanded to include the effort to unseat the Iraqi government. Saddam Hussein, targeted by that effort, was a secular militarist rather than a religious Islamist, and he was no friend of al Qaeda. He had not been involved in al Qaeda terrorism prior to the invasion of Iraq, but he and al Qaeda did share a common enemy: the United States. For this reason, Bush felt that he could not discount the danger of an alliance of convenience between the state of Iraq and the stateless radicals, al Qaeda. His solution was to make a preemptive attack. Bush and his advisers reasoned that destroying Saddam's regime and occupying Iraq would deny al Qaeda a potential base while gaining the United States a strategic base of operations of its own.

Nonetheless, inasmuch as the larger strategy had been identified as a war on terror and inasmuch as Saddam had not recently engaged in ter¬rorism, the invasion of Iraq appeared unjustified. If the war had been more clearly focused on al Qaeda as the enemy, then the invasion would have appeared much more plausible, because a war against a specific group would have included hostility toward that group's allies and even potential allies, which Saddam certainly was.

In a democracy, the foundation of public support is a clear picture of the enemy's threat and of your own purpose in confronting that threat. Such clarity not only mobilizes the public, it provides a coherent frame¬work for communicating with that public. Truman's presidency never recovered from his use of the term police action to refer to the Korean War, a conflict in which more than thirty thousand Americans died. Roosevelt's war against Germany, Japan, and Italy, on the other hand, survived endless subterfuges, attacks on the innocent, and alliances with the truly evil, because Roosevelt made it clear who the enemy was and why we had to fight and defeat it.

THE SIGNIFICANCE OF TERROR. Terrorism is an act of violence whose primary purpose is to create fear and, through that, a political result. The bombing of London by Ger¬many in World War II was a terror attack, in that the goal was not to cripple the British ability to wage war, but to generate a psychological and political atmosphere that might split the public from the govern¬ment and force the government into negotiations. Palestinian terrorism in the 19705 and 19805, from assassination to hijacking aircraft, was designed to draw attention to their cause and maximize the appearance of Palestinian power. As I've tried to show, al Qaeda's terrorism was also designed for a political end. The issue is simple: how much effort should be devoted to stopping terror and its consequences compared to other strategic tasks?

Terrorism is normally undertaken in lieu of more effective action. Had the Germans been able to destroy the British navy or the Palestini¬ans been able to destroy the Israeli army, they would have done so. It would have been a more efficient and direct route to their ends. Terror¬ism derives from weakness, focusing on the psyche in order to make the terrorist appear more powerful than he is. The terrorist's goal is to be treated as a significant threat when in fact he isn't one. As the name implies, the terrorist is creating a state of mind. His ultimate goal is to be taken as an enormous, indeed singular threat. This creates the founda¬tion for the political process the terrorist wants to initiate. Some merely want to be taken seriously. Al Qaeda wanted to convince the Islamic world that it was so powerful it was the most important thing on Amer¬ican minds.

Al Qaeda in fact achieved that goal. By declaring a war on terror, the United States signaled that it regarded this single threat as transcending all others. Protecting the United States against terrorist acts became the central thrust of American global strategy, consuming enormous energy and resources. But terror¬ism as practiced by al Qaeda does not represent a strategic danger to the United States. It can and at times will kill perhaps thousands of Ameri¬cans, and it will cause pain and generate fear. But terrorism in and of itself cannot destroy the material basis of the American republic.
Because terrorism—even including nuclear terrorism—does not rep¬resent an existential threat to the United States, a foreign policy focused singularly on terrorism is fundamentally unbalanced. The lack of bal¬ance consists of devoting all available resources to one threat among many while failing to control other threats that are of equal or greater significance and danger. This is not an argument to ignore terrorism, but rather an argument that terrorism needs to be considered within the context of national strategy. This is where George W. Bush got trapped, and his successors run the risk of falling into the same snare.

Like Lincoln, Roosevelt, and Reagan, Bush had to manage the psychology of the country while pursuing his strategic end, but two phe¬nomena proved to be his undoing. First, the more successful he was at blocking al Qaeda, the more the psychological trauma faded. Some of the public moved from demanding the most extreme measures to being shocked at the measures being taken. Bush should have anticipated this, but by regarding the war on terror as an end in itself, he lost his sense of its place in the broader strategic and political context. Second, he was not able to shift his focus in keeping with the change in public opinion, because he did not understand the purpose of his own global war on ter¬ror. That purpose was not to defeat terrorism but to satisfy the psycho¬logical needs of the public. Yet Bush continued at full bore long after the country no longer felt at risk.

In being fixated on terrorism as a freestanding strategic goal, Bush devoted huge resources to battles he couldn't win and to theaters that were not obviously connected to terrorism. In fighting a Global War on Terror, he not only lost perspective, he forgot to manage the full range of other U.S. strategic interests. He was so obsessed with the Islamic world, for example, that he didn't devote the attention and resources necessary to deal with the reemergence of Russia.

The issue therefore is how to transition from a complete focus on ter¬rorism and the Islamic world to a more balanced strategy. Part of the problem is public opinion. Dealing with the Islamic world is a passion¬ate subject in the United States, one that divides the country. Many regard the Islamic world as not only the prime issue but the only issue on the American agenda. It is the president's job to align with public opin¬ion and to tack with it while quietly pursuing his own moral and strate¬gic ends. The problem that President Obama and other presidents will face in the next decade is to place terrorism and al Qaeda in perspective while redefining American interests in the Islamic world. This needs to be done in such a way that the public doesn't turn on the president, par¬ticularly when the inevitable terrorist attacks do occur. He must satisfy public opinion both when it is terrified and outraged by attacks and when it turns complacent about terrorism and is shocked at the things that have been done to battle it.
Above all, the president must deal with the Islamic world as it is, without allowing public passion to influence his ultimate intentions.

This is not an argument for complacency. For example, even though the likelihood is small, the consequences of an attack with weapons of mass destruction would be enormous. Appropriate resources must be devoted to the threat. That does indeed mean war, covert or overt, and war potentially involves costs and commitments that run the risk of out¬stripping the threat. The president's task is to align threat, consequences, and effort with other challenges, and shape them into a coherent strat¬egy. The United States has many threats and interests and cannot respond to only one. Fear alone cannot drive strategy.

The president must, as we have said, always soothe the nerves of the public, and must always show his commitment to stopping terrorism. At the same time, he must resist the temptation to try the impossible or undertake actions that have disproportionate costs relative to effect. He can lie to the public, but he must never lie to himself. Above all, he must understand the real threats to the country and act against those.

Apart from the killings at Fort Hood in 2009, September n was the only successful attack in the United States during ten years of war. Those coordinated attacks on New York and Washington were the result of a multiyear, intercontinental operation that cost al Qaeda nineteen of its most committed and capable operatives. Two major office buildings were destroyed in New York, and in Washington the Pentagon suffered extensive damage. Three thousand Americans were killed. But for a nation of 300 million people, the material consequences of the attack were in fact minimal.

This is not meant to trivialize the deaths or to dismiss the horror that Americans experienced on that day. My point is merely to emphasize that while you and I are allowed the luxury of our pain, a president isn't. A president must take into account how his citizens feel and he must manage them and lead them, but he must not succumb to personal feel¬ings. His job is to maintain a ruthless sense of proportion while keeping the coldness of his calculation to himself. If he succumbs to sentiment, he will make decisions that run counter to the long-term interests of his country. A president has to accept casualties and move on. When the Japanese attacked Pearl Harbor, Roosevelt called for vengeance but pri¬vately decided to focus on Germany and not Japan. He understood that a president could not allow himself to craft strategy out of emotion.

The purpose of war, according to von Clausewitz, is to impose your will on another nation by rendering that other nation incapable of resist¬ing. The primary means for doing this is to destroy the nation's military, or to undermine the population's will to resist. Instilling terror can destroy an army; for example, the Mongols paralyzed their enemies with the knowledge of their relentless and ruthless cruelty. The Greek city-states would fight their wars to the bitter end, spurred on by fear of the slavery that awaited them if they were conquered. So the net effect of ter¬ror is hard to predict.

During World War II, neither the Germans nor the British made any bones about the purpose of what the British called "nighttime area bombing." The targeting of civilians was a tactic designed to generate terror among the public, in the hope that the civilians would at the very least become less effective in running the wartime economy, and at the extreme possibly rise up against their own regimes. In Japan, the Ameri¬cans pursued the same ends by using incendiary devices, taking advan¬tage of the fact that most Japanese buildings were made of wood. In three days of conventional bombing over Tokyo, U.S. air forces killed 100,000 Japanese civilians, more than were killed at Hiroshima. Yet until the introduction of the atomic bomb, the terror strategy failed, just as it had failed in both Germany and Britain. Rather than destroying faith in the government, the bombing of civilian areas rallied the public to sup¬port the war effort. The attacks inspired outrage while making it easy for the targeted governments to portray the consequences of defeat as being too horrible even to contemplate. If the enemy was willing to go to such lengths to divert resources during a war simply to kill civilians, imagine what they would do when the war was over. Terror made it easy to demonize the enemy and made surrender unthinkable.

In conventional warfare, terror is delivered by massed force. But ter¬ror also can be delivered through a covert operation by a very small number of individuals: a commando attack. These operations were once generally confined to assassinations, but after the invention of high explosives—and force multipliers for high explosives, such as airliners— commando terrorism focused on civilian targets with the goal of produc¬ing casualties as an end in itself.

It is important here to distinguish carefully between commandos whose goals are military and those whose targets are civilian and whose purpose is terror. The French Resistance in 1944 attacked German trans¬port facilities in an attempt to undermine their invader's ability to wage war directly. The terror commando's goal, however, is not to harm the enemy's military but to undermine enemy morale by generating a sense of vulnerability. Sometimes the audience isn't even the target country but public opinion elsewhere, as with the attacks of September 11.

By generating fear, helplessness, and rage, terrorism transforms pub¬lic opinion, which then demands that the government provide protec¬tion from terrorists and punish such people for their actions. The more effective the terrorist attack is, the more frightened the population is, and the more compelled the government is to respond aggressively and visibly. Once again, in the face of terror, the president must convince the public that he shares their sentiments while taking actions that appear to satisfy their cravings both for security and for revenge.

One such largely symbolic action taken since September u has been the attempt to bolster the airport security system. Despite billions of dol¬lars and untold measures of passenger frustration, a terrorist with train¬ing can still devise any number of ways to get explosives or other devices through the system. Some terrorists might be deterred, and the system will find others. But while increased airport security can decrease the threat, it cannot stop it.

There is simply no security system that is both granular enough to detect terrorists reliably and efficient enough to allow the air transport system to function. El Al, Israel's airline, is frequently held up as an example, but El Al has thirty-five planes. According to the Bureau of Transportation Statistics, the combined American air fleet has nearly eight thousand planes and over twenty-six thousand takeoffs per day.

The Transportation Security Administration says it screened 1.8 million passengers per day on average in 2009. These are staggering numbers.

What the limitations of airport screening tell us is that if al Qaeda failed to strike the United States again during the first decade of the twenty-first century, it was not because of security precautions per se. It is even doubtful diat the people who design the airport security system expect it to work. Their real objective is to calm the public by ostenta¬tiously demonstrating that steps are being taken. The greater the osten¬tation and inconvenience, the more comforting the system appears.

But the increasing sophistication of explosives makes it possible to kill dozens of people with a device carried by an individual, hundreds of people with a device hidden in a car or truck, and thousands of people with an aircraft that acts as an explosive. The world is awash in such explosives, and the borders of the continental United States are about nine thousand miles long. The United States is also a trading country, and ships and planes and trucks arrive daily. Any one of those con¬veyances could contain people and explosives prepared to kill other peo¬ple. It is also true that among 300 million Americans, there could be any number of homegrown terrorists preparing to strike at any time.

For these reasons, true homeland security in a country like the United States is impossible, and the task will remain impossible in the next decade. There are no silver bullets. Eliminating Islamist terrorism is similarly impossible. It is possible to reduce the threat, but the greater the reduction we hope to achieve, the greater the cost. Given unlimited possibilities and limited resources, it is safe to say that there will continue to be terrorist attacks on the United States, regardless of the efforts being made.

The president of the United States must know this with crystal clar¬ity, and he must always act on the basis of what he knows, but he must never admit these limits to the public. He must constantly demonstrate that he is doing all he can to destroy the enemy and to protect the home¬land, and he must always convey a sense that the elimination of Islamist terrorism is possible, all the while knowing that it is not.

As we embark on the policy decisions of the next decade, the larger point is that turning all American resources to an end that is unobtain¬able, against a threat that can and will have to be endured, is not only pointless but something that can create windows of opportunity for other enemies and other assaults.

While terrorism can kill Americans and can create a profound sense of insecurity, die obsessive desire to destroy terrorism can undermine— as it already has undermined—the United States strategically. This is an important point for the leaders of the next decade to consider. This is why even though thousands of Americans might be killed by terrorists— myself and my loved ones among them—terrorism should not be ele¬vated to the status of an issue towering above all others. At all times, strategy must remain proportional to the threat.

TERROR AND WEAPONS OF MASS DESTRUCTION. Another unpleasant reality that will loom over the next ten years, which needs to be considered separately, is weapons of mass destruction. The existence of such weapons will occasionally prompt severe responses from the presidents who lead us. The damage that a nuclear device might do would dwarf that of conventional terrorism. Whereas conventional terrorism is rarely strategic, weapons of mass destruction can have a pro¬found effect on the material condition of the country.

To turn our attention back to Bush, there was in fact more to his response to September n than simply stopping conventional terrorism. After that day, the Bush administration received intelligence that a nuclear device—a Soviet-era suitcase bomb, to be specific—had been stolen and might be in the hands of al Qaeda. Thus the specter that haunted the administration in the closing months of 2001 was that at any moment an American city might be destroyed by a nuclear weapon.

It was this threat that defined the Bush administrations initial efforts. The president and vice president were never in the same city at the same time, and all intelligence and security services were directed to find the weapon. It would appear that they never found it, or it may never have existed. After years of mishandling, it may have malfunctioned, or it may have been intercepted and the government chose not to reveal its exis¬tence.

Regardless, weapons of mass destruction, particularly nuclear devices, represent a class of threat that cannot be tolerated. It would take many nuclear weapons to actually destroy the infrastructure and population of the United States, but a single attack by a nuclear weapon could destabi¬lize public morale to such an extent that it would paralyze the country for an extended period of time.

In a small terrorist attack in which dozens die, like the suicide bomb¬ings in Israel, the probability that any one individual out of a population of 300 million will be a victim is small. The probability of dying from an ordinary accident or from disease in the next year is far higher than that of being killed in a suicide bombing. The events of September u dis¬torted the perception of danger for a while, and people avoided flying, and perhaps avoided crowded places and landmark buildings. But as time passed, the sense of being subject to attack declined. The danger was on most people's minds when they went to the airport, and perhaps when they entered the Sears Tower or the Empire State Building or the Capitol. But over time, the perceived risk of being in the wrong place at the wrong time was assimilated into the general background noise. As this happened, for many people the demand that all steps be taken to guard against terror turned to dismay at what they regarded as excesses, inconveniences, and intrusions.

With weapons of mass destruction, the probabilities and the persis¬tence of fear are different. Assume that an American city was destroyed by a nuclear device. Once a WMD attack had destroyed one city, the number of targets a terrorist might want to hit next would be relatively small, but for anyone living in one of the major cities, there would be the immediate, reasonable fear that the enemy had more such weapons and that at any instant they might strike again.

From a terrorist's perspective, wasting a nuclear weapon on Spokane, Washington, or Bangor, Maine, makes no sense. It is the major cities that are the centers of political, economic, and social life. For them to be evacuated by frightened citizens would bring not only chaos but aban¬donment of entire economic and communications systems while mil¬lions of refugees fled to nowhere in particular. This response to the fear of mass annihilation from a completely random threat would be the ulti¬mate objective of terrorism using WMDs.

Terrorists of many stripes—Palestinian, European, Japanese—have been operating since the late 19605, and most of these groups would have jumped at the chance to inflict the kind of damage a weapon of mass destruction can engender. Many of these groups have been technically far more sophisticated than al Qaeda. So why has there never been an effective attack with a weapon of mass destruction?

The simple answer is that while constructing and deploying a WMD is easy to imagine, it is very difficult to execute. Existing weapons are rel¬atively few, heavily guarded, difficult to move, and likely to kill the ter¬rorist well before the terrorist gets a chance to kill anyone else. There have been many reports of Soviet-era nuclear weapons, and biological and chemical weapons, being available on the black market, but most of the offers were made by intelligence agencies trying to lure terrorists into a trap. If you were a terrorist offered a suitcase nuke by a former Soviet colonel, how could you possibly tell whether what you were looking at was the real thing or just a box stuffed with wires and blinking lights? The same uncertainty would have to hold for chemical or biological weapons as well.
Intelligence services don't have to know who is selling real WMDs in order to scare away the customers, and the allure of acquiring these weapons contracted considerably when the number of intelligence officers offering them for sale as entrapment outnumbered legitimate offers by one hundred to one.

There is, of course, the option of making such a weapon yourself, and every year some undergraduate posts a diagram of how to build a nuclear device. Between that sketch and success are the following steps: acquir¬ing the fissile material, along with all the necessary circuitry and casings; acquiring the machinery needed to machine the fissile material to the precise tolerances needed in order to detonate it; engaging the experts who could actually do these things once you had the material and the equipment; finding a very secure facility where these experts could work and live, and so on. The chances of being detected are compounded at each stage of this torturous process. Even if you could acquire the highly guarded fissile material, the machines needed for producing a nuclear weapon are highly specialized, and their manufacturers are few and far between. When a private individual shows up with his American Express card to order one of these machines, the chances that he will be detected are very good indeed.

With biological and chemical weapons, you add to these same risks the likelihood that the only person you'll kill will be yourself and your immediate accomplices. Chemical and biological weapons carry an extra layer of complexity in that they have to be dispersed. When a Japanese group released sarin, an extremely deadly nerve gas, in a Tokyo subway, the contamination remained localized and only a few people were killed, not the substantial numbers the terrorists had hoped for. People always speak of how a speck of this or that could wipe out an entire city. Cer¬tainly—but first you have to figure out how to spread it around.

Only one country ever produced a nuclear weapon from scratch, and that was the United States. The British got their nukes in compensation for their contribution to the American research effort. The French also acquired the technology from the Americans, which they then regifted to Israel. The Russians stole the knowledge from the Americans, then transferred it to both the Chinese and the Indians. The Chinese gave the technology to the Pakistanis. The point is, the development of these weapons through an independent research program is enormously diffi¬cult, which is why Iran is still struggling and North Korea has never got¬ten it quite right.

Just as the financial crisis has created a domestic imbalance in the United States, September n has generated a strategic imbalance. This will have to be addressed in the next decade, and difficult decisions will have to be made. A strategy designed to prevent regional hegemons from threatening American interests is a balance-of-power strategy. It requires an American presence in multiple regions. The next decade, therefore, will be about redefining American strategy so that it can pursue these interests. That will mean moving beyond the war on terror and redefin¬ing interests throughout each region as well as the world. A good place to begin thinking about this is Israel.

REDEFINING POLICY: THE CASE OF ISRAEL

The United States faces no more complex international relationship than the one it maintains with Israel, nor one more poorly under¬stood, most of all by the Americans and the Israelis. U.S.-Israeli relations would appear to poison U.S.-Islamic relations and complicate the termination of warfare in the Middle East. In addition, there are some who believe that Israel exercises control over U.S. foreign policy, a view not confined to Islamic fundamentalists. The complex reality, as well as the even more complex perception of the tie that binds the United States and Israel, will continue to be a fundamental issue for the United States' global strategy over the next decade.

U.S.-Israeli relations are also a case study for the debate between real¬ists and idealists in foreign policy. America's close relations with Israel are based both on national interest and on the moral belief that the United States must support regimes similar to itself. This latter idea has, of course, become an intense philosophical battleground. On the idealist side are those who focus on the kind of regime Israel has: an island of democracy in a sea of autocrats. But there are also those who argue that because of its treatment of the Palestinians, Israel has forfeited any moral claims. On the realist side are those who argue that Israel gets in the way of better relations with the Arabs, and those who argue that they are allies in the war against terrorism.

If there is any place where finding a coherent path that incorporates both strategic and moral interests is more difficult, I can't think of one. But to truly understand this complex state of affairs, we must go back in history.

Given the antiquity of the Middle East, it is fortunate that under¬standing its contemporary political geography requires going back only as far as the thirteenth century. This was the time when the Byzantine Empire was fading and control of the areas bordering the Black Sea and the eastern Mediterranean shifted to the Ottoman Turks. By 1453 the Turks had conquered Constantinople, and by the sixteenth century they were in command of most of the territory that had once fallen to Alexan¬der the Great. Most of North Africa, Greece, and the Balkans, as well as the area along the eastern shore of the Mediterranean, was under Ottoman control from the time of Columbus to the twentieth century.
All this came to an end when the Ottomans, who had allied with Germany, were defeated in World War I. To the victors went the spoils, which included the extensive Ottoman province known as Syria. A secret wartime deal between the British and the French, the Sykes-Picot agreement, had divided this territory between the two allies on a line running roughly from Mount Hermon due west to the sea. The area to the north was to be placed under French control; the area to the south was to be placed under the control of the British. Further divisions gave rise not only to the modern country of Syria but to Lebanon, Jordan, and Israel as well.

The French had sought to be an influence in this region since the days of Napoleon. They had also made a commitment to defend the Arab Christians in the area against the majority Muslim population. During a civil war that raged in the region in the 1860s, the French had allied with factions that had forged ties with France. Paris wanted to maintain that alliance, so in the 1920s, when the French were at last in control, they turned the predominantly Maronite (Christian) region of Syria into a separate country, naming it after the dominant topographi¬cal characteristic, Mount Lebanon. As a state, then, Lebanon had no prior reality. Its main unifying feature was that its people felt an affinity with France.

The British area to the south was divided along similarly arbitrary lines. During World War I, the Muslim clan that ruled the western Hejaz region of the Arabian Peninsula, the Hashemites, had supported the British. In return, the British promised to install this group as rulers of Arabia after the war. But London made commitments to other tribes as well. Based in Kuwait, a rival clan, the Saud, had launched a war against the Turks in 1900, trying to take control of the eastern and central parts of the Arabian Peninsula. In a struggle that broke out shortly after World War I, the Sauds defeated the Hashemites, so the British gave Arabia to them—hence today's Saudi Arabia. The Hashemites received the conso¬lation prize of Iraq, where they ruled until 1958, when they were over¬thrown in a military coup.

The Hashemites left in Arabia were moved to an area to the north along the eastern bank of the Jordan River. Centered on the town of Amman and lacking any other obvious identity, this new protectorate became known as Trans-Jordan, as in "the other side of the Jordan River." After the British withdrew in 1948, Trans-Jordan became con¬temporary Jordan, a country that, like Lebanon and Saudi Arabia, had never existed before.

West of the Jordan River and south of Mount Hermon was yet another region that had once been an administrative district of Ottoman Syria. Most of it had been called Filistin, undoubtedly after the Phili¬stines, whose hero Goliath had fought David thousands of years before. The British took the term Filistin, ran it through some ancient Greek, and came up with Palestine as the name for this new region. Its capital was Jerusalem, and its residents were thereafter called Palestinians.

None of these remnants was a nation in the sense of having a com¬mon history or identity except for Syria itself, which could claim a line¬age going back to biblical times. Lebanon, Jordan, and Palestine were French and British inventions, created for their political convenience. Their national history went back only as far as Mr. Sykes and Monsieur Picot and some British double-dealing in Arabia.

Which is not to say that the inhabitants did not have a historical con¬nection to the land they lived on. If not their homeland, the territory was certainly a home, but even here there was complexity. Under Ottoman rule, the ownership of the land, particularly in Palestine, had been semi-feudal, with absentee landlords collecting rent from the fela-been, or peasants, who actually tilled the soil.

Enter the Jews. Members of the European Diaspora had been moving into this region since the 1880s, joining relatively small Jewish communi¬ties that had existed there (and in most other Arab regions) for centuries. This immigration was part of the Zionist movement, which—motivated by the European idea of the nation-state—sought to create a Jewish homeland in the region the Jews had last controlled in biblical times.

The Jews came in small numbers, settling on land purchased with funds raised by Jews in Europe. Frequently this land was bought from the absentee landlords, who sold it out from under their Arab tenants. From the Jewish point of view, this was a legitimate acquisition of land. From the tenants' point of view, it was a direct assault on their liveli¬hood, as well as an eviction from land their families had farmed for gen¬erations. As more Jews arrived, the acquisition of land, the title to which was frequently dubious anyway, became less scrupulous and even more intrusive.

While the Arabs generally (but not universally) saw the Jews as alien invaders, they did not agree on something perhaps more important: to whom did the residents of Palestine owe national allegiance?
The Syrians regarded Palestine the way they regarded Lebanon and Jordan—as an integral part of Syria. They opposed an independent Palestine, just as they opposed the existence of an independent Jewish state, for the same reason they opposed Lebanese and Jordanian inde¬pendence: for them, the Sykes-Picot agreement was a violation of Syria's long-standing territorial integrity.

The Hashemites, formerly from the Arabian Peninsula, had even greater problems with the Palestinians. The Hashemites were, after all, an Arabian tribe transplanted on the east bank of the Jordan. After the British left in 1948, they became rulers by default of what is today the West Bank. While sharing Arab ethnicity and the Muslim faith with the Palestinians who were native to the area, these transplants were pro¬foundly different in culture and history. In fact, the two groups were quite hostile to each other. The Hashemite (now Jordanian) view was that Palestine was legally theirs, at least the part left after Israel gained independence. Indeed, from the time that the Jews became more numer¬ous and powerful in Palestine, the Hashemite rulers of Jordan saw these new emigrants from eastern Europe and elsewhere as allies against the native Palestinians.

To the southwest of Israel were the Egyptians, who at various points had also been dominated by the French and the British, as well as by the Ottomans. In 1956 they experienced a military coup that brought Gamal Abdel Nasser to power. Nasser opposed the existence of Israel, but he had a very different vision of the Palestinians. Nasser's dream was the cre¬ation of a single Arab nation, a United Arab Republic, which he suc¬ceeded in establishing very briefly with the Syrians. For him, all of the countries of the Arab world were illegitimate products of imperialism and all should join together as one, under the leadership of the largest and most powerful Arab country, Egypt. Viewed in that context, there was no such thing as Palestine, and the Palestinians were simply Arabs occupying a certain ill-defined piece of land.

All the Arab states within the region, then, save the Jordanians, wanted the destruction of Israel, but none supported, or even discussed, an independent Palestine. The Gaza strip, occupied by Egypt during the 1948 Israeli War of Independence, was administered as part of Egypt for the next twenty years. The West Bank remained a part of Jordan. The Syrians wanted all of Jordan and Palestine returned to them, along with Lebanon. This was complicated enough, but then the Six Day War of 1967 shuffled the deck once more.

In 1967, Egypt expelled UN peacekeeping forces from the Sinai Peninsula and remilitarized it. They also blockaded the Straits of Tiran and the Bab el Mandeb, cutting off the port of Eilat from the Red Sea. In response, the Israelis attacked not only the Egyptians but also the Jor¬danian West Bank, which had shelled Jerusalem, and the Golan Heights in Syria, which had shelled Israeli settlements.

Israel's success, including the occupation of Jordan west of the river, transformed the entire region.
Suddenly a large population of unwilling Palestinian Arabs was under the rule of an Israeli state. Israel's initial intent seems to have been to trade the conquered areas for a permanent peace agreement with its neighbors. However, at a meeting held in Khar¬toum after the 1967 war, the Arab states replied with the famous "three no's": no negotiation, no recognition, no peace. At this point the Israeli occupation of these formerly Palestinian areas became permanent.

It was also at this point that the Palestinians first came to be viewed as a separate nation. The Egyptians had sponsored a group known as the Palestine Liberation Organization and installed a young man named Yasser Arafat to lead it. Nasser still clung to the idea of an Arab federation, but no other nations chose to accept his leadership. Nasser wasn't pre¬pared to submit to anyone else, which left the PLO and its constituent organizations, such as al-Fatah, by default the sole advocates for a Pales¬tinian state.
The Jordanians were happy to have the Palestinians living in Israeli territory, as an Israeli problem. They were also happy to recognize the PLO as representing the Palestinian people, and just as happy that the Israelis didn't allow the Palestinians to be independent. The Syrians sup¬ported their own organizations, such as the Popular Front for the Liber¬ation of Palestine, which advocated that Israel should be destroyed and that the Palestinians should be incorporated into Syria. So the recogni¬tion of Palestinian nationalism by the Arabs was neither universal nor friendly. Indeed, Arab support for the Palestinians seemed to increase in proportion to the distance the Arabs were from Palestine.

It should be obvious from this summary that the moral argument that rages about the rights of Israel, which any American president must deal with, is enormously complex. Beyond the substantial displacement of populations that occurred with the creation of modern Israel, the immigration of European Jews did not constitute the destruction of a Palestinian nation, because no such nation had ever existed. The Pales¬tinian national identity in fact emerged only out of resistance to Israeli occupation after 1967. And the hostility toward Palestinian national claims was as intense from Arabs as it was from Jews. Israeli foreign pol¬icy was shaped by these realities and took advantage of them in order to impose the. current political order on the region. But whatever was the case in the past, there is certainly today a self-aware Palestinian nation, and that is part of what must inform U.S. policy going forward.

Apart from dealing with this incredibly convoluted history, which weighs on any moral judgment, U.S. policy in this region must ac¬commodate two other basic facts. First, whatever the Israelis' historical claim, from a twentieth-century perspective, the Jews were settlers from another continent who displaced the natives. Then again, it is difficult for Americans, who displaced their own native population even more thoroughly, to make a moral case against Israel for usurping Palestinian land and mistreating the indigenous people.

A more powerful moral argument is the one that Roosevelt made in support of France and England against Nazi Germany: Israel (excluding the West Bank and Gaza) is a democratic country, and the United States is the "arsenal of democracy." This means that the United States has a special relationship with democratic states, as well as obligations that transcend geopolitics. Therefore, the United States must support demo¬cratic Israel exclusive of other moral or even geopolitical considerations. Realists would disagree. They would argue that the moral claims of any side can have no hold on the United States, and that the United States must shape its policies to its national interest. However, as I have argued, pursuing a national interest without reference to a moral pur¬pose leaves the national interest shallow and incomplete. More impor¬tant, defining the national interest in the region on its own terms is extraordinarily difficult. The moral compass must be there, but it points in many directions. The pursuit of the national interest is less obvious than it might appear.

Morality rooted in historical claims can be shaped to suit, and is by all sides. A simple moral judgment doesn't deal with the realities on the ground, and simply arriving at a coherent moral position is breathtakingly difficult. As for the realist position, it is extraordinarily difficult to extract what that might be. So the question is, how do we frame a realis¬tic foreign policy that will serve the moral purpose and national interest in the decade to come? To find the answer, we need to consider the his¬tory of the relationship between Israel and the United States.

THE UNITED STATES AND ISRAEL. The United States recognized Israeli independence in 1948, but the two countries were hardly allies in any sense of the term. While the United States always recognized Israel's right to exist, that fact never really drove U.S. policy. The primary American interest in 1948, when Israel came into being, was the containment of the Soviet Union, and the American focus was primarily on Turkey and Greece. Greece had an internal Com¬munist insurgency. Both Greece and Turkey had an external Soviet threat as well. For the United States, Turkey was the key to the region. It was only a narrow strait in Turkey, the Bosporus, that blocked the Soviet fleet in the Black Sea from entering the Mediterranean Sea in force. If that strait fell into Soviet hands, the Soviets would be able to challenge American power and threaten southern Europe.

The major impediment to the U.S. strategy of containment in the Middle East was that the British and French were trying to reestablish the influence in the region that they had held before World War II. Seek¬ing to develop closer ties in the Arab world, the Soviets could and did exploit hostility to the Europeans' machinations. Things came to a head in 1956, after Nasser took power and nationalized the Suez Canal.

Neither the British nor the French (who were fighting to suppress an anticolonial revolt in Algeria and who were striving to reclaim their influence in Lebanon and Syria) wanted Egypt to control the canal. Nei¬ther did Israel. In 1956, the three nations hatched a plot for an Israeli invasion of Egypt, but with a twist. After Israel reached the canal, British and French forces would intervene, seizing the canal to secure it from the Israeli invasion and potential conflict with Egypt. It was one of those ideas that must have made sense when sketched on a cocktail napkin after a few drinks.

In the American view, the adventure was not only doomed to failure but would drive Egypt into the Soviet camp, giving them a strong and strategic ally. Since anything that might increase Soviet power was unac¬ceptable to the United States, the Eisenhower administration intervened against the Suez scheme, forcing British and French withdrawal and Israel back to the 1948 lines. In the late 19505, there was no love lost between Israel and the United States.

The strategic problem for Israel was that its national security require¬ments always outstripped its industrial and military base. In other words, given the challenges it faced from Egypt and Syria, and poten¬tially from Jordan, not to mention the Soviet Union, it could not pro¬duce the weapons it needed in order to protect itself. To ensure a steady source of weapons, it needed a major foreign patron.

Israel's first patron was the Soviet Union, which saw Israel as an anti-British power that might become an ally. The USSR supplied weapons to Israel through Czechoslovakia, but this relationship crumbled quickly. Then France, still fighting in Algeria, replaced the Soviets as Israel's benefactor. The Arab countries supported the Algerian rebels, and thus it was in France's interest to have a strong Israel standing alongside France in opposition. So the French supplied the Israelis with aircraft, tanks, and the basic technology for their nuclear weapons.

At this time the United States still saw Israel as of marginal impor¬tance to its broader strategic goals in the area. After the Suez crisis, how¬ever, the United States began to reconsider its strategic relationships. The Americans had intervened on behalf of Egypt in Suez, but the Egyptians migrated into the Soviet camp regardless. The French and British had left behind a series of regimes, in Syria and Iraq in particular, that were inherently unstable and highly susceptible to the Nasserite doctrine of militarily driven Arab nationalism. Syria had begun moving into the Soviet camp as early as 1956, but in 1963 a left-wing military coup sealed that position. A similar coup occurred that same year in Iraq.

By the 1960s, American support for the Arabs had begun to look like an increasingly questionable enterprise. Despite the fact that the only assistance the United States was providing Israel was food, the Arab world had turned resolutely anti-American. The Soviets were prepared to fund projects the United States wouldn't fund, and the Soviet model was more attractive to Arab socialists. The United States remained fairly aloof for a while, content to let France maintain the relationship with Tel Aviv. But when the United States began supplying antiaircraft systems to anti-Soviet regimes in the region, Israel was included on the gift list.

In 1967, Charles de Gaulle ended the Algerian war and sought to resume France's prior relationship with the Arab world, and he did not want Israel attacking its neighbors. When the Israelis disregarded his demands and launched the Six Day War, they lost access to French weapons. Israel's victory over its Arab neighbors in the 1967 conflict gen¬erated pro-Israeli support in the United States, which was bogged down in Vietnam; the Israelis seemed to provide a model of swift and decisive warfare that revitalized the American spirit. The Israelis capitalized on that feeling to aggressively woo the United States.

Struggling with the Vietnam War and public opinion, Lyndon John¬son saw American public infatuation with Israeli military successes as useful in two ways. First, the generation for support of any war might strengthen support for the Vietnam War. Second, the Israeli victory had strengthened an already powerful Soviet hand in Egypt and Syria, mak¬ing Israel a useful ally. A strategic basis for the U.S.-Israeli relationship emerged. The Soviets had penetrated Syria and Iraq in the mid-1960s and were already building up the military of both countries. The Soviets' strategy for dealing with their encirclement by U.S. allies was to try to leapfrog them, recruiting their own allies to their rear and then trying to increase the political and military pressure on them. Turkey, which had always been at the center of U.S. strategic thinking, was the key for the Soviets, as it was for the Americans. The coups in Syria and Iraq—well before 1967—had intensified the strategic problem for the United States. Turkey was now sandwiched between a powerful Soviet Union to the north and two Soviet clients to the south. If the Soviets placed their own forces in Iraq and Syria, Turkey could find itself in trouble, and with it would go the entire American strategy of Soviet containment.

The Israelis now represented a strategic asset, allowing the United States to play leapfrog in return. In order to tie down Iraqi forces, the United States armed Iran, important in its own right because it shared a border with the Soviets. Israel did not share a border with the Soviets, but it did border Syria, and a pro-American Israel served to tie down the Syrians while making a Soviet deployment into Syria more complex and risky. In addition, Israel stood in opposition to Egypt. The Soviets were not only arming the Egyptians, they were using the port of Alexandria as a naval base, which could develop into a threat to the U.S. Sixth Fleet in the Mediterranean.

Contrary to widespread belief, the Egyptians and Syrians did not become pro-Soviet because of U.S. support for Israel. In fact, it was the other way around. The Egyptian shift and the Syrian coup happened before America replaced France as Israel's source of weapons, a develop¬ment that in fact happened in response to Egyptian and Syrian policies. Once Egypt and Syria aligned with the Soviets, arming the Israelis became a low-cost solution for restricting Egyptian and Syrian forces while forcing the Soviets on the defensive in those countries. This helped secure the Mediterranean for the United States and relieved pressure on Turkey. It was at this point, and for strategic—not moral—reasons, that the United States began supplying a great deal of aid to Israel.

The U.S. strategy worked. The Egyptians expelled the Soviets in 1973. They signed a peace treaty with Israel in 1978. While the Syrians remained pro-Soviet, the expulsion of Soviet forces from Egypt blunted die Soviet threat in the Mediterranean. However, another threat had emerged in the meantime: Palestinian terrorism.

The PLO had been crafted by Nasser as part of his extended struggle with the monarchies of the Arabian Peninsula, an effort to topple the royal houses and integrate them into his United Arab Republic. Soviet intelligence, wanting to weaken the United States by contributing to instability in Arabia, trained and deployed PLO operatives. The situa¬tion became critical in September 1970, when Yasser Arafat engineered an uprising against the Hashemite rulers of Jordan, key allies of the United States and covert allies of Israel. At the same time, Syria moved armor south into Jordan, clearly intending to use the chaos to reassert Syrian authority. The Israeli air force intervened to block the Syrians, while the United States flew in Pakistani troops to support Jordanian forces to put down the uprising. About ten thousand Palestinians were killed in the fighting, and Arafat fled to Lebanon.

This conflict was the origin of the group known as Black September, which, among other things, carried out the massacre of Israeli athletes at the Munich Olympics in 1972. Black September was the covert arm of Arafat's Fatah movement, but what made it particularly important was that it also served Soviet interests in Europe. During the 1970s, the Sovi¬ets had organized a destabilization campaign, mobilizing terrorist groups in France, Italy, and Germany, among others, and supporting organiza¬tions such as the Irish Republican Army.

The Palestinians became a major force in this "terrorist interna¬tional," a development that served to further bind the United States and Israel together. To prevent the destabilization of NATO, the United States wanted to shut down the Soviet-sponsored terrorist organizations, whose members were being trained in Libya and North Korea. For their part, the Israelis wanted to destroy the Palestinians' covert capability. The CIA and Mossad, Israel's foreign intelligence agency, cooperated intensely for the next twenty years to suppress the terrorist movement, which did not weaken until the mid-1980s, when the Soviets shifted to a more conciliatory policy toward the West. During this time, the CIA and Mossad also cooperated in securing the Arabian Peninsula against covert Soviet and PLO operations.

The collapse of the Soviet Union—and indeed, the shift in policy that took place after Leonid Brezhnev's death—changed this dynamic dramatically. Turkey was no longer at risk. Egypt was a decaying, weak nation of no threat to Israel. It was also quite hostile to Hamas. Formed in 1987, Hamas was a derivative of the Muslim Brotherhood that had threatened the regime of Egyptian president Hosni Mubarak. Syria was isolated and focused on Lebanon. Jordan was in many ways now a pro¬tectorate of Israel. The threat from the secular, socialist Palestinian movement that had made up the PLO and that had supported the ter¬rorist movements in Europe had diminished greatly. U.S. aid to Israel stayed steady while Israel's economy surged. In 1974, when the aid began to flow in substantial amounts, it represented about 21 percent of the Israeli gross domestic product. Today it represents about 1.4 percent, according to the Congressional Research Office.

Once again, it is vital to understand that U.S.-Israeli cooperation did not generate anti-Americanism in the Arab world but resulted from it. The interests that tied Israel and the United States together from 1967 to 1991 were clear and substantial. Equally important to understand is the fact that since 1991, the basis of the relationship has been much less clear. The current state of play makes it necessary to ask precisely what the United States needs from Israel and what, for that matter, Israel needs from the United States. As we consider American foreign policy over the next ten years, it is also vital to ask exactly how a close tie with Israel serves U.S. national interests.

As for the moral issue of rights between the Israelis and the Palestini¬ans, the historical record is chaotic. To argue that the Jews have no right in Palestine is a defensible position only if you are prepared to assert that Europeans have no right to be in America or Australia. At the same time, there is an obvious gulf between the right of Israel to exist and the right of Israel to occupy the home territory of large numbers of Palestinians who don't want to be occupied. On the other hand, how can you demand that Israel surrender control when large numbers of Palestinians won't acknowledge Israel's right to exist? The moral argument becomes dizzying and cannot be a foundation for a foreign policy on either side. Supporting Israel because we support democracies is a far more persua¬sive argument, but even that must be embedded in the question of national interest. And it must be remembered that the United States has been inconsistent in applying this principle, to say the least.

CONTEMPORARY ISRAEL. The Israel of today is strategically secure. It has become the dominant power among the bordering states by creating a regional balance of power among its neighbors that is based on mutual hostility as well as dependence by some of them on Israel.

By far the most important element of this system is Egypt, which once represented the greatest strategic threat to Israel. The Egyptians' decision in the 1970s that continued hostility toward Israel and align¬ment with the Soviet Union were not in their interests led to a peace treaty in which the Sinai became a demilitarized zone. This kept Egypt¬ian and Israeli forces from impinging on each other. Without a threat from Egypt's military, Israel was secure, because Syria by itself did not represent an unmanageable threat.

The peace between Egypt and Israel always appears to be tenuous, but it is actually built on profoundly powerful geopolitical forces. Egypt cannot defeat Israel, for reasons that are geographical as well as techno¬logical. To defeat Israel, Egypt would have to create a logistical system through the Sinai that could support hundreds of thousands of troops, a system that would be hard to build and difficult to defend.

The Israelis cannot defeat Egypt, nor could they stand a prolonged war of attrition. To win they would have to win swiftly, because Israel has a small standing army and must draw manpower from its civilian reserves, which is unsustainable over an extended period. Even in 1967, when victory came within days, the manpower requirements for the bat¬tle paralyzed the Israeli economy. Even if Israel could defeat the Egyptian army, it could not occupy Egypt's heartland, the Nile River basin. This region is home to more than 70 million people, and the Israeli army sim¬ply does not have the resources even to begin to control it.

Because of this stalemate, Egypt and Israel would risk much and gain little by fighting each other. In addition, both governments are now bat¬tling the same Islamic forces. The Egyptian regime today still derives from Gamal Abdel Nasser's secular, socialist, and militarist revolution. It was never Islamic and was always challenged by devout Muslims, partic- ularly those organized around the Muslim Brotherhood, the Sunni orga¬nization that is the strongest force in opposition to established regimes throughout the Arab world. The Egyptians repressed this group. They fear that a success by Hamas might threaten the stability of their regime. Therefore, whatever grumbling they might do about Israeli Palestinian policy, they share Israel's hostility to Hamas and work actively to contain Hamas in Gaza.

Israel's accord with Egypt is actually the most important relationship it has. So long as Egypt remains aligned with Israel, Israel's national secu¬rity is assured, because no other combination of neighbors can threaten it. Even if the secular Nasserite regime fell, it would be a generation before Egypt could be a threat, and then only if it gained the patronage of a major power.

Nor does Israel face a threat from Jordan, even though the Jordan River line is die most vulnerable area that Israel faces. It is several hun¬dred miles long, and the distance between that line and the Tel Aviv-Jerusalem corridor is less than fifty miles. However, the Jordanian military and intelligence forces guard this frontier for Israel, a peculiar circumstance that exists for two reasons.

First, the Jordanian-Palestinian hostility is a threat to the Hashemite regime, and the Israelis serve essential Jordanian national security inter¬ests by suppressing the Palestinians. Second, the Jordanians are much too few and much too easily defeated by the Israelis to pose a threat. The only time that the Jordan River line could become a threat would be if some foreign country (Iraq or Iran, most likely) were to send its military to deploy along that line. Since desert separates the Jordan River from these countries, deploying and supplying forces would be difficult. But more than that, such a deployment would mean the end of the Hashemite kingdom of Jordan, which would do everything it could to prevent a significant deployment and would be backed by the Israelis. Israel and Jordan are in this way joined at the hip.

That leaves Syria, which by itself poses no threat to Israel. Its forces are smaller than Israel's fully mobilized ones, and the areas in which it could attack are too narrow to exploit effectively. But far more impor¬tant, Syria is a country that is oriented toward the west, and therefore toward Lebanon, which it not only regards as its own but is where its rul¬ing elite, the Alawites, have close historic ties.

Lebanon is the interface between the northern Arab world and the Mediterranean. Beirut's banks and real estate, as well as the Bekaa Val¬ley's smuggling and drug trade, are of far more practical interest to the Syrians than any belief that all of Ottoman Syria belongs to them. Their practical interests are in dominating and integrating Lebanon informally into their national economy.

Following the 1978 Camp David Accords between Egypt and Israel, and faced with hostility from Iraq, the Syrians found themselves isolated in the region. They were also hostile to Arafat's Fatah movement, going so far as to invade Lebanon in 1975 to fight the Palestinians. Neverthe¬less, they saw themselves at risk. The Iranian revolution in 1979 created a new relationship, however distant, and one that allowed the Syrians to increase their strength in Lebanon, using Iran's ideological and financial resources. In the 19805, following Israel's own invasion of Lebanon, an anti-Israeli Shiite militia was formed, called Hezbollah. In part, Hezbol¬lah is simply a part of the Lebanese political constellation. In part, it is a force designed to fight Israel. But in return for receiving a free hand in Lebanon from Israel, Syria guaranteed to restrain Hezbollah actions against Israel. This agreement broke down in 2006, when the United States forced Syrian uniformed forces out of Lebanon, as punishment for supporting jihadists in Iraq. As a result Syria renounced any promise it had made to Israel.

The deeper the detail, the more dizzyingly complex and ambiguous this region becomes, so a summary of the strategic relationships is in order. Israel is at peace with Egypt and Jordan, a far from fragile peace based on substantial mutual interests. With Egypt and Jordan aligned with Israel, Syria is weak and isolated and poses no threat. Hezbollah is a threat, but not one with the weight of fundamentally threatening Israel.

The primary threat to Israel comes from inside its boundaries, from the occupied and hostile Palestinians. But while their primary weapon, terrorism, can be painful, terrorism cannot ultimately destroy the Israelis. Even when Hezbollah and other external forces are added, the State of Israel is not at risk, partly because the resources those forces can bring to bear are inadequate, and partly because Syria, fearing Israeli retaliation, limits what these groups can do.

Indeed, Israel's problems have been lessened by the split among the Palestinians. Fatah, Arafat's organization, was until the 19905 the main force within the Palestinian community. Like the Nasserite movement it came from, it was secular and socialist, not Islamist. During the 19905, Hamas, an Islamic Palestinian movement, arose, which has split the Palestinians, essentially creating a civil war. Fatah controls the West Bank; Hamas controls Gaza. The Israelis, playing the balance-of-power game within the Palestinian community as well as in the region, are now friendly and supportive of Fatah and hostile to Hamas. The two groups are as likely to fight each other as they are to fight Israel.

The danger of terrorism for the Israelis, beyond the personal tragedies it engenders, is that it can shift Israeli policy away from strate¬gic issues and toward simple management of the threat. The killing of Israelis by suicide bombers is never going to be acceptable, and no Israeli government can survive if it dismisses the concern. But the balance of power makes Israel secure from threats by nation-states, and the threat of terrorism within the occupied territories is secondary.

The problem for Israel remains the same as it was in biblical times. Israel has always been able to control Egypt and whatever powers were to the east and north. It was only the distant great powers, such as Babylon, Persia, Alexandrian Greece, and Rome, that were able to overwhelm the ancient kingdom of the Jews. These empires were the competitors that Israel didn't have the weight to manage and sometimes engaged with catastrophically by overestimating its strength or underestimating the need for diplomatic subtlety.

Terrorism puts Israel in the same position today. The threat of this violence is not that it will undermine the regime but that it will cause the regime to act in ways that will cause a major power to focus on Israel.

Nothing good can come from Israel's showing up too brightly on the global radar screen.
From the Israeli point of view, Palestinian unhappiness or unrest or even terrorism can be lived with. What Israel cannot accommodate is the intervention of a major power spurred on by Israeli actions against the Palestinians. Great powers—imperial powers—can afford to spend a small fraction of their vast resources on issues that satisfy marginal inter¬ests or that merely assuage public opinion. That small fraction can dwarf the resources of a country like Israel, which is why Israel must maintain its regional arrangements and prudently manage the Palestinians and their terrorism.

The only such imperial power today is the United States. As such, it has varied global interests, some of which it has neglected during a time of preoccupation with terrorism and radical Islam. The United States must uncouple its foreign policy from this focus on terrorism and realign with countries that do not see terrorism as the singular problem of the world, and that do not regard Israeli occupation of territory with large numbers of Palestinians as being in their interests.

At the same time, there are numerous regional powers, such as Russia and Europe, that can have enormous impacts on Israel, and Israel cannot afford to be indifferent to their interests. Unless Israel reevaluates its own view of terrorism and the Palestinians, it may find itself isolated from many of its traditional allies, including the United States. This would not destroy Israel but would be a precondition for its destruction.

As we've seen, U.S. support for Israel was not the main driver of Mus¬lim hostility to the United States, and no evolution of events in Israel directly affects core American interests. Accordingly, the United States would gain little by breaking with Israel, or by forcing the Israelis to change their policies toward the Palestinians. In fact, the net effect of an estrangement between the United States and Israel would be panic among Israel's neighbors. As mentioned earlier, support for the Palestini¬ans increases the farther away you get from them, and that support in the Arab world is largely rhetorical.

Apart from skirmishes in Lebanon, Israel maintains a stable balance of power and does it without American assistance. Jordan and Egypt actually depend on Israel in many ways, as do other Arab countries. The Israelis are not going to be overwhelmed by the Palestinians, and thus the complex regional balance of power in the eastern Mediterranean will stay in place regardless of what the United States does or doesn't do. All of which leads to the conclusion that as far as the Israeli-Palestinian con¬flict goes, we should let sleeping dogs lie.

The best option for die American president is to marginalize the con¬flict as a concern without actually doing anything to signify a shift. The United States should quietly adopt a policy of disengagement from Israel, which would appear to mean simply accepting the current imbal¬ance of power. Yet in the longer term, its purpose would be to reestablish the balance of power, containing Israel within its framework, without endangering Israel's existence. It would, however, compel Israel to recon¬sider what its national interests are.
Publicly distancing the United States from Israel would not only appear to open opportunities for Syria and Egypt, it would also present domestic political problems within the United States. The Jewish vote is small, but Jewish political influence is outsized because of carefully orga¬nized and funded lobbying efforts. Add to this mix Christian conserva¬tives who regard Israel's interests as theologically important and the president faces a powerful bloc that he doesn't want to antagonize. For these reasons the president should continue sending envoys to build road maps for peace, and he should continue to condemn all sides for what¬ever outrages they commit. He should continue to make speeches sup¬porting Israel, but he must have no ambitions for a "lasting peace," because any effort toward achieving that goal could in fact destabilize the region.

The things the United States needed from Israel in the past no longer exist. The United States does not need Israel to deal with pro-Soviet regimes in Egypt and Syria while the U.S. is occupied elsewhere. Israel is, however, valued for sharing intelligence and for acting as a base for sup¬plies to support U.S. fighting in the region. Israel is not faced with the likelihood of major conventional war anytime soon. It does not need vast and sudden deliveries of tanks or planes, as it did in 1973. Nor does it need the financial assistance the United States has provided since 1974. Israel's economy is robust and growing.

For Israel, foreign aid means far less than close ties with U.S. hedge funds do. Israel is quite capable of handling itself financially. What the foreign aid signifies to Israel, which has no formal treaty with the United States, is a public commitment by the United States to Israel. Israel uses that as a card both in the region and to comfort Israeli public opinion. What the United States once got in return for that aid was a stable part¬ner in the region, which could not manage without the money. Now the United States has a partner regardless of the aid. On the negative side of the ledger, the aid provides grounds for Islamicist arguments that the United States is the source of all their problems, including ruthless behavior on the part of the Israelis. Given that the aid is marginal in importance, that price is too high. Giving up this commitment to aid would actually help Israel by eliminating a prime argument of the anti-Israeli lobby in the United States.

Of course, this is all window dressing for the core policy of simply allowing the balance of power to be reestablished. Israel was of great value to the United States during the second part of the Cold War. After the Cold War, the benefits to the United States of the relationship have declined while the costs have risen. The equation does not call for a break in relations with Israel. It calls for a recalibration based on current realities. Israel does not need foreign aid and is not in strategic danger from conventional forces. There is a mutual need for intelligence sharing and weapons development, but that is by definition a fairly quiet devel¬opment.

There is no moral challenge here. No democratic ally is being aban¬doned, and Israel's survival is not at issue. At the same time, while settle¬ment in the West Bank may be a fundamental national interest to Israel, it is not of interest to the United States. These are two sovereign nations, which means that both get to define the relationship. And every relationship has to be viewed in terms of its value to the broadest sense of the national interest. What the United States needed from Israel thirty-five years ago is not what it needs today.

From the Israeli side, the primary pressure to reach an agreement with the Palestinians comes from concerns that they will find themselves alienated from the United States and particularly Europe over their treat¬ment of the Palestinians. Economic relations are important to Israel, but so are cultural ties. But the Israelis have internal pressures. Given the Palestinian disarray, the idea of reaching a settlement with a Palestinian state that is unable or unwilling to control terrorist attacks from its terri¬tory has limited support. Any settlement would require concessions to the Palestinians that the Israelis would not want to make and that, given the weakness of the Palestinians, they are not inclined to make.

The Arab-Israeli balance of power is out of kilter. Egypt and Jordan have opted out of the balance, and Israel is free to create realities on the ground. It is not in the interest of the United States for Israel, or any country, to have freedom of action in the region. As I have said, the bal¬ance of power must be the governing principle of the United States. The United States must reshape the regional balance of power partly by mov¬ing closer to Arab states, partly by drawing back from Israel. This does not pose an existential threat to Israel, which would pose a moral chal¬lenge. Israel is in no danger of falling and does not depend on the United States to survive. That was in the past. It is not the case in the next decade. The United States needs distance. It will take it. There will be domestic political resistance. There will also be domestic political sup¬port. This is not an abandonment of Israel, but relations between two nations can't be frozen in an outdated mode.

The complicating factor in this analysis is the rest of the Islamic world, particularly Iran and Turkey. The former threatens to become a nuclear power, and the latter will become a powerful force in the region, shifting away from close ties with Israel. Having begun with a narrow focus on Israel, we need to switch to a broader lens. And that is how, as a case study, the balance of power of an empire works.


STRATEGIC REVERSAL: THE UNITED STATES, IRAN,
AND THE MIDDLE EAST

Beyond the special case of Israel, the area between the eastern Mediterranean and the Hindu Kush remains the current focus of U.S. policy. As we've noted, the United States has three principal interests there: to maintain a regional balance of power; to make certain that the flow of oil is not interrupted; and to defeat the Islamist groups centered there that threaten the United States. Any step the United States takes to address any one of these objectives must take into account the other two, which significantly increases the degree of difficulty for achieving even one.

Adding to this challenge is that of maintaining the balance of power in three regions of the area: the Arabs and the Israelis, the Indians and the Pakistanis, and the Iraqis and the Iranians. Each of these balances is in disarray, but the most crucial one, that between the Iranians and the Iraqis, collapsed completely with the disintegration of the Iraqi state and military after the U.S. invasion of 2003. The distortion of the India-Pakistan balance is not far behind, as the war in Afghanistan continues to destabilize Pakistan.

As we saw in the last chapter, die weakness of the Arab side has cre¬ated a situation in which the Israelis no longer have to concern them¬selves with their opponents' reactions. In the decades ahead, the Israelis will try to take advantage of this to create new realities on the ground, while the United States, in keeping with its search for strategic balance, will try to limit Israeli moves.

The Indo-Pakistani balance is being destabilized in Afghanistan, a complex war zone where American troops are pursuing two competing goals, at least as stated officially. The first is to prevent al Qaeda from using Afghanistan as a base of operations; the second is to create a stable democratic government. But denying terrorists a haven in Afghanistan achieves little, because groups following al Qaeda's principles (al Qaeda prime, the group built around Osama bin Laden, is no longer fully func¬tioning) can grow anywhere, from Yemen to Cleveland. This is an espe¬cially significant factor when the attempt to disrupt al Qaeda requires destabilizing the country, training the incipient Afghanistan army, man¬aging the police force of Afghan recruits, and intruding into Afghan pol¬itics. There is no way to effectively stabilize a country in which you have to play such an intrusive role.

Unscrambling this complexity begins with recognizing that the United States has no vital interest in the kind of government Afghani¬stan develops, and that once again the president cannot allow counter-terrorism to be a primary force in shaping national strategy.

But the more fundamental recognition necessary for ensuring bal¬ance over the next ten years is that Afghanistan and Pakistan are in fact one entity, both sharing various ethnic groups and tribes, with the polit¬ical border between them meaning very little. The combined population of these two countries is over 200 million people, and the United States, with only about 100,000 troops in the region, is never going to be able to impose its will directly and establish order to its liking.

Moreover, the primary strategic issue is not actually Afghanistan but Pakistan, and the truly significant balance of power in the region is actu¬ally that between Pakistan and India. Ever since independence, these two countries partitioned from the same portion of the British Empire have maintained uneasy and sometimes violent relations. Both are nuclear powers, and they are obsessed with each other. While India is the stronger, Pakistan has the more defensible terrain, although its heartland is more exposed to India. Still, the two have been kept in static opposi¬tion—which is just where the United States wants them.

Obviously, the challenges inherent in maintaining this complex bal¬ance over the next ten years are enormous. To the extent that Pakistan disintegrates under U.S. pressure to help fight al Qaeda and to cooperate with U.S. forces in Afghanistan, the standoff with India will fail, leaving India the preeminent power in the region. The war in Afghanistan must inevitably spread to Pakistan, triggering internal struggles that can potentially weaken the Pakistani state. This is not certain, but it is too possible to dismiss. With no significant enemies other than the Chinese, who are sequestered on the other side of the Himalayas, India would be free to use its resources to try to dominate the Indian Ocean basin, and it would very likely increase its navy to do so. A triumphant India would obliterate the balance the United States so greatly desires, and thus the issue of India is actually fat more salient than the issues of terrorism or nation-building in Afghanistan.

That is why over the next ten years the primary American strategy in this region must be to help create a strong and viable Pakistan. The most significant step in that direction would be to relieve pressure on Pakistan by ending the "war in Afghanistan. The specific ideology of the Pakistani government doesn't really matter, and the United States can't impose its views on Pakistan anyway.

Strengthening Pakistan will not only help restore the balance with India, it will restore Pakistan as a foil for Afghanistan as well. In both these Muslim countries there are many diverging groups and interests, and the United States cannot manage their internal arrangements. It can, however, follow the same strategy that was selected after the fall of the Soviet Union: it can allow the natural balance that existed prior to the U.S. invasion of Afghanistan to return, to the extent possible. The United States can then spend its resources helping to build a strong Pak¬istani army to hold the situation together.

Jihadist forces in Pakistan and Afghanistan will probably reemerge, but they are just as likely to do so with the United States bogged down in Afghanistan as with the U.S. gone. The war simply has no impact on this dynamic. There is a slight chance that a Pakistani military, with the incentive of U.S. support, might be somewhat more successful in sup¬pressing the terrorists, but this is uncertain and ultimately unimportant. Once again, the key objective going forward is maintaining the Indo-Pakistani balance of power.

As in the case of stepping back from Israel, the president will not be able to express his strategy for dealing with Afghanistan, Pakistan, and India openly. Certainly there will be no way for the United States to appear triumphant, and the Afghan war will be resolved much as Viet¬nam was, through a negotiated peace agreement that allows the insur¬gent forces—in this case the Taliban—to take control. A stronger Pakistani army will have no interest in crushing the Taliban but will settle for controlling it. The Pakistani state will survive, which will balance India, thus allowing the United States to focus on other balance points within die region.

THE REGION'S HEARTLAND: IRAN AND IRAQ. The balance of power between Iran and Iraq remained intact until 2003, when the United States invasion destroyed both Iraq's government and army. Since then the primary force that has kept the Iranians in check has been the United States. But the United States has announced that it intends to withdraw its forces from Iraq, which, given the state of the Iraqi government and military, will leave Iran the dominant power in the Persian Gulf. This poses a fundamental challenge both for American strategy and the extremely complex region. Consider the alliances that might occur absent the United States.

Iraq's population is about 30 million. Saudi Arabia's population is about 27 million. The entire Arabian Peninsula's population is about 70 million, but that is divided among multiple nations, particularly be¬tween Saudi Arabia and Yemen. The latter has about one third of this population, and is far away from the vulnerable Saudi Arabian oil fields. In contrast, Iran alone has a population of 70 million. Turkey has a pop¬ulation of about 70 million. In the broadest sense, these figures and how these populations combine into potential alliances will define the geopo¬litical reality of the Persian Gulf region going forward. Saudi Arabia's population—and wealth—combined with Iraq's population can coun¬terbalance either Iran or Turkey, but not both. During the Iran-Iraq war of the 1980s, it was Saudi Arabia's support for Iraq that led to whatever success that country enjoyed.

While Turkey is a rising power with a large population, it is still a lim¬ited power, unable to project its influence as far as the Persian Gulf. It can press Iraq and Iran in the north, diverting their attention from the gulf, but it can't directly intervene to protect the Arabian oil fields. Moreover, the stability of Iraq, such as it is, is very much in Iran's hands. Iran might not be able to impose a pro-Iranian regime in Baghdad, but it has the power to destabilize Baghdad at will.

With Iraq essentially neutralized, its 30 million people fighting each other rather than counterbalancing anyone, Iran is for the first time in centuries free from significant external threat from its neighbors. The Iranian-Turkish border is extremely mountainous, making offensive mil¬itary operations there difficult. To the north, Iran is buffered from Rus¬sian power by Armenia, Azerbaijan, and Georgia, and in the northeast by Turkmenistan. To the east lie Afghanistan and Pakistan, both in chaos. If the United States withdraws from Iraq, Iran will be free from an immediate threat from that enormous power as well. Thus Iran is, at least for the time being, in an extraordinary position, secure from over¬land incursions and free to explore to the southwest.

With Iraq in shambles, the nations of the Arabian Peninsula could not resist Iran even if they acted in concert. Bear in mind that nuclear weapons are not relevant to this reality. Iran would still be the dominant Persian Gulf power even if its nuclear weapons were destroyed. Indeed, a strike solely on Iran's nuclear facilities could prove highly counterpro¬ductive, causing Iran to respond in unpleasant ways. While Iran cannot impose its own government on Iraq, it could, if provoked, block any other government from emerging by creating chaos there, even while U.S. forces are still on the ground, trapped in a new round of internal warfare but with a smaller number of troops available.

Iran's ultimate response to a strike on its nuclear facilities would be to try to block the Strait of Hormuz, where about 45 percent of the world's exported seaborne oil flows through a narrow channel. Iran has antiship missiles and, more important, mines. If Iran mined the strait and the United States could not clear that waterway to a reasonable degree of confidence, the supply line could be closed. This would cause oil prices to spike dramatically and would certainly abort the global economic recovery.

Any isolated attack on Iran's nuclear facilities—the kind of attack that Israel might undertake by itself—would be self-defeating, making Iran more dangerous than ever. The only way to neutralize those facilities without incurring collateral damage is to attack Iran's naval capabil¬ity as well, and to use air power to diminish Iran's conventional capabil¬ity. Such an attack would take months (if it were to target Iran's army), and its effectiveness, like that of all air warfare, is uncertain.

For the United States to achieve its strategic goals in the region, it must find a way to counterbalance Iran without maintaining its current deployment (already reduced to 50,000 troops) in Iraq and without actually increasing the military power devoted to the region. A major air campaign against Iran is not a desirable prospect; nor can the United States count on the reemergence of Iraqi power as a counterweight, because Iran would never allow it. The United States has to withdraw from Iraq in order to manage its other strategic interests. But coupled with this withdrawal, it must think radical thoughts.

In the next decade, the most desirable option with Iran is going to be delivered through a move that now seems inconceivable. It is the option chosen by Roosevelt and Nixon when they faced seemingly impossible strategic situations: the creation of alliances with countries that had pre¬viously been regarded as strategic and moral threats. Roosevelt allied the United States with Stalinist Russia, and Nixon aligned with Maoist China, each to block a third power that was seen as more dangerous. In both cases, there was intense ideological rivalry between the new ally and the United States, one that many regarded as extreme and utterly inflex¬ible. Nevertheless, when the United States faced unacceptable alterna¬tives, strategic interest overcame moral revulsion on both sides. The alternative for Roosevelt was a German victory in World War II. For Nixon, it was the Soviets using American weakness caused by the Viet¬nam War to change the global balance of power.

Conditions on the ground put the United States in a similar position today vis-a-vis Iran. These countries despise each other. Neither can eas¬ily destroy the other, and, truth be told, they have some interests in com¬mon. In simple terms, the American president, in order to achieve his strategic goals, must seek accommodation with Iran.

The seemingly impossible strategic situation driving the United States to this gesture is, as we've discussed, the need to maintain the flow of oil through the Strait of Hormuz, and to achieve this at a time when the country must reduce the forces devoted to this part of the world.

The principal reason that Iran might accede to a deal is that it sees the United States as dangerous and unpredictable. Indeed, in less than ten years, Iran has found itself with American troops on both its eastern and western borders. Iran's primary strategic interest is regime survival. It must avoid a crushing U.S. intervention while guaranteeing that Iraq never again becomes a threat. Meanwhile, Iran must increase its author¬ity within the Muslim world against the Sunni Muslims who rival and sometimes threaten it.

In trying to imagine a U.S.-Iranian detente, consider the overlaps in these countries' goals. The United States is in a war against some—but not all—Sunnis, and these Sunnis are also the enemies of Shiite Iran. Iran does not want U.S. troops along its eastern and western borders. (In point of fact, the United States does not want to be there either.) Just as the United States wants to see oil continue to flow freely through Hor¬muz, Iran wants to profit from that flow, not interrupt it. Finally, the Ira¬nians understand that the United States alone poses the greatest threat to their security: solve the American problem and regime survival is assured. The United States understands, or should, that resurrecting the Iraqi counterweight to Iran is simply not an option in the short term. Unless the United States wants to make a huge, long-term commitment of ground forces in Iraq, which it clearly does not, the obvious solution to its problem in the region is to make an accommodation with Iran.

The major threat that might arise from this strategy of accommoda¬tion would be that Iran oversteps its bounds and attempts to occupy the oil-producing countries in the Persian Gulf directly. Given the logistical limitations of the Iranian army, this would be difficult. Also given that it would bring a rapid American intervention, such aggressive action on the part of the Iranians would be pointless and self-defeating. Iran is already the dominant power in the region, and the United States has no need to block indirect Iranian influence over its neighbors. Aspects of Iran's influence would range from financial participation in regional projects to significant influence over OPEC quotas to a degree of influ¬ence in the internal policies of the Arabian countries. Merely by showing a modicum of restraint, Iranians could gain unquestioned preeminence, and economic advantage, while seeing their oil find its way to the mar¬ket. They could also see substantial investment begin to flow into their economy once more.

Even with an understanding with the United States, Iranian domina¬tion of the region would have limits. Iran would enjoy a sphere of influ¬ence dependent on its alignment with the United States on other issues, which means not crossing any line that would trigger direct U.S. inter¬vention. Over time, the growth of Iranian power within the limits of such clear understandings would benefit both the United States and Iran. Like the arrangements with Stalin and Mao, this U.S.-Iranian alliance would be distasteful yet necessary, but also temporary.

The great losers in this alliance, of course, would be the Sunnis in the Arabian Peninsula, including the House of Saud. Without Iraq, they are incapable of defending themselves, and as long as the oil flows and no single power directly controls the entire region, the United States has no long-term interest in their economic and political well-being. Thus a U.S.-Iranian entente would also redefine the historic relationship of the United States with the Saudis. The Saudis will have to look at the United States as a guarantor of its interests while trying to reach some political accommodation with Iran. The geopolitical dynamic of the Persian Gulf would be transformed for everyone.

The Israelis too would be threatened, although not as much as the Saudis and other principalities on the Persian Gulf. Over the years, Iran's anti-Israeli rhetoric has been extreme, but its actions have been cautious. Iran has played a waiting game, using rhetoric to cover inaction. In the end, the Israelis would be trapped by the American decision. Israel lacks the conventional capability for the kind of extensive air campaign needed to destroy the Iranian nuclear program. Certainly it lacks the military might to shape the geopolitical alignments of the Persian Gulf region. Moreover, an Iran presented with its dream of a secure western border and domination of the Persian Gulf could become quite concilia¬tory. Compared to such opportunities, Israel for them is a minor, dis¬tant, and symbolic issue.

Until now, the Israelis still had the potential option of striking Iran unilaterally, in hopes of generating an Iranian response in the Strait of Hormuz, thereby drawing the United States into the conflict. Should the Americans and Iranians move toward an understanding, Israel would no longer have such sway over U.S. policy. An Israeli strike might trigger an entirely unwelcome American response rather than the chain reaction that Israel once could have hoped for.

The greatest shock of a U.S.-Iranian entente would be political, on both sides. During World War II, the U.S.-Soviet agreement shocked Americans deeply (Soviets less so, because they had already absorbed Stalin's prewar nonaggression pact with Hitler). The Nixon-Mao entente, seen as utterly unthinkable at the time, shocked all sides. Once it happened, however, it turned out to be utterly thinkable, even man¬ageable.

When Roosevelt made his arrangement with Stalin, he was politically vulnerable to his right wing, the more extreme elements of which already regarded him as a socialist favorably inclined to the Soviets. Nixon, as a right-wing opponent of communism, had an easier time. President Obama will be in Roosevelt's position, without the overwhelming threat of a comparatively much greater evil—that is, Nazi Germany.

President Obama's political standing would be enhanced by an air strike more than by a cynical deal. An accommodation with Iran will be particularly difficult for him because it will be seen as an example of weakness rather than of ruthlessness and cunning. Iranian president Ahmadinejad will have a much easier time selling such an arrangement to his people. But set against the options—a nuclear Iran, extended air strikes with all attendant consequences, the long-term, multidivisional, highly undesirable presence of American forces in Iraq—this alliance seems perfectly reasonable.

Nixon and China showed that major diplomatic shifts can take place quite suddenly. There is often a long period of back-channel negotia¬tions, followed by a breakthrough driven either by changing circum¬stances or by skillful negotiations.
The current president will need considerable political craft to posi¬tion the alliance as an aid to the war on al Qaeda, making it clear that Shiite-dominated Iran is as hostile to the Sunnis as it is to Americans. He will be opposed by two powerful lobbies in this, the Saudis and the Israelis. Israel will be outraged by the maneuver, but the Saudis will be terrified, which is one of the maneuver's great advantages, increasing American traction over its policies. The Israelis can in many ways be handled more easily, simply because the Israeli military and intelligence services have long seen the Iranians as occasional allies against Arab threats, even as the Iranians were supporting Hezbollah against Israel. They have had a complex relationship over the last thirty years. The Saudis will condemn this move, but the pressure it places on the Arab world would be attractive to Israel. Even so, the American Jewish com¬munity is not as sophisticated or cynical as Israel in these matters, and its members will be vocal. Even more difficult to manage will be die Saudi lobby, backed as it is by American companies that do business in the kingdom.

There will be several advantages to the United States. First, without fundamentally threatening Israeli interests, the move will demonstrate that the United States is not controlled by Israel. Second, it will put a generally unpopular country, Saudi Arabia—a state that has been accus¬tomed to having its way in Washington—on notice that the United States has other options. For their part, the Saudis have nowhere to go, and they will cling to whatever guarantees the United States provides them in the face of an American-Iranian entente.

Recalling thirty years of hostilities with Iran, the American public will be outraged. The president will have to frame his maneuver by offer¬ing rhetoric about protecting the homeland against the greater threat. He will of course use China as an example of successful reconciliation with the irreconcilable.

The president will have to deal with the swirling public battles of for¬eign lobbies and make the case for the entente. But he will ultimately have to maintain his moral bearings, remembering that in the end, Iran is not America's friend any more than Stalin and Mao were.

If ever there was a need for secret understandings secretly arrived at, this is it, and much of this arrangement will remain unspoken. Neither country will want to incur the internal political damage from excessive public meetings and handshakes. But in the end, the United States needs to exit from the trap it is in, and Iran has to avoid a real confrontation with the United States.

Iran is an inherently defensive country. It is not strong enough to be either the foundation of American policy in the region or the real long-term issue. Its population is concentrated in the mountains that ring its borders, while much of the center of the country is minimally or com¬pletely uninhabitable. Iran can project power under certain special conditions, such as those that obtain at the moment, but in the long run it is either a victim of outside powers or isolated.

An alliance with the United States will temporarily give Iran the upper hand in relations with the Arabs, but within a matter of years the United States will have to reassert a balance of power. Pakistan is unable to extend its influence westward. Israel is much too small and dis¬tant to counterbalance Iran. The Arabian Peninsula is too fragmented, and the duplicity of the United States in encouraging it to increase its arms is too obvious to be an alternative counterweight. A more realis¬tic alternative is to encourage Russia to extend its influence to the Iran¬ian border. This might happen anyway, but as we will see, that would produce major problems elsewhere.

The only country capable of being a counterbalance to Iran and a potential long-term power in the region is Turkey, and it will achieve that status within the next ten years regardless of what the United States does. Turkey has the seventeenth largest economy in the world and the largest in the Middle East. It has the strongest army in the region and, aside from the Russians and possibly the British, probably the strongest army in Europe. Like most countries in the Muslim world, it is currently divided between secularists and Islamists within its own borders. But their struggle is far more restrained than what is going on in other parts of the Muslim world.

Iranian domination of the Arabian Peninsula is not in Turkey's inter¬est because Turkey has its own appetite for the region's oil, reducing its dependency on Russian oil. Also, Turkey does not want Iran to become more powerful than itself. And while Iran has a small Kurdish popula¬tion, southeastern Turkey is home to an extremely large number of Kurds, a fact that Iran can exploit. Regional and global powers have been using support for the Kurds to put pressure on or destabilize Iraq, Turkey, and Iran. It is an old game and a constant vulnerability.

In the course of the next decade the Iranians will have to divert major resources in order to deal with Turkey. Meanwhile, the Arab world will be looking for a champion against Shiite Iran, and despite the bitter history of Turkish power in the Arab world during the Ottoman Empire, Sunni Turkey is the best bet.
In the next ten years, the United States must make certain that Turkey does not become hostile to American interests and that Iran and Turkey do not form an alliance for the domination and division of the Arab world. The more Turkey and Iran fear the United States, the greater the likelihood that this will happen. The Iranians will be assuaged in the short run by their entente with the Americans, but they will be fully aware that this is an alliance of convenience, not a long-term friendship. It is the Turks who are open to a longer-term alignment with the United States, and Turkey can be valuable to the United States in other places, particularly in the Balkans and the Caucasus, where it serves as a block to Russian aspirations.

As long as the United States maintains the basic terms of its agree¬ment with Iran, Iran will represent a threat to Turkey. Whatever the inclinations of the Turks, they will have to protect themselves, and to do that, they must work to undermine Iranian power in the Arabian Penin¬sula and the Arab countries to the north of the peninsula—Iraq, Syria, and Lebanon. They will engage in this not only to limit Iran but also to improve their access to the oil to their south, both because they will need that oil and because they will want to profit from it.

As Turkey and Iran compete in the next decade, Israel and Pakistan will be concerned with local balances of power. In the long run, Turkey cannot be contained by Iran. Turkey is by far the more dynamic country economically, and therefore it can support a more sophisticated military. More important, whereas Iran has geographically limited regional options, Turkey reaches into the Caucasus, the Balkans, Central Asia, and ultimately the Mediterranean and North Africa, which provides opportunities and allies denied the Iranians. Iran has never been a sig¬nificant naval power since antiquity, and because of the location of its ports, it can never really be one in the future. Turkey, in contrast, has fre¬quently been the dominant power in the Mediterranean and will be so again. Over the next decade we will see the beginning of Turkey s rise to dominance in the region. It is interesting to note that while we can't think of the century without Turkey playing an extremely important role, this decade will be one of preparation. Turkey will have to come to terms with its domestic conflicts and grow its economy. The cautious foreign policy Turkey has followed recently will continue. It is not going to plunge into conflicts and therefore will influence but not define the region. The United States must take a long-term view of Turkey and avoid pressure that could undermine its development.

As a solution to the complex problems of the Middle East, the Amer¬ican president must choose a temporary understanding with Iran that gives Iran what it wants, that gives the United States room to withdraw, and that is also a foundation for the relationship of mutual hostility to the Sunni fundamentalists. In other words, the president must put the Arabian Peninsula inside the Iranians' sphere of influence while limiting their direct controls, and while putting the Saudis, among others, at an enormous disadvantage.

FACING THE WESTERN PACIFIC

The Western Pacific is a region that does not present an immediate crisis for the United States, but this happy state of affairs will not go on indefinitely. Asia was one of the key trouble spots in the world for a good part of the preceding century, and the relative tranquility of the past thirty years has been the exception, not the rule. That is why the presidents task during the next decade will be to prepare care¬fully and at leisure for the inevitable crises that loom just over the horizon.

There is a great deal of concern about the Indo-Chinese balance of power, but India and China are divided by a wall—the Himalayas—that makes sustained conflict and high-volume overland trade virtually impossible. Their interaction is economic and by sea. The central and long-standing opposition in this region is actually that between China and Japan, the two nations locked in a tie for the world's second large-si economy. There is substantial economic competition. Economics affect a balance of power only when geography permits other kinds of compe¬tition. All other regional powers—including South Korea, a substantial economic force in its own right—exist within the framework of the China-Japan-U.S. balance. It is in terms of maintaining and manipulat¬ing that balance that the United States will define its policy during the next decade.

It is difficult to imagine two nations more different than China and Japan, and economic friction has made them hostile to each other since their first modern war, in 1895, when Japan defeated China's navy. Japan is a maritime industrial power, utterly dependent on imports of raw materials for its survival.
China, with its huge population and geogra¬phy, is wedded to the land. From the moment Japan first began to indus¬trialize, it has needed Chinese markets, raw material, and labor and has wanted these on the most favorable terms. The Chinese have needed for¬eign capital and expertise but have not wanted to fall under Japanese control. This wary interdependence of two economies led them into a brutal war in the 19305 and 19405, during which Japan occupied a good deal of the Chinese mainland. The relationship between these two coun¬tries never fully recovered from that war, and hostility and distrust have been kept under control in part by the presence of the United States.

During the Cold War, the United States maintained complex rela¬tions with each country. It needed Japan's industrial power to support the U.S. in the Korean War and beyond, as well as its geography to block the Soviet fleet from entering the Pacific. Japan willingly gave both. In return, the United States gave the Japanese access to American markets for its industrial products and did not require Japan to make a military commitment to American ventures around globe.

During the same era, the United States spent nearly thirty years in marked hostility to Communist China. Then, when it had dissipated its global power in Vietnam and needed a counterweight to the Soviets, it turned to China. China, afraid of the Soviet Union and seeing the United States as a guarantor of its own security, accepted the overture.

Neither China nor Japan was comfortable with the U.S relationship with the other, but the United States managed the triangulation without difficulty, because each country had more important issues to consider. China's concerns were geopolitical: largely the fear of the Soviet Union.

Japan's were economic:  its postwar economic boom.  Each country needed the United States for its own reasons.

When the Cold War ended, the nature of the balance changed. Japan's period of rapid growth stalled out as China, having adopted Japan's focus on economics, was undergoing a prolonged boom. Japan remained the larger economy, but China became the most dynamic—a situation that the United States saw as quite satisfactory. Focused prima¬rily on economic issues, the United States did not look at either country from a genuinely geopolitical point of view. In general, Asia was a matter for the Treasury Department and for managers of trade relations, not something of concern to the Department of Defense.

The stability of the western Pacific and southeast Asia since the i98os is all the more notable when we consider that from Indochina to Indone¬sia, China, and elsewhere, Asia appeared to be one of the most unstable and unpromising regions in the world, a caldron of war, civil war, and general instability throughout the 1960s and '70s.

The president must bear in mind that Asia is an extraordinarily changeable place, and in the next ten years we will undoubtedly see some things that are now regarded as immutable being utterly transformed. For example, the Chinese economy will face harsh tests while Japan begins recovering from its failures. The consensus in 1970 was that Asia was inherently violent and unstable; the consensus today is that it is peaceable and stable. These contradictory assessments suggest the chal¬lenges in determining what Asia will look like over the next decade, how the Sino-Japanese dynamic will play itself out, and what American pol¬icy should be toward the region.

CHINA, JAPAN, AND THE WESTERN PACIFIC. When we talk about east Asia, we are really talking about a string of islands stretching from the Kuriles to Indonesia, as well as their relations with one another and with the mainland. When we talk about the main¬land, more than anything else we are talking about China.

China stretches twenty-five hundred miles inland and borders on fourteen countries. While China faces an ocean on only one side, it may be useful to think of it as a fairly narrow island clinging to the edge of the Pacific, isolated to the north, west, and south by virtually impenetrable barriers.

The image of an island holds up when we consider that the vast majority of Chinas population lives in the eastern part of the country, within about four hundred miles of the coast. The reason for this con¬centration is the availability of water. The area between the line bisecting the map (facing page) and the coast marks the area in which more than fifteen inches of rain a year falls—the minimum needed to maintain large numbers of people. Since the western part of China is too arid to maintain a large population, more than a billion people are crammed into a region about the size of the United States east of the Mississippi, not including New England. This is Han China, the land of the ethnic Chinese.

Western China is a vast and quite empty near-desert surrounded by four non-Chinese buffer states: Tibet, Xinjiang, Inner Mongolia, and Manchuria. These anchor China at its geographical limits, with the Himalayas to the southwest, minimally passable but certainly not by armies and not by trade in any volume. Siberia lies to the north, a huge wasteland with no north-south transportation. Jungles and rugged hills lie to the south, stretching from Myanmar to the Pacific, isolating China from southeast Asia.

Geographically, Japan is a much simpler place, consisting of four main islands and a series of much smaller islands to the north and south. It is being an archipelago that makes Japan by necessity a maritime nation, a fact compounded by an extraordinary geological reality: Japan is almost entirely devoid of the minerals needed by industry. Industrial¬ization has always meant importing resources, including oil, which Japan gets primarily from the Persian Gulf. This means that Japan, by definition, has widespread global interests and vulnerabilities. Unlike China, which imports raw materials but has enough supplies of its own to survive if necessary, Japan would collapse in a matter of months if its imports were disrupted.

Partly because of its isolation and partly because it industrialized rap¬idly in the nineteenth century, Japan avoided the experience that China suffered at the hands of Europeans. The Europeans provided Japan wit assistance in the form of industrial technology and military training. T British organized the Japanese navy, the Germans the army, and thus Japan evolved rapidly into a power that could challenge Europeans. Indeed, it defeated the Russians in 1905.

The country most alarmed by Japan's sudden emergence was the only other industrialized power in the Pacific: the United States. Prior to World War II, the Japanese imported raw materials mostly from sou east Asia and the East Indies. In order to secure access to these supplies Japan needed a substantial military force, particularly a navy. The United States, which became a significant maritime power only at the end oft nineteenth century, saw Japan's naval buildup as something that might one day drive the U.S. out of the Pacific. Simply by becoming an industrial and naval power, Japan appeared to threaten the security of, United States. By expanding its naval force to defend itself against Japan, the United States threatened the security of Japan.

The result of this mutual intimidation was World War II in the Pacific The United States defeated Japan not just because of the atom bomb and the success of its island-hopping strategy, but because its sub¬marines cut off the supply of raw materials from the south and crippled Japan's ability to wage war. Japan continued to resist, but once the U.S. submarine campaign placed a stranglehold on its supplies, its po:
was hopeless.

Today Japan is just as dependent on maritime trade as it was i I93os and 4os. It still must import all of its oil, and it must do so through waters controlled by the United States Navy. That means that Japans industrial position depends on the willingness of the United States to guarantee the sea-lanes. It also depends on the United States' willingness not to take risks along Japan's line of supply-particularly through Strait of Hormuz.

Thus Japan is trapped in a subordinate relationship with the United States. It cannot afford to alienate the United States without first build¬ing up a military force able to secure its own supply lines, but this is an undertaking far more ambitious and expensive than Japan wants to attempt during the next ten years. Nonetheless, its inherent insecurity because of import dependency, along with American unpredictability, will certainly drive Japan to become less dependent and exposed than it has been.

Like Japan, the Chinese can ill afford to alienate the Americans. They depend on the United States less for the flow of raw materials (although Chinese ships also pass through waters controlled by the United States) than as a consumer of Chinese industrial products. China, like Japan before it, has become a huge exporter to the United States, so much so that the ability and willingness of the United States to buy is one of the foundations of the Chinese economy along widi the European market. China must have access to both. Over the next ten years, China, like Japan, will be focused on preparing for what it sees as the worst-case scenario vis-a-vis its American trading partner, a political decision to limit Chinese access to the American market.

To the extent that the regional balance will continue, it will do so not so much because of Japanese-Chinese relations but because of the rela¬tionship each Asian nation has with the United States. As China and Japan both become stronger, each will inevitably notice the other's rise and become concerned.

All other things being equal, Japan's relationship with the United States will remain stable, but with China the story will be different. Exports stabilize China's economy and society, but it is not enough to have buyers; it is also essential that the sale of exports build Chinese prosperity. If exporting to the United States no longer fits Chinese requirements, then Chinese interest in the relationship with the United States will shift and China will move away from dependency. Over the next decade, as China becomes more of an economic free agent, although not always a particularly prosperous one, Japan will have to have the United States guarantee its interests against China or shift its posture as well. Thus the balance that rests on the U.S.-Chinese relation¬ship actually depends on how the Chinese economy functions over the next several years.

CHINA AND JAPAN. Part of the reason China was able to grow so dramatically in the 19805 is that Mao restrained growth just as dramatically up until that moment. When Mao died and was ultimately replaced by Deng Xiaoping, the mere shift of ideology freed China for an extraordinary growth spurt based on pent-up demand, combined with the native talents and capa¬bilities of the Chinese people.

Historically, China has cycled between opposites: either isolation combined with relative poverty or an openness to trade combined with social instability. From the 18405, when Britain forced China to open its ports, to 1947 and the Communist takeover, China was open, prosper¬ous in at least some regions, and violently fragmented. When Mao went on the Long March and raised a peasant army to expel the Westerners, he once again imposed relative isolation and reduced the standard of liv¬ing for everyone, but he created a stability and unity that China had not experienced in almost a century.

This oscillation between openness and instability and enclosure and unity is based in part on the nature of China's primary economic asset, cheap labor. When outside powers are allowed to invest in China, they build the kinds of factories and businesses that take advantage of China's abundant human capital. And yet the primary purpose of these factories is not to sell in China but to produce goods that can be sold in other countries. Accordingly, the primary focus of investment is near large ports and in areas with good transportation to these harbors. Because the pop¬ulation is concentrated in the coastal region, there is little reason to build infrastructure deeper within the country. Indeed, the vast majority of the factories are within a hundred miles of the coast. Even as China pros¬pered and the factories became Chinese-owned, the pattern continued.

According to the People's Bank of China sixty million Chinese—a population equivalent to that of a large European country—live in middle-class households (those earning more than $20,000 a year). But with China's population of 1.3 billion people, 60 million middle-class citizens represent less than 5 percent of the total population, and the overwhelming majority of those live in the coastal region or in Beijing.

Six hundred million Chinese live in households earning less than $1,000 a year, or less than $3 a day for the family. Another 440 million Chinese live in households earning between $1,000 and $2,000 a year, or $3 to $6 a day. This means that 80 percent of China lives in conditions that compare with the poverty of sub-Saharan Africa. Even in the belt within one hundred miles of the coast, home to the 15 percent of Chi¬nese who are the industrial workers, China is an extraordinarily poor country. Its narrow zone of prosperity creates a chasm that is social as well as geographic. The region around the ports profits from trade, and the rest of China does not. The coastal region's interests are in fact much more closely aligned with those of China's foreign trading partners than with the interests of the rest of the country, or even with the interests of the central government.

It is along these fault lines that China fragmented in the nineteenth century, and it is here that it may fragment in the future. Beijing bal¬ances between the impoverished majority and the prosperous minority. Supported by foreign interests, the well-off Chinese in the coastal areas will resist the central government. Attempts to transfer wealth either weakens the central government or forces it to become dictatorial. The Qing Dynasty weakened after the British incursion. Mao's solution in die 19405 and "505 was extensive repression, the expulsion of foreigners, and the expropriation and redistribution of wealth to the impoverished interior.

During periods of relative prosperity and growth, the problem can be managed by the state. Even as inequality increases, the absolute standard of living for most Chinese rises, and that increase, however minimal, goes a long way toward keeping people passive. But what happens when the economy weakens and standards of living decline overall? For those in the middle class and above, this is inconvenient. For the more than one billion Chinese living in abject poverty, even a small contraction in living standards can be catastrophic. That is where China is heading in the very near future—toward a relatively small decline of growth, but one that will pyramid economically and socially, generating resistance to the central government.

Given that China has a producer economy completely out of propor¬tion to its consumer economy, the problem is inevitable. The iPods and clothing that China manufactures are not sold to its own impoverished masses. And yet China no longer has a wage advantage over countries like Pakistan and the Philippines. Given a limited pool of semiskilled labor (as opposed to its limitless supply of untrained peasants), the price of labor has risen. Pressed by competition, China has reduced prices, which has decreased the profitability of exports. In the face of increasing competition and of sluggish growth among some of its customers, China's ability to compete will decline, increasing the difficulty of repay¬ing business loans and thus increasing pressure on the entire financial system.

The stark reality is that China simply can't afford unemployment. Large numbers of peasants have moved to the cities to get jobs, and if they lose their jobs, they either stay in the cities and cause instability or return to their villages and increase the level of rural poverty. China can keep its people employed by encouraging banks to lend to enterprises that should be out of business, by subsidizing exports, or by building state-owned enterprises, but these efforts hollow out the economic core.
Over the next decade, China will have no choice but to increase its internal security. The People's Liberation Army is already huge. In the end, the PLA is what will hold the country together, but this assumes that this force, drawn heavily from the poorest segments of society, will itself hold together and remain loyal. To quell class resentments, China will have to tax the coastal region and the 60 million well-to-do Chinese, then transfer the money to the PLA and the peasants. Those being taxed will resist, and the revenues will be insufficient for those the government intends to benefit, but it should be enough to retain the compliance of the army.

The long-term question, which will be answered in the decade to come, is whether the Chinese will attempt to solve their problem as Mao did—by closing off the country and destroying the coastal businessmen and expelling foreign interests—or by following the pattern of regional¬ism and instability of the late nineteenth and first half of the twentieth centuries. The only certainties are that the Chinese government will be absorbed with internal problems, working carefully to balance compet¬ing forces and increasingly paranoid about the intentions of the Japanese and the Americans.

In 1990, Japan went through the kind of decline that the Chinese are beginning to experience now. Japan has a much stronger degree of infor¬mal social control than most outsiders can see, and at the same time the large corporate conglomerates, called keiretsu, retained a great deal of lat¬itude. Having grown rapidly after World War II, the Japanese suc¬cumbed to a financial crisis made inevitable by their failure to develop a market system for capital. Their economy operated through informal cooperation among the keiretsu and the government. This cooperation was designed so that there would be no losers, and therein lay its fatal flaw.

The capital problem was exacerbated by Japan's not having a retire¬ment plan worth mentioning, which meant that citizens were forced to save heavily, putting their money in government post office banks, which paid very low interest rates. The money was then loaned by the government to the large "city banks" linked to the keiretsu. This system gave Japan a huge advantage in the 19705 and 19805, when U.S. interest rates were in the double digits and Japanese corporations could borrow at less than ^ percent. But the money was not being loaned to businesses that were inherently profitable. Most profit was derived from the added margin provided by cheap money. And the need for the Japanese to save a huge amount in order to retire meant that they were reluctant consumers. Thus the heart of the Japanese economy, like the Chinese econ¬omy today, was in exports, particularly to the United States.

As competition from other Asian countries increased, the Japanese cut prices, which reduced profits. Lower profits meant that businesses had to borrow more money in order to grow, then found it increasingly difficult to pay back their loans. What followed was an economic crash that wasn't noticed by the Western media until several years after it hap¬pened.

Like the Chinese, the Japanese had to avoid unemployment, but for different reasons. In Japan, the reluctance to downsize was based on the social contract whereby a worker committed himself to one company for life and the company reciprocated. The Japanese honored the tradition by maintaining near full employment while allowing the growth rate to slip to almost nothing.

Western economists dubbed the twenty years during which the Japa¬nese economy stagnated the "lost decades," but this is a misunderstand¬ing of Japanese objectives, or rather the imposition of a Western point of view on Japanese values. Sacrificing growth in order to maintain full employment was for this highly cohesive society not to lose a decade but to retain a core interest.

At the same time, Japan's birthrate dropped well below the 2.1 chil¬dren per woman needed to maintain its population. Now, with each generation smaller than the one before, the economy can no longer sup¬port retirees. In this way, debt and demography have created an enor¬mous crisis for Japan.

During the next ten years, the Japanese will no longer be able to maintain full employment by exorbitantly increasing their debt, both public and private. Like the Chinese, they will have to shift economic models. But the Japanese have one overwhelming advantage: they do not have a billion people living in poverty. Unlike the Chinese, they can absorb austerity, should it be required, without inviting instability.

Japan's fundamental weakness remains its lack of natural resources for industry, from oil to rubber to iron ore. To remain an industrial power, Japan has to buy and sell globally, and if it loses access to the sea-lanes, it loses everything. If trouble arises and it lacks the option of turning inward, Japan is far more likely to become assertive once again.

THE SINO-JAPANESE BALANCE OF POWER. For the past thirty years or so, relations between China and Japan have been secondary to each country's relationship with the United States. The United States maintained the regional "balance by maintaining mutually beneficial relations with each country, but those relations will shift in the decade ahead. First, China's economic problems will alter its relationship to the world while transforming the country's internal workings. Similarly, Japan's internal problems and the solutions it chooses will transform the way it operates.

Even when passive and dependent on other countries to guarantee access to world markets, Japan always remains deeply embedded in the world. China is embedded as well, but not as irrevocably as Japan. The loss of imported raw materials does not represent an existential threat to China the way it does to Japan. Similarly, while China depends on exports, it could reconfigure itself if necessary, albeit painfully.

China, then, has less of a temptation to become assertive; it also has less of an ability to do so. China's main access to the world is by sea, but it does not have a substantial navy relative to geography and the United States. Building a naval power takes generations, not so much to develop the necessary technology as to pass along the accumulated experience that creates good admirals. It will be a long time before China can chal¬lenge either the United States or even Japan at sea. There has been a great deal of discussion of the development of China's navy. Certainly, signifi¬cant development is under way, but there is a huge gap between the pres¬ent level of effort and what China has to do to challenge U.S. naval power even in the waters near China. The most significant developments are in land-based anti-ship missiles. But the Chinese have a very long way to go before naval vessels can hope to defeat an American fleet. And even the anti-ship missiles are highly vulnerable to U.S. air and missile strikes. China's navy will not force the United States out of regional waters in the next decade.

Today Japan is formally a pacifist power, barred by Article 9 of its constitution from having an offensive armed force, but this has not pre¬vented it from maintaining the most capable navy in the western Pacific, nor from having a substantial army and air force. It has, however, man¬aged to avoid using those forces, relying instead on the United States to protect its international interests, particularly its access to natural resources.

Japanese submission to the United States after World War II proved beneficial because the United States needed Japan's help in the Cold War and wanted Japan to be as strong as possible. Things have now subtly changed. The United States still controls Japan's sea-lanes and is still pre¬pared to guarantee access, but its willingness to take risks with that access has put Japan in a potentially dangerous position. So far, during the U.S.-jihadist war, the United States has been cautious in not endanger¬ing the oil route through the Strait of Hormuz that Japan depends on, but it could easily miscalculate. Simply put, the United States can endure risks that Japan can't afford, so the two countries' perspectives on the world and their national interests diverge.

The internal problem for the Japanese is that they have gone as far as they can in this economic cycle. They must either accept austerity and unemployment or allow the economy to begin to overheat. Their great weakness remains capital markets, which still don't operate freely, and yet the Japanese don't have effective central planning either. This situa¬tion cannot be sustained. Moving to a free market in capital might solve the Japanese problem in the long run, but only at the cost of instability now.
Because they can't afford a true market economy, they will move toward an economy in which the state imposes greater efficiencies (never as efficient as a market, but more efficient than what they have now) and in which the keiretsu decline in importance. This will mean that the Japanese state will concentrate more power in itself and take a greater role in managing finance.

Japan's other great problem is demographic. It is an aging country that needs more workers but is socially unable to manage large-scale immigration, which moves counter to the cohesiveness of Japanese cul¬ture. The solution is not to have workers that come to the factories but to have factories that go to the workers. Over the next ten years, Japan will be even more aggressive in exploiting labor markets outside its own borders, including those in China, depending on the evolution of events there.

Whatever the future holds, the Japanese will want to continue their core strategic relationship with the United States, including their reliance on the U.S. to secure their sea-lanes. For Japan, this is both more cost-effective and far less dangerous than striking out on its own.

THE AMERICAN STRATEGY: PLAYING FOR TIME. The United States does not have the resources or the policy bandwidth to deal with every regional balance of power at the same time. It will be preoccupied with Russia and the Middle East, which does not leave it much in the way of resources to deal with the western Pacific. By default, then, American strategy in this region must be to delay and deflect. The United States cannot really control the vast processes that are under way, so the best it can hope to do is to shape them a bit. Fortunately, this is one region in which the processes at play have the countries on a rela¬tively benign path toward the United States, at least for now. Therefore U.S. policy should be to stall while laying the groundwork for what comes after.

The American danger does not rest in an alliance forged between Japan and China. These two nations compete with each other in too many ways, and differ from each other too profoundly, for close cooper¬ation. Having reached the limits of this economic cycle, Japan will no longer be the quietly passive giant it has been for the past twenty years. China, on the other hand, will be less than the economic juggernaut that it has been. The challenge for the United States will be to manage its relationship with both players in this western Pacific system, each in its own different phase. At the same time, the United States must step back from being the center and let these two Asian powers develop more direct relationships with each other, finding their own point of balance.

Neither China nor Japan will emerge as a regional hegemon in the coming decade. The Chinese economic miracle will subside, as all eco¬nomic miracles do, and China will focus on maintaining stability with¬out rapid growth. Japan will restructure itself internally while beginning to align its foreign policy with its global interests. But it will be Japan that the United States will have to watch.

As Japan increases its power, it must necessarily increase its maritime strength. It is a fundamental principle of the United States to oppose the rise of maritime powers, but obviously the United States isn't going to go to war with Japan over this issue in 2015 or 2020 the way it did in 1941. Still, it will have to develop a strategy to deal with a more assertive Japan. The first step in the U.S. strategy toward Japan must be to ensure that China doesn't splinter, because the weaker China becomes, the freer Japan will be to flex its muscles. To the extent possible, the United States should relieve pressure on China by facilitating its exports to the United States. This is a reversal, of course, and there are obvious political prob¬lems in doing this. The president will have to be very clever in justifying his generosity at a time of high U.S. unemployment. But anything that constrains Japan, even marginally, is valuable to the United States.

Only a stable China can control foreign investments in its economy, and both stability and control will be necessary to fend off Japan's designs on Chinese factories and workers. Constraining Japanese expan¬sion will in turn delay Japan's ability to cope with its problems, and any¬thing that slows down Japan's economic resurgence benefits the United States, if only to the extent that it buys time.

The second step in U.S. strategy must be to keep relations with the Japanese as cordial as possible. The more confident Japan is in its access to raw materials, the less it will be motivated to build its own naval force. The Japanese, always painfully aware of the imbalance of power, have never been as comfortable as they might appear in their deferential rela¬tionship with the United States. At the same time, they have never wanted to confront the enormous amounts of money and risk needed to create an alternative.

In the long run, a country as economically large and vulnerable as Japan will have to search for a way to secure its own interests. That doesn't have to be in the next decade, however, and the American strat¬egy must be to prolong Japan's dependency as long as possible. The longer the Japanese remain dependent on the United States, the more influence the U.S. has over Japanese policy and the more it can shape that policy. Pushed hard enough, Japan might choose a new course that returns to the destructive policies of the 19305, when it was a nation both economically statist and driven by an emphasis on national defense. The United States must be careful not to push.

Two things will make this Asian strategy easier to sell to the American public. The first is that other matters will preoccupy them. The second is that American moves in the western Pacific will be incremental rather than sudden. The president will have the advantage of not having to declare a change in policy, and his actions will not have decisive effect, because the United States is important but not central to either of these Asian powers.

At the same time, the United States must be building relationships for the next phase of history, in which it might wish to recruit Japan, China, or both to cooperate against threats from Russia or other powers. The appetite for risk within these two countries is not very great, and the United States must realize that pressing them without inducements probably won't work.

This is where Korea may play a critical role. It is already the thorn in the side of both parts of the Sino-Japanese balance, but it is particularly irksome for the Japanese. For historical reasons, Korea despises the Japa¬nese and distrusts the Chinese. It is not particularly comfortable with the United States, for that matter, but at least geography has made it depen¬dent on the U.S.

As Japan increases in power and China weakens, the Koreans will need the United States more than ever, and the United States will rely on Korea to increase U.S. options for dealing with both countries. Fortu¬nately, the U.S.-Korean relationship already exists, and for that reason extending it would not cause significant concern to either Japan or China.

Korea also has become a significant technological center. China in particular will be hungry for that technology, and having some control over die rate of transfer would increase U.S. leverage with China. For their part, the Koreans will need help in dealing with the North Korean nuisance, particularly in handling the financial aspects of reunification when it inevitably comes. A unified Korea would want special trade opportunities with the United States, and even though Korea has nowhere else to turn, the American president should make such conces¬sions, because over the next ten years Korea may well be the most important relationship the United States has in the western Pacific. But reuni¬fication is not the core issue. North Korea, for all its bluster, is a cripple, and its nuclear facilities exist only as long as others permit it. North Koreas nuclear program has bought it time by deflecting pressure. It cannot stabilize North Korea permanently. South Korea, in contrast, remains a dynamic power on its own and will remain a dynamic power whatever happens in the north.

The second important relationship the United States will have in the region is with Australia. One of the last landmasses to fall under Euro¬pean control, it is certainly on the margins of the world geographically, and most of its population remains confined to a relatively small area of the country's southeast.

Geopolitically, Australia is misunderstood and misunderstands itself. It appears to be isolated and secure, yet its isolation is an illusion and its vulnerability real. For example, its nearest neighbor is Indonesia, a highly fragmented and weak country, separated from Australia by hun¬dreds of miles of water. During World War II, Indonesia and its eastern neighbor, New Guinea, served an important strategic function for Aus¬tralia, soaking up the Japanese attack and leaving the Japanese too weak to think about extending themselves farther south. Interestingly, World War II and Australia's island buffers to the north have reinforced its sense of security, in spite of creating worries about boat people.

Despite the appearance of standing alone and secure, Australia is actually quite dependent on international trade, particularly the sale of food products and industrial minerals such as iron ore, to sustain its economy. These goods are shipped by sea, and Australia has no control whatever over the security of its sea-lanes. In a sense, then, Australia is like a creature whose arteries and veins are located outside its body, unprotected and constantly at risk.

Australia's strategy for dealing with this vulnerability has been to ally itself with the dominant naval power in the western Pacific—once Britain, now the United States. All alliances bear costs, and the British and Americans wanted the same quid pro quo: Australia's participation in their wars. Australians sacrificed heavily in the Boer War, both world wars, and in Korea and Vietnam. Between 1970 and 1990 the Australians pulled back from this role as military partner, but during this period there were few calls for their participation. In 1990, in Desert Storm, they returned to their strategy of assisting in military operations, and they then went on to fight in both Afghanistan and Iraq.

Along with the security of sea-lanes, Australia's well-being depends on an international trading regime that allows terms it can manage. Aus¬tralia's strategy of being of service to its Anglo-American cousins has bought it a seat at the table alongside the great powers. This has provided influence and security to its trade, something that Australia never could have achieved on its own.

During World War II, Australia served Britain by sending troops to North Africa. It served the United States by acting as a depot for build¬ing up U.S. forces for the Pacific theater. Certainly Australian forces fought as well, but if no forces had been available, Australia's tremendous value was its location, behind the geographic shield of Indonesia and New Guinea. Should any great power emerge in the western Pacific to challenge the United States, Australia will once again be the strategic foundation for America's Pacific strategy. The caveat is that building the infrastructure for a rear depot took several years in World War II, and any future conflict might not allow that kind of lead time.

For the United States, maintaining a relationship with Australia shouldn't be difficult. Australia has only two strategic options. One is to withdraw from alliance commitments and assume that its interests will be addressed in passing. The other is to participate in the alliance and have more formal commitments from the United States. The former is cheaper but riskier. The latter is more expensive but more reliable.

If a major threat developed, Australia would most likely return to the U.S. fold. If a western Pacific power suddenly gained control of the sea-lanes, however, there is always a chance that Australia would make a deal, if it calculated that such compliance would achieve its ends with less risk than fighting alongside the Americans. Therefore, having prior commit¬ments from and installations in Australia serves the American interests best by limiting Australia's options.

Even if Australia is hostage to U.S. protection, its strategic importance is such that the United States should be as generous and seductive as pos¬sible. Being sparing in what it asks of Australian military commitments also makes sense, because the United States may need Australia more— and more broadly—in the future than it needs Australian troops now.

Of similar strategic importance for the United States is the city of Singapore, created by the British at the tip of the Malay Peninsula as a base from which to control the Strait of Malacca. This narrow passage¬way is still the primary route between the Indian and Pacific Oceans, particularly for oil headed for China and Japan from the Persian Gulf. U.S. warships on the way to the Persian Gulf also must pass through this strait. Along with Gibraltar and the Suez Canal, it is one of the world's great maritime choke points. Whoever controls it can shut off trade at will, or guarantee that it will flow.

Singapore is now an independent city-state, enormously prosperous because of its geographical position and because of its technology industry. It needs the United States as a customer, but also to protect its sovereignty. When Malaya was given independence, the primarily ethnic-Chinese Singapore split from the predominantly Muslim Malaysia. Relations have varied, and there has not been much threat of annexation, but Singapore understands two geopolitical realities: that the worst thing in the world is to be rich and weak, and that security is never a sure thing. What Malaysia or, for that matter, Indonesia might want to do in a generation or two can't be predicted.

The United States cannot simply control Singapore; instead it must have cooperative relations with it. As in his dealings with Korea and Aus¬tralia, the president should be more generous with Singapore than he needs to be in order to assure the alliance. The price is small and the stakes are very high.

INDIA. It is in the context of the western Pacific that we should consider India. Despite its size, its growing economy, and the constant discussion of India as the next China, I simply do not see India as a significant player with deep power in the coming decade. In many ways, India can be understood as a very large Australia. Both countries are economically powerful—obviously in different ways—and in that sense they have to be taken quite seriously.

Like Australia, India is a subcontinent isolated geographically, although Australia's isolation, based on thousands of miles of water, is much more visible. But India is in its own way an island, surrounded by land barriers perhaps less easily passable than oceans. The Himalayas block access from the north, and hilly jungles from the east. To the south, it is sur¬rounded by the Indian Ocean, which is dominated by the United States Navy.

The biggest problem for India lies to the west, where there is desert, and Pakistan. That Islamic nation has fought multiple wars with the pre¬dominantly Hindu India, and relations range from extremely cool to hostile. As we saw in my discussion of Afghanistan, the balance of power _ between Pakistan and India is the major feature of the subcontinent. Maintaining this balance of power is a significant objective for the United States in the decade to come.

India is called the democratic China, which, to the extent that it is true, exacts a toll in regional power. One of the great limitations on Indian economic growth, impressive as it has been, is that while India has a national government, each of its constituent states has its own reg¬ulations, and some of these prevent economic development. These states jealously guard their rights, and the leadership guards its prerogatives. There are many ways in which these regions are bound together, but the ultimate guarantor is the army.

India maintains a substantial military that has three functions. First, it balances Pakistan. Second, it protects the northern frontier against a Chinese incursion (which the terrain makes difficult to imagine). Most important, the Indian military, like the Chinese military, guarantees the internal security of the nation—no minor consideration in a diverse country with deeply divided regions. There is currently a significant rebellion by Maoists in the east, for instance, just the sort of thing that it is the army's job to prevent or suppress.

On the seas, the Indians have been interested in developing a navy that could become a major player in the Indian Ocean, protecting India's sea-lanes and projecting Indian power. But the United States has no interest in seeing India proceed along these lines. The Indian Ocean is the passageway to the Pacific for Persian Gulf oil, and the United States will deploy powerful forces there no matter how it reduces its presence on land.

To keep Indian naval development below a threshold that could threaten U.S. interests, the United States will strive to divert India's defense expenditure toward the army and the tactical air force rather than the navy. The cheapest way to accomplish this and preempt a potential long-range problem is for the United States to support a stronger Pakistan, thus keeping India's security planners focused on the land and not the sea.

By the same token, India is interested in undermining the U.S.¬Pakistani relationship or, at the very least, keeping the United States in Afghanistan in order to destabilize Pakistan. Failing that, India may reach out to other countries, as it did to the Soviet Union during the Cold War. Pakistan does not represent an existential threat to India, even in the unlikely event of a nuclear exchange. But Pakistan is not going to simply collapse, and therefore will remain the persistent problem that India's strategic policy will continue to pivot on.

India lags behind China in its economic development, which is why it is not yet facing China's difficulties. The next decade will see India surging ahead economically, but economic power by itself does not translate into national security. Nor does it translate into the kind of power that can dominate the Indian Ocean. American interests are not served by making India feel overly secure. Therefore, U.S.-Indian relations will deteriorate over the next ten years, even as the United States leaves Afghanistan and even as U.S.-Indian trade continues.

A SECURE HEMISPHERE

Given that the United States shares a hemisphere and quite a bit of history with Latin America and Canada, some might assume that this region has a singular importance for the U.S. Indeed, many Latin Americans in particular see the United States as obsessed with dominating them, or at least obtaining their resources. But with few exceptions—primarily in the case of Mexico and Cuba—what hap¬pens in Latin America is of marginal importance to the United States, and the region has rarely held a significant place in American thinking. Part of this has to do with distance. Washington is about a thousand miles farther from Rio de Janeiro than it is from Paris. And unlike Euro¬pean and Asian powers, the United States has never had an extensive war with the Latin world south of Panama. This isn't to say that there isn't mutual distrust and occasional hostility. But in the end—and again excepting Mexico and Cuba—the fundamental interests of the United States simply don't intersect with those of Latin America.

The United States has had limited concern with the region in part because of the fragmentation there, which has prevented the rise of a transcontinental power. South America looks like a single geographical entity, but in fact the continent is divided by significant topographic bar¬riers. First, running north and south are the Andes, a chain of mountains much taller than the Rockies or the Alps and with few readily traversable passes. Then, in the center of the continent, the vast Amazonian jungle presents an equally impenetrable barrier.

There are actually three distinct regions in South America, each cut off from the others to the extent that basic overland commerce is diffi¬cult and political unity impossible. Brazil is an arc along the Atlantic Coast, with the inhospitable Amazon as its interior. A separate region lies to the south of Brazil along the Atlantic, and it consists of Argentina, Uruguay, and Paraguay, the latter not on the coast but part of this bloc of nations. To the west are the Andean nations of Chile, Bolivia, Peru, Ecuador, Colombia, and Venezuela. Off the mainland and not com¬pletely Latin are, of course, the Caribbean islands, important as plat¬forms but without weight themselves.

The only connection between Brazil and the southern nations is a fairly narrow land bridge through Uruguay. The Andean nations are united only in the sense that they all share impenetrable geographies. The southern region along the Atlantic could become integrated, but there is really only one significant country there, Argentina. In addition, there is no passable land bridge between North and South America because of Central America's jungle terrain, and even if there were a bridge, only Colombia and perhaps Venezuela could take advantage of it.

The key to American policy in Latin America has always been that for the United States to become concerned, two elements would have to converge: a strategically significant area (of which there are few in the region) would have to be in the hands of a power able to use it to pose a threat. The Monroe Doctrine was proclaimed in order to make it clear that just such an eventuality was the single unacceptable gcopoliiii.il development as far as the United States was concerned.

During World War II, the presence of German agents and sympathizers in South America became a serious issue among strategist in Washington, who envisioned German troops arriving in Brazil from Dakar, across the Atlantic. Similarly, during the Cold War, the United States became genuinely concerned about Soviet influence in the region and intervened on occasion to block it. But neither the Germans nor the Soviets made a serious strategic effort to dominate South America, because they understood that in most senses the continent was irrelevant to U.S. interests. Instead, their efforts were designed merely to irritate Washington and divert American resources.

The one place where outside involvement has been seen as a threat to be taken seriously is Cuba, and its singular importance is based on its singularly strategic location.

Early in the nineteenth century, American prosperity was founded on the river system that enabled farmers in the Louisiana and Ohio territo¬ries to ship their agricultural output to the East Coast and Europe. All of these goods first flowed to the city of New Orleans and were then trans¬ferred from barges to oceangoing vessels. The United States fought to keep New Orleans safe, first at the Battle of New Orleans in 1814, and then during the Texan war of independence. New Orleans and nearby ports remain the largest by tonnage in the United States, enabling mid-western grain to be shipped out and steel and other industrial goods to be shipped in.

Because a naval force in Cuba could control the sea-lanes in and out of the Gulf of Mexico and thereby could control New Orleans, the United States has always been obsessed with the island. Andrew Jackson contemplated invading it, and in 1898 the United States intervened to drive out the Spaniards. A half century later, when a pro-Soviet govern¬ment emerged there under Fidel Castro, Cuba became a centerpiece of U.S. strategy. An anti-American Cuba without the Soviets was a trivial matter. An anti-American Cuba with Soviet missiles was a mortal threat. As we look toward the decade ahead, Cuba has no great power patron, so the president can craft his Cuban policy in response to Amer¬ican political opinion. But he must bear in mind that if the United States faces a global competitor, Cuba will be the geographic point at which that competitor can put the greatest pressure on the United States. This makes Cuba the prize it will aim for.

In the long run, bringing Cuba back under American influence is a rational, preemptive policy, and it is highly desirable to do so before a global competitor emerges to raise the stakes and the price. Fidel and Raul Castro will die of retire during the decade we're considering, and the political and intelligence elites who control the island are both younger and more cynical than the founding generation of the Castro regime. Rather than gambling on whether they can survive the deaths of the founders, they will be open to accommodation, amenable to deals that allow them to retain their position while granting America increas¬ing power over their foreign policy. The transition will be the moment for the United States to try to deal. Before the Castros leave power they might be open to a deal that preserves their legacy while conceding to American influence. If that fails, the insecurity of the transition might be the moment to approach their heirs. The American interest is simple and has nothing to do with human rights or regime change. It is to have guarantees that regardless of future challenges, Cuba will not become a base for foreign powers. Having achieved that, the United States will have achieved much.

Venezuela is another Latin American country that has managed to attract attention by appearing to be a significant threat to the United States. It is not. First, the Venezuelan economy depends on exporting oil, and the realities of geography and logistics make it inevitable that Venezuela will export its oil to the United States. Second, Venezuela's physical isolation—with the Amazon to the south, the Caribbean (dom¬inated by the U.S. Navy) to the north, and a hostile and stable Colombia to the west, on the other side of mountains and jungle—renders the country otherwise irrelevant, even if Islamist terrorists, say, showed up and tried to exploit its current rift with the United States. Even if a new global challenger sought to align with Venezuela and use it as a launch¬ing pad for mischief, the country's location does not allow for a signifi¬cant air or naval base. Obviously, it would be desirable to have Venezuela shift its strategic outlook by the 20305, but that is not essential to U.S. interests.

Venezuela is a case in which U.S. foreign policy should discipline itself to ignore ideology and annoyance and focus on strategy. In all like¬lihood, Hugo Chavez will lose power within the regime he created. Indeed, if the United States were to cut a deal with Cuba at the right time, part of that deal might be the withdrawal of Cuban support in Chavez. But even if he remains in power, he presents no threat to anyone but his own people.

BRAZIL AND THE ARGENTINE STRATEGY. There is only one Latin American country with the potential to emerge as a competitor to the United States in its own right, and that is Brazil. It is the first significant, independent economic and potentially global power to develop in the history of Latin America, and it has hedged its bets nicely.

Brazil is the world's eighth largest economy and the fifth largest country both in size and in population. Like most developing countries, it is heavily oriented toward export, but its exports are well balanced. Two-thirds are primary commodities (agricultural and mineral) and the rest are manufactured products. The geographic distribution of its exports is impressive as well, with about equal amounts going to Latin America, the European Union, and Asia. A relatively small but not insignificant amount goes to the United States. This balanced export posture means that Brazil is less vulnerable to regional economic downturns than are more focused economies.

Right now Brazil is not a power that is particularly threatening or important to the United States, nor does the United States represent a challenge to Brazil. There is minimal economic friction, and geography prevents Brazil from easily challenging the United States. Brazilian expansion northward would be irrational, because the terrain to the north is extremely hard to traverse, and there is nothing to the north that Brazil needs. Venezuelan oil, for instance, cannot be easily shipped to Brazil because of the terrain, and Brazil has ample supplies of its own anyway.

The only challenge that Brazil could pose to the United States would be if its economic expansion continued enough for it to develop suffi¬cient air and naval power to dominate the Atlantic between its coast and West Africa, a region not heavily patrolled by the United States, unlike the Indian Ocean or South China Sea. This would not happen in the next decade, but as Brazilian wage rates rise, the geographical factors are such that Brazilian investments in Africa might carry lower trans¬portation costs than investments in other parts of Latin America. Thus there would be advantages for Brazil in developing relations with sub-Saharan countries, particularly Angola, which, like Brazil, is Portuguese-speaking. This could lead to a South Atlantic not only dominated by Brazil but with Brazilian naval forces based on both the Brazilian and the African coasts.

Even though Brazil is not yet in any way a threat to American inter¬ests, the underlying American strategy of creating and maintaining bal¬ances of power in all areas requires that the United States begin working now to create a countervailing power. There is no rush in completing the strategy, but there is an interest in beginning it.

In the next decade, while maintaining friendly relations with Brazil, the United States should also do everything it can to strengthen Argentina, the one country that could serve as a counterweight. It should be remembered that early in the twentieth century Argentina was the major power in Latin America. Its current weakness is not inevitable. The United States should work toward developing a special relationship with Argentina in the context of a general Latin American development plan that also includes resources devoted to Uruguay and Paraguay.

This is a region where modest amounts of money now can yield substantial benefits later. Argentina's geography is suited for develop¬ment; it has an adequate population and room for still more people. It has a strong agricultural base and a workforce capable of developing an industrial base. It is protected from all military incursions except those Brazil needs. Venezuelan oil, for instance, cannot be easily shipped to Brazil because of the terrain, and Brazil has ample supplies of its own anyway.

The only challenge that Brazil could pose to the United States would be if its economic expansion continued enough for it to develop suffi¬cient air and naval power to dominate the Atlantic between its coast and West Africa, a region not heavily patrolled by the United States, unlike the Indian Ocean or South China Sea. This would not happen in the next decade, but as Brazilian wage rates rise, the geographical factors are such that Brazilian investments in Africa might carry lower trans¬portation costs than investments in other parts of Latin America. Thus there would be advantages for Brazil in developing relations with sub-Saharan countries, particularly Angola, which, like Brazil, is Portuguese-speaking. This could lead to a South Atlantic not only dominated by Brazil but with Brazilian naval forces based on both the Brazilian and the African coasts.

Even though Brazil is not yet in any way a threat to American inter¬ests, the underlying American strategy of creating and maintaining bal¬ances of power in all areas requires that the United States begin working now to create a countervailing power. There is no rush in completing the strategy, but there is an interest in beginning it.

In the next decade, while maintaining friendly relations with Brazil, the United States should also do everything it can to strengthen Argentina, the one country that could serve as a counterweight. It should be remembered that early in the twentieth century Argentina was the major power in Latin America. Its current weakness is not inevitable. The United States should work toward developing a special relationship with Argentina in the context of a general Latin American development plan that also includes resources devoted to Uruguay and Paraguay.

This is a region where modest amounts of money now can yield substantial benefits later. Argentina's geography is suited for develop¬ment; it has an adequate population and room for still more people. It has a strong agricultural base and a workforce capable of developing ;m industrial base. It is protected from all military incursions except those from Brazil, which should give it an incentive to play the role that the United States wants it to play.

The challenge in Argentina is political. Historically, its central gov¬ernment has been focused on addressing social problems in ways that actually undermine economic development. In other words, politicians tend to gain popularity by spending money they don't have. Argentina has also gone through periods of military and other dictatorship with imposed austerity, a cycle in which it does not differ fundamentally from other Latin American countries, including Brazil.

The Brazilians will see a long-term threat in U.S. support for Argentina, but ideally they will be preoccupied with their own develop¬ment and the internal stresses it generates. Nevertheless, the United States should be prepared for the Brazilians to offer Argentina economic incentives that would tie its economy closer to their own. Still, two fac¬tors play in the Americans' favor. First, Brazil still needs to preserve its investment capital for domestic use. Second, Argentina has long feared Brazilian dominance, so given a choice between Brazil and the United States, it will opt for the latter.

The American goal should be to slowly strengthen Argentina's eco¬nomic and political capabilities so that over the next twenty to thirty years, should Brazil begin to emerge as a potential threat to the United States, Argentina's growth rivals Brazil's. This will require the United States to provide incentives for American companies to invest in Argentina, particularly in areas outside of agricultural products, where there is already sufficient investment. The United States also should be prepared to draw the American military closer to the Argentine military, but through the civilian government, so as not to incite fears that the U.S. is favoring the Argentine military as a force in the country's domes¬tic politics.

The American president must be careful not to show his true inten¬tions in this, and not to rush. A unique program for Argentina could generate a premature Brazilian response, so Brazil should be included in any American program, if it wishes to participate. If necessary, this entire goodwill effort can be presented as an attempt to contain Hugo Chavez in Venezuela. It will all cost money, but it will be much cheaper, in every sense, than confronting Brazil in the 2030s or 2040s over control of the South Atlantic.

MEXICO. Like Cuba, Mexico is a special case in U.S. relations, and the obvious reason is that it shares the long U.S. border stretching from Texas to Cal¬ifornia. And yet Mexico is a society at a very different stage of develop¬ment from Canada, the neighbor to the north, and it therefore interacts with the United States very differently. Nowhere else do domestic poli¬tics and geopolitics intersect more directly and perhaps more violently than along the desert frontier south and west of El Paso.

These two countries have had a complex and violent relationship throughout their history. In 1800, if a reasonable person had asked which would be the dominant power in North America in two hundred years, the logical answer would have been Mexico. It was far more developed and sophisticated (and better armed) than the United States at the time. But after vastly expanding its territory through the Louisiana Purchase, the United States pushed Mexico to its current borders, first by seizing Texas and then by waging the Mexican-American War, which forced Mexico out of its holdings as far north as today's Denver and San Francisco.

The reason for American success in appropriating those western lands was ultimately geographical. Compared to the area around Mexico City, the northern part of the country is underpopulated, and it was even more so in the nineteenth century. The reason is that the land running from the border both north into the United States and south into Mex¬ico is intensely dry and desolate, and it is especially inhospitable on the Mexican side. That meant that the Mexicans found it difficult to settle and support populations north of the desert, and even harder to move armies northward. During the uprising of Anglo settlers in Texas, the Mexican president and military leader Santa Anna moved an army of
peasants north through the desert to San Antonio. A period of cold weather then crippled many of his soldiers, who were from the jungles of the south and had no shoes. Santa Anna's army was exhausted by the time it arrived, and while it defeated the defenders of the Alamo, it was itself defeated at San Jacinto, near the present city of Houston, by a force that had only two virtues: it was not exhausted and it was not shoeless.

The creation of a new border between the United States and Mexico created a new reality in which the populations on both sides are able to move freely back and forth, migrating with economic opportunities and engaging in smuggling whatever is illegal on die other side. These turbu¬lent borderlands exist throughout the world, between any countries whose political boundaries and cultural boundaries don't match up, usu¬ally because, as in this case, the border has moved. Sometimes, as in the case of Germany and France, the issue of the borderland generates war. At other times, as between the United States and Canada, the border is a matter of little importance. The situation of Mexico and the United States in the next decade will be somewhere between the two extremes.

Mexico is a country of 100 million people, most of whom live hun¬dreds of miles away from the United States. It is now the world's four¬teenth largest economy—counting only legal commerce—with a GDP of over $i trillion. It annually exports about $130 billion worth of goods to the United States and imports about $180 billion worth, making it the second largest trading partner with the U.S., after Canada. The United States obviously can't afford to disengage from Mexico, certainly not in less than a generation. Nor does it want to.

But the United States faces two problems: Mexico's illegal export of immigrant workers and Mexico's illegal export of drugs. In both cases the underlying issue is the appetite of the American economic system for the commodities in question. Without the appetite, the exports would be pointless. Because of the appetite—and particularly in the case of drugs, because of their illegality—the export is advantageous to individ¬ual Mexicans and to Mexico as a whole.

It is important to understand that Mexican immigration is funda¬mentally different from immigration from distant countries such as China and Poland. In those cases, people are breaking their tie with a homeland that is thousands of miles away. Some degree of assimilation is inevitable, because the alternatives are isolation or a life within a cultur¬ally segregated community. Although immigrants have frightened Amer¬icans ever since the Scots-Irish arrived to unsettle the merchants and gentry of eighteenth-century America, there is a fundamentally geopolit¬ical reason not to compare Mexican immigration with those precedents. Not only is Mexico adjacent to the United States, but in many cases the land the migrants are moving into is land that once belonged to Mexico. When Mexicans move northward, they are not necessarily breaking ties with their homeland. Indeed, within the borderland, which can extend hundreds of miles into both countries, the movement north can require minimal cultural adjustment. When Mexicans move to dis¬tant cities, they react as traditional immigrants have done and assimilate. Within the borderland, they have the option of retaining their language and their national identity, distinct from whatever legal identity they adopt. This state of affairs can create serious tension between the legal border and the cultural border.

This is the root of the profound anxiety within the United States today about Mexican illegal immigration. Critics say that American con¬cern is really an aversion to all Mexican immigration, and they are not altogether wrong, but this analysis does not fully appreciate the roots of the fear. Non-Mexicans within the borderland and even beyond are afraid of being overwhelmed by the migrants and finding themselves liv¬ing culturally in Mexico. They are also afraid that the movement north is the precursor to Mexicans reclaiming formerly Mexican territories. The fears may be overwrought, but they are not irrational; nor can they be avoided.

The irony, of course, is that the American economy requires these migrants as low-wage workers. The only reason that individuals take the risk of coming to the United States illegally is the certainty that they will be able to get jobs. If migrants were not required in order to fill these jobs, the jobs would be filled already and the migrants would not come. The counterargument—that migrants take jobs from others, or that their claims on social services outweigh whatever economic advantages they provide—is not entirely frivolous, but it has some weaknesses. First, 10 percent unemployment in the United States translates into about 15 million people out of work. The Pew Hispanic Center estimates that there are about 12 million illegal immigrants in the United States. If the replacement theory were correct, then getting rid of illegal immigrants would create 12 million job openings, leaving only 3 million unemployed and an unemployment rate of only about 2 percent. That such a replace¬ment scenario seems intuitively illogical argues to the point that most of die low-cost, unskilled labor that is imported does not compete with the existing workforce. The American economy requires additional workers but doesn't want to increase the pool of citizens dramatically. The Mexi¬can economy has surplus labor it needs to export. The result is pre-dictable.

And this problem will only intensify, because the fertility of nonim¬migrant women has fallen below the rate of replacement, and this at a time when life expectancy has expanded. This means that we will have an aging population with a shrinking workforce—a condition overtak¬ing the advanced industrial world in general. That means that countries will be importing labor both to care for the aged and to expand the workforce. Rather than subsiding, the pressure to import workers will increase, and even while Mexico improves its domestic economy, it will continue to have an abundance of exportable labor.

Compounding the turbulence along the border are the law of supply and demand and the cost of goods applied to the American appetite for narcotics. Heroin, cocaine, and marijuana, the drugs of choice, originate as extremely low-cost agricultural products—weeds, essentially, that require almost no cultivation. Because the drugs are illegal in the United States, normal market forces don't apply. The legal risk of selling drugs drives efficient competitors out of the market, enabling criminal organi¬zations to create regional monopolies through violence that further sup¬presses competition, which further inflates the cost of the drugs.

Illegality means that 'merely moving a product a few hundred miles from Mexico to Los Angeles will increase the price to the user by extremely high multiples. Official estimates of the amount of money (lowing into Mexico from the sales of narcotics run from $25 billion to $40 billion a year. Unofficial estimates place the amount much higher, but even assuming that the $40 billion figure is correct; the effective amount is staggeringly high. When you look at the revenue from a prod¬uct, it is not the amount you sell it for that matters—it's the profit mar¬gin. For a manufactured product, such as the electronic components that Mexico exports to the United States legally, a profit margin of 10 percent would be quite high. Let's assume that this is the profit margin for all legal imports from Mexico into the United States. Mexico's exports of $130 billion would then generate about $13 billion in profit.

The profit margin on drug sales is enormously higher than 10 per¬cent, because the inherent cost of the commodity is extremely low. Mar¬ijuana needs no processing, and processing costs on heroin and cocaine are insignificant. A reasonable and even conservative estimate for the profit margin on narcotics is 90 percent, which means that the $40 bil¬lion from the illegal trade generates a profit of about $36 billion. Drugs generate free cash, then, at a level almost three times greater than all of Mexico's $13 billion in legal exports.

Even if Mexico makes only $25 billion a year at an 80 percent margin, that still means a profit of $20 billion a year, which is still $7 billion more than the profit being made from all legal exports. Play with the numbers as much as you like—even demonstrate that drugs generate only half the profit of legal exports—and the fact still remains that drug money helps the liquidity of the Mexican financial system tremendously. Mexico is one of the few countries, for example, that continued to make loans for commercial real estate construction after the financial crisis of 2008.

It follows, therefore, that the Mexican government would be foolish to try to stop the trade. Certainly there is violence from the cartel wars, but it is generally concentrated along the border, not in the populated heartland of Mexico. On balance, the enormous amount of money pouring into the country—all of which finds its way into the banking system and the general economy in some way—benefits the country more than the violence and lawlessness harm it. As a consequence, the rational approach ought to be for the Mexican government to give the appear¬ance of trying to stop the drug trade while making certain that all sig¬nificant efforts fail. This would keep the United States mollified while making certain that the money continues to pour in.

AMERICA'S MEXICO STRATEGY. The American economy is too integrated with Mexico's ever to allow a disruption of legal commerce, which means that large numbers of trucks will be moving between the United States and Mexico indefinitely. The volume of traffic is too high for agents at the border to inspect all car¬goes, and therefore even if the border is walled off, both illegal aliens and drugs will continue to slip through at international crossings and else¬where. Given the low cost of the narcotics before they reach the United States, the interception of cargoes has very little effect on trade. Cargoes are readily replaced with little impact on aggregate revenue.

It should be much easier to stop illegal immigrants than drugs, because it is easy to detect immigrants once they are in the country. The simplest means of doing this is to institute a national identity card with special paper and embedded codes that make it extremely difficult to forge. No one could be employed until his or her employer first cleared the card via the sort of system currently used for credit card transactions. Any alien without a card would be deported. Any employer who hired him or her would be arrested and charged with a felony.

But this simple method is highly unlikely to be employed, in part because many of the people most opposed to illegal immigration also have a deep mistrust of the federal government. The national identity card could be used to track the movement of money and people—to detect tax fraud and deadbeat dads as well as to monitor political organi¬zations—which could easily lead to government abuse. Dissension within the anti-immigrant coalition on these issues will preclude support for such a system.

But there is a deeper reason this relatively easy step won't be taken: the segment of society that benefits from large numbers of low-cost workers is greater and more influential than the segment harmed by it. Therefore, as with the Mexican government and drugs, the best U.S. strategy is to appear to be doing everything possible to stop the move¬ment of immigrants while making certain that these efforts fail. This has been the American strategy on illegal immigrants for many years, creating a tension between short- and mid-term economic interests and long-term political interests. The long-term problem is the shift in demographics—and in potential loyalties—in the borderland. The pres¬ident must choose between these options, and his only rational course is to allow the future to tend to itself. Given the forces interested in main¬taining the status quo, any president who took the steps needed to stop illegal immigration would rapidly lose power. Therefore the best strategy for the president is to continue the current one: hypocrisy.

Similarly, the drug issue has a relatively simple solution that will not be implemented: legalization. If drugs were legalized and steps were taken to flood the country with narcotics, the street price would plunge, the economics of smuggling would collapse, and the violence along the border driven by all the money to be made would decline precipitously. Along with that there would be a decline in street violence among drug addicts seeking to steal enough money for a fix.

The downside of this strategy is that there would be an unknown increase in the amount of drug use and in the number of users. Existing users, no longer restricted by price, would increase their indulgence, and it is almost certain that some individuals who are unwilling to use drugs illegally would begin to use drugs once they were decriminalized.

The president—and in this case it is up to Congress as well, so it is not really a foreign policy decision—would have to calculate the benefits of stopping the flow of money to Mexico and limiting violence in the borderland against increased drug use and worse, and would have to appear to favor or at least be indifferent to that increase. No significant political coalition in the United States is prepared to embrace the lof crushing the illegal drug trade by legalization. So, like national identity cards, legalization simply won't fly, for internal ideological reasons.

Assuming that no magical solution will emerge to quell the national appetite for narcotics, the president must accept three realities: drugs will continue to flow into the United States, vast amounts of money will continue to flow into Mexico, and violence in Mexico will continue until the cartels achieve a stable peace, as has happened with organized crime in other countries, or until a single group wipes out all the others.

The only other strategy the United States could use to deal with the struggle is intervention. Whether a small incursion by the FBI or a large military occupation of northern Mexico, this is an extraordinarily bad idea. First, it is unlikely to succeed. The United States is unable to police narcotics at home, so the idea that it could police narcotics in a foreign country is far-fetched. As for a large military occupation, the United States has learned that its armed forces are superbly positioned to destroy enemy armies but far less adept at crushing guerrillas resisting occupa¬tion on their own terrain.

An American intervention would conflate the drug cartels with Mex¬ican nationalism, an idea that is already present in some quarters in Mex¬ico, and thus would pose a threat on both sides of the border. Suddenly attacks on U.S. forces, even in the United States, would be not mere banditry but patriotic acts. Given the complexities the United States faces in the rest of the world, the last thing it needs is an out-and-out war on the Mexican border.

The top priority of the president must be to make certain that the violence in northern Mexico and the corruption of law enforcement offi¬cials do not move into the United States. He must therefore commit sub¬stantial forces to the northern borderland in an effort to suppress violence, even though this is a defective strategy. Its flaws include fight¬ing a war that allows the enemy sanctuary on the other side of a border, which, as we learned in Vietnam, is a very bad idea. It is also a purely defensive strategy that does not give the United States control over events in Mexico. But given that gaining control of events in Mexico is extremely unlikely, a defensive posture may be the best available.

The American strategy will continue to be inherently dishonest. It does not intend to stop immigration and it doesn't expect to stop drugs, but it must pretend to be committed to both. To many Americans, these appear to be critical issues that affect their personal lives. They must not be told that in the greater scheme of things, their sense of what is impor¬tant doesn't matter, or that the United States is incapable of achieving goals they see as important.

It is far better for the president to appear to be absolutely committed to these goals, and when they aren't met, to fall back on the failure of some underlings to act forcefully. On occasion, members of his staff or of the FBI, DEA, CIA, or military should be fired in disgrace, and major investigations should be held to identify the failures in the system that have permitted drugs and illegal aliens to continue crossing the border. Over the next ten years, the president will be engaged in constant inves¬tigations to provide the illusion of activity in a project that cannot suc¬ceed.

Stopping the violence from spreading north of the border is alone important enough to topple any president who fails to do so. Fortu¬nately, not allowing violence to spread is in the interests of the cartels as well. They understand that significant violence in the United States would trigger a response that, while ineffective, would still hamper their business interests. In recognizing that the United States would neither move south nor effectively interfere with their trade otherwise, the drug cartels would be irrational to spread violence northward, and smugglers dealing in vast amounts of money are not irrational.

A final word must be included here about Canada, which of course shares the longest border with the United States and is America's largest trading partner. Canada has been an afterthought to the United States since British interest in continental North America declined. It is not that Canada is not important to the United States; it is simply that Canada is locked into place by geography and American power.

Looking at a map, Canada appears to be a vast country, though in terms of populated territory it is actually quite small, with its population distributed in a band along the U.S. border. Many parts of Canada have a north-south orientation rather than an east-west one. In other words, their economic and social life is oriented toward the United States in contrast to Canada, which operates on an east-west basis.

The issue for Canada is that the United States is a giant market as well as source of goods. There is also a deep cultural affinity. This creates problems for Canadians, who see themselves as and want to be a distinct culture as well as country. But as with the rest of the world, Canada is under heavy pressure from American culture, and resistance is difficult. For the Canadians, there are multiple fault lines in their confedera¬tion, the most important being the split between French-speaking Que¬bec and the rest of Canada, which is predominantly English-speaking. There was a serious separatist movement in the 19605 and 19705, which won major concessions on the use of language, but it never achieved independence.
Today that movement has moderated and independence is not on the table, although expanded autonomy might be.

For the United States, Canada itself poses no threats. The greatest danger would come if Canada were to ally with a major global power. There is only one conceivable scenario for this, and that is if Canada were to fragment. Given the degree of economic and social integration, it would be hard to imagine a situation in which a Canadian province would be able to shift relationships without disaster, or one in which the United States would permit close relations to develop between a province and a hostile power while continuing economic relations. The only case in which this would be imaginable is an independent Quebec, which might forgo economic relations for cultural or ideological reasons. In the next decade, of course, there are no global powers that can exploit an opening, and there are no openings likely to appear. That means that the relationship between the two countries will remain sta¬ble, with Canada increasing its position, as natural gas, concentrated in western Canada, becomes more important. The U.S.-Canadian relation¬ship is of tremendous significance to both countries, with Canada far more vulnerable to the United States than the other way around, simply because of size and options. But as important as it is, it will not be one requiring great attention or decisions on the part of the United States in the next decade.

The American relation with the hemisphere divides into three parts: Brazil, Canada, and Mexico. Brazil is far away and isolated. The United States can shape a long-term strategy of containment, but it is not press¬ing. Canada is going nowhere. It is Mexico, with its twin problems of migration and drugs, that is the immediate issue for the United Slates. Outside of the legalization of drugs, which would force down the price, the only solution is to allow the drug wars to burn themselves out, as they inevitably will. Intervention would be disastrous. As for migration, it is a problem now, but as demography shifts, it will be the solution.

The United States has a secure position in the hemisphere. The sign of an empire is its security in its region, with conflicts occurring far away without threat to the homeland. The United States has, on the whole achieved this.

AFRICA: A PLACE TO LEAVE ALONE

The U.S. strategy of maintaining the balance of power between nation-states in every region of the world assumes two things: first, that there are nation-states in the region, and second, that some have enough power to assert themselves. Absent these factors, trim-is no fabric of regional power to manage. There is also no system in internal stability or coherence. Such is the fate of Africa, a region that can be divided in many ways but as yet is united in none.

Geographically, Africa falls easily into four regions. First, there is North Africa, forming the southern shore of the Mediterranean basin. Second, there is the western shore of the Red Sea and the Gulf of Aden, known as the Horn of Africa. Then there is the region between the Atlantic and the southern Sahara known as West Africa, and finally a large southern region, extending along a line from Gabon to Congo to Kenya to the Cape of Good Hope.
Using the criterion of religion, Africa can be divided into just two  parts: Muslim and non-Muslim. Islam dominates North Africa, the northern regions of West Africa, and the west coast of the Indian Ocean basin as far as Tanzania. Islam does not dominate the northern coast of the Atlantic in West Africa, nor has it made major inroads into the southern cone beyond the Indian Ocean coast.

The linguistic map probably gives us the best sense of Africa's broad regions. But language as a way of looking at Africa is infinitely more complex, because hundreds of languages are widely used and many more are spoken by small groups. Given this linguistic diversity, it is ironic that the common tongue within nations is frequently the language of the imperialists: Arabic, English, French, Spanish, or Portuguese. Even in North Africa, where Arabic lies over everything, there are areas where the European languages of past empires remain an anachronistic residue.

A similar irony surrounds what is probably the least meaningful way of trying to make sense of Africa, which is in terms of contemporary borders. Many of these are also holdovers representing the divisions among European empires that have retreated, leaving behind their administrative boundaries. The real African dynamic begins to emerge when we consider that these boundaries not only define states that try to preside over multiple and hostile nations contained within, but often divide nations between two contemporary countries. Thus, while there may be African states, there are—North Africa aside—few nation-states.

Finally, we can look at Africa in terms of where people live. Africa's three major population centers are the Nile River basin, Nigeria, and the Great Lake s region of central Africa, including Rwanda, Uganda, and Kenya. These may give a sense that Africa is overpopulated, and it is true that given the level of poverty, there may well be too many people trying to extract a living from Africa's meager economy. But much of the continent is in fact sparsely populated compared to the rest of the world. Africa's topography of deserts and rain forests makes this inevitable.

Even when we look at these centers of population, we find that the political boundaries and the national boundaries have little to do with each other. Rather than being a foundation for power, then, population density merely increases instability and weakness. Instability occurs when divided populations occupy the same spaces.

Nigeria, for instance, ought to be the major regional power, since it is also a major oil exporter and therefore has the revenues to build power. But for Nigeria the very existence of oil has generated constant internal conflict; the wealth does not go to a central infrastructure of state and businesses but is diverted and dissipated by parochial rivalries. Rather than serving as the foundation of national unity, oil wealth has merely financed chaos based on the cultural, religious, and ethnic differences among Nigeria's people. This makes Nigeria a state without a nation. To be more precise, it is a state presiding over multiple hostile nations, some of which are divided by state borders. In the same way, the population groupings within Rwanda, Uganda, and Kenya are divided, rather than united, by the national identities assigned to them. At times wars have created uneasy states, as in Angola, but long-term stability is hard to find throughout.

Only in Egypt do the nation and the state coincide, which is why from time to time Egypt becomes a major power. But the dynamic of North Africa, which is predominantly a part of the Mediterranean basin, is very different from that of the rest of the continent. Thus when I use the term Africa, from now on, I exclude North Africa, which has been dealt with in an earlier chapter.

Another irony is that while Africans have an intense sense of commu¬nity—which the West often denigrates as merely tribal or clan-based their sense of a shared fate has never extended to larger aggregation of fellow citizens. This is because the state has not grown organically out of the nation. Instead, the arrangements instituted by Arab and European imperialism have left the continent in chaos.

The only way out of chaos is power, and effective power must be located in a state that derives from and controls a coherent nation. This does not mean that there can't be multinational states, such as Russia, or even states representing only part of a nation, such as the two Koreas. But it does mean that the state has to preside over people widi a genuine sense of shared identity and mutual interest.

There are three possible outcomes worth considering for Africa. The first is the current path of global charity, but the system of international aid that now dominates so much of African public life cannot possibly have any lasting impact, because it does not address the fundamental problem of the irrationality of African borders. At best it can ameliorate some local problems. At worst it can become a system that enhances cor¬ruption among both recipients and donors. The latter is more frequently the case, and truth be known, few donors really believe that the aid they provide solves the problems.

The second path is the reappearance of a foreign imperialism that will create some foundation for stable life, but this is not likely. The rea¬son that both the Arab and the European imperial phases ended as read¬ily as they did was that even though there were profits to be made in Africa, the cost was high. Africa's economic output is primarily in raw materials, and there are simpler ways to obtain these commodities than by sending in military forces and colonial administrators. Corporations making deals with existing governments or warlords can get the job done much more cheaply without taking on the responsibility of governing. Today's corporate imperialism allows foreign powers to go in, take what they want at the lowest possible cost, and leave when they are done.

The third and most likely path is several generations of warfare, out of which will grow a continent where nations are forged into states with legitimacy. As harsh as it may sound, nations are born in conflict, and it is through the experience of war that people gain a sense of shared fate. This is true not only in the founding of a nation but over the course of a nation's history. The United States, Germany, or Saudi Arabia are all nations that were forged in the battles that gave rise to them. War is not sufficient, but the tragedy of the human condition is that the thing that makes us most human—community—originates in the inhumanity of war.

Africa's wars cannot be prevented, and they would happen even if there had never been foreign imperialism. Indeed, they were being fought when imperialism interrupted them. Nation-building does not take place at World Bank meetings or during the building of schools by foreign military engineers, because actual nations are built in blood. The map of Africa must be redrawn, but not by a committee of thoughtful and helpful people sitting in a conference room.

What will happen, in due course, is that Africa will sort itself out into a small number of major powers and a large number of lesser ones. These will provide the framework for economic development and, over genera¬tions, create nations that might become global powers, but not at a pace that affects the next decade. The emergence of one nation-state that could introduce a native imperialism to Africa could speed up the process, but all the candidates for imperial power are so internally divided that it is hard to imagine a rapid evolution. Of all of them, South Africa is most interesting, as it combines European expertise with an African political structure. It is the most capable of Africa's countries. But that very fact leaves it with divisions that make its emergence as a regional power harder to imagine with each passing year.

Ultimately, the United States has no overwhelming interest in Africa. It obviously cares about oil from Nigeria or Angola and about control¬ling Islamist influence in the north as well as Somalia and Ethiopia. Thus it cares about the stability of Nigeria and Kenya, powers that might help with these issues. But America's intense involvement in Africa during the Cold War—the Congolese civil war in the early 1960s, Angola's civil war in the 1980s, Somalia and Ethiopia—was merely an attempt to block Soviet penetration. That level of intensity no longer exists.

In recent years the Chinese have become involved in Africa, purchas¬ing mines and other natural resources. But as we have discussed, China does not represent the same order of threat that the Soviets did, both because of the limits of power projection and because of China's internal weakness. China can't exploit Africa's position strategically, as the Soviets once did, and it cant carry home the mines. The primary effect of Chi¬nese investment is more intense exposure to Africa's instability, which leaves the United States free to remain aloof.

At the same time, U.S. corporations are as skilled as any in making the deals that allow them to get oil, other minerals, or agricultural prod¬ucts without a major American commitment to the region. Given all the other interests of the United States, having one region where it can remain indifferent is strategically beneficial, if only in that it allows the U.S. to conserve resources.

But there is an opportunity in Africa nonetheless. The strategic requirement for the United States to be involved in systematic manipu¬lation in many parts of the world makes it disliked and distrusted. There is no way to avoid this through policy, but it is possible to confuse—or defuse—the issue, and Africa is the place for that.

The United States, like all nations, is brutally self-interested. But there is value in not appearing that way, and some value in being liked and admired, as long as being liked isn't mistaken for the primary goal. Giving significant amounts of aid to Africa would serve the purpose of enhancing America's image. In a decade in which the United States will need to spend hundreds of billions of dollars a year on defense, spending $10 billion or $20 billion on aid to Africa would be a proportional and reasonable attempt to buy admiration.

Again, the aid itself will not solve Africa's problems, but it might ameliorate some of them, at least for a time. It is possible that it will do some harm, as many aid programs have had unintended and negative consequences, but the gesture would redound to America's benefit, and at relatively low cost.
The fact that a president must never lift his eyes from war does not mean that he cannot be clever about it at the same time. One of Machiavelli’s points is that good comes out of the ruthless pursuit of power, not out of trying to do good. But if doing some good merely convinces Europe to send more troops to the next U.S. intervention, it will be a worthwhile investment.

THE TECHNOLOGICAL AND DEMOGRAPHIC IMBALANCE

This book is about the imbalances of American power in the next decade and the effect of these imbalances on the world. I've focused on economic and geopolitical issues and made the argu¬ment that imbalances here are transitory and can be corrected. But the book would be incomplete without a consideration of two other major issues impinging on the decade ahead, namely demography and technol¬ogy.

Economic cycles—boom and bust—can be driven by speculation and financial manipulation, as was the decade just ending. But at a deeper level, economic expansion and contraction are driven by demo¬graphic forces and by technological innovation.

During the decade to come, we will see the ebbing of the demo¬graphic tide that helped to drive the prosperity of the immediate postwar period. The age cohort known as the baby boom—the children hum during the Truman and Eisenhower administrations—will be in dim sixties, beginning to retire, beginning to slow down, beginning to get old. As a result, the same demographic bulge that helped create abundance a half century ago will create an economic burden in the years ahead.

]n the 1950s, the baby boomers helped create demand for millions of strollers, tract houses, station wagons, bicycles, and washer-dryers. Dur¬ing the 1970s, they began to seek work in an economy not yet ready for them. As they applied for jobs, married and had children, bought and borrowed, their collective behavior caused interest rates, inflation, and unemployment to rise.

As the economy absorbed these people in the 1980s and as they matured in the 1990s, the boomers pushed the economy to extraordinary levels of growth. But during the next ten years, the tremendous spurts of creativity and productivity that the boomers brought to American life will draw down, and the economy will start feeling the first rumblings of the demographic crisis. The passing of the baby boomers throws into sharp relief an accompanying crisis in technological innovation that ulti¬mately may be more salient. As the boomers age, not only will their con¬sumption soar and their production disappear, but they will require heath care and end-of-life care at a level never seen before.

The next decade will be a period in which technology lags behind needs. In some cases, existing technologies will reach the limits of how far they can be stretched, yet replacement technologies will not be in the pipeline. Which isn't to say that there won't be ample technological change; electric cars and new generations of cell phones will abound. What will be in short supply are breakthrough technologies to solve emerging and already pressing needs, the kinds of breakthroughs that drive real economic growth.

The first problem is financial, because the development of radically new technologies is inherently risky, both in terms of implementing new concepts and in terms of matching the product to the market. The finan¬cial crisis and recession of 2008—2010 reduced the amount of capital that is available for technological development, along with the appetite for risk. The first few years of the next decade will be marked not only by capital shortages but by a tendency to deploy available capital in  low-risk projects, with available dollars flowing to more established technologies. This will ease up globally in the second half of the decade, and sooner in places like the United states. Nevertheless, given the lead time in  technology development, the next generation of notable technological breakthroughs won't emerge until the 2020s.

The second problem in this rate of innovation, oddly enough. In with the military. In the nineteenth century, the development of the steam engine and the development of the British navy (and its impcn.il reach) moved hand in hand. In the twentieth century, the United States was the engine of global technological development, and much that innovation was funded and driven by military acquisitions, and almost all of that had some spin-off civilian application. The development of both aircraft and radios was heavily subsidized by the military and resulted in the subsequent birth of the airline industry and the broad¬casting industry. The interstate highway system was first conceived of as a military project to facilitate the rapid movement of troops in case of Soviet attack or nuclear catastrophe. The microchip was developed for use in the small digital computers that guided both nuclear missiles .mil the rockets needed to put payloads in space. And of course the Internet, which entered public consciousness in the 19905, began as a military communications project in the 1960s.

Wars are times of intense technological transformation, because societies invest—sometimes with extensive borrowing—when and which matters of life and death are at stake. The U.S.-jihadist war has driven certain developments in unmanned surveillance and attack aircraft as well as in database technology, but the profound transformations of World War II (radar, penicillin, the jet engine, nuclear weapons) and the Cold War (computers, the Internet, fiber optics, advanced materials) are lacking. The reason is that ultimately the conflicts in Afghanistan and Iraq are light-infantry wars that have required extrapolations of existing  technologies but few game-changing innovations.

As funding for these wars dries up, research and development budgets will take the first hits. This is a normal cycle in American defense procurement, and growth will not resume until new threats are identified over the next three to four years. With few other countries working on breakthrough military technologies, this traditional driver of innovation will not begin bearing civilian fruit until the 2020s and beyond.

The sense of life or death that should drive technological innovation in the coming decade is the crisis in demographics and its associated costs. The decline in population that I wrote about in The Next 100 Years will begin to makes its appearance in a few places in this decade. How¬ever, its precursor—an aging populace—will become a ubiquitous fact of life. The workforce will contract, not only as a function of retirement but as increasing educational requirements keep people out of the mar¬ket until their early or mid-twenties.

Compounding the economic effects of a graying population will be an increasing life expectancy coupled with an attendant increase in the incidence of degenerative diseases. As more people live longer, Alzheimer's disease, Parkinson's disease, debilitating heart disease, can¬cer, and diabetes will become an overwhelming burden on the economy as more and more people require care, including care that involves highly sophisticated technology.

Fortunately, the one area of research that is amply funded is medical research. Political coalitions make federal funding sufficiently robust to move from basic research to technological application by the pharma¬ceutical and biotech industries. Still, the possibility of imbalance remains. The mapping of the genome has not provided rapid cures for degenerative diseases, nor has anything else, so over the next ten years the focus will be on palliative measures.

Providing such care could entail labor costs that will have a substan¬tial drag on the economy. One alternative is robotics, but the develop¬ment of effective robotics depends on scientific breakthroughs in two key areas that have not evolved in a long time: microprocessors and bat¬teries. Robots that can provide basic care for the elderly will require tremendous amounts of computing power as well as enhanced mobility, yet the silicon chip is reaching the limits of miniaturization. Meanwhile, the basic programs needed to guide a robot, process its sensory inputs, and assign tasks can't be supported on current computer platforms. There are a number of potential solutions, from biological materials to quantum computing, but work in these areas has not moved much beyond basic research.

Two other converging technological strands will get bogged down in the next decade. The first is the revolution in communications that began in the nineteenth century. This revolution derived from a deepen¬ing understanding of the electromagnetic spectrum, a scientific develop¬ment driven in part by the rise of global empires and markets. The telegraph provided near-instantaneous communications across great dis¬tances, provided that the necessary infrastructure—telegraph lines—was in place. Analog voice communications in the form of the telephone fol¬lowed, after which infrastructure-free communications developed in the form of wireless radio. This innovation subsequently divided into voice and video (television), which had a profound effect on the way the world worked. These media created new political and economic relations, allowing both two-way communications and centralized broadcast com¬munications, a "one to many" medium that carried implicitly great power for whoever controlled the system. But the hegemony of central¬ized, one-to-many broadcasting has come to an end, overtaken by the expanded possibilities of the digital age. The coming decade marks the end of a sixty-year period of growth and innovation in even this most advanced and disruptive digital technology.

The digital age began with a revolution in data processing revolution in data by the tremendous challenges of personnel management during WorId War II. Data on individual soldiers was entered as nonelectronic binary code on computer punch cards for sorting and identification. After the war, the Defense Department pressed the transformation of this primitive form of computing into electronic systems, creating a demand for massive mainframes built around vacuum tubes. These mainframes ¬entered the civilian market largely through the IBM sales force, serving  businesses in everything from billing to payrolls.

After development of the transistor and the silicon-based chip, which allowed for a reduction in the size and cost of computers, innovation moved to the West Coast and focused on the personal computer. Whereas mainframes were concerned primarily with the manipulation and analysis of data, the personal computer was primarily used to create electronic analogs of things that already existed—typewriters, spread¬sheets, games, and so on. This in turn evolved into handheld computing devices and computer chips embedded in a range of appliances.

In the 1990s, the two technological tributaries, communications and data, merged into a single stream, with information in electronic binary form that could be transmitted by way of existing telephone circuits. The Internet, which the Defense Department had developed to transmit data between mainframe computers, quickly adapted to the personal computer and the transmission of data over telephone lines using modems. The next innovation was fiber optics for transmitting large amounts of binary data as well as extremely large graphics files.

With the advent of graphics and data permanently displayed on web¬sites, the transformation was complete. The world of controlled, one-to-many broadcasting of information had evolved into an infinitely diffuse system of "many to many" narrowcasting, and the formally imposed sense of reality provided by twentieth-century news and communica¬tions technology became a cacophony of realities.

The personal computer had become not only a tool for carrying out a series of traditional functions more efficiently but also a communica¬tions device. In this it became a replacement for conventional mail and telephone communications as well as a research tool. The Internet became a system that combined information with sales and marketing, from data on astronomy to the latest collectibles on eBay. The Web became the public square and marketplace, tying mass society together and fragmenting it at the same time.

The portable computer and the analog cell phone had already brought mobility to certain applications. When they merged together in the personal digital assistant, with computing capability, Internet access, and voice and text messaging, plus instant synchronization with larger personal computers, we achieved instantaneous, global access to data. When I land in Sydney or Istanbul, my BlackBerry instantly downloads my e-mail from around the world, then enables me to read the latest news as the plane taxis to the gate. The revolution in communications has reached an extreme point.

We are now at an extrapolative and incremental state in which the primary focus is on expanding capacity and finding new applications Im technology developed years ago. This is a position similar to the plateau reached by personal computers at the end of the dot-corn bubble. The basic structure was in place, from hardware to interface. Microsoft had created a comprehensive set of office applications, wireless connectivity had emerged, e-commerce was up and running at Amazon and else¬where, and Google had launched its search engine. But it is very difficult to think of a truly transformative technological breakthrough that occurred in the past ten years. Instead of breaking new ground, the focus has been on evolving new applications, such as social networking, and on moving previous capabilities to mobile platforms. As the iPad dem¬onstrates, this effort will continue. But ultimately, this is rearranging the furniture rather than building a new structure. Microsoft, which trans-formed the economy in the 1980s, is now a fairly staid corporation, pro¬tecting its achievements. Apple is inventing new devices that make what we already do more efficient. Google and Facebook are finding new ways to sell advertising and make a profit on the Internet.

Radical technological innovation has been replaced by a battle- for market share—finding ways to make money by introducing small improvements as major events. Meanwhile, the dramatic increases in productivity once driven by technology, which helped in turn to drive the economy, are declining, which will have a significant impact on the challenges we face in the decade ahead. With basic research and development down and corporate efforts focused on making incremental improvements in the last generation's core technology, the primary global growth impetus is limited to putting existing technologies into the hands of more people. Since the sale of cell phones has reached the saturation point already and corporations are reluctant to invest in unnecessary upgrades, this is a problematic prescription for growth.

This is not to say that the world of digital technology is moribund. But computing is still essentially passive, restricted to manipulating and transmitting data. The next and necessary phase is to become active, using that data to manipulate and change reality, with robotics as a pri¬mary example. Moving to that active phase is necessary for achieving the huge boost in productivity that will compensate for the economic shifts associated with the demographic change about to hit.

The U.S. Defense Department has been working on military robots for a long time, and the Japanese and South Koreans have made advances in civilian applications. However, much scientific and techno¬logical work remains to be done if this technology is to be ready when it will be urgently needed, in the 2020s.

Even so, relying on robotics to solve social problems simply begs another vexing question, which is how we are to power these machines. Human labor by itself is relatively low in energy consumption. Machines emulating human labor will use large amounts of energy, and as they proliferate in the economy (much as personal computers and cell phones did), the increase in power consumption will be enormous.

Questions of powering technological innovation in turn raise the great and heated debate about whether the increased use of hydrocar¬bons is affecting the environment and causing climate change. While this question engages the passions, it really isn't the most salient issue. The question of climate change raises two others that demand astute presidential leadership: first, is it possible to cut energy use? and second, is it possible to continue growing the economy using hydrocarbons, and particularly oil?

There is an expectation built into public policy that says it is possible to address the issue of energy use through conservation. But much of the recent growth of energy consumption has come from the developing world, which makes solving the problem by cutting back wishful think¬ing at best.

The newly industrialized countries in Asia and Latin America are not about to cut their energy use in order to solve energy issues or prevent certain island nations from being inundated by the rising waters of warmer seas. From their point of view, conservation would relegate them permanently to the Third World status they have fought a long and hard to escape. In their view, the advanced industrial world of the United States, western Europe, and Japan should cut its energy use in order to compensate for over a century of profligate consumption.

In 2010 there was a summit in Copenhagen to address the question of energy use, or, more precisely, carbon dioxide emissions. The proposal was made to cut emissions. At a time when energy consumption is growing, cutting emissions at all poses a significant challenge. Except for a dramatic new source of energy, that sort of cut can be reached only by substantial decreases in fossil fuel consumption. Riding your bicycle in work and careful recycling will not do it.

The Copenhagen initiative collapsed because it was politically unsus¬tainable. None of the leaders of the advanced industrial world could pos¬sibly persuade the public to accept the significant cuts in standard of living that reducing fossil fuel use would have required. For people to balk is not irrational. They are measuring a certainty against a probabil¬ity. The certainty is that their lives would be significantly constrained by such reductions in consumption, which would lead to widespread eco¬nomic dislocation. The probability—which is questioned by some—is that climate change will occur, with equally devastating results. Thai I In change in the climate will be harmful rather than beneficial might we'll be true. But the question is whether the probable or possible effects on children and grandchildren outweigh the certainty of immediate conse¬quences. This may be an unpleasant fact, but it explains the outcome of the Copenhagen and Kyoto meetings on climate change that failed to successfully develop strategies for reducing greenhouse emissions.

For the next decade, the assumption must be that energy use will continue to surge, and thus the issue is not whether to cut fossil fuel consumption but whether there will be enough fossil fuels to deal with rising demand. Nonfossil fuels cannot possibly come on line fast enough to substitute for energy use in the short term. It takes well over ten yc.us m build a nuclear power plant. Wind and water power could manage only a small fraction of consumption. The same is true of solar power. For decade ahead, whatever long-term solutions might exist, the problem is going to be finding the fuel for rising energy use while, ideally, restricting increases in carbon output.

Energy use falls into four broad categories: transportation, electrical generation, industrial uses, and nonelectrical residential uses (heating and air-conditioning). Over the next decade, energy for transportation will continue to be petroleum-based. The cost of shifting the existing global fleet to another energy source is prohibitive and won't happen within ten years. Some transportation will shift to electrical, but that simply moves fossil fuel consumption from the vehicle to the power sta¬tion. Electrical generation is more flexible, as it accepts oil, coal, and nat¬ural gas. The same is possible for industrial uses. Home heating and air-conditioning can be converted, at some cost.

There is talk of global oil output having reached its historic high and now being in decline. Certainly oil production has moved to less and less hospitable areas, such as the deep waters offshore and shale, which require relatively expensive technology. That tells us that even if oil extraction has not reached its peak, all other things being equal, oil prices will continue to rise. Offshore drilling has cost and maintenance problems. As we saw with the recent BP disaster off the coast of Louisiana, an accident happening a mile under water is hard to fix. But even apart from environmental damage, wells are very expensive. Shale installations are expensive as well, and when the price of oil falls below a certain point, extraction becomes uneconomical and the investment is tied up or lost. But leaving aside broader questions of peak prices, the increased energy consumption we will see over the next decade cannot be fueled by oil, or at least not entirely.

That leaves two choices for the ten years ahead. One is coal; the other is natural gas. Widespread conservation sufficient to reduce energy con¬sumption in absolute terms is not going to happen in the United States, let alone the world as a whole. The ability to produce more oil is limited, and the vulnerabilities in an oil economy to interdictions by countries such as Iran make it a very risky proposition. The ability of alternative energy sources to have a decisive impact in this decade is minimal at best. No nuclear power plant started now will be operational in five or six years. But a choice between more coal and more natural gas is not the choice the president will want to make. He will want a silver bullet of rapid availability, no environmental impact, and low cost. In this decade, however, he will be forced to balance what is needed against what is available. In the end, he will pick both, with natural gas having the greater surge.

The application of hydraulic fracturing, or fracking, to the production of natural gas opens the possibility of dramatic increases in energy availability. What this technology does is to recover natural gas from up to three miles beneath the earth's surface, where it is contained in rock so compressed that it does not release the gas. Fracturing the rock allows tin-gas to pool and be recovered, but this method, like all energy production on earth, carries environmental risks. Its virtue for the United States is that there are ample domestic supplies, and thus reliance on this source of energy reduces the chance of war. Natural gas readily substitutes for many uses of petroleum and in many cases at relatively low cost. This reduces the need to import oil, which in turn reduces the possibility that a foreign power will blockade the oil, thus triggering a war.

Fracking technology also makes it possible to get at enough quanti¬ties of natural gas in a short enough period of time to control the cost and availability of energy during this decade. We would expect other technologies to become available fifty or sixty years from now, but in the next ten years, the options come down to coal and gas.

This will be a time for addressing problems that have not yet turned into crises and for searching out solutions that do not yet exist. Consider the problem of water availability. Increased industrialization, along with a still-growing population enjoying higher standards of living, is already creating regional water shortages. These depletions have sometimes created political confrontations between nations that might well mature into wars. Add to this the possibility that climate change might alter weather patterns and that those changes might reduce rainfall in populated areas, and the problem could become a crisis.

There is, of course, no water shortage. The water is simply mixed with salt and inconveniently located, but it exists in staggeringly vast quantities. The technology needs improvement, but we do know how to desalinate water. We also know how to transport water in pipelines. The problem is that desalination and water transportation are both hugely expensive and require enormous amounts of energy. That sort of energy will not be found in available solutions. As I said in The Next 100 Years, we will need space-based solar generation or other very radical approaches to increase available energy by orders of magnitude.

When we look at the major problems we have to solve, such as aging population, contracting workforce, and lack of water, we find a consis¬tent pattern. First, the problem is emerging in this decade, but it will not become an unbearable burden until later. Second, the technologies to deal with it—from cures for degenerative diseases to robotics to desalination—either exist or can be conceived of, but are not yet fully in place. Third, implementing almost all of them (save the cure for degen¬erative diseases) requires both a short-term solution for energy and a long-term solution.

The danger is that the problem and the solution will become unbal¬anced—that the problem will get to the crisis stage before the technical solutions come on line. The task of the president in addressing these issues in the next decade is not dramatic. It will be to facilitate short-term solutions while laying the groundwork for longer-term solutions and, above all, to do both rather than just one. The temptation will be to look at the long-term solution and pretend that the problem will wait or that the solution will arrive faster than it can. Long-term solutions are more attractive and cause much less controversy than short-term solu¬tions, which will affect people who are still alive and voting. The prob¬lem that presidents in this decade will have is that the crisis won't happen on their watch but in the decade that follows. The temptation to punt the issue will be substantial. This is where another drop of wisdom from Machiavelli becomes especially important: successful rulers want to do more than rule, they want to be remembered for all time. John Kennedy didn't have time to do much, but we all remember his decision to go to the moon.

In the short term, the most crucial problem is to lay the groundwork for the energy requirements of the next decade. To do this, two things must happen. The president must choose the balance between the two available fossil fuels, coal and gas. Then he must tell the people that these are the only choices. If he fails to persuade the public of this, there will not be energy for the technologies that will emerge in the next decade. He must, of course, frame his argument within the context of global warming, climate change, and the desire to protect all species. The environmental movement has supported Obama, and every president must maintain his political base.  But while appealing to his green constituents, he must make the case for enhanced natural gas and coal use for the generation of electricity. He may well be able to frame his appeal in terms of more electric cars, but however he makes it, this is his task. Otherwise, he will be seen as having neglected a crisis that he could foresee.

At the same time he must prepare for long-term increases in energy generation from nonhydrocarbon sources—sources that are cheaper and located in areas that the United States will not need to control by send¬ing in armies. In my view, this is space-based solar power. Therefore, what should be under way, and what is under way, is private-sector development of inexpensive booster rockets. Mitsubishi has invested in space-based solar power to the tune of about $21 billion. Europe's EAB is also investing, and California's Pacific Gas and Electric has signed a con tract to purchase solar energy from space by 2016, although I think fulfillment of that contract on that schedule is unlikely.

However, whether the source is space-based solar power or some other technology, the president must make certain that development along several axes is under way and that the potential for building them is realistic. Enormous amounts of increased energy are needed, and the likely source of the technology, based on history, is the U.S. Department of  Defense. Thus the government will absorb the cost of early development and  private investment will reap the rewards.

We are in a period in which the state is more powerful than the market, and in which the state has more resources. Markets are superb at exploiting existing science and early technology, but they are not nearly as good in basic research. From aircraft to nuclear power to moon flights to the Internet to global positioning satellites, the state is much better at investing in long-term innovation. The government is inefficient, but that inefficiency and the ability to absorb the cost of inefficiency are at the heart of basic research. When we look at the projects we need to undertake in the coming decade, the organization most likely to execute them successfully is the Department of Defense.

There is nothing particularly new in this intertwining of technology, geopolitics, and economic well-being. The Philistines dominated the Levantine coast because they were great at making armor. To connect and control their empire, the Roman army built roads and bridges that are still in use. During a war aimed at global domination, the German military created the foundation of modern rocketry; in countering, the British came up with radar. Leading powers and those contending for power constantly find themselves under military and economic pressure. They respond to it by inventing extraordinary new technologies.

The United States is obviously that sort of power. It is currently under economic pressure but declining military pressure. Such a time is not usually when the United States undertakes dramatic new ventures. The government is heavily funding one area we have discussed, finding cures for degenerative diseases. The Department of Defense is funding a great deal of research into robotics. But the fundamental problem, energy, has not had its due. For this decade, the choices are pedestrian. The danger is that the president will fritter away his authority on proj¬ects such as conservation, wind power, and terrestrial solar power, which can't yield the magnitude of results required. The problem with natural gas in particular is that it is pedestrian.