Edward J. Lincoln
09/01/2005
The world economy has changed dramatically in ways that have profound implications for foreign policy. Unfortunately, these changes are largely ignored or misunderstood by the Bush administration. Americans are far more closely interconnected with their counterparts around the world through trade and investment than at any previous point in our history. The Bush administration, however, appears to have forgotten that our leadership on international economic issues requires cooperation, compromise and concessions. Being the world’s sole superpower seems to have given us an inflated view of what we can make the rest of the world do.
The unilateralist thinking that has accompanied our military prowess is a liability in other areas. It impedes us, for example, in hammering out a workable deal in the current Doha Round of multilateral trade negotiations in the World Trade Organization.
More than a decade ago, during multilateral trade talks, the U.S. government agreed to end the so-called Multi-Fiber Agreement (under which industrialized nations were permitted to establish quotas for textile imports) this past January. But the Bush administration is already acting to contain the rapid increase in textile imports from China. Furthermore, taking protectionist action on steel and raising subsidies to U.S. farmers at the same time that the administration claimed to be pressing for completion of the Doha Round was hardly a productive step. We want other countries to open their markets to our exports, but our own protectionist actions send the wrong message.
The beauty of economic gain is that it is not a zero-sum game. We are better off when other nations also prosper. We do not accomplish this goal by protecting textiles, and thereby give other nations an excuse to maintain barriers to goods and services in which we are most competitive.
This kind of contradictory behavior occurs because the Bush administration has failed to articulate a foreign economic policy. What we should have heard in Bush’s inaugural or State of the Union addresses was an explanation of why the health of the global economy would boost our economic interests and enhance our security. He could have woven an interlocking set of policy ideas for open trade, reform and bolstering the important multilateral economic institutions, and improved foreign aid for impoverished countries that would advance our strategic goals.
If we want to build democracy, it must
come from inside society. Democracy evolved in places like Taiwan and Korea as
economic growth created a middle class that demanded a voice in politics. We
have other reasons to be concerned about the fate of poor countries. They tend
to be wracked with internal conflict—the Sudan, Uganda and Rwanda among them.
They are also breeding grounds for pandemic diseases that have a nasty habit of
expanding globally. While terrorism appears less connected to poverty, the
middle-class 9/11 terrorists were passionately aroused by the plight of
impoverished societies in the Middle East. Poverty matters to our own peace and
prosperity.
Eliminating poverty requires a renewed focus on economic
development and a rethinking of foreign aid. In the Reagan era, we stopped
funding large infrastructure projects, such as power plants and hydroelectric
dams, on the grounds that so many fell into the hands of unfriendly recipient
governments. What we really need to consider is how many conditions it takes to
help build an economy; we can build a hospital, but there may not be enough
local doctors and nurses to staff it. We need to fund transportation, literacy,
health care and more, all at once. Some in the Bush administration understand
this, but tend to be locked in an ideologically rigid pro-market position that
misses the point of how much public spending a struggling country might need
just to make small enterprises possible. Peruvian economist Hernando De Soto was
right in arguing that clearly defined property rights are essential to bring
economic growth in poor countries, but so, too, is infrastructure for newly
motivated property-owning farmers and entrepreneurs to get their goods and
services to market.
We would be better served by a policy focused on
improving the freedom of international trade and investment and sensible aid for
developing countries. Such policies will do more for our goals of peace and
prosperity than our increasingly unproductive military adventure in Iraq.
 | Edward J. Lincoln is a senior fellow at the Council on Foreign Relations. |