Political Geography: United States of America

4801. Counter A2/AD in Japan – U.S. Defense Cooperation: Toward ‘Allied Air-Sea Battle’

Author:: Sugio Takahashi
Publication Date:: 04-2012
Content Type:: Policy Brief
Institution:: Project 2049 Institute
Abstract:: The balance of power in the Asia – Pacific is rapidly shifting. The U.S. and Japan share concerns over China’s increasing military spending and lack of military transparency. This report analyzes the implications of Japan’s National Defense Policy Guidelines 2010 for Japan’s role in the Pacific and for the future of U.S. – Japan defense cooperation.
Topic:: Defense Policy, International Cooperation, Military Spending, and Transparency
Political Geography:: Japan, Asia, North America, and United States of America

4802. Iran’s Nuclear Program: A Case Study in Successful U.S.-Japan Alliance Management

Author:: Vance Serchuk
Publication Date:: 04-2012
Content Type:: Policy Brief
Institution:: Project 2049 Institute
Abstract:: Speaking at Suntory Hall in Tokyo during his inaugural visit to the Asia-Pacific region as President of the United States, Barack Obama in November 2009 affirmed his Administration’s commitment to “an enduring and revitalized alliance between the United States and Japan.” Noting the impending 60th anniversary of the alliance, President Obama pledged to “deepen” the ties between Washington and Tokyo as a cornerstone of a broader strategy of reengagement with the region. At the same time, Obama cast the U.S.-Japan alliance in global terms, noting Japan’s “important contributions to stability around the world—from reconstruction to Iraq, to combating piracy off the Horn of Africa, to assistance for the people of Afghanistan and Pakistan.”
Topic:: International Relations, Security, Nuclear Weapons, and Alliance
Political Geography:: Japan, Iran, Middle East, Asia, and United States of America

4803. The Arctic and Natural Gas in Northeast Asia’s Energy Future

Author:: Isabella Mroczkowski and L. C. Russell Hsiao
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Project 2049 Institute
Abstract:: The International Energy Outlook 2011 published by the U.S. Energy Information Administration forecasts that world energy consumption will grow by 53 percent from 2008 to 2035. Asia’s rapidly growing economies will be the primary drivers of increasing global energy demand. By 2035, China’s and India’s combined energy use are projected to account for 31 percent of total world energy consumption. If current projections hold, by some estimates natural gas may make up to 60 percent of the region’s energy mix by 2035. New shipping routes and energy supplies in the Arctic have the potential to multiply the utility of gas in the region’s future energy mix.
Topic:: Climate Change, Energy Policy, and Gas
Political Geography:: China, India, Asia, Northeast Asia, Arctic, and United States of America

4804. Get "Smart": Paving the Way To A More Efficient Alliance

Author:: Young Atlanticists
Publication Date:: 05-2012
Content Type:: Working Paper
Abstract:: NATO Secretary General Anders Fogh Rasmussen's concept of Smart Defense, defined as "ensuring greater security, for less money, by working together with more flexibility," will be a hot topic at the NATO Summit in Chicago. The Secretary General has stressed that to successfully maintain its strength amid shrinking defense budgets and economic austerity, NATO "must prioritize... must specialize... and must seek multinational solutions." The European Union, much of its membership overlapping with NATO, has endeavored to accomplish a similar task through pooling and sharing, but concerns over sovereignty have severely limited progress. This policy memo provides several recommendations on how NATO can overcome this roadblock to secure state participation in the Smart Defense initiative. As military cooperation remains a sensitive issue, the success of Smart Defense will depend on how well NATO packages and markets these projects. NATO leadership must prove Smart Defense’s utility and dynamism while demonstrating the financial and strategic benefits to be gained by swift and comprehensive implementation. In order to create attractive projects, NATO will have to focus on four policy areas: 1) rework its structure to facilitate a more cooperative environment, 2) provide mechanisms to ensure efficiency, 3) stimulate and secure connections between like-minded states, and 4) find creative ways to include non-NATO actors in Smart Defense projects. It is through these initiatives that Smart Defense’s prospects for success can be raised; a success which is vital if NATO is to become the more efficient and interoperable alliance that its members need.
Topic:: Defense Policy, NATO, International Cooperation, Military Strategy, and European Union
Political Geography:: Europe, North America, and United States of America

4805. Pakistan Remains A Question Mark in Lead Up to NATO Summit

Author:: Boris Macguire
Publication Date:: 05-2012
Content Type:: Working Paper
Abstract:: After a decade of war in Afghanistan, world leaders will arrive at May’s NATO Summit in Chicago having finally articulated a plan to transfer control of security to Afghan forces. There has also been increasing pressure on President Obama and the alliance’s leaders to use the summit to announce a timetable for the second stage of the endgame process – the actual extraction of NATO forces. But Pakistan, which has perhaps the greatest stake in NATO’s exit and the endurance of a negotiated settlement with Taliban, has yet to publicly articulate a clear and unified position on the process. Instead, Pakistan has initiated a “strategic pause” in relations, appointing a parliamentary committee on national security to review the country’s official engagement with the United States and NATO. Until the results of the review and the status of U.S.-Pakistan relations are clarified, President Obama and NATO leaders will be severely restricted in their ability to formulate a realistic withdrawal timeline.
Topic:: Security, NATO, International Cooperation, and Military Strategy
Political Geography:: Pakistan, Europe, North Atlantic, Middle East, North America, and United States of America

4806. Drones in Our World, Part III: Non-Kinetic Solutions

Author:: Whitney Grespin
Publication Date:: 05-2012
Content Type:: Working Paper
Abstract:: Drone strikes on militants capture the negative headlines, but increasingly UAVs are winning fans amongst war fighters and civilians by other means. From providing eyes in the sky to taking on high-risk life support missions, the use of unmanned platforms is growing with no slowdown in sight. There are five fronts where UAVs are supporting the troops in ways that exploit their capabilities beyond offensive missions: surveillance/reconnaissance, intelligence, logistics, chronological reach back, and perhaps most surprisingly, community engagement. While context specific intelligence analysis is inseparable from its acquisition via surveillance and reconnaissance missions, it is separable for the purpose of this discussion about UAVs and how they are challenging traditional practices. UAVs can be both tactical and strategic assets – they are not only informing today’s missions, and they do not solely provide data that informs theater level decision making. These systems are achieving both tactical and strategic objectives, and they are sometimes doing so with the same machine in the same mission.
Topic:: Intelligence, Science and Technology, Military Strategy, and Drones
Political Geography:: North America and United States of America

4807. Women in Special Forces: The Debate on Combat Exclusion

Author:: Lani Hay
Publication Date:: 06-2012
Content Type:: Working Paper
Abstract:: The Combat Exclusion Policy is a U.S. congressional policy based on a 1988 Department of Defense restriction on women’s military service that created the “Risk Rule” for assignment of women in the military, preventing women from being assigned to units that had the risk of exposure to direct combat, hostile fire, or capture. The policy has been revised over the past 24 years but still precludes women from being assigned to direct ground combat units such as serving at the battalion level, as infantry, and in the Special Forces. Women’s roles supporting military missions have significantly evolved during the past ten years of warfare in Iraq and Afghanistan. The realities of modern day warfare and currently fighting in an asymmetric environment have women fighting on the front lines in specialty positions such as medics, mechanics, and military police. Additionally, to avoid the Combat Exclusion Policy as written, women are being “attached to” and not “assigned to” battalions as intelligence officers and communications officers and yet are not getting any credit for being in combat arms. Not allowing women the opportunity to receive acknowledgement for their combat experience and contributions to front-line battalions ultimately denies them from choice assignments and hinders their career advancement opportunities. The recent partial lift of the Combat Exclusion Policy, currently under consideration, will now allow women to be “assigned to” jobs at the battalion level. However, it continues to prevent women from serving as infantry or in the Special Forces. This partial lift is the first time the Department of Defense has recognized the contributions that our female service members have been and will continue to contribute to our front line combat units, and indicates that future changes to this 24-year old Department of Defense restriction are being considered. This shows signs of progress, but until the Combat Exclusion Policy is completely lifted the military will not be able to establish a level playing field for qualified women to enter all military positions and specialties, which will greatly impact the realities and necessities of modern day warfare.
Topic:: Gender Issues, Military Affairs, Feminism, Military Service, and Civil-Military Relations
Political Geography:: North America and United States of America

4808. Missile Defense System Negotiations: Washington-Warsaw-Moscow Triangle

Author:: Richard Rousseau
Publication Date:: 06-2012
Content Type:: Working Paper
Abstract:: When in March 1983 Ronald Reagan announced the initial plans to build a missile defense system purported to be able to “intercept and destroy strategic ballistic missiles before they reached our [U.S.] own soil or that of our allies,” he in reality proclaimed the end of the deterrence and so called “balance of terror” doctrines which had formed the basis of the relations between the United States and the Soviet Union during what is known as the Cold War. The Strategic Defense Initiative (SDI), more commonly known at the time as "Star Wars," reformulated the power equation that had underpinned the “détente" period (1971-80). This project was abandoned with the collapse of communism in Eastern Europe and the Soviet Union in1991, which marked the end of the Cold War. However, more than ten years later, President George W. Bush reactivated it, signing bilateral agreements with the Czech Republic and Poland for the deployment of a radar system and advanced land based missile interceptors. With the election of President Barack Obama, the missile defense system was transformed from a bilateral project to a multilateral one, directly involving European allies and the very structure of the NATO alliance. The Kremlin strongly opposed the Euro-American missile deployment project, first in the 1980s and again into the 21th Century. Today as in the past, Russia’s complaints and rhetoric remain basically unchanged. It claims that the shield would compromise the effectiveness of the Russian long-range nuclear arsenal, thus drastically alter the balance of power with the West. A turning point seemed to have taken place at the NATO summit in Lisbon in November 2010. Following a lively debate among diplomats, the European allies unanimously signed an agreement for the deployment of a missile defense system, which would provide “full coverage” of the Alliance area by 2020. More importantly, the final declaration of the summit heralded the birth of “cooperation with Russia in a spirit of reciprocity, maximum transparency and mutual confidence.” However, such good intentions and noble sentiments are regarded as mere words by some, as there is no serious likelihood that both sides will cooperate on a joint defense project of this nature.
Topic:: NATO, Diplomacy, International Cooperation, Military Strategy, and Missile Defense
Political Geography:: Russia, Europe, Poland, North America, and United States of America

4809. The Foreign Policy Case For Senate Reform

Author:: Paul Nadeau
Publication Date:: 06-2012
Content Type:: Working Paper
Abstract:: In a famous story about the creation of the Senate, Thomas Jefferson and George Washington were debating a possible upper legislative chamber over tea, and Jefferson wanted to know why it was necessary to create an undemocratic body like the Senate. In response, Washington asked Jefferson why he had poured some of his tea into a saucer. “To cool it,” Jefferson answered, to which Washington replied “Even so, we pour legislation into the senatorial saucer to cool it.” The story (even if it might be apocryphal) illustrates that the slowness and deliberation of the Senate were intentional and designed to offset the popular passions that might govern the House of Representatives. The Senate’s rules were designed to emulate a gentleman’s club (such as the filibuster, which originated from the idea that gentlemen would have the good sense to limit the length of their speeches and that it would be rude to cut them off) but have become archaic as the body changed from a club to a typical legislative chamber. The rules of the Senate as they are currently designed have resulted in giving the opposition a trump card that is usually disproportionate to their legislative power. While its original structure incentivized moderation and compromise, the electoral system that populates its membership has incentivized partisanship. As a result the Senate has changed its form but not its function. The Senate can be deferential and deliberate or it can be factional and partisan, but it can’t be both.
Topic:: Foreign Policy, Diplomacy, and Domestic Policy
Political Geography:: North America and United States of America

4810. What a Tangled Web: India Caught Between U.S. and Iranian Interests

Author:: Felix Imonti
Publication Date:: 06-2012
Content Type:: Working Paper
Abstract:: India is caught between the consequences of provoking a United States driven by its fixation upon the Iranian nuclear program and by an Iran that is a major supplier of oil, providing India with access to its vital interests in Afghanistan. The best that the Ind
Topic:: Diplomacy, Energy Policy, International Cooperation, Military Strategy, and Nuclear Power
Political Geography:: Iran, Middle East, India, Asia, North America, and United States of America

4811. Congress Considers New Sanctions on Iran - But Why

Author:: Paul Nadeau
Publication Date:: 07-2012
Content Type:: Working Paper
Abstract:: It is not surprising that Congress can take a more aggressive stance on foreign policy issues than the Executive: Congress rarely bears the loss in foreign policy mistakes (consider where foreign policy issues rank on voters’ lists of priorities) and that consequently gives Congress an opportunity to demonstrate leadership, since high profile issues in most other issue areas carry considerably more risk. The result is that Congress will often take a position that is contrary to that of the Executive, most frequently by adopting a more extreme position, and then either assailing the Executive for a lack of leadership when the Executive does not follow or by taking credit when the Executive adopts Congress’s position. The most recent example is the issue of Iran’s nuclear program—which is likely the only current issue where there is genuine bipartisan support, famously evidenced in the Senate’s December 2011 100-0 passage of legislation sanctioning Iran’s financial sector. So far, international sanctions, and particularly the European Union’s sanctions of Iran’s oil sector, seem to have succeeded in damaging Iran’s economy and possibly even encouraging them to negotiate, though a breakthrough has been elusive. The problem is that while the sanctions may have succeeded in crippling Iran’s (already weak) economy so far, the goal of the sanctions program is supposed to have been to convince Iran to terminate its nuclear program. On that score, it’s unclear that additional sanctions may help the American cause and it might even undermine it.
Topic:: Energy Policy, Nuclear Weapons, Military Strategy, and Sanctions
Political Geography:: Iran, Middle East, North America, and United States of America

4812. Drones in Our World, Part IV: Adapting a Warfighter

Author:: Whitney Grespin
Publication Date:: 08-2012
Content Type:: Working Paper
Abstract:: Aerial surveillance and remote sensing are nothing new in the world of combat reconnaissance, but they are new tools in the arsenal of the humanitarian relief and development communities. And they are rapidly evolving. Complex, disaster, and rapidly evolving environments all require the capability to promptly collect, analyze, and disseminate critical information that UAVs can gather and exploit in ways and quantities that other resources cannot rival.
Topic:: Science and Technology, Military Strategy, Drones, Humanitarian Intervention, and Conflict
Political Geography:: North America and United States of America

4813. Generation "U".: The Plight oof 75 Million Unemployed Youth

Author:: Arun S. Nair
Publication Date:: 09-2012
Content Type:: Working Paper
Abstract:: Consider this—globally, 75 million youth between 15 and 24 years of age are unemployed, according to a May 2012 report of the International Labor Organization (ILO). If all these youth were residents of a single nation, that would make it the 18th most populous in the world. The 75 million youth (an increase of around 4 million since 2007) comprise about 40 percent of the estimated 207 million unemployed people across the world. Many of those who have managed to secure some employment are not any better off. As many as 228 million youth who have 'jobs' live on less than $2 a day, a reflection of their poverty and under-employment. The ILO forecasts a bleak future too. The international body on labor projects that the global youth unemployment rate—seen at 12.7 percent this year (or higher at 13.6 percent if one includes those who have given up or put off their job search due to the poor prospects)—will remain at such high levels in the near future, that is at least till 2016. Such is the seriousness of the problem that some experts have already started describing today's youth as Generation 'U' (for Unemployed) or Generation 'NEET' (an acronym for Not in Education, Employment or Training), a far cry from the more popularly used term—'Generation Z' or 'iGeneration' (symbolizing their skills in being technologically advanced and connected).
Topic:: Debt, Youth, Unemployment, and Job Creation
Political Geography:: North America and United States of America

4814. The New U.S. Defense Strategic Guidance and Its Implications for South Korean Security

Author:: Young Ho Kim
Publication Date:: 02-2012
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: On January 5, 2012, U.S. President Barack Obama paid a rare visit to the Pentagon and unveiled his guidelines for the Department of Defense to set the goals and priorities of its defense strategy for the next ten years. The resulting eight-page-long guidelines, entitled Sustaining U.S. Global Leadership: Priorities for 21st Century Defense (hereafter DSG), contain the administration’s assessment of changing global security conditions and propose the roles and shape of the U.S. armed forces for the coming decade. Prepared through “unprecedentedly” close consultations between the President himself and senior leaders in the U.S. defense department and military including both service chiefs and combatant commanders, the DSG defines the present as a historic “inflection point” and envisions the future U.S. military as “smaller and leaner, but agile, flexible, ready and technologically advanced.” Moreover, in accordance with the DSG the U.S. defense budget will be cut by $487 billion and the sizes of the Army and Marine Corps will shrink by 80,000 and 14,000 respectively over the next ten years. While a more detailed picture will be revealed next month with the administration’s FY2013 budget request to Congress, the DSG reflects the Obama administration’s arduous effort to rebalance and redirect its defense priorities and spending under severe fiscal austerity. Because of the unusual timing of its publication and the magnitude of the reduction in defense spending, the DSG has generated controversy and concern domestically in the United States as well as internationally. In the United States, particularly people in the conservative wing of the Republican Party have been prompted to criticize the guidelines for putting the nation’s security in danger, whereas some people on the liberal side have advocated seeking deeper and bolder cuts in defense spending. Internationally, China was understandably the first to respond negatively to the DSG. For example, rebutting the DSG’s portrayal of Beijing’s military policy as lacking transparency as “groundless and untrustworthy,” Liu Weimin, a spokesman of the Chinese Foreign Ministry, stressed that Beijing was committed to peaceful development and “defensive” policy. What then are the implications of the DSG for South Korean security? Will there be any changes in U.S. defense policy or posture in the region under the DSG that may affect security conditions in South Korea significantly and, if so, require new measures or scrutiny by the South Korean government or the military? In fact, there have been largely four issues raised by the news media in South Korea. I will examine these four issues, and then discuss more challenging concerns that will require closer attention by South Korean foreign and security policy-makers.
Topic:: Security, Foreign Policy, Defense Policy, International Cooperation, and Military Strategy
Political Geography:: China, Asia, South Korea, North Korea, North America, and United States of America

4815. China, the United States, and the Changing Global Architecture

Author:: Seungjoo Lee
Publication Date:: 03-2012
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: With the prospect of leadership change in China and the United States in 2012, the possibility for instability and uncertainty in the East Asia region is high. Despite such concerns, it is expected that the current structure of global governance will mitigate the difficulties associated with this period of transition. Considering the importance of global governance, it becomes necessary then to follow the changes in the global and regional architecture and think about how South Korea should meet this challenge. The trio of closely-related summit meetings that took place in November 2011 was such an occasion in which China and the United States grappled to shape the regional and global architecture. These meetings included the G20 Cannes summit on November 3, the Asia-Pacific Economic Cooperation (APEC) summit on November 12, and the East Asia Summit (EAS) on November 19. It is important to focus on the fact that during these meetings Beijing and Washington had the chance to examine the intention and capability of each other. In that sense, these meetings were akin to that of a boxing match fought over three rounds using not force but the complex elements of international politics in the twenty-first century that interact to design the regional and global architecture. These elements include power politics in international relations, cooperation and conflict in institutions and networks, and the knowledge power which allows for a consensus among countries by sharing the vision of a new order.
Topic:: Foreign Policy, Globalization, Hegemony, and Leadership
Political Geography:: China, Asia, North America, and United States of America

4816. A Gilded Alliance: Global Korea’s G-20/Yeonpyeong Moment Revisited

Author:: Haejong Lee
Publication Date:: 09-2012
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: Alliance is an instrument for national interest, which is dependent upon the international environment and defined by domestic, democratic political processes. This commonsense notion of alliance was not fully embraced by the incoming South Korean administration of Lee Myung Bak in 2008. For the Lee administration, South Korea’s alliance with the United States was much more than an instrument of foreign policy. The alliance embodied South Korea’s political identity and was severely damaged by the preceding Roh Moo Hyun administration’s anti-American, pro–North Korean policies. The restoration of the Republic of Korea (ROK)–US alliance was both the goal and key to its national security strategy of Global Korea to enhance South Korean’s influence, contribution, and stature on a global scale. Thereafter, in a circle of the alliance’s cheerleaders in both Seoul and Washington, the alliance has almost taken its own life: the alliance should be protected from disruptive political forces and modernized/adjusted/expanded into new dimensions for the preservation of the alliance itself. In the post–Cold War years, the United States has tried to modernize its military alliances in order to preserve its influence at reduced costs. The Barack Obama administration had to mend US alliances strained during the George W. Bush administration’s war on terror. In 2009, Presidents Lee and Obama agreed on “a comprehensive strategic alliance of bilateral, regional, and global scope, based on common values and mutual trust.” The so-called Great Recession, triggered by the fall of Lehman Brothers on September 15, 2008, has both brought to power and bedeviled the Obama administration; 9/15 has become a new historical marker, replacing 9/11. The very “common values” of the ROK-US strategic alliance—democracy and market economy—have been put to the test; the worries and cries over the decline of the US have arisen once again. In May 2010, the Obama administration published its national security strategy of national renewal and global leadership. Nation-building at home was the primary goal of and imperative to national security. Along with moral leadership to “live” American values, global architecture to embed both allies and challengers in US-centered institutional networks became a new feature of American global leadership. “The United States can, must, and will lead in this new century,” asserted Secretary of State Hillary Clinton in September 2010 at the Council of Foreign Relations, the oldest bastion of American global leadership. She went on to declare that “the complexity and connection of today’s world have yielded a new American moment, a moment when our global leadership is essential, even if we must often lead in new ways.” Confirming that “the 21st century will be another great American century,” President Obama argued at this year’s Air Force Academy graduation ceremony that “we have laid the foundation for a new era of American leadership.” Global Korea, with a comprehensive strategic alliance and a free trade agreement with the United States and hosting of a G-20 meeting and nuclear security summit, has been an integral part and a success story of American global architecture. The Lee administration was awarded with the first two-plus-two (foreign and defense ministers) meeting in 2010, which had been previously held only with Japan, and a state visit to Washington in 2011. “The relation between our two countries has never been stronger,” commended Secretary of State Clinton in this year’s second two-plus-two meeting. Korean Defense Minister Kim Kwan-Jin confirmed the 2015 operation control plan and expressed commitment to make “the alliance the best alliance in the world.” American Secretary of Defense Leon Panetta lauded an ongoing trilateral collaboration, including Korea and Japan, to deter North Korea as “another way to strengthen and modernize our alliance.” It is widely disputed that the Obama administration has seized a new American moment and laid the foundation for a new American century. The Obama administration has been beset with rampant unemployment and snowballing deficits. “The Moment of Truth,” a bipartisan commission’s report on the financial crisis, issued a warning in 2010 that it is imperative to raise revenues and to cut both defense and nondefense spending—in short, a complete overhaul of the existing American national security state and social welfare system. However, the political polarization of the Tea Party and Occupy Wall Street and resultant partisan gridlock have foiled nation-building at home and led to the first downgrading of the US credit rating and a self-made financial cliff of sequester—mandatory across-the-board budget cuts in the next ten years beginning January 2013. Against its lean and mean years, the Obama administration’s rhetoric of a new American moment or century rings hollow. In contrast, the positive—it couldn’t be better—evaluation on the state of the ROK-US alliance is widely held. Nevertheless, the alliance’s success does not resonate with a (far from positive) strategic reality facing South Korea; nor does the alliance translate into a smooth-working component of American global architecture. The Lee administration has doubled down on its alliance with the US. With the Obama administration’s “strategic patience” or no policy toward North Korea, the Lee administration has succeeded in punishing/isolating North Korea but failed to prevent the latter’s development of nuclear capacity, not to mention the latter’s denuclearization. Or, to put it differently, when it comes to nuclear issues or power transition, North Korea has been on its own, with no South Korean leverage over the latter. Most critically and tragically, Global Korea’s prime moment of hosting a G-20 meeting in November 2010 (in the midst of the final renegotiation of a Korea-US free trade agreement) was followed by North Korea’s shelling of Yeonpyeong Island, which in turn led to a joint Korean-US military exercise including the USS George Washington aircraft carrier and which was opposed by China. In the G-20/Yeonpyeong moment, the Lee administration succeeded in synchronizing its strategic and comprehensive alliance with the US and global contribution but rather miserably failed to maintain peace on the Korean Peninsula and manage its relationship with China. On the other hand, the ROK-US comprehensive and strategic alliance does not dispense with politics among allies; nor does it develop into a trilateral cooperation of the United States, South Korea, and Japan. The Lee administration has been at odds with the United States on the issues of spent nuclear fuel reprocessing and missile development, albeit much out of public scrutiny. In addition, the Lee administration has recently confronted Japan with the territorial issue of Dokdo and Japanese colonialism, along with a public relations campaign, including President Lee’s visit to Dokdo in August 2012. This was an abrupt turnabout from its attempt to share information with Japan on North Korea through a military accord—a trilateral collaboration that Panetta mentioned as a way to modernize the ROK-US alliance. Faced with a public uproar against the General Security of Military Information Agreement (GSOMIA), the Lee administration canceled the latter’s signing ceremony at the last minute and turned to confront Japan, which reciprocated with its territorial claim and disavowal of historical responsibilities for colonialism, and even a threat to halt financial cooperation. In sum, despite of (or because of, if you will) the much touted success of the ROK-US alliance, South Korea is now in a diplomatic wilderness, isolated from all of its neighbors—North Korea, China, and Japan. Why? It is, I argue, because President Lee’s Global Korea was a vision for a bygone, pre–Great Recession, and pre-G-2 world. As long as the United States confronted an assertive China with allies and new partners, South Korea’s strategic alliance with the United States could serve both the former’s security interests and the latter’s regional architect. The sinking of the Cheonan happened in the context of such confrontations of the United States and China over the South China Seas, which led to the rescheduling of transfer of operational control (from the United States to South Korea) from 2012 to 2015 that had been requested by the Lee administration. However, as the United States began to embrace China and both deemed it necessary to contain security tensions on the Korean Peninsula, an assertive South Korea against North Korea and China became a liability to the United States, and South Korea’s strategic, global, comprehensive alliance with the United States became superfluous, if not necessarily inimical, to South Korea’s local and regional interests. Such was the case after the shelling of Yeonpyeong Island. Following is a reconstruction of an anticlimax of Global Korea in the historical contexts of the Obama administration’s struggles to forge a new American global leadership.
Topic:: Foreign Policy, Diplomacy, International Cooperation, G20, and Alliance
Political Geography:: Asia, South Korea, North America, and United States of America

4817. Aging Eagle and Dark Clouds on the Security Horizon

Author:: Dong-Joon Jo
Publication Date:: 10-2012
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: The financial crisis in 2008 exposed a latent weakness that the United States would not have resources enough to cope with its population aging and maintain its global leadership. The crisis led the federal government to increase its welfare spending, bail out faltering industries, and rely on measures of economic stimulation. These measures resulted in the swelling of the public debt, which increased by $5,077 billion from fiscal year 2006 to fiscal year 2010, and intensified the U.S. federal government’s budgetary difficulties in meeting the welfare and medical needs of senior citizens and carrying out the war on terror abroad (See Figure 1). The belief in the sustainability of the public debt severely weakened, as the interest expense on the public debt rose to 8.6 percent of the total federal spending in 2010; the belief in the comparability between U.S. domestic welfare and its global leadership eroded. The financial crisis evoked a fairly routine set of behavior in partisan politics in 2011. When the public debt was about to reach the ceiling in 2011, Republicans and majority members of the Tea Party threatened not to agree on raising the debt ceiling. They pressured the Barack Obama administration to reduce the federal budget and governmental regulations. Meanwhile, the Obama administration and Democrats wanted to raise the maximum amount of governmental borrowing and keep boosting the economy. In the gunfire between the two parties loomed the possibility of sovereign default. Amid the partisan conflict the credit rating of the U.S. government bonds was downgraded for the first time in history; major market indexes plunged in the third quarter of 2011. The Budget Control Act was the result of bipartisan negotiations, accommodating conflicting goals and instruments from both sides. It provided breathing room for the Obama administration and Democrats by allowing the debt ceiling to increase by $900 billion two times in 2011 and additionally by $1.2 trillion in 2012. Meanwhile, it reduced the budgetary leeway of the administration and gave more power to the House, where Republicans and Tea Party members held the majority. More specifically, it established binding limits on annual appropriations bills to reduce the funding for discretionary programs, relative to the funding in the Congressional Budget Office’s 2010 baseline; it set up a Joint Select Committee on Deficit Reduction, the “Supercommittee,” to come up with a bill to reduce deficits by at least $1.5 trillion through 2021. The legislation appeared to keep the partisan gunfire under control.
Topic:: Security, Financial Crisis, Budget, and Welfare
Political Geography:: North America and United States of America

4818. The 2012 U.S. Presidential Election and Its Implication in East Asia

Author:: Young Kwon Sohn
Publication Date:: 11-2012
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: After the extended and fierce campaign, Obama finally clinched the victory in the 2012 presidential election. By gaining more than 300 electoral-college votes, which are disproportionately huge given his popular vote margin of around two percent over Romney(50% vs. 48%), he can legitimately claim national mandate for the next four year, although conservatives will be reluctant to embrace that mandate. After making a history four years ago by becoming the first black president to occupy the White House, he made another history this year by recapturing the presidency amid the still evolving Great Recession with the high unemployment rate around 7.1%. Given this historic nature of Obama’s second term, this paper aims to show how Obama was able to maintain an exceptionally competitive campaign despite the extremely bad national economic conditions. From the widely accepted consensus that the outcome of the U.S. presidential election is largely determined by the economic conditions of the election year, Obama’s successful presidential campaign needs explanation in one way or another. Following that, the paper also attempts to predict what the post-election U.S. East Asia policy look like. Will the post-election U.S. policy be different from the mainline policy of the last four years? If not, what would be rationale of the policy consistency? This paper will address these questions.
Topic:: Foreign Policy, International Cooperation, Elections, and Leadership
Political Geography:: East Asia, Asia, North America, and United States of America

4819. North Korea’s Estimated Stocks of Plutonium and Weapon-Grade Uranium

Author:: David Albright and Christina Walrond
Publication Date:: 08-2012
Content Type:: Case Study
Institution:: Institute for Science and International Security
Abstract:: For years, great controversy has surrounded North Korea’s uranium enrichment program (UEP). How large is it? Has it made weapon-grade uranium (WGU)? How much could it make in the future? But there are also broader questions. What is the role of the UEP in the larger North Korean nuclear program? Is the UEP program strictly oriented to make 3.5 percent low enriched uranium for a civilian light water reactor (LWR) under construction at the Yongbyon nuclear complex, as North Korea says? Is it to make WGU? Or could North Korea intend to further enrich uranium for use in the light water reactor to make plutonium for nuclear weapons? Although LWRs are not typically used to make weapon-grade plutonium, they can do so efficiently if the reactor core is specially designed. Finally, how should the United States respond to the UEP and the associated uncertainties in this program? This ISIS report attempts to answer these questions utilizing plausible scenarios about past and possible future operation of the centrifuge program that could result in the production of WGU and future operation of the LWR that could make weapon-grade plutonium. In doing so, the report seeks to organize the incomplete data and derive answers to the above questions that have policy relevance. The report’s results are necessarily preliminary because significant uncertainties exist about the number of North Korean gas centrifuge plants, their operation, and the amount and enrichment level of the enriched uranium produced in them. In addition, although North Korea has said that its Yongbyon LWR is for civilian purposes, this statement is unverified and doubts about its potential use are justified. This report is designed to be updated if and when additional information is obtained.
Topic:: Foreign Policy, Nuclear Weapons, and Weapons
Political Geography:: Asia, North Korea, North America, and United States of America

4820. La relation Pakistan – Etats-Unis : un patron et son client au bord de la rupture ? (The Pakistan-US relations : A relationship on the brink ?)

Author:: Christophe Jaffrelot
Publication Date:: 09-2012
Content Type:: Special Report
Institution:: Centre d'Etudes et de Recherches Internationales (CERI)
Abstract:: During the Cold War the US-Pakistan relationship was one in which the US considered Pakistan as a necessary part of its effort to contain communism in Asia while Pakistan considered its relationship with the US as strengthening its position vis a vis India. The high point in this relationship was during the Soviet-Afghan war. The US tried to renew this relationship after 9/11, although when Obama replaced GW Bush he stated his intention to move US-Pakistani relations off the security agenda which the Pentagone and the Pakistani army considered a priority. However, Obama rain into resistance from the Pakistani army and from the national security establishment in Washington- as can be seen from the security-oriented distribution of US aid. But not even in the area of security have the two nations been able truly to collaborate. To begin with, the strengthening of US-India relations angered Pakistan. Then Islamabad protected the Taliban in its fight with NATO. Finally, Obama violated Pakistani sovereignty (the Drone strikes in the tribal belt and the Ben Laden raid). These conflicting interest, however, do not necessary means the end of the relationship.
Topic:: Conflict Resolution, Security, Foreign Policy, Terrorism, War, Peacekeeping, and State
Political Geography:: Pakistan, South Asia, North America, and United States of America

4821. Selling the Future in DC. Marketing Stability for International Security

Author:: Ariel Colonomos
Publication Date:: 02-2012
Content Type:: Special Report
Institution:: Centre d'Etudes et de Recherches Internationales (CERI)
Abstract:: What kind of future worlds do experts of international security envision? This paper studies the role of experts in DC's think tanks, a relatively small world socially and culturally highly homogeneous. It underlines the characteristics of this epistemic community that influence the way its analysts make claims about the future for security. The DC's marketplace of the future lacks diversity. The paradigms analysts use when they study international politics are very similar. Moreover, the range of issues they focus on is also relatively narrow. The paper highlights three main features of the relation between those who make claims about the future of security and those to whom these claims are addressed (mainly policymakers). First, it shows that, for epistemic but also for political reasons, the future imagined in think tanks is relatively stable and linear. This future also contributes to the continuity of political decisions. Second, the paper shows that think tanks are also "victims of groupthink", especially when they make claims about the future. Third, it underlines a paradox: scenarios and predictions create surprises. Claims about the future have a strong tunneling effect. They reinforce preexisting beliefs, create focal points, and operate as blinders when, inevitably, the future breaks away from its linear path.
Topic:: Defense Policy, Terrorism, War, International Security, and State
Political Geography:: North America, United States of America, Washington, and D.C.

4822. The Transatlantic Relationship in the 21st Century: Challenges and Opportunities

Author:: Charles King Mallory
Publication Date:: 01-2012
Content Type:: Journal Article
Journal:: All Azimuth: A Journal of Foreign Policy and Peace
Institution:: Center for Foreign Policy and Peace Research
Abstract:: When one has the opportunity to visit the heart of Anatolia, it is often an eye-opener. While we may read about developments in Turkey, it is quite different to absorb with all of your senses the numerous signs of a flourishing, vibrant, growing, modernizing Democracy. As such, Turkey is more important to U.S. foreign and security policy than ever before. Turkey can act as a strategic bridge along multiple azimuths. Turkey can also become a greater stakeholder and can act as a stabilizer, persuader, facilitator, mediator, as well as an example, as the global community struggles to cope with the challenges and opportunities presented by the new, emerging post-Cold-War strategic landscape. In this article I will touch on three topics: First, I will offer a brief assessment of where Turkey’s bilateral relations with the European Union and the United States stand from a U.S. point of view; next, I will describe three major strategic challenges that I believe Turkey, the European Union and the United States face in the Greater Middle East; and finally, I will attempt to analyze where the opportunities for and challenges to cooperation between Turkey, the European Union and the United States lie, given where bilateral relations stand and the challenges facing them.
Topic:: International Relations, NATO, Bilateral Relations, European Union, and Transatlantic Relations
Political Geography:: Europe, Turkey, Middle East, and United States of America

4823. Area and International Studies in Turkey: The Case of the United States

Author:: Ilter Turan
Publication Date:: 01-2012
Content Type:: Journal Article
Journal:: All Azimuth: A Journal of Foreign Policy and Peace
Institution:: Center for Foreign Policy and Peace Research
Abstract:: Area studies in the international relations discipline have evolved in response to specific needs of countries and particular conditions of the world affairs at a given time. This article addresses a set of conditions and needs that influenced the development of area studies in international relations with a focus on the emergence and growth of studies on the United States in Turkey. Accordingly, it is argued that Turkey has historically conceptualized external relations as state-to-state relations and not prioritized initially a research program on area studies. However, the shift from import substitution to export-led growth and the end of the Cold War created an environment in which Turkey’s needs to research about other societies have intensified. This has led to the establishment of research programs and centers at universities as well as the opening of think tanks, some funded by the public, others privately. In light of the assessment of the growth of these research and teaching institutions focusing on the United States, it is concluded that American studies are less developed than what might be expected given Turkey’s close relationship with the United States. Some explanations are also offered for such an observation.
Topic:: Foreign Policy, Research, Think Tanks, and Area Studies
Political Geography:: Turkey and United States of America

4824. The Dollar’s Influence in East Asia: Benevolent or Overbearing? A Comparative Answer in the U.S. Economic Aid and the Dollar Standard

Author:: Gloria Koo
Publication Date:: 04-2012
Content Type:: Journal Article
Journal:: Joint U.S.-Korea Academic Studies
Institution:: Korea Economic Institute of America (KEI)
Abstract:: There is no doubt that the United States has been a dominant economic power in the world. U.S. troops are deployed in the various corners of the world, and their military presence is often a strong force in propping up the status quo or a peaceful co-existence, possibly and hopefully more peaceful than otherwise. The U.S. has held an important role in the international system as a military power. But also in an economic sense, the U.S. has been a dominant leader. As a major consumer market and an investor, U.S. influence on the global economy is significant to say the least. This is especially true in East Asia. Through military alliance and economic aid, the U.S. crafted close relationships with East Asian countries and influenced their domestic policymaking. For example, as a provider of military and economic stability, the U.S. wielded much influence on domestic macroeconomic policies of Korea and Taiwan during the early industrialization years of 1950s-60s. The economic aid came with conditions, and Korea and Taiwan complied. Although explicit economic aid stopped in the late 1960s, other forms of assistance, for example loans, grants and technology transfers continued, and more importantly security alliances remained strong. The U.S. still holds much influence over Korea and Taiwan, as a military ally and a major trade partner. In the present day, Korea and Taiwan closely peg their currencies to the U.S. dollar and hold large currency reserves in dollars. As a result, macroeconomic stability of Korea and Taiwan depends largely on the stability of the dollar. In this way, the dollar’s influence on Korea and Taiwan is quite significant. Similar to but also different from the way that Korea and Taiwan depended on U.S. economic aid, they again depend on the dollar to anchor economic stability.
Topic:: International Relations, Economics, Investment, Currency, and Economic Stability
Political Geography:: Taiwan, Asia, South Korea, and United States of America

4825. Hard Power in a Soft Package: The ‘True’ Conservatism of Obama Leadership in Foreign Policy

Author:: Matthew Crosston
Publication Date:: 01-2012
Content Type:: Journal Article
Journal:: The Rest: Journal of Politics and Development
Institution:: Centre for Strategic Research and Analysis (CESRAN)
Abstract:: Analyzing President Obama’s foreign policy and its global impact is no easy task. The early presidency of Obama has been marked by vicious attacks from the right, deep disappointment from the left, and something like indifference from the international community. This is understandable when the main argument is entertained: the ex- pectations of Obama’s global positions have not met reality mainly because they are more closely aligned with a cautious and considered ‘true’ conservatism, something no side (left, right, international) anticipated. The consequences of this becomes more than just about election results but has significant potential influence on the funda- mental debates between soft and hard power.
Topic:: Foreign Policy, International Cooperation, Elections, Leadership, and Domestic Politics
Political Geography:: North America and United States of America

4826. The USA: Challenges of the Superpower

Author:: Ketevan Rostiashvili
Publication Date:: 01-2012
Content Type:: Journal Article
Journal:: The Rest: Journal of Politics and Development
Institution:: Centre for Strategic Research and Analysis (CESRAN)
Abstract:: Since the collapse of the Soviet Union function and mission of the United States in the contemporary world system is one of the most debatable problems of academic litera- ture. This article is an attempt to analyze most recent socioeconomic and political tendencies of the USA for better understanding the scale of ongoing transformation of the society. As the level of integration of contemporary world is very high, transfor- mation of the USA provokes tectonic changes and transformation of the world system, its structure and nature. This study argues that, although the US primacy in the world is significantly challenged and shaken by external and internal factors, the USA still preserves its traditional function of economic, financial, military and political superpow- er, but in a quite different environment. The article predominantly uses materials drawn from the Central Intelligence Agency (CIA, The World Fact book 2012); U.S. Census Bureau, Statistical Abstract of the USA - 2012, the US Federal Budgets 2010- 2012, and other valuable literature and sources.
Topic:: Politics, Hegemony, Central Intelligence Agency (CIA), and Socioeconomics
Political Geography:: North America and United States of America

4827. Security Policy in the European Union and the United States through the issue of their Defence Expenditures

Author:: Theodore Metaxas and Emmanouil Marios L. Economou
Publication Date:: 01-2012
Content Type:: Journal Article
Journal:: The Rest: Journal of Politics and Development
Institution:: Centre for Strategic Research and Analysis (CESRAN)
Abstract:: This article aims to clarify how the level of defence expenditures affected security poli- cy in the post-World War II Europe and the United States till the present day. We first analyze theoretically the issue of a nation’s power through its defence outlays. We then proceed to the examination of how security policy was formulated during Cold War and afterwards for both Europe and the United States through their defence ex- penditures. By comparing European to United States defence budgets ceilings we found that the European military capabilities are undermined by the low level of the defence budget which is provided by the European Union member states as a whole, as well as by the lack of homogeneity in military means. By contrast, we noticed that the historically large US defence expenditures were one of the major reasons for the US global hegemony during Cold war and afterwards. We also examine the implica- tions that defence expenditures have on military industry, macroeconomic perfor- mance and geopolitics and the correlation that arises among them.
Topic:: Security, Defense Policy, Regional Cooperation, European Union, and Regionalism
Political Geography:: Europe, North America, and United States of America

4828. Iran at the Center of Chaos Scenarios

Author:: Atilla Sandikli and Bilgehan Emeklier
Publication Date:: 02-2012
Content Type:: Special Report
Institution:: BILGESAM (Wise Men Center for Strategic Studies)
Abstract:: The Middle East region has undergone a rapid transformation period in recent years. Iran’s nuclear program may bring the US-Iranian relations to the verge of close combat. Any Israeli attack against Iran’s nuclear facilities may trigger a series of conflicts. Due to the sanctions imposed upon Iran because of its nuclear program, the country is getting more and more isolated and feels under threat. What could be the possible reactions of an Iran that sees itself as threatened? The US withdrew from Iraq and as a result of the popular movements, the Middle East administrations are changing hands one by one. The region has started to teem with uncertainties and risks. On one hand, there is a wish for freedom, democracy, human rights, rule of law, free market, and fair income distribution. On the other hand, an abundance of conflicts and blood is being seen. What will these developments bring about? Could Iran, as an important player in the area, transform this uncertainty into an opportunity for itself? This report named “Iran at the Center of Chaos Scenarios” focuses on paradigms which direct Iran’s geopolitical features and foreign policy, paying particular attention to elements of continuity, drastic differences and ruptures in Iran. There are certain scenarios on how Iran, which feels under threat, will evaluate and make use of sensitivities and opportunities appearing with the US withdrawal from Iraq and the Arab Spring. The report also pays special emphasis to the fact that Iran stands at the center of all these scenarios, potentially leading to chaos in the region.
Topic:: Foreign Policy, Social Movement, Geopolitics, and Arab Spring
Political Geography:: Iran, Middle East, and United States of America

4829. Nobody's Century: The American Proposal in Post-Imperial Times

Author:: Chas W. Freeman Jr.
Publication Date:: 09-2012
Content Type:: Working Paper
Institution:: MIT Center for International Studies
Abstract:: We are entering a novel period in our history–one in which the United States will be both fiscally constrained and also unable to call the shots in many places around the globe. Let me try to set the stage for your discussions by raising some difficult questions for you to ponder.
Topic:: International Relations, Globalization, Hegemony, and World System
Political Geography:: North America, Global Focus, and United States of America

4830. Foreign Holdings of U.S. Treasuries and U.S. Treasury Yields

Author:: Daniel O. Beltran, Maxwell Kretchmer, Jaime Marquez, and Charles Thomas
Publication Date:: 01-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: Foreign official holdings of U.S. Treasuries increased from $400 billion in January 1994 to about $3 trillion in June 2010. Most of this growth is accounted for by a handful of emerging market economies that have been running large current account surpluses. These countries are channeling their savings through the official sector, which is then acquiring foreign exchange reserves. Any shift in policy to reduce their current account surpluses or dampen the rate of reserves accumulation would likely slow the pace of foreign official purchases of U.S. Treasuries. Would such a slowing of foreign official purchases of Treasury notes and bonds affect long-term Treasury yields? Most likely yes, and the effects appear to be large. By our estimates, if foreign official inflows into U.S. Treasuries were to decrease in a given month by $100 billion, 5-year Treasury rates would rise by about 40-60 basis points in the short run. But once we allow foreign private investors to react to the yield change induced by the shock to foreign official inflows, the long-run effect is about 20 basis points.
Topic:: Economics, International Cooperation, Foreign Direct Investment, and Fiscal Policy
Political Geography:: North America and United States of America

4831. The Effect of TARP on Bank Risk-Taking

Author:: Lamont Black and Lieu Hazelwood
Publication Date:: 03-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: One of the largest responses of the U.S. government to the recent financial crisis was the Troubled Asset Relief Program (TARP). TARP was originally intended to stabilize the financial sector through the increased capitalization of banks. However, recipients of TARP funds were then encouraged to make additional loans despite increased borrower risk. In this paper, we consider the effect of the TARP capital injections on bank risk taking by analyzing the risk ratings of banks’ commercial loan originations during the crisis. The results indicate that, relative to non-TARP banks, the risk of loan originations increased at large TARP banks but decreased at small TARP banks. Interest spreads and loan levels also moved in different directions for large and small banks. For large banks, the increase in risk-taking without an increase in lending is suggestive of moral hazard due to government ownership. These results may also be due to the conflicting goals of the TARP program for bank capitalization and bank lending.
Topic:: Governance, Interest Rates, Risk, Welfare, Capital, and Banking
Political Geography:: North America and United States of America

4832. U.S. International Equity Investment and Past Prospective Returns

Author:: John Armmer, Sara B. Holland, David C Smith, and Francis E. Warnock
Publication Date:: 03-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.
Topic:: International Cooperation, Exchange Rate Policy, Investment, and Equity
Political Geography:: North America and United States of America

4833. When Good Investments Go Bad: The Contraction in Community Bank Lending After the 2008 GSE Takeover

Author:: Tara Rice and Jonathan Rose
Publication Date:: 03-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: n September 2008, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were placed into conservatorship and dividend payments on common and preferred shares were suspended. As a result, share prices fell to nearly zero and many banks across the country lost the value of their investments in the preferred shares. We estimate more than 600 depository institutions in the United States were exposed to at least $8 billion in investment losses from these securities. In addition, fifteen failures and two distressed mergers either directly or indirectly resulted from the takeover. Since these GSE investments were considered to be safe investments by banks, regulators, and rating agencies, we consider these losses to be exogenous shocks to bank capital, and use this event to examine the relationship between community bank condition and lending during this crisis. We find that in the quarter following the takeover of Fannie Mae and Freddie Mac, the measured Tier 1 capital ratio at exposed banks fell about three percent on average, and loan growth at exposed banks with median capitalization was about 2 percentage points lower compared to other banks in the following quarter. Consequently, considering the set of community banks that incurred about $2 billion in GSE-related losses, and assuming that each bank reduced loan growth by 2 percentage points, the estimated aggregate lending drop among these banks would be roughly $4 billion.
Topic:: Investment, Lending, Banking, and Banking Crisis
Political Geography:: North America and United States of America

4834. Do Oil Prices Help Forecast U.S. Real GDP? The Role of Nonlinearities and Asymmetries

Author:: Lutz Kilian and Robert J. Vigfusson
Publication Date:: 06-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: There is a long tradition of using oil prices to forecast U.S. real GDP. It has been suggested that the predictive relationship between the price of oil and one-quarter ahead U.S. real GDP is nonlinear in that (1) oil price increases matter only to the extent that they exceed the maximum oil price in recent years and that (2) oil price decreases do not matter at all. We examine, first, whether the evidence of in-sample predictability in support of this view extends to out-of-sample forecasts. Second, we discuss how to extend this forecasting approach to higher horizons. Third, we compare the resulting class of nonlinear models to alternative economically plausible nonlinear specifications and examine which aspect of the model is most useful for forecasting. We show that the asymmetry embodied in commonly used nonlinear transformations of the price of oil is not helpful for out-of-sample forecasting; more robust and more accurate real GDP forecasts are obtained from symmetric nonlinear models based on the three-year net oil price change. Finally, we quantify the extent to which the 2008 recession could have been forecast using the latter class of time-varying threshold models.
Topic:: Energy Policy, Oil, Natural Resources, GDP, and Price
Political Geography:: North America and United States of America

4835. U.S. Real Interest Rates and Default Risk in Emerging Economies

Author:: Nathan Foley-Fisher and Bernardo Guimaraes
Publication Date:: 08-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper empirically investigates the impact of changes in U.S. real interest rates on sovereign default risk in emerging economies using the method of identification through heteroskedasticity. Policy-induced increases in U.S. interest rates starkly raise default risk in emerging market economies. However, the overall correlation between U.S. real interest rates and the risk of default is negative, demonstrating that the effects of other variables dominate the anterior relationship.
Topic:: Economics, Interest Rates, Risk, and Fiscal Policy
Political Geography:: North America and United States of America

4836. Heterogeneous Workers, Optimal Job Seeking, and Aggregate Labor Market Dynamics

Author:: Brandan Epstein
Publication Date:: 08-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: In the United States, the aggregate vacancy-unemployment (V/U) ratio is strongly procyclical, and a large fraction of its adjustment associated with changes in productivity is sluggish. The latter is entirely unexplained by the benchmark homogeneous-agent model of equilibrium unemployment theory. I show that endogenous search and worker-side horizontal heterogeneity in production capacity can be important in accounting for this propagation puzzle. Driven by differences in unemployed and on-the-job seekers' search incentives, the probability that any given firm with a job opening matches with a worker endowed with a comparative advantage in that job exhibits a stage of procyclical slow-moving adjustment. Consequently, so do the expected gains from posting vacancies and, hence, the V/U ratio. The model has channels through which the majority of both the V/U ratio's sluggish-adjustment properties and its elasticity with respect to output per worker can be accounted for.
Topic:: Labor Issues, Employment, Business, Unemployment, and Labor Market
Political Geography:: North America and United States of America

4837. The Return on U.S. Direct Investment at Home and Abroad

Author:: Stephanie E. Curcuru and Charles Thomas
Publication Date:: 10-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: A longstanding puzzle is that the United States is a net borrower from the rest of the world, yet continues to receive income on its external position. A large difference between the yields on direct investment at home and abroad is responsible and this paper examines potential explanations for this differential. We find that most of the differential disappears after one adjusts for the U.S. taxes owed by the parent on foreign earnings, the sovereign risk and sunk costs associated with investing abroad, and the age of foreign direct investment in the U.S.. Taken together, our results suggest most of the difference in yields should remain as long as there is a difference in tax rates between the United States and the countries in which U.S. firms invest, and U.S. investments are perceived as relatively safe. This has implications for the long-run sustainability of the U.S. current account deficit which will depend, in part, on the long-run behavior of this income.
Topic:: Economics, International Cooperation, Foreign Direct Investment, Tax Systems, and Investment
Political Geography:: North America and United States of America

4838. Foreign Banks in the U.S.: A Primer

Author:: William Goulding and Daniel E. Nolle
Publication Date:: 11-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper describes the foreign banking landscape in the United States. It begins by establishing a vocabulary for discussion of the subject, and then identifies a number of important data-related issues. With that information in hand, the remainder of the paper focuses on identifying the most important underlying trends on both sides of the balance sheets of foreign-owned banks' U.S. operations. At each step, the investigation considers how foreign-owned banks compare to U.S.-owned domestic banks, and how two types of foreign banks operations in the U.S. -- branches and agencies of foreign banks (FBAs), and foreign-owned subsidiary banks (FSUBs) -- compare to each other. The banking sector in the U.S. experienced substantial swings in performance and stability over the decade surrounding the 2008-2009 financial crisis and changes in every major dimension of foreign-owned banks' assets and liabilities were even larger than for domestic banks. Changes were especially large at FBAs. For example, cash balances came to dominate the assets side of FBAs’ aggregate balance sheet, with the absolute level of cash balances larger than those of domestic U.S. banks beginning in 2011, despite the fact that total assets of domestic U.S. banks are five times the assets of FBAs. Further, the recent unprecedented build-up of cash balances by FBAs was almost entirely composed of excess reserves. Changes in FBAs' liabilities-side activities have also been large, with much funding coming from large wholesale deposits and net borrowing from their foreign parents and related offices abroad.
Topic:: Foreign Direct Investment, Fiscal Policy, Capital, Banking, and Funding
Political Geography:: North America and United States of America

4839. An action plan for US policy in the Americas

Author:: Robert F. Noriega and José R. Cárdenas
Publication Date:: 12-2012
Content Type:: Special Report
Institution:: American Enterprise Institute for Public Policy Research
Abstract:: As US policymakers struggle to overcome sluggish economic growth while confronting abiding security threats, there is a stronger argument than ever for fortifying US partnerships with countries in the Americas whose economies and security are intertwined with America’s own economy and security. While the United States has been preoccupied with other regions, most Latin American nations have continued to modernize their market economies; two nations in particular—Brazil and Mexico—are emerging as global players. Therefore, the time is right to restore a strong bipartisan consensus in the United States that promotes a constructive, free-market growth agenda in the Americas. Practical initiatives—not rhetoric—will encourage America and its neighbors to find common ground for their collective benefit.
Topic:: Security, Foreign Policy, Partnerships, Economy, and Economic Crisis
Political Geography:: Latin America and United States of America

4840. Countering Chinese Cyber Operations: Opportunities and Challenges for U.S. Interests

Author:: Mark Stokes and L. C. Russell Hsiao
Publication Date:: 10-2012
Content Type:: Working Paper
Institution:: Project 2049 Institute
Abstract:: Chinese cyber espionage poses an advanced persistent threat to U.S. national and economic security. Groups operating from PRC territory are believed to be waging a coordinated cyber espionage campaign targeting U.S. government, industrial, and think tank computer networks. A dozen of these groups have been identified and linked with the PLA, and others connected with universities and information security enterprises. The largest and most active of these groups may operate from Beijing and Shanghai.
Topic:: Government, Cybersecurity, Economy, and Espionage
Political Geography:: China, Asia, and United States of America

4841. Chinese Direct Investment in California

Author:: Daniel H. Rosen and Thilo Hanemann
Publication Date:: 10-2012
Content Type:: Special Report
Institution:: Asia Society
Abstract:: A new report entitled Chinese Direct Investment in California published by the Asia Society finds that California has attracted more Chinese investment deals than any other U.S. state but remains fifth in the nation in total investment value. Negligible before 2008, Chinese investment in the state is growing at triple-digit levels and could reach $60 billion by 2020, but only if the state and private sector do a better job working together to attract Chinese capital. The report is co-authored by Daniel H. Rosen and Thilo Hanemann of the Rhodium Group and builds on a 2011 Asia Society study, entitled An American Open Door?: Maximizing the Benefits of Chinese Foreign Direct Investment, which looked more broadly at Chinese investment into the U.S. The new report is the most comprehensive study to date of Chinese investment in the Golden State and in the U.S. overall. It finds that the potential gains for California and China are enormous but that success is far from guaranteed. U.S.-China relations remain tense and protectionism is a serious threat. At the state level, California has had a mixed record of promoting its economic strengths. The report urges policy and business leaders in the state to do better to out-compete other states, and nations, that seek to increase their own shares of the Chinese outbound investment surge. Four decades ago, Japanese direct investment in the U.S. was at a similar stage. Now, it totals some $300 billion, employs 700,000 Americans, and undergirds a strong, stable U.S.-Japan relationship. Investment and trade between the U.S. and China show even greater promise today. Compared to the rest of the U.S., the report finds that Chinese investment in California is disproportionately from private rather than state-owned enterprises, greenfield rather than M&As, and strongest in high-tech and high-value services — areas that the Chinese government and private sector have targeted for accelerated growth. Of the $1.3 billion in Chinese investment in the state since 2000, Southern California leads the state in investment with 69 deals totaling $618 million. The San Francisco Bay Area and Silicon Valley/South Bay regions are the second and third most attractive regions for Chinese investors.
Topic:: Foreign Direct Investment, Economy, Business, and Trade
Political Geography:: China, Asia, California, North America, and United States of America

4842. Diplomatic Engagement: The Path to Avoiding War and Resolving the Nuclear Crisis

Author:: Greg Thielmann and Benjamin Seel
Publication Date:: 01-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: U.S.-Iranian relations are bad and getting worse. The New Year has opened with rising tensions between the United States and Iran and an increased prospect of war—either intentional or accidental. The Nov. 2011 report of the International Atomic Energy Agency details why the international community remains deeply concerned about Tehran’s nuclear ambitions. While sanctions and other measures have slowed down Iran’s movement toward acquiring a nuclear weapons option, Tehran continues to improve its nuclear capabilities and has so far refused to implement the confidence-building steps necessary to ensure it is not pursuing nuclear weapons. The latest round of U.S. unilateral sanctions has been met with Iranian threats of closing the Straits of Hormuz through which 35% of the world’s seaborne oil passes. Iran reinforced those threats with ten days of military exercises in nearby waters that included launches of anti-ship missiles. These and other developments highlight how relatively minor incidents could quickly escalate into a major military conflict. At the same time, Iran proposed on December 31 a new round of talks with the P5+1 group of nations, suggesting that that diplomatic options to resolve the nuclear concerns about its nuclear activities have not been exhausted. In the following Iran Nuclear Brief, ACA Senior Fellow Greg Thielmann argues that in order to avoid unintentional conflict with Iran, there is an urgent need to establish better lines of bilateral communication at all levels—between military forces in the region, between diplomats, and between senior officials. Thielmann also explains why pragmatic diplomatic engagement is essential to a successful strategy to prevent a nuclear-armed Iran.
Topic:: Arms Control and Proliferation, Diplomacy, Nuclear Weapons, Sanctions, and Engagement
Political Geography:: Iran, Middle East, North America, and United States of America

4843. Long-Range Ballistic Missile Development: A Tale of Two Tests

Author:: Greg Thielmann
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: North Korea's failed attempt to launch a satellite from its Unha-3 space rocket on April 13 and India's successful flight test of the Agni-5 long-range missile on April 19 marked significant events in the ballistic missile development programs of the two countries. These two ballistic missile test events not only reveal technical information about system performance, but also invite reflection on U.S. policy responses. The demonstration of North Korean failure and Indian success is only the most readily accessible feature of the story. The broader implications for U.S. nonproliferation and security policies are more complicated and less obvious. Both cases imply U.S. failure to accurately assess threats and to adopt appropriate responses for mitigating those threats.
Topic:: Security, Arms Control and Proliferation, Nuclear Weapons, and Weapons
Political Geography:: India, North Korea, and United States of America

4844. Submarine Nuclear Reactors: A Worsening Proliferation Challenge

Author:: Greg Thielmann
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: A long submerged flaw in the nuclear Non-Proliferation Treaty (NPT) surfaced conspicuously in June when Iran announced it intended to build a nuclear-powered submarine. The treaty does not ban a non-nuclear weapons state's production of weapons-grade uranium if it is to be used to power a naval reactor. What many now consider a proliferation loophole in the NPT was first seen as theoretical because only nuclear weapons states had nuclear-powered submarines when the treaty was negotiated. Now, as more and more countries initiate or announce intentions to initiate nuclear-powered submarine programs, this excuse for enriching uranium to levels beyond the needs of civilian power reactors intensifies the challenge of achieving U.S. nonproliferation goals. The United States should adjust its policy by: 1) choosing a reactor for the Ohio-class SSBN follow-on that does not require weapons-grade fuel and 2) pushing for multilateral action to close or at least narrow the NPT loophole that allows for non-nuclear weapons states to produce highly enriched uranium for naval reactors.
Topic:: Arms Control and Proliferation, Nuclear Weapons, Treaties and Agreements, Submarines, and Nonproliferation Treaty (NPT)
Political Geography:: Iran, Middle East, North America, and United States of America

4845. What does a second Obama term mean for Bosnia and Herzegovina and the Balkan region?

Author:: Heidi Hullinger
Publication Date:: 11-2012
Content Type:: Policy Brief
Institution:: The Centre for Security Studies
Abstract:: The 2012 US presidential elections had Europe on its toes, hoping that US citizens chose a candidate that would surely win if the rest of the world had a vote. But Bosnians had little to go on, they’ve only known Obama to be the hands off sort, leaving the region to the expertise of Biden and Clinton and their deputies. It is hard for Bosnians to know what the election results would mean if Romney were elected. The European Union was largely absent from presidential discussions, so why would the Balkan region and enlargement countries be a topic of discussion? Regional policy has been an exercise in cooperation with the European Union, taking a backseat to the Accession process and contributing with aid and missions that focus on assisting Bosnia and Herzegovina in fulfilling NATO accession conditions. As a result, the US gets to play good cop, while the EU works, so far fruitlessly, to tackle corruption, constitutional reform and other hot button topics that cast the EU as bad cop. The appointment of the next US Secretary of State is the latest topic of conversation making headlines in the US. However, US-Bosnian relations and their engagement in the region is unlikely to see any major changes. Either way, the US may decide that it better serve Bosnians and its constituents at home by losing the good cop act and put tangible pressure on politicians.
Topic:: NATO, Elections, European Union, Barack Obama, and Regional Politics
Political Geography:: Balkans, United States of America, and Bosnia and Herzegovina

4846. 2012 US Peace Index

Author:: Institute for Economics and Peace (IEP)
Publication Date:: 04-2012
Content Type:: Special Report
Institution:: Institute for Economics & Peace (IEP)
Abstract:: The United States Peace Index (USPI), produced by the Institute for Economics and Peace (IEP), provides a comprehensive measure of U.S. peacefulness dating back to 1991. It also provides an analysis of the socio-economic measures that are associated with peace as well as estimates of the costs of violence and the economic benefits that would flow from increases in peace. This is the second edition of the U.S. Peace Index.
Topic:: Economics, Education, Health, Violence, Peace, Social Capital, and Socioeconomics
Political Geography:: North America and United States of America

4847. Violence Containment Spending in the United States

Author:: Institute for Economics and Peace (IEP)
Publication Date:: 09-2012
Content Type:: Special Report
Institution:: Institute for Economics & Peace (IEP)
Abstract:: It has been well established that violence has a marked effect on economic activity with many studies demonstrating the negative economic impacts of crime, incarceration, insurgencies and especially war. However, there have been no studies to systematically aggregate the economic costs of all forms of violence, including the costs of prevention and protection, to understand how much of an economy is captured by violence and violence containment. For the purposes of classification, this form of economic activity has been defined as the violence containment industry (VCI). Aggregated as an industry sector it would be the single largest in the United States. The Institute for Economics and Peace (IEP) has developed a new methodology to quantify the cost of violence and the economic gains associated with peace for the U.S. economy. All expenditure that is related to violence containment, whether performed by the military on the international stage or domestically through the provision of services to fight crime, has been classified together as the Violence Containment Industry or alternately, as violence containment spending. This provides a framework to classify and better understand a substantial part of the U.S. economy as well as providing a platform for future research. Given the sheer size of the U.S. economy that is dedicated to containing violence, quantifying the expenditure as a discrete industry creates a unique basis for further analysis and debate.
Topic:: Economy, Violence, Peace, Society, and Containment
Political Geography:: North America and United States of America

4848. Not Congruent but Quite Complementary: U.S. and Chinese Approaches to Nontraditional Security

Author:: Lyle J. Goldstein
Publication Date:: 07-2012
Content Type:: Special Report
Institution:: China Maritime Studies Institute, U.S. Naval War College
Abstract:: U.S.-China relations, difficult in the best of times, have lurched in a dangerous direction since 2009. Against the backdrop of a weakened global economy and sharpened ideological tensions, there has been a disturbing new atmosphere of crisis in East Asia over the last two years, with incidents occurring in greater frequency and sowing serious doubts about the sustainability of the "long peace" that this region has enjoyed for decades. Indeed, any one of the following incidents could have escalated into a serious regional crisis: the sinking of the South Korean frigate Cheonan; the collision between a Japanese coast guard cutter and a Chinese fishing trawler and the ensuing Chinese restrictions on the export of rare-earth minerals; and a string of confrontations between Chinese patrol ships and vessels from both Vietnam and the Philippines.
Topic:: Security, Foreign Policy, Bilateral Relations, and Navy
Political Geography:: China, Asia, North America, and United States of America

4849. Arab Uprisings: New Opportunities for Political Science

Author:: Eva Bellin, Lindsay Benstead, Nathan J. Brown, Nathan J. Brynen, and Melani Cammett
Publication Date:: 06-2012
Content Type:: Research Paper
Institution:: Project on Middle East Political Science (POMEPS)
Abstract:: The uprisings that swept the Arab world following the fall of Tunisia’s President Zine el-Abidine Ben Ali in January 2011 represented a stunning moment in the region’s political history. For political scientists specializing in the region, the events of the last year and a half represented an exhilarating moment of potential change but also an important opportunity to develop new research questions, engage in new comparisons, and exploit new data and information. The Arab uprisings challenged long-held theories dominant in the field, particularly about the resilience of authoritarian regimes, while opening up entirely new areas of legitimate social scientific inquiry. The Project on Middle East Political Science (POMEPS) was created in 2010 in part to build the capacity of Middle East experts to engage and inform policy-makers, the public sphere, and other political scientists about the region. On May 29 to 30, 2012, POMEPS convened a group of leading political scientists who specialize in the Middle East for its third annual conference at George Washington University to discuss the opportunities and challenges that the Arab uprisings pose to the subfield. Participants were asked: “What new and innovative research questions do you think have become particularly urgent, feasible, or relevant? How would those research questions fit into wider debates in the field of political science?” This special POMEPS Briefing collects nearly two dozen of the memos written for the conference. The authors are all academic political scientists and Middle East specialists who speak Arabic and have lived in and studied Arab countries for extended periods. They include scholars at all career levels, from senior faculty at top universities to advanced graduate students still writing their dissertations. The memos reflect on a wide range of debates and paradigms within political science, and taken together lay out an impressive set of marching orders for the subfield. Graduate students looking for dissertation topics and junior faculty looking for articles that might make a big splash take note.
Topic:: Foreign Policy, Political Economy, Democracy, Arab Spring, Political Science, and Muslim Brotherhood
Political Geography:: Middle East, Egypt, and United States of America

4850. Asia-Pacific: Let's Get Back in the Ring

Author:: Hugh Stephens
Publication Date:: 02-2012
Content Type:: Policy Brief
Institution:: Canadian Global Affairs Institute (CGAI)
Abstract:: At the November APEC summit, having cleared the way with President Obama, Stephen Harper publicly announced Canada’s formal interest in joining the TransPacific Partnership (TPP) trade talks. The US and others, while “welcoming” Canada’s interest, reiterated the high bar that new entrants (Mexico and Japan as well as Canada) will have to meet. The promise of the TPP is that it could form the basis for a much wider Free Trade Area of the Asia Pacific (FTAAP), including China. Canada could have much more easily joined the TPP had it expressed interest back in 2008 when the door was open to expansion. At that time, Asia-Pacific was not on the radar in Ottawa, even for China which has now become a key country of interest for Mr. Harper. Canada has an Asia Pacific legacy that it has squandered through neglect. From the 1960s through early establishment of diplomatic relations with China in 1970, and beyond into the 1980s, Canada was considered, and acted like, a leader in the region. That interest seemed to peak, and then wane, after the 1997 Vancouver APEC summit. At the same time, the face of Canada was changing rapidly with a strong and steady influx of Asian immigrants. These cultural and ethnic ties have underpinned a new interest in doing business with Asia, but Canada has been slow off the mark. While we have negotiated free trade agreements with 9 countries in the past six years, not a single one has been in Asia. Meanwhile, Asia is rapidly integrating and establishing new architecture, from which Canada, alone among major Asia Pacific countries, is absent. The US is reaffirming its ties with Asia through security and trade ties. Australia is doing the same. Canada is endowed with the physical and human resources that should allow us to take full advantage of our place in the region. We can reestablish our credentials through a sustained leadership and a long-term strategy. There are signs that this may be happening. The time to do it is now.
Topic:: Foreign Policy, Trade Policy, APEC, and TPP
Political Geography:: Canada, Asia-Pacific, and United States of America

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COLUMBIA UNIVERSITY PRESS