Saturday, 10 October 2009

Beware Of Greeks Bearing Gifts

If one phrase captures the essence of modern American diplomacy, it is, as President Teddy Roosevelt advocated, to walk softly and carry a big stick. If a similar phrase were to be applied to European diplomacy, it is likely that it would be timeo danaos et dona ferentes. At the gates of Troy, the Trojans were warned to “beware of Greeks bearing gifts”. As it turned out, this was quite a good piece of advice. The Greeks gave the Trojans a horse, through which they were able to capture Troy. This cautionary tale came to mind when I learned of President Obama being awarded the 2009 Nobel Peace Prize (see article). Why would these modern “danaos” give this award at this moment in time?

Much has been made of whether or not President Obama deserves the prize. There is, however, a much more subtle process that has been lost in all of the vituperation. In explaining the award, the Nobel Committee cited the President’s willingness to act within a multi-lateral international framework that is characterised by the rule of law rather than brute force, which uses exhortation over threat, that encourages rather than rebukes. In many respects, this is the basis for the comment that President Obama has been given the award for being everything that President Bush wasn’t. And that is the clue to the subtle process.

Few would argue that President Bush wasn't a man who carried a big stick – and who wasn’t afraid to use it too. In his short time in office, President Obama has acted as a team player in building a consensus for international action. This is essentially a European approach to foreign policy. In this regard, Obama is starting to turn out to be something of a ‘European President’. However, this world-view is not shared in Congress – particularly in the Senate, which is important to US foreign policy and which may well return to the Republican party in November 2010.

The award of the Nobel Peace Prize to President Obama for the promise of a more inclusive American foreign policy creates something of a dilemma on Capitol Hill. If Obama actually develops to fulfil his promise, he will have done so on an essentially European agenda. He will have acted through international consensus, using international institutions, and will have started to restore the image of the US in the international arena. If, on the other hand, he fails to fulfil his promise, he will be able to point to his opponents in the Senate for frustrating this promise, thus weakening the image of US at a time when collective international action is needed over a variety of issues. A handy argument to have in the run up to the 2012 Presidential Election!

Perhaps a practical example might highlight the dilemma. In December, President Obama will go to Copenhagen to look for a consensus, through the IPCC, on climate change. He goes representing the chief refusnik on the Kyoto Agreement. We hold that America is now a decade behind the rest of the developed world on this issue. There is an expectation that Obama will look for an agreement on climate change, but, in doing so, will have to compromise American interests as part of the cost of catching up. He will return to the US with a deal that may look pretty poor on its own, but which may have to be accepted in order to make progress elsewhere (such as Iran and North Korea). Will the Senate endorse the lesser evil in order to obtain the greater good?

Possibly not – a poor climate deal will have a real impact on American jobs, in a recession, and just before an election season. There are costs associated with a climate clean up. Europe has, effectively spread these costs over the past decade whilst the US hasn’t. As an example, if the US government were to use a Pigovian Tax to bring American car usage to the Kyoto norms via the price mechanism alone, we calculated that, in 2008, the federal tax would need to be between $18 and $19 per gallon of gas. This is a huge cost to absorb in one single hit. The size of the action needed underpins our view that the Senate will not ratify a climate agreement.

And this is where the Nobel Peace Prize is something of a mixed blessing. It has tied Obama to a European agenda in foreign policy and has given the role of spoiler to the Senate. The Senate undertook this role willingly in the 1990s, but we are in a different world today. In the 1990s, the US had fiscal surpluses. It now has deficits. This means that what the world thinks about America matters more today than it did in the 1990s. If the Senate becomes too unilateralist, it may find itself explaining why it is that foreigners are not so willing to buy US Treasuries.

Either way, President Obama can find a satisfactory outcome. He will be able to claim all of the benefits if things go well. And if they go badly, he can blame the Senate. I now find myself thinking that the cause of re-election for Obama in 2012 has been strengthened somewhat. I am also reminded of the Europeans who bought Manhatten for a bag of glass beads. To have subborned the US President for a mere bauble has to be one of the best buys of the century.

As an aside, in 2005, as part of our ‘America 2025’ project, we published a scenario looking at the future of US foreign policy to 2025 in which there is an uncanny parallel between events as we saw them possibly unfolding and as they are currently unfolding. Click here to access the scenario.


Philip said...

We, (the rest of humanity) should make our own climate treaties and not allow the big Rouge Nation to slow us down.

If the US continues with their stubborn arrogance it is time to impose trade sanctions on the US, and why not use all the emergeny powers in the terrorist laws to freeze American assets.

Stephen Aguilar-Millan said...

Dear Philip,

Thank you for your comment. What you suggest sounds a bit extreme, but something close to your suggestion may be in the offing.

If a nation does not sign up to the agenda to restrict the output of carbon, there is, in effect, a hidden state carbon subsidy. Under the WTO rules, this subsidy can be redressed through tariffs.

France has suggested that the products of polluting nations (e.g. China and the US) face corrective tariffs on entry into the EU. If agreement fails in Copenhagen, this suggestion may gain some ground.

As for the assets argument, in a globalised world, which assets are truly - and purely - American?