Quo Vadis: From Crisis, Opportunity

Patrick C. Doherty

January 06, 2005

The Indian Ocean tsunami has spurred a debate about the "generosity" of the United States as measured by its foreign aid expenditures. Doherty argues that we should abandon the notion that our response to catastrophes like the tsunami are merely a matter of charity. To the contrary, the security of the United States is inextricably linked to the welfare of people in the developing world. With this assumption, Doherty lays out a plan for a strategic response to the tsunami.

Patrick C. Doherty is associate editor at TomPaine.com. Previously, he spent a decade working on conflict and economic development in the Middle East, Africa, the Balkans and the Caucasus. His column, Quo Vadis, focuses on America's strategic dysfunction and how to transform it.

The Indian Ocean tsunami struck at just the right time to shake up Democratic foreign policy thinkers. 
 
This catastrophic event provides a rare and powerful opportunity to get America out of the strategic box in which it resides. Specifically, the global media attention and the calls for long-term programs to address vulnerability and poverty present a rare opening to think beyond the ill-conceived and intellectually dishonest "war on terror" framework. 
 
So far, the world is not responding in a strategic manner. Emergency relief dominates the discussion and today's one-day tsunami summit will only look at the short term. The region needs a strategic response to the tsunami relief, not merely a one-dimensional humanitarian response. More than that, the United States needs a strategic response.

Beyond Relief

With billions of dollars of aid pouring in over a period of three to five years, the world is faced with a massive choice in how to guide not the emergency relief, but the reconstruction. As Oxfam noted two years after Hurricane Mitch, the international community rebuilt communities along their old foundations. This meant communities were rebuilding the unsustainable, poverty-ridden, undemocratic societies that existed before, reconstituting the infrastructure of injustice. Since the hurricane itself had the effect of destroying small farms and washing all the good topsoil into the wealthy farms in the valleys, the peasants were left worse off than before. Forced to compete in the international agricultural markets, the effect was to erase decades of international development assistance.

The tsunami-ridden areas face a similar fate, unless a new vision for the global economy emerges. The UN's Food and Agricultural Organization has warned that inundated farmland will take 10 years before it can be used again because of salt. Wells are similarly poisoned, but for six years. Without arable land, farmers will flee to the cities. Without local farmers' markets, local townspeople will flee to the cities. Without townsfolk, local fisherman will flee to the cities. Once the roads are clear and the camps close, this disaster could send five million survivors into the larger coastal urban areas.

And that's where we can make our biggest impact. Around the world, people are leaving their farmland for cities. Some are leaving because they are pushed off the land by global agribusiness. Some are pushed off the land because of floods and droughts brought on by upstream deforestation. Some are pushed off the land because of natural disasters like hurricanes, earthquakes and now— a tsunami. When looking at the future missions of the Marine Corps, Commandant Charles Krulak saw the same dynamic arising and driving U.S. military intervention: "By 2020, 85 percent of the world's inhabitants will be crowded into coastal cities—cities generally lacking the infrastructure required to support their burgeoning populations."

Imperial Dysfunction

To make the fate of the cities in the developing world a strategic interest of the United States requires a relatively quick reframing of U.S. foreign policy. Bear with me.

U.S. foreign policy is traditionally defined as including three imperatives: territorial defense, economic expansion and values promotion. With the exception of the real—but by no means existential [see Popularity or Progress] —physical threat posed by Al Qaeda, America's foreign policy since the end of the Cold War has been about economics. At the top of that economic agenda is energy security and market expansion.

In that sense, both post-Cold War presidencies—Clinton and Bush 43—have pursued the same strategy: secure a diversified supply of oil and expand access to markets for American goods. That strategy is no longer appropriate. Oil has four well-known and critical flaws—its corrupting power, its scarcity, its location and global warming—that make it incompatible with the pursuit of America's strategic objectives (territorial defense, economic expansion and values promotion).

Market expansion is equally confounded. Our export products—cars, computers, consumer goods—are designed for a level of energy consumption and income that is not an option in the developing world. The majority of the world—four billion people—can neither afford to buy nor operate the products we produce. The victims of the tsunami, for the most part, fall into the "excluded" world. Meanwhile, the other two billion—including Americans—seem to prefer cheaper Chinese goods.

Enter economists like Bob Rubin of CitiGroup, Stephen Roach of Morgan Stanley and Pete Peterson of the Blackstone Group who warn that our record trade imbalances are threatening to destabilize the American economy. The solution—Roach argues — is to reduce American consumption and increase American savings. But while simple to state, it requires a radical re-alignment of the global economy and the changing of behavior of two billion consumers. The only way to do so is to get the major central banks to agree to reverse the polarity of the global economy. Not likely.

Failing such a shift, the global economy is likely to experience a meltdown. Increased foreign concern over U.S. economic mismanagement would trigger rising interest rates, either "rusting" or busting the American housing asset bubble that underpins current consumer spending. For average Americans, this means austerity and significant retirement insecurity. For the rest of the world, the loss of the American consumer would trigger a general recession. In China, economic slowdown could mean political upheaval as expectations of high growth combined with no safety net put lots of hungry workers in the streets. In Europe, the inequities of a deep general recession in the Eurozone could shatter the Union.

A Strategy Of Innovation

So the experts say America needs more buyers for its goods and we obviously need to better manage our destabilizing dependence on oil. President Bush seems to think that inequitable trade agreements and military occupation of energy producing regions will achieve these goals, but he is wrong. Neoliberal free trade agreements won't magically enable poor people to buy our expensive products. Control of Iraq won't produce more, secure, clean or altruistic oil.

The alternative to an unsustainable strategy of domination, strategic competition and increased consumption is a strategy of economic integration, cooperation and innovation. Instead of thinking of global economic development as the third world moving toward the model of the first, a new strategy of innovation would mean both the third world and the first world moving toward a new sustainable economic system—one that integrates the two billion in the global economy with the four billion excluded by it.

It only makes sense. If consumers overseas are going to buy more American goods they will do so only if we innovate in ways that make sense in their markets. With our high labor costs, that means America will need to innovate in terms of efficiency, quality and utility—using less material to make a superior product and requiring less energy to operate. America's economic advantage would be held—or lost—according to how well we innovate, which is in turn dependent on how well we educate.

A strategy of innovation would be twofold. At home, we would shift the Cold War-era bias built into our subsidies and taxation that favors suburban sprawl and fossil fuels toward smart growth and renewables. The transformation of America alone from an unsustainable consumer economy to a sustainable innovation economy will yield a massive boom. Housing, like in the 1950s, will lead, in tandem with transportation and energy infrastructure. New homes inevitably need new services and new products.

The Economics Of Human Security

Overseas, American investments and partnerships would help developing countries grow toward that same smart growth and renewable energy combination. Cities are where you start. As General Krulak observed above—with inadequate infrastructure—coastal cities will soon turn into hotbeds of poverty and mounting political instability. Interestingly, as Governor Mitt Romney has observed in his own state of Massachusetts, it is also urban infrastructure that needs major re-thinking in the United States. For metropolitan Boston and the tsunami-stricken city of Banda Aceh, the issues are the same: affordable housing, transport, schools and public services.

In practical terms, metropolitan land use is where America must focus its energies overseas. Infrastructure assistance, legal and bureaucratic streamlining, loan guarantees for homeowners and democratization assistance are all essential. But while such programs can create demand, there must also be supply. With a booming United States, American firms will have access to the financial and human capital necessary for mutually-beneficial foreign direct investment. As legal and political systems tighten overseas, equity investment will follow. It's a reversal of the export-focused "Washington Consensus:" Instead of focusing on building an export economy, developing nations would focus on building sustainable homes and communities that are linked to the global economy.

Where is such a strategy most feasible overseas? In areas experiencing a crisis where the old status quo is no longer an option and where reconstruction money is already pledged. That not only means the coastal cities in the tsunami-affected areas, but, interestingly, in the war-torn urban areas of Iraq, Afghanistan and Palestine. Combined with the latest in local participation schemes used commonly by development agencies, reconstruction can leverage democracy building, too.

Unfortunately, such a vision is anathema to the Bush administration and Europe doesn't seem quite ready to lead.

Oh well. There's always the next catastrophic global disaster.