SIMON SAYS, MAY 2019
“Finally, we must have courage and self-confidence to cling to our own methods and conceptions of human society. After all, the greatest danger that can befall us in coping with this problem of Soviet Communism, is that we shall allow ourselves to become like those with whom we are coping.”
With that short paragraph, George Kennan ended his famous “Long Telegram” in February 1946. His admonition is a reminder of the importance of being true to ourselves as the United States takes on the leading foreign policy challenge of our era: managing the rise of China. It is especially timely as talk of a new “Cold War” circulates in Washington, following the Trump administration’s ratcheting up of tariffs on Chinese imports and blacklisting of Chinese telecommunications giant Huawei.
I thought about Kennan’s warning as I testified this month before the East Asia Subcommittee of the Senate Foreign Relations Committee on the benefits of economic diplomacy in the Indo-Pacific region. The hearing was one of a series hosted by Subcommittee Chairman Senator Cory Gardner (R-CO) and Ranking Member Senator Ed Markey (D-MA) to put meat on the bones of the legislation they successfully guided into law in the last Congress, the Asia Reassurance Initiative Act (ARIA).
As I told the senators, ARIA is pitch-perfect in reassuring skeptics both in the region and here at home about the U.S. stake in, and commitment to, the vital Indo-Pacific. The act offers a constructive agenda for U.S. engagement in the region, based on the premise that we can compete and win by doing more of what the United States does best. It challenges the overly “dark” view of risks that currently prevails in Washington, and that is skewing our policy responses in the way Kennan warned against.
Do we face challenges in the Indo-Pacific? Yes. But if the competition there is a marathon, we started about two miles ahead of the pack. Our security posture in the region, founded on a bedrock on strong alliances, is a source of stability that most Asians highly value. And those alliances provide much more than security; they are a unique asset that no other competitor has and that bind our interests tightly to those of our friends in the region.
Our economic position is also strong; we have the world’s largest market, and we’re currently growing above potential. U.S. companies bring products, services, capital, and technology that Asians want and need. And unlike many of their competitors, U.S. companies operate according to the rule of law.
The United States is invested in the success of partners in the Indo-Pacific. We offer technical assistance to build capacity in these countries and help them develop the right way. And the traditional openness of our society, our great universities, and other elements of our soft power are huge draws for Asians wanting a better life.
Is China a growing economic presence in the Indo-Pacific? Yes. Is Beijing offering things Asians want, including a growing consumer market, advanced technologies, and infrastructure? Yes. At the same time—back to the marathon metaphor—do the Chinese “sneak over the hill from milepost 5 to milepost 17,” as my colleague Bill Reinsch has so colorfully put it? Yes again. Should we try to stop this cheating? Absolutely.
But our focus should be on running our own race. We certainly shouldn’t tie our shoelaces together by doing unhelpful things like pulling out of the Trans-Pacific Partnership (TPP) or hitting our allies with tariffs. But we can sustain our leadership if we do the right things, like showing up; having a comprehensive strategy that draws on all the main tools of economic policy, including trade, development, finance, and energy; and working with our allies and partners to build rules-based institutions in the region.
In my written testimony for the May 23 hearing, I offered seven topline recommendations for a smarter economic statecraft in the Indo-Pacific:
Develop a credible regional trade strategy;Launch a major digital governance initiative;Articulate and implement a regional infrastructure strategy;Increase support for regional institutions and initiatives;Invest in economic expertise;Deepen educational exchange; andWork with allies and partners.
At the hearing, I described one U.S. program that highlights the kind of low-cost, high-impact economic diplomacy that can bolster our position in the Indo-Pacific. The program, administered by the U.S. Agency for International Development (USAID), was featured in an article in the Wall Street Journal last month. It involved dropping teams of U.S. lawyers and economists into Myanmar to help local officials ask the right questions when negotiating contracts for infrastructure projects with Chinese entities. As a result of this assistance, Myanmar was able to renegotiate the terms of a deep-water port project funded by the Chinese, cutting the scale of the project by billions of dollars and reducing the country’s potential debt burden.
The USAID program in Myanmar is the kind of work that would be supported by the Trump administration’s proposed Transaction Advisory Fund (TAF),an initiative under its “free and open Indo-Pacific” strategy rolled out last summer. Unfortunately, the small amount of money requested by the administration for this initiative—a mere $10 million, according to a government source—is bottled up in the House of Representatives.
The TAF is the type of creative economic statecraft that is key to U.S. success in the Indo-Pacific. It’s not expensive, but it leverages our comparative advantages (and to be sure, lawyering is a U.S. comparative advantage) to bring something that countries in the region want, especially where they have serious questions about what China is offering.
Again, the United States starts with tremendous advantages in the Indo-Pacific. We don’t need to spend trillions of dollars on grand initiatives to sustain our economic leadership there. Nor will we succeed by hunkering down behind a wall of tariffs, investment restrictions, and visa denials; that is the road to perdition for a United States that has built its strength on openness. What we do need is a comprehensive, coordinated, and confident economic diplomacy that plays to our strengths—the kind of strategy I’m sure George Kennan would advocate were he writing from our embassy in Beijing today.
Matthew P. Goodman is senior vice president and holds the Simon Chair in Political Economy at the Center for Strategic and International Studies in Washington, D.C.
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