America's Asian allies probably have that sickening feeling in the pits of their stomachs that they are about to get "McDougaled" or "Lewinskyed" by the Clinton Administration. Some, like Taiwan, already have been. And it will be a hot topic all the way past the 2000 Presidential and Congressional elections unless it's stopped now. And if the policies are not changed then they will have unintended consequences not only in Asia but the entire globe. And they will also have unintended consequences for the U.S. economy and markets. What we might be seeing is an entirely new Cold War and arms race that could heat up into a real war before the first decade of the 21st Century is out.
What follows is not a partisan or political analysis, but a cold look at the consequences of the Clinton Administration's continued caving to the Chinese Communists. For what it's worth, China is the tail and not the dog. It could quite easily be forced to back down if a united front was formed. The Chinese believe that there won't be one and they're probably right.
During the Secretary of State's latest meeting with the Chinese Communists, she was told in no uncertain terms that the U.S. better not attempt to defend its allies from missile threats from either China or North Korea. And the U.S. caved and backed down. Stating that concerns over theater missile defenses for: Japan, Taiwan and South Korea weren't an issue as the technologies weren't developed. Wrong. As we've reported in the past, the Aegis system is a theater missile defense system now and could be an even better theater missile defense system if the Clinton Administration and-or Congress had the guts to unhobble its capabilities. The Chinese know this. So do the rest of America's adversaries.
It's tough being an Asian ally of America these days. They are being left swinging in the wind by the Clinton Administration and its "coddling of dictators" and "the butchers of Beijing." Remember, candidate Clinton accused the Bush Administration of doing that in '92. But the Bush Administration did not pursue an "engagement policy" that abandoned protecting our allies. As far as America's Asian allies are concerned, they're looking at "Monsoon Clinton" heading their way. That's an observation and not a criticism.
Japan, South Korea, Taiwan and our other Asian allies stuck by the United States all during the Cold War. Even when it wasn't an easy thing to do in lots of instances, especially domestically. They had struck a deal with the U.S. and abided by it. And by so doing they knew they were in it for the long haul. Currently just those three nations are a lot closer to the U.S. than France or Italy. Sorry, it's true.
After World War II, Japan served as an island aircraft carrier; as did Okinawa and other Japanese bases including seaports for the Pacific Fleet, etc. It wasn't ever very popular with a lot of the Japanese populace as the alliance came as a result of occupation, but it evolved. It still isn't very popular with a lot of the Japanese. But, they stood by that alliance because they were a small nation being protected from Soviet and Chinese Communist aggression. If anyone was going to get to Japan, they were going to have to come through the U.S. first. That has apparently changed and the Japanese and others were given a wake-up call.
And they are left scrambling to find a way to protect themselves if the U.S. has signaled its intentions not to offend the Chinese and will cave into them. And that could trigger unintended consequences world-wide. Including a global arms race as well as reallocating resources to defense. The sentiment in Japan isn't very kindly towards the Clinton Administration these days. Hard to be when you've suddenly realized that you won't be protected from nuclear destruction by the ally that you have counted on all these years. Don't feel too bad though, the American public are in the same boat.
In 1993-94 Echo 4 reported that the Chinese were helping the North Koreans perfect not only their missiles that would eventually have the capability of reaching the West Coast of the United States, Alaska, etc.; but there were also indications and reports that the Chinese were also providing assistance to the North Koreans in perfecting their nuclear warheads. It didn't get much attention at the time but it should have. And where did the Chinese get that technology? Theft in the '80s and buying it in the '90s. Then selling and sharing it with others. Places like Iran. It's all been documented.
Back then, those who were voicing concerns over what China was, and still is, doing were branded as being out "to get" the Clinton Administration. If so, then that included a lot of people who supported an engagement policy with China so that peace, stability and prosperity could be maintained in Asia. True believers that the Clinton Administration's policies wouldn't leave Asia vulnerable to naked aggression by China or North Korea. They assumed (a dangerous thing to do as history has shown) that the Clinton Administration would stand tall and protect them. Apparently they assumed wrong.
Late in the '96 election cycle the news of the campaign finance scandal broke and the subsequent Senate hearings were down played even though there is classified intelligence that proved Senator Thompson's initial statements. Those statements were approved by the CIA, FBI, NSA and others. Sen. Thompson is now being vindicated and the Justice Department's inactions, to this day, are an indictment all by itself. That inaction will only give the critics gas to toss on the fire.
Currently, all attention is on the Cox Report and whether all 700 pages will be released. They should. For if the American people are to understand the dangers they are under they can understand what has to be done. Otherwise, the isolationists and protectionists will have a field day in the not too distant future. And that would also threaten the U.S. economy and might possibly totally discredit the U.S. as an ally; as well as discrediting any foreign policy stance that the U.S. will take. This isn't about the Clinton Administration per se, it's about America after the Clinton Administration.
Furthermore, if this threat is left unchecked we will also see unintended consequences to the U.S. economy and markets. We'll explain.
It's no longer a joking matter or a discussion relegated to the likes of Japanese Nationalists over whether Japan should re-arm in order to defend itself from aggression. It's being whispered and discussed as a possible necessity in light of the Clinton Administration's caving in to China over defending them from Chinese or North Korean missiles. Suddenly, there is talk about having to increase defense spending and re-arming for "self-defense," which is allowed under Japan's Constitution. How long would it take for the Japanese to build nuclear weapons? Missiles? Not long. Missile defenses? Not too long. Extremely expensive yes. Long? No.
That will have consequences. The Japanese will need hard currency to make the appropriate purchases, etc. It's no longer a matter of national pride but survival. Therefore, they will need those Dollars in their massive Dollar reserves as well as those Dollars currently locked into Treasuries. If they have to, they will use those reserves in order to finance their national defense. And to hell with the U.S. and the impacts that it would have on the American economy and markets. Defense contractors might have salad days, but the ripple effects throughout the rest of the U.S. economy and markets would be disastrous.
If the Japanese have to re-arm to protect themselves, and therefore repatriate even more capital to finance it then the Bond would tank and rates would rise. It takes a lot of money to build and deploy a national defense that has been minimal all these years. And while those Dollars would be used to buy and manufacture tangible goods, the impacts it would have on the Japanese economy might not be as stimulative as some might think. Yes, the "unthinkable" has become the thinkable in Japan now.
And as the Bond tanks so will the U.S. markets. Flight to quality and safety would be the norm. But even then it wouldn't prove to be safe as rates would continue to rise. And those higher interest rates would also stall the U.S. economy with the aforementioned exceptions. Think Japan in the '90s.
Don't take this lightly, or as our engaging in gloom and doom scenarios. Think of the massive build up the United States had to undergo during World War II. Think of the expenditures the U.S. had to undergo during World War I and the resultant inflation. Think of all the treasure that was expended during the Cold War and the costs that it inflicted. Not to mention the inflation that it caused. Yes, the economy and markets flourished for the most part during the Cold War but it came at a high cost. Don't expect history to repeat itself if Japan has to re-arm. And we wouldn't blame them if they did.
This potential "arms race" and "New Cold War" could cause a huge disruption in the global economy and both Japan's and the United States' economies are inextricably linked. Some would dispute that assertion, but we disagree. If Japan has to re-arm it would have very negative consequences in the U.S. and the entire globe.
First and foremost, sunshine is the best disinfectant. And we're not "out to get" the Clinton Administration. Someone has to step up to the plate and take a heavy political risk. In other words, forget about getting re-elected and take a high-profile stance. Somebody has to yell "STOP!", and it needs to be done fairly quickly. Forget the rumblings of Republican presidential primary hopefuls. It has to be someone in power or has the respect of the political and business classes. First, the Republican leadership in Congress comes to mind. Secondly, the Democratic leadership in Congress better get off their knees (praying to recapture Congress in 2000) and step up to the plate as well. And we would also hope that former Secretary of State Henry Kissinger publicly weighs in on this as well. He could see all of his efforts and achievements come undone.
Secondly. All of us need to stop thinking only in terms of selling things to the Chinese, and paying lip service to it being the biggest economy and a super power in the 21st Century. Cut off their access to the world markets, especially exports, and their economy would implode. As would their political system. They want to play hardball? Then let's take the gloves off. If the U.S. was willing to fight Japan in World War II to prevent them dominating Asia then the U.S. must be willing to fight China to prevent them from dominating Asia under another "East Asia Co-Prosperity Sphere;" under a totalitarian system. And if the U.S. and its allies were willing to fight Soviet domination of Asia, Europe and the rest of the world (which for a long time had China as its co-conspirator) then the world can do no less today. Profit be damned, we're talking core principles upon which the United States was founded.
Third. The rest of the free world, and even the not so free world, needs to present a united front. A lot of people might hate the United States, but they also realize what life would be like under Chinese Communist domination. Furthermore, a lot of people who lived under Soviet domination know that life under Chinese Communist domination would be even worse. Not even the Soviets were harvesting and selling human organs for transplants for profit on the open market.
The above are just starting points, but those three alone might cause China to rethink its strategic goals. Currently they are enjoying the best of both worlds. The world has to tell them that they can choose one or the other. The days of engagement will soon be over unless they change their ways.
Do we expect anyone to follow the above course of action? No. Maybe Doctor Kissinger might speak out and therefore allow someone else to find enough backbone to take a principled stance, but that's a hope and not a belief. Do we expect the Clinton Administration to reverse itself? Not likely. Do we even expect the Senate Foreign Relations Committee to call Secretary of State Albright to explain herself? Oh, that would be attacking President Clinton and the Democrats would probably circle the wagons once again.
Do we expect corporations to stand up and let their voices be heard on this issue? Dream on. If they don't, then they are handing their critics a potent weapon to use against them. And those critics would be right. We couldn't say that the critics were wrong. And in the long run those critics could find a lot of supporters in the general populace. "They'd sell the world down the river for a buck." Think William Jennings Bryant and his populist movement in the late 1800's.
As you can see, this analysis hasn't been an attack on the Clinton Administration's policies, or even hinting at any allegations pertaining to improprieties in respect to the Clinton Administration's actions. It has completely dealt with the unintended consequences of the most recent actions and what should be done to stop them from happening. The Clinton Administration could take these actions itself, without people throwing out wild allegations and accusations pertaining to campaign finance corruption, "treason," and all the other things that are simmering beneath the surface.
Somebody has to stop this before it gets out of control. Soon. Like now. Like yesterday.
©1999 Robert Morgan / Echo 4. All Rights Reserved.