Tuesday, November 8, 2011

Admin's Economic Focus Shifts to Asia

The cover story of Foreign Policy magazine--penned by Secretary of State Hilary Clinton--is entitled "America's Pacific Century." And apparently, President Obama is in substantial agreement with the premise--that the future economic interests of the U.S. lie across the Pacific--given his upcoming travel schedule, after playing observer at the G20 in Europe:
Contrast that, however, with the administration’s bolder posturing leading up to Obama’s Asia trip, which is to begin Friday in Hawaii at the Asia Pacific Economic Cooperation summit and continue to Australia for a state visit and then to Bali, Indonesia, for the East Asia Summit.
From Ms. Clinton's extensive essay in FP:
Harnessing Asia's growth and dynamism is central to American economic and strategic interests and a key priority for President Obama. Open markets in Asia provide the United States with unprecedented opportunities for investment, trade, and access to cutting-edge technology. Our economic recovery at home will depend on exports and the ability of American firms to tap into the vast and growing consumer base of Asia. Strategically, maintaining peace and security across the Asia-Pacific is increasingly crucial to global progress, whether through defending freedom of navigation in the South China Sea, countering the proliferation efforts of North Korea, or ensuring transparency in the military activities of the region's key players.
Just as Asia is critical to America's future, an engaged America is vital to Asia's future. The region is eager for our leadership and our business -- perhaps more so than at any time in modern history. We are the only power with a network of strong alliances in the region, no territorial ambitions, and a long record of providing for the common good. Along with our allies, we have underwritten regional security for decades -- patrolling Asia's sea lanes and preserving stability -- and that in turn has helped create the conditions for growth. We have helped integrate billions of people across the region into the global economy by spurring economic productivity, social empowerment, and greater people-to-people links. We are a major trade and investment partner, a source of innovation that benefits workers and businesses on both sides of the Pacific, a host to 350,000 Asian students every year, a champion of open markets, and an advocate for universal human rights.
I'm no fan of the current administration, but when it's right on target on something--especially when it comes to economic policy--this needs to be pointed out.

And in this case, the admin is indeed on target. The growth potential in the Asian sphere is enormous. The populations are younger and have higher birth rates than Western Europe, by far. And the people want the standards of living we often take for granted.

Certainly, dealing with China is and will continue to be difficult, as it attempts to wield its only recently acquired economic might to advance its interests, while simultaneously trying to maintain its internal political and social status quo. But China is not the only player.

Setting aside the issue of trade with the United States and Europe, the trade between these Asian and Pacific nations is substantial. And in that regard, I'd urge to admin to not ignore the corridors of trade in the Indian Ocean. For that is the gateway to the Pacific and will likely soon be the most important economic sphere of influence in the world.

As Robert Kaplan details in his wonderful book Monsoon: The Indian Ocean and the Future of American Power, the link from Asia to the Middle East runs through the Indian Ocean, not the Pacific. Port cities like Gwadar, Pakistan are poised to become major players, along with current trading behemoths like Singapore, Shanghai, and Mumbai. Look at its location on this map:

From the Persian Gulf, to the Arabian Sea, it links the oil-producing world with the manufacturing and consumer base of the Indian and Pacific rims.

But it's not enough to know where the action is, when it comes to the world economy. Just as important is a means of access, which necessitates some level of control. In this regard, the naval bases of the Indian Ocean are critical. Kaplan rightly notes that the cultivation of friendship with the many nations in control of such is critical. Once again, sea power will become the standard, something that China seems well aware of.

The admin's laudable foray into the Pacific is a good first step, but much more needs to be done, from expanding diplomatic efforts in the Indian Ocean to increasing security for shipping in the same.

Cheers, all.

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