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Common Cents

The Obama Pivot

Ralph Murphy

(2/2013) During a State visit to Australia in late 2011, President Obama announced a "strategic pivot" which would have a major impact on the world’s political, economic, and military communities. This declaration, which was quickly labeled the "Obama Doctrine"- sought to neutralize the nuclear strike potential of East Asian countries through a Ballistic Missile Defense (BMD) shield involving friendly nations in the region.

The administration claimed this pivot away from traditional concerns in Europe, and a less overt role in the Middle East was justified given North Korea’s bellicose threats towards Western allies in the region. The Pentagon said the BMD was necessary to safeguard nations such as South Korea, Japan, and Australia from the North Koreans.

The Chinese saw the BMD development as personal, and shortly after the President’s announcement presented photos of a new Chinese stealth fighter aircraft, and unveiled plans for a new, aircraft carrier. They also claimed to have a state-of-the-art ballistic missile that reportedly could sink moving sea targets at long range. China currently spends about 110 billion dollars on defense.

This figure might be much higher, but the Chinese do not provide exact defense expenditures.

While the US spends 43% of the world's annual military outlay each year. the momentum may be shifting towards a more heavily-armed China as their economy grows at a searing, annual rate of 7.5%.

Meanwhile, the President seeks defense cuts as part of an effort to avoid an impending fiscal cliff. In 2011 the President stated "With most of the world's nuclear power, and some half of its humanity, Asia will largely determine whether the century ahead will be marked by conflict or cooperation. The U.S. will play a larger and long term role in shaping this region and its future."

Japan is carefully monitoring a North Korea that successfully tested a nuclear weapon in 2006. These tests triggered UN sanctions against such testing and development of associated technology that might deliver the weapons. Nevertheless, the North Koreans launched a “weather satellite” in December 2012- despite the UN sanctions.

There is also China's troubled neighbor India, which has worked closely with the U.S. to build a "multi layered defense system". India’s efforts were thinly disguised as being against their, belligerent next door neighbor Pakistan - not China.

The Philippines are also concerned about China and its growing military presence in the region. Especially in the mineral rich, territorial waters of the South China Sea. Philippine Defense officials expect "more U.S. ships, aircraft, and troops for multi-national, training exercises as well as support for disaster and relief operations.

Vietnam is also concerned about the threat of an economically, dominant China that can project its monetary power through military strength and adventurism. Vietnam is an unlikely U.S. BMD partner at this time, but this could change if, and when, they feel more directly threatened by the Chinese.
Japan is perhaps the most worried player at this time. They are so dependent on the U.S. for their own defense, and are currently "squaring off" against the Chinese over islands and a resource-rich territory in the East China Sea it calls Senkaku. China calls it Diaoyu. China recently included these islands in their passport listings-inferring political control. This set off an immediate diplomatic battle. In December, China flew a military aircraft over the region causing Japan to scramble eight fighter jets. No shots were reportedly fired, but things could heat up. There have been massive protests in China against the Japanese insistence that they now own the territory, and trade between the world's second and third largest economies has dropped precipitously.

The present administration appears to want to control the growth of China’s influence and dominance in the region and is courting neighboring states. Unfortunately many of these states have strong economic ties with China. Australia, for example, is a major commodity exporter to China. Japan and South Korea are exporting manufactured goods to the growing Chinese markets. These countries want to protect themselves from China, but also have to keep and eye on their own pockets. This all could change if China were to become more aggressive. Adventurous.

In November 2012, Cambodia hosted the 7th East Asia Summit which included heads of state from the U.S., China, Australia, Japan, South Korea, and others, Russia sent a foreign minister.

At this event, President Obama focused on the need to "tackle" regional issues and solve the territorial disputes plaguing East Asia. China was present, but President Obama still offered the commitment of increased military cooperation between the U.S. and Japan, while promoting dialogue and action on increased economic exchange between the attending powers.

While all this was going on, the Congressional Research Service (CRS) noted that- despite the threat of an arms build-up- there was also the specter of a rising economic super power in Asia. China was a nation with new, military, global reach that was forcing the Americans into "laying the foundation" for a region-wide missile defense system. A system that virtually surrounded an aggressive China -and its nasty, little, hermit-neighbor- North Korea.

How far the BMD concept goes is pure conjecture at this point, and will depend on regional hostilities and economic necessity. China is largely export dependent, and as such is vulnerable. It does however, hold over 3 trillion dollars of U.S. debt, along with that of others. It is therefore wealthy where we are indebted. It is probably safe to say an allied, defensive shield will continue to develop with an offensive capability already in place.

The world’s economic power base is slowly shifting eastward towards Asia from Europe and the European Union and a cash-strapped U.S.

The Obama Doctrine may grow, but can we afford it? Time will tell!

Ralph Murphy is a former economist with the CIA

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