Tag Archives: China

Why the U.S. outspends the world on defense

By CATHERINE NGAI
WASHINGTON – Evan Siff comes from a military family. His great grandfather was a general, his grandfather was in the navy and so was his father. For Siff, staying close to that tradition was second nature.

But, he chose the academic route and pursued an MA in International Relations at Durham University in England. In his dissertation, he examined NATO as an instrument of U.S. foreign policy, and how that relates to US military spending.

If you ask him what he learned as a result of the degree, his answer will be unorthodox.

“When I was writing my thesis, I really examined why NATO didn’t go away. The fall of the USSR made it obsolete,” Siff said. “I found out some things that didn’t help my outlook on things at all…I had gotten pretty cynical. The more you study, you more you will realize how much lobbyists actually determine legislation in the U.S.”

And while most of his fellow-classmates moved into government jobs, Siff chose to work in public relations at Topaz Partners, a Boston-area technology PR firm, because he was disappointed in how “political” the military had become, especially when the U.S. is pouring millions and billions of dollars into two wars that seem too expensive. (Continued below graphic)

In U.S. Dollars. Source: Stockholm International Peace Research Institute
Graphic by Catherine Ngai

The current U.S. defense budget proposal of $708 billion for fiscal 2011, a 6.7 percent increase from the year prior of $663.8 billion. According to the Stockholm International Peace and Research Institute, this number surpasses defense spending in the next 10 countries combined. Some question why this number is so big and whether reducing it would help lower the nation’s budget deficit.

“The US military is the pillar upon which the stability and safety of the international system rests,” said Daniel Goure, vice president of the Lexington Institute, a libertarian think tank based in Arlington, VA, in an interview. “It’s not in our interests to see the Middle East exploding into war or to see South Korea overrun by North Korea.”

Goure says that although the U.S. military budget is large, it acts as an international defense mechanism. He argues that the U.S. uses its military to keep peace internationally.

He also points out that if the entire defense budget were cut to zero, it would further exacerbate the debt situation instead of alleviating it. He reasons that eliminating the defense budget would mean firing the nearly 1.4 million men and women on active duty and the another 1 million in the Reserves and the National Guard. This would mean increasing the already high unemployment rate.

Pages: 1 2

Tagged , , , , , , , , ,

U.S. debt a national security threat?

As of this month, the federal debt stands at more than $13 trillion, or about 90 percent of annual Gross Domestic Product.

Let’s do the math. If you had been alive since Jesus was born and spent a million dollars every day, you wouldn’t have spent $1 trillion dollars, never mind $13 trillion. That’s according to calculation by Kevin Williamson of the National Review.

Why is the burgeoning debt a security threat? In addition to hindering economic growth, a 90 percent threshold of government debt relative to G.D.P. will make it extremely difficult for the U.S. government to make debt-service payments to its creditors, including governments around the world.

If its creditors in Asia and the Middle East doubt Washington’s ability to pay back interest on treasuries, they may stop purchasing US-backed securities, experts warn. They might even demand higher interest rates. Both will impede the federal government from doing its job, including protecting the country’s security.

As of last month, a quarter of the country’s debt is in the hands of foreign governments, nearly double the ratio in 1988 at 13 percent. Of that amount, China holds 23 percent, followed by Japan with a little more than 20 percent.

“I think the biggest threat we have to our national security is our debt,” said Adm. Mike Mullen, Chairman of the Joint Chiefs of Staff, during a “Tribute to the Troops” breakfast in Washington last month.

House Democratic Majority Leader Rep. Steny Hoyer, D-Md., said, “It is time to stop talking about fiscal discipline and national security threats as if they’re separate topics.” His comments came during a speech to the Center for Strategic and International Studies in June.

Hoyer phrased the whopping dollar amount as “unsustainable,” and mentioned how financial dependence has toppled other superpowers.

David Walker, the former Comptroller General and current President of the Peter G. Peterson Foundation, said Washington’s financial dependence on foreign loans affects its policy towards its lenders. “One of the reasons American tax payers now guarantee $5 trillion in Fannie Mae and Freddie Mac debt is because the Japanese and the Chinese demanded it,” said Walker during an interview with Politics Daily earlier this year.

Walker added, it’s likely that “China will say, ‘We’re not going to lend you money unless you pay us higher interest rates.’”

While that is a possibility, the Basel, Switzerland-based Bank for International Settlement reported that that is highly improbable for public sector investors, i.e. governments. The global institution caters only to central banks and international organization, with the aim of fostering cooperation within the world financial system.

Doug Bandow, a senior fellow at the Cato Institute agrees. The specialist in foreign policy and civil liberties said that asking for a higher interest rate, and thus putting the U.S. economy in danger, will be a “self-destructive move” by Beijing. “The Chinese government knows the importance of a vibrant American economy, China’s biggest market.”

Similar confidence in financial stability in the future is also reflected in a briefing paper published on July 26 by the Economic Policy Institute, a non-partisan, non-profit think tank. John Irons and Josh Bivens wrote the fact that interest rates of U.S. treasuries are at historic lows reflects that there is still demand by global investors.”

While there is no immediate threat to national security, the defense chief, Mullen, is urging sharp cuts in expensive programs. His department spends $700 billion a year, the biggest part of the federal budget. That’s as much on defense as the rest of the world’s combined.

The largest program right now is the F-35 Joint Strike Fighter, funded at a level of $11.5 billion in next year’s budget request.  The aircraft carrier replacement program receives $2.7 billion in annual funding, the DDG-51 Destroyer gets $3.0 billion, and Space-Based Infrared System receives $1.5 billion.

Todd Harrison, Senior Fellow for Defense Budget Studies at Center for Strategic and Budgetary Assessments said it is time for an overhaul. “It would be a mistake to simply downsize the military such that in a few years it looks essentially like a smaller version of the force we have today. ” Harrison added, “We should use this as an opportunity to make some strategic decisions about what missions and capabilities our military no longer needs to support.” Harrison concluded that targeted cuts that reshape the force could actually be a benefit in the long run.

Despite worries that the burgeoning debt might put the U.S. government in vulnerable position, many experts claim its influence on world economy is too large for any one of its creditors to want to destabilize. And with the defense department showing unprecedented efforts to downsize, the rate of government spending will likely slow down.

Tagged , , , , , , , , , , , , ,

How far will the U.S. go to fuel the war in Afghanistan?

WASHINGTON – Some of the characters are new, but the scene in Bishkek, Kyrgyzstan is one of déjà vu. This past April’s riots were the second time in five years that the United States was left in the uncomfortable position of watching as a president of the small Central Asian country was ousted amidst allegations that U.S. fuel contracts supplying a major logistical hub for the war in Afghanistan were funneling millions of dollars to Kyrgyzstan’s presidential family.

Even before the most recent overthrow, the House National Security Subcommittee was looking into contracts in the region, which is renowned for its corruption. Now, the subcommittee has undertaken a full-fledged investigation, focused on the contracts at Manas Transit Center in Kyrgyzstan, while the Department of Defense moves to open up bidding on the suspect contracts.

“Let’s be honest: At many times throughout our history, the United States has closely dealt with unsavory regimes in order to achieve more pressing policy or strategic objectives,” Rep. John Tierney, D-Mass., said in his opening remarks at the investigation’s first hearing in April. “The United States will have to work hard to restore our credibility in (the Kyrgyz’­) eyes, beginning with transparency regarding U.S. fuel contracts at Manas.”

The F.B.I. collaborated with the Kyrgyz government on an investigation in 2005, when accusations that the son of then-president Askar Akayev was improperly benefiting from U.S. fuel contracts. That FBI report was never made public, but an independent investigator for the Kyrgyz told The New York Timesthat he suspected the new president, Kurmanbek Bakiyev, simply took over the same business model, installing his son, Maksim Bakiyev, as the beneficiary.

Now, the anti-corruption interim government led by Roza Otunbayeva is opening its own investigation, focused on six subcontractors allegedly controlled by Maksim Bakiyev.

“Whatever the Pentagon’s policy of buying warlords in Afghanistan, the state of Kyrgyzstan demands more respect,” Edil Baisalov, chief of staff for the interim lead, told ­The Times in April. “The government of Kyrgyzstan will not be bought and sold. We are above that.”

The closely linked companies at the center of the allegations are Red Star and Mina Corp., which provide enormous amounts of Russian jet fuel to power U.S. troops in Afghanistan. Together, the companies have received more than $1 billion for fuel sales over the past six years.

The fact that companies’ director of operations, Charles “Chuck” Squires, is a retired Army lieutenant colonel and former defense attaché to the U.S. embassy in Bishkek raises some eyebrows. Except in the case where a presidential directive makes an exemption for national security concerns, military contracts are subject to the Foreign Corrupt Practices Act, the law that outlaws bribery in U.S. business transactions overseas.

“If this were a commercial setting, an investigator would probably start by studying whether there really is an arm’s-length relationship between Red Star and Pentagon contractors,” Scott Horton, an expert on accountability in military contracts, said in his written testimony to the House committee. “If not, an investigator might quickly conclude that it is a shell interposed to provide a buffer between the procurement officers and companies controlled by the president’s family.”

The hearing witnesses consistently hit the refrain that the U.S. embassy delegation was unnecessarily close with the Bakiyev regime. The essential question is whether this was a State Department blunder, or if it was part of a larger policy of currying favor with the regime to ensure the future of the Manas air base.

In February 2009, in what was widely seen as a quid pro quo, Bakiyev announced plans to close the Manas base on the same day that Russian President Putin announced $2.15 billion in aid to the country. Later, Bakiyev flipped when the U.S. agreed to pay $17 million more in annual rent for the base.

Earlier this month, the Department of Defense moved to open up bidding on the contracts to the Manas base. Meanwhile, the United States and Kyrgyzstan have been in intense negotiations over taxes on fuel being imported to the base.

In impoverished Kyrgyzstan, the U.S. air base and its connected contracts make an easy whipping boy for disgruntled citizens whose country was ranked 128 out of 149 for corruption by World Audit in 2009.

But in business environments like that of Kyrgyzstan, it may well be that only countries connected to political elite will be in a position to meet U.S. needs.

“Allegations like these are an inevitable by-product of working in this part of the world, where corruption is just the way business is done,” said Martha Brill Olcott, an expert on the region for the Carnegie Endowment for International Peace. “The question is, were these contracts illegal, or were they simply unethical? There are only a few places you can get oil from – you’ve got to have a refinery – and it’s predictable that the bigger companies, the ones with elite connections, are going to be the ones that can get the best deal for the U.S. government.”

Tagged , , , , , , , , ,

Has the U.S. got its eye on the right ball in Kyrgyzstan?

WASHINGTON – When opposition forces toppled Kyrgyzstan’s government in April, many Americans would have been hard-pressed to find the country on a map, despite the fact it’s home to an American air base that provides a key supply line to troops in Afghanistan.

Simply looking at a map would tell you how disjointed U.S. policy in the region is, says Paul Goble, an expert on Eurasian issues who has served in various capacities in the Central Intelligence Agency and the U.S. State Department. Although U.S. efforts have remained fixated on Russian influence in the former-Soviet region, the country does not in fact share a border with Russia – but it does with China.

“There is a very large geopolitical switch going on that Americans are not ready for,” Goble said. “China is simply going to be the biggest player in the region. Russia doesn’t have the leverage it once did.”

With its booming population and industry hungry for raw materials, China is roaming the world in search of energy supplies and minerals. In its backyard of Central Asia, it is investing billions in infrastructure including pipelines, railroads and highways.  Earlier this year the first segment of an oil pipeline stretching from Turkmenistan to China opened up. The project signifies what many experts say is a shift in the region’s petroleum resources away from Russia and toward China.

“Economic interests are the Chinese entryway into Central Asia and Eurasia,” said China expert Russell Hsiao of the Jamestown Foundation. “Kyrgyzstan is a pretty crucial piece in the whole of the puzzle.”

In the near-term, most analysts agree that Russia poses the greatest threat to America’s primary interest in the region – the Manas Air Base, which provides a critical link in the supply chain to U.S. operations in Afghanistan. Last year, the now-deposed president Kurmanbek Bakiyev agreed to end the U.S. contract for the air base after receiving a promise for more than $2 billion in aid from Russia. Bakiyev later reversed, after receiving the initial installment of Russian aid, when the U.S. agreed to pay more than three times the original rent for the base. Now, there is wide speculation that Russia supported the revolution that deposed Bakiyev in early April.

But, while a heavy-handed media blitz tends to accompany Russia’s tactics, Chinese policies are subtler. The flood of top provincial party leaders that travelled to the bordering Chinese province of Xinjiang in the days after the revolution, and the reported financial support China has lent the provisional government, underscore the Chinese leadership’s vested interest in the country.

In addition to being a hinge in China’s plan for expansion into Central Asia and Eastern Europe, Beijing fears that Kyrgyzstan raises the specter of unrest on its borders. Their particular concern is that the unrest could spread to the Muslim Uighur population, which makes up more than half of Xinjiang province, and which has members in Kyrgyzstan.

Chinese economic interests and the country’s desire for stability in the region do not directly conflict with U.S. goals in Kyrgyzstan. Satiating the Chinese appetite for oil with resources in Central Asia, in fact, could prevent the country from undertaking measures that conflict more directly with U.S. interests. Analysts warn, though, that Chinese economic policy lacks the ideological prerequisites that the West has come to expect.

“They’re willing to bribe, they’re not concerned about human rights violations, their businesses can deal with corrupt practices that our businesses can’t,” Goble said.

And while Chinese leadership is not directly threatened by the revolution, some authoritarian leaders in the region such as Islam Karimov of Uzbekistan and Nursultan Nazarayev of Kazakhstan – with whom China has vested economic relationships – are.

“If they’re able to hold free and fair elections, which has never happened in this region before, then it’s going to be a huge threat to some countries in this region,” said Erica Marat, a Eurasia expert. “None of them want Kyrgyzstan to become a good example.”

As the U.S. navigates relations with the provisional Kyrgyz government – a task made more difficult by allegations that the American military knowingly purchased corrupt fuel contracts that benefited the deposed leader’s family – regional experts warn that policy makers should keep an eye on the East as well as the West.

Tagged , , , ,


© 2010 – 2013 All Rights Reserved | Coraline theme by WordPress