Retrieving the Irretrievable: The Clinton Foreign Policy Legacy
Summary
In the final months of his presidency, President Clinton has
launched vigorous efforts to establish his foreign policy legacy,
primarily in China and Russia. The president has battled for an
inherited foreign policy - one that insists that free markets and
democracy are mutually reinforcing concepts that in turn can bring
former adversaries into an American-engineered economic and
political system. After a decade, this view has been proven
empirically false. And yet this president continues to pursue it -
just as his successor likely will.
Analysis
Two recent events have caused us to consider President Clinton's
foreign policy legacy. In the waning days of his presidency,
Clinton has faced massive challenges in foreign policy. In both
China and Russia we have seen substantial political shifts and
reversals over the past year; neither has been to the advantage of
the United States. There can be little question but that relations
with both have deteriorated dramatically since 1995.
The president has spent the last two weeks trying to salvage
relations with both countries. The summit with Russian President
Vladimir Putin and the desperate struggle to get permanent
normalized trade status for China through the House of
Representatives have been different strands of a single fabric.
Clinton's foreign policy has aimed at containing both Chinese and
Russian aspirations within the context of the global trade regime
that the United States has presided over since the end of the Cold
War.
This foreign policy is not original; it evolved directly and
naturally from George Bush's response to the collapse of communism.
Behind that was the worldview contained in Ronald Reagan's
conservatism. This is a critical point: the policy pursued by the
United States following the Cold War has not been some random or
idiosyncratic response.
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Rather, American foreign policy has been based on a perspective
that has run deep in American thinking and has transcended
ideology. This perspective has consisted of four parts:
1. The free market is universally attractive because it inevitably
yields greater economic benefits. Except for tyrannical regimes
whose power might be threatened by the free markets, nations tend
to gravitate toward the free market.
2. Even inherently tyrannical regimes will tend to adopt the free
market in order to maintain a position within the international
system. When encouraged with investment and trade, these regimes
will liberalize and increase democratic tendencies.
3. In a corollary assumption, societies that are democratized will
tend to defend both market reforms and human rights. Democracy,
market reforms and human rights are mutually reinforcing concepts.
4. Countries that are democratic and have free markets will not be
political and military competitors with other democratic, market-
oriented countries because the risks outweigh the benefits.
In this view, the primary interest of the United States is to
facilitate the growth of the free market in both Russia and China.
If the free market grows, political liberalization and
democratization would follow. In due course, domestic political
forces would arise that have a vested interest in defending the
free market and democracy. These forces would be natural allies of
the United States. As they grow more powerful, the threat of
national conflict between them and the United States would decline.
Therefore, maintaining economic engagement with both countries was
the foundation of U.S. foreign policy.
This policy has substantially benefited economic interests in the
United States. Indeed, as we saw during the recent debate over
China, momentum for economic engagement came less from ideologues
than from corporations. This is, of course, as it should be. A
robust foreign policy requires both principle and interest. The
fact that American interests profited from the policy does not
repudiate it - but neither does it validate it.
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A great debate could be waged on the connection between capitalism
and democracy. In fact, one has gone on for the past 150 years.
While it may be true in the long run that one reinforces the other,
it is clear that in the short run this theory has now been proved
false in both Russia and China.
The case is clearest in Russia where the free market has proven an
economic calamity of unparalleled proportions. In fairness, a free
market requires a legal system that defends property rights, a
condition that has never existed in Russia. The democratic system
has been discredited by the economic system. Former President Boris
Yeltsin's economic reforms created an oligarchy of unearned wealth
and his political reforms were seen as part of a system of
corruption. The net result: the basic premise of U.S. foreign
policy in Russia has been proven false and the rest of the
assumptions have unraveled.
The case is similar, though more complex, in China. China did
indeed introduce market reforms. Market reforms did generate a
strong democratic movement favoring human rights; the movement was
crushed at Tiananmen Square 11 years ago while the market reforms
remained.
The assumption that the free market will yield political
liberalization was falsified, almost from the start. Economic
growth continued through the 1990s. But it was an economic growth
that diverted the benefits of the market economy to a different set
of oligarchs, those in the party and in the military. Then the
meager economic benefits were smashed when the region's economic
crisis hit China's economy, which has never recovered.
The fundamental assumptions of American policy have been proven
false in both countries. Neither regime is what Washington had
hoped for. Neither economy is developing market-oriented democracy.
The final test is one that both countries are failing: In various
ways, Beijing and Moscow are challenging U.S. interests in the
political and military arena, and both will intensify that
challenge.
In immediate retrospect, the president's struggles on these fronts
- including the summit with Putin - are desperate attempts to
retrieve the irretrievable. Though begun before the current
administration, these policies have now reached bankruptcy. What
two administrations have now missed, or ignored, is that:
1. Creating a market economy out of tyranny is extraordinarily
difficult. If it can be done at all, it will take generations.
Economic theory can be conceived in terms of generations. Political
reality cannot.
2. The introduction of market reforms does not necessarily reform
regimes. It frequently corrupts them. It is possible to confuse
corruption with reform, which is what happened in China in the
1990s. A resilient regime can recover from corruption by
circumscribing market reforms. In so doing, the regime becomes more
- not less - repressive.
3. If economic reforms don't succeed and don't create political
reforms, economic downturns intensify nationalist feeling and
increase pressure to compensate for economic failures with poltico-
military successes. Now the consequences of failed market reforms
will be equal to the effects of productive market reforms.
In other words, assumptions that began in the 1990s have proven
false a decade later and can create the exact opposite effect than
was expected.
There is good reason that U.S. defense planners are thinking about
Chinese blockades of Taiwan and of Russian pressure along the
periphery. It is also understandable why Clinton believes that
engagement on an economic level would alleviate these problems.
But it is impossible to engage with Russia economically because it
cannot possibly introduce a market system. Yeltsin could not do it
by law. Putin cannot do it by fiat. Appointing regional czars
cannot create property rights. It can only change the
beneficiaries. Similarly, it is impossible to reform China through
economics. A decade after market reforms yielded the first
benefits, the assumption that this will turn into political reform
has proven empirically false.
There has been a fundamental assumption at work here, shared by
economists as diverse as Karl Marx and Milton Friedman: that
capital has no country. This means that money moves where profits
go and borders lose meaning. That is the premise of Clinton's
foreign policy. The problem is not that the premise is false, but
that it is true only under very specialized circumstances: where
there are free markets, where the markets work, where the regime
subordinates itself to profit.
The problem here is that the president and his advisors have
continued to act as if the theory were true, long after empirical
evidence proved it was false. Too many academics and too many
businessmen have wanted to believe. The facts are otherwise. Russia
and China will not integrate into the American free trade regime
except where these regimes directly benefit, given their
circumstances.
Rather than seducing Russia and China, the United States has
seduced itself. Clinton has spent the last weeks trying to pump
life into an illusion. It is his good fortune that he will make it
to the end of his term without seeing the full consequences of this
miscalculation. But the presumptive Republican and Democratic
nominees share in the illusion every bit as much as their
predecessors.
And this will be the central problem facing U.S. foreign policy:
Why would what failed in the past succeed in the future?
Overthrowing a failed orthodoxy is never easy or painless. It is
not clear how great the pain will have to be.
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(c) 2000 WNI, Inc.
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