The 1997 E. Asian financial crisis and world trade

Loomis in a Lawyers Guns & Money post linked to this piece that in turn linked to this piece by Dean Baker.  I was particularly interested in Baker's point that many poorer countries started running large trade surpluses with most of the developed world after the '97 East Asian financial crisis.  Governing elites in the S.E. Asian countries after the crisis felt they needed to build up large foreign exchange reserves (and were also, in effect, told to by the IMF); hence, the need to increase their exports as much as possible to the rich countries.  The U.S., unlike Europe and Japan, was running a trade deficit with these countries before the '97 crisis, but the U.S. trade imbalance with them got larger after that, peaking in 2005.  One result was increased loss of U.S. manufacturing jobs.  Anyway, you can read the links for the details of the argument.

Once more with the Asian pivot

A WaPo piece by David Nakamura -- quick reading because so much of it is what might be called 'mainstream-media foreign-policy boilerplate' -- concludes that the Obama admin's Asian pivot is falling short of expectations. The, by implication, obstructionist Dems are blocking the TransPacific Partnership 'free trade' pact (did it ever occur to the WaPo that maybe the TPP has problems?); the State Dept, according to a recent Senate report, is not focusing much of its resources on Asia; and as a result (gasp, what a surprise) the pivot has come to be seen in the region as militarily-focused, the piece informs us.

Also (how shocking), the Chinese believe the aim of the pivot is containment, the Obama administration's protests to the contrary notwithstanding. Of course the piece does mention, in quick passing, the placement of a rotating contingent of U.S. Marines in Australia that was announced shortly after the pivot was launched. What if China placed a rotating contingent of its soldiers in, say, Cuba or, less plausibly, Jamaica? Wouldn't the U.S. admin think China's aim was containment of the U.S.? The distinction between containment and hedging, mentioned in the article, seems not worth wasting all that much time on: China likely will view the redeployment of U.S. military assets to the region as containment, regardless of what the U.S.'s  preferred label is.

There is however at least one success story, or semi-success story, from the pivot, and that is Burma. Hillary Clinton made two trips there as Sec. of State, the second time accompanied by Pres. Obama, and Burma is on what seems to be a gradual path to political liberalization, with emphasis on "gradual." (Jeffrey Brown on the NewsHour had a report from Burma/Myanmar the other day, which I heard on the radio but haven't watched yet.)

The case for cutting U.S. military aid to Pakistan (with a postscript on the Pakistan 2020 report)

Lawrence Wright, in the May 16 New Yorker, advocates reducing U.S. support for Pakistan's military and intelligence service. (Phil Arena earlier drew attention to this piece at his blog.) I'm inclined to agree with Wright's prescription if not with all the reasoning. It seems likely that a lot of the aid is being diverted into non-military investments or used in ways that have nothing to do with the intended purposes. Wright notes that the Pakistani government is not doing much to expand its tax base (fewer than 2 million people pay taxes, he says, in a country of 180 million people) beyond appointing eunuchs as tax collectors in Karachi. The Pakistani military remains over-focused on India, which, as Wright observes, is not the main current threat to the state.

However, some of the presumed benefits that Wright connects with cutting military aid may prove difficult to realize. He mentions reducing U.S. tariffs for Pakistani textiles as a way of helping the civilian sector (and Pakistan's economy generally). But as a January 2011 article in The Seattle Times (which appears to have been picked up from Wash. Post) notes:

The [U.S.] House last year passed a narrowly focused bill designed to promote export industries in Afghanistan and [in] specific zones primarily in Pakistan's northwestern border region, but a corresponding bill has been stalled in the Senate. Separately, the U.S. textile industry has made clear it would strongly oppose any legislation that is more ambitious than the bill being considered, saying it would put American jobs at risk.

(See also Joshua Partlow and Haq Nawaz Khan, "As Violence Hurts Business, Pakistanis Debate U.S. Help; Restrictions Make Textile-Export Bill Useless, Some Say," Washington Post, July 28, 2009.)

Wright also suggests that a reduction in U.S. aid to Pakistan's military could give the U.S. leverage with India on the Kashmir issue, leading perhaps to a referendum that would result in Kashmir's independence. I wouldn't bet on that (I mean the leverage part). Nonetheless, Wright's piece does make a pretty strong case for cutting U.S. aid to Pakistan's army and the ISI (the intelligence service). (See also Aqil Shah, "Getting the Military Out of Pakistani Politics," Foreign Affairs, May/June 2011.)

P.s. Wright's piece is relatively brief and thus does not address issues that must lurk in the background of any discussion of U.S.-Pakistan relations, such as the persistently oligarchical character of key aspects of Pakistani society (i.e., the power of a small number of wealthy families) and the disastrous condition of the Pakistani state education system (which I have blogged about before), just to mention two.

P.p.s. The Asia Society has recently released a report, Pakistan 2020; according to part of a roll-out session for the report that I caught on C-Span radio several days ago, it addresses some of these more basic issues. The Asia Society's press release on the report is here.

P.p.p.s. The Economist chimes in.