Against Ceteris Paribus Theories of International Relations, A Prelude

A quick hit from me, as I'm swamped with dissertation work and am also in grading purgatory. But this, via Tyler Cowen, is interesting:

Since 2008, in response to the economic downturn, most big European countries have cut defence spending by 10-15 per cent. The longer-term trends are even more striking. Britain’s Royal Air Force now has just a quarter of the number of combat aircraft it had in the 1970s. The Royal Navy has 19 destroyers and frigates, compared with 69 in 1977. The British army is scheduled to shrink to 82,000 soldiers, its smallest size since the Napoleonic wars. In 1990 Britain had 27 submarines (excluding those that carry ballistic missiles) and France had 17. The two countries now have seven and six respectively.

And yet Britain and France are commonly regarded as the only two European countries that still take defence seriously. The British point out that, even after the current round of cuts, the UK will have the fourth-largest military budget in the world. Britain is also, for the moment, one of only two European nations to meet the Nato target of devoting 2 per cent of gross domestic product to defence – the other is Greece.

The situation in most other European countries is worse – Spain devotes less than 1 per cent of GDP to military spending. And much European military spending goes on pensions or pay, not equipment. The Belgians distinguished themselves in the Libyan campaign of 2011. But about 75 per cent of Belgian military spending now goes on personnel – causing one critic to call the Belgian military “an unusually well-armed pension fund”.

Britain and France now have one aircraft carrier... combined (they share it). What this means is that the US now accounts for 50% of the world's naval power.

Why does this matter? For awhile I've been hoping to carve out time for a short article with the working title "Against Ceteris Paribus Theories of International Relations". It is intended as a retort to those who claim, based on stylized comparative statics, that US military spending is essentially wasted and therefore those funds should be re-directed either to shoring up the social welfare state or tax rebates. (As of now I'm planning on targeting John Quiggin particularly, who has made similar arguments to these in especially egregious form on numerous occasions, but the scope may broaden, narrow, or shift in some other direction at the point of writing.)

In other words, the article will argue that if the US significantly lowered its military spending the effect would be dynamic, not static: an increase in security dilemmas worldwide, which would be marked by a large and sustained increase in military spending in the non-US world. The net effect could very well be great global military spending; this would be something of a tragedy on its own, since most military spending does not go to uses which expand human dignity and well-being. But it could be worse if security dilemmas lead to arms races which spiral into conflict.

The core of the argument will be this: take away 50% of the world's naval power... do you think anything else might change? Put into the language of economics, some sectors of the economy are natural monopolies; it just wouldn't be efficient to have 100 different telephone companies putting up poles all over the place. Similarly, from the perspective of global welfare, it is probably more efficient for the US to spend disproportionately on its military. There are downsides to this, of course, similar to market monopolies. Nevertheless, the most efficient outcome is likely for the US to out-spend the rest of the world to such an extent that security dilemmas (and concomitant arms races and conflict) do not result, accepting the negatives that go along with this positive.

Anyway, that paper is roughly 20th in the queue so I'll probably never get around to it.

Korea

When I went to bed last night the news sites were all saying that a resumption of the conflict on the Korean peninsula was possible -- even "imminent" according to one source -- if the South proceeded with its plans to hold a military exercise in disputed territory. I went to bed thinking that I'd wake up to no news, which would certainly be good news. That turns out to have been right, so here's some thoughts on the situation.

1. The security dilemma is still the most important concept in international relations. Obviously the South is spooked by the North's nukes and occasional belligerence, and felt the need to demonstrate its defensive capabilities. The North is obviously spooked by the fact that a huge, well-funded military backed by (still) the only global superpower is right below it, and it can't necessarily count on its only ally (China) for much support.

2. Schelling is still boss. He first identified the "cliff-dancing" strategy in his 1960 book, and it is still relevant. The South just danced a bit closer to the brink, and it worked.

3. North Korea is very weak, but it is not crazy. Neither impression is the one Kim Jong Il wishes to leave, but that conclusion is inescapable at this point. The North threatened retaliation if the South conducted this exercise, but immediately back-tracked since those threats were clearly not credible. In fact, it appears that once its bluff was called it was willing to do quite a lot to walk back its earlier threats. It offered possibly-meaningful concessions in negotiations with Bill Richardson, including resumption of the six party talks, access to its nuclear facilities by outside inspectors, and the return of the remains of U.S. soldiers that died during the Korean War. I'm not at all suggesting that the South should continue to posture in this way, but in this case it appears to have worked.

4. Nukes only get you so much deterrence capability. Namely, they can (perhaps) act as a repellent, but cannot compel others to

5. For all of the talk about shifting power structures in Asia, the U.S. and its ally still won the day. Not just by holding the exercise without retaliation, which was sort of a "remind them who's boss" maneuver, but also by the response of the other regional powers. China and Russia implored the South to stand down, to no avail, indicating a clear lack of power and influence in the region. This follows the U.S.'s decision to conduct joint exercises with South Korea last month, a move China opposed because it occurred in China's "exclusive economic zone" but did nothing to prevent.

6. This incident is really the first time the Obama administration has been willing to stare down some of the U.S.'s antagonists, and he won: the other side blinked (DPRK) or sat down (China). Not only the military exercises, which not only involved moving the USS George Washington strike group to the Yellow Sea, but also passed the ROK-US trade agreement. I'm not sure whether this will encourage more risk-taking by the administration or even whether it should, but it is notable.

7. Keep all of this in mind when you hear that Iran is crazy, undeterrable, will be able to marshall nuclear capabilities to blackmail the Middle East, etc. All of those ideas have been tested over the past month in Korea, and all of them have been found wanting.

UPDATE: Drezner also posted thoughts. I like his #4, but I don't buy it. I think #3 is more likely, and if true is a positive sign for the future of Asia.

FOTD

China is building its first aircraft carrier. As Yglesias says:

News that China may be in the midst of building its first aircraft carrier is a reminder both of China’s rising geopolitical clout and also the reminder that they remain quite a bit behind us.

"Quite a bit" is an understatement, of course.

Yglesias also points to this very good article by Rob Farley on why a U.S.-Japan-India coalition to balance against China may not be a good thing, even if its inevitable. It's gated for non-subscribers, but those with institutional IDs (i.e. students) should be able to get access.

Korea

A former student e-mailed me and asked for advice on a paper he was writing about the Korea situation. Up until last week he had been focusing on China's role as facilitator of negotiations. He wanted my take on last's week attack, and the responses from the South, China, and the US since then. A few days late, but this was my off-the-cuff response:

I'm not sure how to read China right now. On the one hand, there is a long history of N Korea doing belligerent things to get attention, and then negotiating some agreement that gets them some aid or something in exchange for them not being stupid anymore. My first reaction is to consider their more recent actions in the same vein, given that history. In that case, you could maybe interpret China's nonplussed reaction as buying into that strategy to get all sides back to the negotiating table.

On the other hand, this recent action is more serious than past actions, and occurs in a different context: succession of power from Kim Jong Il to his son. I don't think this is going to lead to war necessarily, but I do think that it signals that the current status quo is likely untenable. The likelihood of a resumption of fighting has certainly gone way up, and S Korea appears to be losing patience. China also said (I think yesterday) that joint US-S Korean military exercises in the Pacific violated China's economic sovereignty (b/c China uses that water for shipping), which is a sign that China is not interested in marginalizing N Korea to get closer to the US and S Korea right now. Again... this could be a negotiating ploy, but then you'd have to think that both N Korea and China are bluffing. That could be correct, but I'm not very confident that it is.

Certainly the security dilemma is present, and there is some risk of spiraling. You can also think about how deterrence can have negative side effects... the US' security guarantee for S Korea could make S Korea *more* likely to retaliate and escalate the conflict. They know they have a powerful ally, so that will give them much more confidence than they'd have otherwise.

The US obviously does not guarantee N Korea's security, but China might. If so, then you might have a situation in which neither side (US or China) wants to escalate and both sides know it. In that case, N Korea might think that it can act with impunity. Think of it this way: N Korea knows that neither the US nor China want war, and will do whatever it takes to prevent it. The N Korean leadership is also going through a power shift, and the new leaders will want to demonstrate to their citizens that they are strong leaders, and worthy of support. What better way to do it than to attack S Korea in a limited fashion, and not suffer any repercussions? It's true that the only reason there won't be repercussions is because of China and the US, but the N Korean citizens don't know that. (There's a domestic politics information asymmetry too.)

Anyway, that's how I'm reading the situation right now.

IPE and The Security Dilemma

The other day Stephen Walt wrote this about the U.S./Saudi arms deal (that Alex blogged about here):

But my real question is this: if our primary goal is to discourage Iran from developing nuclear weapons, then might this new initiative be counter-productive? Doesn't it just give Iran an even bigger incentive to get a nuclear deterrent of its own? Think about it: if you had a bad relationship with the world's most powerful country, if you knew (or just suspected) that it was still backing anti-government forces in your country, if its president kept telling people that "all options were still on the table," and if that same powerful country were now about to sell billions of dollars of weapons to your neighbors, wouldn't you think seriously about obtaining some way to enhance your own security? And that's hard to do with purely conventional means, because your economy is a lot smaller and is already constrained by economic sanctions. Hmmm....so what are your other options.

This is pretty standard IR security analysis, and probably true as far as it goes. (For those interested, there's a very deep body of research on the security dilemma.) But it got me thinking about applications for IPE. A lot of folks are wringing their hands over Sino-American economic brinksmanship along of number of dimensions including trade protections, exchange rate policy, macroeconomic imbalances, sovereign wealth funds, etc. In the news this week is the Sino-Japanese brinksmanship that is partially about economics, and partially about security. See here for one summary of the situation, here for a discussion of how China's perceived belligerence is helping the U.S. make stronger ties with other Asian states, and here for Drezner marveling over how inept the Chinese appear to be.

(Drezner is surprised by this; I'm not, because Thomas Friedman has recently been writing about how wise and capable the Chinese are. Since Friedman is always wrong about everything, I just assumed the Chinese government would make some blunders in short order. Betting against Friedman: Safest play in town.)

Does any of this conform to the logic of the security dilemma? I think it might. Krugman, for example, has encouraged the U.S. to retaliate against China's exchange rate management by threatening to raise tariffs. He's also suggested that the U.S. threaten similar actions if Germany does not pursue looser monetary policy. He suggests that this is necessary for the U.S. to protect itself against negative externalities being generated by those countries. In other words, Krugman is suggesting using tariffs in self-defense. We wrote a series of posts here discussing why Krugman's "get tough with Chermany" attitude was unlikely to benefit the U.S. in any way. We didn't touch on the logic of the security dilemma, so I'll illustrate it briefly here.

Suppose we do make those threats, and suppose those threats are perceived as credible*. Even further, suppose we get multilateral support from Japan, the U.K., and other leading states in an attempt to pressure China from all sides. Krugman believes that this would lead to major concessions from China. If those threats were issued, had multilateral backing, and were somehow made credible, that might be enough to extract concessions from China. But it might not be. If China feels threatened, it might escalate the situation by further manipulating the RMB, adding new protections for domestic firms, or pursuing preferential trade arrangements with other states. In other words, China may try to preemptively shield themselves from the U.S.'s threat. After all, China might think, the U.S. faces stronger domestic political constraints that we do, so they'll be forced to back down first.

Now it's the U.S.'s turn. Rather than drawing down as we had hoped, China has re-upped. Do we respond in kind? Politicians are not very good at letting sunk costs go, so perhaps we'd respond to China's new policies by doubling down on our own. Rinse, lather repeat. There's a reason these things are called trade "wars", and the reason why we've spent so much time constructing and strengthening multilateral institutions like the WTO is to prevent this type of spiraling from occurring.

The logic of the security dilemma also applies to the China-Japan squabble, as China has responded to Japan's detention of a Chinese national by restricting exports of rare earth materials to Japan. This is already having the effect of moving other Asian nations closer to the U.S. as a means of defense, and may prompt Japan to retaliate in other ways.

This is all pretty basic, but I don't often see the security dilemma applied to IPE subjects. Are there other extensions of the logic that I'm missing?

*Two exceedingly unlikely ifs, I know, but just go with it.