The Shareholder Model

September 1, 2003 Tags: Business

The Shareholder Model

Mini Teaser: The United States must revisit "the art of the deal" to preserve its global leadership.

by Author(s): Nikolas K. Gvosdev

IRAQ HAS demonstrated both the extent and the limitations of American power. The relatively swift ground campaign reinforced the lessons of the first Gulf War, Kosovo and Afghanistan: the United States possesses unparalleled military might and can bring overwhelming force to bear on any opponent. This is not, however, the whole story, for America's unchallenged military supremacy has not enhanced its ability to create and sustain broad international coalitions to pursue its long-term agenda. Realists understand the need to attract "investors" in continued American leadership, rather than relying on military pyrotechnics to produce consensus. Therefore, Washington must make it clear, not only through words, but through concrete actions, that other states have a stake in the international system and in the agenda that America sets. This does not mean that the United States offers other actors veto power over American policy. The United States must act, unilaterally if necessary, to protect its vital interests. But it does mean recognizing that "to get along, go along"--that other states are likely to accede to American leadership if their interests are bound up with ours and if they believe that acceding to Washington's requests enhances their own interests.

Last year, it seemed that the Bush Administration was prepared to follow this strategy in dealing with Iraq, giving other important actors a stake in removing the threat of a WMD-armed Saddam Hussein. In fall 2002, Washington had succeeded in crafting UN Security Council Resolution 1441, which declared Iraq to be in "material breach" of its cease-fire obligations, provided for a much more intrusive inspections regime and gave Iraq "a final opportunity to comply with its disarmament obligations" or face "serious consequences" in the event of noncompliance. This resolution passed by unanimous vote in the Security Council and was a major victory for American diplomacy. Moreover, Resolution 1441 signaled that the other major powers were prepared to accept American leadership in resolving the Iraqi problem.

But 2003 witnessed one setback after another. Idealistic rhetoric about justice and freedom for the Iraqi people found only a limited audience overseas, primarily among some segments of the Labour Party in Britain and among some politicians from "New Europe." In many countries, both the political establishment and mass public opinion reacted skeptically to such claims. Other states also disputed the American contention that Iraq posed an imminent threat to regional and global security--and Washington was unable to persuade them to adopt its own view.1

Instead, calls were made for the inspection process to continue, for months or even years if necessary, to locate and destroy any remaining weapons of mass destruction. Washington's attempts to secure a second Security Council resolution explicitly authorizing the United States and other states to use force to secure compliance collapsed.

What made this setback even more galling for the administration is that it was long-time NATO allies France and Germany that led active European opposition to a U.S. war with Iraq. Their resistance provided the cover for other states, such as Russia and Turkey, to declare their reluctance to endorse a military solution for Iraq. Even rotating Security Council members with no direct stake in the crisis--such as Mexico and Chile--sent signals that they would oppose a second resolution authorizing the use of force.

Pundits spilled gallons of ink lambasting the cravenness, cowardice and greed of our supposed partners in abandoning us in our hour of need. But all of the available evidence suggests that these parties acted reasonably. Most other states that were invested in the notion of containing and disarming Saddam Hussein were not so invested in the prospect of regime change. Some states were genuinely concerned that the United States would be unable to prevent Iraq from breaking up in the wake of a forcible change of regime, further destabilizing the region, or that regime change would bring an even worse alternative to power. Other states had conditions for their support (increased amounts of aid, playing a role in the postwar administration of the country, having definitive ideas about the composition of a new government or enforcement of existing contracts).

In the end, the Bush Administration made a conscious choice to retain its freedom of action to act as it saw fit with regard to Iraq, declining to accept help that might come with strings that Washington might find too constricting. This is an understandable position. It is equally understandable, however, that other actors saw no reason to lift any of the burden of the Iraq operation from Washington's shoulders, with the exception of Britain and Australia.

This pattern has repeated itself in the postwar period. Many states have shown little interest in providing concrete support in terms of personnel and material for an American-directed and controlled reconstruction of Iraq. Despite repeated requests to a number of countries--particularly those with significant peacekeeping and humanitarian-reconstruction expertise, including Muslim countries--most have declined to provide assistance unless the U.S. occupational administration is significantly "internationalized", with a greater role being played by the United Nations. In the wake of the late August suicide bombing at the UN's Iraq headquarters (and the exodus of humanitarian personnel that it has caused), the Bush Administration revived efforts to seek a new Security Council resolution to do just that. Yet similar efforts over the last few months have been stymied because of significant gaps between the authority the United States is willing to concede and the demands of other countries for substantive power-sharing arrangements in the reconstruction effort.

ALL OF THIS raises the question: Has the run-up to the war in Iraq and its aftermath produced the long-anticipated "crisis" in which other states are coming together to oppose American predominance in the world? Does this mark the end of the "unipolar era"?

Certainly, other states recognize the value of American leadership in maintaining an "international system, which provides for open seas, open trade and open societies lightly defended."2 Very few countries would consider it to be in their interest to see the United States disengage from the world, especially if the alternative would mean a resumption of regional rivalries, destabilizing arms races and accelerating tensions. Even China, which for several decades rejected the legitimacy of the postwar international system, has found that its "market-oriented reforms and growing economic interdependence, both regionally and globally, have begun to challenge these principles." Beijing has found that it too benefits from an American-led international system that has enabled it to modernize and develop via free trade with other states, especially the United States. As a result, some within the Chinese foreign policy establishment are calling for Beijing to "forge a new type of security relationship with the United States."3

But the crisis over Iraq has demonstrated the limits of unilateral American action and has highlighted the importance of the quidpro quo in conducting diplomacy. If other countries lack a stake in a particular outcome desired by Washington, or, more importantly, if they see nothing specific to gain by placating the United States on a particular issue, they will not support U.S. actions. Clearly, this was the case with Iraq, even more so because the White House itself signaled to its partners that "[n]o matter what position they take" on the Iraq issue, "we will continue to have important relations with them beyond any decisions that are made."4

Moreover, it is clear that other countries used the Iraq issue as a way to settle simmering scores with the United States, a number of which have been documented in the pages of this magazine over the last several issues. For example, why should the administration have assumed that Mexican support for a second UN resolution was a sure bet when Mexico did not get the deal it was seeking with the United States on immigration, an agreement upon which President Vicente Fox had staked the credibility of his administration? In the case of Russia, those in the foreign policy establishment who maintained that opposing the Iraq war would help to cement political and economic ties to Europe--Russia's primary source for investment, capital and trade--and might strengthen the appeal of pro-government parties in the forthcoming Duma elections, won out over those who sought to salvage the partnership with the United States, especially when they were unable to demonstrate what concrete benefits support for Washington in this matter would bring to Russia.5 The message consistently heard in other capitals was that Washington was unable or unwilling to overrule its domestic lobbies to take into account the interests of other countries. This, in turn, weakened the position of pro-American officials in foreign governments who argued for cooperation with the United States (particularly with regard to Iraq) despite potentially negative domestic consequences for such support.

A country may earnestly desire to be a partner of the United States, but this in no way means that it ceases to pursue its own national interests. Indeed, its very desire to seek closer relations with Washington is based on an assessment that such an arrangement will be beneficial (greater access to U.S. markets, extension of the American "security umbrella" to encompass the given country, and so on). Historically, the United States has offered alliance on easy terms, placing few demands on its partners and preferring to see them "as a pool of potential volunteers rather than conscripts to its cause", as Lord Black noted in his article earlier in this issue. Yet there comes a point when an ally or partner of the United States must assess whether support for the United States and the pursuit of its national interests are compatible--and one way to resolve this question is to examine the diplomatic balance sheet.

Returning to the case of Russia, President Vladimir Putin has faced vociferous criticism for a number of the steps he has taken in support of the United States. Sharing intelligence, paving the way for the deployment of U.S. forces in Central Asia to support the campaign in Afghanistan, closing down intelligence and military outposts in Vietnam and Cuba--all of these were unprecedented steps for a Russian leader to take. Not even Boris Yeltsin, often viewed as a more "pro-American" leader than Putin, would have had the political will to undertake such measures. Yet many Russians believe they have received little in return from the United States. Americans point to the destruction of the Taliban regime as proof of the benefits Russia has received--for the Taliban was arguably one of the greatest threats to Russia's national security, given its sponsorship of Islamic radicalism in Central Asia. Russians respond that the United States moved to remove the Taliban only after the September 11 demonstrated that the terrorist haven Afghanistan had become could lethally injure the United States as well. On a whole host of other issues, ranging from Russia's trade with Iran to the import-export squabbles over chicken and steel, it is clear that the U.S.-Russian relationship lacks a framework that would help set priorities and fully vest Russia within the U.S.-managed international system.

Instead, it appears that the United States does not know how to deal with a Russia that defines its national interest in terms of remaining Eurasia's metropolitan power. One Russian commentator observed: "The United States has no need for the revival of a strong Russia, whether or not it is a democratic Russia."6 Does the acquisition of economic assets in Serbia, Georgia, Romania, Hungary, Ukraine or Lithuania by Russian firms constitute a serious threat to the security of the United States or affect its ability to pursue its core interests? Does Russia's retention of bases in Armenia or Kyrgyzstan or its attempts to modernize its military upset the balance of power? Given Russia's size and its economic potential, it is to be expected that Russia will play a leading role in Eurasia. Certainly it is in American interests to ensure that the other states of the former Soviet Union are not forcibly reintegrated with Russia or that Moscow does not seek to destabilize or intimidate these governments. But for the United States to insist that Russia has no legitimate political, economic or security interests in the countries that lie on its borders--and to actively try to block Russia's pursuit of those interests by legitimate means--is both unreasonable and counterproductive. So, when Washington "expresses concern" over the Russian acquisition of energy companies in Georgia, refineries in Lithuania and pipelines in Bulgaria, its protests over the sales of nuclear equipment to Iran do not sound any more urgent to Russian ears. Despite the rhetoric of partnership, Russia still is not sufficiently invested in outcomes desired by the United States in places like Iraq and Iran--where vital interests are at stake--in part because the United States has not made it clear that key Russian interests are of concern to Washington.

This is the biggest challenge facing the United States: conceptualizing its interests in order to create a hierarchy of foreign policy priorities. Too often since the end of the Cold War, the United States has adopted a "Christmas tree" approach to foreign policy--hanging all sorts of conditions (oftentimes very minor or petty issues) as a price for other states to pay for the continuation of normal, bilateral relations.7 This has to change. Two years ago, Dimitri K. Simes advised, "The United States ... needs to be flexible, creative and realistic in establishing its priorities and addressing seriously the unpleasant but inevitable trade-offs that arise among conflicting policy objectives."8

This includes setting out targeted goals and searching for the tools to achieve them. One of the problems with depending on ad hoc "coalitions of the willing" to pursue U.S. interests is that there is no guarantee that other coalition partners will supply adequate amounts of troops, equipment or money to ensure equitable burden-sharing. In contrast, focused and specific agreements with other countries-laying out not only specific duties but also the benefits both parties expect to receive--would better serve our interests.

In the weeks and months ahead, this may be the strategy we will need to pursue in order to achieve our goals in Iraq, which, unfortunately, still remain inchoate at the time of this writing. For example, if we cannot establish a stable democracy and withdraw U.S. forces in the shortest possible amount of time, will we choose to empower an autocratic regime capable of implementing gradual reforms, or will we commit to a long-term deployment of U.S. forces to Iraq for "as long as it takes?" If we cannot have an effective Iraqi leadership that is also unfailingly pro-American, do we want effective rulers capable of holding the country together, or weak but pro-American leaders who may end up presiding over a failed state? What do we need from countries like Russia (UN Security Council support), India (large numbers of peacekeepers) or Germany (financial contributions), and what are we prepared to offer in exchange?

Foreign policy need not become an "Oriental bazaar" (in Putin's words), but the rules of the marketplace apply no less to the conduct of international affairs as they do to business transactions. The United States may believe that its causes are just, but it must provide incentives nonetheless for its partners to join in shared enterprises. If other states are invested in continued American leadership of the international system, it becomes their national interest to have that leadership be successful. If the United States fails to make other countries shareholders, however, not only will its leadership appear bankrupt, it will become increasingly difficult to secure its vital interests. This is no way to run a profitable international order.

1 Speaking at a symposium last December at The Nixon Center, Ambassador L. Paul Bremer III advised, "During the Reagan Administration, prior to the cruise missile deployments, we sent high level emissaries to Europe accompanied by intelligence officers bearing classified material on the Soviet threat to share directly with decision-makers in Europe. This is the approach that ought to be taken." ( /Articles/Vol1Issue14/Vol1Issue4Symposium.html)

2 Charles Krauthammer's comment in the Foreign Policy section of the symposium, "After September 11: A Conversation", The National Interest (Thanksgiving 2001), p. 68.

3 Pang Zhongying, "Some Points on Understanding China's International Environment", In the National Interest, vol. 1, no. 6 (October 16, 2002).

4 Comments made by Ari Fleischer on March 5, 2003.

5 Paul J. Saunders, "The U.S. and Russia After Iraq", Policy Review, no. 119 (June/July 2003).

6 Vitaly Tretyakov, Rossiiskaya Gazeta, October 8, 2002.

7 David M. Lampton discusses this tendency in the Sino-American relationship in his article that appears in this issue.

8 Simes, "What War Means", The National Interest (Thanksgiving 2001), p. 41.

Nikolas K. Gvosdev is executive editor of The National lnterest and a senior fellow for strategic studies at The Nixon Center. 

Essay Types: Essay