Biden’s losing Cold War strategies

OPINION:

The United States is in a new Cold War with China — and something more with Russia — but President Biden’s overreliance on sanctions and protectionism is self-defeating.

After World War II, the United States created NATO and alliances in the Pacific, and starved both socialist regimes of American technology through export controls.

Russia’s leaders were ready fools. Stalinist central planning and autarky created a moribund economy. Only through sheer size did it have the resources to create mischief around the globe.

The West thrived by tearing down barriers to commerce through the General Agreement on Tariffs and Trade, the European Union and other regional arrangements.

The Soviet Union became Upper Volta with rockets.

Throughout, the U.S. economy was large enough to underwrite the entire international system. It supported a military adequate to fight wars across both great oceans and offered its allies a significant market to develop their industries.

In the years between the collapse of the Soviet Union and Russia’s invasion of Ukraine, the United States and its allies sought to integrate Russia and China into the Western commercial system. They assumed economic integration would instigate democratic reforms.

Wandel durch Handel was the greatest foreign policy blunder since the British Parliament shrugged off the grievances of the 13 colonies.
Europe became tragically dependent on Russian natural gas, and Russia and China exploited access to Western markets and technology to create more modern economies, boost their militaries and bully other nations.

In the words of Japanese Trade Minister Yasutoshi Nishimura, “the free trade system ended up increasing the legitimacy of authoritarian regimes” and “amplifying the threat of hegemonic powers.”

We didn’t give Russia and China free access to our military technology, but so much commercial technology is dual use these days that both Russia and China are capable enough of creating lots of trouble.

The United States still spends more on defense than China, Russia and several other nations combined, yet it can’t guarantee the security of Taiwan.

In the event of war, the U.S. Navy is incapable of simultaneously supporting American forces in the Pacific, fulfilling military commitments elsewhere and securing U.S. supply chains, which are much more dependent on ocean commerce today than during the first Cold War.

In the new U.S. maritime strategy known as Advantage at Sea, the Navy, Marine Corps and Coast Guard remarked that securing global commerce and the interdiction of “adversary war materials and commerce” would be dependent on “allies and partners.”

The most powerful navy in the world plans on renting protection of its economy from Japan, Australia and others. Given the menacing capabilities of the growing Chinese navy, that’s rich.

The U.S. foreign policy establishment has become enamored with economic sanctions as a substitute for kinetic engagement. It believes those will break Russia before European and American public resolve relents regarding the mounting costs of supporting Ukraine.

Ultimately, we will have to arm Ukraine to strike Russia itself, become directly engaged or face stalemate.

In the near term, the Russian economy is stabilizing after the initial bite of sanctions — a 2.3% loss in gross domestic product in 2022. The International Monetary Fund forecasts modest growth for 2023, but the real consequences of sanctions will be the cumulative, long-term loss of technological progress and growth.

Wars are fought in the present tense. Russia can bear the short-term costs, and for President Vladimir Putin, winning is an existential imperative.

The real contest over sanctions is Mr. Biden’s escalation toward China.

State-of-the-art semiconductors are central to the creation of superior military weapons. China has been terribly frustrated in its efforts to develop an indigenous industry to supply its military.

The United States no longer manufactures the most advanced chips — those are made in Taiwan and South Korea — but those foundries are dependent on American engineering and Dutch and Japanese machinery.

As with securing lanes of commerce, the U.S. must depend on allies to stifle Chinese ambitions.

China has its own cards to play. It is a dominant processor of copper, nickel, cobalt, lithium and rare earth minerals, which are vital in making many electronic products and semiconductors.

Seen in this context, Mr. Biden’s protectionist industrial policies by excluding our security partners are self-defeating. The United States must redevelop its chip manufacturing capability and secure sources in the West for rare earth minerals and other critical materials. “Buy American” policies — like those embraced for electric vehicles — hardly cultivate Japanese and European support for cutting China out of the semiconductor supply chain.

Free trade with Russia and China was folly, but that does not mean free trade with the rest of Europe and Asia is the same. Drawing our security partners into common prosperity would make it more likely we could count on them in a crisis over Taiwan and over the long haul in our efforts to stay ahead of China in military technology.

• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.