KISSINGER
___
Bosnia

DEPT: PG:

A good example is the case of Bosnia, which can be summed up in this question: Will the American people support a substantial troop deployment in Bosnia into the next millennium? If the issue is posed in those terms, the answer is almost surely in the negative. But if the decisions are made on an ad hoc basis, two outcomes are nearly certain: either an attempt to impose the political provisions of the Dayton agreements by force, or a continuation of the status quo, which implies a de facto partition of Bosnia policed by NATO forces into the next century. Neither course can be reconciled with the national interest of the United States.

When, after three years of ambivalence, the Clinton administration finally committed itself to imposing peace on Bosnia, it did so more with an eye to calming the domestic storms the issue was raising in America than to bringing about a long-term solution. The Dayton agreement, which it brokered, did end the bloody massacres and ethnic cleansing that disgraced all the parties in the civil war. But the means chosen were not only inherently stop-gap but were inconsistent with each other. The military terms provided that the Croat, Muslim and Serb parties be separated; the political terms provided that they unite by means of the free movement of populations and the return of refugees, which, in the light of recent history, were achievable only by a resumption of the civil war.

The dilemma is that enforcing the political provisions will land us in an open-ended Balkan civil war in which American casualties will become unavoidable. The administration seems tempted to find a way out by seeking to manipulate the successions in Belgrade and Zagreb. Such a course will only ensnare us in the obscure passions of Balkan domestic politics: we will become a party to them without having criteria to find our way through them. The presumptive successors in Croatia and Belgrade are already resorting to an even more nationalist rhetoric than the leaders whose positions they are seeking to replace. Do we have the staying power into the next century for such a policy, either politically or militarily?

If, however, we rest on the military provisions, NATO forces will be needed to police politically illegitimate ceasefire lines into the next millennium. The dangers of such an arrangement are demonstrated in Cyprus, where international forces have been policing a ceasefire line not accepted as final by one of the parties for 20 years. And the unresolved issue threatens to boil up into a Greek-Turkish conflict at regular intervals. To steer clear of

KISSINGER

KISSINGER

DEPT: PG:

an open-ended military commitment and a permanent political crisis in Bosnia, the military and political provisions of the Dayton agreement must be reconciled, either by imposing the political provisions or by turning the armistice lines between the ethnic groups into political lines defended by the national forces of each side.

Since I can discern no American national interest in American participation in a war to impose a multi-ethnic state on populations which have been practicing genocide against each other, I prefer the option of internationally sanctioned partition. It would bring about an internationally recognized Muslim state with appropriate guarantees (NATO and/or UN) of its borders. The Croat and Serb populations of Bosnia could be given the choice of either joining their compatriots or constituting themselves as independent entities.

Asia

In Asia, China will emerge as an incipient superpower. When it reaches the per capita income of Korea (about a third of ours) its GNP will be double that of the United States. Such an economic colossus is bound to have a major impact. All the countries will be conscious of the China's vast market which, reinforced by its China's growing military power, will, in the hands of skilful and determined leaders, provide a vehicle for growing political influence.

Does that mean that China will necessarily aim for hegemony? Or that American policy will lose its capacity to affect the evolution of Asia? For one thing, China's growth will not take place in a vacuum. The end of the bipolar world

KISSINGER

KISSINGER

DEPT:

PG:

and the rise of other power centers—primarily India to <u>through</u> Vietnam, China and Korea—will bring about a more nationalist course in Japan. Less and less convinced that its

-------- End of column --------

interests parallel and those of the United

States are inevitably parallel, Japan will place a greater emphasis—

on a foreign and defense policy more—

geared to its own <u>specifically national Japanese interests.</u>

India will <u>emerge</u> as a major

power <u>will be a major player</u>, especially in South and Southeast

Asia. The Asian nations, from Vietnam to Myanmar and Indonesia, will increase

their cohesion. In these conditions, hegemony by any one nation can occur only if all others collapse internally or as a result of <u>by a military effort on of a scale for which</u>

there is as yet no evidence and which, if it

occurred, would evoke <u>«add» strong and immediate retaliation.</u>

<u>«add» counteracting reactions.</u>

Those pining for the

simple verities of the Cold War <u>tend to propose</u>
trying to anticipate <u>resist</u> challenges which have
not yet occurred by a <u>policy of confronting</u> China

with <u>to and by</u> relentless human rights pressures <u>on China</u> (and for that matter other countries of Asia such as Indonesia) and

economic warfare. The theory is that

KISSINGER Page 5 of 19

·KISSINGER

DEPT:

PG:

Finally, the facile revisionism
should not blind us to what would be
is involved in confrontation with China. The
Chinese economy is stronger than was

--------- End of column ---------

that of the Soviet Union; Chinese diplo-
macy far more skilful; Chinese society
more cohesive; and the neighboring coun-
tries far more ambivalent about where the
threat to their security ultimately lies[add].

Of course, we must not shrink
from confrontation if vital American
interests are challenged. But the stakes are
sufficiently high for us not to prompt a cri-
sis. For the first time in its history, China
is tied to the world economy and a global

international system. It is not foreordained that it will protect its interests in interdependence by hegemony rather
than cooperation. Before turning to
confrontation, a cooperative relationship
must be given a chance.

For all these reasons, American
policy toward Asia for the next century
will need to be based on these ingredients:

(1) Good relations with all the
countries of the region, to give our diplo-
macy the greatest possible «add» flexibility for crisis situations. We
have no unbridgeable schisms with any of

KISSINGER

Page 8 of 19

(4)

KISSINGER

DEPT:

PG:

the key countries of Asia; in general, our
differences with them are less than each
has with its *those with their* neighbors. We have no inter-
est in dividing Asia into friendly and hos-
tile blocs.

(2) Continuation of the alliance
with Japan as the keystone of our Asian
security policy. Were it to end or even to
weaken, the Japanese trend toward
nationalism *to rely [increasingly] on a nationalist course* would be greatly accelerated.

At the same time, we must be sensitive to
the historic fears of the other(<u>add</u>) Asian
nations and conduct the alliance with
Japan, in both words and actions, so that it
cannot be perceived as a cover for a new
wave of Japanese expansionism.

(3) Alliance with Korea to pre-
vent aggression and to develop common
positions on unification. The new century
will not be very far along before the issue
of Korean unification becomes pressing, if
indeed it does not happen before. The
United States will be torn between its sup-
port of the principle of self-determination
and its reluctance to face the implications
of Northeast Asian instability. These con-
flicting motivations are not irreconcilable.

KISSINGER Page 9 of 19

KISSINGER

construed as a purely tactical maneuver in
China and of confusing the other capitals

of Asia. The effectiveness of the dialogue
therefore depends on its content. It needs to be

based on an analysis of foreseeable

changes in Asia and of the means either to
soften their impact or to distill common
approaches.

The future of Korea is a good example. The North Korean regime is clearly on the wane. While militarily strong, it has proved unable to take care of the most elementary needs of its population. And in the era of global communications, even the most repressive regime cannot indefinitely keep its people from noticing the disparity between its living standard and that of the rest of the world, especially of South Korea.

A crisis could erupt in any number of ways that include: a collapse of the regime followed by peaceful unification on the German model; a re[v][s]olution in which the successor insists on continued independence; a North Korean military attack on the South to elicit international recognition of its continued existence, perhaps buttressed by some kind of international economic assistance.

Since Korea is at the vortex of Northeast Asia, any transformation of the existing situation will have major implications for Korea's neighbors. Korean unification promises to be even more complicated than was Germany's. For Korea is surrounded by major powers in a far stronger position to thwart or delay unification than was the decrepit Soviet Union of 1989 with respect to Germany. While these countries will be at one about not wishing another Korean war, their perceptions of what is at stake will differ.

- In the light of its suspicions of Vietnam, China will be uneasy about the emergence of yet another significant military power along its border, especially one that may galvanize the Korean minorities in Manchuria and Northeast China. It will surely maneuver to prop up the North Korean regime as long as possible and to achieve some degree of demilitarization of the North if unification becomes unavoidable.

DEPT:

PG:

KISSINGER

Page 11 of 19

KISSINGER

DEPT:

PG:

- Russia will share some of China's concerns, including a worry about Korean minorities in the Maritime Provinces of Russia. But it will balance these concerns against the possibility that a unified Korea may, in a crisis with China, be available as a possible Russian auxiliary.

- Japan will regard Korean unification with only barely disguised dismay. It will assume that a unified Korea will be almost certain to base its foreign policy on anti-Japanese feelings. And if, by then, the North Korean nuclear potential still exists (as is extremely likely) it will use it as an additional justification for a nuclear program of its own.

The Gulf

Discussions about the Middle East focus almost exclusively on the Arab-Israeli issue. But while it is <u>add</u> demonstrably explosive, there exists an established and tested framework for dealing with it. Below the surface, <u>moved</u> however, lurk <u>there are</u> even more dangerous structural issues.

The most sinister of these concerns the stability of the Gulf. There, states of very limited power <u>at the same time</u> possess the capacity to cause nearly infinite international damage. When, in 1973, the Gulf states found themselves in a position to raise oil prices by 387 percent in a three month period, they triggered a ten-year financial and economic crisis which threatened the

KISSINGER

KISSINGER

DEPT:

PG:

global economic and financial systems
and undermined the governability of the
industrial democracies.

Today the consequences of a cri-
sis in the Gulf are no less ominous «add». But the
structure on which its stability depends is
far more brittle. The two strongest
nations—Iran and Iraq—are outlaw
states. The United States has imposed
sanctions on Iran; *is under sanctions by the United States* Iraq by the international com-
munity, on Iraq. The immediate area con-
tains only two friendly countries—Saudi
Arabia and Jordan. But Saudi Arabia is
going through the torments of adapting an
essentially feudal society to the modern-
ization wrought by oil resources, global
communications and the spread of educa-
tion. Jordan, bordering Iraq, Syria and
Israel, has its hands so full with its restless
and threatening neighbors that it is not
able to contribute decisively to regional
stability.

*ear the lunt* of shaping a
*peaceful* order in the Gulf
*somehow* is

Turkey and Egypt, though a little
removed geographically, are central to
Gulf strategy. Looking toward Iran and
Iraq on one set of frontiers and toward
Europe on another, Turkey has been the

KISSINGER

Page 13 of 19

'KISSINGER

DEPT:

PG:

Fortunately, there are no compa-
rable obstacles in dealing constructively
with Turkey and Egypt. But it is high time
to treat *deal with* Turkey in a manner compatible
with its strategic importance and to meet
Greek concerns in some other way. There
is an urgent need for such a new emphasis
before a fundamentalist victory in Turkey
removes the *this* option.

But if we can find no way of modifying the building blocs in the *Persian Gulf* «*add*», we better prepare ourselves for an *the inevitable blow-up* which will *occur early in the new century, if not earlier*. The new Clinton foreign policy team has no more urgent task than to assemble the best minds it can find to devise an appropriate response to an explosion in the Gulf or an upheaval in Saudi Arabia. These are crises which can-not possibly be dealt with by improvisation.

The Trans-Atlantic Region

Three events will shape trans-
Atlantic relations in the next century: (1) the
success *emergence*, or conversely *the failure*, of the attempt by *of* the

KISSINGER

KISSINGER

European Union to emerge as a political entity; (2) the rise of Russia; (3) and the Atlantic policy of the United States.

(1) By the beginning of the new millennium, «moved» the European currency—the Euro—will have come into existence for France, Germany, Belgium, the Netherlands and Luxembourg as founding members, with Italy and Spain joining either from the beginning or within two years. The question is in italics the challenge to be less whether the founders can meet the agreed criteria for fiscal discipline when they establish the common currency than whether they will be able to maintain it afterwards. There are two possibilities: that the inability to maintain fiscal discipline will set off an inflationary spiral, or that the effort to impose austerity by means of a European Central Bank will trigger a political backlash. Either of these contingencies will condemn Europe to years of discord and division, which will make it difficult for it to participate effectively in the world order described in this article.

The more favorable prospect is that the Euro succeeds and that, despite all doubts, a common fiscal and monetary

DEPT:

PG:

KISSINGER

Page 16 of 19

KISSINGER

DEPT:

PG:

policy will help overcome Europe's eco-
nomic sclerosis. In that case, Europe, with
a restored competitiveness, would turn the
Euro into a new «add» reserve currency next to the United States, as bond
managers around the world use it to hedge
their dollar investments. For America, this
will be an unprecedented situation setting-
off either economic warfare or a new era
of cooperation, depending on the states-
manship on both sides of the Atlantic
Specifically, some vision backed by insti-
tutions of trans-Atlantic solidarity needs
to be can be devised.

2) The recovery of Russia will be
another seminal event. After many ups
and downs, Russia will, by early in the
next millenium, have restored its central
authority. It is likely to <u>This will be far</u> closer to the
political structures favored by Pinochet or
Salazar than to a western pluralistic sys-
tem—though it will be far freer than
Communism. Once a legal system is
established and a measure of predictabili-
ty is introduced, the economy should begin
to recover as well.

KISSINGER

Page 17 of 19

1

3754 WORDS

KISSINGER NEWSWEEK ARTICLE

1/13/97 - PM

To suggest that a newly elected administration raise its sights to the kind of world the next millennium will bring may appear as an interruption to the almost blissful tranquillity that [tends to] follow our national elections. During the transition, the victor relishes his success; the loser is busy analyzing the cause of failure. Since it is too early to raise new issues and too late to review old ones, the invocation of bipartisanship often reflects an equilibrium between exhaustion and conviction. For the reelected administration, the temptation to prolong this state of affairs is nearly overwhelming.

Events, however, have their own momentum; if not

2

mastered, they develop their own internal logic which,
with the passage of time, becomes increasingly
difficult to manage. This is a particular challenge
for second-term administrations, which are inherently
lame-duck and lose the capacity for implementing long-
range decisions well before the end of their tenure.
The key choices must be made early in the
administration, especially since the period of calm
that characterized the first Clinton term is clearly
coming to an end.

Never before have so many structural changes
occurred simultaneously; never before have some
elements of the international system been global - for
example, economics or communications - while the scope
of politics has remained imprisoned in the nation-
state or shrunk to the scope of an ethnic unit. To

3

make a long-term difference, the reelected Clinton
Administration must raise its sights of the world it
seeks to achieve. Only in that way will it be able to
establish criteria for judging where it is heading.

Bosnia

4

5

The dilemma is that enforcing the political
provisions will land us in an open-ended Balkan civil
war in which American casualties will become
unavoidable. The administration seems tempted to find
a way out by seeking to manipulate the successions in
Belgrade and Zagreb. Such a course will only ensnare
us in the obscure passions of Balkan domestic
politics; we will become a party to them without
having criteria to find our way through them. The
presumptive successors in Croatia and Belgrade are
already resorting to an even more nationalist rhetoric
than the leaders whose positions they are seeking to
replace. Do we have the staying power into the next
century for such a policy, either politically or

(Y)

6

militarily?

If, however, we rest on the military provisions,
NATO forces will be needed to police politically
illegitimate ceasefire lines into the next millennium.
The dangers of such an arrangement are demonstrated in
Cyprus, where international forces have been policing
a ceasefire line not accepted as final by one of the
parties for 20 years. And the unresolved issue
threatens to boil up into a Greek-Turkish conflict at
regular intervals. To steer clear of an open-ended
military commitment and a permanent political crisis
in Bosnia, the military and political provisions of
the Dayton agreement must be reconciled, either by
imposing the political provisions or by turning the
armistice lines between the ethnic groups into
political lines defended by the national forces of

7

each side.

Since I can discern no American national interest
in American participation in a war to impose a multi-
ethnic state on populations which have been practicing
genocide against each other, I prefer the option of
internationally sanctioned partition. It would bring
about an internationally recognized Muslim state with
appropriate guarantees (NATO and/or UN) of its
borders. The Croat and Serb populations of Bosnia
could be given the choice of either joining their
compatriots or constituting themselves as independent
entities.

Asia

8

that of the United States. Such an economic colossus
is bound to have a major impact. All the countries
will be conscious of the vast market which, reinforced
by China's growing military power, will, in the hands
of skilful and determined leaders, provide a vehicle
for growing political influence.

Does that mean that China will necessarily aim
for hegemony? Or that American policy loses
its capacity to affect the evolution of Asia? For one
thing, China's growth will not take place in a vacuum.
The end of the bipolar world and the rise of other
power centers - from India through Vietnam, China and
Korea - will bring about a more national course in
Japan. Less and less convinced that its interests and
those of the United States are inevitably parallel,
Japan will place a greater emphasis on a foreign and

9

defense policy more geared to specifically national
Japanese interests.

India emerging as a major power will be a major
player, especially in South and Southeast Asia. The
Asian nations, from Vietnam to Myanmar and Indonesia,
will increase their cohesion. In these conditions,
hegemony by any one nation can occur only if all
others collapse internally or by a military effort of
a scale for which there is as yet no evidence and
which, if it occurred, would evoke countervailing
reactions.

Those pining for the simple verities of the Cold
War tend to propose a policy of confronting China to
resist challenges which have not yet occurred and by
relentless human rights pressures on China (and for
that matter other countries of Asia such as Indonesia)

(4)

10

and economic warfare. The theory is that democratization will lead to a more peaceful policy and that economic shortfalls will cut down on China's military options.

Neither approach is appropriate to the challenges of Asia and both are likely to evoke the very dangers with which they profess to deal. Human rights pressures against China (and other significant Asian countries) have failed for the past six years partly because they reflect a number of misconceptions. China's foreign policy is not so much driven by Communist ideology as by the growth of nationalism. The Chinese economy is not a Stalinist planned system but describes itself as a socialist market economy. The word "market" is operationally far more significant than the word "socialist." Its biggest

11

danger is overheating, not the stagnation associated
with the Soviet Union. Moreover, outside pressures
would be fiercely resisted and might produce the
hostile China adduced by the advocates of the policy
of confrontation. They would also lag far behind the
transformation of Chinese society produced by
indigenous causes such as the reforms introduced by
Deng Xia Pin. By decentralizing decision-making, they
evoke a kind of pluralism (though not necessarily
democracy). And the impact of the one-child family on
historic Chinese social patterns is likely to be
profound.

As for military containment on the model of the
Cold War, there is simply no objective basis for it in
Asia. The Soviet Union's European neighbors felt
militarily threatened and were eager for visible

12

American support. By contrast, no neighbor of China
will be prepared to ground its policy on the postulate
of Chinese military aggression, or join an alliance
based on that assumption. To be sure, they want an
American presence, especially in the diplomatic and
economic fields, to establish the idea that America
would not be indifferent to their fate. But knowing
that China is a permanent part of Asia while American
commitments are likely to be episodic, they will
refuse, short of an extremity, to base their policy on
hostility to China. A confrontational American policy
perceived as unprovoked will drive the countries of
Asia into dissociation from the United States, and to
seek a middle position between us and China. Thus,
under present circumstances, a containment policy will
compound the Chinese hostility it engenders by

13

fostering both nationalism and neutralism in the rest
of Asia.

Finally, the facile revisionism should not blind
us to what is involved in confrontation with China.
The Chinese economy is stronger than was that of the
Soviet Union; Chinese diplomacy far more skilful;
Chinese society more cohesive; the neighboring
countries far more ambivalent about the threat to
their security.

Of course, we must not shrink from confrontation
if vital American interests are challenged. But the
stakes are sufficiently high for us not to prompt a
crisis. For the first time in its history, China is
tied to the world economy and a global international
system. It is not foreordained that it will protect
its interests in interdependence by hegemony rather

14

(1) We have no unbridgeable schisms with any of
the key countries of Asia; in general, our differences
with them are less than those with their neighbors.
Good relations with all the countries will give our
diplomacy the greatest flexibility for crisis
situations; we have no interest in dividing Asia into
friendly and hostile blocs.

(2) Continuation of the alliance with Japan as
the keystone of our Asian security policy. Were it to
end or even to weaken, the Japanese trend to rely
[increasingly] on a nationalist course would be

15

greatly accelerated. At the same time, we must be
sensitive to the historic fears of the Asian nations
and conduct the alliance with Japan, in both words and
actions, so that it cannot be perceived as a cover for
a new wave of Japanese expansionism.

(3) Alliance with Korea to prevent aggression and
to develop common positions on unification.

(4) Strategic dialogue with China. American
policy must not forego the possibility of political
understandings with China. For the first half of the
next century, our interests in the stability of Asia
should be parallel; while China's disagreements with
several of its neighbors are greater than the ones it
has with the United States. Nor will China, for the
foreseeable future, have the military strength to
undertake a hegemonical policy. Thus China and the

16

United States have [enough] common interests to concert their policies where possible, or at least to take the sting out of their disagreements.

The change in emphasis in administration policy to seeking a strategic dialogue is to be welcomed. What is lacking is a rationale for this change of emphasis. The sudden reversal from near-military confrontation in March to the announcement of three high-level visits runs the risks of being construed as a purely tactical maneuver in China and of confusing the other capitals of Asia.

The effectiveness of the dialogue therefore depends on its content. It needs to be based on an analysis of foreseeable changes in Asia and of the means either to soften their impact or to distil common approaches.

(4)

17

The future of Korea is a good example. The new century will not be very far along before the issue of Korean unification becomes pressing, if indeed it does not happen before. The North Korean regime is clearly on the wane. While militarily strong, it has proved unable to take care of the most elementary needs of its population. And in the era of global communications, even the most repressive regime cannot indefinitely keep its people from noticing the disparity between its living standard and that of the rest of the world, especially of South Korea.

18

19

20

The United States will be torn between its support of the principle of self-determination and its reluctance to face the implications of Northeast Asian instability. These conflicting motivations are not irreconcilable. But they require a serious dialogue with all the countries concerned; improvising a resolution of so many conflicting views *after* the Korean peninsula has already exploded is far too dangerous.

## The Gulf

Discussions about the Middle East focus almost exclusively on the Arab-Israeli issue. But while demonstrably explosive, there exists an established

21

and tested framework for dealing with it. But there
are even more dangerous structural issues lurking just
below the surface. The most sinister of these concerns
the stability of the Gulf. There, states of very
limited power at the same time possess the capacity
to cause nearly infinite international damage. When,
in 1973, the Gulf states found themselves in a
position to raise oil prices by 387% in a three month
period, they triggered a ten-year financial and
economic crisis which threatened the global economic
and financial systems and undermined the governability
of the industrial democracies.

Today the consequences of a crisis in the Gulf
are no less. But the structure on which its stability
depends is far more brittle. The two strongest nations
- Iran and Iraq - are outlaw states. Iran is under

22

sanctions by the United States; Iraq by the
international community. The immediate area contains
only two friendly countries - Saudi Arabia and Jordan.
But Saudi Arabia is going through the torments of
adapting an essentially feudal society to the
modernization wrought by oil resources, global
communications and the spread of education. Jordan,
bordering Iraq, Syria and Israel, has its hands so
full with its restless and threatening neighbors that
it is not able to contribute decisively to regional
stability.

Turkey and Egypt, though a little removed
geographically, are central to Gulf strategy. Looking
toward Iran and Iraq on one set of frontiers and
toward Europe on another, Turkey has been the anchor
of our Mediterranean policy. But it feels rejected by

23

decades of American and European pressures over its
policies on Cyprus and the Kurds. And there is a real
danger that its fundamentalists might win a democratic
election, reversing the Ataturk reforms and
reorienting Turkey toward the Islamic world.

[Text says "insert" at this point but there was none]

It will not be possible to maintain indefinitely
the stability of the Gulf against both Iran and Iraq
and without the effective support of Turkey and Egypt.
Nor will it be possible to maintain international
support for the Iraqi sanctions very far into the new
millennium, if indeed until then. Or to conduct a
policy of keeping Iraq united as a potential obstacle
to Iran while fostering the autonomy of the Kurds in
the North and of the Shiites around Basra by means of
no-flight zones and similar measures. Dealing with

(4)

24

Saddam Hussein presents insuperable problems and so far there has not been a shred of evidence that Iran is prepared to abandon its support for terrorism.

Fortunately, there are no comparable obstacles in dealing constructively with Turkey and Egypt. But it is high time to deal with Turkey in a manner compatible with its strategic importance and to meet Greek concerns in some other way. There is an urgent need for such a new emphasis before a fundamentalist victory in Turkey removes this option.

But if we can find no way of modifying the building blocs, we better prepare ourselves for the inevitable blow-up which will occur early in the new century, if not earlier. The new Clinton foreign policy team has no more urgent task than to assemble the best minds it can find to devise an appropriate

25

response to an explosion in the Gulf or an upheaval in
Saudi Arabia. These are crises which cannot possibly
be dealt with by improvisation.

The Trans-Atlantic Region

Three events will shape trans-Atlantic relations
in the next century: (1) the emergence, or conversely
the failure, of the attempt of the European Union [to
emerge] as a political entity (2) the rise of Russia
(3) the Atlantic policy of the United States.

(1) The European currency - the Euro - will have
come into existence by the beginning of the new
millennium for France, Germany, Belgium, the
Netherlands and Luxembourg as founding members, with
Italy and Spain joining either from the beginning or
within two years. Their challenge will be less whether
the founders can meet the agreed criteria for fiscal

26

discipline when they establish the common currency
than whether they will be able to maintain it
afterwards. There are two possibilities: that the
inability to maintain fiscal discipline will set off
an inflationary spiral, or that the effort to impose
austerity by means of a European Central Bank will
trigger a political backlash. Either of these
contingencies will condemn Europe to years of discord
and division and will make it difficult for it to
participate effectively in the world order described
in this article.

The more favorable prospect is that the Euro
succeeds and that, despite all doubts, a common fiscal
and monetary policy will help overcome Europe's
economic sclerosis. In that case, Europe, with a
restored competitiveness, would turn the Euro into a

27

reserve currency next to the United States, as bond managers around the world use it to hedge their dollar investments. For America, this will be an unprecedented situation setting off either economic warfare or a new era of cooperation depending on the statesmanship on both sides of the Atlantic - specifically, whether some vision backed by institutions of trans-Atlantic solidarity can be devised.

(2) The recovery of Russia will be another seminal event. After many ups and downs, Russia will, by early in the next millennium, have restored its central authority. This will be far closer to the political structures favored by Pinochet or Salazar than to a Western pluralistic system - though it will be far freer than Communism. Once a legal system is

28

established and a measure of predictability is
introduced, the economy should begin to recover as
well.

At that point, the nations bordering the Atlantic
will have to get used to a far more assertive Russia
conducting a historically nationalistic policy. This
will challenge the Atlantic Alliance to understand
that Russian nationalism, an important vehicle of
domestic cohesion, [must be kept from] spilling over
into pressure on all of Russia's neighbors. Russia
should be given an opportunity to participate fully in
the political constructions of the new millennium
without unleashing its nationalism.

The enlargement of NATO can provide the necessary
security for this task. But there must also be created
a political body embracing the key members of the

29

Atlantic Alliance plus Russia for the political
construction of the post-Cold War world. The
appropriate forum for this is the European Security
Conference. Charging NATO with both tasks waters down
the Alliance and invites long-term Russian pressure.

The administration - the formative experience of
many of whose key figures was in the Vietnam period
and who consider the Cold War to have been at least
partially provoked by the United States - has so far
pursued a different course. It has been tempted to
turn NATO into a political forum which, to all
practical purposes, includes Russia. This would
destroy NATO as a safety net and invite constant
Russian pressure into the heart of alliance decision-
making.

My doubts about attempts to spread democracy

30

around the globe by pressure or persuasion
notwithstanding, I do believe in the importance of
promoting the democratic ideal by fostering close
cooperation where it already exists: especially among
the nations bordering the Atlantic and within the
Western Hemisphere. Military conflict among these
nations is nearly inconceivable. It is among the
established democracies that we should cultivate
cooperation and foster the values and institutions we
treasure. The Western Hemisphere Economic Free Trade
Area proposed by President Clinton and its ultimate
merging into an Atlantic Free Trade Area are crucial
steps toward realizing these goals.

[Concluding paragraph to come]

1

3856 WORDS

To suggest that a newly elected administration raise its sights to the kind of world the next millennium will bring may appear as an interruption to the almost blissful tranquillity that tends to follow our national elections. During the transition, the victor relishes his success; the loser is busy analyzing the cause of failure. Since it is too early to raise new issues and too late to review old ones, the invocation of bipartisanship often reflects an equilibrium between exhaustion and conviction. For the reelected administration, the temptation to prolong this state of affairs is nearly overwhelming.

P. 01

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:26

2

It is not necessary to settle the dispute whether
this was due to skilful handling or to the fact that
all the other major powers were simultaneously too
preoccupied with domestic transitions to leave
attention and resources to international adventures.

(A)

P. 02

FAX NO. 5617450358

COLDHAMMER

JAN-13-97 MON 14:26

occurred simultaneously; never before have some
elements of the international system been global - for
example, economics or communications - while the scope
of politics has remained imprisoned in the nation-
state or shrunk to the scope of an ethnic unit. To
make a long-term difference, the reelected Clinton
Administration must raise its sights of the world it
seeks to achieve. Only in that way will it be able to
establish criteria for judging where it is heading.

Bosnia

(4)

P.03

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:27

basis, two outcomes are nearly certain: either an
attempt to impose the political provisions of the
Dayton agreements by force, or a continuation of the
status quo, which implies a de facto partition of
Bosnia policed by NATO forces into the next century.
Neither course can be reconciled with the national
interest of a United States faced with huge structural
challenges in the next millennium.

When, after three years of ambivalence, the
Clinton administration finally committed itself to
imposing peace on Bosnia, it did so more with an eye
to calming the domestic storms the issue was raising
~~in America~~ than to bringing about a long-term
solution. The Dayton agreement, which it brokered, did
end the bloody massacres and ethnic cleansing that
disgraced all the parties in the civil war. But the

(A)

P. 04

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:27

5

P. 05

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:27

P. 06

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:27

P. 07

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:28

Asia

To disengage from Bosnia in this manner is all the more important because, in the next century, we shall be obliged to deal with unprecedented structural changes in every continent. In Asia, China will emerge as an incipient superpower. When it reaches the per capita income of Korea (about a third of ours) its GNP will be double that of the United States. Such an economic colossus is bound to have a major impact. All the countries will be conscious of the vast market which, reinforced by China's growing military power, will, in the hands of skilful and determined leaders, provide a vehicle for growing political influence.

P. 08

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:28

9

for hegemony? Or that American policy loses
its capacity to affect the evolution of Asia? For one
thing, China's growth will not take place in a vacuum.
The end of the bipolar world and the rise of other
power centers ~~all around~~ Japan - from India through
Vietnam, China and Korea - will bring about a more
national course in Japan. Less and less convinced that
its interests and those of the United States are
inevitably parallel, Japan will place a greater
emphasis on a foreign and defense policy more geared
to specifically national Japanese interests.

P. 09

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:28

10

Those pining for the simple verities of the Cold
War tend to propose a policy of confronting China to
resist challenges which have not yet occurred and by
methods analogous to that period, relentless human
rights pressures on China (and for that matter other
countries of Asia such as Indonesia) and economic
warfare. The theory is that democratization will lead
to a more peaceful policy and that economic shortfalls
will cut down on China's military options.

P. 10

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:28

11

pressures against China (and other significant Asian countries) have failed for the past six years partly because they reflect a number of misconceptions. China's foreign policy is not so much driven by Communist ideology as by the growth of nationalism. The Chinese economy is not a Stalinist planned system but describes itself as a socialist market economy. The word "market" is operationally far more significant than the word "socialist." Its biggest danger is overheating, not the stagnation associated with the Soviet Union. Moreover, outside pressures would not only be fiercely resisted and might produce the hostile China adduced by the advocates of the policy of confrontation, but would be bound to lag far behind the transformation of Chinese society produced by indigenous causes such as the reforms introduced

P. 11

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:29

12

As for military containment on the model of the Cold War, there is simply no objective basis for it in Asia. The Soviet Union's European neighbors felt militarily threatened and were eager for visible American support. By contrast, no neighbor of China will be prepared to ground its policy on the postulate of Chinese military aggression, or join an alliance based on that assumption. To be sure, they want an American presence, especially in the diplomatic and economic fields, to establish the idea that America would not be indifferent to their fate. But knowing

P. 12

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:29

that China is a part of Asia while American commitments are likely to be episodic, they will refuse, short of an extremity, to base their policy on hostility to China. A confrontational American policy perceived as unprovoked will drive the countries of Asia into dissociation from the United States, and to seek a middle position between us and China. Thus, under present circumstances, a containment policy will compound the Chinese hostility it engenders by fostering both nationalism and neutralism in the rest of Asia.

Finally, the faulty revisionism about how easily the Cold War was won on the basis of heightened presidential rhetoric should not blind us to what is involved in confrontation with China. The Chinese than that of the Soviet Union economy is stronger; Chinese diplomacy far more

(4)

P. 13

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:29

14

threat to their security.

Of course, we must not shrink from confrontation
if vital American interests are challenged. But the
stakes are sufficiently high for us not to <u>prompt</u> a
crisis. For the first time in its history, China is
tied to the world economy and a global international
system. It is not foreordained that it will protect
its interests in interdependence by hegemony <u>or by</u>
<u>mutual</u> <u>attraction</u>
<u>becoming a partner</u>. Before turning to confrontation,
a cooperative relationship must be given a chance.

P. 14

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:29

15

the key countries of Asia; in general, our differences
with them are less than those with their neighbors.
Good relations with all the countries will give our
diplomacy the greatest flexibility for crisis
situations; we have no interest in dividing Asia into
friendly and hostile blocs.

(2) Continuation of the alliance with Japan as the keystone of our Asian security policy. Were it to end or even to weaken, the Japanese trend to rely [increasingly] on a nationalist course would be greatly accelerated. At the same time, we must be sensitive to the historic fears of the Asian nations and conduct the alliance with Japan, in both words and actions, so that it cannot be perceived as a cover for a new wave of Japanese expansionism.

P. 15

FAX NO. 5617450358

COLDHAMMER

JAN-13-97 MON 14:30

(4) Strategic dialogue with China. American policy must not forego the possibility of political understandings with China. For the first half of the next century, our interests in the stability of Asia should be parallel; while China's disagreements with several of its neighbors are greater than the ones it has with the United States. Nor will China, for the foreseeable future, have the military strength to undertake a hegemonical policy. Thus China and the United States have [enough] common interests to concert their policies where possible, or at least to take the sting out of their disagreements.

P. 16

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:30

17

P. 17

FAX NO. 5617450358

GOLDHAMMER

JAN-13-97 MON 14:30

JAN-13-97 MON 14:30

GOLDHAMMER

FAX NO. 5617450358

P. 18

A crisis could erupt in any number of ways that include: a collapse of the regime followed by peaceful unification on the German model; a re[v] [s]olution in which the successor insists on continued independence; a North Korean military attack on the South to elicit international recognition of its continued existence, perhaps buttressed by some kind of international economic assistance.

JAN-13-97 MON 14:31

GOLDHAMMER

FAX NO. 5617450358

19

unification promises to be even more complicated than
was Germany's so for Korea is surrounded by major powers
in a far stronger position to thwart or delay
unification than was the decrepit Soviet Union of 1989
with respect to Germany. While these countries will be
at one about not wishing another Korean war, their
perceptions of what is at stake will differ.

JAN-13-97 MON 14:31

GOLDHAMMER

FAX NO. 5617450358

P. 20

20

The United States will be torn between its support of the principle of self-determination and its reluctance to face the implications of Northeast Asian

JAN-13-97 MON 14:31

GOLDHAMMER

FAX NO. 5617450358

21
instability. These conflicting motivations are not
irreconcilable. But they require a serious dialogue
with all the countries concerned; improvising a
resolution of so many conflicting views *after* the
Korean peninsula has already exploded is far too
dangerous.

The Gulf

Discussions about the Middle East focus almost
exclusively on the Arab-Israeli issue. But while
demonstrably explosive, there exists an established
and tested framework for dealing with it. But there
are even more dangerous structural issues lurking just
below the surface. The most sinister of these concerns
the stability of the Gulf. There, states of very
limited power at the same time possess the capacity
to cause nearly infinite international damage. When,

JAN-13-97 MON 14:31

GOLDHAMMER

FAX NO. 5617450358

22

in 1973, the Gulf states found themselves in a position to raise oil prices by 387% in a three month period, they triggered a ten-year financial and economic crisis which threatened the global economic and financial systems and undermined the governability of the industrial democracies.

Today the consequences of a crisis in the Gulf are no less. But the structure on which its stability depends is far more brittle. The two strongest nations - Iran and Iraq - are outlaw states. Iran is under sanctions by the United States; Iraq by the international community. The immediate area contains only two friendly countries - Saudi Arabia and Jordan. But Saudi Arabia is going through the torments of adapting an essentially feudal society to the modernization wrought by oil resources, global

JAN-13-97 MON 14:32

GOLDHAMMER

FAX NO. 5617450358

P. 23

23

communications and the spread of education. Jordan, bordering Iraq, Syria and Israel, has its hands so full with its restless and threatening neighbors that it is not able to contribute decisively to stability in the Gulf.

Turkey and Egypt, though a little removed geographically, are central to Gulf strategy. Looking toward Iran and Iraq on one set of frontiers and toward Europe on another, Turkey has been the anchor of our Mediterranean policy. But it feels rejected by decades of American and European pressures over its policies on Cyprus and the Kurds. And there is a real danger that its fundamentalists might win a democratic election, reversing the Ataturk reforms and reorienting Turkey toward the Islamic world.

JAN-13-97 MON 14:32

GOLDHAMMER

FAX NO. 5617450358

P. 24

24

It will not be possible to maintain indefinitely the stability of the Gulf against both Iran and Iraq and without the effective support of Turkey and Egypt. Nor will it be possible to maintain international support for the Iraqi sanctions very far into the new millennium, if indeed until then. Or to conduct a policy of keeping Iraq united as a potential obstacle to Iran while fostering the autonomy of the Kurds in the North and of the Shiites around Basra by means of no-flight zones and similar measures. Dealing with Saddam Hussein presents insuperable problems and so far there has not been a shred of evidence that Iran is prepared to abandon its support for terrorism.

JAN-13-97 MON 14:32

GOLDHAMMER

FAX NO. 5617450358

P. 25

25

compatible with its strategic importance and to meet
the concerns of Greek groups in some other way. There
is an urgent need for such a new emphasis before a
fundamentalist victory in Turkey removes this option.

But if we can find no way of modifying the
building blocs, we better prepare ourselves for the
inevitable blow-up which will occur early in the new
century, if not earlier. The new Clinton foreign
policy team has no more urgent task than to assemble
the best minds it can find to devise an appropriate
response to an explosion in the Gulf or an upheaval in
Saudi Arabia. These are crises which cannot possibly
be dealt with by improvisation.

## The Trans-Atlantic Region

JAN-13-97 MON 14:32

GOLDHAMMER

FAX NO. 5617450358

(1) The European currency - the Euro - will have come into existence by the beginning of the new millennium for France, Germany, Belgium, the Netherlands and Luxembourg as founding members, with Italy and Spain joining either from the beginning or within two years. Their challenge will be less whether the founders can meet the agreed criteria for fiscal discipline when they establish the common currency than whether they will be able to maintain it afterwards. There are two possibilities: that the inability to maintain fiscal discipline will set off an inflationary spiral, or that the effort to impose austerity by means of a European Central Bank will

JAN-13-97 MON 14:33

GOLDHAMMER

FAX NO. 5617450358

P. 27

27

The more favorable prospect is that the Euro succeeds and that, despite all doubts, a common fiscal and monetary policy will help overcome Europe's economic sclerosis. In that case, Europe, with a restored competitiveness, would turn the Euro into a reserve currency next to the United States, as bond managers around the world use it to hedge their dollar investments. For America, this will be an unprecedented situation setting off either economic warfare or a new era of cooperation depending on the statesmanship on both sides of the Atlantic -

JAN-13-97 MON 14:33

GOLDHAMMER

FAX NO. 5617450358

28
specifically, whether some vision backed by
institutions of trans-Atlantic solidarity can be
devised.

(2) The recovery of Russia will be another
seminal event. After many ups and downs, Russia will,
by early in the next millennium, have restored its
central authority. This will be far closer to the
political structures favored by Pinochet or Salazar
than to a Western pluralistic system - though it will
be far freer than Communism. Once a legal system is
established and a measure of predictability is
introduced, the economy should begin to recover as
well.

JAN-13-97 MON 14:33

GOLDHAMMER

FAX NO. 5617450358

29

The enlargement of NATO can provide the necessary security for this task. But there must also be created a political body embracing the key members of the Atlantic Alliance plus Russia for the political construction of the post-Cold War world. The appropriate forum for this is the European Security Conference. Charging NATO with both tasks waters down the Alliance and invites long-term Russian pressure.

JAN-13-97 MON 14:33

GOLDHAMMER

FAX NO. 5617450358

P. 30

30

many of whose key figures was in the Vietnam period and who consider the Cold War to have been at least partially provoked by the United States - has so far pursued a different course. It has been attempted to turn NATO into a political forum which, to all practical purposes, includes Russia. This would destroy NATO as a safety net and invite constant Russian pressure into the heart of alliance decision-making.

My doubts about attempts to spread democracy around the globe by pressure or persuasion notwithstanding, I do believe in the importance of promoting the democratic ideal by fostering close cooperation where *democracy* exists: especially among the nations bordering the Atlantic and within the Western Hemisphere. Military conflict among these

JAN-13-97 MON 14:34

GOLDHAMMER

FAX NO. 5617450358

31

1
3856 WORDS

2

3

Bosnia

4

basis, two outcomes are nearly certain: either an
attempt to impose the political provisions of the
Dayton agreements by force, or a continuation of the
status quo, which implies a de facto partition of
Bosnia policed by NATO forces into the next century.
Neither course can be reconciled with the national
interest of ~~United States~~ faced with huge structural
challenges in the next millennium.

5

6

7

8

Asia

9

for hegemony? Or that American policy loses
its capacity to affect the evolution of Asia? For one
thing, China's growth will not take place in a vacuum.
The end of the bipolar world and the rise of other
power centers all around Japan - from India through
Vietnam, China and Korea - will bring about a more
national course in Japan. Less and less convinced that
its interests and those of the United States are
inevitably parallel, Japan will place a greater
emphasis on a foreign and defense policy more geared
to specifically national Japanese interests.

10

11

The word "market" is operationally far more
significant than the word "socialist." Its biggest
danger is overheating, not the stagnation associated
with the Soviet Union. Moreover, outside pressures
would ~~not only~~ be fiercely resisted and might produce
the hostile China adduced by the advocates of the

~~they would also lag~~
policy of confrontation, ~~but would be bound to lag~~ far
behind the transformation of Chinese society produced
by indigenous causes such as the reforms introduced

12

13

Finally, the facile revisionism about how easily the Cold War was won on the basis of heightened? presidential rhetoric should not blind us to what is involved in confrontation with China. The Chinese economy is stronger; Chinese diplomacy far more

14
skilful; Chinese society more cohesive; the
neighboring countries far more ambivalent about the
threat to their security.

Of course, we must not shrink from confrontation
if vital American interests are challenged. But the
stakes are sufficiently high for us not to prompt a
crisis. For the first time in its history, China is
tied to the world economy and a global international
system. It is not foreordained that it will protect
its interests in interdependence by hegemony or by
cooperation.

15

16

17

18
its population. And in the era of global
communications, even the most repressive regime cannot
indefinitely keep its people from noticing the
disparity between its living standard and that of the
rest of the world, especially of South Korea.

19

20

21

## The Gulf

Discussions about the Middle East focus almost exclusively on the Arab-Israeli issue. But while demonstrably explosive, there exists an established and tested framework for dealing with it. But there are even more dangerous structural issues lurking just below the surface. The most sinister of these concerns is the stability of the Gulf. There, states of very limited power at the same time possess the capacity to cause nearly infinite international damage. When,

22

23

24

25

The Trans-Atlantic Region

26

27

28