The State Department’s blog Dipnote is one of my favorite blogs and this week they highlighted U.S. efforts to combat Somali piracy. The U.S. helped organize and now actively participates in an international armada of ships that patrol the pirate infested waters off the coast of Somalia. This effort has been a model of multinational and multilateral problem solving and a great example of U.S. collaborative leadership.

This report in The New York Times demonstrates why President Obama’s trip this week to the G20 Summit in London, the NATO Summit in Strasbourg, and the EU Summit in Prague will be fraught with difficulties and not at all like his campaign trip to Europe when he was the center of adulation and praise. The report notes that Obama will be challenged to demonstrate U.S. confidence and leadership at a time when that leadership has been called into question. International economic stimulus spending, troops for Afghanistan, weapons proliferation and missile defense will top his agenda. President Obama will conclude his European trip with a stop in Turkey, a predominantly Muslim country and member of NATO that hopes in time to become a member of the EU. Obama is expected to reiterate U.S. support for Turkish membership in the EU.

President Obama announced his war strategy today, and the White House website has a nice recap as well as a direct link to a PDF file on the new policy. As expected, his strategy calls for more troops in Afghanistan and a coordinated attack on al Qaeda in Pakistan and Afghanistan. I was most interested in his plan to increase the number of civilian advisors that will assist Afghanistan in building their agricultural economy and promoting the kind of development that will make it harder for al Qaeda to recruit jihadists. I hope that fighting al Qaeda militarily while making peace more attractive (and profitable) for the people will be a winning strategy.

The New York Times recently featured a report about a new world news website that has a unique business model:

With 65 correspondents worldwide - drawn from a surfeit of experienced reporters eager to continue working in their specialties even as potential employers disappear - GlobalPost has begun offering a mix of news and features that only a handful of other news organizations can rival. Recent articles, free at GlobalPost.com, included reports on Thailand’s Islamic insurgency and Indian yogis worried about the financial crisis. That ad-supported reporting is only one part of the GlobalPost business plan. If it is to succeed, it will depend in part on how many people sign up for a separate paid section of the site, which was to have been available in test mode beginning last week but is now expected to go online in the coming days.

I was browsing the site and noticed that they have been running a series called For Which It Stands which seems particularly noteworthy considering our focus on the U.S. role in the world:

From every corner of the world, more than 40 GlobalPost correspondents and columnists have contributed nearly 50 stories built around a single question: What does the idea of America mean to the world? This guide will help you navigate the series, which begins with our launch and runs through President Barack Obama’s swearing in as president - an event billed as the first global inauguration. We will add to the series in the first 100 days of the Obama presidency, what he has called a “chance to reboot America’s image around the world.” During this time, we want to know what you think America means to the world, and also what the world means to America.

It makes for some interesting reading and they invite comments. If you have thoughts on “What does the idea of America mean to the world?” drop by and let them know and also let us know in the comments here.

President Obama held his second prime-time news conference last night, the White House transcript can be found here. The President fielded questions on a wide variety of topics, including his budget and economic recovery plan, health care, race in American politics, and foreign policy. On the topic of foreign policy, I was glad to see that one reporter, Major Garrett of Fox News, specifically asked the President to comment on his view of the U.S. role in the world:

And last point I would make in terms of changing America’s image in the world, Garrett, I — you know, I haven’t looked at the latest polling around the world, but I think — I think it’s fair to say that the response that people have had to our administration and the steps that we’ve taken are ones that are restoring a sense of confidence and the ability of the United States to assert global leadership. That will just strengthen.

Also noteworthy, the President dismissed the Chinese proposal for a new international reserve currency:

As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now. And the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world, with the most stable political system in the world. So you don’t have to take my word for it. I think that there is a great deal of confidence that ultimately, although we are going through a rough patch, that the prospects for the world economy are very, very strong.

[...]

Q And the need for a global –

THE PRESIDENT: Excuse me?

Q — the need for a global currency?

THE PRESIDENT: I don’t believe that there’s a need for a global currency.

Though I would have preferred to see a more collaborative tone in his reply (something along the lines of “we will carefully examine the proposal and consult with China and our other trade partners, but we are not enthusiastic about the idea”), I’m encouraged to see that the decline of the dollar as an international standard of trade will not be supported by this administration. In an ideal world, the logic and merits of the Chinese proposal might recommend a closer examination of the idea, but the sad truth is that the U.S. is not in the financial position to embrace that kind of idealism.

Photo: Reuters

U.S. leadership of the global financial system has been called into question by the global economic crisis. In the latest chapter of this ongoing story, China has proposed the creation of a new international reserve currency to replace the dollar. According to this report in The New York Times:

In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar. In a paper released Monday, Zhou Xiaochuan, governor of the People’s Bank of China, said a new currency reserve system controlled by the International Monetary Fund could prove more stable and economically viable. A new system is necessary, he said, because the global economic crisis has revealed the “inherent vulnerabilities and systemic risks in the existing international monetary system.” While few analysts believe that the dollar will be replaced as the world’s dominant foreign exchange reserve anytime soon, the proposal suggests that China is preparing to assume a more influential role in the world. Russia recently made a similar proposal.

Though the Chinese statement notes that any eventual creation of a new reserve currency would take some time, and China will continue to buy U.S. Treasuries in the meantime, it’s clear that the long-term viability of the U.S. dollar as the cornerstone of the international financial system is now in doubt. Although I’m not an alarmist, our role as a steward of the international trading system has been so much a part of the U.S. role since WWII that I find it difficult to see this proposal as anything less than a watershed event in world affairs. True, nothing has happened yet, but the proposal has been made, China has framed the terms of the debate and the upcoming G20 meeting has now been turned into a referendum on U.S. economic leadership. A confidence vote on the U.S. dollar has been called and it will take some stunning diplomacy and quick success for the economic recovery program for Team Obama to turn this around.

After a series of provocative incidents between U.S. and Chinese naval vessels in international waters, China released a statement denying a naval buildup in the South China Sea:

China has no plans to beef up its naval presence in the South China Sea following a confrontation earlier this month between Chinese boats and a U.S. Navy ship, an official newspaper reported Friday. The brief comment in the China Daily adds to apparent efforts by Beijing to tamp down the controversy surrounding the March 7 incident in which the USNS Impeccable was surrounded and harassed by Chinese boats. “Top commanders do not have plans to increase the military presence in the South China Sea following a confrontation earlier this month between a U.S. spy ship and five Chinese vessels,” the paper said, citing unidentified naval sources. The report gave no additional information, although it quoted government-backed Chinese academics as saying Beijing wanted to put the incident to rest. “It is time to call an end to it,” Li Jie, a senior researcher at the navy academy, was quoted as saying.

Gordon G. Chang, author of The Coming Collapse of China, is among those incredulous at the lackluster American response to what they seen as a brazen violation of maritime law and tradition by China. Ever since Mahan’s The Influence of Seapower Upon History it has been generally been accepted and expected that the great powers, and indeed the superpower, would maintain dominance of the seas and continue to guarantee safe passage in international waters. Is this U.S. on the verge of sacrificing naval dominance and the legal status of international waters for the sake of political (and economic) expediency? After all, we would not want to upset our trade partner and national debt holder, right? Though the Chinese desire to extend their power and influence seems clear enough, I think what we really have here is an old fashioned spy-vs-spy drama in which China has built some new military installations and is testing out some new hardware and the U.S. would like to get a look at it. I don’t think it’s anything more than that. Still, we must be very careful about how we handle future incidents of this type, we don’t want to establish (by default or inaction) a new maritime sphere of influence for China that endangers our friends and allies in Asia. How then should the U.S. respond? We should establish and communicate clear red lines: spy-vs-spy harassment of surveillance missions may be tolerated (to a point) as the price of doing business, but standard naval missions and commercial shipping in international waters will be protected by force if necessary. China, as a responsible stakeholder in the international system, should accept these red lines or risk being seen as no better than cheap Somali pirates.

Photo: USNS Impeccable, Wikipedia

I thought this op-ed by Fareed Zakaria on the Post Global blog was a nice rebuttal to Kagan’s “there’s been no change in U.S. foreign policy” argument, though with a clear cautionary note on what he sees as the continuing dangers of an imperial foreign policy. I would question whether his criticism on that point better reflects the old administration and ask for some clear recent examples. Still, it’s worth a read.

The Washington Post reports that, “The U.S. government welcomed moves by Pakistani President Asif Ali Zardari to restore the former chief justice of the Supreme Court. Zardari faced increasing pressure from a broad coalition of opponents who demanded the reinstatement of Pakistan’s independent judiciary.” This is significant because instability in Pakistan threatens, “to upend a new Afghanistan-Pakistan strategy before it leaves the White House drawing board.” According to this MSNBC report, the behind-the-scenes role of the U.S was instrumental in resolving the crisis:

Last week ended on an optimistic note for the U.S. stock market, prompting renewed optimism that the U.S. economy will lead the world out of the global recession. Is optimism warranted? According to this report in The New York Times, investors indeed may be on the verge of dispelling the cloud of gloom and doom they have been under. Why? Because they recently received some bad news about the economy, but it was not as bad as they expected, so they celebrated and hoped for the end of the downturn:

General Electric, the blue-chip corporation, was stripped of its triple-A credit rating, an emblem of business prowess it proudly held since 1956. But its rating fell just one notch, less than some analysts predicted. Shares of G.E. soared 13 percent. The Commerce Department reported that retail sales fell slightly in February — again, less than forecast. And the head of the beleaguered Bank of America said the lender probably would not need more government money, but other banks might. Less bad was good enough. The Dow Jones industrial average jumped 239.66 points, or 3.46 percent, to 7,170.06. The Standard & Poor’s 500-stock index leaped 29.38 points, or 4.07 percent, to 750.74. The Nasdaq composite index rose 54.46 points, or 3.97 percent, to 1,426.10.

The report goes on to note that a recovery is not imminent and that these kinds of rallies are common in recessions. Of far greater concern than the markets fluctuations is this remarkable statement by China’s premier about their $2 trillion investment in U.S. Treasuries, as reported by the AP:

“We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference following the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”

Did you ever think you would live to see the day that the United States is placed on notice by a foreign creditor? The Bloomberg service notes that the U.S. acted swiftly to reassure China:

The U.S. sought to ease Chinese Premier Wen Jiabao’s concern about the security of his country’s investments in U.S. government debt, reiterating pledges to cut the budget deficit in half in four years. “There’s no safer investment in the world than in the United States,” White House Press Secretary Robert Gibbs said yesterday at a briefing in Washington.

Though there is little fear that China will start selling their U.S. Treasuries (the Wall Street Journal reports this would not be in their interest) this incident raises concerns about the leverage a creditor country like China acquires over U.S. foreign policy. For example, how might this relationship of economic interdependence constrain U.S. policy toward Taiwan? I can’t help but wonder if last Friday will become a benchmark date for future historians, the date the post-Cold War era of U.S. hegemony ended and a new era of multipolarity began.