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Foreign Affairs
The Global Economic Challenge
By Jeffrey E. Garten
Jeffrey E. Garten is Dean of the Yale School of Management. Formerly a Managing Director of the Blackstone Group, he also served in the Nixon, Ford, Carter, and Clinton administrations.
Priority Attention
As he begins a second term, President George W. Bush faces daunting global economic challenges. It will not be easy to meet them successfully, for although some of his administration’s policies have been encouraging, many have been deeply flawed. Most important, his administration will have to increase vastly the emphasis it places on international economic policy in general.
For the last four years, global finance, trade, and development, and the cultivation of overseas relationships to advance U.S. interests in these areas, were not given the priority that they generally received in the preceding half-century. During the Cold War, lowering barriers to trade and investment, granting generous foreign aid, and strengthening international economic institutions—all in close cooperation with U.S. allies—were a central part of Washington’s fight against communism. After the Soviet Union collapsed, the administrations of George H.W. Bush and Bill Clinton geared much of their foreign and domestic policy to enhancing U.S. competitiveness in global markets and to spreading U.S.-style capitalism abroad. During this time, the United States had intense policy interactions not just with the European Union and Japan, but also increasingly with emerging markets in Latin America, eastern Europe, and Asia.
It is no mystery why the current President Bush has subordinated global economic issues in the hierarchy of his concerns: since September 11, 2001, combating terrorism and waging war in Afghanistan and Iraq have been the primary lenses through which the administration has viewed nearly every aspect of its foreign policy. There has been little time, interest, or energy for anything else. But even if terrorism remains the focus of U.S. foreign policy in the second Bush term, as seems likely, the United States cannot succeed in this fight with a strategy that is predominantly military and that fails to gain foreign help in terms of both people and money. The United States has neither the skills nor the resources to mount adequate postconflict stabilization and reconstruction efforts in the Middle East or elsewhere entirely on its own. And it certainly does not have the wherewithal to deal single-handedly with the massive longer-term development challenges around the world that must be met if future generations of potential terrorists are to feel they have a less destructive alternative.
The need for a broader foreign policy that focuses more attention on economic growth and development becomes even more urgent when the interests and goals of other nations are taken into account. Washington may be obsessed with fighting terrorism, but economic and social advancement matters more to most other countries. It is on that plane that the United States must build stronger international relationships if it wants other nations to embrace its priorities.
President Bush also must devote more attention to global economic policy in order to strengthen the U.S. domestic economy. Bush has set out an ambitious agenda for his second term that includes tax reform and the partial privatization of Social Security. The president will be better able to gain needed political support for such complex and controversial goals if economic . . .