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[bg...@apache.org]

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+BMW 's and Chinese Justice * * * * * In most places , the name " BMW " implies luxury and exclusivity . But in China , the brand has unwittingly found itself enmeshed in tales that illustrate the powerlessness of ordinary Chinese against the powerful and corrupt . The first scandal occurred last year , after a tractor filled with green onions scraped the side of a BMW in Harbin . The drivers of both the tractor and the metallic-silver luxury car were 45-year-old women , but any similarity between them ended there : the former was a peasant , the latter the wife of a wealthy businessman . After a confrontation between the two , the wealthy wife drove her BMW into the growing crowd of spectators on the roadside , killing the peasant woman and injuring 12 others . The case went to the local court , where the judge ruled it an " accidental traffic disturbance " and gave the driver a two-year suspended sentence . The judge 's ruling spurred rumors that he went easy on her because her hus
 band was related to senior provincial officials . It quickly became a story of " rich versus poor , " widely cited as an example of high-level corruption . Over the next few months , newspapers and television stations ran with the story as it snowballed into a national obsession . Alarmed by the public reaction , the Harbin magistrate ordered the case reopened , only to have the suspended sentence confirmed when the case was closed this March . The big BMW story of late 2003 resurfaced quietly , before being buried again forever . That same month , a lottery scandal threw the BMW brand into the limelight once again . Lottery officials in Shaanxi province rejected a winning ticket , calling it a fake and denying its bearer , a 17-year-old security guard named Liu Liang , the grand prize of a $58,000 BMW and 120,000 yuan ( $14,510 ) in cash . Liu became so angry about being accused of fraud and denied the car that he climbed atop a high advertising billboard and threatened to jump as 
 a show of innocence . But the story did n't end when police officers managed to talk him down . News broadcasts covered his continued insistence that he did not forge his ticket , along with the lottery center 's claims that their rejection of the ticket was legitimate . The police finally stepped in and , after a careful investigation , announced that they had found the true criminal : Yang Yongming , a private businessman whom the local lottery administration had contracted to organize ticket sales . Yang had conspired with the government officials directing the lottery , who were arrested for malfeasance , to fraudulently obtain the top prizes . In June Liu Liang finally got what he deserved - a BMW-325i sedan and a sincere apology from the lottery center . If the first scandal was a tragedy , the second was more like a farce . But both offer keys to understanding contemporary Chinese psychology . The outcry after the first BMW case was not really about the light sentence given t
 o a rich woman , but about the lack of confidence ordinary people have in China 's judicial system . In China , power , money , and connections trump the law . Even as they are becoming ever more litigious , many Chinese believe that they have no hope of securing justice against the powerful . The apathetic response of the dead peasant woman 's husband to the $10,000 in compensation he received was telling . " I do n't care about the verdict and whether it is justice or not , " he said . The most harmful consequence is the public 's loss of trust in the system . Social trust is not something you can buy with money . If an entire society believes that you cannot depend on legal rights for protection - that one must instead rely on a web of relationships with those who have power and influence - questions about whether such a society is livable or desirable will remain . Similarly , in the second BMW case , people did n't blame a corrupt businessman ; they ascribed culpability to the 
 lottery center , a government body . So instead of mistrusting one person , they grew suspicious of an institution - even of government itself . When a stubborn teenager went up against the mighty lottery authority with its army of auditors and inspectors and initial alibis , this individual , not the system , was the clear winner of the public 's admiration . Liu Liang may have been just a working-class kid , but there was wisdom in his words that there is still a " silent majority " who can affect the workings of China 's fragile society . He refused to settle privately , because he believed that if he let corrupt government officials off the hook , " they 'll keep scamming the public . " Thanks to his perseverance and the media 's investigation , the fraud was laid bare . Power corrupts everywhere , but individuals in China such as Liu have come to form a countervailing force . Even so , such marginal forces do not yet constitute a system for redressing grievances . While pop mus
 ic fans in China can listen to whatever they like , including Madonna singing " I 'm gonna shake up the system , " ordinary Chinese need courage to speak such messages aloud . As one saying goes , " There is not want of conscience in Chinese , but there is want of courage . " 
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+France\u2019s Fourth Moment KYIV \u2013 Since World War II\u2019s end , France has consistently risen to the challenge of restructuring Europe in times of crisis . In doing so , France became the catalyst not only for building European unity , but also for creating the prosperity that marked Europe\u2019s post-war decades \u2013 a prosperity now under threat because of the global financial and economic crisis . If we are to see a stronger Europe emerge from today\u2019s challenges , visionary French leadership is needed again . The first moment when decisive French leadership began to unify Europe came when Robert Schuman and Konrad Adenauer created the European Coal and Steel Community . By rooting the then West Germany in the political , economic , and social fabric of the West , that step heralded the start of Germany\u2019s rebirth and economic miracle . The second time that France consolidated Europe\u2019s internal architecture came in 1983 , during the debates over the stationing of American cruise 
 and Pershing missiles in Germany to counter the deployment of SS20 missiles by the Soviet Union . France\u2019s resolve to stand with Germany helped prevent Germany from drifting into a dangerous neutrality that would have shaken the European community to its core . The third moment came after the Berlin Wall fell , and it was feared that an enlarged Germany might destabilize Europe . After initially trying to delay reunification , France embraced it , in exchange for Germany\u2019s reaffirming its commitment to European unity and Franco-German leadership of the European community . As a result , Germany bound itself to the idea of \u201c ever closer union \u201d even more definitively by pledging to join the common European currency , the euro . It is now urgent that the insights that have animated Franco-German relations be applied to all of Central and Eastern Europe . Only by securing the European identity of this entire region , and by anchoring the growing Russo-German relationship in a E
 uropean context , can the European Union continue on its path of stability and prosperity . Only by reinforcing open trading and financial relations across Europe can we hope to subdue today\u2019s crisis . For it is in no European country\u2019s interest , or in the interest of the EU as a whole , that Central and Eastern Europe feel that they have been cast adrift or that Germany and Russia fixate on each other in this time of crisis . As with Germany in the 1950\u2019s , the nature of Russia\u2019s links with its immediate neighbors is turning out to be the defining factor in shaping the country\u2019s international image . Many observers regard these relations as a signal not just to the region , but to the rest of the world , of the sort of power that Russia wishes to be . The issue is partly one of \u201c internationalism \u201d itself . In contrast to Europe \u2013 with its close-knit network of multilateral organizations through which states formulate and conduct much of their foreign policies \u2013 
 Russia is not accustomed to intensively cooperative international procedures . But keeping Russia at arm\u2019s length from Europe has only strengthened the sense of isolation that many Russians feel , tempting them to define the country\u2019s interests in ways that are irreconcilable with those of Europe . It has also heightened Russia\u2019s desire to construct a special , bilateral Russo-German relationship heedless of the context of the EU . European history during the past 60 years makes clear that the most promising approach to meeting the challenge of national reconciliation and stability is not to focus on specific contingencies , but to establish procedures that encourage orderly change . A singular vision has always animated this process : animosity between neighbors must not be allowed to fester , and the rule of law must reign not just within countries , but also between them . To believe that such a vision can work for Russia , Ukraine , and Europe is not wishful thinking , but
  rests on the successful experience of France and Germany in promoting amity . Indeed , the existence or absence of a framework of cooperation often determines whether a dispute mutates into a crisis . Such cooperative frameworks seek to reconcile national independence with regional interdependence , focusing political leaders \u2019 minds on prosperity for their people rather than on gaining unilateral advantages that ultimately impoverish and unsettle everyone . The first lesson of European unity is that times of crisis must draw the continent closer together , not divide it through protectionism , competitive devaluations , and expulsions of immigrants . Similarly , the euro must not be allowed to become an Iron Curtain that consigns non-members to a high-risk zone where investors dare not venture . For Ukraine , Europe can help by embracing the free-trade agreement that we are now negotiating . Coupled with our successful membership in the World Trade Organization , Ukraine would s
 tand to benefit when world and European trade begins to recover . Europe can also consider using various stabilization funds to help our economy through the crisis that we are all enduring . I do not ask for these things out of a narrow concern for my country\u2019s health . Just as the US Federal Reserve has engaged in credit and currency swaps with Brazil , Mexico , Singapore , and South Korea and other countries to ease their access to the dollars they need , the European Central Bank must offer such swap arrangements to Europe\u2019s non-euro countries in order for trade and production processes to continue . Yes , these are dark times , and all politicians want to protect their voters . But Europe\u2019s greatest postwar leaders understood that keeping the wider view of Europe in mind is the best way to achieve this goal . As at so many times before , now \u2013 with all of our economies in peril \u2013 is a moment for decisive French leadership . 
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+Fran�ois Hollande\u2019s Wrong Idea of France LONDON \u2013 France\u2019s new president , Fran�ois Hollande , has achieved a remarkable series of political victories \u2013 at home and in Europe \u2013 since his election in May . Unfortunately , his streak of success will inevitably call forth an economic reckoning that will shock France\u2019s apparently unsuspecting citizens and doom the French elite\u2019s approach to the \u201c construction of Europe . \u201d Since winning the presidency , Hollande has won a parliamentary majority and pushed Germany toward accepting joint liability for eurozone countries \u2019 debts . But forebodings of crisis have become widespread in French business and economic circles . But the real danger \u2013 which even Hollande\u2019s sternest critics may be underestimating \u2013 is not so much his individual policy failings ( serious though they may be ) as his approach to the twin challenges posed by France\u2019s economic imbalances and the eurozone crisis . On each front separately , he
  might manage to muddle through ; together , they look likely to cement France\u2019s loss of competitiveness . Declining competitiveness is best captured in a single indicator : unit labor costs , which measure the average cost of labor per unit of output . In a monetary union , discrepancies in wage growth relative to productivity gains \u2013 that is , unit labor costs \u2013 will result in a chronic accumulation of trade surpluses or deficits . Since the euro\u2019s introduction , unit labor costs have risen dramatically faster in France than they have in Germany . According to Eurostat data published in April 2011 , the hourly labor cost in France was \u20ac34.2 , compared to \u20ac30.1 in Germany \u2013 and nearly 20 % higher than the eurozone average of \u20ac27.6 . France\u2019s current-account deficit has risen to more than 2 % of GDP , even as its economic growth has ground to a halt . The high cost of employing workers in France is due not so much to wages and benefits as it is to payroll taxes lev
 ied on employers . The entire French political class has long delighted in taxing labor to finance the country\u2019s generous welfare provisions , thus avoiding excessively high taxation of individuals \u2019 income and consumption \u2013 though that is about to come to an end as Hollande intends to slap a 75 % tax on incomes above \u20ac1 million . This is a version of the fallacy that taxing companies ( \u201c capital \u201d ) spares ordinary people ( \u201c workers \u201d ) . Of course , such taxes on firms are always passed on to households \u2013 usually through straightforward price hikes , and , in France , also through unemployment . High tax rates on labor \u2013 together with rigid regulation of hiring and firing \u2013 make employers extremely reluctant to recruit workers . As a result , France has had chronic long-term unemployment \u2013 forecast to reach 10.5 % by 2013 \u2013 for many years . Hollande\u2019s predecessor , Nicolas Sarkozy , tried to address this problem . He exempted voluntary overtime pay fro
 m employment tax and shifted some of the burden of labor taxation onto consumption ( via a hike in VAT ) . But Hollande quickly reversed both of these reforms . The repeal of the tax break on overtime reflects another economic fallacy to which French Socialist politicians are deeply attached : the \u201c lump of labor \u201d notion that underlay the most disastrous of their economic policies \u2013 the 35-hour workweek , introduced in 2000. The idea behind the policy is that demand for labor is a constant , and that this fixed number of aggregate working hours required by employers to meet final demand can be spread more evenly among workers to reduce unemployment . Such measures , designed to create jobs by freeing up work hours , are futile at best , and are often detrimental . French Socialists should recall their school physics lesson about communicating vessels : when a homogeneous liquid is poured into a set of connected containers , it settles at the same level in all of them , regard
 less of their shape and volume . Generating more \u201c liquid \u201d ( jobs ) requires not discouraging the entrepreneurs on whose activities sustainable job creation ultimately depends . The effect of fiscal and regulatory pressure on employment is to encourage French firms to invest and hire outside France . Hollande\u2019s apologists praise his gradualist and consensual approach to addressing the economy\u2019s structural distortions . They argue that his penchant for setting up consultative commissions is the best way to forge the consensus required for structural reform , whereas Sarkozy\u2019s combative style was counterproductive . Even banishing skepticism and assuming that Hollande could over time persuade his supporters to embrace competitiveness-boosting policies , the eurozone crisis is denying France the time that such gradualism requires . A simple , effective way to buy time would be to abandon the euro and restore competitiveness through a devalued national currency . But this exp
 edient is incompatible with mainstream French politicians \u2019 devotion to the \u201c European project , \u201d which amounts to a projection of French soft power ; indeed , building Europe lies at the heart of the French establishment\u2019s version of what Charles de Gaulle used to call \u201c a certain idea of France . \u201d For mainstream French politicians , renouncing the European project to buy the time required to restore competitiveness is as unthinkable as is the logical alternative : an all-out push for full European political union . This would reestablish monetary sovereignty and create a normal central bank ( like the Federal Reserve or the Bank of England ) at the European level . But it would also mean abandoning France\u2019s republic in favor of a federal European government \u2013 anathema to that \u201c certain idea of France . \u201d The combination of gradualism ( on the most generous interpretation ) in domestic economic reform and the paralyzing effect of the eurozone crisis will lead 
 to a massive shock . Remaining in a currency union with the much more competitive German economy will require wrenching and rapid reforms , for which Hollande\u2019s tepid approach will fail to prepare the complacent French . The result will be even more support than was seen in last April\u2019s presidential election for extremist political parties that reject both Europe and competitive market capitalism . 
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+Hollywood\u2019s Favorite Villains Once upon a time , Cold War enemies , white supremacists , and evil geniuses reigned supreme as Hollywood\u2019s favorite bad guys . No more . Today , it is multinational corporations that are increasingly being cast as the �ber-villains of our globalized world . For all their subliminal paid promotions and subtle product placements , corporations are getting drubbed in the main story lines of our popular culture . This treatment goes far beyond documentaries like Michael Moore\u2019s polemical Fahrenheit 9/11 or The Corporation , an earnest if somewhat paranoid portrayal of multinational companies \u2019 role in globalization . It extends to mainstream hits like The Constant Gardener , in which the idealistic protagonists do battle with a malicious global pharmaceutical company that is bent on exploiting Africa\u2019s misery to test experimental drugs . To be sure , sociopathic corporations have populated books and films for more than a century . But corporate 
 villains , typically multinational companies , have never been so ubiquitous as today . Is it unfair ? Most corporations , after all , are merely convenient mechanisms for ensuring that scarce global capital is used at maximum efficiency , to the benefit of all . Are famously liberal Hollywood film directors spending too much time going to anti-globalization rallies ? Perhaps . But I would submit that Hollywood\u2019s misgivings , however untutored , represent only the tip of a growing iceberg of resentment against the perceived injustices of globalization . The simple truth is that corporations represent capital , and capital \u2013 in the form of factories , equipment , machines , money , and even houses \u2013 has been the single biggest winner in the modern era of globalization . Corporate profits are bursting at the seams of investors \u2019 expectations in virtually every corner of the world . Even in moribund economies like Germany and Italy , where employment security is vanishing , cor
 porations are swimming in cash . This phenomenon comes as no surprise to economists . Add two billion Indian and Chinese workers to the global labor force , and the value of other means of production \u2013 particularly capital and commodities ( for example , gold and oil ) \u2013 is bound to go up . And so it has , with capitalists everywhere gaining an ever larger share of the economic pie . ( In theory , capitalists in labor-abundant China and India could end up as losers , but in practice they , too , have benefited thanks to their governments \u2019 success in simultaneously liberalizing and globalizing . ) Many policymakers seem to be under the impression that surging profits are a purely cyclical phenomenon , as economies continue to grow out from the depths of the 2001 recession . Wait a bit , they predict , and wages will fully catch up later in the cycle . Not likely . Capital\u2019s piece of the pie has been getting bigger for more than 20 years , and the trend looks set to continue 
 . Indeed , corporations \u2019 growing share of income has been a major driver behind the long , if uneven , bull market in stocks that began in the early 1990\u2019s . At the same time , inflation-adjusted wages for rich-country unskilled workers have barely budged over the last two decades . Some of these trends also have to do with the nature of modern technological change , which seems to favor capital and skilled workers disproportionately . But , regardless of their cause , rapidly growing inequalities are a powerful force for instability everywhere , from wealthy America to rapidly growing China to reform-challenged Europe . \u201c A rising tide lifts all boats , \u201d conservatives like to say . Fine , but what happens to people , like the poor of hurricane-struck New Orleans , who don\u2019t own boats ? Growing inequality would not be such a problem if governments could simply raise taxes on the rich and strengthen subsidies to the poor . Unfortunately , any country that taxes capital to
 o aggressively will only succeed in chasing it to regions where the tax burden is lighter . In a globalized world , national governments \u2019 ability to tax potentially mobile factors of production is sharply circumscribed . The same mechanism that pours profits into the pockets of global corporations also prevents governments from claiming a larger share of the spoils . Unfortunately , the long-term trend towards ever-lower income shares for unskilled workers is likely to continue over the coming decades , as modern technology permeates the globe , and as emerging markets like China , India , Brazil , and Eastern Europe continue to integrate into global production . This is not to say that unskilled workers are actually being made worse off by globalization in absolute terms ; the vast majority are actually breaking even or better . But unskilled workers \u2019 incomes are not keeping pace with overall economic growth , and the resulting social strains are a ticking bomb . If so , then
  Hollywood\u2019s cartoon-like caricatures of evil multinational corporations may some day seize mainstream consciousness , leading to political upheavals that shatter today\u2019s social contract . That won\u2019t be good for profits , or for the poor . Governments \u2013 and corporations \u2013 must find better ways to provide equal opportunity through improved education , broader financial markets , and other channels . Otherwise , globalization\u2019s storyline may not proceed according to the script . 
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+Japanese Lessons for China\u2019s Currency SHANGHAI \u2013 The question of how much China\u2019s currency should appreciate to rebalance its trade has become a global hot-button issue . But the answers have been all over the map , with some finding that the yuan is not undervalued at all , while others argue that it should appreciate against the dollar by more than 30 % . Clearly , there must be major differences in the macroeconomic models used to produce such a wide range of estimates . But the one thing about which everyone seems to agree is the theoretically and empirically unjustified assumption that an equilibrium exchange rate actually exists . The theoretical problem is simple : a country\u2019s trade balance depends on a lot more than the value of its currency in the foreign exchange markets . Interest rates , employment , aggregate demand , and technological and institutional innovation all play a role . As the economist Joan Robinson pointed out in 1947 , just about any exchange rate
  will be the equilibrium value for some combination of these other variables . The equilibrium exchange rate , she famously argued , is a chimera . Not surprisingly , the empirical evidence that trade imbalances can be resolved through exchange rate changes alone is unconvincing . In the case of China , the most useful precedent is probably that of Japan in the period from the end of the Bretton Woods fixed exchange-rate regime in August , 1971 , to the collapse of its \u201c bubble economy \u201d in 1990. During that period , the yen\u2019s value more than doubled against the dollar , rising from its original fixed rate of 360 to 144 at the end of 1989. Yet , even as Japan\u2019s exports became much more expensive in dollar terms and its imports much cheaper in yen , its trade surplus rose from $6 billion in 1971 to $80 billion in 1989. For two decades , expectations that an appreciating yen would restore external balance were repeatedly disappointed . At the time of the December 1971 Smithson
 ian Agreement , 308 yen to the dollar was supposed to do the trick . Fourteen years later , during the Plaza Accord negotiations , the Japanese argued for an eventual level of 200-210 , while some US Treasury officials thought the final target should be as high as 165-170 . At the end of the 1980\u2019s , some analysts thought rates as high as 120 might finally produce the long-sought equilibrium . Yet , as Japan entered the \u201c lost decade \u201d of the 1990\u2019s , its exports continued to grow faster than its imports . Japan\u2019s trade surplus peaked only in 1994 , at $144 billion , just a few months before the yen\u2019s April 1995 all-time high of 79.75 . In retrospect , it is easy to see why none of these supposed equilibrium exchange rates delivered external balance . As the yen appreciated , Japan responded not by exporting less but by improving productivity and quality control through plant and equipment investment and innovations in factory management , making possible rapid growth in
  exports of high-value-added products . Exchange-rate equilibrium calculations from the 1970\u2019s and 1980\u2019s , which could only have been based on the export sector\u2019s contemporary structure , naturally would have little relevance subsequently . The same is true of calculations at the beginning of the 1990\u2019s , which would have forecast Japanese import growth based on extrapolations from the high GDP growth rates of the previous 40 years rather than on the decade of stagnation that ensued . In China , changes in the export sector\u2019s structure similar to those observed in Japan are now taking place . These changes are likely to make today\u2019s attempts to find an equilibrium yuan-dollar exchange rate seem just as chimerical in hindsight as previous calculations of the yen-dollar equilibrium rate . For the 30 years since the beginning of China\u2019s economic reforms , Chinese industry has achieved impressive efficiency gains by adopting new technologies and realizing economies of sca
 le , leading to a huge expansion in locally made products suitable for export . While an appreciating currency might eventually drive labor-intensive manufacturers out of business , if Japan\u2019s economic history is any guide , they are likely to be replaced by producers of things like ships , machine tools , semiconductors , and doubtless new products yet to be invented . The equilibrium yuan-dollar rate is a chimera not because China\u2019s trade could never be balanced , but because the exchange rate alone does not determine equilibrium . The structure of the entire economy matters , too . As this is constantly evolving in unpredictable ways , there is no reason to expect that the assumptions underlying any particular macroeconomic model will ever remain valid long enough for its steady-state solution to be achieved in practice . 
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+The Cuban Missile Crisis at 50 CAMBRIDGE \u2013 This month marks the 50th anniversary of the Cuban missile crisis \u2013 those 13 days in October 1962 that were probably the closest the world has come to a major nuclear war . President John F. Kennedy had publicly warned the Soviet Union [ 178]not to introduce offensive missiles into Cuba . But Soviet leader Nikita Khrushchev decided to cross Kennedy\u2019s red line surreptitiously and confront the Americans with a fait accompli . When an American surveillance plane discovered the missiles , the crisis erupted . Some of Kennedy\u2019s advisers urged an air strike and invasion to destroy the missiles . Kennedy mobilized troops , but also bought time by [ 179]announcing a naval blockade of Cuba . The crisis subsided when Soviet ships carrying additional missiles turned back , and Khrushchev agreed to remove the existing missiles from the island . As then US Secretary of State Dean Rusk put it : \u201c We were eyeball to eyeball , and I think the oth
 er fellow just blinked . \u201d At first glance , this was a rational and predictable outcome . The United States had a 17-to-1 advantage in nuclear weaponry . The Soviets were simply outgunned . And yet the US did not preemptively attack Soviet missile sites , which were relatively vulnerable , because the risk that even one or two of the Soviet missiles would be fired at an American city was enough to deter a first strike . In addition , both Kennedy and Khrushchev feared that rational strategies and careful calculation might spin out of control . Khrushchev offered a vivid metaphor in one of his letters to Kennedy : [ 180]\u201cWe and you ought not now to pull on the ends of the rope in which you have tied the knot of war . \u201d In 1987 , I was part of a group of scholars that met at Harvard University with Kennedy\u2019s surviving advisers to study the crisis . Robert McNamara , Kennedy\u2019s secretary of defense , said he became more cautious as the crisis unfolded . At the time , he thoug
 ht that the probability of nuclear war resulting from the crisis might have been one in 50 ( though he rated the risk much higher after he learned in the 1990\u2019s that the Soviets had already delivered nuclear weapons to Cuba ) . Douglas Dillon , Kennedy\u2019s treasury secretary , said he thought that the risk of nuclear war had been about zero . He did not see how the situation could possibly have escalated to nuclear war , and thus had been willing to push the Soviets harder and to take more risks than McNamara was . General Maxwell Taylor , the chairman of the Joint Chiefs of Staff , also believed that the risk of nuclear war was low , and he complained that the US let the Soviet Union off too easily . He felt that the Americans should have removed the Castro regime . But the risks of losing control of the situation weighed heavily on Kennedy , too , which is why he took a more prudent position than some of his advisers would have liked . The moral of the story is that a little nuc
 lear deterrence goes a long way . Nonetheless , there are still ambiguities about the missile crisis that make it difficult to attribute the outcome entirely to the nuclear component . The public consensus was that the US won . But how much the US won , and why it won , is hard to determine . There are at least two possible explanations of the outcome , in addition to Soviet acquiescence to America\u2019s superior nuclear firepower . One focuses on the importance of the two superpowers \u2019 relative stakes in the crisis : the US not only had a greater stake in neighboring Cuba than the Soviets did , but could also bring conventional forces to bear . The naval blockade and the possibility of a US invasion strengthened the credibility of American deterrence , placing the psychological burden on the Soviets . The other explanation questions the very premise that the Cuban missile crisis was an outright US victory . The Americans had three options : a \u201c shoot-out \u201d ( bomb the missile si
 tes ) ; a \u201c squeeze out \u201d ( blockade Cuba to convince the Soviets to withdraw the missiles ) ; and a \u201c buyout \u201d ( give the Soviets something they want ) . For a long time , the participants said little about the buyout aspects of the solution . But subsequent evidence suggests that a quiet US promise to remove its obsolete missiles from Turkey and Italy was probably more important than was thought at the time ( the US also gave a public assurance that it would not invade Cuba ) . We can conclude that nuclear deterrence mattered in the crisis , and that the nuclear dimension certainly figured in Kennedy\u2019s thinking . But it was not the ratio of nuclear weapons that mattered so much as the fear that even a few nuclear weapons would wreak intolerable devastation . How real were these risks ? On October 27 , 1962 , just after Soviet forces in Cuba shot down a US surveillance plane ( killing the pilot ) , a similar plane taking routine air samples near Alaska inadvertently viola
 ted Soviet air space in Siberia . Fortunately , it was not shot down . But , even more serious , unbeknownst to the Americans , Soviet forces in Cuba had been instructed to repel a US invasion , and had been authorized to use their tactical nuclear weapons to do so . It is hard to imagine that such a nuclear attack would have remained merely tactical . Kenneth Waltz , an American scholar , recently published an article entitled [ 181]\u201cWhy Iran Should Get the Bomb . \u201d In a rational , predictable world , such an outcome might produce stability . In the real world , the Cuban missile crisis suggests that it might not . As McNamara put it , \u201c We lucked out . \u201d 
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+Merkel in China NEW DELHI \u2013 German Chancellor Angela Merkel\u2019s second visit to China in a year comes against the backdrop of dire forecasts of a difficult September for the eurozone . Mindful of such concerns and persistent pessimism in global financial markets , Merkel is now taking bold political initiatives at home and overseas . Indeed , her China trip should be seen as an effort to assert leadership across the eurozone . At home , Merkel recently sent out a clear message to her critics that Germany must pay a price for eurozone leadership . She cautioned her colleagues against loose talk about a \u201c Grexit \u201d \u2013 Greece\u2019s exit from the eurozone \u2013 and assured visiting Greek Prime Minister Antonis Samaras that Germany remained committed to his country\u2019s membership of the eurozone . While it required courage to take such a tough stance , doing so helped to bolster her position at home and throughout the eurozone . There is now no doubt that Merkel is willing to commit Ge
 rmany to the cause of preserving both the European Union and the eurozone , and that she will work to achieve that goal . If she succeeds , she will emerge as the first great European leader of the twenty-first century . This stance suggests that Merkel appreciates the essence of the argument that Fran�ois Heisbourg , the chairman of the council of the International Institute for Strategic Studies ( IISS ) , advanced in a [ 179]recent essay : a federal arrangement does not fall apart because of problems at the periphery but because of \u201c failure at the heart of the system . \u201d Merkel has come to terms with Germany\u2019s position \u2013 and that it must act to preserve the unity of the whole . The eurozone ( and probably the EU ) cannot be saved in Greece or Finland if it cannot be saved in Germany . Committing Germany to that objective is precisely what Merkel has defined as her political goal for the rest of her term in office . Within hours of declaring her leadership at home , Merk
 el announced her visit to Beijing . The timing was highly significant : Merkel goes to China , the emerging global power , after declaring her own commitment to strengthening the eurozone , if not the EU as a whole , as a credible pole of an emerging multipolar world . In recognition of Germany\u2019s growing significance , Chinese Prime Minister Wen Jiabao welcomed a delegation of German business leaders to Beijing this May with the words : \u201c Stronger Chinese-German cooperation is good for the two countries , good for China-EU relations , and good for world prosperity and stability . The strategic dimension of Chinese-German relations , therefore , can only be strengthened , not weakened . \u201d There are several dimensions to the bilateral relationship . Germany needs both China\u2019s markets and the funds that its government can deploy to purchase German and European bonds . It also has more than 7,500 enterprises operating in China , with gross investment totaling $18.5 billion . Mor
 eover , Germany has sold $15 billion worth of technology to China , and bilateral trade hit a high of $169 billion in 2011 , accounting for 30 % of total China-EU trade . The two countries have set a bilateral trade target of $280 billion for 2015. Trade , however , is not the only immediate concern . Far more important , especially for Germany , is to get China to invest in and hold its bonds . In mid-August , at the First IISS Oberoi Lecture in Mumbai , Klaus Regling , the CEO of the European Financial Stability Facility , underscored the importance of Chinese demand for EFSF bonds and China\u2019s role in stabilizing the eurozone . Regling also revealed that there is now increased and frequent coordination between monetary authorities in the United States , Germany , and China , drawing attention to the fact that the \u201c old Triad \u201d of the dollar , euro , and yen may now have been replaced by a \u201c new Triad \u201d of the dollar , euro , and Chinese renminbi . While Regling spoke of 
 an emerging \u201c multipolar monetary system , \u201d his remarks clearly indicated the functioning of a \u201c tripolar \u201d system . Lying at two ends of that monetary triangle , the eurozone and China have acquired a geopolitical stake in helping each other . [ 180]Hans Kundnani and Jonas Parello-Plesner of the European Council on Foreign Relations view the China-Germany relationship as one that will shape the overall China-EU relationship . Like many strategic analysts , they worry whether Germany , in pursuit of purely short-term economic interests , might forsake long-term strategic interests and concerns about human rights , environmental problems , press freedoms , and other political and geopolitical issues . It is significant , therefore , that German political parties have emphasized the need for Merkel to raise such matters in her talks with Chinese leaders . However , Merkel\u2019s focus may well remain on trade , investment , and currency flows . After all , unless she can turn ar
 ound the eurozone , her rising profile at home and in Europe could easily wither . What this means is that to secure German leadership of Europe , and her own leadership of Germany , Merkel has to \u201c walk on two legs , \u201d so to speak . She needs to balance both geo-economic and geopolitical factors \u2013 both interests and values \u2013 in advancing Germany\u2019s relations with China . 
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+Ms. Europe or Frau Germania ? BERLIN \u2013 Just what is the matter with Angela Merkel ? Only a short while ago , she was celebrated as \u201c Ms. Europe \u201d ; now , she increasingly gives the impression of being Frau Germania . Instead of providing resolute leadership in the global financial and economic crisis , the European Union\u2019s largest economy is withdrawing into its shell . Germany has always been the motor of European integration , in accordance with its political and economic interests . Every post-World War II government has always been willing to harness Germany\u2019s financial strength to further that aim , i. e. , to foot the bill for Europe . The motto was simple : Germany gives and profits in turn . Should Germany spurn the first part of this formula , the European project would suffer serious damage \u2013 and so will German national interests . Yet this is the direction in which Chancellor Merkel seems to be heading . Indeed , in the wake of the Greek crisis , Merkel spoke 
 publicly of the need to be able to exclude eurozone members that do not play by the rules . Does she seriously believe that the euro and the EU would survive such punitive action ? Instead of ideas for strengthening the solidarity and stability of the eurozone , absurd proposals are floated in Berlin . The idea that Germany would show financial solidarity with weakened eurozone members only if they accept draconian stabilization measures is similarly unrealistic . Such measures would only exacerbate deflation in these countries , which are the most important markets for German exports . What is essential is the right combination of stability and financial aid , even if the latter is unpopular with the German public . To be sure , eurozone member states also needed the courage to respond to the crisis of confidence confronting the common currency with concerted action for tighter control of national budgets and improved cooperation . As a first step , however , Greece must be given h
 elp , through the financial solidarity of EU governments . On the other hand , foreign criticism of Germany for running a current-account surplus similar to China\u2019s is unfounded . Such criticism disregards two important differences : first , unlike China , Germany , as a member of the eurozone , cannot undervalue its currency . Second , German \u201c exports \u201d go mainly to the EU . To demand that Germany should stop increasing its competitiveness , or even reduce it , is simply bizarre . From 1990 to 2005 , Germany struggled with high unemployment , slow growth , and low competitiveness , and Europe\u2019s economy suffered as a result . Recovery was difficult to achieve , but the Common Market has profited from Germany\u2019s renewed competitiveness . The crucial point is not the German economy\u2019s renewed strength , but whether Germany will use this strength in Europe\u2019s interest or its own . Unfortunately , Merkel seems to have decided on the second option , because it entails fewer d
 omestic political risks . The responsibility for the current conflict within the EU rests with eurozone governments , but primarily with Germany and France , the zone\u2019s two strongest economies . Rather than lead , the Franco-German couple is constantly , and publicly , at each other\u2019s throats . While today\u2019s quarrel is about who should pay for restructuring Greece , the real issue is the latent distrust between the two partners , which carries the danger of a permanent estrangement . From the German point of view , France only wants to solve its national budget and debt problems at Germany\u2019s expense , simultaneously weakening Germany\u2019s competitiveness . The French government , on the other hand , fears that the Germans \u2019 commitment to eurozone stability is a ploy aimed at pushing France into a corner and leaving it behind economically . Since the global crisis erupted in the fall of 2008 , both Merkel and French President Nicolas Sarkozy have been faced with threats that
  their political majorities might disappear if they put aside their national interests in favor of a European compromise . France has no chance of meeting Germany\u2019s stabilization objectives unless Sarkozy wants to forget about re-election . Merkel would cause outrage among her conservative voters ( as well as court defeat at the German Constitutional Court in Karlsruhe ) should she agree to a more free-spending policy , including any direct financial assistance for Greece . Soon , Helmut Kohl , Europe\u2019s Honorary Citizen and Germany\u2019s Chancellor of Reunification , will be celebrating his 80th birthday . As is usual on such occasions , there will be a lot of lofty speeches about Europe . But , in view of the current situation , we can safely ignore these . What Europe needs in this serious crisis are statesmen and women of Kohl\u2019s caliber , not domestic politicians ! As the big economic and political winner of the eurozone , Germany , in particular , cannot let a serious crisis
  of confidence threaten the European project , because nearly two-thirds of its exports go to the EU . Ever since the collapse of Lehman Brothers in September 2008 , it has been clear that the global crisis would challenge the EU and the euro , because Europe lacks a common government and fiscal policy . Coordination within the eurozone \u2013 above all between its most important economies , France and Germany \u2013 is therefore all the more important . It is in Berlin and Paris , first and foremost , that the crisis-management strategy for the eurozone must be decided . 
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+Reshaping China\u2019s Government-Services Supply Chain HONG KONG \u2013 A supply chain links producers and consumers through a complex web of outsourcing contracts , with market leaders in any product category orchestrating activities to produce components profitably along its entire length . For example , an iPad is designed in California \u2013 with chips from Japan and parts from South Korea , Taiwan , and elsewhere \u2013 and finally assembled in China for global distribution . But the ecology of supply chains is not as straightforward as this depiction suggests . Most studies of supply chains examine their operations , but take for granted governments \u2019 critical enabling role . Because the non-delivery of government services would inhibit the proper functioning of business supply chains , understanding how the government-services supply chain works is vital . For example , the Chinese economy\u2019s transformation was enabled by the synchronized delivery of government services to support t
 he logistics , finance , and manufacturing supply chains . This was a complex task that involved different levels of the Chinese government and many state agencies and ministries . A supply chain is not only a network for production , but also a live feedback mechanism , continually adjusting itself to ensure that production is coordinated and aligned efficiently to meet changes in global consumers \u2019 demand , tastes , and preferences . Technology has enabled faster , more efficient \u201c just-in-time \u201d delivery , taking full advantage of specialization and knowledge-sharing on a global scale . As Apple has discovered , the winner in orchestrating a supply chain emerges with the lowest global costs and the largest market share . The iPad could not be produced at such high speed and low cost without the \u201c made-in-the-world \u201d supply chain based in China . In addition to the macro and micro aspects of economics , understanding supply chains in private and public goods and services
  in China requires [ 178]mezo ( institutional ) and meta ( system-wide ) analysis . When China initiated its economic reforms in 1979 , it inherited a centrally planned economy that lacked the institutional infrastructure for markets . Recognizing the need for systemic change , China allowed local governments in special economic zones and cities to experiment with modern legal , administrative , and logistical practices for export industries , including investments in utilities and transport . Intense competition among local governments for foreign investment led to dramatic improvements in the business environment , featuring economic incentives in areas like land , labor , and taxation , as well as speedy issuance of permits and approvals . City leaders were given responsibility for mobilizing local resources to generate GDP and employment , and they were ( and continue to be ) rewarded with promotion for good performance . The result was considerable innovation and institutionali
 zation of local government services to support market activities , including outsourcing of expertise in infrastructure project design , administration , and operations to private and foreign consulting and design companies . To support China\u2019s participation in global manufacturing supply chains , many local governments sold and dismantled their state-owned enterprises ( SOEs ) , enabling many new private firms to provide the services needed for an export-oriented , market-based economy . At the national level , the consolidation of SOEs and banks , and the modernization of their corporate governance via public listing on stock exchanges , enabled improved efficiency in regulated utilities , hard infrastructure , and resource sectors , complementing liberalization and market growth . The Chinese government-services supply chain also benefited substantially from a meritocratic human-resources tradition . Officials with substantial and successful experience in local governments , mi
 nistries , or SOEs were deliberately promoted and cross-posted to less-developed regions to spread know-how , technology , and best practices and processes . Indeed , China\u2019s economic success reflects the depth of administrative and market experience embedded in the Chinese bureaucracy . Chinese mayors are CEOs of their local economy , responsible not only for market development , but also for social stability . The critical mechanism for orchestrating and implementing the complex web of contracts embodied in China\u2019s government-services supply chain is the Five-Year Plan , which foresees vertical and horizontal integration of almost all Party and administrative agencies . The FYP uses broad objectives and targets for social and economic development , formed after extensive internal and public consultations . These mandates are translated by sub-national officials into projects and work plans , such as targets for reducing energy use per unit of GDP in order to address resource c
 onstraints and concern about climate change . China\u2019s success in developing from scratch a modern government-services delivery system explains why many foreign investors find it much easier to deal with Chinese governments than those in other developing countries . The 12th FYP aims to shift China from an export-driven growth model toward a balanced economy that relies on domestic demand , while simultaneously addressing industrial transformation , social inequities , and environmental degradation . This implies more complex contracts that go beyond promoting markets , GDP growth , and employment to ensure inclusive , equitable , and high-quality government-services delivery . Implementation of these evolving social goals through local government agencies by specific officials is a daunting task that requires profound changes in roles and performance metrics . No one doubts that Chinese local governments play a much more active and intrusive role than their counterparts in the Wes
 t , which implies an additional complicating factor . Local governments now face not only growing demands from the emerging middle class for greater transparency , competition , fairness , and access to opportunities , but also deepening conflicts between local interests and global rules . Orchestrating a complex government-services supply chain in a substantially open continental economy with 1.3 billion people and five levels of government is difficult enough using a simple GDP growth objective . Adapting the governance metric in a country of China\u2019s size to an economy that is green , inclusive , and equitable presents a novel challenge in human history . The only precedent for such an achievement is China itself . 
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+Russia\u2019s Ukrainian Path to the Future MOSCOW \u2013 Russia and the West are losing each other yet again . The magnetic attraction and repulsion between the two has been going on for centuries . Indeed , historians have counted as many as 25 such cycles since the reign of Tsar Ivan III . In the past , however , Russia\u2019s sharp anti-Western turns were reversed \u2013 usually out of simple necessity \u2013 after relations reached rock bottom . Not this time . On the contrary , the deterioration of the relationship nowadays has developed a momentum of its own . There are four reasons for this . First , the \u201c loss \u201d of the Cold War , and with it imperial and superpower status , has created a deep and so far unresolved crisis in the collective mentality of Russia\u2019s political class . Russian leaders continue to perceive the West as a phantom enemy in opposition to which all the traditional mythologies of Russian foreign policy are being resurrected . Second , by the end of Vladimir Putin
 s second presidential term , Russia\u2019s modernizing dreams had been shattered . Modernization , indeed , simply turned out to be yet another redistribution of property to those on top , particularly those who came out of the St. Petersburg mayoral office and the Federal Security Bureau ( FSB ) . The image of the West as an enemy has become the only ideological excuse for Putin\u2019s model of the corporate state . Third , the soaring price of oil has made the Kremlin\u2019s inhabitants believe that they are all-powerful . Today\u2019s Russia , which thinks of itself as a \u201c great energy state , \u201d laughs at its previous meager desire to catch up with little Portugal in terms of living standards . Finally , a series of Western mistakes and misfortunes , a crisis in transatlantic relations , lack of leadership , and the growing threat of Islamic fundamentalism ( in both the Middle East and Europe ) have led Russian leaders to believe that the West is a sinking ship , to be abandoned as soon
  as possible . While this belief unfortunately does have some validity , it requires one very important caveat : Russia is part of that ship . Russia can make advances to Hamas , Hezbollah , and Iran , and it can remind the Arab world that the Soviet Union helped it develop and offered it protection in the United Nations Security Council . But in the eyes of Islamic extremists , Russia is part of the \u201c Satanic \u201d West \u2013 indeed , its most vulnerable part . Thus , it is Russia , with a soaring birth rate among its Muslim citizens that is the most attractive for expansion and take-over . But Russia\u2019s self-destructive confrontation with the West can be halted , and its centuries-old debate between Westernizers and the Slavophiles put to rest once and for all . This , however , will depend on Ukraine\u2019s success on the path of European development it chose in the Orange Revolution of 2004-2005 . Ukraine does , indeed , present a threat , but not to Russia\u2019s security , as Kremlin
  propagandists claim . The real threat is to the Putin model of a corporate , authoritarian state , unfriendly to the West . For the Kremlin\u2019s occupants , it is a matter of life and death that countries that were once part of the Soviet Union but chose a different model of development \u2013 Ukraine being the chief example \u2013 should never become attractive to ordinary Russians . The example posed by the Baltic nations does not threaten the Kremlin much , because they are perceived as foreign to the Russian psyche . Indeed , in Soviet films , Baltic actors were usually cast in the roles of Nazi generals and American spies . Ukrainians , on the other hand , are close to us in their culture and mentality . If they made a different choice , why can\u2019t we do the same ? Ukraine\u2019s success will mark the political death of Putinism , that squalid philosophy of \u201c KGB Capitalists . \u201d If Ukraine succeeds in its European choice , if it is able to make it work , it can settle the question 
 that has bedeviled Russian culture for centuries \u2013 Russia or the West ? So the best way to help Russia today is to support Ukraine\u2019s claim that it belongs to Europe and its institutions . This will influence Russia 's political mentality more than anything else . For if Russia\u2019s anti-Western paranoia continues and the Kremlin\u2019s Eurasian fantasy of allying with China lasts another 10-15 years , Russia will end up seeing China swallowing its Far East and Siberia . Indeed , the weakened Russia that will be Putin\u2019s legacy will then also lose the Northern Caucasus and the Volga region to their growing Muslim populations . The remaining Russian lands would then have no other choice but to attach themselves to Ukraine , which should by then have become a successful member of the European Union . After 1,000 years , Russia will have come full circle , returning to Kievan Rus after wandering on the roads of the Mongol hordes , empire , communism , and farcical Putinism . So Russia 
 now has a choice : Ukrainian plan A or Ukrainian plan B. 
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+Should Europe Regulate Sovereign Wealth Funds ? WIESBADEN \u2013 State-controlled investments from overseas \u2013 so-called sovereign wealth funds ( SWFs ) \u2013 are now the subject of intense debate . The United States and France have made their fears known . In Germany , too , the debate centers on SWFs \u2019 political and economic significance for the country\u2019s future . The problem has been exacerbated by the growing wealth of a number of countries , some of them formerly run by socialist or communist regimes . China , Russia , India , and the Gulf States have integrated their wealth into the global economy , to the immense benefit of world trade . The openness of Germany\u2019s markets makes them especially attractive to global trade . This openness will not change , yet there are some who now call for new safety fences \u2013 in other words , for protection . For example , Russian investors are interested in taking a massive share in the German-French aerospace company EADS , which is alrea
 dy 5%-owned by a Russian bank . For many , this proposal has underscored a change in investors \u2019 behavior . But what , exactly , has changed ? SWFs have been around for years . Among the first countries to invest their considerable state-owned funds were Kuwait , the United Arab Emirates , Norway , and Singapore . They invested , and still invest , their budgetary surpluses worldwide in government bonds and state-owned enterprises . Industrialized countries like the US and Japan also have so-called \u201c reserve funds . \u201d Some of these funds are huge . In the UAE , the Abu Dhabi Investment Authority has estimated capital assets of $875 billion , making it probably the world\u2019s largest state-owned investment company . In July 2007 , another rich UAE fund , Dubai International Capital , bought 3 % of EADS , after taking a stake of almost 2 % in the automotive manufacturer Daimler in January 2006. The Kuwait Investment Authority , also a state-owned fund , holds 7 % of Daimler . Sin
 gapore possesses two SWFs \u2013 Temasek-Holdings , with capital assets of roughly $100 billion , and the Government of Singapore Investment Corporation , with approximately $330 billion . Both funds are invested worldwide , including with the port operator PSA . Some funds are subject to considerable restrictions . Japan limits its state investments overseas to bonds , mostly those issued by the US . Until recently , China , which holds foreign currency reserves of more than $1.2 trillion ( the world\u2019s largest ) , followed this policy , too . But a $3 billion investment by the Chinese SWF in the US investment firm Blackstone suggests a more worryingly strategic investment policy , one that appears aimed at advancing its own industrial interests in certain markets . Russia , where the line between state-controlled and privately controlled companies is often blurry , has demonstrated this strategy in Europe . Indeed , Russian investments in aerospace , telecommunications , and , most 
 of all , in the energy sector , are the main source of concern for Germany . Are state-controlled investors now aiming primarily for strategic rather than purely financial returns ? Because SWFs \u2019 resources are so substantial , it is advisable to take precautions to avoid becoming a target of politically motivated market manipulation , or becoming economically and psychologically dependent on foreign governments \u2019 decisions . Most Western countries already have instruments to deter foreigners from making unwanted investments , not only in defense industries , but also in other sectors . But , while Germany\u2019s Foreign Trade and Payments Act protects against takeovers in the defense industry ( though the law needs strengthening ) elsewhere Germany has no system for examining investments by SWFs that may be strategically motivated . The International Monetary Fund now encourages more transparency by foreign investors , and has plans for a code of conduct . The EU Commission also f
 avors voluntary agreements aimed at strengthening transparency . Some SWFs now seem willing to engage in constructive dialogue . But assessing potential threats is not easy . Most investments are seen to benefit a country\u2019s economy , if not its security . We in Germany need to distinguish one from the other . Bills have been drafted that amount to amendments to the Foreign Trade and Payments Act and related regulations . While strengthening the act , they seek to avoid affecting the openness of the German economy . Under proposed new legislation , if a foreign investment in a German company amounts to more than 25 % , an assessment can be made of whether public order or safety might be threatened . In my view , this would address the concerns about SWFs , while not generally impeding investment because it would apply only in a very few cases . Germany has also drawn up a plan to protect its industries that is modeled on US regulation . Since 1988 , the US president can prohibit fo
 reign direct investment if it is seen as a threat to national security . An additional control was introduced last year , so now all direct investments in which a foreign government is involved are scrutinized by the Committee on Foreign Direct Investment . The principle of reciprocity should clearly apply to transnational investments . Germany is open to foreign investors , but in return we Germans demand the same market access abroad . Much remains to be done in this area even in Europe , as Germany\u2019s own experiences with France and Spain demonstrate . In China and almost all Middle Eastern countries , foreigners are restricted to minority shareholdings and must contend with high import duties and numerous non-tariff barriers . Protective measures must remain the exception rather than the rule . We Europeans must accept the challenges of global competition , and transnational investments are the basis of thriving economic development at home and abroad . Nevertheless , we must n
 ot allow ourselves to become the passive economic playthings of other nations , or of big state-owned enterprises . We must play an active part in shaping globalization , and that means crafting appropriate rules . 
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+China and a New Balance of Power SHANGHAI \u2013 The last rival superpower to the United States , the Soviet Union , collapsed in 1991. But , apart from its military strength , the USSR was never really powerful enough to counterbalance US influence . In the late 1980\u2019s , Japan seemed capable of challenging America\u2019s industrial leadership , but by the 1990\u2019s it lost its competitive edge . China might itself wish to be a major force in a multi-polar world , but has been plagued by its lack of overall strength . Given these realities , China sees the expanding European Union as a likely counterweight to unchecked US power . In terms of economic output , today\u2019s EU is on par with the US . But it has yet to build a strong defense system that can respond effectively either to regional contingencies or to global needs . What would be the strength of such a system if and when it is developed , and how will it compare with that of the US ? In assessing America\u2019s strength , China foll
 ows US debates on the merits of a uni-polar or a multi-polar world with keen interest . Some Americans favor a uni-polar system in which the US dominates . Such a Pax Americana would cost the country less to sustain , but the world would worry if America adopts a wrong policy , as has been the case in Iraq . The US certainly has a right to curb terrorists like those who staged the attack on September 11 , 2001. But the \u201c war on terror \u201d did not warrant the decision to attack a sovereign state and topple its government on the flawed presumption that it housed weapons of mass destruction and was linked to the 2001 attacks . The US went to war despite strong opposition from France , Germany , Russia , China , and other United Nations Security Council members . France and Germany have since sought to restore good relations with the US , but continue to disapprove of the war . The Middle East , always a region of concern for Europe , has become even less stable as a result of the war
  . American leadership has been one of the war\u2019s casualties . In China , the concept of an independent European defense \u2013 embodied in the European Security and Defense Policy ( ESDP ) , as well as the EU\u2019s Rapid Reaction Force ( RRF ) and various police missions \u2013 is thus generally seen as necessary and effective in a multi-polar world system . China observes that on most security matters , the ESDP will ( for now ) mimic American security interests , because the EU and US share fundamental values of human rights and democracy . Moreover , many EU members have simultaneously pledged their defense capabilities to NATO , which has been led by the US since its creation . But the ESDP , once fully developed , will not necessarily follow America\u2019s lead unconditionally , especially if American policy continues to deviate from the norm of international law , as in Iraq . As a result of acquiring a pan-European defense capacity , the Europeans are likely to play a more independent
  role than at present in managing intra-European security relations and carrying out global missions . China welcomes this expanded security role for the EU . Although it remains wary of international intervention by the EU , the substance and pattern of ESDP operations are likely to win China\u2019s respect for several reasons . First , China\u2019s leaders note that the ESDP gives priority to the legitimacy of its missions . So far , all ESDP missions have respected international law and governmental arrangements among disputing parties . Most of its military or police missions have been based on UN Security Council resolutions , and ESDP missions outside Europe have been at the invitation of local authorities . Of course , ESDP security missions , even those in accordance with Security Council resolutions , may not operate within the UN system \u2013 the EU prefers its own independent leadership . The ESDP does not necessarily require Security Council authorization as a condition for its 
 missions , and it retains an independent role in executing them . However , when compared with the US , the ESDP ( in Chinese eyes ) cares far more about international legitimacy , backed by the authority of the UN . Second , the ESDP is concerned with good governance and institution building . The EU is keen to restore or establish human rights , stability , and prosperity . Outside Europe , the ESDP acts to enhance governance rather than promote regime change , and the EU has often assisted governments \u2019 efforts to improve security conditions . Third , the ESDP is open to international cooperation . The EU works with either non-EU states , such as NATO members like Canada , Norway , and Turkey , or applicants for EU membership . The ESDP cooperates with the UN and other regional organizations , such as the African Union and ASEAN . When the EU reaches out , it tends to play a leading role in these collaborations . There are good reasons to expect that China will continue to acce
 pt an independent European security mechanism . There is little concern , if any , about the ESDP intervening in internal Chinese affairs , such as Taiwan . Indeed , China wants a strong and independent Europe , and from that vantage point it is not too early for China to envisage a truly multi-polar global system . 
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+The \u201c Browning \u201d of African Technology Forget MIT . Hello , Tsing Hua University . For Clothilde Tingiri , a hot young programmer at Rwanda\u2019s top software company , dreams of Beijing , not Cambridge , animate her ambitions . Desperate for more education , this fall she plans to attend graduate school for computer science \u2013 in China , not America . The Chinese are no strangers to Rwanda . Near Tingiri\u2019s office , Rwanda\u2019s largest telecom company , Rwandatel , is installing new wireless telephony equipment made by Huawei of Shenzen . Africa boasts the world\u2019s fastest-growing market for wireless telephony , and Huawei \u2013 with offices in 14 African countries \u2013 is running away with the business , sending scores of engineers into the bush to bring a new generation of low-cost technology to some of the planet\u2019s poorest people . Motivated by profit and market share rather than philanthropy , Huawei is outpacing American and European rivals through lower prices , faster act
 ion , and a greater willingness to work in difficult environments . According to Chris Lundh , the American chief of Rwandatel , \u201c That\u2019s the way things work in Africa now . The Chinese do it all . \u201d Well , not quite . Across sub-Saharan Africa , engineers from India \u2013 armed with appropriate technologies honed in their home market \u2013 are also making their mark . India supplies Africa with computer-education courses , the most reliable water pumps , low-cost rice-milling equipment , and dozens of other technologies . The sudden influx of Chinese and Indian technologies represents the \u201c browning \u201d of African technology , which has long been the domain of \u201c white \u201d Americans and Europeans who want to apply their saving hand to African problems . \u201c It is a tectonic shift to the East with shattering implications , \u201d says Calestous Juma , a Kenyan professor at Harvard University who advises the African Union on technology policy . One big change is in education . Ther
 e are roughly 2,000 African students in China , most of whom are pursuing engineering and science courses . According to Juma , that number is expected to double over the next two years , making China \u201c Africa\u2019s leading destination for science and engineering education . \u201d The \u201c browning \u201d of technology in Africa is only in its infancy , but the shift is likely to accelerate . Chinese and Indian engineers hail from places that have much more in common with nitty-gritty Africa than comfortable Silicon Valley or Cambridge . Africa also offers a testing ground for Asian-designed technologies that are not yet ready for US or European markets . A good example is a solar-powered cooking stove from India , which has experimented with such stoves for decades . Wood-burning stoves are responsible for much of Africa\u2019s deforestation , and , in many African cities , where wood accounts for the majority of cooking fuel , its price is soaring . The Indian stove is clearly a work-in-pr
 ogress ; it is too bulky and not durable enough to survive the rigors of an African village . But with India\u2019s vast internal market , many designers have an incentive to improve it . How many designers in America or Europe can say the same ? Of course , technology transfer from China and India could be a mere smokescreen for a new \u201c brown imperialism \u201d aimed at exploiting African oil , food , and minerals . In recent years , China\u2019s government alone has invested billions of dollars in African infrastructure and resource extraction , raising suspicions that a new scramble for Africa is underway . But Africans genuinely need foreign technology , and the Chinese , in particular , are pushing hard \u2013 even flamboyantly \u2013 to fill the gap . This year , Nigeria\u2019s government bought a Chinese-made satellite , and even paid the Chinese to launch it into space in May . China was so eager to provide space technology to Africa\u2019s most populous country that it beat out 21 other bidde
 rs for a contract worth $300 million . China\u2019s technology inroads are usually less dramatic , but no less telling . In African medicine , Chinese herbs and pharmaceuticals are quietly gaining share . For example , the Chinese-made anti-malarial drug artesunate has become part of the standard treatment within just a few years . Likewise , Chinese mastery over ultra-small , cheap \u201c micro-hydro \u201d dams , which can generate tiny amounts of electricity from mere trickles of water , appeals to power-short , river-rich Africans . Tens of thousands of micro-hydro systems operate in China , and nearly none in Africa . Americans do-gooders like Nicholas Negroponte , with his $100 laptop , have identified the right problem : Africa is way behind technologically and rapid leap-frogging is possible . But Chinese and Indian scientists argue that Africa can benefit from a changing of the technological guard . They may be right . 
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+The China Question President Bush\u2019s recent visit to Asia made little news \u2013 by design . But that\u2019s because Bush didn\u2019t begin to address the issue that is looming ever larger in the region : the changing face of security in Asia in view of China\u2019s growing economic and military might . This summer , for example , China and Russia conducted their first-ever grand-scale joint military exercise . This was followed by Russian news reports that China , Russia , and India would conduct trilateral military exercises , named \u201c Indira 2005 , \u201d on the same scale before the end of this year . In the past , such a combination of countries was almost unthinkable , and these exercises cannot be explained away as simple \u201c one-off \u201d affairs with little resonance . Instead , they reflect China\u2019s long-term strategic goal of establishing hegemony across Asia . One tool of this ambition is the Shanghai Cooperation Organization ( SCO ) , under which the Sino-Russian exercises took plac
 e . Established in June 2001 , the SCO includes China , Russia , Kazakhstan , Kyrgyzstan , Tajikistan , and Uzbekistan . The SCO\u2019s original purpose was to mitigate tensions on the borders of China and the Central Asian countries after the collapse of the Soviet Union and the arrival of the United States military with the war in Afghanistan . China regards the SCO as a stage for broadening its influence over a vast region , ranging from the Asia-Pacific to Southwest Asia , the Middle East , East Africa , and the Indian Ocean . Indeed , its members include about 45 % of the world\u2019s population , and 28 % of the landmass ranging across the Eurasian continent . China\u2019s active leadership of the SCO has resulted in policies that it favors . Gradually , the SCO shifted its focus to fighting Islamic radicals . Nowadays , however , the SCO is often used as a forum to campaign against supposed American unilateralism and to provide a united front \u2013 especially between China and Russia 
  against the US with respect to security and arms-reduction issues in the region . This includes joint anti-terror training and demands to reduce US forces in the region , particularly from Uzbekistan and Kyrgyzstan . The SCO provides China not only with a platform to confront the existing US-led alliance in the Asia-Pacific region , but is increasingly being used to prevent the formation of a US-led network to restrain China\u2019s advance . Ultimately , it is feared that the SCO could develop into a military alliance similar to the Warsaw Pact of the Cold War era , with an embryonic \u201c Great China Union \u201d at its core . But China\u2019s regional diplomacy goes far beyond the SCO . It seizes every opportunity that comes its way , including the Six Party Talks on North Korea\u2019s nuclear ambitions , to emphasize its centrality to the settlement of any and all Asian issues . Moreover , it continues to build its \u201c string of pearls \u201d of military bases at every key point on maritime tra
 nsportation routes along the \u201c arc of instability \u201d from the Middle East to China\u2019s coast . No one seems to know how to respond to China\u2019s diplomatic and military muscle flexing in Asia , for the extent of China\u2019s ambitions remains utterly unclear . But , while everyone else ponders China\u2019s motives , its government is acting . Indeed , the UK\u2019s premier security think tank , the Institute for International Strategic Studies , recently warned that , while the world focuses on the fight against international terrorism and the unfolding events in the Middle East , China is rapidly expanding its influence from Asia to Africa . The \u201c pearls \u201d in Africa include Sudan , Angola , Algeria , Gabon , Namibia , Zambia , Tanzania , Zimbabwe , Uganda , Djibouti , Mali , Central Africa , Liberia , Ethiopia , Mozambique , Sierra Leone , and the Democratic Republic of Congo . In each country , China is nurturing special military and commercial relations intended to promote loyalty t
 o Chinese interests . As in Asia , there is a pattern at work : growing Chinese influence begets increased support for Chinese policies . Of course , it\u2019s a two-way street . Whenever complaints come up in the United Nations \u2019 Human Rights Committee , China can count on the support of many African countries that have their own human rights problems . Even the selection of Beijing as the site of the 2008 Olympics benefited from \u201c African votes . \u201d And China has publicly stated that it will back African nations in potential disputes at the World Trade Organization ( WTO ) and other international organizations . Similarly , many African states now seem to be leaning heavily toward China in its dispute with Taiwan . When Japan\u2019s government tried to become a permanent member of the UN Security Council , few African countries backed its bid , despite receiving economic aid for decades . China likes to boast of its \u201c peaceful rise . \u201d But the rise of Bismarck\u2019s Germany at th
 e end of the nineteenth century was also peaceful \u2013 for a while . The question is not whether China rises to great-power status peacefully , but whether it intends to remain peaceful when it gets there . Just as the world confronted the \u201c German Question \u201d 125 years ago , it is now confronting the \u201c China Question . \u201d We need a better answer this time . 
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