The Georgia Syndrome Two years after a disastrous war, Tbilisi is booming, but Georgians remain on edge, for

one overriding reason: They're not sure Barack Obama loves them enough. Over the course of the last week, Russia has celebrated the second anniversary of its war with Georgia in typical style: A visit by President Dmitry Medvedev to the breakaway province of Abkhazia, which Russia now recognizes as an independent country, and the announcement by a Russian general that the air force had stationed in Abkhazia the S-300, a highly sophisticated anti-aircraft system, to counter unspecified Georgian threats. While the Georgians, who tend to treat each new act of Russian provocation as a prelude to apocalypse, reacted with alarm, a State Department spokesman waved off the S-300 as old news. President Barack Obama's administration has tried -- successfully, so far -- to strike a balance between defending Georgia and preserving the "reset" with Russia. But what will it do if Russia simply refuses to withdraw from territories seized in an illegal and unjust war? Grossly inferior to Russia in all matters of hard power, Georgia enjoys a crushing soft-power advantage that the Russians must find both bewildering and infuriating. Like Israel, Georgia is a country that many Americans find impossible to think about rationally. Visitors to Tbilisi, the country's charming and ancient capital, quickly succumb to Georgia Syndrome, a blissful capitulation to hand-on-heart sentimentality, sodden feasts, Mitteleuropean boulevards, and passionate devotion to Western values in the face of threats both real and imagined. I've been half in the bag myself since writing an account of the run-up to the war in the New York Times that President Mikheil Saakashvili apparently found highly satisfying. I'm in Tbilisi now at the invitation of the government to deliver a series of lectures, though really to visit my son, who is working as a summer intern with the Ministry of Finance. It's not just me, of course. When George W. Bush came here in 2005, he danced a little jig of happiness that made him an instant national hero -- and the namesake of Tbilisi's George W. Bush Avenue. Georgia quickly became the unofficial mascot of the president's crusade for democracy; Bush supported providing Georgia a path to NATO membership in the teeth of furious Russian opposition. (He failed.) Sen. John McCain nominated Saakashvili for the Nobel Peace Prize in honor of Saakashvili's central role in the 2003 "Rose Revolution" that brought democracy to Georgia, and Saakashvili to power. (Then-Senator Hillary Clinton was co-nominator.) McCain remains a single-minded Georgia booster: His recent Washington Post op-ed, in which he alleged that the Obama administration "has appeared more eager to placate an autocratic Russia than to support a friendly Georgian democracy," was reprinted in full in the Messenger, Georgia's highly pro-government English-language daily. Georgian leaders take a more sanguine view, at least publicly. Temuri Yakobashvili, Georgia's minister for reintegration and a Saakashvili intimate who shares many of his boss's leading traits -- total self-assurance, reckless candor, and spontaneous wit -- said to me, "We believe that the Obama administration is not selling out Georgia." As a candidate, Obama issued a sharp -- if ever so slightly belated -- condemnation of the invasion, and as president he has been unambiguous in his repudiation of Russia's de facto annexation of Abkhazia and South Ossetia, the breakaway region where the 2008 war began. Yakobashvili and others were much reassured last month when Secretary of State Hillary Clinton visited Tbilisi and bluntly described the ongoing Russian presence in the two regions as "occupation." Nevertheless, Georgia has not yet had the chance to work its voodoo on Obama, and Georgians fret that this dispassionate and unfamiliar figure is not the type to succumb to the Syndrome. Insiders worry that while Michael McFaul, the National Security Council (NSC) official responsible for Russia and Eurasia, is philo-Georgian -- McFaul once worked in Georgia for the National Democratic Institute -- Denis McDonough, Obama's longtime advisor and McFaul's superior at the NSC, is a cold-hearted realist. Outsiders ask whether Obama has discarded the principle of "Eurocentrism," which is code for "Western values," or whether he is prepared to sacrifice Georgia to the reset with Russia. Like Israelis, Georgians are plagued by the uneasy sense that their claims on the United States are moral rather than strategic. Yakobashvili makes the wild assertion that the Russian presence in the South Caucasus threatens NATO's commitment to stopping terrorism, organized crime, and nuclear proliferation -- he says that Russian passports issued to Ossetians have been found on Chechen separatists -- but the truth is that the current stalemate is hardly destabilizing. When I asked Irakli Porchkhidze, deputy secretary of Georgia's national security council, why the West should pressure Russia to withdraw from Abkhazia and South Ossetia, he said, "Russia has violated the principle of the inviolability of borders; Russia has engaged in ethnic cleansing. Are these not human rights issues?" The answer is yes, mostly. The ethnic cleansing in question occurred chiefly during the savage civil war of the early 1990s, when forces on all sides committed atrocities. But though disputes remain over who fired the first shot in 2008, in the course of the war Russia violated Georgia's territorial integrity as brutally and unequivocally as Iraq did Kuwait's in 1990. And despite signing a cease-fire agreement requiring both sides to withdraw from the disputed region, Russia has maintained thousands of troops in the region, held the territories as dependencies, and flaunted its contempt for the agreement by moves like the announcement of the S-300, which serves no conceivable defensive purpose. "Our air force has like three and a half planes," Yakobashvili said to me. "What are they going to shoot down - UFOs?" This Week at War: Moral Hazard at NATO Europe may not be able to rely on America's free security guarantee forever. In blasting NATO, Gates explains what moral hazard feels like

In what he termed his "last policy speech as U.S. defense secretary," Robert Gates ripped into his policymaking peers at NATO headquarters in Brussels last week for allowing "significant shortcomings in NATO in military capabilities, and in political will" to occur. Gates noted that although the non-U.S. alliance members have more than 2 million troops in uniform, these countries struggle to deploy 40,000 soldiers into an effective military campaign. Gates also pointed to NATO's embarrassing performance in Libya, noting that European members, despite having a multitude of officers collecting paychecks at frivolous staff billets, have failed to generate the intelligence support and command capabilities needed to wage an effective air campaign. Gates warned of a "dismal future for the transatlantic alliance." Gates's frustration was no doubt sparked by the realization that his department has become the victim of moral hazard. The United States provides a free security guarantee to Europe. Europeans, meanwhile, have responded in an economically rational way by taking greater risk with their external defense. With the collapse of the Soviet Union removing the last plausible military threat, it was logical for European policymakers to avoid spending on expensive space, communications, and intelligence systems that the United States was largely providing for free. Gates and many other U.S. policymakers see an alliance with too many free riders; Gates noted that only five of the 28 allies spend more than the agreed target of 2 percent of GDP on defense. In the short term, Gates fears that the United States will have to bail out the Libya operation. This week, Adm. Mark Stanhope, Britain's top naval officer, warned that budget limits and unit rotation requirements could force NATO combatants over Libya to soon have to choose between Libya and Afghanistan. Should a shortfall of European forces in either campaign result, Gates undoubtedly fears that the United States will have to make up the gap. Over the longer term, the moral hazard issue extends beyond NATO into the Western Pacific, the South China Sea, and soon the Persian Gulf. For example, the United States has a great interest in signaling to China that it has strong security commitments to its partners in the region. Washington likewise wants those partners to share the defense burden and to also avoid provocative behavior. The stronger the signal it sends to China, the less incentive the partners have to do their part. In the Middle East, the United States will likely respond to the emerging Iranian nuclear threat with a security guarantee for its Sunni Arab allies on the west side of the Persian Gulf. It is just as likely that a future exasperated U.S. defense secretary will someday tour that region, reprising Gates's final speech to NATO and pleading with the Arab allies to do more for themselves. Of course, the United States could opt not to issue the Persian Gulf security guarantee and risk either a regional nuclear arms race or watch another major power to move into the region with its own guarantee. No U.S. administration would tolerate these outcomes. Gates concluded his speech by warning Europe's leaders that the next generation of U.S. leaders lacks nostalgia for the Cold War struggle and could walk away from the NATO alliance. In the future, Europe will undoubtedly have to do more for its external defense. That doesn't seem like a problem now since there is no apparent external threat. But should they have to more fully insure themselves, European defense planners should consider how they would rebuild their defenses. They should consider how much time it would take to mobilize political and budgetary authority to prepare for these threats and how long it would take to rebuild the required military forces. Most notable in this regard is the risk of losing both a defense industrial base and functioning military institutions, which once gone might never be restored, at least within a relevant time frame. Gates's speech displayed his frustrations with the decision to intervene in Libya, which quite possibly will see the United States having to pay up on an insurance policy that Gates never wanted to write in the first place. More broadly, the military security guarantees the United States has issued to Europe and elsewhere are risk-management tools that come with benefits and annoying costs. Gates has warned Europe that its insurance policy may be cancelled. If that happens, the continent's leaders will have to think about their security risks in old and unfamiliar ways. In last week's column, I discussed how the U.S. government is inexorably "civilianizing" its military operations in response to irregular adversaries who have adopted a civilian appearance to gain an advantage. The U.S. government will increasingly find itself assembling its own civilianized army comprised of covert intelligence operatives, paramilitary groups, and local militias to battle modern irregular opponents. This week U.S. officials revealed that the next test of this game-plan will occur in Yemen, where it will now have to track down al Qaeda without the help of the Yemeni government. According to the Washington Post, there will be a large buildup of CIA assets for the Yemen mission. This buildup will include CIA-operated Predator drones, which will fly from a new airbase now under construction somewhere in the region. This expanded CIA effort in Yemen will supplement and perhaps supersede a small counterterrorism operation that has thus far been run by the Pentagon's Joint Special Operations Command (JSOC). The recent collapse of government authority in Yemen accounts for the reshuffled U.S. counterterrorism command structure. JSOC operated in Yemen with the permission of the Yemeni government and in support of its counterterrorism units. But with the departure of President Ali Abdullah Saleh, who was wounded in a rocket attack, government authority seems to have collapsed. Yemeni counterterrorism teams have also apparently abandoned the

hunt for al Qaeda. With local government support to the JSOC operation either withdrawn or effectively suspended, it has become necessary to start a covert operation under CIA authority to continue the hunt for al Qaeda. This is the future of irregular warfare, at least in the world's most difficult, ungoverned spaces. The first preference of the U.S. government is to deal with other legitimate governments and their institutions. Over the past decade, when there was no such government, it was U.S. policy to "nation-build" a suitable sovereign counterpart that could control its territory and work with U.S. government officials. But after the costs of such efforts in Iraq and Afghanistan, there is little chance the United States is going to attempt similar efforts in ungoverned al Qaeda hangouts like Yemen or Somalia. Instead, the United States will have to fall back to a long-term strategy of cultivating useful relationships with tribal leaders, warlords, and other local powers. If the U.S. government wants to find targets for drones and chase al Qaeda in other ways, it will have to give up on nation-building and go straight to local sources instead. The arc of the U.S.-Pakistani relationship over the past decade is another illustration of a transformation from military to civilian warfare. At the beginning of this period, the United States hoped to assist the Pakistani military to fight al Qaeda and other radicals inside Pakistan. But as the relationship has collapsed, the U.S. has had to civilianize its military effort inside Pakistan. Gone are U.S. military trainers for the Frontier Corps. Instead, the United States will have to rely more on its unilateral covert intelligence effort to support the CIA's drones, bypassing the Pakistani government -- as it also did to track down Osama bin Laden. The forthcoming CIA operation against al Qaeda in Yemen will thus utilize techniques the agency has already had to adopt in Pakistan. Legally, it will be a deniable covert action which will put the CIA in the lead. The CIA's drone air force looks set to expand. And the agency's clandestine service and paramilitary officers will likely be in the lead on the ground, developing targets for the drones and others. The Pentagon's JSOC will play a supporting role, as it did in the raid on bin Laden. But it seems like the war in Yemen will be run and fought -- on both sides -- by civilians. Back in the Saddle How Libya helped NATO get its groove back. NATO's operations in Libya got off to a rocky start. Although the venerable treaty organization's member countries -- principally Britain, France, and the United States -- were dropping bombs on Muammar al-Qaddafi's military as soon as the ink was dry on the March 17 U.N. Security Council resolution authorizing a no-fly zone over Libya, as of late March the allies still couldn't agree on whether NATO itself should lead the mission. Turkey, opposed to intervention, insisted on the alliance acting unanimously, which was to say, not acting at all; hawkish France opposed NATO leadership, fearing less-enthusiastic countries would muck up the ad hoc coalition's campaign. Weeks later, confusion still persists, with heads of member states issuing conflicting statements and military leaders contradicting their civilian bosses. These hiccups have spawned the inevitable prophecies of doom for the alliance. "Will the Libya intervention bring the end of NATO?" asks the headline on a column by Anne Applebaum in the Washington Post this week. Other interested parties in the Libyan conflict, meanwhile, have engaged in no end of backseat driving over the alliance's performance. The Arab League, whose call for action in Libya was a crucial catalyst for spurring intervention, denounced NATO for being too aggressive once the action began. The anti-Qaddafi rebels bitterly complained the alliance wasn't doing enough. These dire predictions are nothing new -- they've greeted every NATO operation over the past several decades. NATO's critics were wrong then, and they're wrong now. Indeed, the case for the alliance is stronger than it has been since the collapse of the Soviet Union. To take the current critiques of the alliance one at a time: Applebaum claims that the NATO label is but a fig leaf for what is "an Anglo-French project and has been from the beginning," arguing that they insisted on intervening in Libya under the alliance banner because "neither Britain nor France wants responsibility for the operation -- and neither feels comfortable relying on the other." In truth, however, the political value in a NATO operation is that the alliance's name is a stand-in for the developed world and operating under its name confers a legitimacy that national flags don't. This is particularly the case for Britain and France, whose colonial histories bring enormous baggage in the Middle East and North Africa -not to mention the United States, with its own more recent complicated history in the region. With the notable exception of Russia, NATO does not have imperialistic connotations. In its 62 years of operation, the alliance has deployed its might sparingly: humanitarian protection missions in Bosnia, Kosovo, and now Libya; maritime missions against the Somali pirates; and fighting the Taliban in Afghanistan. While not all uncontroversial, these operations all had widespread international approval. This is not insignificant. Domestically, the NATO aegis provides assurances to publics -- particularly in Europe -that are weary and skeptical of war. Internationally, it takes much of the edge off the use of hard power, making it clear that humanitarian interest, not a thirst for foreign oil, is the motivation for action. It's true that, in the case of Libya, the call for action by the Arab League and the imprimatur of the U.N. Security Council provided substantial cover, too. But, as the comedian Dave Chappelle memorably pointed out, the United Nations doesn't have an army. NATO does -- or at least its member states do.

This fact does raise the question, however, of whether the existence of an official NATO alliance adds anything to a collective action by countries such as Britain, France, and the United States -- which are, after all, allies anyway and supply NATO's soldiers and military hardware. As the Iraq war demonstrated, the United States and its allies can fight just fine apart from NATO as a coalition of the willing. But this sort of ad hoc alliance comes with lower legitimacy -- as the Iraq war also demonstrated -- and without an institutional framework that has benefited from six decades of development. Though NATO's bureaucracy is a favorite butt of jokes by even the alliance's staunchest supporters, its existence provides a massive head start. As a standing alliance, NATO has been the main venue for making sure that different countries' command structures and systems can work together, creating standard operating procedures, and ensuring a degree of uniformity in weapons and equipment. The commencement of a war is a really awful time to work these issues out, as we saw in the first Gulf War and its numerous friendly-fire incidents. The most militarily significant members of NATO have been working together now for generations. Alliance members constantly train together and, over the last two decades, fight together. While an American has always been supreme allied commander for Europe, major operations have been commanded by generals and admirals from almost all major NATO partners. There is no hesitation for British troops to take orders from French generals or viceversa. NATO's engagement in Libya has also given lie to the argument that the alliance has no place in the strategic realities of the post-Cold War world -- a criticism that has grown in strength since the war in Afghanistan began to turn sour. In 1993, U.S. Sen. Richard Lugar famously declared that NATO must go "out of area or out of business": that the alliance had to prove its value beyond Western Europe in a world without the Soviet threat that had justified its creation. Otherwise, there was little incentive for the United States to invest in an alliance that would not be able to fight in actual wars. NATO avoided having to answer this existential question in the 1990s thanks to several in-area operations in the Balkans. In those wars as in Libya today, a reluctant United States was shamed into action by insistent European allies. And then as now, after an initial lead role during intense air operations, the United States handed over the longterm responsibility to the Europeans. It was the post-9/11 mission in Afghanistan, rather, that proved NATO's relevance beyond Europe. For the first time ever, NATO invoked Article 5, the linchpin of the alliance, which insisted that an armed attack on one member be treated as an attack on all. The Europeans stepped up to the plate, even after offers of help were initially brushed off by George W. Bush's administration. The glow faded in Afghanistan, however, as the mission of retaliating against those who had attacked a member state morphed into one of nation-building -- establishing democracy and stability in a country that has little progress to show for years of fighting and massive amounts of blood and treasure spent. Enthusiasm waned. Many allies have pulled their forces out entirely. Despite a commitment by NATO's member states at November's Lisbon summit to stay in Afghanistan through at least the end of 2014 and to address threats wherever in the world they might arise, most observers were deeply skeptical that NATO would ever again be able to operate outside Europe's borders absent a direct threat. And yet, only months later, here we are. To be sure, this is not an unalloyed good. Many -- myself included -- were and are highly dubious of intervention in Libya's civil war. But it's clear that the United States, Britain, and France were all inclined to intervene regardless. And once that decision was taken, using NATO as the platform was a no-brainer. It's true that anti-Qaddafi forces have been mistakenly killed by NATO forces. But that's a function of both the amateurism of the Libyan rebels and the constraints under which NATO must operate. As NATO Secretary-General Anders Fogh Rasmussen told Spiegel, Qaddafi "has changed his tactics. But that also points to our successes. Now that he has to hide his tanks and other heavy weapons, he can no longer use them as easily against civilians." The chief issue underlying most of NATO's problems in Libya is lack of consensus on the desired end state. Rasmussen insists that the fate of Qaddafi and what manner of government the country might have in the future are matters for Libyans to decide. But Qaddafi will survive unless NATO forces him out -- the ragtag rebels simply don't have the ability to do it, even with someone else knocking out the dictator's airplanes and tanks. Having entered the fight in Libya, NATO is under serious pressure to end it with Qaddafi out of power and a stable, democratic government in his place. But the most powerful member, the United States, has receded into a supporting role and insists that it will put no boots on the ground. If the intervention goes badly, the blame will (rightly) go to national political leaders -particularly Barack Obama and Nicolas Sarkozy -- for committing to a war without the willingness to see the job through to its logical conclusion. The fact of the matter is that the Libya operation is, like any multilateral effort, subject to the constraints of the least enthusiastic member. By insisting on a U.N. Security Council resolution, the coalition members accepted a very narrow mandate in order to secure abstentions from Russia and China, council members that would have vetoed anything more robust than a civilian protection mandate. In short, the mission's most serious limitations are not the fault

of NATO but rather of the United Nations. The same problems would exist, and might well be worse, if the players had carried out Resolution 1973 without the alliance. NATO does, however, face one looming problem, one that long predates the Libya intervention but is bound to complicate it: the unwillingness of Europeans to adequately fund their own militaries, instead allowing the Americans shoulder the burden. As the Center for a New American Security's Andrew Exum points out, "The problem with being a free rider is that if you ever decide you need to drive someplace yourself, you realize quickly that you no longer have the means to do so." This criticism isn't new, of course. Americans have been bemoaning Europeans' lack of defense spending since at least the 1970s. But it has gotten worse in recent years and come to a head in the current regime of austerity that has followed the global financial crisis. Even France and Britain, easily the two most robust military powers in Western Europe, have slashed their budgets in this environment, so much so that they now have but a single aircraft carrier between them. That the second- and third-biggest powers in the world's most powerful military alliance need U.S. help to take on Qaddafi's pitiful forces should be a wake-up call. As Exum puts it, "Hopefully this intervention in Libya will convince European leaders to either stop talking so tough regarding military interventions or to re-invest in truly independent military capabilities." That's unlikely in the near term; the combination of political culture and economic pressure make it all but untenable. But there's good reason for hope in the longer run. The British and French, in particular, covet their national sovereignty and still rightly see themselves as world powers. Without providing for more robust forces on their own, as the Libya operation is demonstrating, even such mundane things as 1970s-era close air support jets are "unique military capabilities" for which they must lean on America. As strong and valuable an institution as NATO is, it will not reach its full potential so long as it remains utterly dependent on the United States to do the heavy lifting. Maybe Libya will be the wake-up call for Europeans who have until now not seen much value in investing in their own defense. All Quiet on the Western Front NATO's at war, but you wouldn't know it in Brussels. BRUSSELS During the Kosovo conflict in the late 1990s, NATO's Brussels headquarters had something of the feeling of a battlefield encampment. Member states dispatched top strategists to Belgium to confer with one another and with the international press. Journalists from around the world crammed themselves by the hundreds every day into a gloomy auditorium to digest and challenge the latest spin, not only at the daily briefings, but also afterward, well into the night. As the alliance's public face, NATO spokesman Jamie Shea became so well known that his name was chanted by Kosovar Albanians when he visited a liberated Pristina. The contrast with today could hardly be greater. NATO is at war again, this time in Libya, but you wouldn't know it from roaming its sleepy halls. Briefings take place twice a week, not every day, and journalists do not have to clamor for a seat. NATO's new spokeswoman, Oana Lungescu, appears before the same auditorium that Shea did, but now it's more than half-empty: Only 30 journalists or so sat scattered about at a recent briefing, and nearly all disappeared as soon as it was over. Needless to say, it's unlikely that Libyans will be chanting Lungescu's name anytime soon (and not just because it's harder to pronounce than Shea). NATO officials still insist that Brussels remains the nerve center of the Libya campaign. They acknowledge, of course, that the alliance's communication strategy has changed, but argue that the apparent downsizing is a strategic shift, not a tactical retreat: a choice in favor of new media like Facebook and Twitter, rather than traditional newspapers and television broadcasters. "A static, Brussels-based daily briefing is no longer needed," Lungescu tells me. But it's also hard to deny that NATO is struggling to manage a conflict based on a fragile political consensus. Lungescu could probably acquire prestige for NATO by assuming more of the international spotlight. A former journalist who fled Romania before the fall of communism and now speaks German, Spanish, French, and English as well as her native tongue, she is an apt symbol of the West's achievements during and after the Cold War. But she can only assume as much responsibility as NATO member states feel compelled to cede. And while France and Britain have been glad to assume the military lead, they have been ambivalent about NATO's role. France initially resisted any NATO involvement at all in the no-fly zone over Libya. Canadian, British, and Italian military officers have since taken the podium at NATO briefings, but the sniping from the sidelines has sometimes drowned them out. Only this week, British and French ministers called on NATO allies to take on a bigger burden of a campaign that the United States does not want to run. This wasn't constructive criticism offered quietly at Brussels headquarters, but public shaming conducted from London and Paris. It's a far cry from the Kosovo conflict, when British Prime Minister Tony Blair sent his own personal spokesman, Alistair Campbell, to Brussels to help direct NATO strategy and advise Wesley Clark, then-NATO's supreme allied commander in Europe. Campbell dutifully decamped to NATO headquarters, making its cavernous cafeteria his own high-stakes strategy center. Most conspicuous in their absence in Brussels are the Americans. The United States, which has been anxious to distance itself from front-line operations in Libya, has also been happy to take a back seat in the publicity war; but in doing so, it has produced a leadership vacuum. Indeed, the United States' dominance over the alliance is mostly

unquestioned. The supreme allied commander in Europe is always an American; Washington's ambassador to NATO is invariably the alliance's most influential diplomat. Without American leadership, NATO has been forced to improvise. NATO Secretary-General Anders Fogh Rasmussen has tried to fill the gap, but he has yet to gain much traction. The former Danish prime minister has lead several news conferences, but much of his focus has been on new media. He regularly updates his Facebook page, his personal blog, and his Twitter feed. Unlike Javier Solana, who held this post during the Kosovo war, Rasmussen has proved eager to take center stage in the Libya intervention. But if his goal has been to advance the cause of the multinational alliance, he has also confirmed his reputation as an ambitious politician keen on self-promotion. "The world has changed," said Lungescu in a telephone interview, "You don't need to have a spokesperson addressing the Brussels media every day. You reach people in different ways, and we are reaching out to a global audience." NATO TV footage can be downloaded by broadcasters and has been used widely, she says. Moreover, the alliance says its focus is on reaching out to the Arab world, not just the press corps in Brussels. A lot has changed since 1999: Al Jazeera and Al Arabiya are probably more important than CNN, for starters. NATO, a Cold War creation, has for years been a tough sell as a news story for Western audiences. NATO has recognized the looming battle for Western hearts and minds, appointing an executive from Coca-Cola, Michael Stopford, as a deputy assistant secretary-general responsible for improving public awareness of the military alliance. The organization has even tried to alleviate the relative burden of the 15 euro cab fare that journalists have to pay to go from downtown Brussels to NATO headquarters on the outskirts of town: Weekly briefings are now regularly held in the EU district to make life easier for reporters. But the press corps continues to dwindle: It's especially difficult to justify a correspondent here now that every single NATO briefing can be seen online and there are multiple ways to communicate with reporters and civilians on the battlefield. The only media to still follow NATO regularly in Brussels have been news agencies and specialist defense reporters. Those remaining journalists spend much of their time questioning what kind of role NATO is suited to play in the 21st century. The air campaign under way in Libya gives fresh urgency to that skepticism. At a time when Washington may not have the energy or the money to invest in new operations, can the military alliance still make credible calls for shared sacrifice? And if the United States has little interest in a military campaign, can anyone else be made to care about it? But long-term media trends aside, part of the problem in trumpeting NATO's role in Libya isn't PR at all, but the fact that the West's rebel allies have stalled in their progress. There are only so many ways you can spin a stalemate. The Least Wanted Most Wanted Man The inside story of how the United States and NATO let war criminal Ratko Mladic evade justice for 16 years -and why it matters Early on the morning of May 26, Serbian security forces surrounded a rundown farmhouse in Lazarevo, a village about 50 miles north of the capital of Belgrade. Inside was the Bosnian Serb general Ratko Mladic, the second-to-last remaining fugitive war criminal from the Balkan wars and the most wanted man in all of Europe. Mladic may not have been an international villain of Osama bin Laden's stature, but during four years in the early 1990s he unleashed far more killing and destruction than the al Qaeda mastermind managed in almost two decades of terrorism. It was Mladic, along with the Bosnian Serb civilian leader Radovan Karadzic, who bore the responsibility for the massacre of 8,000 Muslim men and boys in the Bosnian town of Srebrenica in 1995. In the late 1990s, both men fled Bosnia for Slobodan Milosevic's Serbia, where they lived freely under the protection of their wartime sponsor until Milosevic's own fall in 2001. Karadzic was captured in 2008 in a Belgrade suburb, where he was living a surreal second life disguised as a New Age doctor. But Mladic remained elusive. Mladic's arrest and transfer to The Hague, where he will have his first hearing on June 3, is cause for celebration, of course. But it also should prompt plenty of soul-searching: It took almost 16 years to accomplish what should have been achieved within several years or even months, given NATO's military and intelligence capabilities. COMMENTS (10) SHARE: Twitter Reddit Buzz More...

I should know; I witnessed the failure firsthand. During Mladic's first half-decade on the run, bringing major war criminals to justice was my job, first as senior advisor and counsel to Madeleine Albright during her tenure as U.S. ambassador to the United Nations and later as the first U.S. ambassador at large for war crimes issues, a post I held from 1997 to the end of President Bill Clinton's second term. For more than five years I lived constantly with the hope of catching Karadzic and Mladic, and with the frustration of the operation's evident futility. The quest landed me in one dispute after another with top Clinton administration officials and their NATO allies. Many fugitives indicted over the ethnically fueled conflicts in the former Yugoslavia and Rwanda were tracked down and arrested on my watch -- and yet Mladic and Karadzic, the highest profile of them all, evaded us. Why? To be sure, there were plenty of complicating factors, many of them the result of Serbian complicity. Loyalists in Serbia shielded Mladic from international investigators for years; it was only the combination of new political leadership in Belgrade and the threat of denied European Union membership that finally pushed the government of President Boris Tadic to starve Mladic of resources and corner him last week. But the Serbs' intransigence was only a problem because NATO forces failed to capture Mladic in Bosnia when we had the chance, allowing him to flee to Serbia. Capturing Mladic and Karadzic was well within our reach in the years immediately after the fall of Srebrenica in 1995 -and our failure to do so left a shadow hanging not only over the Balkans, but over the whole project of international justice. In 1993, the U.N. Security Council established the International Criminal Tribunal for the former Yugoslavia, with the hope that it would help deter future atrocities in the Balkans and bring the perpetrators of past crimes swiftly to justice. Among its biggest targets was Mladic, who was first indicted in July 1995 with an epic rap sheet: He was accused of war crimes associated with the three-year siege of the Bosnian capital of Sarajevo, at the cost of an estimated 10,000 Bosnian Muslim (Bosniak) civilian lives, and massive ethnic-cleansing campaigns that swept aside the non-Serb population of wide swaths of Bosnia and Herzegovina and victimized tens of thousands of Bosniaks and Bosnian Croats. (The Srebrenica massacre, which Mladic oversaw shortly before his indictment, was added to the list the following November.) It was more than enough grounds to have Mladic -- who at the time was still strutting about the devastated Bosnian landscape -- arrested in uniform and flown to The Hague straight away. He wasn't. Pursuing Mladic was impractical until NATO soldiers were on the ground in Bosnia, which did not occur until after the Dayton Accords were signed in December 1995, negotiating the end of the four-year war in the Balkans and creating the constitutional structure of a new government in Bosnia. The peace agreement divided the country into three sectors patrolled by American, British, and French forces, along with troops from other mostly NATO countries. The militaries were given a straightforward task: separate the warring parties and stabilize the country so that the political deal struck at Dayton could be realized on the ground. Arresting indicted war criminals was simply not on the agenda during the first year of the occupation. Furthermore, NATO officials worried about the violent reaction that might erupt among Bosnian Serbs if their leaders were arrested so quickly after Dayton. I could count on one hand the high-level U.S. officials who actually wanted to go after Mladic: Albright; John Shattuck, the State Department's top human rights official; Leon Fuerth, Vice President Al Gore's national security advisor; myself; and, as time progressed, Richard Holbrooke, then assistant secretary of state and the principal architect of the Dayton agreement. In the early post-Dayton years, you could basically assume that the other key administration officials at the Pentagon, Joint Chiefs of Staff, Justice Department, White House, and intelligence community opposed any truly effective arrest effort. They wanted to avoid the risks of a failed operation, of casualties even during a successful initiative, and of a violent backlash among Bosnian Serbs. The pursuit of justice carried very little weight in their calculus. The Dayton Accords underscored this thinking; they established a tentative peace in the Balkans, but they also dealt a crippling blow to the hunt for Mladic and Karadzic before it had truly begun. The Implementation Force (IFOR) deployed to Bosnia and Herzegovina to enforce the Dayton agreement put 57,000 pairs of boots on the ground, including 20,000 U.S. soldiers. But Pentagon officials insisted that U.S. troops not be tasked with arresting indicted war criminals: That was considered a law enforcement duty, not a military one. At a critical NATO meeting in London in early December 1995, top U.S. and European officials decided not to give IFOR any explicit arrest authority. Albright pressed the U.N. Security Council to pass a resolution designed to stiffen NATO's -- and the Pentagon's -- wobbly spine on the issue. But it was blocked by Russia, whose allies in Belgrade had no interest in giving IFOR the authorization to arrest their own leaders. What this meant, in effect, was that IFOR would not arrest Karadzic or Mladic even if the two walked arm in arm into a room full of IFOR soldiers. It was an absurd position, and ultimately an untenable one. By late December, NATO revised its stance: IFOR troops couldn't go looking for the war criminals, but in the unlikely event that they happened to bump into one, they could nab him and hand him over to tribunal officials -- who, in turn, had to be present in Bosnia for the actual arrest. Otherwise no clear rule required them to hang onto the fugitive. This was like giving a police

officer in Texas the authority to detain a federally indicted felon only if he happened to pull him over for speeding and a U.S. marshal happened to be nearby to serve the arrest warrant. I thought we had entered the comedy of errors. Perversely, Adm. Leighton Warren "Snuffy" Smith, the top U.S. commander dispatched to Bosnia, was less concerned that he wouldn't find Karadzic and Mladic than that he would -- that he would run into one of the men, perhaps on a visit to the Bosnian Serb capital of Pale, and find himself in the awkward position of having to personally arrest him. Smith scoffed at any suggestion that his forces had the authority or mandate to make such arrests. His was an old-school way of thinking that drove Holbrooke, me, and many others crazy as we struggled to work with the military to deal with the unconventional challenges of Bosnia. Fed up with the intransigence, Louise Arbour, the Yugoslav tribunal's crusading prosecutor, visited Washington in early 1997 to push for giving NATO troops a mandate to do more to catch the fugitives than to simply hope for an accidental run-in with them. Pentagon officials told her to forget about it. Arbour's talks with the Federal Bureau of Investigation, where she had hoped to find seasoned law enforcement professionals who would take up the challenge, proved equally futile. "Everyone has a good reason why someone else should [make the arrests]!" Arbour burst out to me as we crossed Pennsylvania Avenue afterward. She left Washington deeply frustrated. In July 1997, two years after the first indictments of Karadzic and Mladic, U.S. officials finally gave the OK for special operations forces to actively pursue the criminals. At that time, the two men were believed to still be in Bosnia, but moving back and forth to Serbia and Montenegro. The newly appointed NATO supreme allied commander, U.S. Army Gen. Wesley Clark -- who had been criticized for taking a friendly meeting with Mladic in August 1994, in which the two men were photographed playfully exchanging hats -- took a more active role in the manhunt than any of his predecessors. But inaction remained the rule, and by late May 1998 the whole project seemed dead in the water. By the end of that year, everyone involved in the arrest effort was more interested in pulling off a no-risk operation than a successful one. One American soldier joked despairingly to me that his boss wanted the number of tiles on the fugitive's roof triple-counted before even considering a raid. As far as Mladic was concerned, it was already too late; a crucial opportunity had been lost. An early arrest of the general would have prevented him from finding sanctuary across the border in Serbia, where NATO forces had no authority to go after him. But that simple point never persuaded key officials -- and indeed, I wondered whether they even wanted to arrest him. They were perpetually worried about what an arrest of Mladic in Bosnia or, for that matter, in Serbia might do to the stability of Bosnia and to the security of NATO forces there. In fact, as other indicted Bosnian Serb fugitives were arrested, the reaction of the Serbs appeared relatively tame, and the dreaded backlash that so many had predicted never materialized. Rather, it was our failure to catch Mladic and Karadzic that proved toxic. It perpetuated the septic influence of these two men among Bosnian Serbs, the ethnic group with which the Bosnian Muslims and Croats most needed to achieve reconciliation in a regenerated and democratic Bosnian nation. The longer the fugitive leaders roamed free, the longer NATO forces would have to remain in Bosnia to keep the peace, and the longer those men actually posed a threat to the safety of those forces. It's possible that apprehending Mladic and Karadzic quickly would even have deterred Milosevic and his lieutenants from launching their deadly assault on Kosovo in March 1999. Arbour pleaded with me during the Kosovo conflict that if NATO would just take down at least one of these indictees, that act alone could influence Belgrade's aggressive attitude. I agreed and pressed the idea in Washington, but to no avail. International justice renders consequences that usually work in favor of U.S. interests, but to understand that, policymakers have to take the long view -- which, of course, they seldom do. I always counseled the public during my ambassadorial days that international justice requires infinite patience, but that the perpetrators of atrocities ultimately will stand before the judges and face up to their crimes. Leaders must have the courage to bring about these reckonings sooner rather than later; after all, the public memory of these crimes does fade, and the victims whose rights must be upheld don't live forever. In the case of Mladic, justice will, at long last, be done. I just regret that the general made fools out of so many of us for so long. Chinas America Obsession Why Osama bin Laden's death is making Chinese leaders nervous. In Thursday's edition of China's Communist Party-owned Global Times newspaper, the lead editorial was headlined, "After Bin Laden, will China become US's foe?" Hoping that economic integration would defuse "right-wing paranoia" about China in the United States, the editorial nevertheless concluded: "The rise of China is certain to cause friction" in America. On Friday, the paper led with an editorial that referenced an interview I had given the Global Times in late April to admit that "China could be the loneliest rising power in world history."

COMMENTS (86) SHARE: Twitter Reddit Buzz More... Of course, editorials in state-owned newspapers do not always mirror the Communist Party's thinking or policies. But in this case, these two editorials remind us of two related points about Beijing's worldview. First, China respects and even fears the United States more than the vast majority of Americans probably realize. And second, China's sense of isolation is not an act but acute and real -- and Osama bin Laden's death will only accelerate America's reengagement with its Asian allies and partners at China's expense. When Washington shifted its focus toward terrorism and the Middle East after the September 11 attacks in 2001, Beijing experienced genuine relief. As China's leaders and strategists came to believe, an America distracted by two wars and a weak economy presented a priceless window of opportunity for China to extend its influence in Asia and beyond. But Beijing realizes that Washington's strategic attention will eventually turn eastwards, and the death of bin Laden is one small but significant step in hastening the arrival of that day. As one prominent Chinese Academy of Social Sciences (CASS) analyst put it to me recently, the American "spearhead will soon be pointed at Beijing." China's focus on America is obsessive and omnipresent among its leaders and strategists. In a study of 100 recent articles by leading academics at CASS, comprising the network of official state-backed think-tanks and institutes throughout the country, I found that about four in every five were about the United States -- whether it was seeking to understand the American system and political values, or describing how to limit, circumvent, bind, or otherwise reduce American power and influence. Of these themes, several emerged that help better understand the thinking behind editorials like the one in the Global Times. One is that Beijing views international politics in broadly neorealist terms. Chinese strategists believe the distribution of power in the world today will determine tomorrow's conflicts. China has long seen building competition between itself and America in particular as the inevitable and defining big-picture strategic play. In Beijing's thinking, tension can be managed, but never resolved, between the established power and the emerging one. Tension is a structural inevitability. But Chinese experts also view America as a unique superpower that relentlessly seeks not only to build and maintain its power, but also to spread its democratic values. This is of grave concern to the authoritarian Chinese leaders, because they believe that America will have difficulty accepting a greater leadership role for Beijing so long as Communist Party remains exclusively in power. Senator John McCain's "League of Democracies" might never become a formal reality, but Beijing believes that it already exists, at least in Asia, through democracies such as India, Japan, and South Korea. Moreover, Beijing fears the American democratic process. While Americans view democracy as an advantage since it can offer United States an institutional and bloodless process for leadership and policy renewal, China views American democracy as a source of irrationality and unpredictability. Many in Beijing, pointing to President George W. Bush's rapid decisions to go to war in Afghanistan and Iraq after 9/11, believe a new administration might actually increase the chances of uncomfortable shifts in policy that will lead Washington to suddenly focus its competitive and hostile gaze to the east. Some of Beijing's strategists now even argue that the United States has three advantages over China that will help preserve American strategic primacy in Asia. First, the United States has built an order based not just on American power but also democratic community. It has not escaped Beijing that few countries in East and Southeast Asia fear India's democratic rise. Whereas India's ascent is seen as natural, predictable, and welcomed, almost every country in Asia is trying to benefit from China's economic success while strategically hedging against Chinese military power by moving even closer to the United States. (Witness the recent speech by Australian Prime Minister Julia Gillard to Congress in which she reaffirmed the alliance with America as the bedrock of Canberra's security strategy, or Singapore's leader Lee Hsien Loong urging America to remain engaged in Asia.)

Second, unlike China, America does not have land and territorial disputes with other Asian states. For example, China still claims around 80 percent of the South China Sea as its "historic waters" and is in an ongoing dispute with India over the eastern-most Indian state of Arunachal Pradesh. In this sense, China's rise is inherently disruptive since a more powerful China is likely to demand a resolution to these issues that is in Beijing's favor. Third, the United States is not a resident power in that it is not geographically in Asia. China now realizes that this simple fact, once seen as a handicap, instead presents America with a unique advantage. To maintain its military bases in the region and thus remain the pre-eminent strategic power in Asia, the United States requires other key states and regional groupings to acquiesce to its security role and relationships. There is broad-based regional approval of U.S. alliances with Australia, Japan, and South Korea, as well as with partners such as India, the Philippines, Singapore, and Thailand. This interdependent relationship means that America is not so powerful that it can easily ignore the wishes of Asian states. In contrast, if China were in the dominant strategic position, its pre-eminence would be much harder to challenge or shift. Beijing would not need the same level of regional acquiescence. As a resident power, China would not need the "approval" of other Asian states to maintain its military footholds. As the largest Asian power, it would be easier to dominate regional institutions without an American presence -- yet one more reason why America is trusted to provide the public and security goods in Asian sea lanes while China is not. All this is why, instead of taking full advantage of America's terrorism obsession, Beijing has watched resentfully as the United States has built a hierarchical democratic order in which Asian states willingly aid in preserving American pre-eminence. In such an order, China remains a strategic loner in Asia, with Myanmar and North Korea as its only true friends. China is well aware of its relative vulnerabilities. Rather than lament the irretrievable loss of its better days, America should learn to better appreciate its relative strengths. Hu's Really in Control in China? Are the generals -- or Beijing's new leader-in-waiting -- now running the show? Images of China's newly unveiled stealth fighter -- designated the J-20 -- just prior to and during U.S. Defense Secretary Robert Gates's visit to Beijing last week underscored an uncomfortable aspect of an evolving U.S.-China relationship: Engagement is not winning over the People's Liberation Army (PLA). The drab gray stealth fighter scooting down the runway and flying over Chengdu hours before President Hu Jintao met Gates served as a clear reminder to the United States about the competitive, confrontational China that comprises one aspect of its rapid rise. Meanwhile, Hu's upcoming visit to Washington this week will symbolize the cooperative nature of a bilateral relationship. Billions of dollars in two-way trade, investment, and planeloads full of students, tourists, business people, and officials flying between the two countries on a daily basis reminds us that we are clearly not facing a new Cold War with China. However, China's assertive tone and confrontational approach toward neighbors and the United States over the past year raises questions about China's intent. Shortly after the J-20 took its first test flight in front of spectators lining the periphery of the airfield, Gates reportedly asked Hu about the fighter plane, only to be met with blank stares and confusion from both civilian and military officials in the room. Immediately after the meeting, speculation ran rampant that Hu had been unaware of the test flight. Before jumping to conclusions, however, let's remember that China's national security decision-making process is opaque, and so this worrisome disconnect -- who knew what when -- is difficult to ascertain with certainty. It is highly improbable that Hu was unaware of the development of this major military advancement. His role as chairman of the Central Military Commission ensures that he is well briefed about major programs, and he doubtlessly approves their large budgets. What is not known is how much oversight and control the central government leadership in Beijing had over the PLA's decision-making process that lead to highly visible tests at the Chengdu air base just as Gates was visiting China. Similar questions have arisen in the past: On Jan. 11, 2007, China launched an anti-satellite weapon, destroying an aging Chinese satellite in low Earth orbit, but the Foreign Ministry did not publicly acknowledge the test for 12 days. In March 2009, according to the Pentagon, five Chinese civilian vessels "aggressively maneuvered in dangerously close proximity" to the USNS Impeccable, blocking its path and closing to within 25 feet while crew members tried to grapple electronic gear towed behind the U.S. ship. There are many more examples. In each instance, the question arose: Were these provocative confrontations ordered from the highest echelons in Beijing, or were they the result of overzealous local commanders or even the plane and boat drivers themselves? Do these incidents reflect an intentional pattern of growing Chinese assertiveness and a long-term strategy to ultimately confront the U.S. military? Or are these Chinese overreactions to U.S. technological dominance and what the Chinese perceive to be American

provocations -- such as air and sea surveillance in international waters close to China's shores and the well-publicized deployments of the United States' most advanced submarines, ships, and jet fighters to bases in the western Pacific? No matter how you look at it, the possible explanations for the apparent civil-military disconnect revealed in the meeting between Hu and Gates are troubling. Whether Hu was snubbed by his own military, or whether he had indeed endorsed the stealth-fighter flight tests the same day he met with Gates to signal China's intent to challenge the United States -- both possibilities are equally disturbing for the bilateral relationship. If Hu's presumed successor, Vice President Xi Jinping, played a role -- even observing the tests at the Chengdu base as some amateur Chinese army enthusiasts have claimed -- then it might indicate a difficult transition of power between the two in the run-up to the 18th Community Party Congress in 2012. Should Hu and Xi become embroiled in a direct power struggle (in truth, an unlikely possibility), each would undoubtedly seek to garner support from "patriotic" conservatives at home by painting themselves as defenders of China from the American hegemon; but this would limit their ability to engage and compromise with the United States. Regardless, the pattern of China confronting the United States and its allies in Asia is increasingly well established. It stands in stark contrast to the close working relationship between U.S. and Chinese civilian officials and businesses, but it is increasingly apparent that there are two very different faces of modern China. Clearly, the Chinese government is eager for Hu's visit to the United States to be a success. It is an integral part of its succession process, a last "face-giving" trip to establish his role as a great world leader -- cementing his legacy and enabling him to retire to the pantheon populated by Mao, Deng, and Jiang. But the PLA's reluctance to engage the United States mocks the rest of the bilateral relationship. Gates's visit to Beijing was squeezed into the calendar ahead of Hu's visit to Washington, ostensibly to help ensure the success of Hu's state visit. Although the PLA carried out its orders and received Gates, the Chinese military's lack of enthusiasm was apparent in the lack of progress in restarting the relationship. Gates had invited various PLA generals to visit the United States and proposed establishing a "2+2" dialogue mechanism -- pairing civil and military counterparts at the same meeting -- replicating a model that has proved effective with Japan and South Korea. The PLA, unfortunately, received these proposals tepidly, only agreeing to consider them, rather than accepting them outright. In this complex environment, Hu's visit to Washington is an opportunity to reinforce the importance of dialogue and engagement, made all the more important following Gates's uncomfortable meetings in Beijing. But President Barack Obama should be cautious that, when it comes to Beijing, he may no longer be dealing with an executive in full control of all sectors of his government. Indeed, the Chinese have many ways -- and perhaps now many stakeholders who know how -- to say "no" without using the term. On the Economy, Be Careful What You Wish For A major shift in global economic power is approaching. Can the U.S. cope? Halfway through 2011, we've already seen an extraordinary year of volatility: turmoil across the Middle East and North Africa, the eurozone's ongoing fiscal crises, Japan's triple disaster, the killing of Osama bin Laden. Yet these dramatic events have obscured a slow-moving, underlying shift of much greater long-term importance: global rebalancing. In its simplest form, rebalancing means this: a reset of the global economy shifting the balance of accounts between the world's established and emerging powers or between its biggest consumers and biggest savers. That alone, of course, is a transition of landmark historic significance. Yet it is far from the only consequence, for rebalancing is not just an economic story, but one that will result in a seismic shift in the international balance of power, in every region of the world.

The Great Rebalancing FP surveyed 55 of the world's top economists on the new rules of the global markets. Here's what they think. And I have bad news for the United States: Rebalancing won't be the relatively pain-free process some in Washington hope. Faced with an increasingly ugly bilateral trade deficit, many of the most senior U.S. officials -including many who should know better -- have repeatedly called on the Chinese leadership to empower Chinese consumers to buy more Chinese-made products and to allow the renminbi, China's currency, to appreciate to help them afford it. The Foreign Policy Survey results reported here also suggest Washington is on solid ground: Nearly 100 percent of the leading economists consulted told the magazine they think the renminbi is undervalued. But in reality it's hard to imagine a better example of "be careful what you wish for." COMMENTS (22) SHARE:

Twitter Reddit Buzz More... At a moment when Western-led globalization is under threat from a new brand of emerging-market mercantilism, this sort of decoupling will produce a lot of pain. This is what's happening already in many areas of the fasttransforming global economy -- but unfortunately, U.S. leaders aren't doing much to prepare for this transition, perhaps because they're in denial about its inevitability and its implications for American power. Talk of "winning the future," whether from President Barack Obama or his Republican rivals, allows Americans to believe that all their country needs is to become more "competitive." But rebalancing means that the U.S. economy can't simply grow its way back to the pre-financial crisis era of American profligacy. Instead, it will have to thrive in a new world in which U.S. primacy is no longer a given. In years to come, U.S. diplomats will have to do more than jet around the world twisting arms and cutting deals. They'll have to find creative solutions to transnational problems that involve multiple players who don't necessarily accept U.S. leadership. American power has always been a mix of hard and soft forms of persuasion: a blend of liberal values, military muscle, and economic leverage. Those values endure, even if the United States itself might not always be loved in foreign capitals. It's the third element of power that is fast waning: the paramount position of the United States in a global economic order built to its advantage. For decades, American consumers have been the engine of growth around the world, and the U.S. economy remains by far the world's largest, two and a half times the size of China's. But the latest projections from the International Monetary Fund forecast that China will surpass the United States by 2016. And China is far from the only rising power on the horizon. American consumer purchasing power will continue to be an important variable for global growth and the economic health of many countries, but Americans won't have as much money to spend. The financial crisis pulled huge amounts of money from the pockets of U.S. consumers by, among other things, deflating the value of their biggest asset: their homes. And the loss in U.S. purchasing power will be felt in every economy that depends on access to U.S. markets. That's exactly why Chinese policymakers are now working to decouple -- not because Washington wants them to, but because excessive long-term dependence on U.S. consumers puts China's future growth trajectory at risk. The dollar's preeminent position may be the first casualty of this shift. The United States borrows about $4 billion per day, much of it from China. That borrowing finances the ballooning U.S. debt -- in effect, China loans Americans the money that allows them to live beyond their means (and, of course, purchase Chinese goods). But the meltdown in U.S. financial markets and the dive into recession persuaded many within China's leadership that this system is unsustainable. China's domestic economy can no longer depend quite so heavily on foreign consumers to drive the creation of domestic jobs. As China works to stoke the growth of domestic consumption by investing more of its cash at home, the renminbi will appreciate against the dollar and Americans will pay higher prices until cheaper alternatives become available. And as China develops a consumption-driven economy, Chinese consumers will increasingly be spending their hard-earned cash abroad, leading to the development of deeper and more liquid renminbi debt markets, a necessary prerequisite for China's currency to become a leading global reserve currency. This will be a gradual process, but it will come at the expense of the dollar and the big-spending habits its preeminence enables for both U.S. consumers and their government. Washington's security role in East Asia has long paid economic dividends as the United States has translated its military ties into greater trade and investment throughout the region. But as China's consumer markets take on added weight and Americans see their purchasing power reduced by the need to restore the country to long-term fiscal health, East Asian countries will trade increasingly with one another and with fast-growing China. It's already happening. According to Xinhua, China's state-run news agency, "China became the largest trading partner and the single biggest export market of Southeast Asian countries in 2010." China's free trade agreement with the 10 countries of the Association of Southeast Asian Nations, which came into effect last year, is the world's largest in terms of population, and it underscores Washington's inability to continue in its traditional role of free trade champion. Then there is the reform process in Europe, which also threatens to undermine the dollar in the long run. Of course, America's traditional ties with Europe and the enormous trade volumes moving in both directions across the Atlantic demand U.S. support for a strong European economy. But if Europe's resilient core economies can help build a coordinated European fiscal policy and buttress cash-strapped governments like those of Greece, Ireland, Portugal, and other so-called peripheral countries, a strengthened euro can offer another viable alternative to the dollar as a reserve currency. And a recovered eurozone will further weaken America's ability to act as global lender of last resort,

reduce the central role of the United States in the global banking system, and further erode America's singular international influence. Indeed, the American way of capitalism itself is now under threat. That model was built on open market access and minimal government meddling. But the world loves a winner: China's heavily top-down approach is finding adherents from Vietnam to Venezuela, while the idea of American-style market-driven capitalism has lost some of its allure. As the appeal of state-driven capitalism grows, we can expect a much less efficient global economy. We'll see politics injected into economic policymaking much more often and on a much larger scale -- within both emerging and established powers. We'll see governments defend their political interests with new sets of tools and weapons, like currency policies, market access, intellectual property rights, and new forms of resource nationalism that move beyond oil, gas, metals, and minerals into commodities like food. For Americans, what this all means is that the long, postwar party is over. The U.S. debt-to-GDP ratio has climbed above 84 percent, putting America's ability to meet its obligations in question for the first time in memory. To close the gap, U.S. consumers will have to pay higher taxes, save more money, delay retirement, and accept less generous pension and health-care benefits. In coming years, an increasingly cash-strapped U.S. government will have to become more sensitive to the costs and risks of its foreign adventures. It will be harder to persuade more cost-conscious Americans (and their lawmakers) that the stability of countries such as Afghanistan, Iraq, or even a longtime U.S. protectorate like Taiwan is worth a bloody and costly fight. Questions will arise abroad about the U.S. commitment to the security of particular regions, encouraging local players to test American resolve and exploit any weakness they find. Then there are the economic risks. The dollar has provided the global economy with a deep, liquid, and stable reserve currency that reduces costs and increases efficiency for enormous volumes of commercial transactions. It has offered investors a safe port during many a financial storm, including the 2008 financial crisis. But other governments have already begun to move toward a more diversified basket of currencies and commodities to hold in reserve, weakening confidence in the dollar's long-term dominance. Europe will eventually recover, boosting the euro, and a big wave -- a sharp spike in crude-oil prices or another deep and lasting U.S. recession, for example -- will only accelerate the global drive to diversify. Borrowing costs in the United States will rise, in part because there will be fewer lenders. The cost of doing business will increase along with the complexity of settling transactions in a world of multiple currencies. Some might argue that the impact of the relative decline of the U.S. economy has already been felt and that a weaker dollar will ultimately make American products more competitive abroad. FP's survey results seem to reflect this optimistic view, though the vast majority of those surveyed are clamoring for rebalancing, with all its pitfalls and dangers. There is no reason to doubt, moreover, the long-term resilience of America's political and economic systems. Democracy offers a degree of domestic political legitimacy that cannot be earned in any other way. America's achievements in higher education and innovation are, and will remain, the envy of much of the rest of the world. But rebalancing will upend lots of assumptions, in the United States and around the world, about American economic resilience and its importance for other countries. This transition is not a product of poor decisions or myopic political leadership -- though leaders of both parties in Washington have offered plenty of both in recent years. This is a structural shift, one that has been decades in the making. Resistance is futile. Adapting to its impact can help Americans, and everyone else, thrive in the era to come.