BREXIT

For a very long period now there has been a fear of BREXIT. BREXIT in simple terms refers to Britain
holding a referendum to decide whether it wants to continue membership under EU or not. The referendum
was held on 23rd June 2016 and 52% voted for BREXIT whereas 48% voted for remaining within the EU.
Background
Post the Second World War, two countries Germany and France came together and decided that they wanted
to establish trade relations as it would prevent their countries waging war against each other in the future.
The result was the 6 members (France, Germany, Italy, Belgium, Luxemburg and Netherlands) signed a deal
covering resources like coal and steel.
In 1957 a treaty was signed in Rome (Europe)-European Economic Community (EEC) or Common Market.
This has expanded and now has 28 member states.
There are four key institutions in the EU:
o European Commission- based at Brussels (Belgium), it consists of 28 commissioners (1 each from the
member states, it administers the money spent and also formulates new laws.
o European Parliament- based at Brussels (Belgium), there are 751 members in the parliament, their function is
to discuss and vote all the laws that have been proposed by EC.
o Council of European Union- based at Brussels (Belgium), It is where the government of each member
country will have their say and hold discussions as to in what political direction should the EU be moving.
Usually the deals are signed at the end of the discussions.
o European Court of Justice- based at Luxembourg. The function is to make sure that all the member states
abide by the rules and regulations; will also come into picture if there are any frictions between the above three
institutions.
The Great Britain
It became a member country in 1973 and held the first referendum in regards to EU in 1975 (when they voted
to stay in EU).
A referendum is basically a vote in which everyone of voting age takes part specifying yes or noanswer to a
question. Whichever side gets the majority of votes (of the total votes cast) is considered to be a winner.
Today the arguments in favor of BREXIT have increased because the representatives of BRITAIN are of the
opinion that the EU over the decades has undergone a lot of transformation and has taken away the powers of
Britain to decide on various matters.
Some of the reasons for Britain to seek BREXIT are
o Sovereignty- Although the British Government has an influence in some form in selecting the members to
the European Commission, the members are neither under the influence nor accountable to the British
Parliament and some of the policy decisions such as competition policy, agriculture, copyright and patent law
go against the interests of Britain (these laws override the domestic laws)
o Regulations are becoming burden- some of the regulations such as limits on the power of vacuum cleaners,
non-recycling of tea bags etc have often been seen as a burden on some of the conservatives in Britain. As per
Michel Gove these regulations have cost Britain to the tune of 3 billion per year.
o Euro the disaster- although Euro is the common currency for EU, Britain still uses pound as its currency.
Now if the euro had to be successful then it would have required greater fiscal and monetary integration and
this cannot be achieved unless all the member states have the same currency. The problem with euro as a
common currency has also been exposed wherein on one side countries such as Greece and Spain are suffering
from high debt, high unemployment, whereas other countries such as Germany are enjoying higher growth.
Now in this situation the ECB (European Central Bank) is in dilemma whether to go for fiscal stimulus or
prudence.
o Immigration- Britain is not a signatory of Schengen Border free zone (allows easy travel across Europe),
over the last ten years there has been a quite an opposition towards migration into the country from within the
EU and its effects on wages and public services especially post 2008 recession wherein the workers from
Lithuania, Poland, Italy, Romania etc. have moved to Britain.
The leave proponents show the example of Canada and Australia which follow a point based immigration
system and say Britain could adopt such measure rather than being forced to follow the laws laid down by EU.
Point based immigration system-under this the potential migrants are awarded points based on factors such as
language, job skills, education and age. In simple words those who can contribute to the economy once they
allowed to immigrate will be rated higher.
Finance- although EU doesnt have the powers to collect the taxes from the people directly, it mandates
member countries to make payments. In case of Britain it comes around $19 bn per year or $300/person.
Although the funds are again used on Britain, the BREXIT supporters say, the money could be used more
efficiently, if Britain is out of EU.
EU pro or anti corporate? - There has been a mixed response to this question. The far left in Britain argues
that EU is too pro-corporate and the far right argues the vice versa.
Any measures taken to prevent call for BREXIT- In the beginning of 2016, David Cameroon (Britains
PM) sought an agreement to change the terms of Britains membership, the deal was conditioned on BREXIT
outcome to remain within EU.
Some of the points under the agreement are
a) Migrant workers will still be able to send child benefit payments back to their home country ( Mr. Cameron
had wanted this abolished), but the payments will be set at a level reflecting the cost of living in their home
country rather than the full UK rate.
b) New migrant arrivals will not be able to claim tax credits and other welfare payments straight away but
will gradually will gain the right to more benefits. (He had promised a blanket ban).
c) Britain will retain pound also an assurance from EU that it will not be discriminated as it has a different
currency and any money of Britain used to bail out the nations in crisis (in Euro Zone) will be reimbursed.
d) Britains large financial service industry will be protected from imposition of euro zone regulations.
e) It will be incorporated in an EU treaty change that Britain will not be a part of ever closer union (one of
the core principles of EU).
f) Red card system- If 55% of national EU parliaments object to a piece of legislation then the legislation has
to be rethought (the critics say it is not clear if this would ever be used in practice).
The critics pointed out that what was proposed under the agreements made no change and fell short of what he
had promised when he had announced his plan for referendum.
Why Scotland voted in favor of staying- as per the numbers it was found that 62% of the voters in
Scotland chose to remain within EU. The reasons for their decision are
a) EU is a common market which not only allows the movement of four freedoms (finance, goods, services and
labour) but also provides a huge market for Scotland to export. b) With Scotland being a part of EU, the trade
barriers will be eliminated to a great extent (both for exports from and imports into Scotland).
c) Scotland has been able in attracting foreign investments as a result of which there has been employment
creation, contribution to growth etc (in 2013, 40% of the companies in Scotland were foreign owned which
employed more than 3 lakh workers).
d) When the EU negotiates a deal with other countries (has trade deals with more than 50 countries), it is
automatically applicable to Scotland but with BREXIT, Scotland may be forced to sign all the deals again with
the trade partners (the advantages may be lost).
e) As a member of EU, it will get access to various development funds (Regional Social Funding, Rural
Development Program etc). f) With BREXIT, the citizens of Scotland may lose the freedom of movement i.e.
to move freely in Europe.
g) In a nutshell Scotland is much safer than remaining within rather than moving out of EU. (On moving out it
will face security/terrorist threats, climate change, trade barriers etc. all alone).
Global impact of BREXIT
a) The globalization has increased correlation between the countries. If there is a disturbance in one country
then there will be impact on other countries.
b) The BREXIT would affect the global growth.
c) It is a big blow when more countries are moving towards multilateral trade arrangements.
d) It will further alienate the investors and the capital will move from risky markets to safer havens.
e) The major exporting countries such as China and India would get affected as EU is one of the major export
market.
f) As per one of the estimates BREXIT would lead to 25% reduction in imports by Britain.
g) BREXIT was a referendum which rode on many components-anti immigration, increasing protectionism etc.
with this these sentiments are going to increase in other parts as well.
h) Britain was one of the major financial and military contributors to the EU but with BREXIT, the financial of
EU will suffer.
i) With BREXIT there are calls for NEXIT (Netherlands exit), Italeave (Italy leaving) and FREXIT (France
Exit) etc.
j) With BREXIT there have been demands for Scotland exiting from UK.
 k) Although the pro exit supporters have claimed that the Britain can sign bilateral agreements free of
restrictions any restrictions imposed by EU now, but the experience has shown that it takes a long period to
negotiate and sign a new a trade agreement.
l) UK and EU both account for 23.7% of rupees effective exchange rate. BREXIT would lead to outflow of
foreign portfolio investments and this may further weaken rupee. (On the positive side the central bank will try
to maintain the liquidity in the market so the fear of fed hike of interest rate could be brought down).
m) Brexit is a blow to the commodity prices. As such because of lower global demand, slowdown in china and
many European countries had led to drop in the prices of commodities and this will be further accentuated
because of BREXIT.
n) The sectors that would get affected are-auto and auto components; IT sector, metals, oil, aviation,
pharmaceuticals etc.
Brexit consequences on EU:
If we see the trade pattern then 51.4% goods export to EU from Britain in return to 6.6% from EU to Britain.
A post-Brexit Britain will have to form a set of trading and institutional relationship.
EU will become smaller and weaker both in economic and geopolitical terms.
The EU share of the world population will fall from 7.0 to 6.1 percent. In terms of world GDP, in purchasing
power parity, the EU share will decrease from 17.0% to 14.6%, and in current international dollars from 23.8 to
20.0 percent. The EU share in global exports of goods and services at current prices and exchange rate will fall
from 33.9% to 30.3 percent. The transition process may take several years. It would greatly increase legal and
economic uncertainty, not only in the UK but also in EU.
The political and economic shock created by Brexit could be a step towards further disintegration of the
union. Given the increasing strength of Eurosceptic parties in many EU member states.
It will further aggravate problems with completing the Banking Union, or accepting the burden sharing
mechanism to tackle the refugee crisis. Due to its opt-out clauses the UK does not participate in these projects
and there are other EU member states that are reluctant to accept larger degree of burden and sovereignty
sharing related to them.
The free movement of people, goods and services has been affected by the Brexit from other EU member
states.
Attracting and retaining this foreign talent will become harder after Brexit, when EU workers moving to
Britain will no longer be able to take their pension rights with them, and the other conveniences of a single
labour market which are lost.

The Future of the European Union?

The European Commission has published a document outlining five scenarios for how the European Union
could evolve within the next ten years.
The so-called White Paper on the Future of Europe, which will be presented at the Rome Summit on March 25,
2017 to mark the 60th anniversary of the European Union, is intended to be "the starting point for a wider
public debate on the future of our continent."

Each of the five scenarios is based on the premise that "the 27 Member States move forward together as a
Union." The document does not consider the possibility that the EU could collapse or break apart, or even that
the powers of the EU be significantly curtailed. The document states:

"Too often, the discussion on Europe's future has been boiled down to a binary choice between more or less
Europe. That approach is misleading and simplistic. The possibilities covered here range from the status quo,
to a change of scope and priorities, to a partial or collective leap forward."

Nevertheless, for the European Commission, the powerful administrative arm of the European Union, publicly
to even consider alternatives to full-blown European federalism is a testament to the growing power and
influence of anti-EU political movements in Europe.

Indeed, a document such as this would have been unthinkable before Brexit an abbreviation for "British
exit," which refers to the June 23, 2016, referendum by which British citizens voted to exit the European Union
and the rise of anti-EU populist parties in Austria, Britain, France, Germany and the Netherlands, among
others. The document admits:

"Europe's challenges show no sign of abating. Our economy is recovering from the global financial crisis but
this is still not felt evenly enough. Parts of our neighborhood are destabilized, resulting in the largest refugee
crisis since the Second World War. Terrorist attacks have struck at the heart of our cities. New global powers
are emerging as old ones face new realities. And last year, one of our Member States voted to leave the Union."

The five scenarios for the EU by 2025 are: 1) carrying on; 2) nothing but the single market; 3) those who want
more do more; 4) doing less more efficiently; and, 5) doing much more together.

Scenario 1: Carrying On.

This scenario envisions the status quo, with the EU plodding ahead with "incremental progress" from crisis to
crisis. The document explains:

"Priorities are regularly updated, problems are tackled as they arise and new legislation is rolled out
accordingly. The speed of decision-making depends on overcoming differences of views in order to deliver on
collective long-term priorities."

Scenario 2: Nothing but the Single Market.

This scenario envisions a European Union re-focused on the single market, which refers to the free movement
of goods, services, capital and people within the bloc:

"In a scenario where the EU27 cannot agree to do more in many policy areas, it increasingly focuses on
deepening certain key aspects of the single market. There is no shared resolve to work more together in areas
such as migration, security or defense. The functioning of the single market becomes the main 'raison d'tre' of
the EU27."

Scenario 3: Those Who Want to do More.

This scenario envisions a so-called multi-speed Europe in which some member states proceed with integration
in certain areas while other member states do not:

"In a scenario where the EU27 proceeds as today but where certain Member States want to do more in
common, one or several 'coalitions of the willing' emerge to work together in specific policy areas. These may
cover policies such as defense, internal security, taxation or social matters."

Scenario 4: Doing Less More Efficiently.

This scenario envisions the EU placing greater emphasis on some policy areas, while reducing its focus on
others:

"The EU27 decides to focus its attention and limited resources on a reduced number of areas.... As a result, the
EU27 is able to act much quicker and more decisively in its chosen priority areas.... Elsewhere, the EU27 stops
acting or does less.... The EU's weight in the world changes in line with its recalibrated responsibilities."

Scenario 5: Doing Much More Together

This scenario is the European Commission's preferred option: European federalism:

"In a scenario where there is consensus that neither the EU27 as it is, nor European countries on their own, are
well-equipped enough to face the challenges of the day, Member States decide to share more power, resources
and decision-making across the board.

"As a result, cooperation between all Member States goes further than ever before in all domains.... Decisions
are agreed faster at European level and are rapidly enforced.

"On the international scene, Europe speaks and acts as one in trade and is represented by one seat in most
international fora. The European Parliament has the final say on international trade agreements. Defence and
security are prioritized. In full complementarity with NATO, a European Defence Union is created.
Cooperation in security matters is routine."

The document also offers a glimpse into what European federalism may look like in practice:
"Citizens travelling abroad receive consular protection and assistance from EU embassies, which in some parts
of the world have replaced national ones. Non-EU citizens wishing to travel to Europe can process visa
applications through the same network."

The European Commission, in a rare instance of candor, admits that European federalism risks "alienating
parts of society which feel that the EU lacks legitimacy or has taken too much power away from national
authorities."

The document does not, however, contemplate a scenario in which the European Union faces collapse, or in
which major member states decide to follow the British example and exit the bloc.

In France and the Netherlands two of the EU's original six founding members anti-EU presidential
candidates are leading in the polls. Marine Le Pen and Geert Wilders have both promised to call referenda on
continued EU membership. If one or both of those countries were to leave the EU, this at a time when Italy and
Greece are at a fiscal breaking point, a collapse of the bloc seems increasingly possible.

The European Commission says its White Paper marks "the beginning of a process for the EU27 to decide
together on the future of their Union." The Commission does not, however, consider the possibility that in 2025
it may not even exist.

UN Reforms
The United Nations will mark its 70th anniversary when world leaders assemble next month at its
headquarters in New York. Though there will be plenty of fanfare, it will inadequately reflect the UNs
value, not only as the most important political innovation of the twentieth century, but also as the best
bargain on the planet. But if the UN is to continue to fulfill its unique and vital global role in the
twenty-first century, it must be upgraded in three key ways.

Fortunately, there is plenty to motivate world leaders to do what it takes. Indeed, the UN has had two
major recent triumphs, with two more on the way before the end of this year.

The first triumph is the nuclear agreement with Iran. Sometimes misinterpreted as an agreement
between Iran and the United States, the accord is in fact between Iran and the UN, represented by the
five permanent members of the Security Council (China, France, Russia, the United Kingdom, and the
US), plus Germany. An Iranian diplomat, in explaining why his country will scrupulously honor the
agreement, made the point vividly: Do you really think that Iran would dare to cheat on the very five
UN Security Council permanent members that can seal our countrys fate?

The second big triumph is the successful conclusion, after 15 years, of the Millennium Development
Goals, which have underpinned the largest, longest, and most effective global poverty-reduction effort
ever undertaken. Two UN Secretaries-General have overseen the MDGs: Kofi Annan, who introduced
them in 2000, and Ban Ki-moon, who, since succeeding Annan at the start of 2007, has led vigorously
and effectively to achieve them.
The MDGs have engendered impressive progress in poverty reduction, public health, school
enrollment, gender equality in education, and other areas. Since 1990 (the reference date for the
targets), the global rate of extreme poverty has been reduced by well over half more than fulfilling the
agendas number one goal.

Inspired by the MDGs success, the UNs member countries are set to adopt the Sustainable
Development Goals (SDGs) which will aim to end extreme poverty in all its forms everywhere,
narrow inequalities, and ensure environmental sustainability by 2030 next month. This, the UNs third
triumph of 2015, could help to bring about the fourth: a global agreement on climate control, under the
auspices of the UN Framework Convention on Climate Change, in Paris in December.

The precise value of the peace, poverty reduction, and environmental cooperation made possible by the
UN is incalculable. If we were to put it in monetary terms, however, we might estimate their value at
trillions of dollars per year at least a few percent of the world economys annual GDP of $100 trillion.

Yet spending on all UN bodies and activities from the Secretariat and the Security Council to
peacekeeping operations, emergency responses to epidemics, and humanitarian operations for natural
disasters, famines, and refugees totaled roughly $45 billion in 2013, roughly $6 per person on the
planet. That is not just a bargain; it is a significant underinvestment. Given the rapidly growing need for
global cooperation, the UN simply cannot get by on its current budget.

Given this, the first reform that I would suggest is an increase in funding, with high-income countries
contributing at least $40 per capita annually, upper middle-income countries giving $8, lower-middle-
income countries $2, and low-income countries $1. With these contributions which amount to roughly
0.1% of the groups average per capita income the UN would have about $75 billion annually with
which to strengthen the quality and reach of vital programs, beginning with those needed to achieve the
SDGs. Once the world is on a robust path to achieve the SDGs, the need for, say, peacekeeping and
emergency-relief operations should decline as conflicts diminish in number and scale, and natural
disasters are better prevented or anticipated.

This brings us to the second major area of reform: ensuring that the UN is fit for the new age of
sustainable development. Specifically, the UN needs to strengthen its expertise in areas such as ocean
health, renewable energy systems, urban design, disease control, technological innovation, public-
private partnerships, and peaceful cultural cooperation. Some UN programs should be merged or
closed, while other new SDG-related UN programs should be created.

The third major reform imperative is the UNs governance, starting with the Security Council, the
composition of which no longer reflects global geopolitical realities. Indeed, the Western Europe and
Other Group (WEOG) now accounts for three of the five permanent members (France, the United
Kingdom, and the US). That leaves only one permanent position for the Eastern European Group
(Russia), one for the Asia-Pacific Group (China), and none for Africa or Latin America.

The rotating seats on the Security Council do not adequately restore regional balance. Even with two of
the ten rotating Security Council seats, the Asia-Pacific region is still massively under-represented. The
Asia-Pacific region accounts for roughly 55% of the worlds population and 44% of its annual income
but has just 20% (three out of 15) of the seats on the Security Council.

Asias inadequate representation poses a serious threat to the UNs legitimacy, which will only increase
as the worlds most dynamic and populous region assumes an increasingly important global role. One
possible way to resolve the problem would be to add at least four Asian seats: one permanent seat for
India, one shared by Japan and South Korea (perhaps in a two-year, one-year rotation), one for the
ASEAN countries (representing the group as a single constituency), and a fourth rotating among the
other Asian countries.

As the UN enters its eighth decade, it continues to inspire humanity. The Universal Declaration of
Human Rights remains the worlds moral charter, and the SDGs promise to provide new guideposts for
global development cooperation. Yet the UNs ability to continue to fulfill its vast potential in a new
and challenging century requires its member states to commit to support the organization with the
resources, political backing, and reforms that this new era demands.

Pending IMF and World Bank reforms

Created soon after the end of the Second World War, the IMF and World Bank are powerful international
financial institutions which hold immense sway in orchestrating efforts to deliver the elusive fruits of
prosperity to the majority of countries in the world, which are still considered to be in the transitional phase
of becoming developed. The World Bank lends money and provides advice to developing countries for
programmes aiming to boost economic growth and reduce poverty. The IMF provides funds to countries in
financial crisis, particularly in order to ensure that they can pay their international debts, to ensure stability
of the broader international financial system. The ability of both these entities to fulfill their lofty aims,
however, remains a question of much contention around the world. In fact, the very manner in which these
two entities are themselves governed is also an issue which continues to be mired in controversy.

While on paper, the World Bank and IMF are governed by, and held accountable to, all 188 member
countries, in effect both these entities are controlled by just a small number of economically powerful
nations. Since a handful of countries choose the leadership and senior management of both the IMF and the
World Bank, critics allege that it is their economic interests that dominate, despite the fact that the main
borrowers from the World Bank and IMF are developing countries. European countries control a proportion
of the IMFs overall shareholding which exceeds their contribution to the global economy. Changes to
increase individual states quotas would automatically reduce the relative shareholding of all other states,
including the US whose current quota provides it with an effective veto on all major IMF decisions.

Recommendations to reform the governance structures of the IMF and World Bank include shifting the focus
from the needs of the US and European countries to those of the developing world by reforming the voting
structure. Both the IMF and World Bank do acknowledge the need for internal reform. The World Bank aims
to increase the voting power of developing countries to at least 50 per cent over time. The G20 endorsed the
need for IMF quota rebalancing, whereby the large, dynamic emerging market countries, Brazil, China, India
and Russia move up to be among the top 10 shareholders of the IMF.

However, developing countries have become increasingly frustrated with the slow pace of these promised
reforms. The IMF and World Bank annual meetings held earlier in October this year represented the ideal
opportunity for a comprehensive reform resolution. But despite the usual platitudes about the need for
structural reforms within the IMF and World Bank, this process has been stalled once again.

It is ironic that an entity like the World Bank, which is committed to the process of improving accountability
and good governance across the developing world, cannot get its own house in order. There are also
economic imperatives which compel the need for reforming both the IMF and the World Bank. The global
economy is currently fraught with anxieties over Chinas slowdown, weakening emerging markets and
lingering disparities within and across countries around the world. The IMFs ability to respond to potential
economic crises tailored to individual member countries circumstances requires not only a reformed vision
but also increased financial backing. The level of financial commitment estimated to enable the IMF alone to
function another decade is well over a trillion dollars. Allowing a greater share to emerging countries within
its governance structures would bolster the IMFs available financial resources. Moreover, governance
reforms would further enable both the IMF and the World Bank to reassess their existing programmatic
approaches, and to also gain increased legitimacy and effectiveness within the developing world.

A geo-economics-led world order

A new international order seems to be emerging defined overwhelmingly by geo-economics rather than
geopolitics. In this new order, the old multilateral institutions created under American auspices, or what is
known as the Washington Consensus , no longer seem as effective or capable of addressing global problems
as they were just a decade ago. Geo-economics has been defined by its proponents in two different ways: as
the relationship between economic policy and changes in national power and geopolitics; or as the economic
consequences of trends in geopolitics and national power. Both the notions that trade follows the flag and
that the flag follows trade point to what is called geo-economics.

Britains decision to join Chinas new Asian Infrastructure Investment Bank (AIIB) is a telling example of
one of the key realities of the new international order. Britain recognises how economically important the
Far East has become, and just how high the potential costs of exclusion might be from the region China
dominates. This also throws into bold relief Americas reduced ability to influence the foreign policies of
even its closest and formerly most reliable allies. The AIIBs establishment has been welcomed by most
regional countries vastly lacking in infrastructure and acutely short of resources to fund projects that are to
be financed by the Bank. But then, the AIIB also enables China to employ its growing economic leverage to
achieve long-term geopolitical goals in the region, as well as internationally.
By signing up as a member of the AIIB, Britain is becoming a player in a wider geopolitical and geo-
economic game. As a recently released report by the World Economic Forum points out, some of the real
losers of the new international order are the global institutions like the World Bank, the Asian Development
Bank and the International Monetary Fund, associated with American hegemony.

The setting up of the China-Pakistan Economic Corridor and the creation of a new Silk Road, linking
Beijing to its immediate neighbours, will not only dramatically increase regional productivity and trade, it is
expected to stand as an enduring, very tangible expression of Chinas material centrality in Asia and beyond.
The so-called Beijing Consensus is gaining ground over its rather discredited rival from Washington. This is
why the US is said to be so concerned about what might otherwise be seen as a welcome, productive and
positive expression of Chinas growing economic power.

The struggle to define the norms, rules and practices that will determine the environment in which states and
corporations operate in the 21 stcentury is said to be one of the most important expressions of heightened geo-
economic competition. Nation-states are coming to realise that war is no longer a viable option for remaining
in control. Seeing this, competitive nations are shifting their resources towards science, education,
production and trade. Now with even more lethal weapons in existence, the disastrous consequences of wars
between nations have become even more obvious. This may prevent nations from engaging in large-scale
wars with one another in the future. Not only are geopolitics and geo-economics intimately linked, but the
latter is expected to increasingly trump the former in the absence of outright war. Wars by commercial means
are becoming the principal focus of inter-state competition.

Already, Pakistan has reached the point of zero-sum on nuclear weapons capability with India. So a frontal
war is no more an option for either India or Pakistan. With the entire world watching the two nuclear-armed
South Asian neighbours very closely, cross-border militancy perpetrated by non-state actors is also hopefully
off their respective strategic planning boards. So, it would be on the economic front that the two rivals are
most likely to confront each other in the future. Or perhaps cooperate with each other. There is vast
asymmetry between the two countries with India far ahead of Pakistan, economically, as well as in many
other aspects. We, therefore, need to urgently readjust our position regionally and internationally to face the
realities of this geo-economics-led new order. And as a first step towards achieving this goal, we should be
shifting our resources from geo-strategic matters to geo-economic subjects like science, education,
production and trade.

What are the main concerns and criticism about the World Bank and IMF?

Criticism of the World Bank and the IMF encompasses a whole range of issues but they generally centre
around concern about the approaches adopted by the World Bank and the IMF in formulating their policies,
and the way they are governed. This includes the social and economic impact these policies have on the
population of countries who avail themselves of financial assistance from these two institutions, and
accountability for these impacts.

Critics of the World Bank and the IMF are concerned about the conditionalities imposed on borrower
countries. The World Bank and the IMF often attach loan conditionalities based on what is termed the
Washington Consensus, focusing on liberalisationof trade, investment and the financial sector,
deregulation and privatisation of nationalised industries. Often the conditionalities are attached without due
regard for the borrower countries individual circumstances and the prescriptive recommendations by the
World Bank and IMF fail to resolve the economic problems within the countries.

IMF conditionalities may additionally result in the loss of a states authority to govern its own economy as
national economic policies are predetermined under IMF packages. Issues of representation are raised as a
consequence of the shift in the regulation of national economies from state governments to a Washington-based
financial institution in which most developing countries hold little voting power. IMF packages have also been
associated with negative social outcomes such as reduced investment in public health and education.

With the World Bank, there are concerns about the types of development projects funded. Many infrastructure
projects financed by the World Bank Group have social and environmental implications for the populations in
the affected areas and criticism has centred on the ethical issues of funding such projects. For example, World
Bank-funded construction of hydroelectric dams in various countries has resulted in the displacement of
indigenous peoples of the area.

The World Banks role in the global climate change finance architecture has also caused much controversy.
Civil society groups see the Bank as unfit for a role in climate finance because of the conditionalities and
advisory services usually attached to its loans. The Banks undemocratic governance structure which is
dominated by industrialised countries its privileging of the private sector and the controversy over the
performance of World Bank-housed Climate Investment Funds have also been subject to criticism in debates
around this issue. Moreover, the Banks role as a central player in climate change mitigation and adaptation
efforts is in direct conflict with its carbon-intensive lending portfolio and continuing financial support for
heavily polluting industries, which includes coal power.

There are also concerns that the World Bank working in partnership with the private sector may undermine the
role of the state as the primary provider of essential goods and services, such as healthcare and education,
resulting in the shortfall of such services in countries badly in need of them. As an increasing shift from public
to private funding in development finance has been observed recently, the Banks private sector lending arm
the International Finance Corporation (IFC) has also been criticised for its business model, the increasing use
of financial intermediaries such as private equity funds and funding of companies associated with tax havens.

Critics of the World Bank and the IMF are also apprehensive about the role of the Bretton Woods institutions in
shaping the development discourse through their research, training and publishing activities. As the World
Bank and the IMF are regarded as experts in the field of financial regulation and economic development, their
views and prescriptions may undermine or eliminate alternative perspectives on development.

There are also criticisms against the World Bank and IMF governance structures which are dominated by
industrialised countries. Decisions are made and policies implemented by leading industrialised countriesthe
G7because they represent the largest donors without much consultation with poor and developing countries.
Americas Foreign Policy
A central function of the U.S. government is to conduct relations with the almost 200 other nations in the
world. A nation is a sovereign country, and as such, possesses the highest authority over its territories. All
sovereign states are theoretically equal.

Foreign policy determines how America conducts relations with other countries. It is designed to further
certain goals. It seeks to assure Americas security and defense. It seeks the power to protect and project
Americas national interests around the world. National interest shapes foreign policy and covers a wide range
of political, economic, military, ideological, and humanitarian concerns.

Americas foreign policy has changed over time reflecting the change in its national interest. As a new nation
after the Revolutionary War, Americas prime national interest was to maintain its independence from more
powerful European countries. Protected by the Atlantic Ocean, its major foreign policy, as typified by the
Monroe Doctrine, was to limit European attempts of further colonization of the Western Hemisphere.

Through the 19th century, America concentrated on creating a nation that spanned the continent, and it avoided
foreign entanglements. Once industrialized and more prosperous, it began looking for foreign markets and
colonies.

By the turn of the 20th century, the United States had become a minor imperial power, fighting a war with
Spain for Cuba and the Philippines and annexing Hawaii and several other territories. World War I engaged the
United States in European affairs, but after the war, a wave of isolationist feeling swept the country. Refusing
membership in the League of Nations, America turned inward once again. Absorbed by the prosperity of the
1920s and the Great Depression of the 1930s, America let its military strength erode. It was not prepared for
war when the Japanese struck the U.S. fleet at Pearl Harbor in late 1941.

Emerging from World War II as the most powerful economic power on Earth, the United States changed its
foreign policy dramatically. It took the lead in founding the United Nations. It invested billions of dollars
through the Marshall Plan to help strengthen war-devastated European democracies. It created a system of
alliances, including the North Atlantic Treaty Organization (NATO).

Central to Americas foreign policy in the post-war period was the containment of the Soviet Union and
communism. During the Cold War, the United States and its allies competed with the Soviet Union and its
allies militarily, economically, and ideologically. Both sides created massive military forces and huge
stockpiles of nuclear weapons. Although the two superpowers never went to war, the policy of containment led
the United States into the bloody Korean and Vietnam wars.

The Cold War ended when the Soviet Union, economically exhausted from competing with the West,
disintegrated. This left the United States the only remaining superpower in a world no longer ruled by the logic
of containing the Soviet Union.

Through time, various constitutional principles and values have shaped American foreign policy. American
foreign policy has favored the self-determination of nations for independence. Based on our commitment to
constitutional government, we often favor and support nations that practice democracy. These principles,
however, sometimes have conflicted with the goals of national security, economics, or the realities of
international politics. In certain cases, America has supported dictatorial governments or intervened to curtail
popular political movements.

Making and Carrying Out Foreign Policy

Americas foreign policy today covers a wide range of functions and issues. It includes establishing and
maintaining diplomatic relations with other countries and international organizations such as the United
Nations and the Organization of American States. It includes peacekeeping functions such as working with
allies to assure regional and international security and arms-control efforts. It covers a range of international
economic issues including trade, travel, and business. It involves foreign aid and disaster relief. As a
superpower, the United States has also taken a leadership role in peacemaking around the globe by trying to
negotiate treaties and agreements to end regional conflicts. Also, as a world leader, the United States has a
longstanding role in trying to address international economic and environmental problems.
The making and carrying out of Americas foreign policy involve all three branches of government and a
complex array of governmental institutions and agencies.

The president and the executive branch have the most significant role in making foreign policy and are
responsible for carrying it out. With the advice and consent of the Senate, the president makes treaties and
appoints ambassadors. The president can hold summit meetings with world leaders. As commander in chief of
the military, the president can, by executive order, rapidly project U.S. power around the globe.

In forming U.S. foreign policy, the president relies on advice from the National Security Council. This group is
made up of the vice-president, secretary of state, secretary of defense, head of the Central Intelligence Agency
(CIA), and chair of the Joint Chiefs of Staff (the nations highest military adviser).

The secretary of state heads the U.S. State Department and often represents the president abroad. The State
Department carries out foreign policy decisions and helps develop foreign policy for every region of the world.
Attached to the State Department is the U.S. Foreign Service, or diplomatic corps. It is made up of
ambassadors (who represent Americas political interests in every county), consuls (who represent Americas
business interests), and other officials who specialize in technical matters and issues of foreign aid.

Congress also plays a role in Americas foreign policy through its power to set duties and tariffs on foreign
exports and imports, regulate foreign commerce and immigration, and declare war. It sets quotas on
immigration, chooses which countries will benefit for most-favored-nation status in trade agreements, votes on
foreign aid, and sets the defense budget. But Congress is usually in the role of accepting, changing, or rejecting
policies proposed by the president.

The Supreme Court plays a limited role in foreign policy. It has jurisdiction over cases involving treaties,
admiralty and maritime law, and ambassadors and other public ministers. It also is charged with deciding
disputes between states and foreign states and their citizens and subjects.
At different times, tensions have arisen between the branches in the conduct of foreign policy. Presidents
sometimes favor treaties that the Senate does not want to approve. President Woodrow Wilson promoted
treaties establishing the League of Nations after World War I, but the Senate opposed the League and refused to
ratify the treaties. Other times, tensions have arisen between the Congress power to declare war and the
presidents role as commander in chief. Presidents have committed American armed forces to major conflicts
such as the Korean, Vietnam, and Gulf wars without a declaration of war by Congress.

The public also plays a role in influencing foreign policy. Advocacy groups for foreign countries often try to
influence Congress and the president about issues. Business associations lobby the government about
international economic and trade issues. Groups and individuals with strong views on certain foreign policy
issues, especially military intervention, often organize protests or other political actions to influence decisions.

Background of American Foreign Policy

The Early Republic After the American Revolution, the foreign policy thrust of the United States focused
mostly on regional rather than international issues. Coalescing the various states with diverse interests into a
unified nation proved to be a challenge for the new republic. Sectional differences, especially between the
northern and southern states, would continue unabated until the American Civil War. Compounding these
issues was Americas uneasy post-war truce with Great Britain and France. Negotiations for the gradual
withdrawal of British forces and Frances increasing pressure on the U.S. to repay loans and expenses incurred
from the Frenchs support during the war caused relations with both countries to become increasingly strained.
When war broke out between the European powers, the United States was pressured to choose sides but instead
adopted a policy of neutrality. Indeed, in George Washingtons farewell address he cautioned that the new
nation should avoid foreign entanglements, stating that:

Europe has a set of primary interests, which to us have none, or a very remote
relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to
our concerns. Hence therefore it must be unwise in us to implicate ourselves, by artificial ties, in the ordinary
vicissitudes of her politics, or the ordinary combinations and collisions of her friendships, or enmities.

Despite Washingtons warnings, the United States found itself in an undeclared war with France in 1798,
mostly due to President John Adams failed attempts at diplomacy. Although peace with France was achieved
in 1800, his presidency never recovered.

19th Century

The Democratic-Republican Party, led by Thomas Jeffersons rise to the presidency, ushered in several years
of peace until the War of 1812 with Great Britain. After the U.S. victory, Americans embraced nationalism as
the country moved to greater independence and became a global power to be reckoned with.

In 1823, President James Monroe issued the Monroe Doctrine in response to the emerging independent
Spanish colonies in Latin America. The edict stated that any efforts by European powers to colonize the land or
peoples of the Americas would be considered acts of aggression. At the same time, the U.S. was expanding its
territory further west, fueled by the philosophical fervor of manifest destiny, the belief that America was
destined to expand across the continent, from the Atlantic to the Pacific Oceans. This culminated in a series of
Indian Wars in addition to the annexation of Texas and areas in the west. The issue of slavery was exacerbated
by this territorial expansion, as both southern and northern states battled over whether it should be extended
into these new lands.

After several decades of peace following the American Civil War, the United States found itself embroiled in a
foreign policy dispute over the Spanish colony of Cuba. When Spanish military leaders were sent to the island
to quell a Cuban insurrection, the United States became concerned as many American businessmen had
investment interests in the country. Under the leadership of military commander Theodore Roosevelt, the U.S.
liberated Cuba in 1898 and through the spoils of victory gained possession of Puerto Rico, Guam, and the
Philippines (which regained independence after World War II).

World War I

Empowered by its success in the Spanish-American War, the United States adopted a decidedly interventionist
and imperialist foreign policy doctrine in the early 20th century. President Theodore Roosevelt sought colonies
and ports all over the world to exert American influence. He took advantage of political strife between Panama
and Colombia to build a canal in Central America. However, he did mediate to prevent a war between Russia
and Japan and received the Nobel Peace Prize in 1906 for brokering this peace. Roosevelt was largely credited
(and criticized) for expanding the American presence throughout the world.

After Woodrow Wilson became president in 1913, U.S. foreign policy took a different direction. In the events
leading up to the outbreak of World War I in 1914 and for several years afterward, Wilson pursued a policy of
non-interventionism in European affairs. After Germany sunk several American warships in the Atlantic
Ocean, Wilson reluctantly called for war, which Congress declared in 1917. The U.S. joined the Allied Powers
of France and Great Britain in their fight against the German, Austro-Hungarian, and Ottoman Empires (the
Central Powers). After the Allied victory in 1918 and the peace negotiations offered in the Treaty of Versailles,
Wilson tried in vain to garner U.S. support for joining the League of Nations, an international organization
whose mission was to maintain world peace. The League was roundly rejected by Congress in favor of a
resumed policy of isolationism.

World War II

Like the first World War, World War II was precipitated by major unrest in Europe. Germany, emboldened by
the leadership of Adolph Hitler and the Nazi Party, commenced a series of invasions in Eastern Europe with the
goal of seizing Lebensraum ("living space") for the Aryan people. Although the war is generally accepted to
have begun in 1939 when the British Empire, France, and Poland declared war on Germany, the United States
did not enter the war until 1941 when the Japanese attacked the naval base of Pearl Harbor in Hawaii as a
preventive strike to keep the United States from interfering with the countrys military operations in Southeast
Asia. President Franklin D. Roosevelt described the attack as a date which will live in infamy. On December
9, 1941, Congress passed a formal declaration of war against Japan which officially brought the United States
into World War II, fighting along with the Allied Powers of Russia, France, and Britain. Soon after, Roosevelt
authorized the forced interment of 110,000 Japanese-Americans into relocation camps across the county, one of
the most shameful chapters in American history.
 The war ended with the unconditional surrender of Germany and the Axis Powers. However, Japan refused to
abide by the conditions of the peace settlement and was still making preparations for a U.S. invasion when, in
August 1945, President Harry Truman ordered the dropping of two atomic bombs on the Japanese cities of
Hiroshima and Nagasaki, killing hundreds of thousands of people. Several days later, Japan announced its
surrender to the Allied Powers.

The Cold War

After the war, the United States reoriented itself from a long-standing policy of isolationism to one of potential
intervention around the globe. Once uneasy allies, the United States and the Soviet Union saw its relationship
deteriorate as the former gained increasing power in Eastern Europe. The U.S. adopted a policy of containment
to enhance Americas power abroad and used various military, political, and economic strategies to stall the
spread of communism. The Truman Doctrine pledged to provide aid to countries to prevent their falling into
the Soviet sphere. Additionally, the North Atlantic Treaty Organization (NATO) was created in 1948 as a direct
response to the Soviet threat. An intergovernmental military alliance consisting of European states and the
United States, NATO pledged to unify in collective defense should any of its member countries be attacked by
an external party. Historians often point to these events as precursors to the Cold War.

The Cold War, a period of political tension, economic competition, and military brinkmanship, dominated
foreign policy from the Truman to the Reagan Administration. The Korean War, erection (and subsequent fall)
of the Berlin Wall, the Cuban missile crisis, the Vietnam War, and the nuclear arms race were issues that
became integrated parts of the U.S. political and military landscape. A thaw in relations between the two
countries finally began to take form in the late 1980s. Soon after, the Soviet Union collapsed amid a faltering
economy and numerous revolutions among its member countries. With the official fall of communism in 1991,
the United States became the worlds sole remaining superpower.

Post Cold War and 9/11

With the breakup of the Soviet Union, the United States was presented with different challenges, most notably
the threat of nuclear terrorism and unrest in the Middle East. In 1991, the George H.W. Bush (Bush Senior)
Administration successfully suppressed an invasion of the small nation of Kuwait by Iraqi leader Saddam
Hussein. After the conflict, the United States mostly scaled back its military budgets and major foreign policy
edicts to focus on economic matters for the remainder of the decade.

Years of economic prosperity came to an end with the September 11, 2001 attacks on the World Trade Center
in New York City and the U.S. Pentagon in Arlington, VA. The attacks, conducted by terrorist members of the
militant Muslim group Al-Qaeda, resulted in one of the most significant and aggressive overhauls of American
foreign policy in the nations history. President George W. Bush (Bush Junior) embraced a unilateral war on
terrorism to combat the growing threat of fundamentalist, anti-American terrorism in the Middle East. The
policy resulted in military campaigns in Iraq and Afghanistan and, domestically, enhanced powers given to the
federal government to monitor potential threats with controversial Patriot Act. Although the George W. Bush
Administration justified the Iraqi invasion due to its certainty that Saddam Hussein was in possession of
weapons of mass destruction (WMD), none were found. The continuing wars in Iraq and Afghanistan have
seen their support dwindle among political leaders and the American people.
In recent years, the United States has increasingly been called upon to administer aid to foreign countries, both
military and economic, to assist recovery efforts from war and natural disasters. In 2009, most U.S. assistance
went towards establishing and stabilizing democratic regimes in the Middle East. However, a significant
amount of aid was also directed to the plight of refugees, food emergencies and disasters, and other
humanitarian crises. The Obama Administration has sought to reframe foreign policy regarding U.S. aid as not
only a moral issue, but also one that helps to strengthen Americas security and economic conditions.

Objectives/aims of US FP Against Terrorism

1. Make no concession to terrorist and strike no deals.

2. Bring terrorist to Justice for their crime.

3. Isolate and apply pressure on states that sponsor terrorism , force them to changed their behavior.

4. Enhance the counter terrorism capabilities through economical aids of those states those work with USA and
required assistance.

5. Promoting the spread of liberty and democracy throughout the world.

1st National Security Strategy(NSS)

Those Objectives/ ideas were codified in the 2002 national security strategy (NSS) statement. That statement
also identified Afghanistan & Iraq as a major threats to international order and stability.

2nd National Security Strategy(NSS)

In March 2006, the administration released its 2nd National Security Strategy ( NSS).it repeated many of the
principles of the 1st NSS , but the second NSS placed greater emphasis on wide rang multilateral co-operation
among the states to cope with terrorism and stable the economy. Promoting democracy was also a central focus
of this 2nd NSS.

US Foreign Policy as Super Power

At the present stage USA has great influence on the globalised world and leading it as super power. At the
current age major & core objectives of USA foreign policy are under as

1. Remain a dominant power of the world.

2 .Leading the war on terror with alliance states.

3. To Promote& achieve its hidden economic interests & other benefits through UNO cover.(as influencing in
African states & collecting the raw materials/sources)

4. To maintain its image as liberal & developed state.

5. To promote the Justice & democracy among the Nations.

6. Seeking for global peace & prosperity for itself and for rest of world as well.
Great Power Conflict: Will It Return?

The lessons World war holds for the present come from the fact that it was caused by the
multipolarity of great power conflict that simmered from 1871 onward. In 1914, the rise of Italy and
Germany as nation-states ensured that alliance politics, arms races, imperial maneuvering,
expansion, navalism, resource scarcity, cultural divides, and political philosophy would collide.
Germany, Italy, Great Britain, France, Russia, Austria-Hungary, and Japan all used the world as a
chessboard. (Still dealing with the aftermath of the Civil War and focused on both western and
industrial expansion, America was initially in no mood for involvement in what it perceived as
another in a long string of wasteful European conflicts.)

The medium and lesser powers attempted to use the great powers for their own reasons; Belgium,
Holland, Spain, China, Serbia, and Turkey all had their part to play in the conflagration. However, at
the core of the complex circumstances that caused the Great War was the absence of a world
hegemon. The Pax Britannica was over, although Great Britain did not yet know it, and the Pax
Americana had yet to begin.

The international situation today bears a disquieting resemblance to that world of a hundred years
ago that came apart with sudden and appalling violence. International relations experts may claim
that great power conflict is pass, having been replaced by issues such as terrorism, climate change,
pandemics, energy, and migration. All these issues are pressing. Yet they should not hide the fact
that there are many areas of the globe that are erupting or have erupted into great power conflict.
The list includes the Euro-Russian frontier, the Baltics, the South China Sea, the Korean Peninsula,
the Sea of Japan, the Indian Ocean, the Taiwan and Korea/Tsu Shima straits, and the Middle East,
especially Syria and Iraq.

Because of these conflicts, we are witnessing four changes in international affairs that will lead to
renewed great power conflict.

The first change is the slow disengagement of the United States from the dominating role it has
played after World War II, marked most notably by a lowering of its defense spending and
commitments. America has retreated from its role of protector of the world order, but the current
occupant of the White House clearly ranks foreign affairs as an annoyance compared to an ambitious
domestic agenda and has telegraphed his desire for America to have either a light or non-existent
footprint across much of the globe.

The slow American withdrawal coincides with the second change, in which four of the current great
powers (Russia, China, India, and Japan) are revaluating, amplifying, or changing aspects of their
grand strategy in a way that resembles a similar reshuffling that took place late in the nineteenth
century.

Third, there are ominous parallels between the cauldron that created the conflict of the Great War
and those simmering today. China, playing the role of nineteenth-century Germany, seems
determined to upset the economic and military stability created by the United States and Japan,
especially in the area of naval power and power projection. Japan is playing the role of the United
Kingdom, an old power clinging to its power base by mobilizing nationalism and militarism. Russia,
attempting to resurrect its glory by aggressive action, reminds us of a turn-of-the-century France.
India, coming on the world stage for the first time, yet not quite ready for a big role, is reminiscent of
the newly unified Italian peninsula of 1861.

Too much could be made of such parallels, but the mix is right: an increasing multipolarity, in which
new powers rise while old powers try to hold on, and alliance systems that ever more constrain
actions and decisionmaking.

A Russian Ministry of Defense document requested by President Vladimir Putin in 2003 spoke in
terms of the geopolitical realities of Russias engagement with the Euro-Atlantic world to its west, the
Islamic world to its south, and the Asian-Pacific world to its east. Russias Armed Forces must have
sufficient power to deal with the challenges posed on each of these axes. Four years later, the Russian
media announced the declaration of the Putin Doctrine. Putin himself said that Russia viewed
policies embraced by the United States and NATO as threats to Russian national interests. He
particularly called attention to NATOs expansion and warned that the deployment of a US
antiballistic missile system into Eastern Europe would be a precipitous step toward a new arms race.
Later, Russia endorsed the use of energy as part of a coercive diplomacy and the old Soviet method of
using arms control and reduction agreements to achieve Russian national interest.

Woven throughout all of these documents and declarations is the need by Russia to be treated with
the respect granted the old USSR. Putin was able to achieve this when he forced President Obamas
hand over the chemical weapons issue in Syria. Russia came out as the proactive indispensable
nation for a road to peace. In reality, Russia was able to outmaneuver the United States on the
diplomatic front and throw a lifeline to the Assad regime in one fell coup de grce.

The Putin Doctrine also aims in part to reassert Russian regional hegemony, and supported by a
rising and nationalistic Orthodox Church, Putin has borrowed elements of the nineteenth-century
Russian state to justify a return to an imperial path.

Soviet grand strategy was governed by creating and exploiting the constellation of forces for the
benefit of the socialist motherland. Russian strategic thinking today is dominated by a number of
factors: the border it shares with Eastern Europe, NATO expansion, its border with China, a blessing
and curse of natural resources, military modernization, nuclear weapons, and national pride. One of
its singular fears is an attack along its periphery it would not be able to defend against. This requires
the creation of buffers between itself and potential adversaries. It can do this by claiming to protect
Russians in what they often call the near abroad, where Russian minorities are large and loyal to
Moscow.

Crimea, and to a slightly lesser degree Ukraine and Moldova, offer places where Russia can establish
breathing space from the Europeans; the Caucasus from the Turks and Iranians; and Central Asia
from the Chinese. Belarus is in a class by itself, as it will form a joint defense system that will
legitimate larger concentrations of Russian troops on the Polish and Baltic frontier.

The Putin regime recently announced a new military modernization program that runs through
2025, with a proposed injection of $770 billion dollars over the next ten years. Russia spends 4.4
percent of its GDP on the military, with a purchasing power of close to $100 billion. A future force
will be smaller, but more capable of handling a range of contingencies on Russias periphery. Russia
also has purchased select foreign systems, such as Frances Mistral-class amphibious assault ship,
unmanned aerial vehicles from Israel, and Italian light armored vehicles. Priorities for the strategic
nuclear forces include force modernization and command-and-control facilities upgrades. Russia will
field more roadmobile SS27 Mod2 ICBMs with multiple independently targetable reentry vehicles.
It also will continue development of the RS26 ICBM, the Dolgorukiy ballistic missile submarine and
SSNX32 Bulava submarine-launched ballistic missile, and next-generation cruise missiles. Russias
Black Sea Fleet will receive thirty new ships by 2020 and will become self-sufficient with its own
infrastructure in the Crimean Peninsula.

Russia will continue to modernize its military, use covert operations, and economic intimidation to
neutralize or co-opt borderland areas while attempting to project power abroad. This will partially be
focused on blunting Americas ability to act unilaterally or to create and hold together alliance
structures and coalitions.

C hinas strategic doctrine since the Deng Xiaoping era has been defined by the phrase to
preserve Chinas independence, sovereignty, and territorial integrity. In recent years, other slogans
and statements have been added, such as desiring a harmonious world system and taking
advantage of a period of strategic opportunity.

The Mao Zedong era attempted to literally and figuratively destroy Chinese Taoism, Buddhism,
Christianity, and classical Confucianism. But todays lip service Maoism is bankrupt, and China itself
is filled with bellicose nationalism and wounded pride. The Chinese Communist Party and its allies
in the Peoples Liberation Army use aggressive nationalism to unify the people. Yet this is a tiger
that, once unleashed, is difficult to put back in its cage. Chinas potential civil disorder problem is
greater than that of any other great power. Growing protests by disaffected political, economic,
religious, and ethnic groups, especially in the countryside, continue to bedevil the Communist
government.

Unlike the United States, or even Pan-Slavic Russia, Chinas foreign policy does not possess
crusading goals, but is driven by pure realism that consists of ensuring buffers between itself and
potentially powerful allies, massive resource acquisition, and route accessibility especially in Central
and South Asia. China, in many ways, is resurrecting Ming and Qing dynasty ambitions by trying
(with much difficulty) to create semi-vassal states in Burma, Thailand, Vietnam, and North Korea.

This Dragon Reborn creed is the longest-term threat to peace in the Pacific since the 1930s. The
most worrying aspect of this doctrine is the attempt by China to engage in the twin plans of building
a blue-water navy and expanding its capability in area-denial weapons and tactics. The workings of
this strategy can be seen in the recent Chinese moves in the South China Sea, the Sea of Japan, and
the Taiwan straits, where its navy has confronted, initially, Japan, the Philippines, Indonesia,
Singapore, Taiwan, Vietnam, and even Australia. Driven by resource instability, nationalism, and
jingoism, this First Island Chain policy envisions Beijings ability eventually to neutralize or push
out Americas bases and aircraft carrier task forces, followed by dominance of the region.

All of this is expressed in concrete actions: a $132 billion military budget, creation of a major naval
base on Hainan island, a massive increase in land-to-sea ballistic missiles, massive investment in
modernizing Chinas strategic nuclear arsenal, the deployment of its first aircraft carrier, the
development of its first nuclear-powered ballistic missile submarine, an immense investment in
offensive cyber warfare operations (and attacks), intimidation of Hong Kong, diplomatic isolation of
Taiwan (while offering economic carrots), arms and missile technology proliferation, anti-satellite
missiles, space weapon research, use of the North Korean regime as a bargaining chip, development
of naval-friendly places in the Indian Ocean, and attempting to create a Chinese Air Defense
Identification Zone over the Japanese Senkaku Islands.

Turning from Maoism to imperial expansionism, China has had significant success on the world
stage, but the flash-point scenarios it faces are numerous: conflict with Vietnam over the Spratly
Islands; conflict on the Korean Peninsula because of Pyongyangs nuclear arsenal; a continuing
potential for a confrontation with Taiwan.

But of all the scenarios that might cause a showdown between the United States and China in the
Pacific, the most serious one involves Japan.

J apan is the most unusual of all the great powersstill in some ways the second most important
economy in the world, and unlike Chinas, one that is devoted primarily to finished goods, high
technology, high quality, and efficiency. Still trying to rev up this economic machine, Japan sees the
world today as potentially very hostile because of Chinese imperial dreams in Asia; North Korean
aggression past, present, and future; and Russian resurgence. All of these powers are modernizing
their navies and nuclear arsenals, while America declares a pivot to Asia with little evidence of
consequences for its foreign policy.

Unlike the other great powers with which it competes, Japan is hampered by a Constitution that the
United States wrote and also depends on America for large areas of its security. Prime Minister
Shinzo Abe is continuing the evolution away from both of these dependencies by slowly returning
Japan to its intrinsic geopolitical imperatives. If Washington signals to Tokyo that it is downsizing its
protections, Japan will accelerate its strategic independence. Traditionally, Japans grand strategy
has been dictated by the need to secure the home islands and neighboring ones; control the strategic
avenues to and from Japan for military and economic needs; ensure adequate resources for its
economy and markets for its finished goods; and prevent a breakdown of domestic social order.

The long rule of the Shogunate, stretching back to the early seventeenth century, was inward-
looking, and broken by the imposition of foreign powers, notably the United States in 1854. Japan
understood it needed to expand or expire. This thinking, in its extreme form, reached its apex in the
1930s, when Japan started World War II, and was tempered only by the postwar American
occupation, followed by Article 9 of the Japanese Constitution and the US security guarantee. Article
9 renounced war and the ability of the Japanese state to possess a military, although this was
changed in 1954 to allow a self-defense force, which began to resemble a great power military. For
decades, Japan was governed by the Yoshida and Fukuda doctrines, which essentially enshrined
these pacifist policies. Since 2012, however, the Abe doctrine has introduced an incredible
transformation, in which Japan is asserting itself once again as it did prior to World War I.

Much has been made of Abes 2013 five principles, chief among them the protection of universal
values, such as freedom, democracy, and basic human rights; the guarantee that free and open seas
are governed by laws and rules and welcoming the US rebalancing in the region; and the
promotion of trade and investment, as well as the flow of goods, capitals, people, and services,
through various economic partnership networks.
However, the real change is deeper and more important. Also in 2013, the Japanese Cabinet, under
Abes direction, approved Japans first national security strategy, made more possible by the creation
of a Japanese National Security Council. In large part a response to Chinas aggressive moves in the
Pacific over areas such as the Senkaku Islands, the strategy argues that Japan needs to make a more
proactive contribution to peace, i.e., it needs to contribute more to its military alliance with
America despite its pacifist constitution.

The strategy amounts to a plan for a five-year military buildup. Spending will increase to $240
billion, an increase of about five percent over the previous five-year plan. The document promises
that Japan will respond calmly and resolutely to the rapid expansion and step-up of Chinas
maritime and air activities. It also declares North Korea a grave and imminent threat. It calls for
the cultivation of love of country in Japan, and for expanding security education in universities.
More controversially, it also promises to review Japans self-imposed ban on arms exports. Under
the plan, Japan will transform its Self-Defense Forces into a full-fledged military, primarily by
investing heavily in advanced war-fighting technology, space weapons, ballistic missile defense,
unmanned aerial vehicles, a more mobile ground force, and expanded naval and coastal capabilities.

Abe continues to push the envelope on Article 9. The first modification granted more military
flexibility for overseas logistics, transport, and support missions. The next was the deployment of
forces in Iraq. Now Abe seeks to give the military more freedom to intercept missiles launched at
allies, to search or apprehend vessels at sea that lend support to allies enemies, to help allies with
military logistics such as refueling, and to engage in self-defense operations.

At a meeting in Davos, Switzerland, in January 2014, Abe stated that the tensions between China and
Japan were similar to the situation that Britain and Germany found themselves in before World War
I, and said that having strong trade relationships was not enough to deter strategic differences. There
has been an ensuing debate about the quality of the translation of the remark, but the essential truth
of the statement remains. Abe has made it clear that he intends that Japan should return to being a
normal player in international relations by 2020, freed from the last restraints placed on it in 1945.

T he newest great power is India, although it has yet to fully define its place in the world, and is
constantly sucked into the vortex of radical Islam and subcontinental geopolitics that have so far
prevented it from devoting energy to great power maneuvers. In fact, among the great powers, India,
which spent much of its post-independence history as nominal leader of the non-aligned movement,
has devoted the least attention to a grand strategy.

India faces the rise of Islamic extremism, border tensions with China, perennial strife with Pakistan,
and the inability to remedy a level of domestic poverty and corruption that none of the other great
powers are burdened with. Most importantly, it appears to be on a collision course with China
dictated by geographical proximity, resource scarcity, and historical enmity. In 1991, India began its
Look East policy as an alternative to China in South Asia, targeting Nepal, Burma, Vietnam,
Indonesia, and Thailand for greater attention. The policy was generally an economic success, but
geopolitical assessments have been mixed. As a result, India recently rebranded the policy using the
phrase Act East.

Spurred on by Hindu nationalism, Prime Minister Narendra Modi has indicated a new assertiveness
in foreign policy, an emphasis on strategic thinking, and a desire for India to become a regional
powerall of it supported by a greater role for the Indian military.
The much-discussed Transformation Study by General V. K. Singh created a window into Indias
new strategic thinking. It envisions an Indian military able to fight on two and a half fronts
(namely, against China, Pakistan, and an Islamic insurgency at home). Yet this seems a grandiose
ambition given the fact that India has been unable to come to terms with a consistent policy over its
three major geopolitical issues: Pakistan, China, and the Indian Ocean. Ultimately, Indias decision
over this last issue will determine its pathway as a great power. A new generation of policymakers
has indicated that they want to see the Indian Ocean as an Indian lake, so to speak. Should New
Delhi pursue this vision, it will make for greater tensions with Beijing. Although India spends only
$46.1 billion on defense, Indias naval trajectory is clearly headed toward power projection. It has
two aircraft carriers, and by 2020 intends to have a third. This would give it the largest carrier fleet
in the eastern hemisphere with the exception of Americas.

Indias problem is how it will build the technology and military capabilities of a great power in the
absence of a clear goal or strategy. In conceiving of such a strategy, India will ultimately be forced to
choose sides, which it has avoided since independence, and that choice will dramatically affect the
worldwide geopolitical situation.

N ot all the elements of the decades before the Great War are currently in play in the
international arena. However, we are witnessing a similar cauldron of rising multipolarity,
revanchist emotions, resurrected grievances, military expansion and modernization, along with a
return to grand strategies that were suppressed after World War I by the aggressive ideologies of
fascism and communism and Cold War politics. Scholars dismiss great power conflict, and statesmen
cant bring themselves to confront it. If they did, the debates in many Western democracies about
defense budgets would vanish. The enduring pain and destruction of that great conflagration a
century ago is often hard for people of this age to imagine, but the world would be ill served if great
power politics is ignored due to political correctness or boredom with history

The Global Nuclear

Nonproliferation Regime

Scope of the Challenge

Nuclear weapons proliferation, whether by state or nonstate actors, poses one of the
greatest threats to international security today. Iran's apparent efforts to acquire nuclear
weapons, what amounts to North Korean nuclear blackmail, and the revelation of the A.Q.
Khan black market nuclear network all underscore the far-from-remote possibility that a
terrorist group or a so-called rogue state will acquire weapons of mass destruction or
materials for a dirty bomb.

The problem of nuclear proliferation is global, and any effective response must also be
multilateral. Nine states (China, France, India, Israel, North Korea, Pakistan, Russia, the
United Kingdom, and the United States) are known or believed to have nuclear weapons,
and more than thirty others (including Japan, Germany, and South Korea) have the
technological ability to quickly acquire them. Amid volatile energy costs, the accompanying
push to expand nuclear energy, growing concerns about the environmental impact of fossil
fuels, and the continued diffusion of scientific and technical knowledge, access to dual-use
technologies seems destined to grow.

In the background, a nascent global consensus regarding the need for substantial nuclear
arms reductions, if not complete nuclear disarmament, has increasingly taken shape. In
April 2009, for instance, U.S. president Barack Obama reignited global nonproliferation
efforts through a landmark speech in Prague. Subsequently, in September of the same
year, the UN Security Council (UNSC) unanimously passed Resolution 1887, which
called for accelerated efforts toward total nuclear disarmament. In December 2011, the
number of states who have ratified the Comprehensive Test Ban Treaty increased to 157,
heightening appeals to countries such as the United States, Israel, and Iran to follow suit.

Overall, the existing global nonproliferation regime is a highly developed example of

international law. Yet, despite some notable successes, existing multilateral institutions
have failed to prevent states such as India, Pakistan, and North Korea from "going nuclear,"
and seem equally ill-equipped to check Iran as well as potential threats from nonstate
terrorist groups. The current framework must be updated and reinforced if it is to effectively
address today's proliferation threats, let alone pave the way for the "peace and
security of a world without nuclear weapons."
Strengths and Weaknesses

Overall Assessment: Progress but crucial tests ahead

International instruments for combating nuclear proliferation were largely successful before
1991, but are proving unable to meet today's challenges. Although three states (India, Israel,
and Pakistan) are known or believed to have acquired nuclear weapons during the Cold
War, for five decades following the development of nuclear technology, only nine states have
developedand since 1945 none has usednuclear weapons. However, arguably not a
single known or suspected case of proliferation since the early 1990sPakistan, Iraq, Iran,
North Korea, Libya, or Syriawas deterred or reversed by the multilateral institutions
created for this purpose. The continued advancement of Iran's nuclear program
despite the implementation of crosscutting economic sanctions and near universal global
condemnationhas elicited serious concerns from states including Israel, the United States,
and Saudi Arabia. Additionally, recent nonproliferation success stories, such as Libya's
abandoning its nuclear program in 2003 and the accession of all of the Soviet successor
states except Russia to the Nuclear Nonproliferation Treaty (NPT) as nonnuclear
weapon states, have been the result of direct government-to-government negotiations and
pressure rather than action by global bodies.

In dealing with today's proliferation challenges, international organizations work in tandem

with ad hoc forums of interested parties, such as the Six Party Talks on North Korea, the
P5+1 grouping on Iran, and the most recent development of biannual global nuclear security
summits. But such forums have often proven inadequate to arrest the spread of nuclear
technology, and states such as Iran and North Korea continue to pursue nuclear capability,
if not outright weaponization. Given these trends, rising doubts about the
sustainability of the nonproliferation regime are no surprise.

But nonproliferation as an international issue has recently benefited from revived attention.
The United States and Russia signed a legally binding replacement agreement to
the Strategic Arms Reduction Treaty (START), which expired in December
2009. New START entered into force in February 2011. President Obama has made
nuclear issues a centerpiece of his international agenda, convening a high-level Nuclear
Security Summit in April 2010, dedicating serious political effort to strengthen the NPT at
the NPT Review in May 2010, and building consensus in the UN Security
Council and elsewhere for new economic sanctions targeting Iran. The Obama
administration has also pledged to win U.S. Senate ratification of the Comprehensive
Test Ban Treaty (CTBT) and reduce the role of nuclear weapons in U.S. defense
doctrine. Recently, it initiated discussions with the Pentagon about potential deep cuts to
the U.S. nuclear arsenal. Yet even with these renewed efforts, major challenges and threats
remain, namely with regard to Iran and North Korea.

Establishing a normative and legal framework: Fairly comprehensive, but with

significant gaps

The Nuclear Nonproliferation Treaty (NPT) is the core component of the global
nonproliferation regime, and establishes a comprehensive, legally binding framework based
on three principles: (1) states without nuclear weapons as of 1967a year before the treaty
opened for signatureagree not to acquire them; (2) the five states known to have tested
nuclear weapons as of 1967the nuclear weapon states (NWS)agree to not assist other
states in acquiring them and to move toward eventual disarmament; and (3) the non-
nuclear weapons states (NNWS) are guaranteed access to civilian nuclear technology and
energy development.

NNWS are subject to safeguards to ensure that materials and technology from civilian
activities are not diverted to weapons programs. The International Atomic Energy
Agency (IAEA) is the implementing body for the NPT, monitoring compliance with the
treaty and assisting NNWS in developing civilian technology. Although the scope and
mandate of the NPT and the IAEA are relatively broad, there is a critical gap in coverage:
189 states are party to the treaty, but three of the world's nine nuclear powersIndia, Israel,
and Pakistanhave never joined, and a fourthNorth Koreawithdrew in 2003. Thus, even
if enforcement of the existing regime were not an issue, nearly half of the world's nuclear-
armed states are excluded from its provisions.

By design, the NPT does not address proliferation by nonstate actors. After the September 11
attacks, the UN Security Council (UNSC) adopted Resolution 1540, a legally
binding instrument requiring all UN member states to enact and enforce measures to
prevent nonstate actors from acquiring WMD. Many states in the UN General
Assembly, however, have argued that the UNSC did not have the authority to impose a
binding resolution in this area. Partly as a result, some states have resisted cooperation with
the 1540 Committee established to oversee implementation of the resolution. The
UNSC, however, recommitted itself to 1540 in April 2011 with Resolution 1977,
extending the mandate of the 1540 Committee by ten years. In addition to resistance facing
the implementation of Resolution 1540, the legally binding Cnovention on Nuclear
Terrorismwhich defines nuclear terrorism and requires international cooperation to
prevent and punish such actshad only seventy-nine parties as of June 2012.

Moreover, two important elements of the nonproliferation regime have never come into
effect, largely because of resistance by the United States and other nuclear weapon states.
The Comprehensive Nuclear Test Ban Treaty (CTBT) of 1996 has been signed
by 183 countries but cannot enter into force until all forty-four states with significant
military or civilian nuclear capacity ratify it. China, India, Israel, Pakistan, and the United
States have not yet done so. Efforts to conclude a Fissile Material Cutoff Treaty (FMCT) to
ban the production of weapons-grade material have also stalled. The United States has been
criticized for blocking progress on both issues, but the Obama administration
has signaledthat it will move to again ask the Senate's advice and consent on ratification
of the CTBT (the body rejected the treaty in 1999) and to revive negotiations on an FMCT
with verification measures.

A review of the NPT in 2010 concluded with modest success. The final outcome
document recommits signatories to the principles of the treaty, provides some specific
action plans for nonproliferation and disarmament, and calls for the elimination of nuclear
weapons from the Middle East through the establishment of a nuclear weapons-free zone in
the region. The need for unanimous agreement resulted in some new U.S. initiatives, such
as stronger verification requirements, being eliminated from the final document.

Preventing proliferation by state actors: Poor record on compliance, continued

risk of breakout
Despite the broad legal coverage of the Nuclear Nonproliferation Treaty (NPT), a
string of failures since the early 1990s have highlighted the ineffectiveness of existing
nonproliferation instruments to deter would-be nuclear weapon states. In theory,
the International Atomic Energy Agency (IAEA) can refer countries that do not
comply with the NPT to the UN Security Council (UNSC), which in turn can impose
sanctions or other punitive measures. In practice, however, political calculations have often
caused deadlock at the UNSC, enabling nuclear rogues such as Iran to defy successive, fairly
weak UN sanctions resolutions with virtual impunity. The IAEA did, however, refer Syria
to the UNSC in June 2011 due to an "absence of confidence that Syria's nuclear program is
exclusively for peaceful purposes."

Another problem is the lack of adequate verification and enforcement mechanisms available
to the IAEA, whose budget, intelligence capabilities, and technological resources fall far
short of what would be needed to detect, prevent, or punish NPT violations. In 2010, the
IAEA's inspections budget was approximately $164 million. Not surprisingly, even
discounting nuclear facilities the IAEA does not have access to, such as those in Iran and
North Korea, nuclear materials have reached the black market from installations under
IAEA safeguards, namely, from several in Pakistan. One positive step has been the adoption
of IAEA Additional Protocols, which strengthen the agency's inspections mandate and
is in force in 115 countries, including all five recognized nuclear weapon states and, as of
2009, India. Nonetheless, more than half of all NPT member statesincluding Syria and
Iran (which has ratified but not implemented the protocol)have yet to agree to the
toughened inspections regime. A review of the NPT in 2010 failed to reach consensus on
U.S. efforts to make the additional protocols mandatory.

Other multilateral, informal organizations also play a role in implementing and enforcing
the NPT, notably the Nuclear Suppliers Group (NSG). Made up of forty-six advanced
nuclear states, the NSG prohibits the transfer of civilian nuclear materials or technology to
states outside the NPT, or those that do not fully comply with IAEA safeguards. However,
the NSG's export bans are not legally binding, and members (including the United States,
Russia, and China) have taken advantage of the weakness of the NSG regime to pursue
civilian nuclear projects with non-NPT members.

Interdicting illicit nuclear transfers: Some progress since 2001

In addition to legal frameworks, several multilateral initiatives have been created in recent
years to improve international coordination in preventing nuclear terrorism. The Global
Initiative to Combat Nuclear Terrorism (GICNT), launched in 2006, seeks to
coordinate international efforts to detect, investigate, and respond to proliferation by
nonstate actors.

Alongside the efforts of the GICNT, many countries are developing a comprehensive
detection mechanism to monitor trafficking in nuclear material and related financial
transactions. The U.S.-led Proliferation Security Initiative (PSI), established in
2003, today involves more than ninety-eight countries in developing the best practices, joint
training exercises, and information-sharing activities to improve multilateral interdiction
efforts.

Although often cited as a flexible approach to coordinating the international response to

proliferation, PSI does not grant any legal authority for ship-boarding or interdiction
beyond the UN Convention on the Law of the Sea Treaty and various bilateral
agreements. India and China, which do not participate in PSI, have questioned the legality
of its interdictions. PSI also cannot interdict ships of nonmember states unless master
consents to being boarded are allowed, such as Iran and Pakistan. Whether the 2003
interdiction of a ship supplying nuclear materials to Libya was the direct result of PSI
activities, for example, is still disputed.

Analysts have also criticized the PSI for being a club of developed economies and not
addressing the problem of increasing independence among a growing number of developing
countries and nonstate actors from the controls enacted by the traditional supporters of the
nuclear establishment. Others have pointed out that the initiative is limited by having
neither an independent budget nor coordinating mechanisms, and does not provide a
legal framework in which to lock in long-term, verifiable, and irreversible member state
commitments. However, as a sign that progress may be forthcoming, the United and States
and China jointly installed a nuclear radiation detection system at the Yangshan port in
Shanghai in December 2011. Two years earlier, the U.S. Navy was also able to successfully
pressure a North Korean vesselwhich many suspected to be carrying illicit nuclear
weapons materials destined for Myanmarto return to port by tailing the ship in open
waters.
Securing fissile material and nuclear arsenals: Significant progress since the
1990s, but incomplete

Possibly the most successful element of the nonproliferation regime has been the effort to
secure so-called loose nukes and fissile material throughout the former Soviet Union. This is
critical given that some 135 nuclear facilities worldwide use highly enriched uranium (HEU)
as fuelenough HEU to create some 400 nuclear weapons. If terrorist or criminal groups
were able to buy or steal even a small portion of this material, they could use it
to construct [PDF] a crude nuclear weapon or dirty bomb.

The United States and Russia have led this effort since 1991. By 2011, some 92 percent of
sites in the former Soviet Union with weapons-usable nuclear material had been secured.
U.S.-funded efforts such as the Cooperative Threat Reduction program, Global
Threat Reduction Initiative, and the Global Initiative to Combat Nuclear
Terrorism have been complemented by other multilateral initiatives, such as the Group of
Eight Global Partnership against the Spread of WMD, which has provided funding and
technical assistance to secure nuclear facilities, repatriate fissile material to origin countries,
and promote international cooperation to counter proliferation.

In late 2011, the importance of securing nuclear material came into focus again following
the collapse of Muammar al-Qaddafi's regime in Libya. In September 2011, ten thousand
drums of uranium yellowcake were discovered in a Libyan warehouse, virtually
unguarded, although a UN official claimed the material was only "slightly" radioactive
and did not pose an immediate threat.

The Obama administration brought additional attention to this issue, pledging to secure all
vulnerable nuclear weapons materials by 2014 and convening a high-level global nuclear
security summits in 2010 and 2012. The 2010 summit yielded tangible results, with Ukraine
announcing that it would get rid of all its Soviet-era highly enriched uranium, and five other
countries stating intentions to convert their research reactors to run on low-enriched
uranium, which is less dangerous. The next global nuclear security summit is planned for
2014 and will take place in the Netherlands.
A related concern, ranging from pioneering nuclear powers like the United States to more
recent powers like Pakistan, is the security of nuclear arsenals, specifically regarding
safeguarding warheads from accidents, theft, or unauthorized use.

The security of Pakistan's arsenal is a serious concern, especially for the United States.
Reports have emerged that nuclear warheads are often transported on normal roads with
little to no protection. While Pakistan has always countered that its arsenal is secure, some
U.S. officials have voiced concern about the possibility of one of Pakistan's weapons falling
into the hands of terrorists.

Similarly, there have been repeated safety issues related to the U.S. nuclear arsenal. In 2007
and 2008, two nuclear safety incidents prompted Secretary of Defense Roberts Gates to
institute high-level leadership shifts within the U.S. military. In November 2011 a
damaged component of an unarmed intercontinental ballistic missile prompted a partial
evacuation and emergency response at a U.S. Air Force base in North Dakota. In July 2012,
activists broke into the Y-12 National Security Complex in Tennessee. It would later come to
light that security weaknesses had been discovered at the facility two years
previously. These incidents demonstrate that ensuring the safety and security of nuclear
arsenal remains a serious and important issueeven for countries with decades of
experience with nuclear weapons.

Oversight of civilian nuclear programs and dual-use technologies: Inadequate

monitoring and verification mechanisms

Some analysts note that the Nuclear Nonproliferation Treaty (NPT), which
guarantees states' rights to develop civilian nuclear technology, enables a peaceful
path to proliferation through fuel cycle activities. Many of the processes used to produce
civilian nuclear power can be converted to military ends. As noted, the International
Atomic Energy Agency does not have the capacity to adequately monitor every nuclear
site. Iran has almost certainly used its civilian program as a cover for illicit weapons
activities. The challenge of monitoring and verifying NPT safeguards will likely only increase
as more countries look to nuclear power to offset volatile energy prices and reduce reliance
on carbon-based fuels.
In particular, several Middle Eastern countries that currently lack robust civilian nuclear
programs have increasingly looked to diversify their economies through nuclear power.
Other than safety risks commonly linked with the development of civilian nuclear programs,
other countries may also fear that such programs will be used in the future to develop
nuclear weapons. The latter concern is most commonly discussed in reference to Iran
potentially developing nuclear weaponsregardless of that country's repeated assertions
that its nuclear program is for peaceful purposesand how such a development could affect
regional security dynamics in the Middle East.

Disarmament: Not enough action toward nuclear disarmament by NWS

The five recognized nuclear weapon states have committed under the Nuclear
Nonproliferation Treaty (NPT) to pursue in good faith nuclear disarmament and a
treaty on general and complete disarmament. The NPT does not specify an end-date for
achieving disarmament. Although almost everyone believes that complete disarmament or
even nuclear disarmament remains a distant goal, the record of NWS on pursuing nuclear
disarmament is mixed.

At the 1995 NPT Review Conference, in return for agreement from the nonnuclear weapon
states to extend the treaty indefinitely, the United States and other nuclear powers
reaffirmed their commitment to nuclear disarmament. But despite major cuts in the
numbers of U.S. and Russian operationally deployed nuclear warheads, both countries still
retain massive stockpiles that account for more than 90 percent of the world's nuclear
weapons. Many NNWS have repeatedly called for the NWS to make even deeper reductions
in their arsenals and argued that the NWS foot-dragging is undermining the legitimacy of
the NPT. This perceived failure to make progress toward disarmament has been one factor
in the unwillingness of many UN members to support sanctions against Iran for NPT
violations, which many developing countries see as a justifiableeven admirableresponse
to the hypocrisy of the nuclear weapon states. In 2010, the U.S. government revealed it
had 5,113 warheads in its nuclear arsenal.

Recently, the NWS have recommitted themselves to reductions in nuclear arms, particularly
in the New START Treaty and the outcome document of the 2010 NPT Review
Conference. There are also reports that, due to heightened fiscal pressure, the Obama
 administration is considering deep cuts to the U.S. nuclear arsenal. However, specific
estimates for the cuts vary, and it is unclear if reducing the U.S. nuclear arsenal would be
a politically viable option.

Options for Strengthening the Nonproliferation Regime

Introduction

Recent trends have brought the nuclear nonproliferation regime to a moment of grave crisis.
The regime is under siege from both rogue states and nonstate actors, and its core bargain
between the nuclear haves and have-nots continues to erode. Bolstering international
restraints on the world's deadliest weapons will require the United States and its
international partners to adopt realistic, concrete steps to strengthen and close gaps in
existing treaty regimes, institutions, and partnerships.

These recommendations reflect the views of Stewart M. Patrick, director of the

program on international institutions and global governance.

Increasing the IAEA budget and reforming the safeguards,

security, and personnel systems
The International Atomic Energy Agency (IAEA) is the world's technical agency in
charge of ensuring that countries maintain safeguards on their peaceful nuclear programs.
Safeguards help deter a country from diverting nuclear technology and materials from
peaceful to military programs. The major concern is that safeguards capabilities have not
kept up with the increased use of nuclear power and the projected expansion of nuclear
power to many counties. In the words of the Bush administration's head of the National
Nuclear Security Administration, "safeguards equipment is outdated and personnel
preparedness declining as the agency failed to replace retiring experts with new hires."

The IAEA provides services on improving nuclear security in order to prevent nuclear and
radiological materials from falling into the hands of terrorists. In 2008, the Eminent
Persons Commission advised the IAEA director general that the agency needs to
substantially increase its budget for safeguards and security work. Unfortunately, this
financial support has not been forthcoming. The IAEA, however, needs member states to
 commit to place the agency on a sustainable funding path. It also needs to reform its
personnel rules to allow experts to stay in one type of job for longer than seven years and for
highly qualified senior personnel to stay employed beyond the mandatory retirement age of
sixty-two.The recent release of an IAEA report discussing Iran's alleged covert nuclear
weapons activity presents more evidence regarding the need to ensure the funding needs
of the IAEA are satisfied.

Increasing national and international efforts to bring the

Comprehensive Test Ban Treaty into force
Increasing national and international efforts to bring the Comprehensive Nuclear
Test Ban Treaty into force and boost funding to the CTBT Preparatory Commission is
required in order to continue to improve the international monitoring system. The CTBT is
specifically linked to the overall nonproliferation regime, and entry into force would
strengthen the norm against proliferation of nuclear weapons and make it more difficult for
states to have confidence that nuclear weapons would work without testing. For the CTBT to
enter into force, forty-four nuclear-capable states must ratify it. If the United States ratifies,
it can then apply more leverage to the remaining holdout states to do the same.

Nonratifying states include China, Egypt, India, Indonesia, Iran, Israel, North Korea,
Pakistan, and the United States. In a February 2010 speech, Vice President Biden reaffirmed
U.S. commitment to ratify the treaty. The United States will need allied states to reach out
and apply diplomatic pressure to holdout states to help secure entry into force. To ensure
the requisite technical support for the treaty, the United States and its allies need to provide
enough funding and other technical resources to the CTBT Organization (CTBTO) and
Preparatory Commission. Such support will improve the global monitoring system that is
designed to detect relatively low yield nuclear tests throughout the world.

Negotiating new, emboldened nuclear arms control treaties

The United States and Russia replaced the Strategic Arms Reduction Treaty (START) with
the New START Treaty. Successful negotiation and ratification of this agreement
improved the overall condition of U.S.-Russian relations, possibly making it easier to work
together on other multilateral efforts (such as ensuring the peaceful use of nuclear energy,
preventing further proliferation to additional states, and implementing global best security
practices on nuclear weapons and weapons-usable nuclear materials). The New START
 agreement preserves many of the best elements of its predecessor, such as information
exchange, predictability, and permanence in reductions, verification, and transparency. But
the United States and Russia must also look ahead to deeper nuclear reductions and
focus on broader issues of contention, including missile defense and advanced conventional
weapons.

In the longer term, the United States and its international partners should consider the
following steps:

Reforming and strengthening the NPT by creating automatic or

binding UNSC mechanisms.
Rights in the NPT come with responsibilities. Nuclear weapon states have the responsibility
to ensure access to peaceful nuclear technologies, and the recipient states need to show that
they can manage nuclear power safely and securely. Although Iran has cited its inalienable
right under the NPT to access peaceful nuclear technologies, including dual-use enrichment
technologies, it has not met its responsibility to ensure adequate safeguards on its peaceful
nuclear program. It has also not provided enough transparency into suspected nuclear
weapons development activities to assure the world that it is meeting its responsibility to
not acquire nuclear weapons. North Korea left the NPT under the Article X supreme
national interests clause, but it did so while under suspicion of developing nuclear weapons.
Moreover, it never placed its nuclear program under safeguards.

Although amending the NPT is admittedly a difficult task, states should commit to
strengthening the interpretation and application of the treaty's rules. In particular, the UN
Security Council should require that any state in violation of its safeguards agreement
should suspend the suspect activity until the violation is resolved. The Security Council
should also require any state in violation of its safeguards agreement that wants to leave the
NPT to return nuclear technologies and materials obtained while a member to countries of
origin. In addition, the Security Council should call for a special inspection in any country
that has violated its safeguards commitment and is under suspicion of having a nuclear
weapons program. Nuclear weapon states have a special responsibility to reaffirm their
commitment to pursue nuclear disarmament. They need to demonstrate what concrete
actions they have taken and intend to take on the disarmament front. The 2010 NPT Review
Conference provided an opportunity for treaty signatories to recommit themselves to a
 world free of nuclear weapons; however, U.S. efforts to include language on stronger
verification measures in the final document failed.

Determining whether to institutionalize PSI.

In his April 2009 Prague speech, President Obama advocated that the world
should "come together to turn efforts such as the Proliferation Security
Initiative...into a durable institution." The purported benefits of creating a
formal institution out of PSI are still being debated. For example, turning the PSI
from an informal cooperation agreement into an organization with a secretariat
and a budget has the potential to increase its resource endowment and expand
its reach. Institutionalizing the initiative may also help clarify commitments and
increase operational transparency, making it easier to evaluate performance
and measure progress. Bringing the PSI under UN aegis, some analysts have
argued, could boost its international legitimacy and appeal to China, India, and
Middle Eastern states, whose cooperation in policing the nuclear trade market
remains important. One way to put PSI on a firmer institutional footing without
folding into an explicitly formalized institution would be to strengthen its legal
foundation. This would place interdiction on grounds consistent with
international law.

Creating a global alliance against nuclear terrorism.

The terrorist attacks of September 11, 2001, while nonnuclear, renewed fears of catastrophic
nuclear terrorism. In response, the United States and partner countries have revived or
initiated international efforts to counter this threat. In particular, the Group of Eight (G8)
countries in 2002 launched the Global Partnership against the Spread of
Weapons and Materials of Mass Destruction, in which the United States
committed to spend at least $10 billion over ten years, and other partners pledged to match
that sum. In 2004, the United States formed the Global Threat Reduction
Initiative, which was an umbrella program including several programs to secure and
reduce fissile materials as well as radioactive materials. Russia is a major partner in this
initiative. In 2006, Russia and the United States joined forces again when then president
Bush and then Russian president Putin began the Global Initiative to Combat
Nuclear Terrorism, which as of early 2010 had eighty-two countries voluntarily taking
 part in sharing intelligence on nuclear terrorist threats as well as pledging to work toward
better security practices over nuclear and other radioactive materials.

These programs and initiatives have achieved significant results, but more committed and
coordinated global efforts are needed. The challenge for the new U.S. administration is to
urge countries to meet their financial and resource commitments pledged under these
programs and to increase funding and personnel to ensure that President Obama's goal of
securing all vulnerable nuclear material can be achieved by 2014. The institutionalization of
biennial global nuclear security summitswith the next summit planned for 2014 in the
Netherlandsis a solid step in the right direction.

Developing a system of layered nuclear fuel assurance.

The spread of nuclear fuelmaking facilities under a single state's control can increase the
risk of diversion of peaceful nuclear technologies into weapons programs. Issuing an edict to
prohibit this activity runs into the barriers of state sovereignty and the "inalienable right" to
pursue peaceful nuclear programs. States have built fuelmaking facilities for reasons of
satisfying national pride, developing a latent weapons capability, and trying to make a
profit. To take away or at least to reduce the economic rationale for these facilities, several
fuel assurance programs have been proposed. Many of these proposals were studied decades
ago. Concerns about proliferation in response to Iran's nuclear program have prompted a
dusting off of these proposals or a dressing up with more incentives. The important point is
that the nuclear fuel market has worked effectively and there is no reason to expect it to fail
in the foreseeable future especially with the expansion plans of the established nuclear fuel
producers.

To further strengthen nonproliferation, it makes sense to offer a layered system of fuel

assurances that would be available to any country that is in compliance with its safeguards
commitments. The first layer would be the existing market in which a handful of major
producers have been meeting customers' needs. The second layer would consist of political
commitments and insurance policies that would form in effect a virtual fuel bank to back up
the existing market. The final layer would consist of an actual fuel bank containing sufficient
fuel or low-enriched uranium that can be readily converted to fuel. Such a bank should
contain at least enough fuel or enriched uranium to supply the needs of a few large power
reactors over a two to three year period. Even with this layered approach, certain countries
may still decide to pursue new fuelmaking endeavors, but a robust layered fuel system will
at least expose that these countries are doing such activities for other than economic
reasons.