3 Foreign Hotspots that Will Test Obama’s Mettle

The “four more years” now stretching out in front of our forty-fourth president will be dense with challenges overseas, and meeting them will be essential if America is to regain a competitiveness already slipping.

It would be hard to list all the policy questions now facing the White House—some longstanding but neglected, some new. Washington has plainly overestimated the benefits of improved ties with India, for instance: Delhi is not going to be our “balancing” ally against China and never entertained such a role. Pakistan: What to do about a friend who is not really a friend?

Here are three of Obama’s most important overseas chores. Each is large and has the potential to affect America’s global standing, its credibility, and its economic health. All require new thinking and none can be ignored during Obama’s second term.

CHINA
Obama’s China policy to date has been so predictable as to be boring—except that it bears risk. He has stood in the same tradition as every president since Nixon, maintaining relations that are made partly of economic interdependence and partly of guarded competitiveness. Ties between Beijing and Washington are destined to be the world’s single most important bilateral relationship of this century. They need to be rebalanced.

Obama has made three well-deserved complaints to the World Trade Organization against China for unfair trade practices.  Romney had threatened to declare China a currency manipulator had he been elected. And the constant drumbeat of political ads and media stories about outsourcing—as if China was forcing American companies to produce their products there—has made d

On the security side, it is plain now that the military-industrial complexes in both countries are holding policy hostage so that they get their outsized budgets and their high-tech jets and naval vessels, and also preserve their “roles” and “missions.” This is yesterday’s stance. Taiwan is no longer the issue it once was, and there is ample room for a less competitive security relationship. Washington’s current strategy—a generous mix of redeployed weapons, new troops assigned to the Pacific, and joint training exercises from Australia to Thailand to Guam—does not reduce tensions in the region; it raises them.

On the economic side, the yuan has appreciated by a third since 2004, which is not bad for a developing nation dependent upon exports. Equally, Washington has to face the music as to the state’s role in the economy. There are dense networks of ties between the leadership and China’s 145,000—count them—state-owned enterprises. Unwinding these remnants of the Communist era is going to take a long, long time.

In the meantime, America needs to grow to compete with these subsidized behemoths. Two years ago, when U.S. exports were about $140 million a month, Obama pledged to double them by 2015. He is on track — they are now nearly $200 million a month. But still the U.S. runs a deficit. What does this say? We are growing, but China and the rest of Asia are growing faster. The job is to make America a 21st century competitor.

EGYPT
Last summer, Secretary of State Hillary Clinton, who seems prone to miscalculations, arrived in Egypt and lectured the Egyptians about the quality of their nascent democracy — a mistake, given Washington’s enduring friendships with Sadat and Mubarak. Clinton got shoes and tomatoes thrown at her in response, and she deserved them. That speech, like the U.S. security policy in Asia, was very yesterday.

Not long ago, many of us were in a near panic as the Muslim Brotherhood, within which there are dozens of political tendencies, accumulated power and then won national elections. Now, Morsi’s government has just negotiated a constitution that represents an historic first. “Islamic democracy” has long been considered an impossibility by many Middle East specialists. Egypt’s new constitution—assuming it becomes law—will prove them wrong, and that will open Obama to a brand new ballgame in the Middle East.

It is time to set aside all thoughts of “managing” the Middle East and do our best to encourage its people to find their own paths to democracy. Egypt’s new president, Mohamed Morsi, was explicit about this new direction in American policy in the Middle East when he went to the U.S. in September. He called it essential.

IRAN
Finally, we come to Iran—in some ways the most pressing of the Obama administration’s tasks. There is little question that Western sanctions against Iran have been effective, and full credit to the president for pulling the West together on this policy. But what should be done now with this success? Several factors suggest that the time has come to negotiate.

First, there is the question of an attack by Israel, or by Israel backed by the U.S. At this point it is very unlikely. My sources in the intelligence community in Washington tell me that the CIA and Israeli intelligence stand strenuously against the pre-emptive strike favored by Israeli Prime Minister Benjamin Netanyahu.

“There’s very strong resistance across the board,” says one intelligence veteran, who cannot be named because of his position. Equally, the intel crowd discounts the threat of an attack by a nuclear-capable Iran. “The clerics are about survival, not suicide,” the intelligence source says. Finally, Iranian President Mahmoud Ahmadinejad is politically down if not entirely out, and there are national elections due in Iran early next year. Ahmadinejad is almost certainly a goner.

All of this gives Obama a window, through which stands a shiny negotiating table. To sit at it, the job is to determine just what is acceptable by way of the Iranians and their nuclear plans. A grand bargain—a comprehensive agreement altering relations—seems out of the question at this point. But what about a new trajectory, one that takes the Iran question beyond an anxious deadlock? Obama, with the election behind him, has to worry a little less about alienating Netanyahu. The question now: What kind of nuclear arrangement can the U.S. live with? Japan is what is known as a virtual nuclear power: It could have a bomb if it wanted one but sees no need. Could we contemplate a virtually nuclear Iran? If we put some carrot into the bargain along with the stick, the thought is not out of the question.