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Center for Security Studies
STRATEGIC
TRENDS 2019
Key Developments in Global Affairs
STRATEGIC TRENDS 2019 is also electronically available at: www.css.ethz.ch/publications/strategic-trends Editors STRATEGIC TRENDS 2019: Jack Thompson, Oliver Thränert Series Editor STRATEGIC TRENDS: Andreas Wenger Contact: Center for Security Studies ETH Zurich Haldeneggsteig 4, IFW CH-8092 Zurich Switzerland This publication covers events up to 1 March 2019. © 2019, Center for Security Studies, ETH Zurich Images © by Reuters ISSN 1664-0667 ISBN 978-3-905696-66-0
Center for Security Studies
STRATEGIC
TRENDS 2019
Key Developments in Global Affairs
Editors: Jack Thompson, Oliver Thränert
Series Editor: Andreas Wenger
Authors: Michael Haas, Jeronim Perović,
Jack Thompson, Lisa Watanabe
CSS
ETH Zurich
Contents
Acknowledgments.............................................................................................................5
Introduction.........................................................................................................................7
CHAPTER 1
Trump and the Weaponization of International Trade.......................................... 11
Jack Thompson
CHAPTER 2
The Eclipse of Western Military-Technological Superiority.................................. 27
Michael Haas
CHAPTER 3
Russia’s Eurasian Strategy............................................................................................. 45
Jeronim Perović
CHAPTER 4
Russia’s Renaissance in the Arab World..................................................................... 65
Lisa Watanabe
3Acknowledgments
Strategic Trends is an annual publication of the Center for Security Studies (CSS)
at ETH Zurich. It offers a concise analysis of major developments in world affairs,
with a focus on international security. Providing interpretation of key trends
rather than a comprehensive survey of events, Strategic Trends targets a broad
audience, ranging from policymakers to the media, academics, and the general
public. Strategic Trends 2019 is the tenth issue in the series.
The publication series is available for download at the website of the Center for
Security Studies (www.css.ethz.ch/publikationen/strategic-trends.html).
We would like to thank this year’s authors, Jack Thompson, Michael Haas, Je-
ronim Perović, and Lisa Watanabe. In addition, a large part of the burden fell on
the CSS’ Miriam Dahinden-Ganzoni (graphic design and layout) and
Linda Samsinger (data collection). They were creative, enthusiastic, and
reliable and made our job much easier. Niklas Masuhr and Annabelle Vuille
helped us avoid numerous minor errors with rock-solid proofreading. Finally,
Christoph Elhardt and the CSS communications team offered invaluable
support throughout the publication process.
We hope you enjoy reading Strategic Trends 2019. Should you have any feedback,
please do not hesitate to contact us at john.thompson@sipo.gess.ethz.ch and
oliver.thraenert@sipo.gess.ethz.ch.
With warm regards from Zurich,
Jack Thompson Oliver Thränert
Global Security Team Head Think Tank Head at the CSS
5Toward a Less Liberal World Order
2019 is shaping up to be another challenging year in world politics. Policymak-
ers on both sides of the Atlantic confront a landscape that is more complicated,
and less conducive to Western interests, than at any point since the end of
the Cold War. Geopolitical competition between the great powers has become
entrenched as the most important feature of the international system. The so-
called liberal world order – the institutions, alliances, economic arrangements,
and democratic values that provided the foundation for the post-World War II
system – is under threat on all fronts.
The North Atlantic Treaty Organization (NATO), the foundation of transat-
lantic security policy for the last 70 years, is wobbling, as the United States
demands more from other member states, sends mixed signals about its willing-
ness to defend allies in the event of war with Russia, and withdraws unilaterally
from crucial agreements such as the Iran nuclear deal (the Joint Comprehen-
sive Plan of Action, or JCPOA). Meanwhile, as European officials and analysts
become more pessimistic about the prospects for continued partnership with
Washington, they have begun to discuss the possibility of pursuing a more inde-
pendent foreign and security policy, with concepts such as “strategic autonomy”
and Permanent Structured Cooperation (PESCO) increasingly driving policy
discussions.
Long-term cultural, economic, and political problems plague many Western
countries, and free market democracy is no longer the undisputed political ide-
al. After two years, there is no longer any doubt that Donald Trump is reshaping
7ST RAT EG I C T R EN DS 2 0 1 9 the domestic and foreign policies of the United States in unprecedented ways, and, in doing so, is contributing to a partial deglobalization of the international order. Meanwhile, the European Union confronts a multitude of challenges, including the emergence of so-called illiberal democracies among its member states, the shortcomings of the common currency, the unresolved status of Brex- it, and the challenge of large-scale immigration. Autocratic regimes are seeking to fill the vacuum. China is posing as a potential leader on issues such as devel- opment, international trade, and climate change – all while seeking to reshape the security architecture in East Asia – and Russia has assumed a more promi- nent military and diplomatic role in hotspots, notably Ukraine and Syria, where the West has failed to develop effective strategies. Technology and information are rapidly changing the contours of global poli- tics, not necessarily for the better. Western policymakers are struggling to cope with the ways in which social media is empowering radical political actors, as well as offering a new tool for adversaries to sow discord and undermine elec- tions. To be sure, the West is active in the cyber realm. However, it has yet to formulate a coherent strategy for responding to countries such as China that have mounted aggressive campaigns to steal sensitive economic, political, or military information. In the burgeoning, and potentially crucial, field of artifi- cial intelligence, most European countries are still debating whether to formu- late official AI strategies. Meanwhile, a competition is emerging between China and the United States, the only nations with the resources to compile the vast amounts of data necessary for machine learning and to put it to use on a large scale. The Strategic Trends 2019 contributions reflect on these themes. In the first chapter, Jack Thompson considers the consequences of the Trump administra- tion’s new approach to trade policy. He notes that the current system is, in some respects, unfair to the United States and harmful to millions of Americans. He also observes that the United States is powerful enough to extract trade conces- sions from all of its trading partners, and that there may be some short-term advantages in following such a course of action. However, he argues, the long- term consequences of the administration’s attempt to, in effect, partially de-glo- balize the international economy will be harmful. It will encourage other coun- tries to pursue zero-sum trade policies, undermine the multilateral framework – especially the World Trade Organization (WTO) – which was painstakingly 8
I N T R O D U C T I O N
constructed over the course of decades, and make international trade less about
rules and efficiency, and more about power. None of this will make the United
States or its allies more prosperous.
Dynamic economies have been a key ingredient of Western military dominance,
but that, too, is threatened. In the second chapter, Michael Haas examines
the advantage Western nations have enjoyed in military technology since the
1970s. He argues that this state of affairs is rapidly changing, as competitors em-
brace new technologies and duplicate or offset Western strengths – a problem
to which there are no easy solutions. In his view, Western policymakers should
act on several fronts to slow the process, while also adapting to a world in which
they no longer enjoy substantial military-technological superiority.
One key competitor is Russia – the focus of this year’s other contributions.
In Chapter Three, Jeronim Perović considers the emergence of the Eurasian
Economic Union (EAEU), a surprisingly robust multilateral organization of
post-Soviet states, which is not a Russian puppet, and which cooperates in eco-
nomic, political, and military matters. He argues that leadership of the EAEU
is a cornerstone of Russia’s strategy to reposition itself as a Central Eurasia great
power. This does not signify a break with the West, but rather an attempt to gain
more leverage in its dealings with the United States and Europe.
Finally, in Chapter Four, Lisa Watanabe looks at Russia’s re-emergence as a
power broker in the Middle East and North Africa, with a focus on countries
of particular interest to Europe when it comes to security issues, economic ties,
and immigration. Partly by reviving ties from the Soviet era, and by shrewdly
embracing a pragmatic, opportunistic approach, Moscow is bolstering its influ-
ence in Syria, Egypt, Libya, and Algeria. With the possible exception of Syria,
Russia is not displacing the United States or European powers. Rather, by in-
creasing its sway in a key region, Russia’s approach to the Arab world is another
way of solidifying its status as a great power.
9CHAPTER 1
Trump and the Weaponization
of International Trade
Jack Thompson
The Trump administration’s trade policies are causing more problems than
they solve. They treat friends like adversaries, thereby weakening alliances,
and are further complicating the relationship with China. By discarding
the current multilateral system in favor of a bilateral approach, the Trump
administration is encouraging other countries to view trade negotiations as
a zero-sum, power-driven process. In an era of renewed geopolitical compe-
tition, this is eroding the dividing line between economic and security issues
and, more broadly, undermining the foundations of the liberal world order.
US President Donald Trump and European Commission President Jean-Claude Juncker discuss
trade at the White House in Washington, DC, July 25, 2018. Kevin Lamarque / Reuters
11ST RAT EG I C T R EN DS 2 0 1 9
The nature of the country’s engage- overall net growth because of trade
ment with the rest of the world has liberalization – millions benefited
emerged as a key cleavage in US po- from these changes, and a majority
litical culture, and no public figure of voters view globalization in most-
has done more to facilitate this phe- ly positive terms1 – but many Amer-
nomenon than Donald Trump. When icans saw their lives change for the
Trump campaigned for president in worse. The consequences for these
2016, he blamed international trade people have been stark: they have en-
for some of the nation’s biggest prob- dured falling income levels or long-
lems. He argued that previous admin- term unemployment, decreased life
istrations had betrayed Americans by expectancies, and hometowns that
“aggressively” pursuing “a policy of have, in some cases literally, crumbled
globalization, moving our jobs, our around them. Not surprisingly, a con-
wealth and our factories to Mexico and siderable percentage of this cohort has
overseas.” In the process, they had “left been politically radicalized.
millions of our workers with nothing
but poverty and heartache.” In order Trump’s trade agenda is designed,
to “Make America Great Again,” he first and foremost, to appeal to these
promised to revamp US trade policy, people, who understand that global-
as part of a broader drive to extract ization has harmed them. In some
concessions from allies and trading respects, he has succeeded. At home,
partners. In the process, he is contrib- Trump has cemented the bond with
uting to the partial deglobalization of his political base and earned the ap-
the international system. proval, or at least acquiescence, of
most Republicans – more than 80
There is a degree of truth in Trump’s percent of whom approve of his job
critique of globalization. Economists performance. Abroad, he has forced,
debate the scale of the problem, but in particular, Europe and China to
major trade deals such as the North reopen existing arrangements and
American Free Trade Agreement to look for ways to avoid tariffs and
(NAFTA), and the impact on the US other barriers to the US market. His
manufacturing sector of China’s in- approach has also reinforced the pres-
tegration into the international eco- ident’s message that policies should be
nomic system – the so-called China based on a dispassionate assessment
Shock – have had a significant impact of US interests, rather than allegedly
on key sections of the economy. The sentimental concerns about interna-
United States probably experienced tional stability, the maintenance of
12T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
longstanding alliances, or the health other trading partners, the president
of the liberal world order (LWO). has instigated a trade war, and done
so bilaterally. This is jeopardizing the
In spite of these short-term successes, world’s most important economic
Trump’s trade policies are counterpro- relationship and destabilizing the
ductive. The president is the first post- international order. Inevitably, trade
1945 US leader to treat allies as if they tensions are inflaming other areas of
are competitors. He has directly tied disagreement – a worrisome prospect
the status of relationships to the out- when it comes to the world’s most
come of trade negotiations, accusing powerful nations.
key partners of taking advantage of the
United States. The clear message from The foundations of the complex, in-
Washington – that friends will need to terdependent international system,
pay more to maintain good relations constructed over decades of pains-
– strikes many as little more than ex- taking negotiations, are in danger of
tortion, and some European policy- splintering under the pressure of US
makers believe he seeks the dissolution hostility. At a time when increased
of the European Union. This misreads collaboration and more intelligent
Trump. The European Union’s de- policymaking are urgently needed
struction is not a top-tier objective, to address challenges such as global
but the president clearly dislikes Brus- warming and the recrudescence of
sels and, when given the opportuni- extremist and illiberal political move-
ty, does not hesitate to undermine it. ments, Washington has embraced
Nonetheless, European officials are unilateralism and nationalism. This is
beginning to make long-term plans undermining the LWO – which was
for the possibility of an adversarial re- already under threat – and making
lationship with the United States. the world a more dangerous place.
The administration’s China strategy Trump’s Worldview and
is also short-sighted. Though there Lighthizerism
is widespread acknowledgement on The current spate of renewed geopo-
both sides of the Atlantic that Beijing litical competition is reminiscent of
should be confronted about its protec- a pre-1945, more anarchic era of in-
tionist trade policies, the president is terstate relations. Similarly, the trade
exacerbating the situation. Instead of policies of the United States and Chi-
a careful approach combining sticks na call to mind a troubling phase of
with carrots, and in concert with international history – the heyday of
13ST RAT EG I C T R EN DS 2 0 1 9
mercantilism. From roughly the 16th a 1990 interview, again amidst spec-
to 18th centuries, European powers ulation about a run for higher office,
sought to maximize their exports as a Trump complained that the United
way to bolster national power, always States was getting “ripped off so badly
at the expense of rivals. Policymakers by our so-called allies,” such as Japan
viewed economics and geopolitics as and West Germany, and vowed that
two sides of the same coin, and mer- as president he would “throw a tax on
cantilist thinking fueled a number of every Mercedes-Benz rolling into this
conflicts. country and on all Japanese products,
and we’d have wonderful allies again.”2
Aspects of the mercantilist worldview
resonate with Trump. He has long These populist forays served as dry
viewed the LWO – the alliances, trad- runs for Trump’s 2016 campaign. He
ing and financial system, international is hardly the only politician to exploit
institutions, and commitment to liber- voter anger about the vicissitudes of
al values that the United States led the international politics, but he is the
way in promoting after World War II – first to reach the White House with
as detrimental to US interests. During an explicitly nationalistic trade and
the late 1980s and into the 1990s, national security agenda. In doing so,
Trump’s anger focused on Japan and he has revitalized a strand of thinking
Germany. He accused Tokyo of unfair- that has long lurked on the fringes of
ly limiting access to its markets even as conservative political culture – one
it depended on the protection of a for- that combines suspicion of entangle-
mal security alliance with Washington. ment in foreign problems with fears
In a 1987 advertisement that appeared that the country’s growing diversity
in several major newspapers, Trump and embrace of multiculturalism are
accused “Japan and other nations” of eroding the white, Christian values
“laughing at America’s politicians as we upon which it was allegedly founded.
protect ships we don’t own, carrying oil From this perspective, partial disen-
we don’t need, destined for allies who gagement from the international sys-
won’t help.” Trump’s letter was designed tem can appear attractive.
to harness the widespread perception
that feckless politicians were ignoring Several senior officials have played a
the threat allegedly posed by Japan’s role in implementing the president’s
economic clout. The advert appeared agenda. The most important has been
just as Trump was floating the possi- US Trade Representative (USTR)
bility of a run for president in 1988. In Robert Lighthizer, a trade lawyer
14T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
Top 10 Countries Affected by Chinese Non-tariff Trade Measures*
As of 2018
United States 26
Japan 22
European Union 19
South Korea 14
Taiwan 9
India 8
Thailand 6
Singapore 4
Malaysia 3
Russian Federation 2
0 5 10 15 20 25 30
* Non-tariff include barriers such as anti-dumping, countervailing, export subsidies, quantitative restrictions, safeguards, sanitary
and phytosanitary measures, special safeguards, state trading enterprises, tariff-rate quotas, and technical barriers to trade.
Source: WTO
and Republican operative. In theory, inaccurate – Washington brings more
Lighthizer favors trade liberalization, cases to the WTO than any other
but he is skeptical of multilateralism. country, and wins almost all of them
Lighthizer and other administration – but it has contributed to the ad-
officials are especially disdainful of the ministration’s determination to force
World Trade Organization (WTO). countries into bilateral negotiations.3
They contend the organization, which
admitted China in 2001 as a develop- Lighthizer argues that multilateral
ing country – thereby placing fewer policies have led to the accumulation
restrictions on Beijing’s protectionist of a massive US trade deficit – 566
policies – puts the United States at a billion USD in 2017. Though most
disadvantage when it comes to dispute economists view the trade deficit
resolution. In particular, they argue as benign, or at least not necessari-
that the WTO too often rules against ly the result of unfair policies, it has
Washington’s use of anti-dumping and emerged as a crucial consideration in
anti-subsidy measures. Trump argued shaping administration policy. For
in a 2017 interview that the WTO had Trump and his advisors, a few trading
“taken advantage of this country like partners are of special concern. The
you wouldn’t believe. We lose…almost deficits with China and the European
all of the lawsuits.” This perspective is Union, which topped 300 billion and
15ST RAT EG I C T R EN DS 2 0 1 9
139 billion USD, respectively, stand companies must operate joint, 50
out. Mexico, Germany, Japan, South percent ventures with local partners.
Korea, and Canada also enjoy surplus- In addition, Beijing often mandates
es with the United States.4 Not coin- technology transfers to Chinese firms
cidentally, the Trump administration in return for market access and is no-
has targeted each of these countries for torious for failing to protect foreign
coercive trade measures. intellectual property.6 The Great Fire-
wall places significant restrictions on
In lieu of multilateral negotiations, US social media and tech companies,
Lighthizer prefers bilateral formats, such as Facebook and Google. This
which allow the United States to more places US firms at a disadvantage, and
effectively wield its massive economic, has raised concerns about democrat-
military, and political power. Trump ic norms – both firms are reportedly
agrees. He told members of Congress developing censored versions of their
that withdrawing from the Trans- operations for use in China.
Pacific Partnership (TPP) agreement
paved “the way to new one-on-one The antidote to at least some of these
trade deals that protect and defend problems, suggests Lighthizer, is the
the American worker.”5 Lighthizer’s use of punitive tariffs, which will
approach dovetails with Trump’s ten- hopefully force Beijing to reform its
dency to view international politics as policies. Meanwhile, he has been en-
a zero-sum game. From the president’s couraging other trading partners to
perspective, freer trade does not bene- embrace so-called voluntary export
fit everyone – there is always a winner restraints. These form part of the re-
and a loser. negotiated version of NAFTA – the
pending United States–Mexico–Can-
The USTR views China as the biggest ada Agreement – and appear to be a
threat to US interests. Lighthizer ar- goal of US negotiations with Europe.7
gues that the Chinese model of state
capitalism has allowed Beijing to un- If Lighthizer has formulated many
dercut the US edge in technology technical aspects of administration
through the use of unfair practices. To policy, the economist Peter Navarro,
an extent, he has a point. In addition who serves as Director of the Office
to Beijing’s pervasive espionage activi- of Trade and Manufacturing Policy,
ties, there are extensive restrictions on has served as Trump’s backbone: every
foreign companies operating in China. time his colleagues try to dilute a new
In the automotive industry, foreign trade initiative, Navarro reminds the
16T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
Tariff Levels: US and Key Trading Partners
Applied average on all imports as of 2017
India 13.8%
South Korea 13.7%
Brazil 13.4%
China 9.8%
Mexico 6.9%
Switzerland 6.4%
European Union 5.1%
Canada 4.0%
Japan 4.0%
United States 3.4%
0 3 6 9 12 15
Source: WTO
president of his campaign promises. against starting a trade war with Bei-
Like Lighthizer, Navarro views the jing. Gradually, however, these men
trade deficit as a pressing problem and lost influence or left the administra-
considers China to be the foremost tion. The result has been a concerted
threat to US economic interests. He effort in recent months to transform
has also urged the president to with- Trump’s extremist rhetoric into con-
draw from NAFTA and argued that crete policies.
German and Japanese policies are un-
fair. Though his impact waned during In mid-2018, the administration
the first year of Trump’s tenure, Navar- imposed so-called Section 232 tar-
ro has regained influence and played iffs – which address alleged threats to
a key role in recent internal debates national security – on 25 percent of
about trade policy.8 steel imports from all countries except
Argentina, Brazil, and South Korea,
Trump’s Trade Strategy which agreed to voluntary export re-
Initially, not all of Trump’s advisors straints, and Australia. It also imposed
favored an aggressive trade policy. A 10 percent tariffs on aluminum im-
group of officials persuaded the pres- ports from all countries except Argen-
ident not to withdraw from NAFTA – tina, which agreed to voluntary export
though they failed to prevent his with- restraints, and Australia. Furthermore,
drawal from the TPP – and advised following a so-called Section 301
17ST RAT EG I C T R EN DS 2 0 1 9
investigation – designed to eliminate The administration has yet to extract
unfair foreign trade practices – the ad- significant concessions from China,
ministration imposed 25 percent tariffs but there is reason to believe that its
on more than 50 billion USD of Chi- approach will yield results, at least in
nese goods. When the Chinese retali- the short term. Most analysts believe
ated in kind, the president imposed 10 that, though both countries will suf-
percent tariffs on another 200 billion fer as a result of the current trade war,
USD of Chinese goods, with a threat China has less leverage because it ex-
to raise the tariff levels to 25 percent ports more to the United States than
on January 1, 2019, though this threat vice versa, and that it has less tolerance
was later suspended.9 for economic pain. China’s growth
rate, which has been high since the
At least in the short term, the specter early 1990s and which has been a cor-
of higher tariffs has borne fruit. Can- nerstone of the Chinese Communist
ada and Mexico agreed to renegotiate Party’s monopoly on power, appears
NAFTA – its successor, the United to be slowing as its economy matures.
States–Mexico–Canada Agreement At the time of publication, Washing-
(USMCA), has yet to be ratified – and, ton and Beijing were in the midst of
though most analysts have concluded intense negotiations, with indications
that the agreement does not offer sig- that China would make at least mod-
nificant concessions, it does include est concessions.12
voluntary export restraints for Cana-
da and Mexico in areas such as auto- The administration is designing other
mobiles and dairy products.10 Canada trade deals in order to intensify the
and Mexico are also still subject to tar- pressure on China. The TPP agree-
iffs on steel and aluminum. ment was designed to reinforce US
leadership in East Asia and to allow
In order to avoid the steel tariffs, Washington, if necessary, to more
South Korea agreed to amend the effectively counter Beijing’s growing
2012 United States-Korea Free Trade influence. However, it was also in-
Agreement (KORUS). The revised ver- tended to encourage Chinese reform,
sion of the deal includes modest con- and even to potentially permit Chi-
cessions that should make it slightly nese membership. Trump’s China
easier for the United States to sell cars policy is much different. The USM-
in South Korea, and more difficult for CA makes it difficult for Canada and
South Korean companies to sell trucks Mexico to negotiate deals with gov-
in the United States.11 ernments that intervene extensively
18T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
in their own economies, prevents Trade and Geopolitics: China
state-owned enterprises from taking Trump’s presidential campaign and
advantage of lower tariffs, and forbids early months in office offered con-
member states from participating in flicting indications about his inten-
currency manipulation – all provi- tions toward China. On the stump,
sions aimed at China. The adminis- he vowed to take a tougher stance
tration views the USMCA as a model, than previous presidents. He also sur-
and is currently seeking bilateral trade rounded himself with advisors with
pacts with key countries in East Asia, anti-Chinese views, such as former
including Japan, the Philippines, and campaign manager and chief strate-
Vietnam.13 gist Steve Bannon, and Peter Navarro.
In a transparent effort to extract con-
The president initially indicated that cessions on trade, he questioned the
he opposed the Transatlantic Trade one China policy and, in an unprece-
and Investment Partnership (TTIP), dented move for a US leader, accepted
but in recent months the adminis- a phone call from Tsai Ing-wen, Pres-
tration has been negotiating with its ident of the Republic of China. The
European counterparts about a deal US 2017 National Security Strategy
that would include similar features. featured antagonistic language, ac-
At the same time, he has sought sig- cusing Beijing of wanting “to shape
nificant concessions from Brussels. In a world antithetical to U.S. values
addition to the steel and aluminum and interests.” In an October 2018
tariffs, which affect all European steel speech, Vice President Mike Pence
exports, he has threatened to impose painted the Chinese government as
25 percent tariffs on European (and harsh and repressive, accused it of
Japanese) automobiles. The president “economic aggression”, and claimed
has issued shifting demands – at times it was using stolen US technology
he has pressed European car compa- to turn “plowshares into swords on a
nies to expand their US operations, at massive scale.”
other times he has focused on lower
barriers for US agricultural products At the same time, Trump select-
– but been consistent in his threats to ed some advisors with less extreme
punish the Europeans for what he sees views, such as former National Eco-
as unfair trade practices. Though the nomic Council Director Gary Cohn.
tariffs would affect all European car The president’s November 2017 visit
imports, in Trump’s view, Germany is to Beijing was characterized by strong
the chief culprit. personal chemistry with Chinese
19ST RAT EG I C T R EN DS 2 0 1 9
President Xi Jinping, and he has tak- Chinese government has condemned
en some steps to assuage China. For the arrest of Meng and, in apparent
instance, despite complaints from the retaliation, arrested several Canadian
US Congress, he prevented the US citizens. The accusations against Meng
Department of Commerce from im- are part of a list of charges the US De-
posing sanctions on ZTE, which could partment of Justice has filed against
have led to bankruptcy for the promi- Huawei, in which the company is ac-
nent Chinese tech company. cused of economic espionage, fraud,
and obstruction of justice.
This inconsistent behavior, and high
staff turnover in the administration, The case against Huawei highlights
has confused Chinese policymakers. Washington’s concerns about China’s
Nevertheless, there is broad agreement vigorous espionage efforts. These in-
about the outlines of a potential deal. clude the aggressive recruitment of
The two sides are in negotiations that human sources and large-scale cyber
could: increase purchases of US goods theft. For instance, in December
and services, open access to China’s 2018 the US government indicted
markets, protect intellectual property, two Chinese nationals on charges of
and reduce subsidies to Chinese com- hacking activities that were alleged-
panies. One potential obstacle to any ly intended to steal data, intellectual
deal is Washington’s insistence that property, and confidential business
Beijing be able to provide credible and technological information from
verification.14 companies in many countries. The
accused worked for the Chinese com-
Yet any agreement could be overshad- pany Huaying Haitai Science and
owed by several areas in which trade Technology Development Company,
tensions are merging with political but are suspected of operating on be-
disagreements. At the request of the half of the Chinese Ministry of State
United States, Canada recently arrested Security’s Tianjin State Security Bu-
Meng Wanzhou, chief financial officer reau and of being part of the hacking
of Chinese tech giant Huawei, on sus- group often referred to as APT 10.15
picion of breaching US sanctions on
Iran. This goes beyond a simple legal Western unease about such efforts
dispute. Meng is the daughter of the is not new, but Meng’s arrest has
company’s founder and president, Ren focused attention on the extent to
Zhengfei, who has close ties to the Chi- which Chinese state and private sec-
nese political and military elite. The tor companies allegedly cooperate for
20T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
the purposes of industrial espionage. Even the prospect of a major trade
In recent months, a number of govern- deal appears to be of limited value
ments and corporations – reportedly when it comes to addressing structur-
partly in response to US urging – have al problems in the relationship. Many
ceased using Huawei technology, fear- Americans that have traditionally
ing for the integrity of their commu- worked for better relations with Bei-
nication networks. The US Congress jing, such as academics and corporate
has repeatedly raised concerns about leaders, have ceased doing so as they
Huawei and ZTE, and in August 2018 become more hawkish and more pes-
Trump signed a bill which included simistic about the prospects for peace-
some restrictions on government con- ful coexistence. Meanwhile, though
tracts with the two companies. Chinese analysts and policymakers
mostly wish to avoid confrontation
The friction over trade practices comes with the United States, President Xi
at a tense time in US-Chinese rela- has clearly lost patience with Deng
tions. In light of the shrinking imbal- Xiaoping’s advice to his countrymen
ance in military power between the to “hide your strength and bide your
two nations, Washington is anxious time.”
about President Xi’s centralization of
political power and formulation of a Trade and Geopolitics: Europe
more assertive foreign policy, especial- According to Trump, Europe’s short-
ly in the South China Sea. US officials comings on trade and NATO are in-
have responded to Beijing’s expansive terconnected. He argues that spend-
claims in the region, and its militariza- ing less on defense has given countries
tion of natural and man-made islands, such as Germany an unfair advantage
with increased overflights and freedom when it comes to fostering economic
of navigation exercises. The risk of an growth, and he has not hesitated to
accidental outbreak of hostilities is ris- treat US allies as competitors. For in-
ing – on a regular basis, Chinese planes stance, following disagreements with
and ships maneuver dangerously close French President Emmanuel Macron
to US craft traversing disputed waters. about NATO and a European army,
To make matters worse, US military he threatened to impose tariffs on
officials who would like to establish French wine imports.
reliable lines of communication with
their Chinese counterparts, partly in Germany has been the focus of much
order to be able to defuse such situa- of the president’s animus. The US am-
tions, have found it difficult to do so. bassador in Berlin, Richard Grenell,
21ST RAT EG I C T R EN DS 2 0 1 9
a Trump favorite, has taken a hard allies and adversaries initially shocked
line with his local counterparts and, European officials. For much of the
judging from the reaction of German post-1945 period, disagreements over
politicians and the media, further un- trade and other economic issues have
dermined US standing in the country. been a feature of the US-European
Trump’s personal attacks on Angela relationship. However US policy-
Merkel have been especially problem- makers, in spite of frequent frustra-
atic. He has frequently criticized and tion, never lost sight of the fact that
belittled the Chancellor and sought the headaches that went with serving
to undercut her political standing at as the anchor of the international
home. In an unprecedented move for economic system, such as trade im-
a US president, in June 2018, during balances, were a small price to pay
tense coalition negotiations about im- for a Europe that was prosperous,
migration policy, Trump encouraged democratic, and closely tied to the
German hardliners by tweeting “the United States. Even Barack Obama,
people of Germany are turning against who urged Europeans to take more
their leadership as migration is rock- responsibility for problems in their
ing the already tenuous Berlin coali- neighborhood so that he could focus
tion.” He argued: “Big mistake made on other parts of the world, especially
all over Europe in allowing millions of East Asia, and who some Europeans
people in who have so strongly and vi- accused of disinterest, viewed the alli-
olently changed their culture.” ance as indispensable.
The origins of Trump’s hostility are Trump is the first post-1945 president
not entirely clear. His mercantilist who does not share this worldview.
instincts predispose him to resent Given his tendency to view interna-
countries that have strong export sec- tional relations in terms of Realpo-
tors. Merkel’s close relationship with litik, his dislike for multilateralism
former US president Barack Obama and international institutions, and
probably also bothers him, as does the his preference for illiberal leaders, his
frequent observation that, with Trump trade policies should not have come
as president, Merkel is now, as one as a surprise to European officials and
Obama advisor put it, “the leader of executives. Nevertheless, they have
the free world.” reacted inconsistently. At times, they
have signaled a willingness to fight
Whatever the reasons, Trump’s un- back. Macron, for instance, declared
willingness to distinguish between in March 2018 that Europe would
22T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
Most Important US Trading Partners by Rank
Exports and Imports in billion USD as of 2018
2
CANADA 14
NETHER-
IRELAND 7 LANDS
UNITED 12
KINGDOM 5 1 4
USA GERMANY 6 JAPAN
CHINA SOUTH
8 KOREA
3
15 9
MEXICO FRANCE SWITZERLAND 11TAIWAN
INDIA
10
ITALY
BRAZIL
13
Volume of Trade
500
200
50
Source: US Census Bureau
“discuss nothing, as a matter of prin- whether to impose Section 232 tariffs
ciple, with a gun pointed at our head.” on European cars, is due to be con-
Europe has also leveled retaliatory cluded in February 2019, though the
tariffs on 3.2 billion USD of goods, findings had not been made public at
many of which are manufactured in the time of publication. Automobile
pro-Trump areas of the United States. executives from BMW, Daimler, and
Volkswagen have made conciliatory
In spite of brave talk about not yield- moves, offering to increase operations
ing in the face of US bullying, Euro- in the United States.
peans have sought to placate Trump.
In July 2018, European negotiators Trump has also used trade to sow po-
made a number of small concessions litical discord on the other side of the
on agriculture and energy in order Atlantic. He has not masked his dis-
to forestall the car tariffs and restart like for the European Union and his
trade talks. Those negotiations have preference for a more nationalistic,
since faltered, as US officials have ac- less integrated Europe, and has open-
cused their European counterparts ly encouraged Britain to withdraw.
of stalling. As further leverage, a US In the wake of the 2016 election, he
Department of Commerce study, on promised London a favorable trade
23ST RAT EG I C T R EN DS 2 0 1 9
deal in order to limit any economic is worth noting that, at least in some
problems caused by Brexit. Howev- respects, the president is taking action
er, after Prime Minister Theresa May that much of the US public supports
agreed with her European counter- – underscoring the extent to which he
parts on the terms of Britain’s with- views trade through a political lens.
drawal, Trump criticized the deal and Though Republicans tend to have
suggested it would prevent a US-UK slightly more hawkish views, concerns
trade pact. about China transcend party lines.16
A Threat to the International In spite of modest concessions from
System trading partners and some potential
Trump has demonstrated that eco- short-term political benefits, the pres-
nomic blackmail by the United States ident’s nationalistic trade policies are
works, at least in a narrow sense. In profoundly damaging. Ironically, US
every case that the administration has interests have been particularly affect-
threatened to limit access to the US ed. In spite of Trump’s frequent asser-
market, trading partners, in spite of tions to the contrary, the LWO has,
vows to the contrary, have agreed to more than any other nation, benefit-
negotiate and offered at least modest ed the United States politically, eco-
concessions. nomically, and militarily. It was a key
factor in sustaining US influence after
There are a number of factors pushing World War II. In an era in which the
Washington toward more aggressive United States is probably in gradual
policies and, to an extent, a rethink decline, it needs the support of strong
on trade is warranted. Chinese trade alliances and trading relationships
practices and espionage activities, for more than ever. Its efforts to partially
instance, merit action – though any de-globalize the international system
response would be more effective if are having the opposite effect, and
it were mounted by a broad coalition are providing opportunities to com-
of interested countries, instead of the petitors. The timing of Xi Jinping’s
United States acting unilaterally. In speech at the 2017 World Economic
addition, though the Trump adminis- Forum, in which he portrayed China
tration has contributed to the erosion as a leader of the globalized economy,
of the dividing line between economic was not coincidental. His argument,
disagreements and political relations, that when “encountering difficulty we
especially vis-à-vis its European allies, should not complain, blame others,
China is equally guilty in this regard. It or run away from responsibilities ...
24T R U M P A N D W E A P O N I Z AT I O N O F T R A D E
Instead we should join hands and rise The consequences of such a develop-
to the challenge,” was a clear attempt ment would be dire. Powerful nations
to assume the mantel of leadership dis- would frequently take advantage of
carded by the Trump administration. weaker trading partners, fueling dis-
trust and, in general, making the in-
Trump’s policies are undermining the ternational system more dangerous.
international economic system that There would also be a tendency for
Washington and its allies spent de- economic disagreements to lead to
cades constructing after World War II. political and even military conflict.
This complex, interdependent system China and the United States should
is now in danger of collapsing, and the serve as a cautionary tale in this re-
alternative that Trump envisages – a gard, as they have entered a vicious
web of bilateral trade deals, with the cycle, wherein trade measures are in-
United States at the center – would evitably seen as designed not just to
harm all parties involved. Such an ar- increase wealth, but to weaken the
rangement would be less efficient than geostrategic position of the other
the current multilateral system, which country.
better reflects how international trade
works in an interconnected global Trump’s attacks on the underpin-
economy, where supply chains often nings of the international system,
stretch across numerous countries. if sustained, could boost nationalist
Bilateral deals also do a much less ef- and extremist political movements
ficient job of harmonizing standards in many countries, as it undermines
and regulations. the trust necessary to sustain inter-
national institutions and democratic
The WTO, in particular, is in danger. norms. In fact, once the process of
The United States remains the world’s deglobalization gathers momentum,
most important economy, and the ad- it will be difficult to resuscitate the
ministration’s unwillingness to work old order. The creation of the cur-
through the WTO system potentially rent multilateral framework was only
renders it irrelevant, especially given possible because of the unique cir-
the relative ease with which Washing- cumstances present during and after
ton has been able to convince its trad- World War II. Absent a comparable
ing partners to enter bilateral negotia- crisis, it is doubtful that the will nec-
tions. If Trump’s approach succeeds, it essary for such a complicated and
could normalize a zero-sum approach politically challenging undertaking
to trading issues. would be present.
25ST RAT EG I C T R EN DS 2 0 1 9
1 Dina Smeltz, Ivo Daalder, Karl Friedhoff, Craig 11 Office of the United States Trade Representa-
Kafura, “What Americans Think about America tive, “New U.S. Trade Policy and National Se-
First,” The Chicago Council on Global Affairs, curity Outcomes with the Republic of Korea,”
2017. 03.2018.
2 Tom Wright, “Trump’s 19th Century Foreign 12 Keith Bradsher, “China Once Looked Tough
Policy,” in: Politico, 20.01.2016; John Shanahan, on Trade. Now Its Options Are Dwindling,”
“Trump: U.S. Should Stop Paying To Defend in: The New York Times, 18.09.2018; Chad
Countries that Can Protect Selves,” in: The As- Bray, “China has a lot more to lose than the
sociated Press, 02.09.1987; Glenn Plaskin, “The US in trade war, says Credit Suisse,” in: South
1990 Playboy Interview With Donald Trump,” China Morning Post, 14.01.2019; James Politi
in: Playboy, 01.03.1990. and Tom Hancock, “US-China Trade Talks
Conclude as Hopes of Progress Rise,” in: The
3 Henrietta Reily, “By the Numbers: Here’s how Financial Times, 10.01.2019.
“Badly” the WTO Treats the US,” in: Axios,
07.07.2018. 13 Barry Naughton, Arthur R. Kroeber, Guy de
Jonquières, and Graham Webster, “What Will
4 The United States Census Bureau, “U.S. Trade the TPP Mean for China?” in: Foreign Policy,
in Goods by Country”. 07.10.2015; Alan Rappeport and Keith Brad-
sher, “Trump Embarks on Bilateral Trade Talks
5 William Mauldin, “Trump’s Big Gamble: Luring to Pressure China,” in: The New York Times,
Countries into One-On-One Trade deals,” in: 17.10.2019.
The Wall Street Journal, 27.01.2017.
14 Lingling Wei, “US Pushes China to Follow
6 Lee G. Branstetter, “China’s Forced Technology Through on Trade Promises,” in: The Wall Street
Transfer Problem – And What to Do About It,” Journal, 07.01.2019.
Peterson Institute for International Economics,
06.2018. 15 Assistant Attorney General John C. Demers,
“China’s Non-Traditional Espionage Against
7 Quinn Slobodian, “You Live in Robert Lighthiz- the United States,” Statement before the
er’s World Now,” in: Foreign Policy, 06.08.2018; Committee on the Judiciary, US Senate,
Jakob Hanke, “Charge of the Lighthizer 12.12.2018; US Department of Justice,
Brigade,” in: Politico, 02.10.2018; White House, “Two Chinese Hackers Associated With the
“Remarks by President Trump at Signing of a Ministry of State Security Charged with Global
Presidential Memorandum Targeting China’s Computer Intrusion Campaigns Targeting
Economic Aggression,” 22.03.2018. Intellectual Property and Confidential Business
Information,” 20.12.2018.
8 Annie Lowry, “The ‘Madman’ Behind Trump’s
Trade Theory,” in: The Atlantic, 12.2018; Peter 16 Pew Research Center, “As Trade Tensions
Navarro, “The Era of American Complacency Rise, Fewer Americans See China Favorably,”
on Trade Is Over,” in: The New York Times, 08.2018.
08.06.2018.
9 Office of the United States Trade Representative,
“USTR Finalizes Tariffs on $200 Billion of
Chinese Imports in Response to China’s Unfair
Trade Practices,” 18.09.2018.
10 Geoffrey Gertz, “5 things to know about
USMCA, the new NAFTA,” The Brookings In-
stitute, 02.10.2018; Gary Hufbauer and Steven
Globerman, “The United States–Mexico–Can-
ada Agreement: Overview and Outlook,” Fraser
Institute, 11.2018.
26CHAPTER 2
The Eclipse of Western
Military-Technological Superiority
Michael Haas
Ever since they grasped the promise of the information revolution in the late
1970s, the United States and its allies have enjoyed a sizeable military-tech-
nological advantage over any plausible adversary. Now, as new technologies
enter the limelight and competitors become more adept at appropriating
or offsetting Western strengths, this qualitative superiority in armaments
is eroding. With the underlying trends gathering steam and policy interven-
tions already falling short, Western armed forces will increasingly face a
choice of confronting revisionist challengers on even terms – or not at all.
A US Air Force F-22 Raptor fighter jet performs ahead of the International Air and Space Fair at
Santiago International Airport, March 28, 2016. Ivan Alvarado / Reuters
27ST RAT EG I C T R EN DS 2 0 1 9
Even though they may sometimes ap- that resulted from late Cold War
pear to operate in a world unto itself, defense programs have facilitated a
military organizations tend to reflect US-centric distribution of power,
important properties of the societies buttressed existing alliances, and en-
that build and sustain them. Hence, abled wars of choice. They have also
it should not come as a surprise that set a standard of military moderniza-
Western approaches to conventional tion to which other countries aspire
deterrence and military conflict, as – and spurred counter-innovation
they have evolved in the late 20th and among those who feared that they
early 21st centuries, have taken a pro- might find themselves at the receiving
foundly techno-centric turn. While end of Western interventionism.
the search for engineering solutions to
national security problems appears to In both regards, Operation Desert
be a persistent feature of the US cul- Storm – the eviction of Iraqi forces
tural setting, in particular, other liber- from Kuwait – constituted a water-
al democracies have exhibited a similar shed event. When President George
tendency.1 In parallel with a deep-seat- H.W. Bush declared the end of ma-
ed belief in the transformative power jor combat operations against Iraq on
of technology in the civilian sphere, February 27, 1991, it became evident
the recourse to high-tech solutions that US and allied forces had crushed
across a broad spectrum of military one of the world’s largest armies at
problem sets has become an essential astonishingly low cost to themselves.
feature of force development and de- To other military powers, especially
fense procurement in Western-style those organized according to Soviet
armed forces. or other non-Western principles, the
Gulf War appeared to serve notice of
The considerable success the West a new era in military affairs, in which
has enjoyed in establishing and – for Western force projection would be
a time – upholding this paradigm of extremely difficult to resist by any
military-technological pre-eminence means currently available to them,
has had important consequences for short of nuclear weapons.
the international order. During the
1980s, the financial impact of the in- The West’s adoption of a paradigm of
tensifying competition in advanced guided weapons, signature-reduced
conventional forces arguably hastened platforms like stealth aircraft, so-
the fall of the Soviet Union. In the de- phisticated intelligence, surveillance
cades since, the Western capabilities and reconnaissance (ISR) assets and
28E C L I P S E O F W E ST E R N M I L I TA RY T E C H N O LO GY
pervasive battlefield networking was, set in motion during the 1980s and
as yet, in its early stages. But the mili- 1990s continue to bolster the capa-
tary foundations of the United States’ bilities of Western-style armed forces,
preeminent position in the interna- the so-called guided weapons revolu-
tional system seemed assured for de- tion has entered the stage of global
cades to come. While the promise of diffusion. And while some of the
a more collaborative, US-led world greatest triumphs of late-Cold War
order that the Gulf War coalition had engineering – such as long-range,
appeared to foreshadow soon proved very-high-precision cruise missiles or
illusory, the reality of Western mili- stealth aircraft – remain inaccessible
tary superiority was inescapable. Ac- to all but the wealthiest and most
cording to a 2011 Rand study, the technologically advanced countries,
Chinese People’s Liberation Army they are no longer the exclusive do-
(PLA) was particularly impressed by main of the United States and its
what it had witnessed: “The 1991 closest allies.
Persian Gulf War sent shockwaves
throughout China’s military commu- Although this would in itself con-
nity and accelerated the PLA’s mod- stitute a significant development,
ernization and shifts in strategy. The it is the underlying shift in the pat-
United States’ overwhelming dom- terns of innovation that should give
inance in that conflict led Chinese pause to Western decision-makers.
military leaders to push for advanced Whereas the late-Cold War advances
military technologies.”2 The armed in military technology were critically
forces of the newly formed Russian dependent on government-funded
Federation also took notice, although research and development (R&D) to
their ability to react was curtailed by a come to fruition, ongoing innovation
chronic lack of resources. processes in fields such as biotech-
nology, nanotechnology, quantum
Almost three decades later, the so- computing, robotics, artificial intel-
called Revolution in Military Affairs ligence (AI), augmented reality, and
(RMA) touted by American theorists additive manufacturing are far more
during the 1990s is following the fa- reliant on open knowledge econo-
miliar trajectory of earlier spells of mies populated by private actors.
military-technological innovation, in Because this knowledge ecosystem is
that it has produced advantages of far more transparent and accessible
limited extent and durability.3 While by design, the challengers of Western
many of the innovation processes military preeminence find themselves
29ST RAT EG I C T R EN DS 2 0 1 9
operating in an environment from another watershed will be reached
which cutting-edge technologies can in the 2020s, with long-term impli-
be extracted with relative ease. Foreign cations not just for Western military
acquisitions, joint ventures, multina- policies and force development prior-
tional research programs, and interna- ities, but for the international order
tional student exchanges are all part of at large. In the following we will look
the same toolbox in this regard, as are into the root causes of this dynamic,
industrial espionage and other forms assess Western policy initiatives de-
of intellectual property theft. signed to offset it, and consider the
way forward.
As a result, the odds that non-Western
actors will not only catch up, but ac- The Crumbling Foundations of
tually pull ahead of the United States Western Advantage
and its allies in some areas of technol- To understand why the military su-
ogy development are set to increase periority of Western democracies can
dramatically. As a result of its striking no longer be taken for granted, as it
economic growth over the last 20 – 30 long had been after 1991, one must
years, this is true of the People’s Re- ultimately look beyond the field of
public of China (PRC) in particular. defense innovation and reckon with
Given that the Western advantage in two economic megatrends that are
military forces is itself derived from a altering the underlying parameters
limited portfolio of key technologies, of military technology development.
the formation of pockets of Chinese The first has been the rapid growth
advantage would amount to an im- of many non-Western economies,
portant break with a pattern of incre- and the spectacular expansion of the
mental progress in military technolo- Chinese economy in particular. The
gy development that has marked the second concerns the ways in which
past two to three decades. At the same new technologies are developed and
time, the ability of other actors to shared within a globalized economic
cancel out existing Western strengths environment.
by combining less advanced technol-
ogies and asymmetric doctrines has The rise of the non-Western econo-
also increased, and this is a function mies constitutes, without a doubt,
of raw economic power to a much the most consequential global trans-
lesser extent. While advantages in formation of the early 21st century.
military technology have never been In 1991, China’s share of the world
static, it seems increasingly likely that economy was 4 percent. The United
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