© REUTERS/Mario Anzuoni

California is the fifth largest economy in the world and in recent years it has been pioneering a new brand of diplomacy, first on climate change and now increasingly on tech policy. With its relative political cohesiveness, policy philosophy, tech-industrial base, and soft power, the Golden State is moving into a unique league in the international system: a sub-national great power.

The role of US states globally has traditionally been relegated to trade delegations with governors occasionally travelling to foreign financial centers in search of investment. California’s first significant entrée as a diplomatic actor was over the issue of climate change.

California’s role at the 2017 UN Climate Conference marked a watershed. Then governor Jerry Brown led a coalition of states and cities dedicated to meeting the Paris Accord’s emissions targets despite the Trump administration’s withdrawal from the agreement. Speaking to a rapturous plenary session in the European Parliament afterward, Brown included California and Texas in a list of powers—along with the United States, Russia and India—that need to tackle climate change more earnestly. The scene had the trappings of an address by a head of state. The governor met with Chinese President Xi Jinping, and California signed an agreement to cooperate on climate tech and withstand the headwinds of the US-China trade war.

Skipping Sacramento

When it comes to tech, California is a superpower. European policy-makers know this. Well, kind of. Streams of ministers and political delegations from Berlin and Brussels regularly shuttle to Silicon Valley hoping to learn from the world’s most dynamic innovation ecosystem, attract investment from its oceans of venture capital, and take selfies with tech founders. But rarely—if ever—do they bother to travel 140 kilometers inland from the Bay Area to the Californian state capital of Sacramento. In fact, not a single European Commissioner has visited California’s State Legislature in recent years.

German Economy Minister Peter Altmaier likes to frame the tech race in starkly geopolitical terms as a clash of values, in which Europe must become a co-equal pole. But when it came to his high-profile US trip in July, where he was on a fact-finding mission into American frontier tech, the German minister visited Silicon Valley and Washington but skipped Sacramento, where he could have found natural allies.

As California resets the regulatory philosophy for tech, Brussels—and others—could be working with the state. Take for instance, California’s sweeping new Data Protection Law. Signed into law in June 2018 with little notice, it has been called an American GDPR because its provisions mirror the EU’s data directive so closely. The law’s effect will be significant. It provides similar protections to all classes of personal data, with fines reaching $7,500 per user and possible amendments that would allow for class action lawsuits against companies that systematically violate California’s data law.

More revolutionary, Sacramento is considering forcing data brokers to disclose the value of personal data. This would bring a whole new reality to personal data, allowing for lawsuits for damages, forms of taxation, transparency and other modes of commercial compensation. California tech laws are often replicated across the United States. Its data breach law became the gold standard for US cybersecurity and was copied by 48 other states. California’s data privacy law goes into effect in 2020 but other states are already beginning to copy it.

The Power of the Techies

As the development cycle for general purpose technologies like AI, 3D printing, and quantum computing accelerates, California’s move to set rules could have global implications. Sacramento was ground zero for Uber and Lyft drivers working to secure rights such as minimum wage, overtime, and health and retirement benefits. They have been joined by traditional unions in the attempt to redefine gig worker rights in a way that could revamp the 21st century labor movement. California is considering a blanket ban on arming police body cams with facial recognition AI. The state is also drawing on moratoria on facial recognition technology in San Francisco and similar measures in Berkeley and Oakland.

The implications could go beyond California’s borders with implications for global law enforcement, democracy, and open society. For instance, China has been recently caught using massive pools of facial data hoovered up in public spaces in the US to train surveillance AI meant to track and monitor the country’s mostly Muslim Uighur minority. And as recently as October 2019, California’s governor Gavin Newsom signed a law banning candidate use of deep fakes 60 day before an election.

Perhaps equally important, a large share of the world’s top programmers are based in California. They are increasingly mobilizing, when they feel their companies are betraying their values-based missions. Google programmers successfully rose up against the company’s cooperation with the Pentagon on Maven Project—an AI-face recognition project for military drones. More and more, California’s techies, too, will be looking to state politics as a check on companies, which could have significant implications for the US military’s tech edge. The Pentagon has taken note.

Championing Human Rights

Sacramento is creating new institutional infrastructures to engage with the world. Newsom’s number two, Lieutenant Governor Eleni Kounalakis—formerly President Barack Obama’s ambassador to Hungary–has been appointed the state’s chief representative on International Affairs and Trade, a kind of Californian foreign minister. After the appointment, she called Trump’s trade policy “erratic” but went further, stating California’s ambition to help “set the standards for democratic values” around the world. The state already has an office in China and plans to open another in Mexico. Other states are doing so as well. For instance New Jersey has opened an office in Germany.

California is becoming a more confident global actor in other areas, too. Even as China and California have already started to build an asymmetric alliance on climate change, the state is increasingly taking strong positions on China’s human rights record, democracy and tensions with Taiwan and Hong Kong. California State Speaker Anthony Rendon stated, “all of us, here in California and elsewhere, have a duty to stand in solidarity with those who stand for freedom…I want the people of Hong Kong to know that California stands with them.”

The state’s massive procurement budget and even greater public pension system, CaLPERS, are increasingly being leveraged to advance human rights, democracy, and rule of law and to combat corruption. As a border state reflecting America’s changing face, it is leading the resistance on Trump’s immigration and relations with Latin America.

No Army, No Currency

There are, however, limits to California’s neo-Hanseatic bid to redefine statecraft. For one, the international system is still nation-state centric. California lacks some of the capabilities traditionally associated with Great Power status. First and foremost, it has no military. California is thus not a player in the exercise of war. It also lacks some of the geo-economic attributes that allow the European Union to project power internationally—namely control over tariffs and its own currency.

And there are the practical challenges. First, the primacy of Washington. California attempted to undercut the Trump administration by negotiating a deal directly with Volkswagen, BMW, Ford, and Honda to reduce greenhouse gas emissions. The deal effectively would have set emissions rates for the entire US, and in doing so, would have helped establish California as a regulatory hegemon within the US by setting American policy—in direct opposition to Trump’s Washington. But the Trump administration has been ruthless in its attempt to block California’s right to regulate emissions and has punished car companies for having worked with the state.

So Goes the World

Then, there’s Big Tech. As the state enters a great tech political awakening, it remains to be seen if California can resist capture by the state’s uniquely powerful tech juggernauts that are seeking to pacify the state’s policy ambition.

Like the world’s diplomats, Big Tech’s political Svengalis had long ignored Sacramento and concentrated their rule-shaping efforts on Washington, Brussels and London. For instance, they lobbied Congress for federal privacy regulations that would either supersede the Sacramento law or at least water down its privacy provisions. This has hit problems given the political polarization, dysfunction, and lack of bandwidth in Congress. Now, Big Tech is concentrating their efforts on Sacramento itself. After all, California is one of only two states—the other is Alabama—that are pushing ahead with a massive antitrust case against Google.

But even with these limiting factors, the rise of California heralds a criteria shift as to what makes a foreign policy actor—and a power—as geo-economic issues like climate change, and connectivity take on greater importance in global politics. As a direct result, the clean lines of the Westphalian system continue to break down. A neo-Hanseatic system of subnational actors is emerging with California at the forefront—joining a tapestry of other powers that include Big Tech companies, multi-stakeholder organizations, and political movements like FridaysForFuture.
New European Commission President Ursula von der Leyen has argued that her top two priorities for the EU’s next five years are tech policy and climate change, both areas where California is an undisputed global leader.

One measure of her seriousness could be whether or not she seeks an asymmetric alliance with like-minded leaders in Sacramento. After all, Sacramento politicians are fond of saying: “As California goes, so goes the nation.” If trends continue, perhaps it should be: as California goes, so goes the world.

The post California Calling appeared first on Berlin Policy Journal - Blog.

© REUTERS/Jason Reed

Former President Bill Clinton once said, “Follow the trend lines, not the headlines.” But as Donald Trump and a raft of more than ten Democratic presidential candidates think about US foreign policy with 2020 in mind, even trend lines don’t command the power they once held. The United States has fallen into the “arc of history” trap—following the trend line—at least four times in the past thirty years, each time exposing strategic weaknesses in US foreign policy.

The first miscalculation was that the fall of the Berlin Wall and Soviet communism would easily lead to the victory of liberal, free-market democracy over all competing ideologies.  A second was that “Europe”—and particularly the broadened core of Europe within an enlarging EU and NATO—would effectively cease to be a geo-strategic theater of international politics. The third—articulated in 2008 by Barack Obama in Berlin and his subsequent administration—was that the ugliness of the Bush administration with its unilateralism, norms-breaking, vengefulness, corruption, feckless management, jingoism, and penchant for violence, was a deviation from the true character of American moral leadership. The final—heralded particularly at the onset of the 2011 Arab Spring—was to see the spread of technology as an unqualified global good paving the way for democracy, freedom and dynamic civil society.

Addressing—and in some ways correcting for—these four interrelated traps will define the US foreign policy debate in 2020 and beyond. No candidate can ignore these four hubristic blind spots. The outcome of this reimagination could be a foreign policy that is more sober, reflective, and circumspect in its ambition. It could also be more imaginative.

No Status Quo Ante

The folly of 1990s triumphalism has been widely derided, but foreign policy in the United States is only now beginning to change. It has become difficult to lean on the platitudes of post-Cold War foreign policy. The Iraq War and 2008 financial crisis dealt twin blows to the unreflective global acceptance of US leadership and the power of American ideals. China’s rise, Russia’s aggression, and Trump’s election have hastened it. As Trump has shown through his withdrawal from the TPP, Paris Climate Accord, the JPCOA with Iran, and UNESCO, agreements with the US will from now on always have a built-in sunset clause lasting the term of an administration. That is a staggering limitation on the credibility of the country that had been the international system’s underwriter since Harry Truman.

In 2020 and beyond, US foreign policy will have to engage and prepare for a world without unquestioned US hegemony. The potential for conflict is rising as great powers and aspirants jockey to fill vacuums. The December 2017 National Security Strategy recognized as much: “After being dismissed as a phenomenon of an earlier century, great power competition returned.” The strategy frames US foreign policy in terms of great power rivalry with China and Russia wielding above-board and below-the-belt instruments to expand their spheres of influence.

US foreign policy has been at once jolted from its complacency and made aware of its limitations. At least in some areas, this could lead to the US becoming a more mature great power. Progressives and mainstream Republicans recognize the need to shore up alliances, institutions, and vehicles of US influence in the international system—albeit clipped by an awareness of the dent in credibility caused by the Trump administration.

This has also created space for creative thinking about policy areas that were once sacred tenants of the liberal order, like free trade and the unencumbered flow of capital. Having cast off slavish adherence to the divinity of open markets, Trump—and any progressives that follow—will feel freer to deploy geo-economic instruments to shape foreign policy. The Trump administration is making maximal usage of the $20 trillion US economy as a cudgel against US rivals—attempting to quarantine Iran through sanctions against the wishes of the other P5+1 JCPOA signatories; levying more than a quarter trillion dollars of tariffs on China; and hanging sanctions and visa bans on hundreds of Kremlin-linked Russians.

Both progressives and Trump adherents will continue to reach for these tools and emphasize their effectiveness against the backdrop of a continuing distaste for military intervention abroad. In fact, 2020 could well see consensus across the political spectrum about the reluctance to use force. Trump has attacked the Iraqi, Libyan, and Afghan wars, as have many leading potential Democratic challengers (with Joe Biden the major exception). Whatever the case, the US could end up in a position where the challenges are more acutely felt and the instruments at its disposal more limited.

No Happily Ever Afters

The grand illusion that Europe would cease to play a role in US foreign policy and domestic politics has also been blown apart. Russia’s Ukraine invasion and the flows of migrants from Syria have brought Europe back to the fore as an active theater for US foreign, security, and to some extent, domestic policy.

On the Republican side, positions on Russia are sticky. The Republican party has long been driven by Russia hawks, led principally by John McCain, who seethed as the early Obama-era reset brought pragmatic nodes of cooperation like New START, supply transport to Afghanistan, and Russian WTO accession. Trump’s own officials, aided by Republicans in Congress, have worked to fortify US power in Europe and elsewhere, strengthening the interior NATO frontline, considering permanent basing in Poland, providing lethal assistance to Ukraine, and naming a Special Envoy to Ukraine negotiations.

But that is slowly changing. More and more, the Trump-allied GOP is broaching the idea of a new openness to the model of Putin’s Russia. Kissinger-style realists are congregating around Trump along with Rand Paul-style isolationists and anti-gay evangelicals like Franklin Graham to form a powerful coalition of Putin admirers within the GOP.

On the other side, Democrats have become decidedly more hawkish. It began with Putin’s aggression in Ukraine and Syria, which hardened progressive foreign policy establishment somewhat, even though Obama still winced at the idea of supplying Georgia-war levels of assistance and lethal weapons to Kyiv. Russia’s 2016 assault on the US election then galvanized Democrats and made Russia a domestic issue to a level that makes rapprochement with Putin impossible.

Behind the rhetoric, there remains a great deal of consensus in US transatlantic policy. The building blocks will remain the same. Concerns about defense spending, trade imbalances, and energy dependence remain high in both parties in Congress and even with the Trump administration. These positions are unlikely to change. But the school of thought underpinning US grand strategy is in line for a massive electoral overhaul.

Who Is Doing the Rigging?

Even as American defenders of the liberal order woke up to the threats from the East and South, Trump has also unmasked threats from within. Obama’s promise that he could transcend the divisiveness both at home and abroad was built on the assumption that the Bush administration was a departure from a wide American liberal consensus of normative leadership, faith in alliances, institutions, and global trust. Of course, the presidency of George W. Bush was not an apparition. Neither is President Trump, who has reinforced several of the core elements of the first Bush administration while adding elements of unpredictability and ethno-nationalism.

By 2020, the wheel will have turned. There is no intellectual consensus on the ideals underpinning the US role in the world. Trump came into office promising to unshackle the country from a rigged system based on pluralism, nondiscrimination, immigration, open trade, an institution- and rules-based international community, and norms built on trust. At the heart of this is a searing critique of Enlightenment Europe with the EU and NATO at its core. As Trump stated in Warsaw in July 2017: “The danger is invisible to some but familiar to the Poles: the steady creep of government bureaucracy that drains the vitality and wealth of the people.” The Bannonist wing of Trump’s coalition will seek to validate this vision at the 2020 polls. If successful, a second Trump administration could revisit a broad range of multilateral arrangements the president considers constraining, including NATO, America’s partnership with the EU, and even membership in the WTO and UN.

Just as Trump is articulating his vision of technocratic globalism and its dangers, 2020 progressives have found a new organizing principle in the fight against kleptocratic authoritarianism. For progressives, US foreign policy will have to draw on new lines of political philosophy that are rooted domestically. These include the fight against corruption and concentration of power and wealth, particularly in big finance, big oil, and big tech. With Trump and Putin both squarely in the crosshairs, Bernie Sanders outlined his unified theory of the global plutocratic sucking sound in a Guardian article in September 2018. He believes there is an “international authoritarian axis” with connections between “unaccountable government power” and “unaccountable corporate power” that reaches across borders and sectors. Progressives increasingly see this clutch of corrupt oligarchs—aided by political clients—as the force that demolishes the rule of law in the pursuit of shameless extraction of wealth, destructive climate policies, monopolistic control of information flow, unfair trade, election manipulation, and a narrower space for democratic action.

In some ways, the narratives behind both paradigms—the fight against globalism and the fight against kleptocracy—have a similar ring. Both feature an unaccountable elite riding roughshod over the will of citizens. Both contain transnational overtones pointing to a world-wide phenomenon that must be confronted both at home and abroad. But only the latter is compatible with the liberal world order.

The Deep Digital Age

Finally, there is technology. The squabbling travails of today’s foreign policy might look quaint when compared to the challenges from artificial intelligence, robotics, quantum computing, and block chain ledgers. If algorithms are ideologies, as Lawrence Lessig and others have argued, then creating the structures in which they develop could be the most important challenge both for relations within states and between states. The understanding that the rise of technology is the driving political, ethical, economic and security factor of our day has been particularly slow to work its way into the American strategic discourse.

The lesson of the hacks against the Democratic National Committee  by FancyBear is that tech can be a wormhole for instability and subterfuge. Political progressives, mainstream conservatives, and US social media platforms are aware of this threat vector and have worked to patch vulnerabilities in the information space. The American left has painfully experienced how open elections are vulnerable to manipulation through hacking, fake news, deep fakes, and other hybrid tools. Both Democrats and non-Trumpist Republicans have attempted to build in consequences for future attempts to undermine the legitimacy of elections in the form of sanctions, asset freezes, and visa bans.

But the myopic focus on social media, fake news, and election meddling ignores other potential effects of technology on American foreign policy. Automation is a source of populist anger globally and potentially as destabilizing as immigration and trade. Cyber threats are increasingly defined not only by data theft and manipulation but by physical harm, as autonomous vehicles and connected homes, appliances, even clothing join critical infrastructure as a vector of attack.

And then there’s artificial intelligence. The AI race between the US and China is accelerating—and not solely for its commercial applications. In fact, AI technology has the potential to have the same effect on relations within states that nuclear weapons had on relations between states. Machine learning voice and visual recognition and omnipresent information analysis could perpetualize authoritarian governing systems like that in China. Neither Republicans or Democrats have begun to rethink a world order where AI-infused predictive policing, communication analysis and wall-to-wall surveillance would make a Tiananmen Square-style uprising almost unthinkable.

Nothing Is Inevitable

The intellectual energy of foreign policy thinkers on both right and left has delivered stinging rebukes to the pristine niceties of the post-Cold War era. Yale historian Timothy Snyder calls those who propagate those platitudes a class of “inevitability politicians” who allow a vague sense of righteousness to anesthetize their followers into inaction. Those day are over. But if the rise of populism, revisionist powers—including the United States—and technology are rendering the old order unfit, we must ask ourselves: are we present at the new creation? All indications point to yes, even if American progressives, stewards of the establishment, and Trump-style reactionaries have yet to fully grapple with the singularity of this moment.

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In the past 16 months, the Trump administration has taken a wrecking ball to the global trade order. Trump pulled out of the Transpacific Partnership; put TTIP negotiations with Europe on ice; pushed his administration into an intense NAFTA renegotiation with terms unacceptable to Mexico and Canada; and dusted off the rarely used Section 232 National Security Provision to slap global sanctions on aluminum and steel. The Trump administration’s trade bombast has set off a flurry of reactions globally, leading many to ask: Are we on the brink of a global trade war?

The evidence points to the need for a bit more level-headedness. First, Washington’s current trade war-mongering follows a familiar pattern that has characterized the Trump administration’s policy choices from climate change to the Iran nuclear agreement: A dramatic announcement meant to shake the international system to its core and create an atmosphere of uncertainty, quickly followed by a series of furtive claw-backs, exemptions, and carve-outs.

Second, for all its flash, the administration’s protectionist bluster has not affected significant change in global trade. The WTO sees strong trade growth of around 4.4 percent in 2018, roughly on par with 4.7 percent growth in 2017.

Third, with the most recent imposition of tariffs on steel, aluminum, washing machines, solar panels, and other goods and products, Trump is delivering on a campaign promise to get tough on China. But a long-term reciprocal trade war would hurt the very people that got Donald Trump elected in the first place.

China and the EU have aimed a dagger at the heart of his base, the 35 percent of US voters from Iowa to Ohio. The EU has dangled retaliatory measures on Kentucky Bourbon and Wisconsin-based Harley-Davidson, a largely symbolic action meant to deal a blow to the Republican Senate Majority Leader and House Speaker, respectively.

But American farmers in the heartland would be hit especially hard by Chinese tariffs on soybeans, pork, cotton, and other items. Beijing announced those trade sanctions on April 4, and they will indeed go into effect should the US and China fail to reach an alternative agreement. The US exports $12 billion in soy to China every year, and soy crop is essentially the life blood of economies in prairie states like Nebraska.

Fourth, other economic powers are trying to balance US protectionism. Thus far, the bark and bite have not matched. But if Trump pushes ahead with strict tariffs, free traders in Europe, Asia, and Latin America are already working to create a post-American safety net for the global trade order. Under Canadian leadership, eleven Pacific states signed the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) without the United States in March. The EU and Mexico successfully concluded negotiations to retrofit their trade agreement, with Merkel praising Mexican President Enrique Peña Nieto at this year’s Hanover Messe trade show.

From Hot War to Deep Freeze

In reality, the story of the trade order is more nuanced. The global trade system is entering into an ice age. It looks something like Han Solo frozen in carbonite—not dead but not moving, at least not institutionally.

Trump is in many ways just the natural extension of a global trend to put the brakes on trade liberalization. The WTO system, which still has a role in trade enforcement, has been diminished as an agenda setter since the Doha Round failure more than a decade ago. For both Germany and China—the greatest beneficiaries of the classical trade system—free trade evangelism tends to be narrowly-defined and self-serving.

For all Chancellor Merkel’s current free trade sanctimony, she did little to salvage the EU’s most ambitious trade project, the Transatlantic Trade and Investment Partnership (TTIP), as approval in Germany tanked and more than 200,000 protesters took to the streets in 2016. China, the other free trade darling of the moment, is massively protectionist on digital services, so much so that the five biggest US companies (Alphabet, Apple, Facebook, Amazon, and Microsoft) barely make a dent in the social media and e-commerce landscape of the middle kingdom.

Choppy electoral waters, national elections in Mexico, the US midterms, the European Parliament elections in 2019—bring more challenges to a deepening of the trade system. EU member-states have been aggressively reasserting the right of national—and regional—parliaments to have veto power over trade agreements negotiated by the Commission. In the United States, even if the Trump administration is able to successfully conclude a NAFTA 2.0, it looks highly unlikely that Congress would ratify it.

The Great Illusion

In 1910, British public intellectual and Labour activist Norman Angell published The Great Illusion—the “End of History” of its day—which triumphantly declared that the depth of trade between the great powers of Europe had rendered war impossible. Yet today, as then, the unlikelihood of a trade war must not fuel complacency about the likelihood of actual war. Even if business does not have the power it once had to drive a positive trade agenda, the status quo trading system is still sticky. The same cannot be said for an increasingly unmoored security system with ongoing wars in Syria and Ukraine and the potential for even greater conflict in North Korea and Iran. Trade war is not what should worry us—it’s actual war.

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© REUTERS/Ralph Orlowski

Stefan Zweig once wrote that people are often “denied recognition of the early beginnings of the great moments which determine their times.” If you were wandering the halls of the Munich Security Conference last weekend, you would have inevitably been confronted by the search for that recognition. The question— “What keeps you up at night?“—was, in some ways, the organizing logic of MSC 2018. Some answered nuclear proliferation. Others cyber. Some spoke dutifully about China and One-Belt-One-Road. A handful of mostly American internationalists raised alarm bells about Putin and his phalanx of trolls, bots, cyber spooks, and rotten money.

Generally, world leaders offered up crises of the day: Iran’s growing malevolence in the Middle East; the evolving proxy war in Syria; North Korea; a ghosting US administration; and Ukraine’s continued struggle for territorial integrity. Some tried to cut through the cacophony of immediate hotspots pointing to climate change and the coming tech revolution in war.

But all noted that the classic set of instruments—treaties, international institutions, effective deterrence, contact groups—are not fit for purpose to address these challenges. If political systems, the instruments, and the elites that manage them are no longer able to address, it begs the real question: to what extent is all this still useful?

That was the real question that kept MSC goers up at night. The poignancy of MSC 2018 was seeing some of the world’s most creative, dogged institution-builders grapple with the sense that the operating system that they and their forbearers created to tackle the world’s problems is on the brink of collapse.

They are not the only ones asking this question. The loaned legitimacy that MSC established – diplomats, experts, party leaders, the press and defense planners – had benefited from for decades is receding. People in Wiesbaden, St. Louis, and Manchester no longer see this class of rarefied thinkers worthy of esteem. They have their own opinions about North Korea, Russia, and international trade. The Polish Prime Minister Mateusz Morawiecki brought this sentiment into Bayerischer Hof, the conference hotel, with his scripted line that the West should invest more in armored tanks and less in think tanks.

Lazy Thinking

It is not a coincidence that in an unscripted moment, Morawiecki made the stunning equivalence that there were “Polish perpetrators as there were Jewish perpetrators” of the Holocaust. The audience was taken aback by his remarks. But the ooze of such lazy thinking is making its way into many of Europe’s illiberal parties, including Germany’s Alternative für Deutschland (AfD), likely soon to be the country’s second largest party.

It is a reality that many do not know how to confront. One instinct is to retreat into the past, into their own version of Stefan Zweig’s “golden age of security.” They pine for the world of yesterday with Atlanticist heroes like Joe Biden, Sam Nunn, and Wolfgang Ischinger. One bright spot was the strong Congressional turnout. But it was the unique force of McCain’s personality kept the MSC spirit alive. Will his successors, even if they are well-meaning, be as charitable with their time for the liberal world order?

At its core, the Munich Security Conference has really been a German-American affair. As one conference veteran wryly observed, the MSC is most electric when the transatlantic relationship is bad. When it is good, the gathering is listless. But then, the participant noted darkly, Munich 2018 seemed to be both listless against the backdrop of a deteriorating Atlantic alliance and a world on fire.

The Trump administration has ghosted from so many world fronts. The reality of Trumpism has set in with its nativism, vulgarity, ethno-nationalism, transactionalism, endemic corruption, and indifference to democracy, human rights, institutions, and notions of international community that US hegemony has provided from Europe to Asia, even Latin America. The administration’s Orwellian talking point—that the world should pay no attention to the president’s words but rather US. actions – received well-deserved derision from a professional class who recognize that rhetoric is primer for action.

But a new source of unease was Germany, itself. The German delegation led by a troika of future past, Sigmar Gabriel, Ursula von der Leyen, and Thomas de Maziere, the foreign, defense, and interior ministers respectively. They did their best to present the brave face of the status quo and even gave accents of policy change on the margins—Franco-German cooperation in joint European security for example. But the growing gap between the status quo they represent and the popular frustration with the establishment hit a boiling point, even in Germany—the world’s premiere status quo power. It is plausible that all three—and the political outlook they represent—could be gone in a year’s time.

In fact, the German political establishment looks a bit like an Antarctic ice shelf. Seemingly stolid, imposing, even magisterial, all at once it crashes into the ocean never to return. This could be the fate of the leaders, the Volksparteien, or people’s parties, and the consensus values they carry with them.  If it does not collapse, it will be owed to the rank-and-file of the Social Democrats (SPD), who are casting their ballots on whether to enter into another government with Chancellor Merkel’s conservatives. The SPD base—whose largest age bloc is between 71-80—dutifully remembers.

Zweig wrote about moments where the world history departs from its iterative plodding and changes forever, what evolutionary theorists call punctuated equilibria. The entire MSC class knows this. They just don’t know how to respond.

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Cover artwork: © Mitch Blunt

Dear Chancellor X,

Outgoing Economy Minister Brigitte Zypries is fond of saying: “In the age of the Internet of Things, the United States has the Internet. Europe has the things.” It is true that the top four publicly traded US companies – Apple, Alphabet, Microsoft, and Amazon – are all tech companies. But the largest German companies – Daimler, Volkswagen, BMW, Siemens, and Bayer – are tech companies, too. They just don’t act like it.

Digital policy featured prominently in all the parties’ manifestos, including yours. Germany has become more sophisticated in thinking about tech policy, moving beyond a focus on data protection toward areas like the industrial Internet, innovation, the sharing economy, and competition law. Your government will have the chance to position Germany as a global leader in international digital policy. Here are five policies that – among others – could help you do so:

Start with investment in digital infrastructure. Every party platform –  even the AfD – states that German broadband must be significantly improved to ensure future competitiveness. Presently, Germany ranks 26th in OECD broadband, behind Poland, the Czech Republic, and Slovakia among others – not a good place.

Create a digital ministry that unites tall the relevant responsibilities and budgets of the economy, interior, and transportation ministries. Bolster Bundestag digital literacy. Balance the interests of incumbent industries like telecoms or publishing houses and startups. Focus financial resources in efforts to advance university research; attract and retain talent and deepen the European market.

Get behind the EU’s Digital Single Market project. The EU’s ambitious project to add open, free, secure movement of data as a fifth freedom to the four defining areas of goods, services, capital, and labor will be a precondition to a 21st century European single market. Germany has been a fair-weather partner in this ambitious project. Without German backing, it will not succeed. Provide the lift to the DSM starting at the Tallinn Summit on September 29. Immediately launch a joint Franco-German R&D and policy initiative to drive European AI. With the US, work within the EU to re-launch the Transatlantic Economic Council, but emphasize the importance of different philosophies of tech regulation, joint impact assessments on regulation, and increased usage of review clauses.

Shape global Internet policy with an eye to autocratic states. Germany’s digital policy debate has been inward-looking, with senior officials like Sigmar Gabriel speaking about “digital sovereignty” and the expansion of hate speech. German rhetoric and policy has often been used to give cover to authoritarian regimes in Russia and China. Both are eying German definitions of data localization, data protection, and the Maas Law as templates to limit Internet freedom at home. Embed German digital policy-making within an international context.

Lead on defining limitations for the use of artificial intelligence in warfare. Countries like Russia, China, and the United States are already thinking about lethal autonomous weapons; swarm drones; supercharged AI surveillance; and hyper-sophisticated fake information like forged videos and interactive electronic communication. Germany and Europe can lead on creating international law governing the use of AI in war. Beyond that, Germany should continue to build military and civilian cybersecurity policy around encryption, hack-back capabilities, resilience, recruitment, and critical infrastructure protection at state, federal, and European levels.

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© REUTERS/Jonathan Ernst

Since Franklin D. Roosevelt’s first term began in 1933, a president’s first hundred days in office has been a benchmark by which to assess their accomplishments, ideological outlook, and governing style. Admittedly, measuring any presidency by the first hundred days is somewhat arbitrary: Bill Clinton’s first hundred days were a time of chaotic mismanagement that ultimately led to massive White House shake-up. At day 100, George W. Bush had just passed a trillion-dollar tax cut and was casting himself as humble on the international stage with a foreign policy tilted toward the western hemisphere. September 11, 2001, the event that would ultimately define his presidency, only happened on day 234. Obama, still riding high on a 65 percent domestic approval rating and nearly universal international adoration, had passed a stimulus bill, bailed out the US automobile industry, and launched a series of foreign policy moon shots like eliminating nuclear weapons and closing Guantanamo.

But even as presidencies prove nonlinear and event-driven, the hundred-day stocktaking does have some predictive power. On US foreign policy and transatlantic relations in the Trump era, five realities – what Donald Rumsfeld might have called “known knowns” – have become clear.

First, Trump thrives on unpredictability. When Trump came into office, his administration quickly placed a lot of foreign policy fundaments back on the negotiating table. The US commitment to NAFTA, NATO, the EU, the One-China policy, the two-state solution policy, and the WTO were all up for review. Trump killed the Transpacific Partnership (TPP), the crown jewel of the Obama administration’s pivot to Asia and arguably the most effective geo-economic instrument to manage and constrain China’s rise.

Vice President Mike Pence, Defense Secretary James Mattis, National Security Adviser Lt. Gen. HR McMaster, and a cadre of acolytes of US Senator John McCain have worked to maintain US commitments in Europe, particularly in NATO. But the learning curve has been steep. The fact that there is a learning curve at all belies the fact that the Trump team never bothered to build the policy architecture necessary to govern.

Even if Trump’s careening rhetoric on NAFTA and NATO ultimately leads to very little policy change, they have damaged the credibility that the US would underwrite the international architecture it helped to build. As a result, allies and adversaries alike are repositioning themselves. Because Trump has asserted that the US might be a revisionist – rather than a status quo – power, all others must consider that they, too, must become revisionist powers to stabilize, reconstitute, or upend the international system in their favor.

Second, at both a popular and elite level, US standing in the world has taken a hit. Global US favorability fell by 12 percent in the aftermath of Trump’s election, its lowest level since George W. Bush was in office. A US News & World Report poll showed that 75 percent of non-Americans surveyed had lost some respect for US leadership following Trump’s win.

The Trump-led free fall of the US’s image globally started before Inauguration Day. In 2016 Iran’s state-run television aired the US presidential debates live to showcase the ugliness, bigotry, corruption, and hypocrisy of American democracy. It is worth noting that just eight years prior, Obama’s election helped to inspire Iran’s 2009 pro-democracy Green Revolution, as millions of Iranians poured into the streets chanting “Yes we can” to protest Mahmoud Ahmadinejad’s fraudulent reelection before being violently suppressed.

The first hundred days, however, have reaffirmed global biases. The post-Obama US image abroad made possible policy objectives like UN Security Council votes on Iran, Libya, reopening Cuba, and building global climate change deals. The absence of global goodwill could affect the ability of the new administration to get things done with Europe. That will make negotiations on tough issues like a Transatlantic Trade and Investment Partnership (TTIP) deal, a renewal of the EU-US data protection agreement Privacy Shield, as well as unity on sanctions against Russia and NATO defense spending all the more difficult.

A Climate of Corruption

Third, the fleeting “drain the swamp” campaign rhetoric has given way to an endemic culture of administrative corruption. Whether it is Ivanka Trump’s business dealings with Azerbaijan’s government in violation of the Foreign Corrupt Practices Act, the president’s opaque tax history, his dubious investment and financing relationships with Chinese state banks and Kremlin-affiliated oligarchs, or a State Department announcement promoting Trump’s private Florida club Mar-a-Lago as the “winter White House” (fees at Trump’s exclusive resort have doubled since his 2016 election victory), it is clear that the Trump White House is flirting with as much of a de facto merger between the US government and the Trump organization as the courts and American public will allow.

This has two knock-on effects in Europe. The mission of cleansing the region of corruption – a top national security priority of the US in recent years in places like Ukraine, Russia, and Turkey – will be hampered by an administration whose leadership is adopting many of the same thinly veiled kleptocratic practices. In addition, the administration will be open to a loose ecosystem of graft that could affect policy. Practices once common only among corrupt authoritarians have become common fare. Even Chancellor Angela Merkel travelled to DC with a German business delegation – a practice normally reserved for China and Russia – and has shrewdly taken up the mentorship of Trump’s daughter.

Trump’s affinity for corruption cannot be disentangled from his attraction to authoritarian strongmen on the world stage. The bellwether here is still Russia. Despite the Syrian bombing, the State Department’s decision to maintain the Crimea and Minsk II-conditioned sanctions, and the disappearance of fawning Trump coverage on RT, Sputnik, NTV, and other Russian channels, Trump’s claim that the relationship has gotten worse since the darkest days of the Obama administration is not borne out by facts. The post-referendum congratulatory call to Turkish President Recep Tayyip Erdogan is grimly consistent with Trump’s penchant for authoritarians. And the White House remains keen to strike some sort of big deal with Putin’s Russia.

Fourth, the administration has made it clear that it is most interested in “quick wins” that can be felt immediately and communicated easily. That means heavy reliance on executive action. Trump’s largest policy accomplishment has been the rollback of Obama-era executive orders and regulations. For Europe, this includes three important areas. One is the erasure of the Cardin-Lugar rule requiring publicly-listed oil, gas, and mining companies to officially disclose payments made to leadership figures of resource-rich, often corrupt countries. On climate change, the White House has gleefully erased rules on coal-fired power plants and reauthorized the Keystone XL and Dakota Access pipelines, placing US commitments under the Paris climate change agreement in question. The administration is also rolling back net neutrality regulations, authorizing greater data processing by telecoms that potentially curtail data rights of European citizens.

Finally, on Europe’s anchor state, Germany, Trump’s rhetoric may be flamboyant – but on policy, he has demonstrated that there are no permanent presidents, only permanent interests. The two primary points of friction for US foreign policy toward Germany remain. Trump – like Obama – believes that at 1.2 percent, Germany’s defense expenditure is woefully low given the health of the German economy (and the NATO commitment to spend 2 percent of GDP on defense by 2024, adopted at the 2014 Wales summit). The US resents the fact that Germany’s comparatively small defense budget (raised by eight percent this year) provides cover for smaller, less prosperous alliance members. If Germany does not spend more, how can Italy or Spain?  And Trump – like Obama – chafes at the US-German trade imbalance. At $65 billion, Germany currently enjoys an annual wealth transfer from the US worth more than the combined economies of Croatia and Estonia. The US looks jealously at Germany’s world-class manufacturing sector, whose cars and appliances compete directly with the politically vital American Midwest. Germany does, however, harbor a similar mix of admiration and resentment toward the US tech sector, the main corrective for the bilateral trade relationship that still favors Germany.

Other similarities abound. Trump is maintaining, and expanding, on “Buy America“ procurement provisions that became a mainstay of Obama’s 2009 stimulus package. The Trump administration also shares the Obama administration’s admiration for German vocational training. Obama made it a theme of his 2013 State of the Union address. In her first visit to Berlin, Ivanka Trump toured the Siemens Technik Akademie to learn about apprenticeships. And the rocky relationship around tech, data, and national security will continue to flare up – albeit without the Google-driven brain trust that staffed the Obama White House.

What does this mean as Europe plans for the remaining 1362 days of Trump’s first term? This fall, the National Security Council is slated to release a National Security Strategy (NSS), the closest approximation of a Trump doctrine. The intellectual architecture for Trump’s foreign policy must be built around the man’s personal capriciousness, desire for quick wins, inclination toward bombastic, tough-guy rhetoric, attentiveness to his political base, and clan-like loyalty to his family and business interests. These strands come together under the nebulous heading “America First”; for Germany, the EU, and the world, it is going to be a bumpy ride.

Read more in the Berlin Policy Journal App – May/June 2017 issue.

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© REUTERS/Kevin Lamarque

At his farewell speech at the State Department, Tom Countryman, the foreign-service veteran ousted from his post as top US arms negotiator, left an ominous parting shot for the Trump administration. “Business made America great, as it always has been, and business leaders are among our most important partners.” Then his tone shifted. “But let’s be clear: despite the similarities, a dog is not a cat. Baseball is not football. And diplomacy is not a business. Human rights are not a business.  And democracy is, most assuredly, not a business.” His message was squarely aimed at both the White House and the new occupant of Foggy Bottom, Rex Tillerson. Countryman was warning about the new mercantilist nationalism that seems to have become palace doctrine for the Trump administration.

This week, this doctrine will make its debut in Germany, as Vice President Mike Pence, Tillerson, Defense Secretary James Mattis, and Homeland Security Secretary John Kelly attend the Munich Security Conference. Indications suggest that, Tillerson – who will also be in Germany for the G20 foreign ministers meeting in Bonn – will function more like a glorified commerce secretary. The State Department will, of course, still tend to the consular duties, stability operations, conflict negotiations, and multilateral organizations that are the staples of diplomacy.  But its core mission will include a more aggressive pursuit of the country’s own narrow geo-economic interests, the likes of which the United States has largely – though not completely – eschewed since the end of World War II. It will have greater authority to attract and even coerce foreign investment in the US, often linking diplomatic support, security guarantees, and development assistance directly to how much market access and preferred treatment for procurement contracts US companies are given. At the same time, access to US markets, infrastructure projects, and procurement will narrow as “Buy American” provisions will increase.

It also means that negotiations will always remain “live.” Trump has already put NAFTA, NATO’s article 5 guarantees, the European project, the OSCE’s Helsinki Principles, the One China policy, and the WTO back on the negotiating table.  “Nothing is true and everything is possible” – the maxim once used to describe Putin’s Russia – could very well apply to Trump’s international agreements and partners abroad.

Trump’s Geo-Economic Axis of Evil

Trump has an “axis of evil”, what he perceives as mercantilist countries masquerading as free traders and taking advantage of US openness and the public goods the US provides in the form of security guarantees, support for international organizations, and the dollar. Under George W. Bush in 2002, it was Iraq, Iran, and North Korea. Today it is China, Mexico, and Japan. Germany and the EU barely dodged inclusion on the list, but Trump and company most resent what they see as the bloc’s weakness and exploitation by Germany, and have hinted at an interest in taking a wrecking ball to the European project.

For Germany and the EU, this means several things. On trade, the administration has stated it prefers to negotiate on a “bilateral basis”, in which the US sees itself in a stronger negotiating position. His first actions as president were to withdraw from TPP in the Pacific and launch a renegotiation of NAFTA in North America.

With TTIP, Trump has not personally made his intentions known. The trade pact with the EU was not mentioned by either candidate once during the 2016 campaign. One thing is clear though: TTIP is not Plan A. Instead, the administration will start by probing the weak spots in European unity for cracks. Early outreach has focused on Europe’s populist reactionaries from the UK, France, and the Netherlands; Nigel Farage and Le Pen both met with Trump during the transition, and Geert Wilders was Trump’s guest at the Republican convention.

The Trump team will also likely set its sights on Central Europe as the focal point of its effort to divide the EU on trade.  The US has a number of pre-existing economic agreements, including bilateral investment treaties (BITs), tax treaties, and sectoral agreements with a number of EU member states in the region. The administration will likely attempt to reopen these agreements and fill them with regulatory arrangements, tax provisions, and market access that would undercut the Commission’s trade negotiating authority and exploit the power asymmetry of small states negotiating with the US.

Trump’s economic team resents Germany’s privileged position within the common currency. New National Trade Council head Peter Navarro has stated that Germany has latched itself to Greece, Italy, and Spain in the eurozone to maintain a “grossly undervalued” euro that artificially inflates Germany’s competitiveness. In essence, they are priming the discourse for the administration and Congress to consider labeling Germany a currency manipulator by virtue of its eurozone membership.

In early 2018, Trump will get the power to fundamentally reshape the Fed, including the chance to appoint a replacement for Fed Chair Janet Yellen. Most expect a full-fledged assault on the Fed’s independence. The likely outcome would be a weakened dollar meant to shore up domestic demand for US manufacturing and steel, often with negative consequences for German exporters.

Taking Russia Out of the Penalty Box

Trump’s affinity for Vladimir Putin is starting to translate into policy. While UN Ambassador Haley reaffirmed that sanctions on Russia for its annexation of Crimea would remain in place, no such guarantee has been given for sanctions in other areas. Already members of his national security team – including ousted National Security Advisor Mike Flynn – have moved to decouple sanctions imposed for the country’s invasion of Eastern Ukraine from the implementation of the Minsk agreements. Trump and Putin are expected to meet early in his term, and many expect a revival of frozen talks on a Bilateral Investment Treaty (BIT) between the two countries. A US-Russia BIT has long been on the wish list of US oil and gas companies, particularly ExxonMobil, which are looking to build out joint exploration projects offshore in Siberia and in the Arctic.

This will be disorienting for German foreign policy, especially for the Social Democrats, who have tried to position themselves as both embedded in the West and a bridge between the US and Russia. Trump would like to cut out the German middle man – with implications for the EU’s sanctions policy, the future of the Normandy Process, the Minsk agreements, and the credibility of the OSCE.

The administration’s largesse to Russia extends beyond sanctions. The Republicans working with the White House are ramming through a measure to kill a major anti-corruption law known as the Cardin-Lugar amendment that forces US companies from extractive industries – oil, gas, coal, and mining – to report payments made to foreign governments for all to see. The provision made it much harder for companies like ExxonMobil and others to bribe corrupt officials in countries like Russia, Libya, and Iraq, because payments could be tracked by civil society watchdogs. The EU followed suit with nearly identical legislation to “drain the swamp” of dirty payments from extractive industries.

If the Republicans in Congress get their way, they will put Europe at a distinct disadvantage to US extractive industries, which will be tempted to go native with secret payments to authoritarian rulers like Putin and his cronies.

Not all US industries are benefiting from Trump’s mercantilism, though. Policy is personnel, and the new cabinet is comprised almost exclusively of men from three areas – extractive and raw materials industry, finance, and the military. Noticeably absent is the tech industry, and the Trump team has taken an early shot at American tech with significant implications for Europe’s privacy standards. The Bannon-designed Immigration Executive Order contains a little-noticed provision that, by some accounts, effectively gutted the non-discriminatory treatment of European personal data by the NSA. The provision, known as PPD28, was the basis for a free flow of data agreement between the US and EU known as the Privacy Shield. If this is indeed the case, the bridge that allows digital trade between the United States and Europe could collapse, with serious consequences for tech, particularly for start-ups.

A Reset with Washington

The Trump administration’s formula – a reset with Russia and a pivot away from Europe – is nothing new. George W. Bush famously began his Crawford Ranch diplomacy with a glimpse into Putin’s soul and tried early on to pivot toward the Western Hemisphere before 9/11.  The Obama administration’s reset with Russia – announced by Vice President Biden at the 2009 Munich Security Conference just months after the Georgia War – was coupled with a new pivot – economically, militarily, romantically – to young, dynamic, vibrant East Asia. Obama even famously cancelled the 2010 US-EU summit, complaining that meeting with EU leaders was akin to “a trip to the dentist.” Administrations’ early relations with Europe always seem to inspire one of two emotions: Republicans are hostile, Democrats are indifferent.

Trump’s reset and pivot are qualitatively different. A Trump administration will both exaggerate these trends and make them more malignant. To the extent he has a preference for potential partners, it is for states run by authoritarian strong men that have succeeded in hollowing out their democracies, characterized by reliance on corruption, familial ties, opacity, kleptocracy, and an aggressive negotiating style where wins for both sides rarely exist.

So what relationship can Germany and the EU have with a maximalist US that perceives Germany and the EU as mercantilist rivals? It’s time to look into a reset policy. To the extent that the US reset worked, it relied on areas where narrow interests aligned with a churlish, corrupt, and unreliable Russia. Germany and the EU must take the same approach to the Trump administration.  Here are five ways to do so.

Think interests rather than values. Agreements with the Trump administration will be constantly subject to threats of renegotiation. Trump has demonstrated that he is willing to put all settled arrangements back on the table. High-minded diplomacy will not be effective with the White House. It will require hard-nosed negotiations, clearly defined consequences for breaking agreements, and vigilance in enforcement, including automatic snap back measures when agreements are violated.

Harden EU cohesion now. Mercantilist systems thrive on hub and spoke arrangements in which a country can exploit massive power asymmetries with its potential partners. The EU must put costs in place now for states that break rank on trade, the EU’s core competency. The EU Malta Summit was a good start.

Forge stronger bonds with the institutions where the transatlantic values relationship still matters – Congress, the federal bureaucracy, US states, and civil society. Each will be constrained in its ability to influence policy, and insulated against the erosion of NATO, US-EU economic and security cooperation, and democratic consolidation. But they will be the foundation for the future repair of the transatlantic and international system.

Use some showy public relations diplomacy. Trump will be more transactional than relational, basing decision-making in short-term, high-profile payoffs that can be easily communicated to his base, particularly white American workers in rust belt states like Pennsylvania, Michigan, and Ohio. This means European leaders need to emphasize every job added as a result of US openness and its relationship with Europe. Japan has already announced the intention to create 700 thousand US jobs as part of its geo-economic charm offensive. Europe should do the same.

Stay rooted in the principle of reciprocity. EU economic policy, particularly access to procurement markets, has long been based on the simple, elegant position of same for same. The Trump administration will fight this, but will be hard pressed to deny it.

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