The Security Consequences of
Globalization and the Borderless Economy
Mr. Bruce E. Stokes; Senior Fellow and Director of Trade Programs,
Council on Foreign Relations
In 1890, in the pages of the Atlantic Monthly, Captain Alfred Thayer Mahan argued that "whether they will or no, Americans must now begin to look outward." The United States has been wrestling with this challenge ever since. Then and now, this national dialogue about America's role in the world has inextricably linked economic and security concerns.
In the era of rampant imperialism in the late 19th century, Mahan advocated the build up of the American navy as a means of asserting American influence and securing American commercial advantage around the world. He wrote of the "unique importance [of] powerfully influencing the commercial and military control of the Pacific" and of the strategic value for a trading nation like the United States of dominion over Cuba and the Philippines.
This economic motivation behind U.S. foreign and security policy was hardly new. American naval forays into the Mediterranean Sea, the War of 1812 and the Monroe Doctrine were all driven by commercial considerations. Yet, Americans have never felt completely at ease linking economic and security concerns. In the late 19th century, for example, a commercial rationale for a strong, interventionist overseas military presence met fierce opposition from the Anti-Imperialist League, whose half-million members decried the debasement of America's higher moral purpose in the pursuit of mammon.
Nevertheless, the economic case for U.S. military engagement around the world emerged triumphant in the Spanish-American War and manifested itself once again in the Open Door policy toward China. But economic concerns were soon eclipsed by world events: World War I, World War II and the Cold War. For three-quarters of a century, the security goals of the United States were again narrowly defined in traditional military terms. Ideology, rather than economics, provided the rationale for military engagement.
Today, with the emergence of the United States as the world's unchallenged military power, the relationship between the use of that power and American economic self-interest is about to again become a topic of public debate.
But this debate will differ markedly from that of a century ago. The 19th century imperialist motivation was aspirational. The United States wanted to ensure itself of a seat at the table as Britain, France, Germany and Japan carved up the riches of the world. Today, the reemergence of economic globalization as a growing influence on U.S. security considerations is more rooted in immediate economic reality.
Exports and imports now mean more to the well-being of the domestic American economy than ever before. As a result, the defense of the U.S. presence in the global marketplace has never been more important. At the same time, economic globalization has created new security challenges for the United States through the ability of international markets to rapidly transmit economic shocks to disparate parts of the world, spreading social and political turmoil. Finally, in providing a new rationale for the traditional goals of U.S. foreign and security policy--stability, balance of power, democratization--globalization is changing how America pursues those goals.
In the end, globalism and the borderless economy is likely to profoundly transform U.S. security policy in the 21st Century.
The New Economic Setting
The American economy that for decades permitted a neat division between foreign security concerns and domestic economic interests no longer exists. A new American economy is emerging--one dependent upon access to foreign markets and imports from abroad--that will inevitably shape a new American foreign security policy deeply rooted in economic self-interest. As a result, all future American presidents--Republican or Democratic--will be forced to pay greater attention to the fortunes of U.S. companies abroad than did any of their predecessors, because trade--especially exports--are now far more politically charged than they ever were before.
Two generations ago, America had a continental economy. What really mattered for the economic wellbeing of average Americans was the commerce that took place in the vast expanse between the Atlantic and the Pacific. There was a yawning divide between economic policy, which by definition was domestic economic policy, and foreign and security policy.
Today, the United States is in transition from an inward-looking to an outward-looking marketplace. In 1970, trade--both imports and exports--was equivalent to 13 per cent of the Gross Domestic Product (GDP). By 1995, trade equaled 29.4 per cent of GDP.
Even more dramatic has been the transformation of the United States from a bystander in the export game to an export superpower. In the last few years, the United States has exported more than any other nation, including Japan. Exports of goods alone accounted for 8 per cent of U.S. GDP in 1996. Before the Asian economic crisis hit, a third of U.S. economic growth was attributable to sales overseas. Export-related jobs accounted for 23 per cent of private industry new-employment growth between 1990 and 1994. And at a time when average American wages were stagnating, jobs in the export sector earned 15 per cent more than jobs in industries that supply only the domestic market.
Economic developments abroad, once peripheral to the core issues driving the domestic U.S. economy, promise to increasingly be a central determinant of America's economic well being. For example, the United States is now the world's largest debtor country. As the world's largest and strongest economy, such debt poses no immediate economic problem, as long as America's creditors continue to be willing to lend it money at reasonable interest rates. Today, the United States must borrow $1 billion a day to fund our indebtedness. That level of dependence on foreign capital gives the United States unprecedented interest in economic growth and stability in overseas markets, so that foreign lenders can continue to lend America substantial sums of money in a predictable manner. Anything that disturbs those markets poses an economic threat the United States has not had to face since our dependence on European investment capital in the late 19th century.
The recent Asian economic crisis has obviously complicated all these matters. Just a year ago, when the Asia-Pacific nations were growing 6-9 per cent per year, their imports were rising about $16 billion annually. This translated into an additional $2 billion a year in U.S. sales to the region. That growth in exports has now been lost. In fact, exports to South Korea declined 47 per cent from June 1997, when the crisis began until June 1998. Exports to Malaysia fell 33 per cent in the same time period. And exports to Thailand fell 35 per cent.
Overall, the U.S. current account position is expected to decline by at least $43 billion because of the Asian crisis, with most of that fall off due to a collapse in exports. Put another way, in 1996, Clinton Administration officials were predicting that exports would constitute 13.2 per cent of Gross National Product (GNP) by 2005, if trends then prevailing continued. That is clearly not now going to happen in that time frame. Some of that lost GNP will be made up by domestic demand. And some will be lost for the time being and the United States will simply grow more slowly or even slip into recession.
But there is no evidence that the United States will revert to a more insular, continental economy. The cost would be high. Disentangling the commercial relationships would be daunting. And the bridge back may already have been burned, if only because U.S. indebtedness has locked America into a dependence on the global market that would difficult to untangle.
The global American economy is here to stay, as are the security problems it brings with it.
More Cost-Benefit Considerations
The implications of economic evolution for future American foreign and security policy is profound. In the first instance, the rise in importance of economic factors will inexorably lead to more bottom line cost-benefit analysis of U.S. security commitments abroad. If economic self-interest is the yardstick against which all policy is increasingly measured, security policy will not be exempt.
This is already evident in the U.S.-Japan security relationship. Washington and Tokyo have long wrestled with the relative importance of trade and defense in the alliance. Since World War II military and business interests have vied with each other to have their goals and objectives set the tone and direction of the relationship.
During the Cold War, U.S. fear of the rise of a Communist trade union movement in Japan and concern that a left-leaning Japanese government would prove an unreliable ally in the global face off against the Soviet Union gave precedence to the post-war rebuilding of the Japanese economy. Such security-driven policies reached their apogee in 1960 with American acceptance of a Japanese ban on imports of U.S. cars in order to create more jobs in Japan.
Revisionist historians now look back on the 1950s and 1960s as a time when U.S. long-run economic interests were sacrificed on the altar of security. And it is true that the creation of a sanctuary auto market in Japan made possible the emergence of a world class domestic Japanese auto industry, which now accounts for two-thirds of Japan's trade surplus with the United States. But hindsight is always better than foresight. Through out this period U.S. economic interests in Japan were of insignificant importance to the domestic American economy. And, up until the mid-1960s, the United States ran a trade surplus with Japan. Under such conditions, it is little wonder that security concerns predominated in the relationship.
In recent years, however, even before the fall of the Soviet Union, the tradeoff between trade and security in the relationship has been less clear cut.
In the late 1970s and early 1980s, massive, disproportionate trade imbalances with Japan concentrated in highly visible and politically well-connected industries--such as autos and electronics--undermined the U.S. economy and American self-confidence. Wages stagnated. Job insecurity rose. U.S. economic wellbeing--once a given--emerged as a major public and policy concern.
Moreover, the security-trade nexus became more complex. In the 1980s, both the Toshiba affair and the FSX dispute were harbingers of a new intersection of trade and security matters that involved technology transfer and export controls. The immediate issues--the sale of sophisticated machine tools by Toshiba to the Soviet Union and Japan's desire to produce its own next-generation fighter jet--were, ostensibly, solely of a security nature. But the underlying concerns that animated the political debate on both sides of the Pacific had to do with the long-term technological competitiveness of key industries in both countries. In particular, in America, the FSX case was viewed, in retrospect probably erroneously, as opening the door for the creation of a Japanese commercial aerospace industry.
In the late 1980s and early 1990s, the security-trade linkage came to a head. American trade hawks proposed a grand bargain, trading off continued U.S. commitment to Japan's defense for greater access to Japan's market for U.S. exports and investments. Other critics of the status quo in U.S.-Japan relations cited the trade imbalance as reason to pressure Japan to increase its host-nation support for U.S. troops stationed in the island nation. For Japan's part, resentment against the drum beat of U.S. criticism on the trade front led to calls by a small but vocal minority for Japan to take greater responsibility for its own defense.
For the time being a confrontation over these issues has been avoided. The Guidelines for Defense Cooperation finally agreed upon between Washington and Tokyo in the fall of 1997 have increased Japanese obligations in the alliance, allaying some American concerns about the balance of risks and benefits in the security relationship.
But the controversy is far from over. The Japanese Diet is unlikely to take up legislation implementing the Guidelines before 1999. The recommendations of the Special Action Committee on Okinawa--the closing and moving of bases on that strategic island--have yet to be fully realized. And Tokyo has yet to decide on the nature of its participation in the Theater Missile Defense system proposed by the United States. More broadly, Japan will need to reallocate government expenditures in the years ahead to deal with its aging population. Already in 1998, for the first time in years, there was talk in Tokyo about cutting defense spending. All of these issues could become flash points in the future. And while none of them are specific economic issues, any Congressional debate over Japanese failure to follow the American lead will evoke references to the rising U.S. trade deficit with Japan, the perceived lack of Japanese burden sharing and Tokyo's failure to adequately reform its domestic economy (one of the alleged causes of the current Asian economic crisis).
So the trade-security debate has entered a new phase. No longer can the U.S.-Japan relationship be easily segmented into concerns about security or concerns about trade. Military and economic issues are now inextricably linked in ways that give precedence to neither issue and create a codependency that insures that, in new ways, both concerns will remain at the heart of the alliance for some time to come.
Old Goals, New Reasoning
Globalization and the growing U.S. dependence on international trade is not simply a 21st Century rationale for imperialism. It will also become the new driving force behind the pursuit of traditional U.S. foreign and security policy goals.
In the past, the United States has pursued a range of mutually consistent and self-reinforcing objectives overseas: physical security for the United States, global and regional stability, a balance of power and democratization.
These will continue to be U.S. objectives, but increasingly for economic reasons, because the achievement of U.S. economic self interest in the global market place necessitates many of the same political and social preconditions as were required to achieve U.S. foreign policy goals during the Cold War.
For example, for the past two generations, the preservation of America's security has been synonymous with the avoidance of nuclear conflagration. As long as atomic arsenals remain, strategic deterrence, arms control and non-proliferation will continue to be critically important objectives for U.S. foreign and security policy. But other threats to national security have now arisen. Primary among these is any erosion in the vitality and strength of the U.S. economy.
In the immediate post-World War II period it was the relative size and strength of the U.S. economy that permitted the United States the luxury of maintaining an army in Europe, of building up a global network of military alliances, of providing the economic assistance that rebuilt the war-torn nations of Europe and Asia and of opening its markets to foreign goods to restart the engines of growth around the world.
Despite the mood of triumphalism about the U.S. economy current today, the economic foundation for that robust foreign and security policy has eroded. The United States is no longer the preponderant world economic power. Moreover, the U.S. economy is now growing on average about a third slower than it did in the 1950s and 1960s.
At the same time, the cost of an active foreign and security policy remains. NATO expansion is expected to add billions of dollars to defense spending and the commitment of U.S. forces in Bosnia and the Persian Gulf only underscores the continued need for a costly U.S. military presence in disparate parts of the globe.
With other claims on the federal budget--Social Security, Medicare and Medicaid--all growing faster than government revenues, prospects for spending on defense depend as never before on the performance of the economy. As recent experience has demonstrated, that performance is increasingly dependent on exports and earnings from investments abroad. To continue to be able to afford the pursuit of traditional foreign policy aims, an international marketplace open to U.S. exports and investment that can in turn sustain domestic economic growth is a necessity.
Similarly, stability has long been a U.S. foreign policy goal in a dangerous world where instability can sow the seeds for military conflict. And a U.S. presence overseas has long been used to stabilize otherwise unstable military situations. But today, that presence is also needed because instability is bad for business.
"The security that comes from America's presence overseas provides a framework of stability that is essential to the prosperity that comes from trade," deputy secretary of Defense John Hamre told the Council on Foreign Relations in June 1998.
As in Mahan's day, the fleet provides some of this stability. Just having the U.S. military in the neighborhood may well deter misadventures. For this reason, the ongoing debate in the United States about the advisability of the continued stationing of American troops in Japan and in South Korea after its eventual unification with North Korea may ring hollow in an American economy increasingly dependent on stability in the corner of the world. Japan is America's leading Asian economic partner and Korea ranks number two. Stability of the Korean market, for example, will be just as important to the United States after reunification as before and the threat of internal instability may be even greater. As long as U.S. forces stationed there keep their heads down and do not become lightening rods for local political dissidents, American armed forces can continue to provide a stabilizing influence that is in America's economic self-interest.
At the same time, America's growing trade and investment relationship with China and Southeast Asia lacks a parallel forward military presence to secure it. The loss of the Subic Bay naval facility in the Philippines has never been replaced. Some day, a basing arrangement with Singapore or Vietnam may be needed to provide a U.S. military presence to ensure stability in what may one day again be the fastest growing region in the world.
But the stabilizing force of the U.S. presence goes beyond having a carrier within striking distance. In Indonesia, for example, one of the only things that kept the lid on the political situation was the close professional ties between the Indonesian military leadership and the U.S. military. The back channel communications between the Pentagon and Jakarta that have helped calm passions in the streets (that may have originally been aggravated by the Indonesian army) and have helped force the Indonesian government to punish some of those responsible for the ethnic rioting in the island nation. Indonesia is far from out of the woods either economically or politically, but the U.S. military has played an important role in initially stabilizing the situation, which serves U.S. economic self-interest as well as promoting regional stability.
Moreover, the sources of instability are increasingly economic in nature. In Indonesia, again, crony capitalism, unregulated international borrowing and unlimited capital flows from abroad, the concentration of wealth and the means of production and distribution in non-ethnic Indonesian hands and poor judgment by government technocrats in charge of the economy all contributed to the collapse of the Indonesian economy in 1997. Over the last generation, unprecedented economic growth bound this disparate island nation together. Now economic collapse threatens to tear it apart.
The security challenges posed by this downfall are self-evident. Indonesians have already taken to the streets, venting their frustration on their Chinese neighbors. Such random killing and looting could easily get out of hand. Indonesia butchered a half million of its Chinese citizens in the mid-1960s on even weaker pretexts. If the killings spread, the nations of the Asia-Pacific--particularly the United States--will face a dilemma. There will be international cries to intervene to avoid a 1960's style ethnic cleansing. The precedent of Bosnia will be invoked. Japan will plead constitutional prohibitions on large scale intervention. Indonesia's neighbors will be reluctant to set a precedent by intervening themselves. And no one will want China to get involved. There will be intense pressure on the U.S. military to take up another thankless task, all because economic globalization ran amuck in Indonesia.
And even apart from such crises, in a global economy the need for stability is increasingly business driven, because peaceful, functioning societies make good markets and stable suppliers.
Social, political and economic uncertainty make consumers and investors cautious, slowing growth and resultant demand for U.S. goods and services. Before the Third World Debt crisis in the early 1980s, Latin America was one of the largest markets for U.S. exports. When financial instability arose, that market almost disappeared over night. Now markets for U.S. goods and services and opportunities for productive U.S. investment have dried up in Asia because of instability there.
Over the last two generations, it was also Washington's goal to avoid the rise of a hegemonic strategic power that could threaten the security of the United States. Today, America has a similar interest in blunting the emergence of economic powers that can challenge U.S. commercial interests.
For example, until recently in Asia, Japan had rising influence exercised through the widespread investment of Japanese corporations, through the predominance of Japanese foreign aid and through the compelling attraction of the Japanese model of economic development. This growing influence threatened to reestablish the Greater East Asian Co-Prosperity Sphere by peaceful, economic means. If this influence had continued unchecked, then the United States risked the emergence of Asia-wide business networks--organized on the keiretsu model of interlocking company relationships dominant in Japan--involving exclusionary ties between suppliers and producers that would effectively lock-out U.S. companies from competing for business in the auto and electronics sectors of East Asia. Japanese-funded infrastructure projects went primarily to Japanese firms. And East Asian governments were drafting rules and regulations based on the Japanese legal model that effectively excluded open participation in government procurement by American firms.
The Asian financial crisis has blunted Japanese inroads into the region. But this may only prove temporary once the Asian economies rebound. Moreover, there is a growing Chinese influence in East Asia that is currently less pervasive but potentially more significant. Beijing's leadership role in the Asian financial crisis--holding the line on devaluation--has given it great stature. The size of the potential Chinese market, the region-wide uncertainty about China's strategic intentions and the close ties between the overseas Chinese and the mainland insure a growing Chinese imprint on economic developments in Asia.
In the face of such challenges, Washington again finds itself needing to play balance of power politics around the world. But the goal this time is to ensure that no one economic power has undue influence in a region to the detriment of U.S. commercial interests.
And the tools for such balance of power politics will not be carrier fleets or foreign military assistance, but increased foreign aid, new help for American companies attempting to do business overseas and pressure on foreign governments to adopt meaningful antitrust policies, tax regimes and regulatory structures that enable American firms to compete on a level playing field.
The creation and sustenance of democracy has long been a goal of U.S. foreign and security policy. In the immediate post-war period democracies were caste as bulwarks against Communism in the global struggle with the Soviet Union.
In the future, the pursuit of U.S. economic self-interest necessitates a reaffirmation of American commitment to practical democratization. This course is required, not out of any philosophical commitment to one particular form of governance or as part of some new global ideological conflict, but because American business functions best in a democratic environment characterized by due process, the rule of law and transparency in decision making.
Free market advocates often argue that capitalism breeds democracy. But democracy--in effect a consumer-driven polity--is also fertile ground from which a consumer-driven economy can grow. Citizens able to freely make decisions about their own governance are less likely to passively accept bureaucratic or corporate decisions about what they can buy and at what price. Moreover, voters in a democracy have the opportunity to change governments and thus change the direction of economic policy in their own interest.
A consumer-oriented market will be an open one, because only when consumers can freely pick between imports and domestically-made products can they exercise their democratic prerogative. Experience suggests that American firms fare quite well in such an environment because of their competitive advantage in the production of a range of goods and services.
Access to a foreign market for U.S. exporters or investors is useless without the rule of law to defend that access and make it meaningful. If U.S. assets can be seized with no recourse in the courts, U.S. corporations may refuse to do business in a country or pursue only the most lucrative investment opportunities to compensate for the high risk. In fact, the absence of a functioning legal system has been one of the primary obstacles to U.S. investment in the former Soviet Union. The cost to the Russian economy of limited foreign investment is obvious. And the security implications of a resurgence of Communist appeal because of a weak economy were evident in the last Russian presidential election.
The absence of due process and a lack of transparency in decision making can also negate U.S. access to foreign markets. Government regulatory decisions can level a playing field for domestic and foreign producers or tilt it in favor of indigenous firms. It has been American experience in Japan, for example, that bureaucratic actions have been used to close ostensibly open markets for products such as photographic film. If the representatives of U.S. business do not have the opportunity to exercise basic democratic oversight--to see proposed regulations before they go into effect, to comment on them, to appeal if they object to them--then the benefits of competing in a foreign market can be limited.
In recent debates over human rights, advocates of free markets have argued that capitalism breeds democracy. That may or may not be true. But it is increasingly evident that without democracy U.S. business can not maximize the benefits of its competitive advantage in foreign markets.
This new rationale for an old objective presents new challenges for the military's recent efforts to foster democratization. Military exchange programs have long been touted by the Pentagon as ways to instill in foreign officer corps a commitment to democracy. Bitter experience in Indonesia and Latin America suggest this is no easy task. Now the bar will get even higher. U.S. interest in democratization is no longer simply respect for human rights, a democratic chain of command and the results of the electoral process. America now has a self-interest in a democratic marketplace governed by due process and the rule of law. No longer will it be sufficient to insist that foreign military officers abstain from torturing their prisoners. The recent experience in Indonesia demonstrates that the U.S. military must also be vigilant that their foreign counterparts do not abuse their position in society to build up business empires that will ultimately undermine the economy and the society at large.
The Globalization Of Technology And Security Challenges
Globalization also poses new security threats because it has facilitated the rapid spread of advanced technologies and ensured the world's growing dependence upon them.
At one level, this new challenge is merely an extrapolation of traditional proliferation threats. The spread of knowledge and training, the growing availability of dual use technologies that may be developed for commercial purposes but are equally useful for military ones and the fall in the price of advanced technologies now work together to enhance the capabilities of the potential military foes of the United States. No longer must the United States simply worry about the spread of nuclear and missile technology. Now simple biological and chemical technology, much of which has commercial application, can be put to devastating military use. The pharmaceutical plant in Sudan leveled by U.S. cruise missiles was ostensibly built to supply the Sudanese economy with much needed medical supplies, but it was also capable of producing deadly chemical weapons.
In the past, the policy response to such a challenge has been to attempt to control the flow of advanced technology. But in an era when the mother board of a super computer can be smuggled across a border in a brief case and when software that is the crucial factor in launching a missile can be transferred over the Internet, fool-proof controls are no longer possible. Globalization dictates a new mind set. The old "control mind set" assumed that the United States could stay ahead of its enemies by not allowing others to catch up. The lesson of economic globalization--the bitter lesson learned by the U.S. auto and computer industries the 1980s--was that the only way to stay ahead in a rapidly changing technological environment is to keep running faster. In the security realm, this means the only way to combat proliferation is to ensure that the United States remains the leader in militarily significant technologies. And the only way to do this is to ensure stable markets all over the world so that U.S. industries can compete abroad in order to justify the level of investment necessary to maintain U.S. technological leadership.
The ubiquitous spread of information technologies--advanced computers, cell phones, satellite communications links--that are both a byproduct and a driving force behind globalization also raise new security threats. Thanks to such technology, terrorists are able to orchestrate a global network financed by investments and bank accounts all around the world, which can be shifted at the stroke of computer key, in a manner that would have been unthinkable only a few decades ago.
Moreover, the dependence of the new global economy on these new information technologies creates new security vulnerabilities. America's major corporations, its financial system and even the Pentagon increasingly rely on computer software that is written overseas. While the nationality of the software writer in no way makes the product inferior, it may make it less secure and reliable. Similarly, navigation for all U.S. shipping is now coordinated by satellite. The blinding of several of these birds would severely disrupt foreign trade and the domestic economy. And foreign hackers could shut down power grids or confuse rail transport by breaking into domestic U.S. computer networks through the global Internet.
Amplification And Transmittal
Finally, the globalization of the economy poses a new security threat to the United States because it amplifies local problems and rapidly transmits them to the other side of the world. For example, in the past, a bad harvest in one part of the world meant food scarcity in that region alone. Now with a global grain market, failure of the harvest in India or China can mean higher food prices in Africa, with all the attendant social and political problems that would entail. Thus the collapse of the Thai economy in July, 1997 rapidly reverberated through out Asia, bringing down the South Korean and Indonesian governments. This, in turn, has led to the collapse of the Russian economy, the ensuing political chaos and new threats of loose nukes, aggressive nationalism and gangsterism.
This easy transmittal of problems through the global economy will constantly threaten to blind side U.S. security policy makers. It was conventional wisdom in 1997 that Russia was slowly on its way to economic recovery. And that a stronger economy would permit Russia to become a "normal" and stable member of the international community. Now the international financial crisis has pushed Russia to the edge of relapse into a Cold War style leadership, with all the security threats that implies. Similarly, the United States had few contingency plans for dealing with security problems arising from instability in Indonesia. Now such planning is a necessity.
The Challenge To The Military’s Legitimacy
One final note of warning. As economic policy increasingly shapes security concerns, the military risks losing the moral high ground it has long enjoyed in the fight against fascism and communism. As U.S. military forces abroad become, even in part, more openly the handmaidens of U.S. commercial interests abroad, the old arguments against imperialism will be reopened. Moreover, the American public has grave concerns about economic globalization, concerns about job losses and wage stagnation that the current financial crisis will only heighten. The U.S. military must be wary of being tarred with that brush.
In addition, some of these new security threats--such as economic disruption caused by computer hackers--raise challenging jurisdictional problems for security policy makers. As Hamre said in his Council of Foreign Relations speech, "We have a 19th century view of national security. If a problem develops outside of the United States, it is a national security problem. If it is inside of U.S. borders, it is law enforcement. But there are no borders in cyberspace." Sorting out these conflicting domestic and international security responsibilities in a time of crisis in a way that guards against a growing domestic role for the military will not be easy.
And economic globalization will only complicate security planners' calculations. If the sphere of U.S. security interest is defined as the global economy, rather than one or two geographically definable regions of the world, there will be great risk of overreach, of the military being expected to do more than it possible can accomplish.
Moreover, globalization creates new opportunities for international tensions. Foreign governments already resent U.S. advice on the internal organization of their economies and that intrusive pressure is only going to grow. In Washington's eyes export controls are a question of denying rogue regimes high end electronics and machine tools that could be used for weaponry. From Tokyo's perspective, it is not surprising that some Japanese who are the world's leaders in producing such technologies see such export controls as thinly veiled attempts to deny them their competitive advantage. Finally, U.S. economic self-interest dictates an eventual narrowing of the persistent U.S. trade deficit to slow the growth of overall U.S. international indebtedness that now requires the U.S. to borrow $1 billion a day overseas and thus exposes its internal market to the whims of foreign investors. This will force U.S. trading partners to diversify their markets, increasing intra-regional trade in Asia, for example. As such intra-regional trade grows, Asian nations will have a new found self-interest in regional security. As they move to provide that security--for their own economic self-interest--it could aggravate an existing regional arms race, further complicating U.S. security challenges in the region.
Conclusion
In the end, the transition from a security policy shaped by direct security threats and ideology to one driven by economics will be a tortuous experience of fits and starts. The profound policy implications of the transformation of the U.S. economy from an inward looking one to an outward looking economy will take time to internalize in the security policy process. For some time to come, our perceptions of the right security policy are likely to be colored by perceptions formulated in the past, even thought they no longer reflect current economic conditions. But the impact on the domestic U.S. economy of trade and foreign investment conditions around the world are now so formidable, the globalization of the U.S. economy and the borderless nature of the economy must inevitably drive security policy in the future.