MUST READ The solvency doctrine

JAN 24 — To restore American power, Barack Obama needs a foreign policy that recognises its limits.

When it comes to predicting a President's foreign policy, there are basically two ways to go: you can look at the guy, or you can look at the world.

Perspective 1 — which is part biography, part psychiatry — is more fun. The problem is that very often a President's past — and even his campaign rhetoric — is not prologue. In 1916, Woodrow Wilson pledged to keep the United States out of war; in 1940, Franklin Roosevelt promised to do the same. Richard Nixon spent his career as a die-hard anti-communist, but in the White House, he opened relations with China and ushered in détente with the USSR. George W. Bush once said America shouldn't tell the world what to do.

Perspective 2 is more reliable. Instead of looking at the person and extrapolating out, you look at the world he inherits and work back in. The world deals the cards, and a President plays them as best he can.

Obama starts with a bad hand. The Bush Administration didn't just preside over the creation of a financial bubble; it helped build a foreign policy bubble as well. After 9/11, it acted as if America's power were virtually unlimited: our resources were infinite; our military was unstoppable; our ideology was sweeping the world. Bush and Dick Cheney were like homeowners who took on more and more debt, certain that they could cover it because the value of their home would forever rise. They toppled regimes in two countries with little history of competent, representative government. They defined the war on terrorism so broadly that it put the US in conflict not only with al-Qaeda but also with Hizballah and Hamas, with the Shi'ite theocracy in Iran and even with relatively secular autocracies like Syria's. They vowed to no longer tolerate dictatorships in the Middle East, which essentially committed the US to a policy of regime change towards not only our enemies but most of our allies as well.

America's military and ideological commitments grew and grew, far beyond our capacity to carry them out. And now the power bubble has popped. Militarily, savvy and savage guerilla movements have learned how to bleed us of money, lives and limbs. Economically, resources are scarce; it's hard to pay to transform the Middle East when we're deep in debt trying to prop up the Midwest. And ideologically, democracy no longer looks like the inevitable destination of all humankind.

In 1943, Walter Lippmann famously wrote that "foreign policy consists in bringing into balance, with a comfortable surplus of power in reserve, the nation's commitments and the nation's power." By that standard, US foreign policy is in Chapter 9. No matter what grand visions Obama may harbour to remake the world, the central mission of his foreign policy — at least at first — will be to get it out of the red. Call it the solvency doctrine.

The power deficit

The most attractive way to balance America's commitments and its power, of course, would be to increase the latter — to do the foreign policy equivalent of growing revenues rather than slashing jobs. But the harsh reality is that in the short term, Obama won't be able to dramatically boost US power. He can enlarge the armed forces, as he has pledged to do, but even if he increases the number of troops and repairs the tanks, the top military brass will still be far more reluctant to use them. So will the public, which wants out of Iraq and isn't that gung ho about an indefinite stay in Afghanistan either. As a result, America's ability to threaten new military action — against Iran, for instance, or in Darfur — has dramatically declined. Our hard power isn't what it used to be — and won't be again anytime soon.

When it comes to soft power — the power to persuade, not coerce — things are little better. True, anti-Americanism is abating as brand Obama rejuvenates brand USA. But popularity is not the same as power (ask Canada or Sweden). In the 1990s, American soft power was based on more than goodwill; it was based on economic and ideological hegemony. There was only one widely accepted path to prosperity — deregulated, American-style capitalism. And there was one central destination for a poor country seeking the investment and aid it needed to travel down that path: Washington. The US and its allies could dangle big financial carrots to get countries to do what we wanted — and turn the screws on those pariahs who held out.

That's no longer the case. American-style capitalism no longer looks as dominant now that Wall Street has blown up. The financial meltdown also means that for the foreseeable future, the US and its European allies will have less money to offer countries they want to influence. There's a lot in Obama's history and rhetoric to suggest he'd love a Marshall Plan-style effort to fight poverty and terrorism in failing states like Pakistan and Yemen. But finding the money is going to be much harder today than it was a few years back. And putting tough conditions on that money will be harder too, since poor countries can turn to China and get cash with fewer strings attached.

All of which is to say that getting to solvency will require reducing the other side of the ledger: the one that lists America's commitments overseas.

Subtracting enemies

The most obvious commitment Obama wants to liquidate, of course, is the war in Iraq. But how can the US draw down its troop levels without letting Iraq spiral out of control? The answer, at least in part, is to end another conflict: America's proxy war with Iran. Since Iran is the other big foreign power with influence in Baghdad, the US needs its help to prevent Iraq from sliding back into anarchy as we withdraw. A better relationship with Iran might also make it easier to achieve calm — if not peace — between Israel and its two non-state foes Hizballah and Hamas, since Tehran arms and bankrolls both terrorist groups.

Getting Iran's help in Iraq — and persuading it to give up its quest for a nuclear bomb — will require abandoning our efforts at regime change, muting our human-rights concerns and accepting an Iranian sphere of influence in the Persian Gulf. Obama's opponents will probably depict that kind of deal as defeatist, an admission of the limits of American power in the Middle East. But those limits already exist; the US just hasn't acknowledged them.

The solvency doctrine also has implications for America's other war, in Afghanistan. Obama wants to send tens of thousands of US and Nato troops there, expand the Afghan army and dispatch boatloads of Western civilians to help build a governmental infrastructure that actually works. He also wants a high-octane diplomatic push across the border into Pakistan, which al-Qaeda and the Taliban have made their home base.

But he still needs to define victory down. Afghanistan is bigger and more populous than Iraq, with harsher terrain and a literacy rate one-third as high. It has no real history of centralised government; a fictional border with Pakistan, which militants cross with ease; an economy based largely on drugs; and a leader who — although still popular in the US —is widely considered a disaster at home.

To make matters worse, public support for the Afghan war has grown noticeably soft. The reason is that to most Americans, the war in Afghanistan has always been principally a war against al-Qaeda — to retaliate for 9/11 and eliminate its safe haven — not a war to build a centralised, democratic state in the Hindu Kush, which is a far harder thing. Obama is right to increase America's military, economic and diplomatic muscle in Afghanistan and across the border in Pakistan, but that power surge will work only if he also sets more realistic expectations. Ultimately, the US will have to cut a deal — or lots of little deals — with the bad guys to flip those Taliban members who will renounce al-Qaeda from enemies to allies. That will mean empowering local warlords who don't truly report to Kabul and may not win any awards from the ACLU. But that's essentially what we've done over the past two years in Iraq, where the Bush Administration both temporarily increased American power and quietly downsized expectations so we were fighting a small number of jihadist terrorists rather than a large number of conservative tribesmen. Achieving solvency requires subtracting enemies, not only in Iraq and Iran but in Afghanistan too.

A downsized war

The best precedent for all this is what the US did in the wake of Vietnam. By the early 1970s, the containment of global communism had become a foreign policy bubble of its own. The US had committed itself to stopping virtually any leftist movement from taking power anywhere in the world. But in Vietnam, this ideological determination was exacting a toll in money and blood that the American public was no longer willing to pay.

Nixon, Jimmy Carter and Ronald Reagan — each in a different way — responded by downsizing containment. Nixon opened up to China, which essentially meant the US was no longer trying to contain the Soviets alone. Carter told Americans not to panic every time leftists overran some banana republic. Even Reagan, although he funded anti-communist guerillas, refused to send US troops to battle communist rebels and regimes in Central America.

Today it's the war on terrorism that has proved too costly. Describing Shi'ite Iran and Sunni al-Qaeda as a unified terrorist threat when they loathe each other makes as little sense as treating China and the Soviet Union as a unified threat in the 1960s, when they were on the brink of war. Even Hamas and Hizballah are fundamentally different from al-Qaeda, since they're national movements, not global ones. They may be terrorists, but politically, socially and economically, they are deeply integrated into their local societies in a way al-Qaeda is not. Our long-term goal should be to transform them from militias into political parties, which means giving them a seat at the table, no matter how odious their ideology, if they give up their guns.

We've done it before. America won World War II and the Cold War not by taking on all the enemies of freedom at once but by shrewdly isolating our greatest enemies, even though that meant cutting deals with some pretty nasty guys. We beat Hitler by allying with Stalin, and we beat Moscow in part by allying with Beijing. Today we need to beat al-Qaeda with the help of Iran, elements of the Taliban, perhaps Syria and maybe one day even Hizballah and Hamas. We need to isolate the violent jihadists who want to attack America rather than isolate ourselves by defining the war on terrorism as America against the field.

The new agenda

Does restoring solvency mean abandoning our commitment to freedom? No, but it means not writing rhetorical cheques that we can't cash. America usually promotes liberty more successfully by luring autocracies into greater engagement with the West rather than by trying to quarantine them. What's more, America's greatest contribution to democracy's spread comes from the power of our example. By defining the war on terrorism as a permanent state of emergency during which human rights and civil liberties don't apply, Bush has harmed freedom's cause far more than his lofty speeches have boosted it. The solvency doctrine may seem coldhearted, but in the long run, restoring America's strategic balance can help restore its moral balance as well.

Finally, downsizing the war on terrorism is crucial to freeing up energy for other things. Since 9/11, the Middle East has swallowed American foreign policy. From Bangkok to Brazil, China has been winning friends and influencing people while the US fights endless wars in the basket cases of the world. Obama's personal story gives him a unique opportunity to remind people in Asia, Latin America and Africa why America can still inspire in ways China cannot. But he can do that only if he and his top advisers take the time to nurture relationships that the war on terrorism has distorted or eclipsed.

If he's very lucky and very good, Obama may be able to get US foreign policy out of the red by late in his first term. If the economy starts growing again, if the US troop presence in Iraq drops without a return to anarchy, if there's a real thaw with Iran and if the outlines of a political settlement take shape in Afghanistan, then Obama will have an opportunity to define his agenda rather than having America's weakness define it for him. If he has the chance, my guess is he'll revive a vision that has intrigued progressive Presidents since Wilson: collective security, the idea that ultimately America's security and prosperity are bound up with the security and prosperity of people across the globe. A collective-security agenda would start with global warming, the ultimate we're-all-in-it-together planetary threat. It might move from there to international financial regulation, so countries can better work together to keep world capitalism from running off the rails. Next might be a new nuclear compact, in which the current nuclear powers begin to disarm while wannabes agree to tighter inspections in return for better access to civilian nuclear power.

This would be a stark departure from the Bush Administration's us-vs-them, neo--Cold War approach to the world, and it would be far better received. It would still be hard to achieve, given that global power is far more diffuse today than it was in the late 1940s, the last time the US helped build a new international architecture for a new

world. But it would be an aggressive, farsighted agenda, launched by an America strong enough to play offence again. If Obama can make US foreign policy solvent, he'll do more than cut our losses. He'll give himself — and us — the power to dream again of a transformed world. — Time