Global Scorecard
Jude Wanniski and Peter Signorelli
May 28, 1996


With critical elections coming up in Israel (tomorrow) and Russia (June 16) and a trade war looming with China (June 17), we are reminded that in the post-Cold War world there are profoundly important issues of foreign affairs that should be debated by our major political parties. Instead, we find only the analytical framework of the Cold War era, with Republicans taking the hawkish view and Democrats the dovish view. Because the country prefers diplomacy to confrontation in this new era, President Clinton gets the better of the narrow posturing. It still leaves the United States without a sense of what our global role should be at the top of the unipolar world. Here are our assessments:

RUSSIA: By signing a peace pact yesterday with the leader of the Chechnya rebels, Boris Yeltsin improves his chances of re-election next month. We still would not be surprised with a run-off victory by his Communist Party challenger, Gennadi A. Zyuganov nor would we be all that distressed. The Russian Communists now represent a benign form of state socialism. They pledge to improve the living standards of the masses of ordinary Russians whose lives have been wrecked by the "shock therapy" inflicted by the Gorbachev/Yeltsin governments. This was the advice of the "IMF witch doctors," to use Steve Forbes's phrase, as well as Republican Cold Warriors who wished to see the Russian political empire demolished. At the time, I warned these old friends that they would come to regret this short-sighted thinking, as it would lead to the return of the Communists. In my 1989-1993 visits to Moscow, the most encouragement I got in my attempts to design a supply-side path to a market economy came from CP officials. The ruble, for example, may be more stable under Zyuganov than under another Yeltsin term. Yeltsin owes his power position to the urban elites who are amassing wealth by inside deals with the present government, and those who forever are pushing for a devalued ruble. Zyuganov also is pledging to straighten out the tax system, which the government of Prime Minister Viktor Chernomyrdin keeps at confiscatory rates that, of course, are ignored by friends of the government. Such positive changes in tax and monetary policies would bring relief to the countryside and pensioners, and make it more attractive for the Chechen rebels to keep the peace. What risk is there that a CP victory would lead to a new Cold War? Not much. The CP still represents the only organized ruling class in Russia. If Zyuganov follows through on his reform program, it would essentially involve taking two steps back from the law of the jungle, then stepping forward on the Chinese path to a market economy. Yeltsin will have an opportunity to address these concerns in the run-off campaign. If he does - and we hope he will the Russian people will be able to avoid the risks of returning the Communists to power via a democratic ballot.

CHINA: Our threatened trade war over pirated software and videotapes has nothing to do with intellectual property rights, and the Chinese know it. They are doing their best to live up to their 14-month-old agreement and are surely pirating less from us in dollar volume than the South Koreans, or Germans for that matter. Sanctions are at issue because Bob Dole and Bill Clinton want to support MFN without seeming like wimps on all the other issues involving Beijing. The U.S. still has not figured out how to deal with China's steady emergence as a serious world power. Our old Cold Warriors are afraid a strong Chinese economy will be able to finance a powerful military that somehow will confront us in another generation, perhaps over Taiwan and other Asian real estate.

Liberals fear China's economic growth will come at the expense of the environment. There is fear of 1.2 billion Chinese driving cars and using up the world's oil. For every businessman who sees a profit in exports to China there is one who sees losses in imports from China. There would be no reason for a trade war with China if it were admitted to the World Trade Organization, which has an arbitration mechanism to settle such politicized trade matters. In lieu of that, Jack Kemp on Friday issued a statement at Empower America recommending a non-binding fact-finding mission composed of delegates named by Canada, Mexico and Japan to look into the issue and make recommendations. It's in the interests of both Clinton and Dole to grab such an idea to get us off this hook. By the way, as we are debating whether or not to send food to North Korea to alleviate the famine there, China last week committed 20,000 tonnes of grain which it has to buy from the United States.

Jude Wanniski

ISRAELI ELECTIONS: Alas, neither Likud nor Labor advances an economic program to challenge the old socialist statism that now prevents Israel from serving as the center of a robust democratic capitalist re-orientation for the entire area. Still, an end to the status quo is at hand, which is why we believe a victory for Likud would be a net loss. A remarkable transformation in Palestinian attitudes toward Israel is underway, as NYTimes Foreign Affairs columnist, Thomas L. Friedman, a knowledgeable veteran of the Middle East beat, reported on 5-22. The region still is racked by unemployment, heavily burdened by onerous security measures, and it looks grim. "All the ingredients are there for an explosion. But," he notes, "it's not exploding." Why? "The conflict is no longer between the Palestinian mainstream and the Israeli mainstream, but between the Palestinian extreme and the Israeli extreme." A bit of light finally? For the first time ever, the prospect of peaceful relations between Israelis and Palestinians appears real. Although the Times editors support this view, columnists such as A.M. Rosenthal and William Safire are in the pro-Likud hawk camp. Joining them is veteran Cold Warrior Albert Wohlstetter, who wrote in the May 22 Wall Street Journal a snarling rebuke to those who harbor hope that there may be light at the end of the "partners for peace" tunnel. The approach is a disastrous policy for Israel, he warned, going as far as to propose outright bombing of Syrian military power. Yes indeed, that certainly would end the "peace process." Likud (which is conceptually wedded to a Masada complex) is best suited, he advises, to burst the region's deadly illusions about any peace process. The two essays reflect a division in the U.S. establishment over the issue, the Times editors on behalf of those inching toward a belief that the region may be on the road to more stable relations, with the Israelis and Palestinians taking the lead. The Journal provides the forum for those who reject any perspective of regional resolution and instead counsel go-it-alone strategies. These are never quite go-it-alone, inasmuch as they are based on the presumption that the U.S. ultimately will have to support the Israeli initiative. We remind you that Wohlstetter and his protege, Richard Perle, are foreign policy advisors to Bob Dole.

Peter Signorelli