Jewish World Review Jan 17, 2001 / 22 Teves, 5761
Frank J. Gaffney, Jr.
http://www.jewishworldreview.com -- LAST MONTH, President Clinton unwittingly provided the perfect leitmotif to the conduct of U.S. foreign policy during his presidency. It came in the form of a letter to Elliott Abrams, the former Assistant Secretary of State who now chairs the U.S. Commission on International Religious Freedom (USCIRF).
On November 1, 2000, Mr. Abrams wrote the President to express concerns about the prospect that the government of China was expected shortly to "offer sovereign bonds in the total amount of $1 billion on international markets, including possibly the U.S. market." He advised Mr. Clinton that the Commission was "considering whether to recommend that you immediately bar any such offering until China meets two conditions: (1) it makes substantial improvements in respect for religious freedom, and (2) it provides sufficient assurances to guarantee that the proceeds are never used to support religious persecution."
The problem, as the Commission appreciates, is that -- given the lack of discipline and transparency associated with such sovereign bond offerings -- China could wind up using unsuspecting U.S. investors' funds for its brutal repression of religious and other human rights. Indeed, there is reason to believe that Beijing (among others) has figured out that, under present circumstances, the American capital markets can also be tapped for underwriting espionage, technology theft, military build-ups, proliferation of weapons of mass destruction and other activities inimical to this nation's interests and values.
The President's response of December 19th to the Religious Freedom Commission's inquiry as to whether the President has the power to bar U.S. financial institutions from purchasing Chinese bonds -- and, if so, whether he intended "to exercise that power so as to prevent China from offering bonds on the U.S. market until it meets the two conditions listed above" -- was vintage Clinton. After paying lip service to the importance of religious freedom, President Clinton declared:
"Barring China's access to U.S. capital markets, however, in my judgement will not advance respect for religious freedom in China. It will have little impact on China's access to capital in an age of global capital markets, but will have a seriously damaging effect on our ability to engage China on issues of human rights and religious freedom. It could also have a negative impact on the American people, as our commitment to the free flow of capital would be undermined, with adverse consequences for our economy."
In the first instance, this response is an example of the "fudging" Mr. Clinton has confessed to doing when it suits his political purposes. (Ironically, he made that confession to a group of religious leaders in explaining why he opposed the creation of the USCIRF!) No one is talking about blocking all Chinese access to the U.S. stock and bond markets -- just that of known "bad actors."
Second, the President's letter is symptomatic of his Administration's general disregard for matters of American sovereignty, deferring reflexively to "global" institutions and arrangements. Whether the issue has been the International Criminal Court, the Kyoto Protocol on global warming, the whims of majorities in the United Nations, implicating U.S. forces in open-ended, multilateral peacekeeping operations or permitting penetration of our capital markets by "bad actors," the answer has generally been the same: The United States must go along to get along.
In fact, this nation is not just another country. It has a unique ability in most instances to exert influence and shape events -- where it has the will and leadership to do so. What the Hudson Institute's John Fonte has dubbed "post-Americanism" may appeal to Clintonites like Deputy Secretary of State Strobe Talbott, who came to office trumpeting the imminent demise of the nation-state. Those of us who remain committed to protecting U.S. sovereignty and vital interests, however, need not accede to international demands that would erode and imperil them.
Consider the capital markets. While there is certainly non-U.S. funding available to the Chinese government and/or some of its more odious companies, should they be barred from access to the American capital markets, they would likely have to pay a premium for funds attracted elsewhere. More importantly, barring Chinese sovereign access to the U.S. markets for political reasons would probably affect risk assessment of China by rating agencies such as Moody's and Standard & Poor's. The "knock-on" effect of these lower ratings in other markets -- and on other Chinese entities -- would likely be sufficiently great as to increase perceptibly the costs to the PRC associated with its religious persecution (as well as other conduct inimical to American interests and values).
Finally, in this episode, as in his foreign policy more generally, Mr. Clinton appears to be guided by economic and trade considerations above all else. As ever, he is willing to ignore the implications of his policies for the national security and interests -- be it the transfer of militarily relevant computers and missile technology to China, the refusal to sanction Russia or China for their proliferation activities, or the wholesale evisceration of the export control regime to the detriment of the American military's critical "qualitative edge" -- as long as at least some segment of the U.S. economy stands to gain (however ephemerally).
It is preposterous on the face of it that blocking a Chinese sovereign bond offering -- which would provide Beijing's leadership with undisciplined cash from U.S. investors that could be used to fund religious persecution, national security abuses and other anti-Western activities -- "would have a negative impact on the American people." To the contrary, such a targeted approach to this kind of ill-advised lending directly to the Chinese government would be very much in the interest of the American people.
Similarly, such an approach need not undermine America's commitment to the free flow of capital. This sort of scare-mongering is also emblematic of the Clinton years; it only serves to discourage efforts to strengthen transparency, disclosure and discipline of the type sorely required by American investors so that they can avoid unwittingly helping to underwrite activities injurious to this nation's security interests and fundamental values.
With regard to bad actors' increasing efforts to penetrate the U.S.
capital markets, as in so many other areas of U.S. foreign policy, George W.
Bush will need to reconsider the policies and priorities bequeathed to him.
In particular, as Roger Robinson of the William J. Casey Institute has
observed, America will need to use, among other tools, disclosure-oriented,
non-disruptive new measures -- including the selective leveraging of its
capital markets -- to demonstrate to "countries of concern" that a
significant price will be paid for their odious repression and other
JWR contributor Frank J. Gaffney, Jr. heads the Center for Security Policy. Send your comments to him by clicking here.
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