The Asian order is under strain as the People’s Republic of China has become an economic colossus with growing military might and diplomatic influence. The PRC is asserting territorial claims once considered impractical or worthless. Brunei, Japan, Malaysia, Philippines, and Vietnam all stand opposed to these claims. 

Washington is not a claimant, but has sparred with the PRC over the U.S. Navy’s legal right to engage in intelligence gathering in Chinese waters. More important, America has a formal military alliance with Japan which, the president declared, covers disputed territories. Washington’s military relationship with Manila is looser, but Philippine officials are seeking a similar territorial guarantee.

The Obama administration has escalated U.S. involvement by sending American aircraft over islands reclaimed by China and discussing joint patrols with the Japanese.

Most of the islands are intrinsically worthless and provide little security value. Maritime rights are affected but, in peacetime, the difference wouldn’t matter so much. In wartime, everything would depend on the capabilities of the contending navies.

The economic benefits from control are real but still relatively small compared to the economies of most of the claimants. For most of the countries, national ego is the primary issue.

What should the United States do? American interests are few and of middling importance. Washington primarily seeks to uphold global norms, in this case, navigational freedom and peaceful conflict resolution.

It is widely assumed that America’s involvement would deter China from starting a war. However, any attempts to coerce the PRC over its perceived interests would add conflict to the U.S./China relationship.

As I point out on National Interest online: “China likely would respond by matching American air and naval maneuvers, accelerating military outlays, and challenging U.S. interests elsewhere. Americans should reflect on how they would respond if Beijing acted like the U.S.”

Maintaining the overly large and expensive military presence necessary for Washington to project power sustainable over the long-term. It costs far more to build carriers than to sink them. Americans are unlikely to heed a clarion call for sacrifice to ensure that the Senkakus stay Japanese.

Instead of goading China, the administration should withdraw from East Asia’s territorial miasma. First, Washington should acknowledge that East Asian hegemony it not essential for America’s security.

Second, Washington should make clear through action, as well as rhetoric, that it takes no position regarding competing territorial claims. While the United States should assert freedom of navigation—and insist that there is no valid legal justification for turning 80 percent of the South China Sea into Chinese territorial waters—Beijing has not threatened that basic freedom.

Third, the administration should remove contested territories from security guarantees. America’s interest is in Japan’s and the Philippines’ independence, not their control over worthless rock piles. It is especially foolish to threaten a nuclear-armed state over territories to which the latter might be entitled.

Fourth, the administration should allow events to take their natural course. China’s neighbors are growing increasingly hostile to Beijing’s aggressiveness. Japan is spending more and rethinking historic strictures on its military, smaller nations are arming–some of which are working with Tokyo–and everyone is encouraging India to play a larger regional role.

Fifth, U.S. officials should more effectively make the case for negotiation. Washington should press its friends to offer creative solutions to the region’s many disputes, such as setting aside or sharing island sovereignty.

Finally, Washington should highlight the advantages of peace for all concerned, especially China. The future should not be risked for stakes of such limited value.

What should the United States do about East Asia’s territorial disputes? In most of East Asia’s territorial controversies, America’s interests are peripheral and Washington should play a minor role. America’s most important interest today is keeping the peace.

Benjamin Franklin said, “There never was a good war or a bad peace.” Given Franklin’s leadership in the struggle for American independence, we can infer that he did not think that there never was a war that was necessary, or a war that was worth its cost. But he reminds us that even necessary wars have terrible costs.

I thought about Franklin when I read an eloquent column on the meaning of Memorial Day by the novelist Mark Helprin, who is also a senior fellow at the Claremont Institute. He lamented:

Though if by and large we ignore the debt we owe to those who fell at Saratoga, Antietam, the Marne, the Pointe du Hoc, and a thousand other places and more, our lives and everything we value are the ledger in which it is indelibly recorded.

It’s a worthy sentiment, one heard frequently in Memorial Day addresses, and we do indeed owe our lives and our pursuit of happiness to the freedom that America’s soldiers have sometimes had to defend.

But I can’t help wondering: Have all of America’s wars have been necessary to American freedom? Helprin mentioned the Second Battle of the Marne, the great turning point of World War I and the first battle in which Americans started experiencing the enormous casualties that Europeans had been facing for nearly four years. The problem is that World War I was a catastrophe, a foolish and unnecessary war, a war of European potentates that both England and the United States could have stayed out of but that became indeed a World War, the Great War. In our own country, the war gave us economic planning, conscription, nationalization of the railroads, a sedition act, confiscatory income tax rates, and prohibition. Internationally, World War I and its conclusion led directly to the Bolshevik revolution, the rise of National Socialism, World War II, and the Cold War. World War I was the worst mistake of the 20th century, the mistake that set in motion all the tragedies of the century. The deaths of those who fell at the Marne are all the more tragic when we reflect that they did not in fact serve to protect our lives and all that we value.

Did the wars in Vietnam and Iraq protect American lives and liberties? Two weeks ago, Republican presidential contender Jeb Bush said that discussing whether the Iraq war was a mistake “does a disservice to a lot of people who sacrificed a lot.” It’s understandable that an aspiring commander-in-chief would want to spare the feelings of those who lost a loved one in Iraq. But surely it’s more important that a commander-in-chief ask tough questions about when it’s advisable to go to war.

In my book The Libertarian Mind, I wrote about the effects of war: not just death on a large scale but the destruction of families, businesses, and civil society. And thus:

War cannot be avoided at all costs, but it should be avoided wherever possible. Proposals to involve the United States—or any government—in foreign conflict should be treated with great skepticism.…We should understand the consequences of war for our entire social order and thus go to war only when absolutely necessary.

On this weekend we should mourn those who went to war, such as my father, who planned and participated in the liberation of Europe, and his brother who was lost off the coast of Normandy, and we should resolve not to risk American lives in the future except when our vital national interests are at stake.

In about 30 seconds this morning on Fox News Sunday, George Will laid out the prudential case for proceeding very cautiously when contemplating a war:

WALLACE: So George, with that as trailer, what’s the lesson that we should take from Iraq, and particularly as it comes to future U.S. policy?

WILL: Four lessons, I think.

First, the government has to choose always on the basis of imperfect information. I agree with Bob [Woodward]. There were no lies here [in the Bush administration’s incorrect claims about WMD]. It was a colossal failure to know what we didn’t know.

Second, the failure to ask Admiral Yamamoto’s question. When he was asked by the government of Japan could he take a fleet stealthily across the Pacific and strike Pearl Harbor, he said yeah, but then what? He knew they would have on their hands an enormous problem in the United States.

Third, Colin Powell’s Pottery Barn rule: if you break it, you own it. Just as when the Kennedy administration in November 1963 was complicit in the coup against Diem, in South Vietnam, we owned South Vietnam ever after.

But fourth and most important, the phrase nation-building is as absurd as the phrase orchid building. Orchids are complex, organic things. So are nations. And we do not know how to build nations any more than we know how to fix English-speaking home grown Detroit. 

On May 19, I testified at a hearing titled “Trade Promotion Agencies and U.S. Foreign Policy,” which was held by the House Foreign Affairs Subcommitee on Terrorism, Nonproliferation, and Trade. The subject agencies were the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the U.S. Trade and Development Agency (USTDA). The focus of my remarks, which follow, was on Ex-Im and the myth that exports are the benefits of trade.

Good morning, Chairman Poe, Ranking Member Keating, and members of the subcommittee. I am Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Thank you for the invitation to share my views with you today concerning “Trade Promotion Agencies and U.S. Foreign Policy.” The views I express are my own and should not be construed as representing any official positions of the Cato Institute.

To the extent that today’s hearing will help clarify some of these issues and prompt a serious effort to reform and retire some of the redundant, distortionary, and, frankly, scandal-prone agencies among the panoply of federal offerings, I am pleased to be of assistance.

U.S. trade promotion agencies are in the business of promoting exports, not trade in the more inclusive sense. That is worth noting because despite some of the wrongheaded mercantilist assumptions undergirding U.S. trade policy—that exports are good and imports are bad—the fact is that the real benefits of trade are transmitted through imports, not through exports.

In keeping with the conventional wisdom, in January 2010 President Obama set a national goal of doubling U.S. exports in five years. Prominent in the plan was a larger role for government in promoting exports, including expanded nonmarket lending programs to finance export activity, an increase in the number of the Commerce Department’s foreign outposts to promote U.S. business, and an increase in federal agency-chaperoned marketing trips.

But the NEI neglected a broad swath of worthy reforms by ignoring the domestic laws, regulations, taxes, and other policies that handicap U.S. businesses in their competition for sales in the U.S. market and abroad. For example, nearly 60 percent of the value of U.S. imports in 2014 consisted of intermediate goods, capital goods, and other raw materials—the purchases of U.S. businesses, not consumers. Yet, many of those imports are subject to customs duties, which raise the cost of production for the U.S.-based companies that need them, making them less competitive at home and abroad. U.S. duties on products like sugar, steel, magnesium, polyvinyl chloride, and other crucial manufacturing inputs have chased companies to foreign shores—where those inputs are less expensive—and deterred foreign companies from setting up shop stateside.

Policymakers should stop conflating the interests of exporters with the national interest and commit to policies that reduce frictions throughout the supply chain—from product conception to consumption. Why should U.S. taxpayers underwrite—and U.S. policymakers promote—the interests of exporters, anyway, when the benefits of those efforts accrue, primarily, to the shareholders of the companies enjoying the subsidized marketing or matchmaking? There is no national ownership of private export revenues.

If policymakers seek a more appropriate target for economic policy, it should be to attract and retain direct investment, which is the seed of all economic activity, including exporting.

Given the exalted status of exports in Washington’s economic policy narrative, it is understandable why agencies would want to portray themselves as indispensable to U.S. export success. But on that metric, none of the subject agencies is scarcely relevant: Ex-Im supported $27.4 billion in exports in 2014; USTDA supported approximately $2.5 billion annually; and, OPIC supports less than $2 billion. In aggregate, these three agencies “support” less than 2 percent of all U.S. exports.

But the relevant economic question concerns the costs and benefits of these agencies to the U.S. economy. Let me focus now on Ex-Im.

Ex-Im financing helps two sets of companies: U.S. firms whose exports are subsidized through direct loans or loan guarantees and the foreign firms who purchase those subsidized exports.

But those same transactions impose costs on two different sets of companies: competing U.S. firms in the same industry who do not get Ex-Im backing, and U.S. firms in downstream industries, whose foreign competition is now benefitting from reduced capital costs courtesy of U.S. government subsidies.

Ex-Im financing reduces the cost of doing business for the lucky U.S. exporter and reduces the cost of capital for his foreign customer, but it hurts U.S. competitors of the U.S. exporter (what I call intra-industry costs), as well as U.S. competitors of his foreign customer (what I call downstream industry costs) by putting them at relative cost disadvantages. According to the findings in a recent Cato Institute study, the downstream costs alone amount to a tax of approximately $2.8 billion every year and the victims include companies in each of the 21 broad U.S. manufacturing sectors.

The notion that because Beijing, Brasilia, and Brussels subsidize their exporters, Washington must, too, sweeps under the rug the fact that the United States is a major export credit subsidizer that has been engaged in doling out such largesse since 1934, well before the founding of the People’s Republic of China. To say that U.S. exporters need assistance with financing to “level the playing field” suggests that they lack advantages among the multitude of considerations that inform the purchasing decision. Moreover, the fact that less than 2 percent of U.S. export value goes through export promotion agencies suggests this rationale for Ex-Im is bogus.

Congress should allow Ex-Im to expire at the end of next month and the administration should announce plans to bring cases to the World Trade Organization against governments operating their export credit agencies in violation of agreed-upon limits under the Agreement on Subsidies and Countervailing Measures. The combination of the carrot of U.S. withdrawal from the business of export credit financing and the stick of WTO litigation would likely incent other governments to reduce, and possibly eliminate, their own subsidy programs.

For better or worse, at different times and for different purposes over the years, U.S. trade policy has been a tool of U.S. foreign policy. Trade preference programs, trade agreements, the Trans-Pacific Partnership, investment treaties, trade sanctions, infrastructure funding, and trade financing have all been pursued or deployed for reasons not entirely economic in nature. Pursuing strategic objectives through trade policy has a long history.

The State Department’s mission is “to shape and sustain a peaceful, prosperous, just, and democratic world and foster conditions for stability and progress for the benefit of the American people and people everywhere.” That broad mission may justify one or two export promotion agencies. But according to the Congressional Research Service, there are at least 20 such agencies within the U.S. government with overlapping responsibilities and, in some cases, working at cross purposes.

Ex-Im’s inspector general is currently investigating 31 cases of fraud and abuse and last year the House Oversight and Government Reform Committee held a hearing with a former bank employee who was subsequently indicted on charges of fraud. It would be difficult to argue that this is the kind of behavior we encourage foreign governments to emulate.

Despite the rhetoric of U.S. decline, the United States maintains enormous commercial advantages over other countries. We have the world’s largest market; strong institutions, including respect for private property and the rule of law; relatively free markets; a highly educated and productive workforce; the world’s best research institutions; a society that encourages innovation and produces deep and broad capital markets to fund it. From these commercial advantages comes security and strength, so it is important that we maintain and build on those advantages. They underlie the strength of the U.S. economy, which is crucial to reaching U.S. security and foreign policy goals going forward.

A peculiar tic of contemporary American nationalism is the notion that the American state, particularly if helmed by a Republican president, makes no errors of commission in its conduct of military affairs. No American war was ill-founded, or aimed at a threat that didn’t exist or didn’t warrant the effort. This logic never applies in the domestic sphere for Republicans, where government programs are at best naïve and bound to make problems worse or at worst, venal and Machiavellian.

This tic is the only reason I can think of that we’re actually sustaining a debate in 2015 about whether, with the benefit of hindsight, it was a good idea to invade Iraq. Jim Fallows at the Atlantic argues that nobody should again ask a politician the question, since

the only people who might say Yes on the Iraq question would be those with family ties (poor Jeb Bush); those who are inept or out of practice in handling potentially tricky questions (surprisingly, again poor Bush); or those who are such Cheney-Bolton-Wolfowitz-style bitter enders that they survey the landscape of “what we know now”—the cost and death and damage, the generation’s worth of chaos unleashed in the Middle East, and of course the absence of WMDs—and still say, Heck of a job.

I actually think this makes the case why the question should be—or at least should have been—asked, since at least one fortunate Republican son, Marco Rubio, belongs in Fallows’ bitter-ender camp. To the extent voters—and donors—care about competent foreign policy, they deserve to know that Rubio strongly opposes it, even with the benefit of hindsight.

But beyond the politics, a weird narrative has begun to emerge on the right that asking about the Iraq war is a “gotcha question.” Keep in mind: we are discussing a policy that was dreamed up by the Bush administration, marketed by the Bush administration, and purchased by the vast majority of our legislators, including the likely Democratic nominee in 2016.

For example, conservative message man Rush Limbaugh whined on his radio show that this is nothing more than a “gotcha question” designed to tarnish Republicans. Iraq War monger Eliot Cohen would later echo this argument, lamenting “gotcha journalism” and calling the question a “silly hypothetical, and the people who ask it should know better.”

Pardon me. Nearly 5,000 Americans are dead, tens of thousands grievously wounded, and more than a hundred thousand Iraqis were killed, two of whom were this little girl’s parents. We spent trillions of tax dollars. We destroyed the political order that existed in Iraq, and a new one has yet to emerge. (To the partisans: Yes! President Obama, too, has failed to produce order in Iraq.)

The conservative movement used to harp on personal responsibility (at least for poor single mothers in inner cities). Today’s conservative foreign policy elite seems to revile that same value. Fortunately for our purposes, Anatol Lieven had all the necessary words for the Eliot Cohens of the world back in 2007:

by contributing… to a hasty, poorly-planned military operation, it must be repeated that Dr. Cohen took on himself a measure of the moral, intellectual and political responsibility for precisely those U.S. administration mistakes in Iraq which he now denounces, and which have cost so many American lives. It is disappointing-though not surprising-that Dr. Cohen himself does not realize that this record demands from him, as an honorable man, a lengthy period of quiet, private reflection on his mistakes and the reasons for them.

If no personal price at all is to be paid in terms of careers for errors on this scale, which contributed to the deaths of thousands of Americans, then the long-term consequences for U.S. government and U.S. democracy could be dire. If being proved obviously, dreadfully wrong brings no long-term consequences, and being proved right brings no long-term rewards, then why in the future should any U.S. analyst, adviser, commentator or public figure ever take a public stand in favor of what he or she believes to be right and correct, if this is going to lead to short-term unpopularity and career damage?

He or she shouldn’t. He or she should go along, and get along… and maybe even run for president.

Washington’s collection of European security dependents (aka, the NATO allies) seek an even stronger U.S. commitment to their defense. That desire has clearly been on the rise since Russia’s annexation of Crimea in 2014 and the subsequent escalation of the Ukraine crisis. Not surprisingly, Moscow’s smaller neighbors, especially the three Baltic republics, worry about the Kremlin’s intentions and want to take cover behind the shield of America’s military power. Their latest ploy is to seek the permanent deployment of a NATO brigade (some 3,000 to 5,000 troops) on their territory. It is a safe bet that they will want U.S. forces to be part of that unit. Indeed, the United States already keeps more than 150 troops (along with military aircraft) in those countries as part of a continuing rotation of forces.

It is not hard to understand why small, weak nations would seek maximum protection from a distant power against a large, powerful neighbor that has displayed worrisome intentions. It is much harder to understand, though, why undertaking such a risk would be in the best interest of the United States. Allies are only beneficial when they augment a nation’s strength, and the potential benefits of defending them significantly outweigh the potential costs and risks. The Baltic republics (and most NATO members, for that matter) spectacularly fail that basic test. They do next to nothing to augment America’s already vast military power, while (being on bad terms with their powerful neighbor) they create the risk of a U.S.-Russia confrontation where none would otherwise exist. In short, they are strategic liabilities, not strategic assets. 

Making matters even worse, the Baltic countries and the other European members of NATO don’t seem terribly serious about their own defense, even as they sound alarm bells about Russia’s behavior. As I note in a new article in Aspenia Online, their defense spending continues to be woeful. Despite a commitment following the 2006 NATO summit, only the United States, Britain, Greece, and Estonia currently spend at least two percent of annual GDP on defense. What is especially frustrating is that several major NATO powers, including Germany, Italy, and Spain, have spending levels far below the two percent target. By comparison, just the U.S. base military budget is more than four percent of a much larger GDP, and if overseas contingency spending for supposed emergency missions (like the ongoing wars in Iraq and Afghanistan) is included, Washington’s defense outlays reach nearly five percent. 

In March, Samantha Power, U.S. Ambassador to the United Nations, flew to Brussels to encourage the leaders of NATO countries to fulfill their two percent commitment. She warned that “the number of missions that require advanced militaries to contribute around the world is growing, not shrinking.” In a subsequent interview on BBC Radio 4, Power conceded that “in most cases” not only was European defense spending inadequate, it was shrinking, despite the growth in security threats.

The contrast in U.S. and European efforts is especially striking. U.S. military spending nearly doubled during the decade following the 9–11 terrorist attacks. Meanwhile, the outlays of NATO’s European members continued the downward trajectory that existed since the end of the Cold War. Indeed, the onset of the global Great Recession in 2007–2008 led to even sharper reductions in European defense efforts.

Even in Eastern Europe, supposedly so worried about Russian intentions, the tangible military response has been meager. Poland announced with great fanfare in February that it had earmarked 33.3 billion euros to upgrade its military forces. But the fine print in the announcement confirmed that the figure was a spending increase parceled out over the coming decade. Moreover, even if future governments maintain that course, it would only bring Warsaw’s defense budget up to the two percent level that it promised to achieve following the 2006 summit—some nine years ago. 

Likewise, the fanfare greatly exceeded the substance accompanying Lithuania’s announcement that it was increasing its military spending by nearly fifty percent. That change, if actually implemented, would bring the country’s military budget barely up to one percent of GDP—still far below the long-standing, very modest, two percent pledge.

U.S. leaders need to face the reality that the United States has weak security dependents, not worthwhile military allies, in NATO. It was a colossal mistake even to bring such nations into the alliance. It would be even greater folly to deepen our existing entanglement. Instead, we need to jettison such unwise commitments before a crisis erupts.

Washington’s determination to defend much of the globe has made the U.S. an international sucker, especially vulnerable to manipulation by supposed friends. Today the Gulf States are upset.

The basic “problem” in their view is that Washington is pursuing the interests of America, not Saudi Arabia & Co., which is seeking hegemony over the Gulf. The administration organized a summit yesterday to assuage their concerns, at which he promised to defend them.

They complain that Washington negotiated to prevent Iranian acquisition of a nuclear weapon rather than demanded Tehran’s surrender when that country said no, as it almost certainly would have. Even though forestalling development of an Iranian nuke would dramatically improve the region’s security environment, the Gulf nations worry that eliminating sanctions would increase Iranian revenues.

They insist on overthrowing Syria’s Bashar Assad, even though he has not threatened the U.S. Finally, they want Washington to issue security guarantees to protect corrupt gerontocracies and monarchies.

However, American foreign policy should be about promoting America’s security. As a global superpower which stands supreme militarily, the U.S. actually does not much need alliances to protect itself, especially in the Middle East.

Washington’s interests in the region are far more limited than commonly assumed. The energy market is global and expanding. The Gulf States would sell their oil even if Washington did not act as monarchical bodyguard on call.

Democratic and humanitarian concerns have been hopelessly compromised by decades of support for dictatorships like in the Gulf. First do no harm would be the best humanitarian prescription.

Israel’s safety is of concern to many Americans. However, it is a regional superpower well able to defend itself.

Instability is endemic to the region and beyond America’s control. Indeed, in recent years Washington has demonstrated that intervention promotes instability.

America’s most important interest is terrorism. Yet U.S. support for authoritarian monarchies angered the likes of Osama bin Laden, making America a target of violence, including 9/11. At the same time the Gulf States, especially Saudi Arabia, were underwriting Islamic fundamentalism and violent extremism. The Riyadh-led attacks on Yemen have empowered al-Qaeda in the Arabian Peninsula.

A “new equilibrium” is desperately required, as President Barack Obama suggested. But not the one he favors.

Before the summit the Gulf States pushed for a formal defense treaty, but likely congressional opposition killed that option. So, explained Secretary of State John Kerry last week: “we are fleshing out a series of new commitments that will create, between the United States and the GCC, a new security understanding, a new set of security initiatives that will take us beyond anything that we have had before.”

As I write on Forbes online: “It is hard to imagine a worse idea than committing America to directly intervene in conflicts irrelevant to American security on behalf of nations which share none of America’s most cherished values and which are able to defend themselves.” The conference attendees already have an institutional frameworks for common defense, the Gulf Cooperation Council and 22-member League of Arab States. Saudi Arabia ranks fourth in the world in military outlays.

The U.S. probably is best served if no single state dominates the Mideast. Certainly not Riyadh. The Kingdom tolerates no religious or political liberty at home; Riyadh has radicalized Islamic children around the world through construction of fundamentalist madrassahs. Saudi Arabia may have done more than any other country to promote terrorism.

Instead of offering long-term dependents enhanced protection, Washington should indicate that it is turning regional affairs over to those in the region. The Middle East likely would be an unstable, chaotic mess—rather like today. Conflict would continue, and it would be better for Americans to be out, not in, the unending bloodletting.

The administration did not need the summit to better communicate with the Gulf States. Washington should just say no and adopt a new policy.