intentBlog:

US Elections: Democrats to control US Senate

Dear ATCA Colleagues; dear IntentBloggers

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Re: Democrats to control US Senate; Response: Northrop - Reflection, Prof Nye - Soft Power Rebirth, Dr Malmgren - Deep Analysis; US Defense Secretary Rumsfeld replaced; Emmott's Brief

We are grateful to Michael Northrop from New York City for "US Elections: A Personal Reflection," Prof Joseph Nye from Harvard for "The Rebirth of Soft Power in the US?" and Dr Harald Malmgren from Washington DC for "Deep Analysis: THE 2006 US ELECTIONS -- What is the action agenda for the future?" by way of their welcome submissions to ATCA.

Democrats to control US Senate

The leading US news agency has called the last undecided Senate seat in Virginia for the Democrats, which should deliver control of the upper legislative chamber to them as well. The Associated Press (AP) news agency declared Democrat Jim Webb the winner, reflecting a growing view that a vote recount cannot change that outcome. Official results have yet to confirm victory for Mr Webb. The claim came after President George W Bush announced that Defence Secretary Donald Rumsfeld was to stand down. The election victory has been a stunning one for the Democrats in that they appear to have won both houses of the US Congress for the first time since 1994. Their aim was to take the Senate by holding onto all their own seats and winning extra ones in traditional Republican areas, which it now seems they have achieved.

In Virginia, Mr Webb is leading by more than 7,000 votes over Republican incumbent George Allen. A Webb win would put the new Senate line-up at 49 Democrats, 49 Republicans and two independents who have said they'll caucus with the Democrats. The margin of victory had been seen so small that a recount is possible though not likely. AP called the election after contacting election officials in all the state's 134 localities for updated voting figures. With 99% of votes now counted, it is thought to be virtually impossible for Mr Allen to make up sufficient ground to win. However, the race remains officially open while officials verify preliminary counts at local polling stations before announcing the result. Because of the narrow margin of Mr Webb's victory, Mr Allen may be entitled to demand a recount, but it is unlikely that he will do so. The race was crucial because a Republican victory would have led to a 50-50 split in the Senate with Vice-President Dick Cheney having a casting vote.
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Michael Northrop directs the Sustainable Development grant making program at the Rockefeller Brothers Fund in New York City, where he focuses on countering climate chaos, forest protection and marine conservation. Northrop moonlights as a Lecturer at Yale University where he teaches a graduate course at the Forest and Environmental Studies School. Previous positions have included a stint as Executive Director of Ashoka, an international development organization that seeks and supports "public service entrepreneurs" working around the globe; at an investment Bank, Credit Suisse (First Boston) in New York; and as a teacher at Anatolia College in Greece and at Gadjah Mada University in Indonesia. Northrop also serves on the Advisory Board of Climate Change Capital in London, on the board of The Climate Group also based in London, and on the Board of Directors of Oceana, a global marine conservation organization. Mr Northrop holds a Master's degree in public policy with a specialization in international affairs from the Woodrow Wilson School at Princeton University, where he was an English major as an undergraduate. He writes:

Dear DK and Colleagues

Re: US Elections: A Personal Reflection

We are in a state of surprised relief here in the US tonight. We hear that Senator Allen of Virginia will concede his race for Senate in Virginia to his Democratic opponent and in so doing hand the Senate over to Democratic control. Many here expected the Democrats would win the House of Representatives. The Senate, though, did not seem as likely to flip.

The Democrats needed to hold all of their Senate seats and pick up four others. Remarkably though, they did it. So suddenly the Democrats appear poised to control both legislative chambers in Washington. This is big change. In the process, the famous red-blue dichotomy seemed to crumble just a little bit in the process. Democrats won House and Senate seats all across the country last night, despite many obstacles, including gerrymandered electoral districts, less financial resources, a sitting wartime President, a decent economy, and the Republicans much vaunted get-out-vote machine.

One can only read this as a broad call for change and a stinging indictment of the Bush Administration. A failed war, corruption by party leaders and rank and file members, incompetence, a failure to ask questions in the legislative branch about repeated failed policies, little attention to issues of concern for moderate Americans, and the general intransigence of this President and his staff all seemed to pile on top of one another. Often mid term elections are more about local issues. This election became a national referendum on Mr Bush and his party.

So what does it mean? It remains to be seen, but at a minimum it means some re-examination of the war in Iraq, tax cuts, the Bush style of governance, and the need for more competent government. It may mean that government in the US will move closer to the centre and further away from the extreme ends of either party. Internationally it probably means a new approach on Iraq (Secretary Rumsfeld's resignation was accepted today by the President), a less bullying foreign policy and a greater level of concern emanating from the US government, writ large, regarding other critical international issues like climate chaos and energy policy.

Can anything really get done in this environment though? Mr Bush and the Democratic Congress don't like each other and they will need to behave like grown ups to accomplish anything. There is no recent trend in this direction here in the US, but there were encouraging signs today coming from the White House and Capitol Hill with the President and Nancy Pelosi, the new Democratic majority leader, both calling for a cooperative approach. Signals were sent that a minimum wage bill and a new approach to immigration policy might be early movers in a more cooperative environment. Neither were fated for success before the election.

Can anything else be accomplished? Lets wait and see. The 2008 presidential race has now begun and both parties want desperately to win that battle.

Can either restrain themselves from trying to make the other look bad in the interim? One cannot be over-confident about that. Democrats see the Presidency as their chief goal now, much more so than they seem to have over the past several electoral cycles. They've probably learned quite a bit from Bush about the power of the Presidency. Lets hope they see a way to put it to better purpose if they do win.

One last reflection. The Democrats won 6 Governorships from Republicans last night. They now hold a 28-22 advantage in this category. In state legislatures, Democrats picked up 145 seats and 12 legislative chambers last night as well. They also now control both branches of government in 15 states. This is significant for the simple fact that statehouses control the redistricting process which the Republicans have used to dramatic advantage in recent years. Democrats will have a chance to change the boundaries of election districts to make them more fair for their caucus. All of this supports the idea that this was a decisive drubbing and a big shift toward the Democrats. The Republicans lost power across all parts of the map and at every level of US Government. The Republican revolution Karl Rove engineered seems to have faltered a lot faster than anyone expected. In retrospect people will wonder how a party so thoroughly in control could have lost control so rapidly.

Best wishes

Michael Northrop
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Prof Joseph S Nye, Jr, is Dean Emeritus of the John F Kennedy School of Government, Sultan of Oman Professor of International Relations, and a member of the Belfer Centre for Science and International Affairs (BCSIA) Board of Directors at Harvard. He joined the Harvard Faculty in 1964 and has served as Director of the Center for International Affairs, Dillon Professor of International Affairs, and Associate Dean of Arts and Sciences at Harvard University. From 1977 to 1979 he served as Deputy to the US Undersecretary of State for Security Assistance, Science and Technology and chaired the US National Security Council Group on Non-proliferation of Nuclear Weapons. In 1993 and 1994 he was chairman of the National Intelligence Council, which coordinates intelligence estimates for the US President. In 1994 and 1995 he served as Assistant Secretary of Defense for International Security Affairs. In all three agencies, he received distinguished service awards.

Prof Nye is a Fellow of the American Academy of Arts and Sciences and the American Academy of Diplomacy and a member of the Executive Committee on the Trilateral Commission. He has served as Director of the Aspen Strategy Group, Director of the Institute for East-West Security Studies, Director of the International Institute for Strategic Studies, the American representative on the United Nations Advisory Committee on Disarmament Affairs, and a member of the Advisory Committee of the Institute of International Economics. Prof Nye received his bachelor's degree summa cum laude from Princeton University in 1958. He was a Rhodes Scholar at Oxford University and earned a PhD in political science from Harvard University. In addition to teaching at Harvard, Prof Nye has also taught for brief periods in Geneva, Ottawa, and London. He has lived for extended periods in Europe, East Africa, and Central America. In 2004 he published Soft Power: The Means to Success in World Politics, Understanding International Conflict (5th ed), and The Power Game: A Washington Novel. He is an honorary fellow of Exeter College, Oxford. He is the recipient of Princeton University's Woodrow Wilson Award, and the Charles Merriam Award from the American Political Science Association.

Soft Power

Prof Nye is credited with coining the term "Soft Power" in a 1990 book, Bound to Lead: The Changing Nature of American Power. He further developed the concept in his 2004 book, Soft Power: The Means to Success in World Politics. Soft power is a term used in international relations theory to describe the ability of a political body, such as a state, to indirectly influence the behaviour or interests of other political bodies through cultural or ideological means. While its usefulness as a descriptive theory has not gone unchallenged, soft power has since entered popular political discourse as a way of distinguishing the subtle effects of culture, values and ideas on others' behaviour from more direct coercive measures, such as military action or economic incentives. In Prof Nye's words, the basic concept of power is the ability to influence others to get them to do what you want. There are three major ways to do that: one is to threaten them with sticks; the second is to pay them with carrots; the third is to attract them or co-opt them, so that they want what you want. If you can get others to be attracted, to want what you want, it costs you much less in carrots and sticks.

Soft power, then, represents the third way of getting the desired outcomes. Soft power is contrasted with hard power, which has historically been the predominant realist measure of national power, through quantitative metrics such as population size, concrete military assets, or a nation's Gross Domestic Product. But having such resources does not always produce the desired outcomes as the United States discovered in the Vietnam War. The resources from which soft power behaviour is derived are culture (when it is attractive to others), values (when there is no hypocrisy in their application) and foreign polices (when they are seen as legitimate in the eyes of others). Unless these conditions are present, culture and ideas do not necessarily produce the attraction that is essential for soft power behaviour. The extent of attraction can be measured by public opinion polls, by elite interviews, and case studies. Prof Nye argues that soft power is more than influence, since influence can also rest on the hard power of threats or payments. And soft power is more than just persuasion or the ability to move people by argument, though that is an important part of it. It is also the ability to attract or to entice, and attraction/enticement often leads to acquiescence. If one is persuaded to go along with the other's purposes without any explicit threat or exchange taking place -- in short, if one's behaviour is determined by an observable but intangible attraction -- soft power is at work. Soft power uses a different type of currency -- not force, not money -- to engender cooperation. It uses an attraction to shared values, and the justness and duty of contributing to the achievement of those values.

The success of soft power heavily depends on the actor's reputation within the international community, as well as the flow of information between actors. Thus, soft power is often associated with the rise of globalisation and neo-liberal international relations theory. Popular culture and media is regularly identified as a source of soft power, as is the spread of a national language, or a particular set of normative structures; a nation with a large amount of soft power and the good will that engenders inspires others to acculturate, avoiding the need for expensive hard power expenditures. He writes:

Dear DK and Colleagues

Re: The Rebirth of Soft Power in the US?

President Bush lost the 2006 elections for a variety of reasons including corruption in his party. But it was Iraq that turned the midterm Congressional elections into a "wave" election reflecting sentiment about the President and national rather than local issues. Exit polls showed six in ten voters opposing the Iraq war. Now the President has finally fired Donald Rumsfeld, his disastrous Secretary of Defense and plans to replace him with Robert Gates, a wise and moderate man who served under Bush 41.

Bill Clinton captured the mindset of the American people when he said that in a climate of fear, the electorate would choose "strong and wrong" over "timid and right." The good news from the recent election is that the pendulum may be swinging back to the middle. One sign will be if the bipartisan Iraq Commission chaired by James Baker and Lee Hamilton produces a consensus on a strategy for gradual disengagement in Iraq.

After the election, we need Democrats to press hard power issues like the failure of the US Administration to implement key recommendations of the 9/11 Commission Report or the inadequate number of troops in Afghanistan, and we need Republicans to press for a strategy that pays more attention to attracting hearts and minds. For example, many official instruments of soft power - public diplomacy, broadcasting, exchange programmes, development assistance, disaster relief, military to military
contacts - are scattered around the government and there is no overarching strategy or budget that even tries to integrate them with hard power into an overarching national security strategy.

We spend about 500 times more on the military than we do on broadcasting and exchanges, with little discussion of trade-offs. Nor do we have a strategy for how the government should relate to the non-official generators of soft power - everything from Hollywood to Harvard to the Gates Foundation -- that emanate from our
civil society.

If Republicans and Democrats continue to ignore soft power and the public discussion is limited to a competition about who can sound tougher, our truncated debate will remain like the sound of one hand clapping. What the nation needs is a discourse that recognizes the importance of both hard and soft power and debates a smart strategy to integrate them. Let us hope that the 2006 election has begun that process.

Thanks

Joseph Nye
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Dr Harald Malmgren is an internationally recognised expert on world trade and investment flows who has worked for four US Presidents. His extensive personal global network among governments, central banks, financial institutions, and corporations provides a highly informed basis for his assessments of global markets. At Yale University, he was a Scholar of the House and Research Assistant to Nobel Laureate Thomas Schelling, graduating BA summa cum laude in 1957. At Oxford University, he studied under Nobel Laureate Sir John Hicks, and wrote several widely referenced scholarly articles while earning a DPhil in Economics in 1961. His theoretical works on information theory and business organization have continued to be cited by academics over the last 45 years. After Oxford, he began his academic career in the Galen Stone Chair in Mathematical Economics at Cornell University.

Dr Malmgren commenced his career in government service under President John F Kennedy, working with the Pentagon in revamping the Defence Department's military and procurement strategies. When President Lyndon B Johnson took office, Dr Malmgren was asked to join the newly organised office of the US Trade Representative in the President's staff, where he had broad negotiating responsibility as the first Assistant US Trade Representative. He left government service in 1969, to direct research at the Overseas Development Council, and to act as trade adviser to the US Senate Finance Committee. At that time, he authored International Economic Peacekeeping, which many trade experts believe provided the blueprint for global trade liberalisation in the Tokyo Round of the 1970s and the Uruguay Round of the 1980s. In 1971-72 he also served as principal adviser to the OECD Wise Men's Group on opening world markets, under the chairmanship of Jean Rey, and he served as a senior adviser to President Richard M Nixon on foreign economic policies. President Nixon then appointed him to be the principal Deputy US Trade Representative, with the rank of Ambassador. In this role he served Presidents Nixon and Ford as the American government's chief trade negotiator in dealing with all nations. While in USTR, he became known in Congress as the father of "fast track" trade negotiating authority, which he first introduced into the historically innovative Trade Act of 1974. He was the first official of any government to call for global negotiations on liberalisation of financial services, and he was the first US official to call for the establishment of an Asian-Pacific Economic Cooperation arrangement, known in more recent years as APEC.

In 1975 Malmgren left government service, and was appointed Woodrow Wilson Fellow at the Smithsonian Institution. From the late 1970s he managed an international consulting business, providing advice to many corporations, banks, investment banks, and asset management institutions, as well as to Finance Ministers and Prime Ministers of many governments on financial markets, trade, and currencies. He has also been an adviser to subsequent US Presidents, as well as to a number of prominent American politicians of both parties. Over the years, he has continued writing many publications both in economic theory and in public policy and markets. He is also currently Chairman of the Cordell Hull Institute in Washington, a private, not-for-profit "think tank" which he co-founded with Lawrence Eagleburger, former Secretary of State. He writes:

Dear DK and Colleagues

Re: Deep Analysis: THE 2006 US ELECTIONS -- What is the action agenda for the future?

This year's American elections revealed a widespread yearning for "change" among voters across the political spectrum. This should not be surprising, as the sixth year of a two-term President typically brings on what American political analysts call the "six-year itch."

Historically, this election revealed little about what the two parties want the US Government to do in the future. This election was not about change towards something specific. Rather, it was an election about sticking with the present political leadership, or rejecting it in favour of an alternative group of political leaders. The Republicans essentially argued the nation's well-being and security would be best served by "staying the course." The Democrats decried the inability of Republicans to "get things done" and focused their attacks on Republican competence and corruption. Many Republican incumbents suffered a "throw the rascals out" wave. Neither side presented an action agenda for the future.

The rapidly growing number of scandals among a number of Congressional Republicans in the weeks just before the election opened the opportunity for Democrats to paint Republicans as having abused their privileged position. As for competence, the "war in Iraq" became the centerpiece: Whether or not voters supported the initial decision to intervene militarily in Afghanistan and Iraq, it was evident to voters in both parties that the management of the American military intervention was poorly planned and poorly executed. This was not simply a matter of poor execution of policy; many young Americans were dying, or suffering grievous injuries.

Democrats succeeded in "nationalizing" the local constituency elections across the country. Normally, Congressional elections are primarily determined at the local level by local voter interests and perceptions of candidates' qualities. Even when national polls show widespread voter disaffection with "Congress," local polls usually show that local voters still support "our guy" in Washington. Usually, incumbents are very difficult to dislodge, given the funding they can command and the personal identity they have built within their own constituencies.

Democratic strategy also aimed at making this election a referendum on the Bush Administration, and to a substantial extent this strategy was successful. The task was made easier by the seemingly endless violence in Iraq. But the President's sinking job approval ratings positioned him as a soft target. Members of his own Republican Party were evidently putting a distance between themselves and President Bush, leaving him isolated and vulnerable to attack. Moreover, Bush's continued resistance to acknowledging his mistakes, and continued resistance to changing personnel when political pragmatism cried out for change, presented an image of stubborn rigidity. Bush also continued to pursue an ideological agenda that appealed to his conservative "base," but which alienated more voters than the entirety of his "base." Most of all, American voters are pragmatic. They admire pragmatism. They do admire politicians who stand on principle -- but they most of all admire the ability of leaders to make compromises and get on with the job of managing the country, so that voters can sleep quietly at night. While voters on the far right or the far left are ideological, the vital swing voters at the centre dislike ideological extremism and want conciliation and consensus building.

Under President Bush, and recent Republican leadership, it was evident that the Congress had become stalemated. Partisan bickering had replaced the more traditional process of back-room bargaining in the generation of budgets, legislation and regulatory policies. Republicans could be blamed for allowing ideological positions to block compromise. But Democrats could also be blamed for relying exclusively on obstructive tactics in order to demonstrate the ineffectiveness of Republicans.

The decline in President Bush's political influence was accelerated as members of his own party distanced themselves from his own agenda. The deterioration in his Republican support began long before the Iraq conflict became the dominant issue. The slide really began with the failure of Bush's public effort to put "privatisation" of part of Social Security at the centre of his proposals to reform the US public retirement system. Congressional Republicans sensed that the President's ideas were simply unacceptable to most of the elderly and generated little or no interest among America's young. Bush was repeatedly advised by fellow Republicans to drop his ideas, but instead he embarked on a nationwide, town by town personal campaign to promote his own proposals. Everywhere he went, polls showed a decline in his approval ratings after he left. Republican politicians became demonstrably aware of the President's inability to hold sway over voters when he went out to meet them directly. The distancing of Republicans from Bush began then and continues to this day. This Republican detachment from the President became more and more evident even before Bush's re-election in 2004, particularly in the Republican rebellion against the President's resistance to intelligence reforms, which led to a Congressionally-mandated creation of the National Intelligence Council.

As Congressional Republicans delinked themselves from the President, they foundered on bitter disagreements among themselves on crucial issues, most notably immigration reform and health care questions like stem cell research. Efforts by a small number of Republican moderates, or "main street Republicans," to cooperate with a small band of moderate, or centrist, Democrats did succeed from time to time in blocking extremist confrontations and moving forward selected, non-ideological legislation. Having long suffered deep divisions of their own, the Democrats gradually converged in a conviction that they could regain power in the wake of public disaffection with the President and his Administration.

Now that the elections are over, and Democrats have assumed a far stronger position in Congress, what can be expected in the future? First of all, virtually every politician, regardless of party, will be thinking about personal survival in the next election. In a sense, every incumbent will informally become a member of what we like to characterize as "the infamous Survival Party" -- keep office and keep official auto at all costs. Beyond that immediate, dominant survival instinct, the process of devising an agenda for the 2007-08 Congressional Session will begin.

Very early in the next session, deep divisions within each party will become evident. The Democrats will be torn by differences between the left wing and the centrists; likewise the Republicans will be torn by differences between the conservative, right wing "base" and their party's moderates. Interestingly, a significant number of incumbent Republican moderates either retired or lost their seats in this year's election, leaving the ranks of Republican centrists very thin. On the other side of the aisle, several of the newly elected Democrats had been selected and fielded as conservatives in an effort to defeat Republican conservatives in their home territories. Their election success will result in an increase in the number of Democratic moderates, or centrists, in the new Congress. In other words, the composition of the small band of Congressional moderates will be shifting, with an increase in Democrats and a decrease in Republicans among the swing Congressional politicians. But the centrists of both parties will remain a distinct minority.

As for Democratic Party leadership, new Speaker of the House Pelosi is a left-wing, confrontational, sometimes inflammatory populist politician. She will need the help of a centrist or moderate Democrat to guide her away from her innate tendency to seek combat where quiet bargaining would be far more efficacious. Former Speaker Hastert was a conciliator and a consensus builder, but he had the "hammer" of Tom DeLay to threaten uncooperative Republican colleagues. The next Republican leader in the House will have greater difficulty in maintaining any semblance of party discipline. Senate Democratic Leader Reid would always rather fight than talk, and that is unlikely to change. The Republicans will choose a new leader, but the underlying ambitions of many Republican Senators to assume their own role on the national stage prior to 2008 will make the new leader's task exceedingly difficult.

What the voters want is an end to partisanship. What they will likely get as a substitute will be intra-party rivalries and rebellions, tying up the Congress in endless competitions to establish who is the alpha dog on any given issue.

Another irony is the victory of Senator Lieberman of New York. The NY Democratic Party rejected him as being too closely aligned with Bush, especially on the Iraq conflict, so he ran as an Independent. While campaigning, he promised to act like a Democrat if re-elected to the Senate. He was so popular in New York that he kept his Senate seat in spite of his own party's effort to dislodge him. He can be expected to behave more like a Democrat than an Independent in the next Congressional Session. It should also be recalled that Senator Jeffords of Vermont, once a Republican and now an Independent, will also tend to vote with, and act like a member of, the Democratic Party. Among Republicans, President Bush has also found that several members of his own party in the Senate have frequently aligned themselves with the Democrats, most notably Senators Chafee, Snowe, and Collins. Chafee lost his seat in this election. In the next Session, as the Presidential aspirations of politicians heat up, Republican Senators McCain and Hagel will make major efforts to distinguish themselves from Bush, to the point that they could be characterized in the public mind as the anti-Bush faction among national politicians. In other words, President Bush will be facing a strong political opposition in both House and Senate, regardless of the final Senate vote count.

Voters in this year's elections did not seem particularly interested in issues of taxation, or budget deficits, or trade policy. The "China threat" was not a significant issue, even in the Midwest. The elderly were angry with the Republican-led reforms of Medicare, which left them with increased personal costs for a significant part of their annual prescription medications, and this was often voiced as a motivation for voting against the Republicans. There was little voter interest in Social Security reform or environment. Because gasoline taxes and the cost of home heating oil had fallen in recent weeks, there was much less attention among voters to energy issues. Climate chaos simply did not rise to the surface as something to be considered in voting.

The new Congress will be well aware of these sentiments among voters. Democrats will know that they do not need to talk about the need for raising taxes, because there is no immediate public interest in the federal budget deficit. Democrats will also not want to cut federal spending, at least not before the 2008 national elections, including the choice of a new President. So no visible tax increases, and no significant spending cuts -- and probably some increased federal spending to prop up the economy and set up positions for the 2008 elections. With a subdued outlook for economic growth, budget deficits may grow, and voters will not care. As for tax policy, most of Bush's tax cuts expire in 2010, unless Congress takes action to extend them. For Democrats, the easy way to increase taxes is to do nothing, let the Bush tax cuts expire in 2010, and take no direct responsibility, blaming the event on "failure of the Republicans to work out acceptable compromises."

Trade policy is a big unknown in the next Congressional Session. The industrial labour union influence in the Democratic Party is substantial, and the industrial labour unions will try to use a more protectionist stance on trade policy as a means of propping up their own membership among machinists, autoworkers, steel workers, electrical workers, etc. The Bush Administration may try to continue its effort to liberalize world trade, and pursue a variety of bilateral and regional free trade agreements, but the next Congress may not be easily persuaded to provide the appropriate implementing legislation. As I have said before, the political timing in Europe as well as the US is unpropitious for the consummation of new trade agreements that would open markets. Until the French national elections are over, the EU can do little to end the impasse in world trade talks at the WTO. Now, given the new Congress in Washington, there are many questions about what Congress will be willing to do.

The new Congress will be challenged by the unfortunate timing of the expiration of the present US agricultural support programs in 2007. Wise leadership should try to combine reforms of American farm supports with a world agreement on market liberalization, including major reforms in Europe's Common Agricultural Policy, but that kind of pragmatic wisdom on agriculture has yet to be seen among US and European political leaders in the last several decades.

As for energy and environmental policy, it is the Congress more than the President which stands in the way of US participation in a meaningful international accord on environmental management and energy conservation. When former Vice President Gore personally agreed to the Kyoto Treaty, he and President Clinton immediately found that the US Senate, including both Democrats and Republicans, would not provide their support for that treaty, or anything like it. The Bush Administration's reluctance to do something about international energy and environmental cooperation is not solely a Bush Administration belief that the science is not clear-cut, or that such an agreement is only workable if the main emerging market economies participate. The problem lies deep in the US Senate, which means deep in the American voter heartland, which embodies fundamental resistance to major changes that affect daily use of energy in all its forms in the energy-intensive US economy. The Stern report had no influence on the US elections. Moreover, it had minimal visibility in the US press and media. It would be surprising if the next Congress gave these vital issues any significant attention. The possibility remains, however, that President Bush might embark on some new form of international dialogue on energy use and climate chaos, if an entirely new format were to be devised, perhaps by leaders of other nations.

President Bush may be stubborn and excessively rigid, but he is also well aware of the steep decline in his personal political influence, especially following the outcome of this election. He had already begun to adjust the power structure around him when he brought in Josh Bolten as his White House Chief of Staff and Hank Paulsen as his Treasury Secretary. Bolten was told to shake up the decision system, including the cabinet. Bush came to recognize that his own influence in economic affairs had become minimal, and instead granted Paulsen autonomy in direction of economic policy. Now, Bush can anticipate opposition from Democratic Party leaders and resistance from many Republicans for any domestic initiatives he might take.

To use the remaining two years of his Presidency productively, and to establish some kind of historic legacy, he is likely to increase his attention to world affairs. Constitutionally, the President has significant autonomy and flexibility to carry out international diplomacy. Where the Congress does play a role in foreign policy is as an adviser, keeper of the purse strings, and when necessary, the grantor of legislation or the approval of treaties necessitated by Presidential accords with other governments.

However, as Bush is learning on the job about world affairs, he is finding that nothing is simple. Introducing "democracy" to Iraq and other parts of the Middle East temporarily had the appeal of purity of purpose to the President. But democracy looks like the opening of gates for violence among disparate sects and geographic regions to those who have experienced brutal or heavy-handed leadership for decades or even centuries. Mr Bush is finding that talking to one's enemies is necessary to explore the potential for threads of common interests within the overall web of conflicting interests. Most likely the President will demonstrate a new pragmatism, beginning with greater willingness to conduct diplomacy with governments like that of Iran and Syria.

But the hard question is who will act as the strategist for the new focus on foreign affairs, and who will conduct such new diplomacy? The President has relied up to now upon a small cadre of hard-line conservatives for advice on how to deal with other governments. The Department of Defense, under the leadership of Secretary Rumsfeld, dominated diplomacy with the Middle East, North Korea and even with China and Russia. Since the time of President Kennedy, the International Security Affairs section of the Pentagon functioned as the internal "think tank" of each Administration in matters of international security. Under Rumsfeld, this section deteriorated into a dysfunctional support system for the personal leadership of Rumsfeld.

In the meantime, the more important roles of the Secretary of Defense were not well managed. The Secretary of Defense, together with his top aides, must provide civilian oversight of the nation's military, and this requires intimate interaction with the entire military command system. It became evident, especially in recent days, that Rumsfeld had lost the confidence and trust of virtually all the US military forces, especially their leadership. As for managing the defense industry supply system, the Defense Department under Bush experienced a series of scandals in acquisition and management of outsourcing of military support operations. Executives of the major defense industrial corporations privately observed that Rumsfeld's Pentagon had been the worst manager of the defense industrial complex since the days of President Eisenhower.

Now that Rumsfeld has resigned, it is widely hoped that an entirely new team will be brought into the Pentagon to manage the US intervention in Iraq and work constructively towards some new political-security framework which would minimize direct involvement of the US military in that country in the not-too-distant future.

The National Security Council staff in the White House had for many years dominated the shaping as well as the execution of American foreign policy. Under Mr Bush, the NSC has been little more than a Presidential briefer and a door keeper for the comings and goings of rivals among the State Department, Defense Department, the military, the Treasury, the various intelligence agencies, and the various other departments and agencies charged with international responsibilities such as world trade negotiations.

Secretary of State Rice has a strong academic intellect, but it is no secret that she dislikes the close contact interaction with domestic and foreign politicians and decision-makers that is required to function effectively in her post. It is no secret in Washington that Defense Secretary Rumsfeld and Vice President Cheney never held her in high esteem, precisely because she did not like to involve herself in the necessary, brutal, seemingly endless bureaucratic and political manoeuvres to establish power and execute policy in Washington. She is also not viewed among her Administration colleagues as a strategist. When she was head of the NSC, the NSC was considered unusually ineffectual in managing interagency rivalries, but she was more criticized by her colleagues for absence of overall strategy. So who can the new strategist be? Former Secretary of Treasury and of State James Baker, together with former Democratic Foreign Relations Committee Chairman Lee Hamilton will soon propose new strategies for Iraq and the Middle East more broadly. But they are outsiders with new ideas. Who will implement a new Presidential foreign policy, including both its formulation and its execution? If the present Secretary of State remains, she will need heavyweight help -- most likely National Intelligence Director will become her Deputy -- but that raises the question whether someone like Negroponte would be satisfied to be second in command in a role which requires extensive personal involvement in domestic and foreign politics? Will Bush choose a new NSC Director to direct his own foreign policy initiatives, and could it be someone who would have the weight of a Kissinger or a Brzezinski relative to Defense and State?

So the emerging politics after this year's election will be a nation split more or less 50-50 on most issues, with an incoherent Congress likely to experience deep divisions within each party as well as between the two parties. The President can wield his veto powers, but the Congress is unlikely to do much by itself. Issues of climate chaos, or world economic imbalances, or reforms of domestic taxation and health care will be duly considered and debated. However, politicians focused on the 2008 elections will not want to be recorded as voting one way or the other on issues which are contentious among the nation's voters. Controversies will be the subject of Congressional hearings, because controversies make news. But resolution of controversies will be left for the Administration of the next President.

Thus, the world should not expect a profound transformation of the workings of the US Government at home or abroad. The President may try to use his remaining term to build better relations with other nations, but his ability to implement commitments he might make with leaders of other nations will be limited by the members of the Congressional Survival Party, all of whom seem to be eager to distance themselves from the President in positioning themselves for the next election and the choice of a new American leader.

In the background, I expect the US economy to continue to slow down. Since the US economy is the primary engine pulling the train of national economies throughout the world, I expect a global economic slowdown in the next couple of years. This might bring some temporary relief in energy demand, but it will certainly undermine the hopes of the Euro zone, the emerging markets, and countries like China for continued and even stronger economic expansion. Rather, the next couple of years will more likely suffer the pains of weakened global growth, putting political strains on governments in Europe and many other parts of the world. A global slowdown is not necessarily harmful to the US -- and in fact, a weakening of the outlook elsewhere is likely to increase capital flight from all over the world to the safest parking place -- which is the US market, the biggest, most liquid, and most legally protected parking area for capital in a time of trouble.

In other words, the US economy can cool down, but the world will likely provide shock absorbers for the US. The Bush Administration and Congress will not much care about "global imbalances" and other global dangers like climate chaos. But President Bush will be looking to build a legacy. Thus, a challenge has been put into the hands of other world leaders, to suggest new initiatives in new frameworks that Bush might be able to join, freed from concerns about his own re-election.

Best regards

Harald Malmgren

[ENDS]

We look forward to your further thoughts, observations and views. Thank you.

Best wishes

For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)