Friday, July 10, 2015

In foreign deals, is half a loaf acceptable?



These days, “half a loaf is better than none” seems to be the rule for major international agreements. 

The old English proverb is very much alive.  Just look at three current negotiations. 
One is on track to a conclusion.  Congress gave the president the authority to enter into trade agreements subject only to its “fast track” approval – a simple yes or no vote.  The majority Republicans and a few Democrats were willing to give the president, this one and the next, what amounts to a blank check.

Why?  The new law permits President Obama to conclude the negotiations on the Trans-Pacific Partnership, a deal involving countries all around the rim of the Pacific Ocean.  But not China.

The idea is to allow the U.S. to continue to play a dominant role in the Pacific area and not allow China, which has obvious expansion goals, to assert its leadership.  The other TPP participants are clearly worried about Chinese intentions, designed to displace the U.S., so they want the TPP.

But the TPP has some serious defects, including one by which panels of lawyers will have the power to make decisions about American trade actions instead of leaving disputes to the courts.  This approach was invented because the court systems in some countries were not reliable.  But some argue it encroaches on U.S. sovereignty.

Is it worth taking that risk in order to block China’s ambitions to dominate the Pacific region?  That was the real choice that had to be made with the result being a potentially significant sacrifice to achieve a strategic gain.

Then, there are the negotiations with Iran.  Without necessarily agreeing with Israeli Prime Minister Benjamin Netanyahu about the degree of the Iranian threat, it seems clear that Iran wants a nuclear deal, not because of a desire for Middle East peace, but to get relief from sanctions imposed on it by other countries.

A deal with Iran should produce tighter controls on its ability to develop nuclear weapons, at least for a number of years.  But its attitude during negotiations has made it obvious that it is likely to try to undercut the effects of an agreement by hidden nuclear development. 

If Iran wanted nuclear capability simply to produce electricity and not bombs, it would hardly have made the negotiations so difficult.

But a deal would make it much tougher for Iran to do what it wants, though not impossible.  The agreement would not change Iranian intentions.  It could build other threatening weapons.

Is it worth gaining significant but not total control of nuclear development in Iran, a country seeking to dominate its region, in return for lifting the crippling sanctions?  That’s the “half a loaf” trade-off.

A congressional review of the deal would almost certainly resolve itself into a debate if the risk were worth the gain.  If other countries are willing to lift their sanctions, they might force the U.S. to take half a loaf.

Then, there’s the situation in Greece in which the U.S. is not a central player.

On one side is Greece, which lived beyond its means thanks to loans from its European neighbors, piled on more debt instead of cutting it, and then resisted Europe’s demands for budget cuts that would severely damage its economy as a condition for getting more bailout money.

On the other side are the other countries using the euro, the single currency of the eurozone, a group of most members of the European Union.  They want to keep Greece in the eurozone, but they do not want to set a precedent of bailing out members in trouble, especially when a country has brought on its own problems.

Greece is gambling that the eurozone countries will settle for half a loaf.  It would adopt some cutbacks demanded by its partners, but probably not enough to satisfy their toughest demands.  The others would give in, the Greek government seems to believe, to preserve European unity even at the risk of more bailouts.

In each of these cases, the judgment about whether to take half a loaf is entirely up to the more powerful party to the deal.  It must decide if the risk of insisting on its demands is likely to produce concessions by the other side.  Or would its insistence blow a deal out of the water, resulting in unfavorable events taking place beyond its influence.

It is always easy for critics to insist on hanging tough.  They seldom bear the responsibility if things go wrong.  What’s really tough is making the “half a loaf” decision.

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