NY Times Book Review: ‘Thieves of State,’ by Sarah Chayes


February 23, 2015

Sunday Book Review

http://www.nytimes.com/2015/02/22/books/review/thieves-of-state-by-sarah-chayes.html?ref=books

‘Thieves of State,’ by Sarah Chayes

Chayes’s “Thieves of State” makes a strong case that acute corruption causes not only social breakdown but also violent extremism. She calls this a “basic fact,” showing that where there is poor governance — specifically, no appeal to the rule of law and no protected right of property — people begin a search for spiritual purity that puts them on a path to radicalization.

Thieves of State_978-0-393-23946-1

Across much of the world, populations suffer daily shakedowns by the police. At roadblocks, market stalls and entrances to government buildings, thugs in uniform gather “like spear fishermen hunting trout in a narrows,” as Sarah Chayes writes. But that isn’t the half of it. Globally, the three most important desiderata of our age — security, resilience and poverty reduction — are consistently being hollowed out by structural theft on a much larger scale, operating across corporations, governments, military establishments and civil services.

One key reason the United States and its allies have struggled to establish sustainable democracies in Afghanistan and Iraq is that the governments of those countries are mired in graft, caught in a mafia-like system in which money flows upward. The same goes for parts of Africa and Asia, and most of the former Soviet Union. The tenure of the Chinese president, Xi Jinping, is being defined by his war on corruption, and in December President Hassan Rouhani of Iran spoke out against corruption there.

Chayes’s “Thieves of State” makes a strong case that acute corruption causes not only social breakdown but also violent extremism. She calls this a “basic fact,” showing that where there is poor governance — specifically, no appeal to the rule of law and no protected right of property — people begin a search for spiritual purity that puts them on a path to radicalization.

In a limited sense, this is Chayes’s own story too: A former reporter for NPR in AlgeriaSarah Chayes and Afghanistan, she abandoned journalism to work for a nongovernmental organization in Kandahar, then was a social entrepreneur there on her own account, finally becoming an adviser on corruption to the International Security Assistance Force (ISAF) and the United States Joint Chiefs of Staff. She (right) is now a senior associate at the Carnegie Endowment for International Peace.

Her personal narrative is even more complicated than any summary might suggest. In 2001, Chayes helped found a charity “of unclear mission,” run by President Hamid Karzai’s Baltimore-based elder brother, Qayum, about whom she has this to say: “Not for years would I begin systematically comparing his seductively incisive words with his deeds. Welded to his brother’s interests, he behaved in ways that contradicted his language so starkly that for a long time I had difficulty processing the inconsistency.”

KarzaiElsewhere “those brothers” (there are six besides Hamid Karzai himself) are characterized as “self-serving,” with the younger half-brother Ahmed Wali singled out as someone “who stole land, imprisoned people for ransom, appointed key public officials, ran vast drug trafficking networks and private militias, and wielded ISAF like a weapon against people who stood up to him.” This, mind you, was also someone at whose house Chayes had dinner one night in 2003, in the course of which she watched C.I.A. officers “hand him a tinfoil-wrapped package of bills.”

Her experience corroborates an October 27, 2009, report in The New York Times,John Kerrry which stated that Ahmed Wali Karzai was on the C.I.A. payroll. It also prompts one to wonder at Senator John Kerry’s response at the time. “We should not condemn Ahmed Wali Karzai or damage our critical relations with his brother, President Karzai, on the basis of newspaper articles or rumors,” he said.

Ahmed Wali Karzai was assassinated by a police official and longtime confidant on July 12, 2011. About six years before that, Chayes severed her own relationship with the Karzais. After leaving for a few months, she returned to Kandahar in May 2005 with a project that, on the surface, could never smell of corruption and intrigue.

Armed with an oil press and $25,000 from Oprah Winfrey, she set up a cooperative producing scented soap and beauty products, taking advantage of Afghanistan’s horticultural riches. But she soon found that even this innocuous activity put her on the sharp end of corruption, as she tried to do simple things like deposit money in a bank without paying a bribe for the privilege of doing so. So she began, in an amateurish way, to develop ideas for limiting corruption in places like Afghanistan.

Very quickly, the amateur became professional. Chayes was soon called upon by NATO and ISAF to give expert briefings with a focus on anti-corruption measures. “ ‘Sally the Soap-Maker Gives an Ops Brief’ was how I jokingly came to refer to my main presentation,” she writes. This led to a job with ISAF, and then another as special assistant to the chairman of the Joint Chiefs of Staff, flitting between Washington and Kabul as the United States laboriously and somewhat unwillingly developed an anti-corruption strategy for Afghanistan.

Any such strategy was bound to conflict with political and military exigencies, which presumably explains Kerry’s response to the report in The Times. But Chayes’s Afghan interlocutors told her again and again that poor governance was actually what was perpetuating the conflict, with graft generating disenchantment and driving people toward the Taliban. “Western officials,” she writes, “habitually flipped the sequence: First let’s establish security, then we can worry about governance.”

Ordinary Afghans, meanwhile, took Western inaction on corruption as approval. Aid just added to the problem, in Chayes’s view: “Development resources passed through a corrupt system not only reinforced that system by helping to fund it but also inflamed the feelings of injustice that were driving people toward the insurgency.”

Chayes refers to the body of medieval and Renaissance advice literature known as “Mirrors for Princes” to contextualize current abuses of government. She begins with the most famous mirror of all, Machiavelli’s “The Prince,” but it is lesser-known figures like William of Pagula and John of Salisbury who give her the most ammunition. She also uses the “Siyasat Nameh” — the “Book of Politics” — of the 11th-century Persian administrator Nizam al-Mulk.

Among the counsels that Nizam al-Mulk gave his sultan was: Listen to the griev­ances of your subjects directly, without intermediaries. Chayes argues that the ­voices of a majority of Afghans are drowned out by the Taliban on one side and by the Karzai government on the other. ISAF, she says, listened only to the government.

Many of the other countries Chayes brings into this chatty study (“John of Salisbury, as usual, nailed it”) show similar patterns. In each case, there are slightly different “variations on a theme,” as she has it, ranging from the military-­kleptocratic complex (Egypt) to the bureaucratic kleptocracy (Tunisia), the post-Soviet kleptocratic autocracy (Uzbekistan) and the resource kleptocracy (Nigeria). In her epilogue, titled “Self-­Reflection,” Chayes also discusses Western countries and the global financial crisis of 2008.

This is an important book that should be required reading for officials in foreign service, and for those working in commerce or the military. The story will interest the nonspecialist reader too, though the balance of exciting narrative, academic discourse and policy-wonk-speak will unsettle some. Indeed, Chayes touches on how language itself becomes corrupt. The standard terminology of military and diplomatic engagement (and much corporate rhetoric) is often evasive, with usage reflecting differences in value systems — as when assassination by drone is described as “targeted killing.”

While I am in full agreement with what Chayes says, I found her own prose style raising my hackles on occasion, with its effortful interpolations of color (“the legendary but painfully dilapidated blue and white Mediterranean port city of Algiers”), verbs on steroids (“I wheeled and strode over to our battered red pickup truck, clambered aboard, and roared off to the bank”), and its chapters that begin with such sentences as “Wait a second.” I did, but I wish she had.

Giles Foden is the author of “The Last King of Scotland.”

Malaysia, Singapore and two views on the last 50 years


February 19, 2015

Malaysia, Singapore and two views on the last 50 years

Bilahari-Kausikan-Singapore2by Bilahari Kausikan For The Straits Times

A new book fails to give due weight to the cooperative aspect of bilateral ties, says the writer.

I have known Tan Sri Kadir Mohamad, the former KSU (the equivalent of our Permanent Secretary) of Wisma Putra, for more than 30 years. We first met in 1984 when he was the Deputy Chief of mission at the Malaysian Embassy in Washington, DC and I was a newly minted First Secretary at our embassy.

In the subsequent decades our paths often crossed – the world of Kadir's BookSouth-east Asian diplomacy is not large and Malaysia is our closest neighbour – and on occasion I worked with him in ASEAN and on some bilateral matters. So when I heard that he had written a book on Malaysia-Singapore relations, I hastened to procure a copy.

The content was as I expected: a very journeyman-like effort. There were no significant errors of fact on bilateral issues that I could detect. Mr Kadir is nothing if not a consummate professional, and contrary to popular belief, good diplomats of every country generally tell the truth and stick to the facts, although there is no obligation to always tell the whole truth and nothing but the truth.

Bilahari's ST article Malaysia and Singapore: Two Systems, One World

In any case, all the most important facts have long been placed in the public domain, mainly by Singapore in answers to parliamentary questions or by the release of documents on water talks more than a decade ago. A reader expecting dramatic new revelations will be disappointed.

Mr Kadir’s interpretations of the facts are of course different from the interpretations that I or other Singapore diplomats would have placed on the same facts. But that is only to be expected, and I am not inclined to quibble with him.

A different interpretation cannot change the most important fact of all: On almost every bilateral issue the book deals with – water, Pedra Blanca, the bridge and land reclamation – the outcome was not one that Malaysia had set out to achieve.

Diplomats try to promote their countries’ interests. So it is entirely understandable that in the twilight of his career, a distinguished Malaysian diplomat would want to place his version of events on the record and vent a little. It would be churlish to deny him even this satisfaction.

I will only take issue with his conclusion, encapsulated in the title of his book and the thread running through it, that it has been “Fifty Years Of Contentions”. Of course, Malaysian and Singapore interests often clashed. Relations between neighbours are always more complicated than relations between distant countries. But the interests of our countries have at least as often coincided.

Diplomacy is not, or at least ought not to be, a zero-sum game. Nor should any one aspect of any relationship be allowed to colour the entire relationship.

Although we contended over bilateral matters, Malaysia and Singapore have simultaneously worked together very well on other issues, for example as we did in ASEAN and the United Nations during the decade-long struggle in the 1980s – which coincided with some tense episodes in bilateral relations – to prevent a fait accompli in Vietnamese-occupied Cambodia. We still cooperate closely in ASEAN.

And even when the outcome of bilateral contentions was in Singapore’s favour, Malaysian interests were not irrevocably hurt. The 2010 agreement on the implementation of the 1990 Points of Agreement on railway land was beneficial to both countries. Malaysia still buys cheap processed water from Singapore.

After 18 years, Kadir’s search for letter still goes onMr Kadir’s failure to give sufficient recognition to the cooperative aspect of bilateral relations is, I think, due to the over-emphasis he places on what he describes as Mr Lee Kuan Yew’s “baggage full of bitterness and a heart filled with anger” over Separation. He describes his book as “…the story of how one man dictated the form and substance of relations…”

Separation was of course a traumatic event for both countries that did indeed shape and set in motion the essential dynamic of Malaysia-Singapore relations. But not in the way Mr Kadir thinks it did.

He places far too much emphasis on the personal element. It is undeniable that Mr Lee was a dominant personality in Singapore politics and policy making for many years. But I suspect that in trying to understand Singapore, Mr Kadir looked in a Malaysian mirror and saw Dr Mahathir Mohamad.

Both were dominant personalities in the government and politics of their respective countries but not in entirely the same way. Far more than Dr Mahathir, Mr Lee worked within and respected the Cabinet system. Mr Lee was acutely aware that any agreement he reached with Malaysia had to outlast his tenure in political office and even his lifetime and therefore sought collective agreement.

By contrast, even after he retired as Prime Minister, Dr Mahathir attempted to influence the way his successors dealt with Singapore on bilateral issues when he did not agree with them. Many Malaysians certainly believe he tries to influence Malaysian domestic politics and policies to this day.

And the metaphor of “baggage” used by Mr Kadir and others is a singularly inappropriate – and simplistic – way to try to understand the complex dynamic of bilateral relations set in motion by Separation. “Baggage” connotes something that is carried by an individual or a group of individuals and which can be jettisoned or changed if necessary. The implication is that if this does not occur, it is only because those individuals are unwilling to do so or have been prevented from doing so. And Mr Kadir argues, or at least strongly implies, that this was what in fact Mr Lee did.

But the reason for Separation, or rather the reason why, as Mr Kadir bluntly and perhaps less euphemistically argues in his first chapter, “it was necessary to expel Singapore” goes far beyond individual personalities.

Singapore is organised on the basis of multiracial meritocracy. Malaysia is organised on the principle, politely described in Article 153 of its Constitution as “the special position of the Malays”, but more popularly and politically potently understood as “Ketuanan Melayu”.

Time has eased the sharp edges of Separation, and time will certainly ease them further. But it is difficult to conceive of either Singapore or Malaysia discarding their respective fundamental organising principles. They are embedded in our societies and political systems, not by the will or whim of any individual, however powerful, but by the collective choice of the majority in both countries.

There are of course Singaporeans who do not agree with the Government and some do not like Mr Lee. Some Singaporeans may well already have only the vaguest of notions of who Mr Lee is and what he has done. But I have yet to meet any serious-minded Singaporean who really wants to abandon our fundamental organising principle and adopt something akin to the Malaysian system.

Nor can I imagine Article 153 of the Malaysian Constitution ever being repealed. We may have been once one country, but are now and for evermore two countries. The existential tension between two countries organised on fundamentally irreconcilable political principles that defines the dynamic of Malaysia-Singapore relations is not going to go away and so must be managed and is being managed.

Once this is understood, a balanced and holistic view of Malaysia-Singapore relations becomes possible. It is a relationship based, like every other interstate relationship throughout history, on national interests, some of which will converge and some of which will diverge.

The complications in Malaysia-Singapore relations are the inevitable ones of proximity and an entangled history. They have some special characteristics, but that is in general not particularly unusual between neighbours anywhere. Every close relationship has its own special characteristics.

It is the purpose of diplomacy to broaden the area of convergence between national interests whenever possible and manage the tensions when interests diverge. That Singapore and Malaysian diplomats – Mr Kadir included – have succeeded in doing so at least as often as we have failed should not be overlooked.

Even if Mr Kadir is right that “the bitterness and anger towards Malaysian leaders that engulfed Lee Kuan Yew on 9 August 1965 … remains with him until this day” – and I think Mr Kadir is profoundly mistaken, entirely misreads Mr Lee, and may well be unconsciously projecting some of his own attitudes onto him – it did not prevent Mr Lee from concluding what was, until the 2010 railway land agreement, the most important Malaysia-Singapore agreement: The 1990 Linggiu Dam agreement.

In his speech at the launch of Mr Kadir’s book, former Prime Minister Abdullah Badawi cut to the core when he said Malaysia cannot blame Singapore entirely for bilateral problems, but “… must also look at ourselves in the mirror”. Good advice.

The writer, a former Permanent Secretary for Foreign Affairs, is now ambassador-at-large.

– See more at: http://www.straitstimes.com/news/opinion/invitation/story/malaysia-singapore-and-two-views-the-last-50-years-20150218#sthash.CFPsvDRx.dpuf

Note: Tan Sri Kadir Mohamad’s book should be read along with Dr. Lily Zubaidah Rahim’s Singapore in the Malay World: Building and breaching regional bridges (New York: Routledge,2010) and Dr. Michael Leifer, Singapore’s Foreign Policy: Coping with Vulnerability  (London: Routledge, 2010).

 

Four Ideas for a Stronger United Nations (UN)


February 8, 2015

Four Ideas for a Stronger U.N.

by Kofi A. Annan and Gro Harlem Brundtland

Kofi A. Annan and Gro Harlem Brundtland Gro Harlem Brundtland and Kofi A. Annan

Seventy years ago, the United Nations was founded “to save succeeding generations from the scourge of war.” Looking around the world today, the least one can say is that it is not fully succeeding in this mission. From Nigeria through the Middle East to Afghanistan and Ukraine, millions are suffering and dying from that scourge, or are imminently threatened by it, and the United Nations seems powerless to save them.

We have four ideas for making the organization stronger and more effective. A big part of the problem is that the Security Council, which is supposed to maintain world peace and security on behalf of all member states, no longer commands respect — certainly not from armed insurgents operating across borders, and often not from the United Nations’ own members.

Throughout the world, and especially in the Global South, people struggle to understand why, in 2015, the Council is still dominated by the five powers that won World War II. They are more and more inclined to question its authority, and the legitimacy of its decisions.

We ignore this threat at our peril. Times have changed since 1945, and the Security Council must adapt.

Almost everyone claims to favor expanding the Council to include new permanent members, but for decades now states have been unable to agree who these should be, or whether, like the existing ones, they should have the power to veto agreements reached by their fellow members.

Our first idea aims to break this stalemate. Instead of new permanent members, let us have a new category of members, serving a much longer term than the non-permanent ones and eligible for immediate re-election. In other words they would be permanent, provided they retained the confidence of other member states. Surely that is more democratic?

Secondly, we call on the five existing permanent members to give a solemn pledge. They must no longer allow their disagreements to mean that the Council fails to act, even when — for instance, as currently in Syria — people are threatened with atrocious crimes.

Let the five permanent members promise never to use the veto just to defend their national interests, but only when they genuinely fear that the proposed action will do more harm than good to world peace and to the people concerned. In that case, let them give a full and clear explanation of the alternative they propose, as a more credible and efficient way to protect the victims. And when one or more of them do use the veto in that way, let the others promise not to abandon the search for common ground, but to work even harder to find an effective solution on which all can agree.

Thirdly, let the Council listen more carefully to those affected by its decisions. When they can agree, the permanent members too often deliberate behind closed doors, without listening to those whom their decisions most directly affect. From now on, let them — and the whole Council — give groups representing people in zones of conflict a real chance to inform and influence their decisions.

And finally, let the Council, and especially its permanent members, make sure the United Nations gets the kind of leader it needs. Let them respect the spirit as well as the letter of what the United Nations Charter says about choosing a new Secretary-General, and no longer settle it by negotiating among themselves behind closed doors. Under current procedures, governments nominate their own citizens as candidates for the position. Members of the Security Council then conduct rounds of secret voting known as “straw polls” to ascertain who has broadest and deepest support; crucially, the five permanent members use different colored voting slips so that their preferences — and those they do not favor — are made clear to the other 10 temporary members.

Let us have a thorough and open search for the best qualified candidates, irrespective of gender or region; let the Council then recommend more than one candidate for the General Assembly to choose from; and let the successful candidate be appointed for a single, non-renewable term of seven years. He or she (and after eight “he’s” it’s surely time for a “she”) must not be under pressure to give jobs or concessions to any member state in return for its support. This new process should be adopted without delay, so that it can be used to find the best person to take over in January 2017.

These four proposals are spelled out in greater detail in a statement issued this Saturday by The Elders, an independent group of global leaders working together for peace and human rights. We believe they form an essential starting point for the United Nations to recover its authority. And we call on the peoples of the world to insist that their governments accept them, in this, the 70th anniversary year of the United Nations.

Kofi A. Annan, Chairman of The Elders, served as Secretary General of the United Nations from 1996 to 2007. Gro Harlem Brundtland, Deputy Chairwoman of The Elders, is a former Prime Minister of Norway and served as Director General of the World Health Organization from 1998 to 2003.

http://www.nytimes.com/2015/02/07/opinion/kofi-annan-gro-harlem-bruntland-four-ideas-for-a-stronger-un.html?ref=opinion&_r=0

Prison or not, Anwar already has won.


February 6, 2015

Prison or not, Anwar already has won.

by John R. Malott@www.malaysiakini.com

COMMENT: February 10 is V-day – Verdict Day. That’s when we willAmbassador Malott learn whether Opposition Leader Anwar Ibrahim will be found guilty in a trial that governments and human rights organisations around the world unanimously have called politically motivated.

No legal basis for Anwar’s guilt

Judged solely on legal grounds, there is no doubt that the prosecution hShafee and Gopal Sri Ramas failed to prove its case. In the Federal Court hearings which spread over two weeks, Anwar’s Defence team, led brilliantly by a former judge, Gopal Sri Ram, made mince meat of the government’s prosecutor, Muhammad Shafee Abdullah, who is better known as UMNO’s lawyer.

Anyone who looks at the facts of the case would conclude this: If Anwar is found guilty, it will be for political, not legal, reasons.

Malaysia has changed forever

But if Anwar is found guilty, he can go to prison with his head held high. He can look back and think about all that he has been accomplished since he was first arrested by then Premier Dr. Mahathir Mohamad in 1998, and how Malaysia’s political situation has changed over the past 16 years.

Anwar Ibrahim, Wan Azizah
Even as the UMNO government pursued and persecuted him, Anwar never gave up. Neither did his supporters. And now the movement he began, and the challenge to Malaysia’s political order that he and his wife Dr Wan Azizah Wan Ismail started in 1998, have become much larger than Anwar himself. There is no going back. Malaysia has changed forever.

Anwar put country above self

Anwar had many opportunities over the past decade to travel overseas. But he always went back to Malaysia, despite the risk. If Anwar were selfish – if it were just about him – he could have stayed overseas and gone into exile.

Mahathir and his wardsMahathir actually gave him that choice in 1998, yet Anwar turned him down and ended up spending six years in prison. That is one reason why I respect him so much. Anwar always chose to go back. He chose his country Malaysia over any risk to himself. I wonder how many other people would do that.

UMNO a minority government

Anwar can think about the fact that in the last general elections, the opposition defeated – yes, defeated – UMNO and its coalition partners in the popular vote.

UMNO was saved only because of the inequitable distribution of electoral seats by the Election Commission, which as everyone knows is controlled by the UMNO government.

Even with one hand tied behind its back, Anwar and the Opposition won 53% of the vote in Peninsular Malaysia. It defeated BN at the polls. As for UMNO’s own candidates, they took only 33 percent of the national vote.

Malaysia now has ‘two-party’ system

Anwar can think about the fact that in the past 16 years, a genuine opposition and ‘two-party’ system have emerged. The difference between UMNO-BN and Pakatan Rakyat is now very clear.

One side, BN is dominated by UMNO, which increasingly tries to survive by appealing to the basest and most racist instincts of its members. It survives by the use of Sedition Act, control of the media, and threatening to arrest anyone who dares to speak out.

UMNO has castrated the other parties in the coalition, MCA and MIC, to the point where they are politically meaningless. There really is no BN anymore.

UMNO – even though it was the recipient of only 33% of the national vote – now calls 100% of the shots. MCA and MIC have lost their supporters and are struggling for their own survival.

Chinese Malaysians have shifted

During the struggle in 1998, the Chinese Malaysian community stood on the sidelines. They considered it an internal UMNO struggle among the Malays. They thought of Anwar as a “ultra Malay.”

But not today. The Chinese-Malaysian community has shifted theirNajib as 1MDB advisor support to the opposition, to the point where Najib complained of a Chinese tsunami after the last elections.

No longer just about Anwar

Over the past 15 years, the movement that began with Anwar’s sacking, arrest, and imprisonment has grown into Pakatan. It is now a permanent fixture in Malaysia’s political landscape and a genuine alternative to BN.

Fifteen years ago, KeADILan basically was about Anwar and the injustice that had been done to him. But no longer.

Today it is about democracy, freedom, human rights, and Malaysia’s future. It is about an end to corruption and cronyism. It is about Malaysia’s future. So whether he goes to prison or not, Anwar already has won.

JOHN R MALOTT is former US Ambassador to Malaysia.

 

The Chinese Century


February 6, 2015

The Chinese Century

Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.

© M. Garfat/MGP (Feather), © Gino’s Premium Images (Leaves), both from Alamy; © Cary Anderson (Wing), © Michael Nolan/SpecialistStock (Eagle’sHead), © Aaron Joel Santos (Bamboo Forest), all from Aurora Photos; © Getty Ellis/Globio/Minden Pictures/Corbis (Panda and Grass); Photo Illustration by Vanity Fair
SOFT POWER For America, the best response to China is to put our own house in order.

joseph-e-stiglitzWhen the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history.

Comparing the gross domestic product of different economies is very difficult. Technical committees come up with estimates, based on the best judgments possible, of what are called “purchasing-power parities,” which enable the comparison of incomes in various countries. These shouldn’t be taken as precise numbers, but they do provide a good basis for assessing the relative size of different economies. Early in 2014, the body that conducts these international assessments—the World Bank’s International Comparison Program—came out with new numbers. (The complexity of the task is such that there have been only three reports in 20 years.) The latest assessment, released last spring, was more contentious and, in some ways, more momentous than those in previous years. It was more contentious precisely because it was more momentous: the new numbers showed that China would become the world’s largest economy far sooner than anyone had expected—it was on track to do so before the end of 2014.

The source of contention would surprise many Americans, and it says a lot about the differences between China and the U.S.—and about the dangers of projecting onto the Chinese some of our own attitudes. Americans want very much to be No. 1—we enjoy having that status. In contrast, China is not so eager. According to some reports, the Chinese participants even threatened to walk out of the technical discussions. For one thing, China did not want to stick its head above the parapet—being No. 1 comes with a cost. It means paying more to support international bodies such as the United Nations. It could bring pressure to take an enlightened leadership role on issues such as climate change. It might very well prompt ordinary Chinese to wonder if more of the country’s wealth should be spent on them. (The news about China’s change in status was in fact blacked out at home.) There was one more concern, and it was a big one: China understands full well America’s psychological preoccupation with being No. 1—and was deeply worried about what our reaction would be when we no longer were.

Of course, in many ways—for instance, in terms of exports and household savings—China long ago surpassed the United States. With savings and investment making up close to 50 percent of G.D.P., the Chinese worry about having too much savings, just as Americans worry about having too little. In other areas, such as manufacturing, the Chinese overtook the U.S. only within the past several years. They still trail America when it comes to the number of patents awarded, but they are closing the gap.

The areas where the United States remains competitive with China are not always ones we’d most want to call attention to. The two countries have comparable levels of inequality. (Ours is the highest in the developed world.) China outpaces America in the number of people executed every year, but the U.S. is far ahead when it comes to the proportion of the population in prison (more than 700 per 100,000 people). China overtook the U.S. in 2007 as the world’s largest polluter, by total volume, though on a per capita basis we continue to hold the lead. The United States remains the largest military power, spending more on our armed forces than the next top 10 nations combined (not that we have always used our military power wisely). But the bedrock strength of the U.S. has always rested less on hard military power than on “soft power,” most notably its economic influence. That is an essential point to remember.

Tectonic shifts in global economic power have obviously occurred before, and as a result we know something about what happens when they do. Two hundred years ago, in the aftermath of the Napoleonic Wars, Great Britain emerged as the world’s dominant power. Its empire spanned a quarter of the globe. Its currency, the pound sterling, became the global reserve currency—as sound as gold itself. Britain, sometimes working in concert with its allies, imposed its own trade rules. It could discriminate against importation of Indian textiles and force India to buy British cloth. Britain and its allies could also insist that China keep its markets open to opium, and when China, knowing the drug’s devastating effect, tried to close its borders, the allies twice went to war to maintain the free flow of this product.

Britain’s dominance was to last a hundred years and continued even after the U.S. surpassed Britain economically, in the 1870s. There’s always a lag (as there will be with the U.S. and China). The transitional event was World War I, when Britain achieved victory over Germany only with the assistance of the United States. After the war, America was as reluctant to accept its potential new responsibilities as Britain was to voluntarily give up its role. Woodrow Wilson did what he could to construct a postwar world that would make another global conflict less likely, but isolationism at home meant that the U.S. never joined the League of Nations. In the economic sphere, America insisted on going its own way—passing the Smoot-Hawley tariffs and bringing to an end an era that had seen a worldwide boom in trade. Britain maintained its empire, but gradually the pound sterling gave way to the dollar: in the end, economic realities dominate. Many American firms became global enterprises, and American culture was clearly ascendant.

World War II was the next defining event. Devastated by the conflict, Britain would soon lose virtually all of its colonies. This time the U.S. did assume the mantle of leadership. It was central in creating the United Nations and in fashioning the Bretton Woods agreements, which would underlie the new political and economic order. Even so, the record was uneven. Rather than creating a global reserve currency, which would have contributed so much to worldwide economic stability—as John Maynard Keynes had rightly argued—the U.S. put its own short-term self-interest first, foolishly thinking it would gain by having the dollar become the world’s reserve currency. The dollar’s status is a mixed blessing: it enables the U.S. to borrow at a low interest rate, as others demand dollars to put into their reserves, but at the same time the value of the dollar rises (above what it otherwise would have been), creating or exacerbating a trade deficit and weakening the economy.

For 45 years after World War II, global politics was dominated by two superpowers, the U.S. and the U.S.S.R., representing two very different visions both of how to organ­ize and govern an economy and a society and of the relative importance of political and economic rights. Ultimately, the Soviet system was to fail, as much because of internal corruption, unchecked by democratic processes, as anything else. Its military power had been formidable; its soft power was increasingly a joke. The world was now dominated by a single superpower, one that continued to invest heavily in its military. That said, the U.S. was a superpower not just militarily but also economically.

The United States then made two critical mistakes. First, it inferred that its triumph meant a triumph for everything it stood for. But in much of the Third World, concerns about poverty—and the economic rights that had long been advocated by the left—remained paramount. The second mistake was to use the short period of its unilateral dominance, between the fall of the Berlin Wall and the fall of Lehman Brothers, to pursue its own narrow economic interests—or, more accurately, the economic interests of its multi-nationals, including its big banks—rather than to create a new, stable world order. The trade regime the U.S. pushed through in 1994, creating the World Trade Organization, was so unbalanced that, five years later, when another trade agreement was in the offing, the prospect led to riots in Seattle. Talking about free and fair trade, while insisting (for instance) on subsidies for its rich farmers, has cast the U.S. as hypocritical and self-serving.

And Washington never fully grasped the consequences of so many of its shortsighted actions—intended to extend and strengthen its dominance but in fact diminishing its long-term position. During the East Asia crisis, in the 1990s, the U.S. Treasury worked hard to undermine the so-called Miyazawa Initiative, Japan’s generous offer of $100 billion to help jump-start economies that were sinking into recession and depression. The policies the U.S. pushed on these countries—austerity and high interest rates, with no bailouts for banks in trouble—were just the opposite of those that these same Treasury officials advocated for the U.S. after the meltdown of 2008. Even today, a decade and a half after the East Asia crisis, the mere mention of the U.S. role can prompt angry accusations and charges of hypocrisy in Asian capitals.

Now China is the world’s No. 1 economic power. Why should we care? On one level, we actually shouldn’t. The world economy is not a zero-sum game, where China’s growth must necessarily come at the expense of ours. In fact, its growth is complementary to ours. If it grows faster, it will buy more of our goods, and we will prosper. There has always, to be sure, been a little hype in such claims—just ask workers who have lost their manufacturing jobs to China. But that reality has as much to do with our own economic policies at home as it does with the rise of some other country.

On another level, the emergence of China into the top spot matters a great deal, and we need to be aware of the implications.

First, as noted, America’s real strength lies in its soft power—the example it provides to others and the influence of its ideas, including ideas about economic and political life. The rise of China to No. 1 brings new prominence to that country’s political and economic model—and to its own forms of soft power. The rise of China also shines a harsh spotlight on the American model. That model has not been delivering for large portions of its own population. The typical American family is worse off than it was a quarter-century ago, adjusted for inflation; the proportion of people in poverty has increased. China, too, is marked by high levels of inequality, but its economy has been doing some good for most of its citizens. China moved some 500 million people out of poverty during the same period that saw America’s middle class enter a period of stagnation. An economic model that doesn’t serve a majority of its citizens is not going to provide a role model for others to emulate. America should see the rise of China as a wake-up call to put our own house in order.

Second, if we ponder the rise of China and then take actions based on the idea that the world economy is indeed a zero-sum game—and that we therefore need to boost our share and reduce China’s—we will erode our soft power even further. This would be exactly the wrong kind of wake-up call. If we see China’s gains as coming at our expense, we will strive for “containment,” taking steps designed to limit China’s influence. These actions will ultimately prove futile, but will nonetheless undermine confidence in the U.S. and its position of leadership. U.S. foreign policy has repeatedly fallen into this trap. Consider the so-called Trans-Pacific Partnership, a proposed free-trade agreement among the U.S., Japan, and several other Asian countries—which excludes China altogether. It is seen by many as a way to tighten the links between the U.S. and certain Asian countries, at the expense of links with China. There is a vast and dynamic Asia supply chain, with goods moving around the region during different stages of production; the Trans-Pacific Partnership looks like an attempt to cut China out of this supply chain.

Another example: the U.S. looks askance at China’s incipient efforts to assume global responsibility in some areas. China wants to take on a larger role in existing international institutions, but Congress says, in effect, that the old club doesn’t like active new members: they can continue taking a backseat, but they can’t have voting rights commensurate with their role in the global economy. When the other G-20 nations agree that it is time that the leadership of international economic organizations be determined on the basis of merit, not nationality, the U.S. insists that the old order is good enough—that the World Bank, for instance, should continue to be headed by an American.

Yet another example: when China, together with France and other countries—supported by an International Commission of Experts appointed by the President of the U.N., which I chaired—suggested that we finish the work that Keynes had started at Bretton Woods, by creating an international reserve currency, the U.S. blocked the effort.

And a final example: the U.S. has sought to deter China’s efforts to channel more assistance to developing countries through newly created multilateral institutions in which China would have a large, perhaps dominant role. The need for trillions of dollars of investment in infrastructure has been widely recognized—and providing that investment is well beyond the capacity of the World Bank and existing multilateral institutions. What is needed is not only a more inclusive governance regime at the World Bank but also more capital. On both scores, the U.S. Congress has said no. Meanwhile, China is trying to create an Asian Infrastructure Fund, working with a large number of other countries in the region. The U.S. is twisting arms so that those countries won’t join.

The United States is confronted with real foreign-policy challenges that will prove hard to resolve: militant Islam; the Palestine conflict, which is now in its seventh decade; an aggressive Russia, insisting on asserting its power, at least in its own neighborhood; continuing threats of nuclear proliferation. We will need the cooperation of China to address many, if not all, of these problems.

We should take this moment, as China becomes the world’s largest economy, to “pivot” our foreign policy away from containment. The economic interests of China and the U.S. are intricately intertwined. We both have an interest in seeing a stable and well-functioning global political and economic order. Given historical memories and its own sense of dignity, China won’t be able to accept the global system simply as it is, with rules that have been set by the West, to benefit the West and its corporate interests, and that reflect the West’s perspectives. We will have to cooperate, like it or not—and we should want to. In the meantime, the most important thing America can do to maintain the value of its soft power is to address its own systemic deficiencies—economic and political practices that are corrupt, to put the matter baldly, and skewed toward the rich and powerful.

A new global political and economic order is emerging, the result of new economic realities. We cannot change these economic realities. But if we respond to them in the wrong way, we risk a backlash that will result in either a dysfunctional global system or a global order that is distinctly not what we would have wanted.