Argument

Danger Zone

The carrier strike groups in the Persian Gulf are an awesome reminder of U.S. military might.

ABOARD THE USS ABRAHAM LINCOLN — U.S. President Barack Obama recently said that "all elements of American power" remain on the table to prevent Iran from obtaining nuclear weapons. The USS Abraham Lincoln -- a nearly 100,000-ton supercarrier with a crew of around 4,800 and 50-plus aircraft -- is one of these elements. Steaming just 30 miles off the coast of Iran while launching F/A-18 Hornet strike aircraft, it is one of the most visibly impressive demonstrations of American military might.

If strategic power can be measured in decibels, the flight operations of a U.S. Navy aircraft carrier must rank at the top. Even if one wears earplugs as well as ear protectors, the noise on the flight deck is overwhelming. Depending on the aircraft type and the payload it is carrying, each F/A-18 is catapulted off either at full power or with the additional fiery blast of afterburners. Similarly on landing, the throttles are opened in case the aircraft's hook does not catch on one of the four arrestor wires stretched across the deck. An aircraft that misses is labeled a "bolter" and has only yards to once again become airborne and fly round for another attempt. In several hours of watching, there were few "bolters." Most pilots caught their target, the third wire.

The Lincoln has two squadrons of F/A-18C Hornets and two of the more advanced, two-seater F/A-18E/F Super Hornets, known as "Rhinos." Both types can perform ground strike as well as air-to-air roles. In addition, there were several EA-6B Prowlers, electronic warfare aircraft designed to detect and jam enemy radars, and an E-2C Hawkeye, with its giant circular radar, providing early-warning detection.

To the layperson and probably also the expert, it is hard to find the appropriate word to describe the potential of a carrier like the Lincoln. Superlatives like "incredible," "extraordinary," and "impressive" fall short. Put in simpler terms, it is, well, awesome.

The carrier, in a blurb handed out to visitors like myself, defines its mission as "to provide a credible, sustainable, independent forward presence and conventional deterrence in peacetime." (Emphasis in the original.)

With the carrier minutes from Iranian airspace, the term "forward presence" could be summed up, less diplomatically, as being "in your face." I can't speak for "credible" -- the question is perhaps best directed to Tehran -- but "sustainable" seems right, at least in terms of apparent effortlessness. And though "independent," the USS Abraham Lincoln is not alone. Carrier Strike Group 9, of which the Lincoln is the flagship, includes the air-defense cruiser USS Cape St. George and the destroyers USS Momsen and USS Sterett. In the haze, the outline of the British Royal Navy's newest warship, the HMS Daring, was also visible. Somewhere, but not discussed, was at least one U.S. submarine.

Along with another carrier strike group, led by the USS Carl Vinson, these ships make up the U.S. 5th Fleet. The size of the fleet is always in flux -- a carrier group departs as another arrives. There is usually a few days or weeks of overlap. At the moment, perhaps because Washington wants to emphasize support for its regional allies and apply pressure on Iran, the overlap seems longer than usual.

There is no U.S. naval dockyard in the region like, say, at Norfolk, Virginia. The home ports of the ships are back in the United States, though the headquarters of the fleet is the troubled island of Bahrain, where Shiite protesters are at odds with the Sunni ruling family. The 5th Fleet's headquarters -- its "Naval Support Activity" moniker deliberately avoids the word "base" -- is not a local issue, as U.S. personnel keep a low profile and any visiting ship moors well out of sight at a distant jetty.

The Lincoln was operating in a narrow "box" of international waters between the Arab Gulf states and Iran, though a casual observer would probably regard the location as being on the Iranian side of the Persian Gulf. The "box" lies north of the small Iranian island of Farsi and parallel to the Iranian coast opposite the city of Bushehr, where Iran's sole civil nuclear power reactor is located.

If I hadn't asked about the position of the carrier, nobody would have told me. When I asked the pilot who was preparing to fly me to the Lincoln in a propeller-driven C-2 Greyhound, known as the "COD" (for "carrier onboard delivery"), his reply was: "That's classified." Sitting trussed up uncomfortably, wearing a life jacket and a cranial helmet, and facing backward in the COD's cargo bay, I calculated from the rays of the sun shining in via two very small windows that we were heading, if anything, northwest from Bahrain. If we had flown east, the carrier would have been near the Strait of Hormuz, the choke point for shipping at the opening of the Gulf through which some 20 percent of the world's traded oil flows daily.

The U.S. Navy welcomes "distinguished visitors" to its carriers and handles such guests with accomplished ease. Along with a colleague, we made the pitch that such a trip would aid our understanding of issues like regional security and the export of energy from the region, which has more than half the world's oil reserves and a third of its natural gas. The narrative we heard from Rear Adm. Troy Shoemaker, the commander of the strike group, and U.S. 5th Fleet commander Vice Adm. Mark Fox was not different from the recent public remarks of U.S. officials.

There is almost daily communication, in one form or another, with the Iranian Navy, whether it's about the return of rescued fishermen from sinking vessels or the announcement of upcoming exercises. Still, there is considerable caution: A motorized dhow, adapted from the local style of sailing boat once used for fishing and pearl diving, steered a parallel course for some of the time during flight operations, probably monitoring (a more polite term for "spying on") the Lincoln. Helicopters from the carrier maintain an outer perimeter so that boats do not come close -- a cautionary measure to deter the Islamic Revolutionary Guard Corps, which employs small boats and has practiced "swarm" tactics.

Another potential threat to the U.S. Navy is Iran's use of mines, which it employed to disrupt shipping during its 1980-1988 war with Iraq. A March 15 Wall Street Journal article reported that the United States was doubling its minesweeping ships in the Persian Gulf to eight, implying that present capabilities were inadequate. Journalists who were recently embedded on a U.S. destroyer were briefed on the positions of Iranian land-based cruise missiles, which, like mines, theoretically, can threaten much of the Gulf, especially the well-defined inward and outward shipping lanes in the Strait of Hormuz. The United States and its allies can probably counter such threats within days, but the Lincoln's purpose is to deter the Iranians from even attempting any aggressive move.

Of course, an acid test is whether Supreme Leader Ali Khamenei finds the destructive powers of Carrier Strike Group 9 as impressive as those aboard its warships. We don't know what he is being told about the USS Abraham Lincoln and the USS Carl Vinson, currently operating outside the Strait of Hormuz in a "box" off Pakistan, in support of the international war effort in Afghanistan.

It is doubtful that anyone in Tehran will have told Khamenei about the motto of the USS Abraham Lincoln: "Shall not perish." The theme of President Lincoln's Gettysburg Address imbues the ship: "Government of the people, by the people, for the people, shall not perish from the Earth." Representative democracy in this part of the Middle East is more than a bit elusive, though, with exceptions, most governments rule with the will of the people. And both the peoples and the conservative Arab states on the southern side of the Gulf are fearful of Iran's influence and apparent desire for hegemony.

Such arguments probably mean little to Khamenei, a lifelong hater of the United States who seems determined to make the permanent establishment of Islamic rule his legacy. So in the absence of an appeal to his sense of decency, the Lincoln represents an appeal to his instinct for survival. One is tempted to suggest that he should put on a pair of earphones, turn up the volume, and search "top gun intro" on YouTube.

The quietness of those first two minutes of Top Gun had previously struck me as strange, but I now realize it captures absolutely the muffled preparations for the next "cycle" of a carrier's air operations. Of course, in real life, there is no sudden rock music as the takeoffs begin, but otherwise, in terms of youthful enthusiasm of Tom Cruise-types, Top Gun's introductory four minutes captures exactly this element of American power. The mullahs in Iran should sit up and take notice.

Simon Henderson/copyright 2012 The Washington Institute for Near East Policy

Democracy Lab

Why Burma Shouldn't Listen to the IMF

If Burma's leaders really want to revive their economy, they can start by giving a cold shoulder to the Washington Consensus.

Burma is at a crossroads. While the country's dramatic (and fragile) political opening is receiving plenty of attention, its leaders are also confronting some stark decisions about their economic future. After decades of economic isolation, the economy of Burma (also known as Myanmar) is badly in need of reforms than can better promote development. The choices that Burma's government makes in the coming months could well determine what the country will look like 30 years from now: an industrialized South Korea or a resource-cursed Nigeria.

According to current academic and policy debates, a developing country can integrate into the world economy in one of two basic ways: rapidly, under the free trade/free markets principles of the Washington Consensus policies favored by the World Bank and the International Monetary Fund (IMF), or more gradually, based on an approach that initially provides domestic industries with trade protection, subsidy support, and technological support until they are mature enough to compete with global companies. Like Burma's partners in the ASEAN free trade agreement, the World Bank and IMF will likely be urging Burma to opt for the rapid integration approach.

Coinciding with its political opening, Burma's leadership has taken steps to deepen the pool of foreign investors in the economy beyond the traditional influence of neighbors China and Thailand. It has also invited the policy advice of western donor agencies such as the IMF and the World Bank and welcomed a range of views on future development policies, from advocates of the Washington Consensus to long-time critics of that approach, such as Nobel laureate Joseph Stiglitz. It remains to be seen which path Burma will follow.

The IMF has already sent several delegations to the country and is assisting the government in unifying its complex system of multiple exchange rates for the currency, the kyat, as a necessary first step to other reforms. No one will argue with that. But there are other areas where the advice of the Bank and the Fund on important fiscal, monetary, financial, trade and investment policies deserves critical scrutiny. The wrong decisions could hinder the country's efforts to industrialize successfully.

Regarding monetary policy, the IMF is likely to advocate for an independent central bank with an inflation-targeting regime. Despite new thinking in monetary policy about the usefulness of capital controls or mandating central banks to adopt a broader array of policy goals such as employment and growth, an IMF program for Burma is likely to advocate its standard inflation-targeting model, committing the Burmese central bank only to achieving low inflation by raising interest rates, even at the cost of reduced public investment in development and putting affordable credit out of the reach of domestic companies.

On financial policy, the IMF and World Bank are likely to suggest that Burma's companies rely on private international banks rather than public development banks, an approach that could also contribute to keeping affordable commercial credit out of the reach of many local companies.

Although Burma has recently made efforts to increase social spending, critics of the IMF's brand of fiscal restraint caution that it could prevent Burma from making the big, long-term capital investments that are needed to build up the underlying transportation, health, and education infrastructure upon which future productivity depends. For example, the 2008 Spence Commission on Growth and Development warned that the IMF tends to see public investment as a short-term stabilization issue, and has failed to grasp its long-term growth consequences. If low-income countries are stuck in a low-level equilibrium, then putting constraints on their infrastructure spending may ensure they never take off."

On trade policy, the IMF and World Bank will echo Burma's ASEAN partners and advise it to lower its trade protection rapidly, even before its new and small industries are strong enough to compete in international markets, thus threatening to block its future industrial development. And the apostles of the Washington Consensus are also likely to advise Burma to focus on its present (static) comparative advantage in natural resources extraction rather than adopting a strong industrial policy to develop its future (dynamic) comparative advantages in manufacturing and services.

By contrast, other critics of the Washington Consensus model, such as the United Nations Conference on Trade and Development (UNCTAD), encourage developing countries to increase public investment and build strong developmental states with institutions capable of executing effective industrial policies. Opponents of industrial policy are correct in pointing to some very unsuccessful previous efforts in developing countries. But they are often selective in their criticisms, ignoring successful cases, and do not account for why industrial policies worked so well in the U.S., Europe, and East Asia but failed so badly in Africa and elsewhere. UNCTAD argues that history says more about how industrial policies should be implemented -- not if they should be implemented.

Stiglitz cautions other developing countries: "Don't do as the U.S. says, do as the U.S. did." By this he means that rather than following the Washington Consensus advice for rapid global integration, developing countries should do what the rich countries did: develop domestic industries first, then open up gradually later on.

One problem facing Burma's leadership is that much of this history of what the rich countries did during their own early decades of economic transformation into manufacturing and services is no longer taught in most university economics departments. History shows that, although each case is unique, all countries that have industrialized successfully have usually done so first behind high levels of trade protection and subsidy support -- often for decades at a time -- and only liberalized their trade once their firms were able to be competitive in overseas markets, not before. Britain, the United States, Europe, Japan, Singapore, Hong Kong, South Korea, Taiwan, and China assigned a strong role to the state with temporary trade protection, public development banks or central bank policies that provided long-term, cheap commercial credit and extensive public technology policies to advance R&D and innovation -- almost precisely the opposite of the Washington Consensus advice of today.

Critics warn that how carefully Burma decides on the timing, pacing, and sequencing of opening its domestic industries to the global economy will be of vital importance. Many are worried that economies such as those of Burma, Cambodia, and Laos are not truly ready to join others in the ASEAN free trade agreement by the date (2015) to which they have committed.

At the moment, most foreign direct investment (FDI) coming into Burma is focused on the extractive industries of oil, gas, and hydropower. There is also interest in developing ports on the country's Indian Ocean coast that could connect with India and serve as alternative routes for Chinese shipping, which today must go through Southeast Asia's U.S.-patrolled Malacca Strait. But rather than simply throwing the doors open to any and all kinds of FDI, Burma's challenge is to use an industrial policy to help attract the types of FDI into its manufacturing and services sectors that will train the Burmese workforce in skills and technology. This is precisely what Burma needs if it is to move up the next rungs of the development ladder. Burma also needs FDI that will provide business for other small manufacturing and services firms in the domestic economy, something less likely to occur in "special" economic zones already being planned. While the IMF and World Bank often refer to the "private sector" in the abstract, Burma needs to think more explicitly about how the needs and interests of its own small and medium-sized enterprises (SMEs) are different from those of foreign investors, and take steps to support them accordingly.

Of course, those making the case for building a strong developmental state in the current national context of Burma face a serious challenge. Many feel that the government has already helped a handful of large and well-connected companies too much, and that this has not benefited many smaller companies. So it is understandable that, on the face of it, arguing that the state should continue to provide such strong support for domestic companies may seem inappropriate. But if Burma wishes to pursue an industrialization-based development model like the one used by some of its East Asian neighbors, its leaders should carefully consider what roles the state will need to play in enabling SMEs to grow into larger and more competitive firms, and take steps to preserve its policy space. Critics warn that the ability of the state to provide this support with trade protection, subsidized credit, and technology is likely to be greatly undermined if Burma adopts the Washington Consensus approach.

Which direction Burma's government will choose remains unclear. One hopes that its leaders will take the time to carefully consider integration into the global economy on their own terms and not be rushed into taking important decisions because of commercial pressure from others. South Korea or Nigeria? The choice is up to Burma.

SOE THAN WIN / AFP / Getty Images