Accounts and Accountability and Sea Monsters

How The Avengers explains the world.

This week, the Avengers continued to confront giant mechanical sea monsters from outer space on the silver screen. In the real world, politicians and businesspeople were locked in similarly intense contests of will. The stakes in both dramas were high. The dialogue was sharp. And as with the Avengers and their merry extended family of mayhem-makers, the collateral damage -- from both their conflicts and their collaborations -- was catastrophic.

In the movie and the actual, considerably less noisy planet Earth, the battle lines were a bit blurry. In the movie, the so-called heroes are motivated by loyalty to a guy who was seeking to harness a mysterious, powerful, blue, and swirlingly 3-D power source on behalf of the Hollywood-imagined military industrial complex with a heart of gold upon which our world depends. Among their band are a narcissistic billionaire arms merchant, a demigod bent on defeating his half brother, a former assassin, and a gentle soul whom we don't start rooting for until he suppresses his better instincts and lets his anger-management issues take over (even if it means slapping around his fellow "heroes" to comic effect).

All of us who follow business and politics closely know that in real life it is even more difficult to tell who is on whose side because the good guys tend not to wear tights -- or inevitably win in the end. So, for example, in the United States, Americans watched as President Barack Obama's deep-pocketed friends at his super PAC unleashed a commercial attacking deep-pocketed Mitt Romney for having been a venture capitalist who restructured businesses with profits in mind. The effort played in counterpoint to the simultaneous saga of the bank still bearing the name of America's alpha plutocrat, J.P. Morgan, as it lost $2 billion thanks to trading mistakes just days after its chief executive was making his most recent public plea to keep regulators off the back of banks.

Obama was seeking to deliver a lasting blow to Romney's reputation, hoping to permanently cast him in the role of rapacious fat cat before Romney could offer himself up with his preferred identity, that of competent supermanager. Obama's eagerness to strike the blow this early in the campaign was perhaps due to his acute awareness of the politicians vs. businesspeople saga currently taking place across the Atlantic and its potential consequences for the U.S. elections this November. Because if Europe blows up, Obama is likely to go the way of the almost a dozen other incumbents struck down for their perceived complicity in making a mess of the finances of essentially the entire developed world. Unless, that is, Romney is seen as a malevolent force who can't be trusted to replace Obama.

In Europe, it is also sometimes hard to know who is on whose side by their job description. But essentially, Germany's politicians and bureaucrats have taken a position that they describe as being "pro-fiscal responsibility" but that also happens to be "pro-banking." It suggests that wayward countries should effectively bear all the costs of the bad deals made by the financial community when lending to those countries earlier. They suggest it creates a "moral hazard" if countries do not cover all their debts while turning a blind eye to the equally obvious moral hazard associated with letting banks make reckless loans without fearing any consequences. In France and Greece, meanwhile, politicians have taken a different stance from their German counterparts, suggesting looking out for people is as important as protecting the shareholders of big financial institutions -- even as they downplayed the complicity of governments in getting everyone into this mess to begin with.

In other words, high drama and, with nary a superhero in sight, plenty of the slam-bang conflict and moral ambiguity that seems to play well with ticket-buying audiences these days.

Absent steroidal men in capes or high-tech rocket suits in the midst of these showdowns over economic ideology in the United States and Europe, there has been one set of actors you could root for, the one every audience likes best: themselves. Because this week we saw important evidence that an empowered public is the best and only available superhero.

We saw that in the elections in France and Greece that gave people the opportunity to do what Europe's leaders were unwilling to -- they led. They reset the agenda and they insisted political leaders were accountable. They tossed out Germany's fairly dependable supporter, Nicolas Sarkozy, in France, and they ushered in a political upheaval in Greece that now has the world on edge wondering whether a Greek departure from the eurozone is inevitable. They also delivered a Hulk-like blow to Chancellor Angela Merkel's party in local elections in North Rhine-Westphalia, Germany's most populous state.

This stood in stark contrast with what was simultaneously happening in the business community. This past week, in instance after instance, we saw that even in an age of mind-blowingly excessive pay packages for top executives -- allegedly to compensate them for the high-stakes decisions they must make and the risks they must assume -- business leaders have become extraordinarily adept at avoiding taking responsibility for their actions.

It's a bitter irony. Champions of markets talk about the ruthless accountability they demand. But what of all those bankers demanding that the people of Greece pay for years because the financial community made too much cash available on too easy terms for the feckless leaders of that country? They're still making the big bucks. They still have their jobs. And they're still demanding to be made whole. Or what about Jamie Dimon at JPMorgan Chase? If a chief executive can avoid assuming responsibility for wildly inappropriate trading within his bank, what message does it send? He sacrificed some of his colleagues but held onto his own job.

Or, for that matter, what about Rupert Murdoch and the phone-hacking scandal that has his closest executives being indicted and his son losing his job? Why does the buck not stop with the man who has collected the most bucks of all? Or what about Aubrey McClendon at Chesapeake Energy, who created a private hedge fund within his company, gambled the company's money, and then, when discovered, tried to get away with offering little more than a thin apology?

Big financial institutions unhesitatingly call for the public sector to make them whole, to bail them out, and to stay off their backs when it comes to regulation. They collect the upside of their financial adventures but spread the costs among the population at large. CEOs of big companies similarly capture the upside but make their shareholders and colleagues pay the price for their failings.

It seems the rule for today's private sector is that the bigger the bank account, the less the accountability. It's an indictment of the oversight role played by boards and big institutional shareholders, not to mention regulators. But it also should be a disqualification for any sort of public support for or coddling of these enterprises, which continue -- even in the midst of crisis -- to seem devoted to the private enrichment of a relative few who wish to stretch or live beyond the law -- except of course, when they can bend the law or the government that enforces it to serve their needs.

So there you have it, folks: a Hollywood happy ending. Given half a chance, regular people power works. As for modern markets, until there is real accountability, they're the giant mechanized sea monsters threatening us all. It's time we found a few larger-than-life men and women to bring the bad guys leading them to justice. And if their shareholders won't do it, then voters can. A good place to start? How about kicking out the cronies and puppets and putting in place governments that demand a higher standard of behavior, in business and in politics?

Photo by Jeff J Mitchell/Getty Images

David Rothkopf

The Debacle That Wasn't

What if the Chen episode was actually a U.S.-China breakthrough?

A couple of weeks ago, before he was pictured on the front page of the biggest newspapers in America last week holding the hand of Chen Guangcheng, I had breakfast with Kurt Campbell. Campbell is assistant secretary of state for East Asian and Pacific affairs, making him the guy with day-to-day responsibility for many of the most sensitive issues the U.S. faces, from North Korea to Myanmar, Japan to China.

We have breakfast every so often. We have known each other for almost 20 years, since we both served in the Clinton administration. When we met this time, I was thinking of doing a column on Kurt. In my view, the work he has done at the State Department has been among the very best of any sub-cabinet official on the Obama team. If they gave out an MVP award for contributions to U.S. foreign policy over the past several years, justice would demand Campbell be considered.

But before I wrote anything, I wanted to talk to Kurt. One reason was to pick Kurt's brain on developments in Asia. Unlike most folks in top Washington jobs, he has a strategic perspective -- a worldview -- and he rigorously re-examines it and ensures it evolves over time. Few people, in fact, would so appreciate the watershed that the dramatic and confounding Chen incident represents than this guy who was at the center of it.

There was another reason I wanted to talk to Kurt, though. I didn't want to write anything about the work he was doing without getting his OK. Not regarding the substance of what I was writing, but that I was writing anything at all. Because while Kurt can hardly be called a self-effacing guy, a large degree of his success thus far has been due to the careful way he has worked behind the scenes. He knows that working quietly is what works best in Asia -- and also in Washington. Press coverage can be useful, but in a town where people actively seek puffery and the spotlight, he, like many others who have thrived in the current environment (including his boss Hillary Clinton), has recognized that you can get more done with less flak when you leave center stage to others.

Campbell has been among Clinton's most important lieutenants helping to shape and execute the strategic rebalancing to Asia that has been Obama's greatest foreign-policy accomplishment. (As for the others: Getting out of Iraq was a done deal before he took office. Escalating in Afghanistan was a mistake. Killing Osama bin Laden was dramatic and welcome but has been awesomely overplayed in terms of its long-term significance.) The rebalancing of U.S. priorities shifted America's focus from near-term threats to longer-term needs, and it was done in an unusual way: It didn't come with a grand speech first. It came with methodical work at the ground level. And Campbell brought to it an unusually well rounded background, having served both as a naval officer and a White House fellow working in the Treasury Department, as a deputy assistant secretary of defense for Asia and Pacific issues, as a member of the team that helped see NAFTA into existence, and also as co-founder of the Center for a New American Security.

Under Campbell's leadership, the United States established bilateral dialogues with countries throughout the region, including those like Laos that haven't had much attention since the Vietnam War era. It promoted reform and the possibility of better relations with Myanmar, a risky initiative that thus far has shown promise, marked dramatically last week as newly released opposition leader Aung San Suu Kyi took her place in that country's parliament. It sought to find ways to draw closer to Japan despite that country's turbulent political environment, such as by reacting quickly and generously to help Japan recover after the tsunami. It put through a trade deal with South Korea. It made the Trans-Pacific Partnership, a multilateral deal to liberalize trade and raise standards on issues like intellectual property around the Pacific Basin, the new centerpiece of its international trade agenda. It stood firm against North Korean provocations without overreacting in the face of an unusually difficult moment in the history of that country's erratic leadership.

Many elements of the pivot have been outside Campbell's region. Deepening ties with India has been among its most important centerpieces. And there is no question that Secretary Clinton has not only overseen and powered and enabled this pivot, but she has also framed it with a series of powerful, timely speeches, such as the one she delivered on prosperity in the region in Hong Kong last year and via articles like the one she wrote for Foreign Policy last November called "America's Pacific Century." Others throughout the State Department have played a vital role in this effort, as has National Security Advisor Tom Donilon, who, along with his team at the White House, has been deeply involved. And of course, none of it could happen without the vision, approval, and leadership of the president, whose trips to the region and meetings with visiting leaders have been essential.

But what has struck me about the pivot is the work behind the scenes and the attention to detail as I've watched the Strategic & Economic Dialogue with China evolve from a high-level show to one in which working-level teams from both sides established ties and relationships that had never been there before and would be essential in the future. And that's why I thought Kurt and his team deserved some public acknowledgement of their work. The architect Mies van der Rohe once famously said, "God is in the details," and the remark is certainly as true of diplomacy as well. It comes in the daily calls and visits and invisible to the public micro-agreements that knit relationships together, add stability, deepen ties, and ensure open channels at times of tension and context in moments of upheaval and confusion.

Last week, it looked like it was going to all blow up. Chen's dramatic escape from house arrest, his odyssey across to China to the U.S. Embassy, the negotiations with the Chinese over his fate, and then his return to the control of the Chinese government produced a torrent of emotions. Watching it unfold was a lesson in the shortcomings of modern media. The tick tock on Twitter produced bold statements of triumph followed by shocked condemnations of betrayal. The perhaps natural but dangerous impulse of commentators to comment in real time when facts were sparse, conflicting and -- as usually happens in these circumstances, not facts at all -- was too seldom resisted. Even the very very best among them, like the New York Times's Nick Kristof, at one moment hailed the maturity of the Chinese for striking a deal to accept back Chen and a few minutes later wished aloud, via another tweet, that he could take the observation back when it seemed the Chinese were reneging.

For a moment, the United States appeared naïve in trying to cut a deal with the Chinese government. Throughout, talking to friends on the ground, it seemed to me that the usually disciplined State Department message machine had blown up with confusing stories, strange silences, and mayhem. Per a story this past weekend in the Daily Beast, the White House may also have been maintaining its laser-like focus on re-election, trying to distance itself from the dust-up and in so doing, being perfectly prepared to let Secretary Clinton take the heat for the problem.

Which, as usual, she was fully prepared to do. But she and her team kept working when it looked like the wheels were coming off the cart. They kept the Strategic & Economic Dialogue on track. They insisted via the channels they had developed over the past several years that the deal they negotiated be honored. And it seems -- at least for now, and all this is still hugely delicate at the moment -- that they were successful in winning the extraordinary opportunity for Chen to come to the United States to study.

Yes, it was ugly. But diplomacy is often messy. It could have been a debacle, but it wasn't. It wasn't because the team involved worked the issues and once again demonstrated that real diplomacy is not about speeches or grand gestures but most often is about private conversations between nearly anonymous men and women -- as much about improvisation as it is strategy. It requires doggedness and the ability to keep one's head when plans are going ass over teakettle.

But let's be clear about this: The real story of last week wasn't just about the efforts of a few diplomats or even about the heroic defiance of a blind man willing to stand up to an oppressive government. It wasn't about the deal struck or the deal blown or the deal resuscitated. It was about the fact that an incident that at any time in the past 20 years of the U.S.-China relationship would have blown it up did not. In the past, similar incidents, from the far more serious challenges that came in the days after the Tiananmen crackdown to spats over visits to Washington by Taiwanese leaders or disputes regarding other human rights advocates, have put the relationship into the deep freeze. If we didn't overreact, the Chinese would have.

But this time both sides kept their heads, worked the issue, and maintained their focus on the long-term interests of both nations, from our intertwined economic futures to the recognition we need to work together to get almost anything major done on the world stage these days. In that respect, the Chen affair resulted in a testament to the importance of the U.S.-China relationship to both sides. Each seems to recognize that in big, complex relationships there will be irritants and even sometimes profound differences, but that for the two dominant powers of the 21st century, it is essential not to let those overshadow shared interests or deep interdependencies. This is why, in fact, the Strategic & Economic Dialogue was set up in the first place. It is why the United States has worked hard behind the scenes to establish ties at deeper levels. It is why, in the end, Kristof was right: The U.S.-China relationship has matured. And it is also why diplomatic craftsmen like Kurt Campbell and the rest of the president's Asia team are doing such an essential job, and why we should be grateful that they are, on balance, doing it so well.