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Get on This Train

When will Americans realize we're losing the infrastructure race to China?

I have never felt so utterly like a remnant of history as I did when I opened FP's special report on "The 75 Most Dynamic Cities" of 2025. Of the first six cities on the list, five are Chinese. New York is seventh, and Los Angeles twelfth. London clocks in at 21, and Paris at 26. As decisively as the United States passed Europe after World War II, so China will have passed the United States a decade or so from now.

The list, compiled by the McKinsey Global Institute, ranks growth, of course, not absolute position. Tokyo, with its giant metropolitan area, will still generate the most wealth of any city in the world by 2025, and New York will still rank second. But what is striking, and unnerving, is that McKinsey ranks cities not by growth rate but by the absolute difference between its GDP in 2010 and its projected GDP in 2025. On growth rate alone, Chinese cities would occupy 23 of the top 25 slots, with the Indian cities of Delhi and Bangalore rounding out the list. But even though New York's economy is eight times larger than that of Shenzhen, the Chinese metropolis will be growing more in absolute terms than New York by 2025. By 2030, Shanghai and Beijing will be bigger than New York in absolute terms.

They will not, of course, necessarily be better. The ranking is accompanied by articles in FP noting the gross failure of urban planning in China, the mega-traffic jams and pollution, and of course the stifling effect of an authoritarian state. But the new Chinese cities will be more effective than Western ones at generating wealth, as well as at the basic urban business of moving people rapidly, cleanly, and safely from here to there. And they will be new! By contrast, New York and Los Angeles and Chicago, which always felt new compared to European capitals -- not just more recent, but more open to renewal -- will be part of the New Old World.

I don't feel any more ready for this moment of relegation than the average Londoner was in 1950, watching the empire drop away piece by piece. Less so, really, because Britain had already been exhausted by the war, while the United States still leads the world in everything important -- GDP, weapons, action-adventure movies, Olympic gold medals. It seems so ... unfair.

And I don't know China. I have never been to China. Suddenly that admission sounds shameful: I have never seen the future. What I know is the past. India, the developing country where I have spent the most time, inhabited a timeless world when I first started going there in 1976 -- folkloric and shambling and apparently irremediable. That's no longer true, of course. The New Delhi I first knew was the elegant colonial city of British architect Sir Edwin Lutyens; today's Delhi has metastasized in all directions. This is, all in all, a great thing. But Delhi does not threaten to eclipse New York or Paris. As an urban machine, it's not very effective. Delhi's GDP in 2010 was less than one-fifth of Shanghai's.

If I have to be eclipsed by somebody, I would like it to be India. It is a democracy and, almost miraculously, it has held together as a nation despite what Indians like to call "fissiparous tendencies" -- cleavages of language, religion, ethnicity. Perhaps I could live with being eclipsed by "the emerging world" collectively.

But it is not to be: In a separate report, McKinsey estimates that the 440 largest cities in the emerging world will generate half of global GDP growth between now and 2025. And of those cities, slightly more than half will be in China. China is expected to contribute 40 percent of the world's growth in urban GDP between 2010 and 2025. So we should just be honest and say, "China is eclipsing the West."

Of course, the projections, and thus the Spenglerian hand-wringing, could prove wrong if China's economy stopped defying the laws of gravity. China's growth has been investment-driven rather than consumer-driven, as in much of the West. That investment, above all, takes the form of the astonishing building and infrastructure projects that have propelled the growth of China's cities -- bullet trains, highways, ports, and giant manufacturing complexes. Local governments issue the debt for these projects, which now stands at a stupefying 10.7 trillion yuan ($1.58 trillion). The city of Tianjin -- number three on the McKinsey list, behind Shanghai and Beijing -- recently announced plans to invest another $236 billion in industrial development over the next four years. If enough of these speculative investments fail, city and regional governments could face unsustainable debt. A recent Economist article, however, argues that those debts have never endangered "the fiscal position of the country as a whole." The claim that China's economy is a house of cards may be an elaborate form of wish fulfillment.

China's urban model is powerful but brutal, like China itself. Cities like Shanghai have bulldozed their past on the way to a glittering future. It's not a model to be emulated, at least in the West: Urbanites, at least in the Old World and New Old World, want to live both on the cutting edge and in the past, and great cities like New York and London and Paris let them do so. But that doesn't mean we can't learn from China.

I cannot read about China's bullet trains and super-modern airports, or the "traffic-jumping bus" described in FP, without feeling mortified by New York's absurdly cumbersome "train to the plane," or the decades of stop-and-start planning that preceded the Second Avenue subway line now under construction. Democracies, of course, cannot sweep away local opposition to infrastructure projects as autocracies can. But as Harvard scholar Edward Glaeser asserts in Triumph Of the City, preservationism -- whether in Manhattan or Paris -- can be an asphyxiating ideology.

But local opposition is not the greatest obstacle to infrastructure development in the United States -- money is. A recent report by America 2050, an advocacy group promoting strategic investments in America's physical plant, notes that after almost two centuries of investment in canals, railroads, ports and highways, U.S. spending on infrastructure has dropped to 2.4 percent of GDP, compared to 4.6 percent in India and 9 percent in China. "No national strategy exists," the authors write, "to build and manage the infrastructure systems needed to sustain inclusive economic growth and our competitive position in the global economy."

Right now, there is zero prospect of significantly raising infrastructure spending. As part of the 2009 stimulus package, Congress authorized $10.1 billion for the U.S. High-Speed Intercity Passenger Rail Program, which would provide grants to states seeking to enhance existing passenger rail service and build new dedicated high-speed railways.  Very few states succeeded in securing grants to develop high-speed trains before Congress eliminated funding for the program in 2011. And that was under President Barack Obama. The long-term budget proposed by Paul Ryan, Mitt Romney's running mate, would halve discretionary spending as a fraction of GDP over the next decade. The document, known as "The Path to Prosperity," was endorsed by the House of Representatives -- and it does not mention the word "infrastructure." Ryan appears to believe that the private market will supply public transportation, sewer systems and power grids, and repairs bridges and roadways.

Perhaps even more dangerous than the Republican idée fixe over government spending is the chest-thumping braggadocio that insists the United States is the greatest nation the world has ever seen, and has nothing to learn from anyone. When will we wake up? Only, I imagine, when it too late to do much about our plight.

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Terms of Engagement

Zone of Insanity

Are Bibi Netanyahu and Ehud Barak really crazy enough to bomb Iran -- against the wishes of the United States and their own people?

It must drive Israeli Prime Minister Benjamin Netanyahu crazy that scarcely anybody outside his immediate circle of advisors -- oh, and Mitt Romney -- understands the imperative for war against Iran. Israel's retired security chiefs uniformly consider a war unnecessary right now. Israel's president, Shimon Peres, agrees. A poll released this week found the Israeli public opposed to war by a solid 46 percent to 32 percent. As for the United States, Defense Secretary Leon Panetta insists that "the window is still open to try to work toward a diplomatic solution."

We know this drives Netanyahu crazy because the last few days have seen a frenzy of leaking and spinning by senior Israeli officials. Deputy Foreign Minister Danny Ayalon told an interviewer that the world must halt Iran's nuclear program within "several weeks." An unnamed "decision maker" -- transparently Defense Secretary Ehud Barak -- told Ari Shavit of the Israeli daily Haaretz that Israel cannot afford to wait for the United States to take action. And Shavit came up with another big scoop: A new U.S. intelligence report, he asserts, demonstrates conclusively that "within about a year Iran will be capable of becoming a nuclear power."

It's unclear whether Netanyahu is trying to prepare domestic public opinion for an imminent Israeli strike on Iran, or hoping to bully U.S. President Barack Obama into making some sort of ironclad promise to launch airstrikes -- should Iran cross some stipulated red line or should diplomacy fail to deter the Iranians by a stipulated date. Netanyahu would plainly prefer an American attack, which would do far more damage to Iran's nuclear infrastructure than an Israeli one would, but he may have concluded (as Barak intimated) that Israel will have to act alone rather than risk American inaction. Yet Netanyahu has put Obama in the almost impossible position of having to reassure Israel that the United States will act if necessary -- thus reassuring American swing voters that he has Israel's back -- without binding himself to fight Israel's war on Israel's terms. Obama has already allowed Israel to back him into a corner by saying that he would go to war rather than accept a nuclear Iran, but apparently Netanyahu and Barak don't believe him.

You wouldn't know it from the way the Israelis have turned the air blue, but absolutely nothing has happened to change the view of U.S. intelligence about Iran's intentions or capacities. In January, James Clapper, director of national intelligence, said in congressional testimony: "Iran is keeping open the option to develop nuclear weapons.… We do not know, however, if Iran will eventually decide to build nuclear weapons." Iran, that is, continues to enrich nuclear fuel to a purity consistent with weaponization, but has yet to resume work on the technology needed to make a bomb. That remains the U.S. view. Indeed, as Jeffrey Lewis argues elsewhere on ForeignPolicy.com, it seems that the devastating new intelligence report does not exist.

The difference between the United States and Israel is not, as Shavit charmingly put it in his account of the nonexistent report, that "the post-traumas of Afghanistan, Iraq and the economic crisis have prevented America from taking a hard straight look at" Iran's nuclear strategy. It is, first, that the United States can wait longer to act than Israel can because it has superior military technology and, second, that so long as diplomacy has a chance of working, the Obama administration is unwilling to risk the terrorist attacks, missile strikes, oil shocks, and grave reputational damage that a war on Iran is likely to provoke. Of course, that's also why the Israeli public opposes a war whose chief victims might well be themselves. What's more, bombing would only delay, not eliminate, Iran's apparent march toward a nuclear bomb -- though Michael Oren, Israel's ambassador to Washington, recently said that this was "not an argument against."

The problem with the Obama administration's position is that diplomacy isn't working. While it is probably true that the vise of sanctions that the United States and its allies have applied has forced Iran to the negotiating table, there is little evidence that economic pain has made the leadership reconsider its commitment to the nuclear program. The so-called P5+1, as the five permanent members of the U.N. Security Council and Germany are known, have not been able to furnish either carrots or sticks powerful enough to change Iran's calculus. The most recent round of negotiations in Moscow this June ended in failure. Israel thus has good reason to fear that Iran will string along the P5+1 until it has placed its precious hoard of highly enriched uranium beyond the reach even of American bombs -- what Barak describes as Iran's "zone of immunity."

Israel, of course, wants sharper sticks -- either a U.S. promise to attack if diplomacy fails by June 2013, according to one unlikely report, or an explicit declaration of red lines, according to another. I can't imagine that Obama will back himself yet further into a corner by making his red lines public. The White House has tried to mollify Israel's bellicose leader, as well as send a blunt message to Tehran, with a stream of tough assertions about rapidly closing windows, as well as by sending two aircraft carrier battle groups to the Persian Gulf.

Washington does need to wave a big stick, but amid all the preparations for war, the idea of inducing Iran to change its behavior appears to have been forgotten. In Moscow, the P5+1 made Iran a very modest offer, including help with nuclear safety and a medical research reactor, in exchange for the bottom-line demand that Iran stop enriching fuel to 20 percent purity. It's hardly surprising that the Iranians spurned the deal.

The P5+1 should have offered a much more comprehensive package. A number of U.S. diplomats with long experience in Iran, including Nicholas Burns and Dennis Ross (of the George W. Bush and Obama administration, respectively) argue that negotiators must test Iran's bona fides by offering the country what it claims to want -- the right to enrich uranium for civilian purposes. Burns recently proposed that the next president, whoever he is, open direct negotiations with Iran "with all issues on the table." Burns added that the United States must not "remain hostage to Prime Minister Netanyahu's increasingly swift timetable for action" -- the kind of home truth you can offer once you're an ex-diplomat.

I can already hear the reminders of Neville Chamberlain coming from the favored journalists and columnists of the war faction. Lest you think I'm kidding, the Washington Post's Colbert I. King recently wrote, "The Iranian government is as anti-Semitic as the Third Reich" -- an exercise in hyperbole that produced a surprise phone call from an admiring Netanyahu.

The real danger, of course, is that Netanyahu might conclude that Israel has to go it alone. The smart money still thinks he's bluffing, but Ross told me that the "decision-maker" interview convinced him that Barak and Netanyahu really are prepared to fight their own war. The Obama administration has prepared for this eventuality with a series of statements paying elaborate deference to Israel's sovereign right to defend itself as it sees fit. I can only say that I hope that officials are sending a different message in private -- making it very clear to their Israeli counterparts that they will not be drawn into a war with Iran and that a unilateral decision by Israel will do very grave harm to relations with the United States. If Netanyahu wants to go ahead anyway and pay that price on top of everything else -- if "an existential threat" means that it's irresponsible to balance benefits with costs -- then it's up to the Israeli public to decide what to do about their fearless, feckless leader.

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