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U.S. Commission on National Security/21st Century

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Phase 1 (July 1998 - August 1999)

Major Themes And Implications

Supporting Research And Analysis

Phase 2 (August 2000 – April 2000)

Seeking A National Strategy: A Concert For Preserving Security And Promoting Freedom

Phase 3 (April 2000 – February 2001)

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NEW WORLD COMING: AMERICAN SECURITY IN THE 21ST CENTURY

MAJOR THEMES AND IMPLICATIONS

The Phase I Report on the Emerging Global Security Environment for the First Quarter of the 21st Century

The United States Commission on National Security/21st Century

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Preface

In 1947, President Harry Truman signed into law the National Security Act, the landmark U.S. national security legislation of the latter half of the 20th century. The 1947 legislation has served us well. It has undergirded our diplomatic efforts, provided the basis to establish our military capabilities, and focused our intelligence assets.

But the world has changed dramatically in the last fifty years, and particularly in the last decade. Institutions designed in another age may or may not be appropriate for the future. It is the mandate of the United States Commission on National Security/21st Century to examine precisely that question. It has undertaken to do so in three phases: the first to describe the world emerging in the first quarter of the next century, the second to design a national security strategy appropriate to that world, and the third to propose necessary changes to the national security structure in order to implement that strategy effectively. This paper, together with its supporting research and analysis, fulfills the first of these phases. As co-chairs of the Commission, we are pleased to present it to the American people.

Gary Hart

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U.S. COMMISSION ON NATIONAL SECURITY/21st CENTURY

Gary Hart Warren B. Rudman Co-Chair Co-Chair

Anne Armstrong Norman R. Augustine Commissioner Commissioner

John Dancy John R. Galvin Commissioner Commissioner

Leslie H. Gelb Newt Gingrich Commissioner Commissioner

Lee H. Hamilton Lionel H. Olmer Commissioner Commissioner

Donald B. Rice James Schlesinger Commissioner Commissioner

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his paper consists of four parts: a con- work harder to prevent conflicts as well as Ttextual introduction; an articulation of respond to them after the fact. Otherwise, the twelve basic assumptions and observations; promise of the next century may never be fourteen key conclusions about the global envi- realized, for greater global connectedness can ronment of the next quarter century; and a lead to an increased possibility of misfortune as statement of their essential meaning for well as benefit. American national security strategy in the 21st century. The U.S. Commission on National The future is one of rising stakes. While Security/21st Century will build upon this humanity has an unprecedented opportunity to foundation to recommend a new strategy for succor its poor, heal its sick, compose its dis- the advancement of American interests and agreements, and find new purpose in common values. It will then propose, as necessary, new global goals, failure at these tasks could structures and processes for U.S. foreign and produce calamity on a worldwide scale. Thanks security policies in order to implement that to the continuing integration of global financial strategy. networks, economic downturns that were once normally episodic and local may become more Introduction systemic and fully global in their harmful effects. Isolated epidemics could metastasize In the next century, the spread of knowl- into global pandemics. The explosion in scien- edge, the development of new technologies, tific discoveries now under way bears the and an increasing recognition of common potential of near miraculous benefit for global problems will present vast opportunities humanity; misused, in the hands of despots, the for economic growth, regional integration, and new science could become a tool of genocide global political cooperation. The size of the on an unprecedented scale. During the next 25 world’s middle class may increase many times years, dilemmas arising from advances in over, lifting literally tens of millions of people biotechnology increasingly will force some from the depredations of poverty and disease. cultures to reexamine the very foundations of Authoritarian regimes will increasingly their ethical structures. As society changes, our founder as they try to insulate their populations concept of national security will expand and from a world brimming with free-flowing our political values will be tested. In every information, new economic opportunities, and sphere, our moral imaginations will be exer- spreading political freedoms. We may thus see cised anew. the rise of many new democracies and the strengthening of several older ones. However For all that will be novel in the next fragile this process may be, it holds the hope of century, some things will not change. Historical less conflict in the world than exists today. principles will still apply. There will still be great powers, and their interaction in pursuit of Realizing these possibilities, however, will their own self-interests will still matter. As ever, require concerted action on the part of the much will depend on the sagacity and good United States and other mature democracies character of leadership. Misunderstandings, around the world. Active American engage- misjudgments, and mistakes will still occur, but ment cannot prevent all problems, but wise so will acts of bravery borne on the insight of policies can mitigate many of them. The United exceptional men and women. States and governments of kindred spirit must

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Today, and in the world we see emerging, American leadership will be of paramount importance. The American moment in world history will not last forever; nothing wrought by man does. But for the time being, a heavy responsibility rests on both its power and its values. It is a rare moment and a special opportunity in history when the acknowledged dominant global power seeks neither territory nor political empire. Every effort must be made to ensure that this responsibility is discharged wisely. It is to this end that our study is ultimately directed.

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Our View of the Future

As we look to the future, we believe that: 1. An economically strong United States is sional associations, and others) will likely to remain a primary political, continue to grow in importance, military, and cultural force through 2025, numbers, and in their international role. and will thus have a significant role in 8. Though it will raise important issues of shaping the international environment. sovereignty, the United States will find 2. The stability and direction of American it in its national interest to work with society and politics will help shape U.S. and strengthen a variety of internation- foreign policy goals and capacities, and al organizations. hence the way the United States may affect 9. The United States will remain the prin- the global future. cipal military power in the world. 3. Science and technology will continue to 10. Weapons of mass destruction (nuclear, advance and become more widely available chemical, and biological) and weapons and utilized around the world, but their of mass disruption (information benefits will be less evenly distributed. warfare) will continue to proliferate to 4. World energy supplies will remain largely a wider range of state and non-state based on fossil fuels. actors. Maintenance of a robust nuclear 5. While much of the world will experience deterrent therefore remains essential as economic growth, disparities in income well as investment in new forms of will increase and widespread poverty will defense against these threats. persist. 11. We should expect conflicts in which 6. The international aspects of business and adversaries, because of cultural affini- commerce (trade, transportation, telecom- ties different from our own, will resort munications, investment and finance, to forms and levels of violence manufacturing, and professional services) shocking to our sensibilities. will continue to expand. 12. As the United States confronts a variety 7. Non-governmental organizations (refugee of complex threats, it will often be aid organizations, religious and ethnic dependent on allies; but it will find advocacy groups, environmental and other reliable alliances more difficult to single-issue lobbies, international profes- establish and sustain.

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Conclusions on knowledge-based technology for producing goods and providing services, new vulnerabili- On the basis of the foregoing beliefs, and ties to such attacks will arise. our understanding of the broad context of the international security environment that will emerge over the next quarter century, we 3. New technologies will divide the world as conclude that: well as draw it together. In the next century people around the world in 1. America will become increasingly vulner- both developed and developing countries will able to hostile attack on our homeland, be able to communicate with each other almost and our military superiority will not instantaneously. New technologies will entirely protect us. increase productivity and create a transnational The United States will be both absolutely and cyberclass of people. We will see much greater relatively stronger than any other state or com- mobility and emigration among educated elites bination of states. Although a global competitor from less to more developed societies. We will to the United States is unlikely to arise over the be increasingly deluged by information, and next 25 years, emerging powers—either singly have less time to process and interpret it. We or in coalition—will increasingly constrain will learn to cure illnesses, prolong and enrich U.S. options regionally and limit its strategic life, and routinely clone it, but at the same time, influence. As a result, we will remain limited advances in bio-technology will create moral in our ability to impose our will, and we will be dilemmas. An anti-technology backlash is vulnerable to an increasing range of threats possible, and even likely, as the adoption of against American forces and citizens overseas emerging technologies creates new moral, as well as at home. American influence will cultural, and economic divisions. increasingly be both embraced and resented abroad, as U.S. cultural, economic, and politi- 4. The national security of all advanced cal power persists and perhaps spreads. States, states will be increasingly affected by the terrorists, and other disaffected groups will vulnerabilities of the evolving global acquire weapons of mass destruction and mass economic infrastructure. disruption, and some will use them. Americans will likely die on American soil, possibly in The economic future will be more difficult to large numbers. predict and to manage. The emergence or strengthening of significant global economic actors will cause realignments of economic 2. Rapid advances in information and power. Global changes in the next quarter- biotechnologies will create new vulnera- century will produce opportunities and bilities for U.S. security. vulnerabilities. Overall global economic Governments or groups hostile to the United growth will continue, albeit unevenly. At the States and its interests will gain access to same time, economic integration and fragmen- advanced technologies. They will seek to tation will co-exist. Serious and unexpected counter U.S. military advantages through the economic downturns, major disparities of possession of these technologies and their wealth, volatile capital flows, increasing vul- actual use in non-traditional attacks. Moreover, nerabilities in global electronic infrastructures, as our society becomes increasingly dependent labor and social disruptions, and pressures for

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increased protectionism will also occur. Many "big ideas" to spread quickly around the globe. countries will be simultaneously more wealthy Some ideas may be religious in nature, some and more insecure. Some societies will find it populist, some devoted to democracy and difficult to develop the human capital and human rights. Whatever their content, the stage social cohesion necessary to employ new tech- will be set for mass action to have social impact nologies productively. Their frustrations will be beyond the borders and control of existing endemic and sometimes dangerous. For most political structures. advanced states, major threats to national security will broaden beyond the purely 7. The sovereignty of states will come under military. pressure, but will endure. The international system will wrestle constant- 5. Energy will continue to have major ly over the next quarter century to establish the strategic significance. proper balance between fealty to the state on Although energy distribution and consumption the one hand, and the impetus to build effective patterns will shift, we are unlikely to see transnational institutions on the other. This dramatic changes in energy technology on a struggle will be played out in the debate over world scale in the next quarter century. international institutions to regulate financial Demand for fossil fuel will increase as major markets, international policing and peace- developing economies grow, increasing most making agencies, as well as several other rapidly in Asia. American dependence on shared global problems. Nevertheless, global foreign sources of energy will also grow over forces, especially economic ones, will continue the next two decades. In the absence of events to batter the concept of national sovereignty. that alter significantly the price of oil, the sta- The state, as we know it, will also face chal- bility of the world oil market will continue to lenges to its sovereignty under the mandate of depend on an uninterrupted supply of oil from evolving international law and by disaffected the Persian Gulf, and the location of all key groups, including terrorists and criminals. fossil fuel deposits will retain geopolitical sig- Nonetheless, the principle of national sover- nificance. eignty will endure, albeit in changed forms.

6. All borders will be more porous; some will 8. Fragmentation or failure of states will bend and some will break. occur, with destabilizing effects on neigh- New technologies will continue to stretch and boring states. strain all existing borders—physical and social. Global and regional dynamics will normally Citizens will communicate with and form alle- bind states together, but events in major coun- giances to individuals or movements anywhere tries will still drive whether the world is in the world. Traditional bonds between states peaceful or violent. States will differ in their and their citizens can no longer be taken for ability to seize technological and economic granted, even in the United States. Many coun- opportunities, establish the social and political tries will have difficulties keeping dangers out infrastructure necessary for economic growth, of their territories, but their governments will build political institutions responsive to the still be committed to upholding the integrity of aspirations of their citizens, and find the lead- their borders. Global connectivity will allow ership necessary to guide them through an era

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of uncertainty and risk. Some important states video game. What will change will be the may not be able to manage these challenges kinds of actors and the weapons available to and could fragment or fail. The result will be an them. While some societies will attempt to increase in the rise of suppressed nationalisms, limit violence and damage, others will seek to ethnic or religious violence, humanitarian dis- maximize them, particularly against those soci- asters, major catalytic regional crises, and the eties with a lower tolerance for casualties. spread of dangerous weapons. 12. U.S. intelligence will face more challeng- 9. Foreign crises will be replete with atroci- ing adversaries, and even excellent ties and the deliberate terrorizing of intelligence will not prevent all surprises. civilian populations. Micro-sensors and electronic communications Interstate wars will occur over the next 25 will continue to expand intelligence collection years, but most violence will erupt from con- capabilities around the world. As a result of the flicts internal to current territorial states. As the proliferation of other technologies, however, desire for self-determination spreads, and many many countries and disaffected groups will governments fail to adapt to new economic and develop techniques of denial and deception in social realities, minorities will be less likely to an attempt to thwart U.S. intelligence efforts— tolerate bad or prejudicial government. In con- despite U.S. technological superiority. In any sequence, the number of new states, event, the United States will continue to international protectorates, and zones of confront strategic shocks, as intelligence autonomy will increase, and many will be born analysis and human judgments will fail to in violence. The major powers will struggle to detect all dangers in an ever-changing world. devise an accountable and effective institutional response to such crises. 13. The United States will be called upon frequently to intervene militarily in a time of 10. Space will become a critical and competi- uncertain alliances and with the prospect tive military environment. of fewer forward-deployed forces. The U.S. use of space for military purposes will Political changes abroad, economic considera- expand, but other countries will also learn to tions, and the increased vulnerability of U.S. exploit space for both commercial and military bases around the world will increase pressures purposes. Many other countries will learn to on the United States to reduce substantially its launch satellites to communicate and spy. forward military presence in Europe and Asia. Weapons will likely be put in space. Space will In dealing with security crises, the 21st century also become permanently manned. will be characterized more by episodic "posses of the willing" than the traditional World War 11. The essence of war will not change. II-style alliance systems. The United States will Despite the proliferation of highly sophisticat- increasingly find itself wishing to form coali- ed and remote means of attack, the essence of tions but increasingly unable to find partners war will remain the same. There will be casual- willing and able to carry out combined military ties, carnage, and death; it will not be like a operations.

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14. The emerging security environment in the accuracy, lethality, strategic mobility, next quarter century will require different superior intelligence, and the overall will and military and other national capabilities. ability to prevail. It is essential to maintain The United States must act together with its U.S. technological superiority, despite the allies to shape the future of the international unavoidable tension between acquisition of environment, using all the instruments of advanced capabilities and the maintenance of American diplomatic, economic, and military current capabilities. The mix and effective- power. The type of conflict in which this ness of overall American capabilities need to country will generally engage in the first be rethought and adjusted, and substantial quarter of the 21st century will require sus- changes in non-military national capabilities tainable military capabilities characterized by will also be needed. Discriminating and hard stealth, speed, range, unprecedented choices will be required.

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Seeking an American National be a well-planned cyber-attack on the air traffic Security Strategy control system on the East Coast of the United States, as some 200 commercial aircraft are trying In many respects, the world ahead seems to land safely in a morning’s rain and fog. Other amenable to basic American interests and threats may inhere in assaults against an increas- values. A world pried open by the information ingly integrated and complex, but highly revolution is a world less hospitable to tyranny vulnerable, international economic infrastructure and more friendly to human liberty. A more whose operation lies beyond the control of any prosperous world is, on balance, a world more single body. Threats may also loom from an conducive to democracy and less tolerant of unraveling of the fabric of national identity itself, fatalism and the dour dogmas that often attend and the consequent failure or collapse of several it. A less socially rigid, freer, and self-regulating major countries. world also accords with our deepest political beliefs and our central political metaphors—the Taken together, the evidence suggests that checks and balances of our Constitution, the threats to American security will be more diffuse, “invisible hand” of the market, our social creed harder to anticipate, and more difficult to neutral- of E Pluribus Unum, and the concept of feder- ize than ever before. Deterrence will not work as alism itself. it once did; in many cases it may not work at all. There will be a blurring of boundaries: between Nevertheless, a world amenable to our homeland defense and foreign policy; between interests and values will not come into being by sovereign states and a plethora of protectorates itself. Much of the world will resent and oppose and autonomous zones; between the pull of us, if not for the simple fact of our preeminence, national loyalties on individual citizens and the then for the fact that others often perceive the pull of loyalties both more local and more global United States as exercising its power with arro- in nature. gance and self-absorption. There will also be much apprehension and confusion as the world While the likelihood of major conflicts changes. National leaderships will have their between powerful states will decrease, conflict hands full, and some will make mistakes. itself will likely increase. The world that lies in store for us over the next 25 years will surely chal- As a result, for many years to come lenge our received wisdom about how to protect Americans will become increasingly less American interests and advance American values. secure, and much less secure than they now In such an environment the United States needs a believe themselves to be. That is because many sure understanding of its objectives, and a of the threats emerging in our future will differ coherent strategy to deal with both the dangers significantly from those of the past, not only in and the opportunities ahead. It is from the Phase I their physical but also in their psychological Report—both this document and the research and effects. While conventional conflicts will still be analytical study from which it is drawn—that this possible, the most serious threat to our security Commission will seek to develop that understand- may consist of unannounced attacks on ing, and build that strategy, in Phase II. We will American cities by sub-national groups using unveil that strategy in April 2000. genetically engineered pathogens. Another may

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NEW WORLD COMING: AMERICAN SECURITY IN THE 21ST CENTURY

SUPPORTING RESEARCH AND ANALYSIS

The Phase I Report on the Emerging Global Security Environment for the First Quarter of the 21st Century

The United States Commission on National Security/21st Century

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Table of Contents

Foreword, Gary Hart and Warren Rudman ...... iv

Preface, Charles G. Boyd...... v

Introduction ...... 1

I: Global Dynamics...... 5

The Scientific-Technological Future: “What Will People Learn and Build?” ...... 5

Global Economics: “How Is Wealth Created?”...... 21

The Socio-Political Future: “How Will the World Be Governed?”...... 38

The Military-Security Domain: “How Will Societies Protect Themselves?” ...... 46

II: A World Astir ...... 58

Greater Europe ...... 58

East Asia ...... 70

The Greater Near East ...... 81

Sub-Saharan Africa...... 95

The Americas...... 102

III: The U.S. Domestic Future...... 116

Social Trends...... 116

Technology Trends...... 120

Economic Trends...... 122

Values, Attitudes, and National Will...... 124

Trends Affecting National Security ...... 128

IV: Worlds in Prospect ...... 131

A Democratic Peace ...... 131

Protectionism and Nationalism ...... 133

Globalization Triumphant...... 134

Division and Mayhem...... 135

A Patchwork Future ...... 136

V: Major Themes and Implications ...... 138

Commission and Study Group Staff Rosters ...... 143 Acknowledgements ...... 144 71730_DAPS_RSRCH.qx 9/22/99 4:19 PM Page iv

Foreword ver 50 years ago, President Harry Truman signed into law the National Security Act of 1947, the landmark U.S. national Osecurity legislation of the latter half of the 20th century. That Act brought the U.S. Armed Forces together under the Secretary of Defense and established the National Security Council to integrate all aspects of our nation’s power. The 1947 legislation has served us well, providing us a template with which to deal with our primary challenge of the last half of the century—the Soviet Union. It undergirded our diplomatic efforts, provided the basis to establish our military capabilities, and focused our intelligence assets.

Some things do not change. The survival and security of the United States remain our priority, we still cherish our freedom and the promise of a good life, and we remain committed to our friends and allies. But in the future our national security system will have to consider a world of chemicals and biological agents as well as nuclear weapons and conventional armies. We will find ourselves challenged with protecting the information networks on which our banking systems and public services will depend, the disruption of which could paralyze our economy and pose literally life-threatening dangers. Our potential adversaries will range from great military powers to “rogue” states to international criminals to malicious hackers. Future battlefields may extend beyond the air, the land, and the sea into both outer space and cyberspace.

We are changing as a nation, as well, as our human complexion, values, and skill-sets evolve. Economic recessions, environmental degradation, and the spread of disease all have the potential to tear at our nation’s social fabric, which is the very foundation upon which we stand.

The thinking behind the 1947 law was rooted in the experiences of the Second World War and the earliest days of the Cold War. Fifty years without fundamental revision is a long time for any policy structure to endure, particularly during a period of such vast change. In 1997, U.S. lawmakers recognized that the country needed to conduct a thorough study of U.S. national security processes and structures. In mid-1998, that study was chartered by the Secretary of Defense under the provisions of the Federal Advisory Commission Act and endorsed by the White House and Congressional leadership. Thus was the U.S. Commission on National Security/21st Century (USCNS/21) born.

The Commission held its first business meeting in October 1998. Since then, it has conducted its effort in three phases, the latter two each designed to build upon what has come before:

New World Coming: The first phase, represented by this Report, explores the world developing between now and 2025. It identifies what we can anticipate, as well as areas that may remain uncertain or subject to dramatic change. It also tries to understand what we will look like as a nation over the next 25 years, and how we will fit into the world at large.

Seeking a National Strategy: The second phase will develop an overview of U.S. strategic interests and objectives for the next 25 years. It will describe an overall national security philosophy and a strategy to support those interests and objectives.

Building for Peace: The third phase of the effort will examine our current legislation, government structure, and policy integration process to determine the extent to which the system inspired in 1947 supports our needs for the 21st century. To the extent that it does not, changes will be proposed for implementation.

This Report represents the culmination of phase I of our efforts. We trust that it will prove to be the sturdy foundation we need to build the rest of the study. We believe it is that foundation.

Warren Rudman Gary Hart

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Preface

he United States Commission on National Security/21st Century was chartered to provide the most comprehensive govern- Tment-sponsored review of U.S. national security in more than 50 years. The Commission’s tasks are three:

First, to analyze the emerging international security environment;

Next, to develop a U.S. national security strategy appropriate to that environment;

Finally, to assess the various security institutions for their current relevance to the effective and efficient implementation of that strategy, and to recommend adjustments as necessary.

In sum, this Commission seeks to promote the security interests of the nation and its citizens at home and abroad, to safeguard American institutions and values, and, ultimately, to preserve the independence and well being of the United States for succeeding generations of Americans.

It has fallen to us, just as it has to all generations since the founding of the Republic, to “provide for the common defense.” We do so, moreover, at a time when the international landscape is changing rapidly in the wake of the Cold War. Our security institutions, fashioned in an earlier era under conditions that no longer exist, may not be able to respond to circumstances their designers did not foresee. The first step in assessing the current suitability of those institutions is to anticipate the emerging conditions under which they must function. But how, as one classical historian put it, are we “to divine the unseen future that lies hidden in the present?”

Broadly speaking, there are three methods of contemplating the future. One assumes that the future will mirror the past. A second envisages abrupt change and tries to hedge against it. A third attempts to discern the underlying causes of current trends, in order to anticipate how those causal forces will shape the future. Each has its merits and limitations. The problem, of course, is to understand which method is most appropriate to the particulars of time, place, and subject.

Had a study similar to our own been undertaken in 1956, anticipating the quarter century to come, the first method would have worked best. From 1956 until 1981, much of the world was divided, geo-strategically and ideologically, into two hostile camps. The United States, the Soviet Union, the United Kingdom, Germany, France, and Japan were the centers of economic and military-industrial power. Nuclear weapons prevailed in the strategic arsenals of the world’s great military powers; their surface combatants and submarines continued to roam the seas, artillery and main battle tanks dominated land operations in warfare, and air power was ubiquitous. Despite many changes in the world, both the political alignments and military technology that dominated in 1956 still remained in 1981. The world grew accustomed, uneasily, to continuity.

Had a study begun in 1925, pointing to 1950, the second method, which envisages abrupt change, would have been best. As that era began, Germany and the Soviet Union were weak powers, and Asia and Africa were still largely controlled by the great and wealthy imperial powers of Europe. The United States had recoiled from world politics following the frustrations of the Great War and its aftermath. Battleships were the capital ships of the world’s great navies, infantry doctrine defined armies, and the airplane was seen primarily as a tool to support land forces. By 1950, however, European economies were just emerging from ruin, their overseas colonial empires were dying, the Soviet Union and the United States had become rival superpowers, and America was committed by treaty to the defense of Western Europe. The military domain had absorbed at least two major revolutions: the full exploitation of the third dimension through air power, and the advent of nuclear weapons. Warfare for the United States had changed dramatically through unifying the operations of land, sea, and air forces, and would never be the same again.

Given the magnitude of change now clearly underway, our study primarily adopts the third way to contemplate the next 25 years. We have attempted to distinguish the determinants of current trends so as to anticipate their effect on the future. As before, the components of change will be technological, economic, political, and military.

No one, of course, can predict exactly how that next quarter century will unfold. Through available lenses, we can foresee some things with reasonable clarity—demographic patterns, for example. Other phenomena, however, are rather more opaque. Nonetheless, we have used every analytical tool we could find to discern and analyze the emerging world. Finally, we have tried to find a proper balance between confidence and humility, both being important in any effort of this kind. We trust we have achieved that balance, and that its result will prove to be a sturdy foundation and an illuminating guide for the next two phases of the Commission’s effort.

Charles G. Boyd

Executive Director

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Disclaimer This document reflects the work of the National Security Study Group, a collection of national security scholars and practitioners whose task it has been to provide basic research and analytical support for the chartered task of the United States Commission on National Security/21st Century. From this document, the Commissioners have drawn fourteen major conclusions that they have published separately under the title, New World Coming: American Security In The 21st Century, Major Themes and Implications. Not every proposition or nuance in this analysis is endorsed by every Commissioner. 71730_DAPS_RSRCH.qx 9/22/99 4:19 PM Page 1

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Introduction the system of sovereign states reformed or replaced on account of these challenges. But he future, in essence, is this: The both the system and its member units are TAmerican “moment” in world politics, certain to change as a consequence, as they which combines bloodless victory in the final have always changed from having been tested. stage of the Cold War with the apparent global In the years ahead, borders of every sort—geo- triumph of fundamental American ideals, will graphical, communal, and psychological—will not last forever. Nothing wrought by man does. be stressed, strained, and compelled to recon- In the next 25 years, the United States will figuration. As the elements and vulnerabilities engage in an increasingly complex world to of national power shift, they will often leave assure the benefits that we—and most of the current institutional arrangements at logger- world with us—derive from American leader- heads with reality. Already the traditional ship. functions of law, police work, and military power have begun to blur before our eyes as As powerful as the United States may well new threats arise. be over the next 25 years, the world will not be tidily managed, whether from Washington or Notable among these new threats is the from anywhere else. History has not ended, prospect of an attack on U.S. cities by indepen- mankind’s cultural diversity endures, and both dent or state-supported terrorists using the will to power and the pull of passionate weapons of mass destruction.1 Traditional dis- ideas remain as relevant as ever in political life tinctions between national defense and both within and among nations. domestic security will be challenged further as the new century unfolds, and both conventional A diffusion of power thus stands before us, policies and bureaucratic arrangements will be but not necessarily one of the classical sort. A stretched to and beyond the breaking point new balance of power may arise that would be unless those policies and arrangements are intelligible even to the statesmen of the 18th and reformed. 19th centuries, but something more, and something different, will overlap and perhaps The future is also one of rising stakes, for overwhelm it. The ever tighter harnessing of good and for ill. Humanity may find ways to science to technological innovation, and of that compose its disagreements, succor its poor, innovation to global economic integration, is heal its sick, and find new purpose in common changing the rules of international engagement. global goals. But if it fails at these tasks, it stands to fail more spectacularly than ever. That It is even affecting the identity of its engaging is because greater global connectedness leads parties. The sway of state power has always one way to benefit and another way to misfor- fluctuated within society, and states have often tune. Economic downturns that have usually competed with other institutions for influence been episodic and local may become, thanks to beyond their borders. But the challenges now the integration of global financial markets, being mounted to national authority and more systemic in their origins and hence more control—if not to the national idea itself—are global in their effects. The greater wealth that both novel and mighty. may be expected to flow from global economic

It is not a foregone conclusion that the role 1 See William S. Cohen, “Preparing for a Grave New World,” of the state will be permanently diminished, or Washington Post, July 26, 1999, p. A19.

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integration will nevertheless produce growing cises control. They may consist, too, of an un- inequality within and among nations. The raveling of the fabric of national identity itself, march of science and technology, too, will leading several important countries to fail or provide ever more powerful tools—tools that disintegrate, generating catalytic regional crises can be used for benefit in the right hands, but in their wake. that may pose even genocidal dangers should they fall into the wrong ones. The next 25 years The main policy challenge in all such may well force mankind back to first principles cases, diverse as they may be, is the same: over the ethical dilemmas inherent in biotech- How does an American national leadership nology. Our concept of national security will bring the country together and marshal its re- expand. Our political values will be tested as sources to both seize new opportunities and our society changes. In every sphere, our moral deal with novel threats? But we are getting imaginations will be exercised anew. ahead of ourselves. Before moving to arguments and evidence, let us first briefly describe Some things, however, will not change. We ways and means. will no doubt revisit many times the three oldest questions of political life: How is legiti- o man can have in his mind a con- mate authority constituted? What is fair in “Nception of the future, for it is not social and economic life? How do we reconcile yet,” wrote Thomas Hobbes in Leviathan, “But disagreements? Historical principles will still of our own conceptions of the past we make a apply as we ponder these and other questions. future.” Hobbes meant two things by this state- There will still be great powers, and their ment: most obviously, that the past is the only mutual engagement will still matter. As ever, basis upon which to forecast the future; more much will depend on the sagacity and good subtly, that social life tends to freeze into itself character of leadership. Misunderstandings, the conceptions we have of it. Hobbes was misjudgments, and mistakes will still occur, but twice right. Absent the gift of prophecy, so will acts of brave leadership borne on the history’s recurrent patterns, discontinuities, and insight of exceptional men and women. intimations about human nature compose our only means of reckoning ahead. It remains true, The upshot of the changes ahead is that as well, that the very act of probing the future Americans are now, and increasingly will tends to shape it, for we often act on our antic- become, less secure than they believe them- ipations in ways that invite their arrival. selves to be. The reason is that we may not easily recognize many of the threats in our It is therefore no mean feat, and an act of future. They will differ significantly from the no little consequence, to describe the interna- dangers to which history has accustomed us: tional environment for U.S. national security 25 ranting dictators spouting hatred, vast armies on years hence. Let anyone who doubts the diffi- the march, huge missiles at the ready. They may culty inherent in the task look back as far as this 2 consist instead of unannounced attacks by sub- study looks ahead. national groups using genetically engineered In the late summer of 1974, just 25 years pathogens against American cities. They may ago, the United States had just passed the consist of attacks against an increasingly inte- deepest throes of a major constitutional and po- grated and vulnerable international economic infrastructure over which no single body exer- 2 See Study Addenda, part 1.

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litical crisis. Its economy was more anemic predicting a specific one is not. The reason for than it had been at any time since the Great this last assumption is critical, and it is this: the Depression and it had just lost a war, a process future is contingent. Human history does not accompanied by deep social divisions and a just happen; it is made. The state of global massive loss of faith in the national purpose. affairs in 2025 will be determined by an array America’s most serious global adversary, the of decisions, large and small, most of which Soviet Union, was steadily augmenting its have not yet been made. Our problem, there- strategic military clout and pursuing territorial fore, is not how far we can see out on the road encroachment by proxy from Africa to Central ahead with the best of analytical tools. The America. Meanwhile, America’s key allies in problem is that the road is not straight, and not Europe and Asia were hedging their bets over even the highest power binoculars allow us to American leadership and seemed set to see around curves. overtake the United States economically. Faith in the future of democracy and the health of However difficult looking into the future market economies declined both at home and may be, it is both necessary and irresistible. It abroad. Not many predicted then that just 25 is necessary because the stakes are so high that years later, the United States would be standing even an imperfect effort is better than none at at a pinnacle of national prosperity and interna- all. It is irresistible because we are human tional power, its institutions very much intact beings: curious, emotionally engaged, and its core political values vindicated on a beckoned to challenge. We have organized New global scale. World Coming in five parts. Part I, “Global Dynamics,” sketches an overview of the range Clearly, the U.S. national trajectory in the of major systemic changes we see arising over world has pointed upward since 1974. Over the the next 25 years. These are organized, in turn, next 25 years, however, it could point other according to four basic categories: scientific- ways. Nevertheless, our point of departure in technological, economic, socio-political, and this study is an assumption that the United military-security. Part II, “A World Astir,” looks States, a primary political, military, economic, at regional trends in light of global dynamics. and cultural force in the world today, will remain such a force through 2025. Its size, Part III, “The U.S. Domestic Future,” examines wealth, power, cultural sway, and diplomatic what the United States itself will be like over reputation render it inevitable that the United the next quarter century. American resources States will retain a significant role, and be a and social cohesion will influence how much significant factor, in shaping the international power the state will have at its disposal, and security environment. American domestic political culture will help shape how the United States exercises that We also make three key methodological as- power in the world at large. sumptions: that the definition of national security must include all key political, social, Part IV, “Worlds in Prospect,” translates the cultural, technological, and economic variables analyses of the three foregoing sections into that bear on state power and behavior; that four global scenarios. The purpose is not to future projections based solely on today’s predict which of these worlds will come into trends are liable to be misleading; and that being, but rather to offer heuristic devices to while forecasting a range of futures is possible, help us encapsulate the forces that will drive

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the world toward one of several alternative futures over the coming 25 years. The scenarios describe the interplay of developments in technology and economics with associated social, political, and military environments. These four scenarios are followed by a speculation that the first quarter of the 21st century will be a patchwork of these four worlds.

Part V, “Major Themes and Implications,” is a summation of the Commission’s findings.

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I: Global Dynamics The Scientific-Technological Future: “What Will People Learn and Build?” he future is an enigma wrapped in fa- Tmiliarities. If we were suddenly he tools that Americans and others transported back 25 years to 1974, we would Thave built in this century alone have feel much at home, yet we still could not wrought major social and political changes in foresee the world of 1999. We could not predict technologically advanced countries, most of the end of the Cold War, the information revo- them unanticipated. Mass electrification trans- lution, the sustained economic growth of the formed economies by revolutionizing both 1990s, or the specific collection of conflicts manufacturing techniques and consumption that have lately roiled international politics. So, patterns. Extensive private ownership of auto- too, even though we are liable to feel at home mobiles led to vastly increased labor mobility, in 2025—if only because our arrival there will to new spatial patterns in residential life and, be so comfortingly gradual—many things will particularly in the United States, to the advent have changed that we cannot foretell. of the suburbs. Suburban life, in turn, accelerated the integration of diverse communities into a Social change involves not a single but a new mainstream, changed voting patterns and twin puzzle. To the one side is the ceaseless purchasing behavior, accelerated the separation buzz of natural and human activity that seem- of generational cohorts within extended ingly amounts to nothing of real significance. families, and altered the social functions and But to the other side, we suddenly awake to economics of major cities. Antibiotics begot a great transformation in domains where we have demographic revolution and, with other sensed no activity at all. Just as we do not feel advances in medical science, contributed to the the earth turning on its axis despite the consid- transformation of religious sensibilities. erable speeds and distances involved, we Television brought a nascent commercial usually do not “see” social or political change culture still at the margins of social conscious- as it occurs. ness in the mid-1940s into the core of social life. Birth control technologies have altered There are grand theories of social change gender roles and family patterns. that grapple with this twin puzzle, but we need The political impact of these developments only recognize that social reality has multiple is virtually incalculable. Skill-sets and civic and interactive sources. Some are proximate, values, even the foci of national identity, have such as those animated by personalities, intellec- all been altered. If the point that technology in- tual fashions, and happenstance. Others are more fluences social and political life is not remote, including those embedded in the sufficiently clear at the national level, consider physical environment, the biological constitution the epic struggles of the 19th and 20th centuries of the species, and the perdurable patterns of between various forms of socialism and liberal human culture. We proceed here by examining democracy. The basis for those struggles was scientific-technological trends and prospective the enormous social and psychological disconti- patterns in the global economy, then move to the nuities unleashed by the Industrial Revolution, socio-political dynamics affecting and affected since it was that Revolution that turned the so- by both, and conclude with a discussion of the cialist idea into programmatic ideologies. New international military-security domain. social and political discontinuities will surely

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flow from the major scientific discoveries and tiny silicon wafers, and we are beginning to technological innovations that await us in the mimic the molecular assembly capabilities of next century. Indeed, so vast are their implica- biological systems. tions that we can only hint at them here. The most striking innovations of the next hat technologies will emerge over quarter century will occur in three basic cate- Wthe next 25 years? The general char- gories, and combinations thereof. These acteristic that stands out with respect to new categories are information technology, biotech- technology is a major shift in paradigms of nology, and micro-electromechanics (MEMs). scale. Until the 1970s, the reigning industrial-

Internet Users Are Increasing

technological paradigm was one in which Great strides in information technology factories grew larger to serve global markets; will continue, and the social impact will be buildings grew taller, concrete spread wider, great. Internet use is increasing dramatically and continents were linked by ever larger around the globe and will continue to do so. jumbo jets. Gigantic rockets lifted men to the moon and, with multi-megaton warheads, un- Computing power will grow and costs derwrote the nuclear standoff. Efficiency and per unit of value will decline. Networks will status lay in large scale. Now, however, minia- be ubiquitous, software will be smarter, and turization, adaptability, and speed are primary computers will assume more “human” char- traits. Ever more capacity is being placed on acteristics in terms of voice and visual

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capacities. There will be near-universal await us in biotechnology. By 2010, biotech- access to information and many forms of ex- nology may overtake information technology in pertise on a global scale by 2025, if not terms of economic investment; whether it does before. The entire world will be linked, so that or not, it will almost certainly overtake it in from any stationary or mobile station it will be terms of macro-social impact.5 Both business physically possible to send and receive near- and, to a lesser but not small extent, govern- instantaneous voice, video, and other serial ments will sustain large research and electronic signals to any other station. If the development funding in biotechnology. This millennium about to pass into history is re- funding, along with parallel advances in membered as the time when humanity first genetic engineering and tissue-growth research, recognized its common planetary space, the will spur rapid innovation and related economic first century of the coming millennium may be growth. remembered as that in which humanity achieved the potential, if not the reality, of full Capabilities could be startling by today’s connectedness in real time. We will witness, standards. If governments permit, genetic engi- as it has been called, the death of distance.3 neering will allow sex and specific trait selection in infants. Cloning human organs will Information technology will make much of be possible, and in some instances common. our environment interactive, both with respect Many viral diseases will be better understood, to devices that respond to our wishes, and with and stem-cell technology could allow treat- respect to other people. By 2025, vast numbers ments for many degenerative neurological of people—large majorities in advanced soci- ailments. Treatments to enhance the human eties—will carry their own personal immune response against diseases will be infospheres with them, perhaps wearing them possible. “Farmaceuticals” will be readily in their clothing and powering them with the available, with cows, pigs, and sheep with mere kinetic motion of walking.4 Most people altered genes providing proteins with medical and vast amounts of information will be acces- value in their meat and milk. Agriculture will sible at all times, in all places, in a world where be transformed by higher productivity, nutri- a tailored virtual work environment will action- and vaccine-enhanced foods, and greater company us whenever we wish. When we plant resistance to (known) pests. Taken travel, our cars will have GPS receivers net- together, these innovations suggest that the worked to central databases, allowing for a human life span in the developed world could constant update of map and traffic information. shift from the present average of about 75 Upon arriving home, the environment will years to at least 85 years—and perhaps to as adjust to our presence thanks to linked, pro- 3 Coined by Frances Cairncross, The Death of Distance: How grammable appliances. Entertainment will take the Communications Revolution Will Change Our Lives on a more cosmopolitan flavor since it will (Boston: Harvard Business School Press, 1997). reflect global connectivity. We will be able to 4 MIT’s Lincoln Lab is experimenting with a sneaker-borne battery powerful enough to drive integrated circuits. associate “virtually” with any person or group Merely walking produces sufficient energy. See T. Starner, sharing our interests in hobbies, politics, eth- “Human-powered Wearable Computing,” IBM Systems nicity, or religion. Journal, Vol. 35, Nos. 3&4, 1996. 5 See Forecast `98: A Vision for Advanced Research and Technology (Fort Meade, MD: National Security Agency, Even more dramatic than new innovations 1998), p. 29; and The U.S. Biotechnology Industry, Office in information technology, major developments of Technology Policy, 1997.

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much as 120 years—within the next quarter able for the first time to fashion simple com- century. puting components no thicker than a single molecule.7 This is a breakthrough that, in retro- Between now and 2025, cheap, high- spect, may come to rival in importance Enrico density microelectronics will proliferate in the Fermi’s nuclear chain reaction in a squash court tools and the physical environment of those at the University of Chicago in 1942. living in technologically advanced societies. We will become familiar with MEMs: micro- The implications of nanotechnology are electromechanical devices in which sensors, particularly revolutionary given that such tech- transmitters, receivers, or actuators (switches nologies will operate at the intersection of that activate mechanical devices) have been information technologies and biotechnologies. miniaturized to the size of a transistor. Such This merging and melding of technologies will technologies will affect our lives in many ways. produce smaller, more stable, and cheaper cir- Should we become sick, our doctors will know cuitry that can be embedded, and functionally as soon as, or even before, we do, for micro- interconnected, into practically anything—in- sensors will constantly monitor our health. cluding organic life forms. The implications of Smaller, more capable sensor devices will help such a fundamental innovation for advances in insure the safety of both home and work. materials science, medicine, transportation, Energy bills will drop due to the use of low energy, manufacturing, and agriculture are si- power devices. Airplane wings will feature mi- multaneously huge and still mostly unknown.8 croscopic sensors on their surfaces, allowing for faster travel at more efficient speeds. MEMs What is clear is that such basic innovation may also allow far more intrusive and cost-ef- will allow for more sophisticated scientific ex- fective exploration of outer space, with plorations of our environment. It will facilitate unknown economic, political, and possibly the gathering of information and advance our moral implications. understanding of complex distributed systems. Such technologies may also merge with, and Dramatic new capabilities in MEMs devices aid, major advances in theoretical physics, par- will appear as the long awaited nanotechnology ticularly in the areas of complexity and chaos revolution takes hold. In nanotechnology, theory. The results will not be just theoretical devices are manufactured using molecular fabri- and intellectual, but will have dramatic implication techniques not unlike those found in the cations for creating new technological human body. Many new technological advances synergies and for developing ever more so- will be based on bio-mimicry—the deliberate phisticated applications of our new tools. attempt to capitalize on what nature has learned through millions of years of evolution. To 6 Eric Drexler, Engines of Creation (New York: Anchor- borrow from Eric Drexler, one of the founding Doubleday, 1987). Many of Dr. Drexler’s concepts await fathers of nanotechnology, we will be engaging experimental verification. 7 John Markoff, “Tiniest Circuits Hold Prospect of Explosive the “engines of creation” to alter the tools we Computer Speeds,” New York Times, July 16, 1999, p. 1. 6 use. 8 There are several ongoing projects that estimate technological innovation. See, for example, William E. Halal, Michael Current developments indicate that nano- D. Kull, and Ann Leffman, “Emerging Technologies: technology, though in its early stages, will What’s Ahead for 2001-2030,” The Futurist, Nov.-Dec. develop rapidly. In July a research team was 1997.

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owever dramatic such potential break- Indeed, demand for fossil fuels will grow as Hthroughs may be, they will not the economies of Asia and other parts of the revolutionize everything within a 25-year developing world expand.10 American depen- period. dence on foreign sources will also grow over most of the next quarter century. If prices The belief in a revolutionary shift in world remain moderate enough to depress the ex- energy patterns will not die. Many scientists ploitation of marginal or difficult-to-extract hold faith in nuclear fusion, or in a hydrogen- fossil fuel reserves—as may well be the case based energy economy. Some believe that over the next two and one-half decades—then energy may one day be mined from the the importance of Persian Gulf producers will vacuum of space—zero-point energy, so actually grow back to levels reminiscent of the called. Still others believe that substituting mid-1970s. ethanol for standard gasoline can make a major impact on energy balances, and that genetic his is not the place to detail all the engineering can radically increase the biomass Tvarious innovations in science and available to make ethanol, thus radically technology that will shape our lives in the next reducing the price.9 25 years, or to speculate about those that will not. In any event, what matters for the purposes The problem with these prognostications, of this study is less the devices themselves and save for the last one, is that they offer no more their social and political impact, and here viable solution for the inertia inherent in the prospects are mixed. While new scientific dis- existing fossil fuel infrastructures. Even if a coveries and technological innovations hold out major innovation does come from the labora- the promise of enormous benefits, they will also tory, it will take most of a 25-year period to present many challenges, some of them cognitive create the supportive production, transporta- and practical, others moral and philosophical. tion, and marketing infrastructures necessary to make a major difference on a global scale. One reason to expect new challenges is that We should expect steady advances in the labs change will come upon us faster than ever. The and important practical innovation, not so speed with which new technological innova- much in energy sources as in the efficiency tions enter the commercial and thus the social with which new devices use energy. Major mainstream will continue to increase, leaving advances in batteries are a near certainty, and society less time to adjust. It was with great and urban-use automobiles that run on fuel cells are likely, too. As the economies of many 9 See R. James Woolsey and Richard G. Lugar, “The New advanced countries become more knowledge- Petroleum,” Foreign Affairs, Jan./Feb. 1999. The Clinton based, and as telecommuting, telemarketing, Administration endorsed major research in this area in August 1999. and e-commerce become more prevalent, 10 energy consumption patterns may change for See Energy Information Administration, Annual Energy Outlook 1999 (Washington, DC: Department of Energy, the better, as well. December 1998); Geoffrey Kemp, Energy Superbowl: Strategic Politics and the Persian Gulf and Caspian Basin But unless the ethanol solution transforms (Washington, DC: Nixon Center for Peace and Freedom, the global energy industry, fossil fuels and 1997); and Anthony H. Cordesman, The Changing their locations will still matter economically Geopolitics of Energy (Washington, DC: Center for and in the political calculus of major powers. Strategic and International Studies, August 12, 1998).

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justified anticipation that Thomas Alva Edison cial multiplier effect—and it will be used in the threw the switch that electrified Pearl Street in future to market other innovations, many of lower Manhattan in 1882, but it took another which will doubtless be linked with informa- thirty years before the commercial and social tion technology and biotechnology.11 implications of electricity hit full stride in the United States. Nowadays, moving from the Fourth, the technologies of the future will germ of a scientific breakthrough to the main- be far more knowledge-based than physical streaming of new devices may take little more resource-based, and the constraints imposed than a year. by extracting and processing bulk materials will shrink proportionately. What once There are good reasons for the picking up required tons of steel and concrete to create a of this pace. First, basic science is increasing- given increment of GDP growth now requires ly wedded to technological innovation, and a tiny fraction of that weight in plastic and this new conjunction in turn is increasingly silicon. While the presumed “de-materializa- wedded more closely to industry than to gov- tion” of the world can be exaggerated, ernment defense labs. One result is that knowledge-based innovation is freer to move considerably more research and development ahead rapidly, constrained only by the avail- investment is flowing to basic science, in both ability of human capital and the organizational universities and commercial labs, than ever capacities of society to marshal and exploit before. This trend, almost certain to widen and that capital. accelerate, means that the propensity for breakthroughs has been virtually systematized. ne of the inevitable consequences of Oan increased pace of innovation Second and closely related, in much of the married to an interweaving of basic science world, and particularly in the United States, fields is that our capacity to anticipate specific markets allow for the rapid commercialization developments shrinks. In a way, we become of new technologies, and populations have smarter and dumber at the same time. We see become used to ceaseless innovation. The this already in the way that the information result is a cultural propensity to accept and revolution has played out in the last two adapt to innovation, which in turn works as an decades; while very few wish to turn back the accelerator to innovation itself. clock, there is no denying the disruptions in Third, information technology accelerates business and personal lives that many have ex- innovation because it is simultaneously a perienced. product and marketing device. The first thing Information technologies have already had that television advertising stressed was the a significant impact on most individuals in the purchase of more televisions, so that the tech- United States and other technologically nology became self-replicating in market terms. The array of new commercial informa- advanced countries. We already have a rudi- tion technologies, from personal computers to 11 See Daniel A. Losk and Randall P. Nottingham, “Global Internet nodes to GPS devices to cell phones, Market Penetration of Communications Equipment: trumps the self-replicating capacity of televi- Computers, Telephones, and Televisions,” Standard & sion by orders of magnitude. This technology Poor’s DRI World Economic Outlook, First Quarter 1999, is its own infrastructure and its own commer- p. 39.

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mentary personal infosphere: witness the confound all attempts at centralized control, number of people driving down the freeway not unlike the logic of the marketplace. To using cell phones and staying in daily contact succeed, as individuals and as organizations, with relatives and business associates via e- will mean adapting to a life of continuous edu- mail. We know, too, that individuals in cation and operational redesign. New technologically advanced societies are in many information/knowledge tools will become our respects more powerful than ever before. They tutors and guides. Compared to the present, know more, and, by extending their senses everything will be hurled into relative motion. more effectively, are more efficacious than any Some people and some organizations will cope generation before them. They are more long- better than others in such circumstances, and lived than any previous generation, as well. those left behind will suffer economically. In short, new technologies will create new filters The domain of the personal infosphere will for sifting out winners and losers in society. grow over the next 25 years, both vertically and horizontally. In other words, the sophisti- Adding to the press of complexity and in- cation of such spheres will rise, and the formation overload will be the pressure of number and types of people who have them short reaction times. The Internet already will proliferate over much of the world. As a allows us to do things globally in near real time result, the physical boundaries of our neigh- that used to take weeks or months. In the past borhoods and business locations will become we have always had time to prepare and react, less relevant as individuals create virtual com- and to weigh the potential consequences of our munities of common interests—“communities actions. In the future, we may process more in- of choice” or “hobby tribes,” some have called formation but, held in thrall by the grip of the them—by electronic means. Through our com- technology itself, we may actually be prone to puters we will visit any business site or read think less about it. Many will learn the hard the latest in science and culture as we choose, way the differences between data, information, or communicate with others who share our in- and knowledge. Hard as this challenge will be terests anywhere at virtually any time. The on individuals, it will be even harder on large Internet will provide interactive rather than organizations and especially on governments. mainly passive information; it will become a tutor rather than just a reference resource in As a consequence, we may be headed for a subjects of our own choosing. In that sense if considerably more stressful cognitive environ- not also others, as one observer put it, “time ment. While stress is a subjective notion to zones will become more important than some extent, it does have an objective physio- borders.”12 logical basis, and potential health implications flow from it. Disease patterns could shift; we This prospective technological environ- might learn to cure many forms of cancer only ment will pose certain problems. Individuals to be plagued by a host of cardiovascular and will have to cope with new levels of complex- psychological maladies that rest today at the ity. No one will fully understand the fringes of our health concerns. Stress may also environment or be able to master the massive, lead some people to seek more predictability in continuous flow of information about it. One of the key social implications of the technolo- 12 Walter B. Wriston, “The Third Technological Revolution,” gies in our future is that they will tend to Foreign Affairs, Sept./Oct. 1997, p. 172.

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their lives and to compensate for uncertainty in social borders shift and sometimes dissolve, indi- some realms by magnifying certainty in viduals will have to accept more responsibility others.13 for their own mental and moral balances. As one observer put it, a totally open and unfiltered But it is not a foregone conclusion that a network, operating amid the frenetic pace of con- high-technology future will be more stressful temporary life, means that “the most important for most people. More prosperous and healthi- thing parents need to understand about preparing er people with more recreational time on their their kids for the Internet world is that it requires hands may well be under far less stress. If, in not more whiz-bang high-tech skills, but rather addition, telecommuting saves countless hours more old-fashioned fundamentals” such as good of being stuck in traffic and allows more people parenting, a functional family life, and high to live in idyllic environs, then, rather ironical- quality basic education.15 ly, more people would experience more of nature thanks, in essence, to high technology. orders between generations and sexes Bwill shift, too. As to the former, the New technologies will also affect develop- faster the rate of technological innovation, the mental and educational issues. As with any more likely that younger people will be at the young animal, a human child’s neural networks forefront of it as “technological generations” form as a function of the pace and nature of the grow ever shorter. This is despite the fact that so stimuli the child encounters in the environment. many people living longer and healthier lives Some neurophysiologists believe that a child may compose a “new middle-aged”—those who has spent hundreds of hours watching between, say, 55 and 75—who may be far more “action” television and playing fast-paced active and productive as a group than ever before. computer games before reaching age six may The relatively greater economic utility and status have a hard time sitting still in a standard class- of young people may have enormous social im- room, where the pace of activity is far slower. plications in many societies. This does not necessarily mean that there is anything inherently wrong with the technology For much of human history, advanced age or the games. But this technology does bear im- signified deeper knowledge in nearly every plications for better understanding controversies 13 Some believe that the growing popularity of gated communi- over the definition and treatment of hyperactivi- ties owes something to this motive, particularly for those ty, or attention deficit disorders, in pre-adolescent invested in the fast-paced, high-stress corporate world. See children, and for educational methods general- Robert D. Kaplan, An Empire Wilderness: Travels into America’s Future (New York: Random House, 1998), pp. ly.14 There is a good prospect that educational 33-5; and Edward J. Blakely and Mary Gail Snyder, methods will be revolutionized for the better Fortress America: Gated Communities in the United States (Washington, DC: Brookings, 1997). once we fully understand and learn how to apply 14 Empircal research relevant to this connection is detailed in the new technologies at our disposal. Jane N. Healy, Your Child’s Growing Mind: A Guide to Learning and Brain Development from Birth to Families as well as individuals will have to Adolescence (New York: Doubleday, 1994). See also, “Understanding TV’s Effects on the Developing Brain,” cope with new circumstances. The denizens of AAP News, May 1998; and Committee on the most advanced countries will face new re- Communications, American Academy of Pediatrics, sponsibilities as parents and citizens in managing “Children, Adolescents, and Television (RE9538),” American Academy of Pediatrics, October 1995. and utilizing the information age. As the natural 15 Thomas Friedman, “Are You Ready?” New York Times, June limits and disciplines imposed by physical and 1, 1999, p. A23.

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society. Old people used to be relatively rare, impact in the next century is likely to be in non- and it has always made a certain evidential Western domains. The arrival and acculturation sense that the more experience someone has the of new information technologies in such areas wiser they are liable to be. The nature of are likely to greatly reinforce this impact, as prospective technological processes turns this women have an equal chance as men to make tradition on its head. With younger minds more themselves master over such tools. flexible and absorptive, and hence more valuable to a continuously innovating society, everal divisive issues will arise on the continued veneration of elders will make Saccount of some new biotechnologies less evidential sense, particularly as population that will affect gender and other human traits. pyramids invert and there are more elderly than Many ethical problems reside in the growing young. This may be especially problematic in technical ease with which parents may choose Confucian societies, but it will have an impact the sex, and other traits, of their children. on Western ones, as well. Similar ethical—and practical—problems will also inhere in the use of increasingly precise As to gender differences, as we head into a means of altering mental states, including new knowledge-based economy driven by technolo- psychopharmacological methods of inducing gies characterized by smallness and speed, the happiness, self-esteem, and other emotions, relevance of males’ greater size and physical entirely divorced from any behaviors in the strength will further diminish. Historically, the world. larger average size and strength of males determined the division of labor in families. As first Many problems will also be raised by the animal and then machine calories were substi- prospect of radically prolonged life spans. First tuted for those of human muscle, the economic and foremost is the question of access: Who relevance of gender distinctions and divisions will get to use such technologies, and who will began to fade. The lag time between economic not? How will scarce medical resources be ap- reality and culture has been considerable, but portioned if everyone claims a right to a culture has been catching up. The next few gen- radically lengthened life? Should finite re- erations of technology should close the gap sources be spent on prolonging life when those further, and one implication is that women will resources are needed for saving younger lives move in greater numbers into positions of from the ravages of disease? How will public authority. advanced countries deal with social policy issues concerning retirement age and benefits, There are honest differences as to what this pension funds and medical insurance? implies, but most speculation on the point exceeds the grasp of current evidence.16 It is 16 See Helen Fisher, The First Sex: The Natural Talents of clear, however, that women’s issues are the Women and How They Are Changing the World,(New main barometer of social change in many non- York: Random House, 1999); Francis Fukuyama, “Women Western societies, and in some places the and the Evolution of World Politics,” Foreign Affairs, vanguard force in breaking down patterns of Sept./Oct. 1998; and the response to Fukuyama by Barbara Ehrenreich and Katha Pollitt in the Jan./Feb. 1999 17 social stasis. So while the impetus for sexual issue. equality has been mainly a Western phenome- 17 For one example, see Celia W. Dugger, “India’s Poorest Are non in this century—and while technology has Becoming Its Loudest,” New York Times, April 25, 1999, had a good deal to do with it—its main global (Week in Review), p. 3.

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Individuals, too, may confront totally novel On the other hand, local communities issues, such as how to relate to their grandchil- could flourish in reaction to the proliferation drens’ grandchildren. of virtual communities. People who spend more time at home as they telecommute may All of this has an international dimension, take a greater interest in local concerns and as well. Those few Americans who have local politics. That, in turn, could revivify recently been able to choose the sex of their communities and nurture higher levels of po- children have preferred females to males, but litical participation at the grassroots.21 the cultural bias in most other parts of the world, particularly the Far East, is the As to the latter, telecommuting will not 18 opposite. If choosing the sex of children make workplaces obsolete, for workplaces becomes widespread, it could in time create have an indissoluble human dimension and sharply divergent population profiles in dif- need such a dimension to function effectively. ferent societies. Moreover, the resentment But it will change how workplaces function.22 toward advanced societies by those farther The fact that many people will be freer to live behind is likely to grow if, for example, farther from a central workplace will also people in the Near East or Latin America affect residential patterns, and could have sig- come to have average life spans several nificant implications for land and water use. decades shorter than those in more technolog- Closely related, if, as many expect, e- ically advanced societies. The lack of commerce composes half or more of all availability of advanced medical technologies could prove a stimulus for immigration from commercial transactions before the year 2025, the developing world. there are implications for the spatial and social compositions of city and suburb. The ratio of he boundaries of communities and residential to commercial uses of real estate Tworkplaces will shift, too. As to the will rise as fewer stores are necessary to sell former, virtual communities may replace similar volumes of goods. Labor profiles will actual ones to some extent, the limit defined change, too: There will probably be fewer by the instinctual human proclivity to socia- bility and social order.19 If virtual 18 Note the data in Nicholas Eberstadt, “Asia Tomorrow, Gray communities proliferate very widely at the and Male,” The National Interest, No. 53 (Fall 1998), expense of real ones, then our public space pp. 63-5. 19 See also Francis Fukuyama, The Great Disruption: Human itself may contract. The Internet, and the Nature and the Reconstitution of Social Order (New York: merging of the Internet with commercial en- Free Press, 1999), and David Whitman, “More Moral,” tertainment culture, will allow individuals to The New Republic, 22 Feb. 1999, pp. 18-9. virtually select their own news. That may re- 20 Andrew Shapiro, “The Internet,” Foreign Policy, Summer inforce preexisting biases, and it may narrow 1999, p. 25. people rather than broaden them, leading 21 There are signs that this is already happening in the United them to be less concerned about society-at- States. See Deconstructing Distrust: How Americans View Government (Washington, DC: Pew Research Center, large rather than more.20 If so, our public 1998), pp. 15-6. space may shrink, and democracy may be 22 Hamish McRae, The World in 2020: Power, Culture, and hollowed out from the inside, even as all of its Prosperity (Boston: Harvard Business School Press, outward forms still appear normal. 1994), p. 179.

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retail clerk jobs in stores, but more delivery, Privacy will be more difficult to maintain. sales, and inventory management jobs. Ever expanding capabilities to monitor individual workers, to intercept messages or The new economy will transform entertain- monitor conversations, and to obtain personal ment culture as well as residential and business data from databases may conflict with indi- patterns. Here, too, there are implications for vidual rights in democratic countries. Secrets the spatial layout of communities. New places will be difficult to keep—whether individual, will allow for new social mixing and new ideas; business, or governmental—but individuals new vocabularies will form and new cultural and organizations will still try hard to keep symbols will evolve. This matters because the them. We do not yet know who will win the spatial features of community—human geography, so to speak—have always had political race between encryption and decoding, but it implications.23 is likely that more basic information will be available to those who wish others ill. There Telecommuting, telemarketing, and e- will be a pervasive tension between divulging commerce are also parts of a wider reality information, so that one may benefit from the that is introducing new patterns into work- social networks of the future, and holding and marketplaces alike. The ability to bypass back information to foil the efforts of those traditional lines of communication has intro- who would abuse such networks. duced new efficiencies in business—the much discussed “flat,” non-hierarchical organiza- s to the physical environment itself, tion. The wealth-producing potential of what Athe future is likely to bring a mixed amounts to a new way to use human capital is picture. No one doubts that human activity has enormous, and we have probably seen only altered the biosphere. The expansion of the beginning of it so far.24 But new techno- human numbers and habitations has changed logical patterns have created a need for the face of the planet, although there is much different organizational structures and debate over particulars and over the moral processes to allow decision making authori- balance inherent in human activity. Pollution ties to function. It has not always been easy to is bad for humans and other animals, but devise them, nor will it get much easier in the economic growth lifts people out of misery future. Obviously, a completely flat organiza- and the condition of a life nasty, brutish, and tion is not an organization at all, but just an short. Moreover, the technology of environ- agglomeration. Moreover, what private mental remediation is now keeping pace with business can do, public bureaucracies in de- the damage that industrialization causes in mocratic countries cannot do as easily, for the advanced countries, and it will be increasing- latter do not measure success in keeping the ly available in developing countries as well. public trust by standard accounting methods. Nor can they, or should they, override the 23 For historical examples, see Michael Vlahos, “Entering the rules of accountability essential to demo- Infosphere,” Journal of International Affairs, Spring 1998. cratic governance. 24 For a brief review of the debate over the relationship between information technology and gains in productivity, A related technology-driven issue that see Steve Lohr, “Computer Age Gains Respect of will have an impact on both individuals and Economists,” New York Times, April 14, 1999, society at large concerns privacy and secrecy. pp. A1, C14.

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Still, even with advances in remediation there is a downside, too. British Telecom now technology, limits to resources are real, in- uses operators located in New Zealand because cluding the availability of fresh water as they are wide awake when most people are populations grow. There is also a problem snoozing in England; that brings lower costs inherent in sharp reductions in biodiversity and greater efficiency to the company but owing to anthropogenic activity.25 These greater employment pressures in Manchester limits represent a major challenge to posterity. and Leeds. Such changes are likely to affect That said, there is fierce disagreement over white-collar jobs as much or more than blue- several major environmental issues. Many are collar ones that are physically bound to a certain that global warming will produce major particular place. social traumas within 25 years, but the scientific evidence does not yet support such a The polarization of work forces is also a conclusion. Nor is it clear that recent weather potentially serious social issue. Those members patterns result from anthropogenic activity as of society who are not adept at symbol manip- opposed to natural fluctuations. ulation may have difficulty adjusting to the new techno-economic environment. It is not clear, There is no doubt that natural disasters will for example, that there will be enough low-skill roil the future as they have always roiled the service jobs for those echelons of the popula- past. It is also clear that as population pressures tion that require them for independent and other factors drive large numbers of people sustenance. If there are not, the sprawling and in developing countries to build homes in river very liberally defined American middle class— flood plains and coastal areas, the human toll and the middle classes of other formerly from such disasters will rise.26 Some 40 of the industrial societies, too—will split, with the 50 fastest growing cities in the world are in upwardly mobile joining the international earthquake zones. Already half the world’s cyber-economy and the rest headed toward population lives in coastal zones prone to more marginal economic domains. flooding and to the spread of malaria and other diseases. Environmental refugees now account Moreover, whenever educational segmen- for more than half of all refugees worldwide, tation reflects racial or ethnic segmentation, the and that percentage may grow.27 There is new geography of labor stratification may ex- doubt, however, about the severity of future acerbate existing social divisions. This could be trends, depending on how one reads the pace, a particularly volatile issue in those societies, depth, and source of climate change. including that of the United States, that have a

ocio-economic borders will also be 25 This activity includes the burning of rain forests for seden- Sstressed by new technologies. The new tary agriculture, the destruction of estuaries and requirements of an information-based economy mangroves, desertification, and the overuse of pesticides may create novel social divisions with serious in conjunction with monocultural methods in agriculture. 26 political implications. For example, interna- See Steve Lonergan, “The Roles of Environmental tional connectivity will allow job competition Degradation in Population Displacement,” Environmental Change and Security Project, The Woodrow Wilson over an increasingly wide geographical area. Center, Issue 4 (Spring 1998), pp. 5-15. The good news here is that efficiencies will 27 International Federation of Red Cross and Red Crescent rise, and greater efficiency in business trans- Societies, World Disaster Report 1999 (New York: IFRC, lates overall into more wealth in society. But 1999).

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relatively benign history of social mobility. threaten all vested interests whose power New technologies may also affect social resides in the familiarities of the status quo. For patterns related to socio-economic stratifica- those who have achieved high incomes and tion. Already in advanced countries the advent status, the prospect of rapid change can be of automated service devices such as automat- threatening, and those who have “made it” very ed tellers at banks and voice mail in offices has often have the power to arrest or even derail reduced the number of face-to-face encounters change—at least for a while. One manifestation between people of different socio-economic of such fears is the way in which technological echelons. The social and political implications innovation is often depicted by tenured elites. of increased isolation among socio-economic National politicians extol the promise of the groups is unclear, but it is not something to be Internet, for example, and then turn their atten- taken lightly in mass democracies. tion to ways of limiting it through regulation, censorship, and taxation. Clearly, then, technological drivers will affect social patterns and raise questions of Depending on the wider cultural milieu, social justice. Such questions will doubtless some tenured elites do better at resisting change become major items on the political agendas of than others. All of this suggests that the culture advanced societies. This is already so to some wars of advanced societies will shift over time as extent. Over the last several decades there has new technologies work their way down and into been a greater skewing of income distribution social patterns. We may stop arguing so much in the United States, as well as in many other over abortion, gun control, and the coarseness of entertainment culture, and more over evisceration advanced societies. Some blame regressive tax of public space, the ethics of selling synthetic life- policies for this, but more likely we have wit- forms for profit, and government regulation of nessed a technology-driven asset expansion cyberspace. But argue we shall and, as we do, among the wealthy not different in essence new content will fill the vessels of our political from the basic economic dynamic of the Gilded vocabulary, changing what it means to be liberal Age. As before, this asset-driven expansion of or conservative, progressive or reactionary. wealth is likely in time to generate a wage- driven expansion, and there is some indication ew knowledge-based technologies that it already has done so. The democratization Ncould also divide societies in terms of of capital that seems to be inherent in the new basic values. Some unknown percentage of technological environment could also lead to a adults in advanced societies may opt out of a greater leveling of income and status amid a life characterized, in their view, by a frenetic greater prosperity for all. But we do not yet pace of cognitive demand, a lack of privacy, the know how new technologies, and their effects dissolution of comforting boundaries, and the on domestic and international economic misapplications of human priorities. Some arrangements, will remix opportunity and citizens will be actively hostile to the new cy- economic achievement in various societies. berworld, perhaps violently so. Most likely, there will be more polarization in some domains and less in others. This suggests that the adversary cultures of advanced societies will form new ideologies on A concern with social justice is not the only the basis of opposition to the sort of technology- macro-social area liable to be put to new tests driven social changes outlined above. One sees by technological dynamics. Changes ahead will such signs already at the fringes of the environ-

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mental movements in many technologically widely diffused, the benefits may be more advanced countries. This is a trend likely to unevenly distributed than ever. Some countries, grow in intensity, and it has potential security and groups within countries, will embrace tech- implications in the form of eco-terrorism, a taste nological innovation, while many others will go of which we have already experienced both in through life in a technological environment that North America and in Europe. is pre-1940s by Western standards. Thus, new technologies will divide the world as well as While some will rue the new machines, and draw it together. while environmental concerns will doubtless take many forms, others will relish the personal This is extremely important for the long empowerment that the new technology will run. All major technological-economic revolu- provide to those ready and able to embrace it. tions have tended to empower some groups and But this, too, poses a potential social challenge, diminish others. As we move ever deeper into a and one with profound implications for demo- time of knowledge-based power, those nations, cratic political cultures. The growing sense of societies, and groups that excel at education power that will accrue to many individuals, not and human capital generally will find them- to speak of societies and states, as their senses selves with daunting relative advantages over are extended by technology could corrupt moral those that do not. This is already obvious in balances and erode moral discipline. If that some respects through the postwar examples of were to happen on an extensive basis, it could Hong Kong, Singapore, and Israel, small and undermine the very sources of the cultural natural resource-poor places that have nevertheless been able to generate considerable system that has facilitated such individual em- wealth and relative power. This is why educa- powerment in the first place.28 It could threaten tion, as well as social capital and cohesion, will the balance of healthy civic habits that have be increasingly important components of long sustained democratic communities. national power in the future. nternational borders will become more In this regard, the Internet may play a porous, too. States will find it increas- I powerful role. On the one hand, the Internet has ingly difficult to prevent the flow of ideas, considerable potential to spur greater literacy in economic goods, and dangers into their territo- much of world, and to bring knowledge to 29 ries. At the interstate level, technology millions who might otherwise not have the op- portends a sharp leveling effect in the ability to portunity to learn. That is all to the good. But a do harm to others across territorial borders. It global Internet culture may also produce far will no longer require a major investment in more half-educated people. The proverb that a scientific and industrial infrastructure for small little knowledge can be a dangerous thing may states and even reasonably well-heeled groups be trite, but that does not make it false. When and individuals, whether they be criminal syn- one recalls that some of the most dangerous dicates or terrorists, to get their hands on very leaders, and followers, in the 20th century have dangerous technologies. been half-educated men—Stalin, Hitler, Mao,

As important, while all societies will be 28 Daniel Bell, The Cultural Contradictions of Capitalism exposed to technology and its effects, not all so- (New York: Basic Books, 1976). cieties will master them equally. While the 29 See Human Development Report 1999, United Nations implements of new innovations will be more Development Program, pp. 29-30

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and Pol Pot come readily to mind—the possi- largest industry by 2025, as interest in other bility begins to take on a worrisome dimension. climes and the ease of getting to them both increase, and the costs of doing so decline. This is a potential problem not just at the Technology may also allow a near-universal level of national leadership, but at a level far language translation capability, resulting in the deeper in society. The Internet is already full of potential for a far wider exchange of ideas. In information, but not necessarily of knowledge— many countries, this will likely create a greater and it is utterly unfiltered. For those who lack a sense of something like a global citizen, and it solid basic educational grounding, it is difficult may change dramatically how people identify to distinguish accurate from false information, themselves and how they see their country’s serious ideas from half-baked ones, practical place in the world. Americans, and other tradi- proposals from those both dangerous and fanciful. After all, any person, even a child, can tionally patriotic nationals, could come to use the Internet to visit with “hate” groups, or be develop strong associations both above the unwittingly influenced by many sundry forms of level of existing national identification—that of unhealthy or just unusual propaganda from any the “world citizen”—and below it, with ethnic, of the four corners of the earth. It is as easy to get sectarian, or otherwise local community the Aryan Nation website up on a computer as it symbols. In other words, we may witness the is to load Amazon.com. “Big ideas” hatched birth of the post-modern state, a phenomenon anywhere on earth may rush around the world with potentially huge implications for interna- far more quickly than ever before—both good tional politics.31 and not so good “big ideas.” The potential for the growth of an international “know-nothing” This is a crucial uncertainty because major populism cannot be ruled out just because the changes in the global political order have web will also facilitate coordination among occurred historically only under two conditions: groups lobbying for peace and human rights. when the nature of legitimate political units changes (for example, from empires to nation- Nor can it be assumed that essentially anti- states in the 19th and 20th centuries), and when modern forces will abjure using the Internet. In new values generate the redefinition of personal some Muslim societies, religious fundamental- identifications and loyalties. It is hard to say ists are often the first to seize upon modern how much eroded the idea of the unitary techniques of communication to spread their national state may be over the next quarter messages. The quasi-religious martial arts soci- century, but the splaying of political associa- eties of China, though mystical and anti-modern tions both upward and downward from the level at heart, may do so as well if their leaders argue of the state is already in evidence in Europe. that they need to use technology in order to Skeptics doubt the possibility of building an “humanize” technology. economy in order to build a state, and a state in ew technologies may also affect the order to build a nation—which is the logic of a bonding strength of national identities. N 30 Through the Internet, Americans and other See the special issue on the impact of the Internet in the Indiana Journal of Global Studies, Spring 1998. citizens of technically sophisticated societies 31 See James Kurth, “The Post-Modern State,” The National will have far greater exposure to peoples of Interest, No. 28 (Summer 1992); and John Lewis Gaddis, other nations, and greater levels of interaction “Living in Candlestick Park,” The Atlantic Monthly,April with them.30 Tourism may become the world’s 1999, pp. 65-74.

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federated Europe from the European elite point human behavior through genetic engineer- of view. But what would never have worked in ing.35 the old world may work in the new; already many Germans, Dutch, and Portuguese While such abilities hold out promising younger than age 30 think of themselves as techniques for healing many mental and European as much as they do German, Dutch, physical illnesses, and for a very advanced and Portuguese.32 And if it does work, it will do form of robotics, it also suggests that the very so largely because, thanks in part to new tech- constituency of humanity may change—not nologies, the sinews of intersocial just from altering the human genome through communications will break down existing genetic engineering, but also from mixing it cultural as well as economic borders in favor of with non-organic mechanics. When philoso- new ones.33 phers have spoken of the co-evolution of man and machine, until now they have spoken Oddly enough, too, but still quite logical, metaphysically. Notions of “androids,” existing national units are more likely to break “cyborgs,” and “bionic” men and women have down in circumstances where an overarching dwelled exclusively in the realm of science transnational edifice is in place, or is seen to be fiction. But at least the beginnings of such ca- coming into being. Thus will forms of integra- pabilities could literally exist within the tion and fragmentation coexist. The slogan of lifetime of today’s elementary school children. the Scottish National Party (SNP), for example, in this past spring’s first election for The implications of such developments a modern Scottish parliament, was “Scotland should not be underestimated. Our understand- independent in Europe.” The SNP did not win ing of all human social arrangements is based, the day, but in the future it might; and roughly ultimately, on an understanding of human similar logic applies to places such as Corsica, nature. If that nature becomes subject to sig- Lombardy, Wallonia, Catalonia, and the nificant alteration through human artifice, then Basque country. all such arrangements are thrown into doubt.36 It almost goes without saying, too, that to e may also face, as a species, new delve into such matters raises the deepest of Wethical and philosophical challenges ethical issues: Can humanity trust itself with to human civilization itself thanks to the prospects of biotechnology. While biotechnol- 32 But still not most, according to the European Commission’s ogy harbors tremendous potential for good, the Eurobarometer 50, cited in Dominique Moisi, “Dreaming of Europe,” Foreign Policy, Summer 1999, p. 49. potential for permanent damage to humanity 33 and the biosphere is also a reality. This tech- See John Newhouse, “Europe’s Rising Regionalism,” Foreign Affairs, Jan./Feb. 1997. nology, for example, will allow for the creation 34 Scientists have already grown brain cells from a rat on a of ever deadlier and harder to detect weapons silicon chip, the result exhibiting certain characteristics of of potentially genocidal dimensions. The each. A photograph may be found in Business Week’s linkage between biotechnology and nanotech- special Summer 1999 issue on innovation, p. 106. nology methods poses dilemmas even more 35 This has already been achieved with mice. See “Social profound. For example, it will soon be possible Behavior Transformed With One New Gene,” Science to connect human brain cells to silicon chips.34 Daily, August 19, 1999, p. 1. It will also be possible to alter more precisely 36 Argued by Frances Fukuyama, “Second Thoughts: The Last Man in a Bottle,” The National Interest, No. 56 (Summer 1999).

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such capabilities? Should it? How can it know national security is the extent to which the before the fact? Who gets to decide? global economic system will continue its path toward integration. That is because such inte- here have always been technological gration will affect the distribution of Tpessimists among us, yet despite the economic, political, and, ultimately, military disruptions of several iterations of major tech- power in the world. Some countries will nological innovation over the past few prosper more than others, and some alert de- centuries, the lives of the vast majority are veloping countries, such as China, may longer, healthier, happier, and more secure as a prosper most of all. consequence.37 Most likely, the new discoveries and devices of the next quarter century will Continued integration promises greater also tend to enhance life in quality and wealth for most countries, including the quantity. Still, there is growing unease that we United States, but it also promises a host of are upping the ante to the point that a single novel vulnerabilities. If integration stalls or is mistake or a single act of sheer evil could leave reversed, however, other problems will come a potentially fatal wound. So it may be that to the fore. Beyond the broad distribution of mankind will come face to face with techno- wealth and power, political destabilization logical choices that make us think twice before could arise from the tendency of knowledge- we plunge ahead. If so, then we will have based economies to exacerbate divisions reached a new and higher stage of civilization within and among states. Economic interde- in which man as a tool-making animal and pendence will create vulnerabilities for the man as a moral being will devise an explicit U.S. economy. Capital markets and trade may reconciliation between these two core facets of well be exploited by others for purposes at his nature. odds with U.S. interests. New economic patterns may also affect national identities and Global Economics: “How Is Wealth the capacities of states to govern. Created?” ost observers believe that the inter- n its essence, economics comes down to Mnational economic system is in a Ia simple question: How is wealth state of rapid transition, but they often disagree created, distributed, and used? But the answer about where this transition is leading. That is to that question is anything but simple. We partly because outside the domains of profes- have moved far beyond undifferentiated sub- sional economists—and sometimes within sistence means for making ends meet. Local, them—prescriptive disagreements shape most regional, national, and international economic discussions of globalization. Nevertheless, a dynamics have become extraordinarily reasonably objective picture of the new global complex, involving matters of matching re- economy can be drawn. It requires first a grasp sources, sophisticated production techniques, of structural changes in the international education and human capital, marketing, economy having to do with its financial and finance, trade, and the corpus of custom and production dimensions, and how world law that binds all of these activities together. economic cycles are being influenced as a 37 The optimist-pessimist debate goes on. See Virginia Postrel’s As far as the next 25 years are concerned, The Future and Its Enemies (New York: Free Press, 1998), most important in any consideration of U.S. which describes the contest as it takes the optimists’ side.

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result. It means understanding the connection commercial banks still play a major role in between trade and capital flows, especially in global capital flows, and in their volatility. But the developing world. And it means understand- the sources of investment have expanded to ing the various barriers to economic change. include pension and insurance funds as well as individual portfolios.39 In sum, the global finan- A key to the changing global economic en- cial system has grown from a small core set of vironment is the explosion in the volume of players to a much larger and more disparate set international capital flows. The basic data tell of investors and creditors. This has created new the tale. In 1990, the first full year of the post- vested interests across a wide range of Berlin Wall epoch, developing countries economic, financial, and political domains

Capital Flows to Developing Countries

absorbed a little over $100 billion in total long- worldwide who are wagering increasingly larger term capital flows. More than half of these sums for investment and short-term speculation. reflected official aid and assistance from gov- Technology has been an important enabler ernments or multilateral institutions such as the in this development. Advances in information World Bank. By 1998, the contrast was stark. technology have made it possible for financial Total long-term capital flows to the developing world increased to $275 billion. Of that amount, private capital flows both from international 38 According to the World Bank, international capital markets markets and foreign direct investment account- consist of bonds, loans, and portfolio equity flows. ed for over 80 percent.38 Foreign direct investment consists of the sum of equity capital, reinvestment of earnings, other long-term capital, Perhaps as important as the increased capital and short-term capital, as shown in the balance of flows are the changes in the nature of the private payments. Official flows consist of the sum of net flows of parties participating in the market, and how they long-term debt from official creditors such as multilateral are doing so. There have been dramatic increas- institutions and governments. 39 es in the numbers and types of participants in the According to the Organisation for Economic Co-operation market, the size of discrete transactions, the and Development (OECD), pension fund assets invested in capital markets increased from $4.9 billion to $8.2 billion types of instruments and funds involved, and the between 1990 and 1995. OECD, The World in 2020: overall speed at which trading takes place. Large Towards a New Global Age (Paris: OECD, 1997), p. 52.

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institutions and individual investors alike to Taiwan by force, and in the process cut the collect, analyze, and act on information about economic links between Taiwan and the United markets with unprecedented speed. This trend States, American industry might well find itself will grow because, as the technologies spread, short of important economic components. others around the world will be able to participate in global markets just as ever more Then there is the Internet, which is revolu- individual and corporate investors in developed tionizing traditional methods of marketing and countries like the United States do today. distribution. The Internet already provides a novel source of commercial advertisement— Technology has had an even more profound less for particular products than for classes of effect on production itself. Technological products—and its influence in that domain will advances have changed the way companies are grow exponentially over the next quarter being run in terms of operation, size, and century.40 It also lowers the cost of entry to new location. On the one hand, it is now possible— markets, facilitating the expansion of smaller and will become increasingly so—for many enterprises into international business. The businesses to be truly global. On the other hand, Internet is allowing markets to become truly information technology facilitates the shaping global, with fewer middlemen taking profit and of specific production to specific markets. This slowing transaction times. Not only is the inter- phenomenon, known as niche production, will national market becoming larger, it is also expand in coming years as the diffusion of becoming less hierarchical, and that has signifi- knowledge about production techniques, and of cant implications for the structure of commerce smart machines themselves, merges with a far and competition across both the service and in- more specific and near-instantaneous knowl- dustrial sectors of the global economy. edge of the market. This is true for old product areas, such as textiles, and for new product he integration of the world economy domains that technology itself helps bring into Tnow afoot is different from earlier being. In different ways, the globalizing of episodes of economic integration. First, the ratio business organization, the expansion of interna- of trade to global GDP, at least according to tional markets, and the advent of niche some measures, is at historically high levels.41 production will force the restructuring of indus- States today benefit more from economic inter- trial and service sectors alike. It will also tend to action with other states than at any other time improve standards and quality, and to put a in the modern age, and they are also more de- premium on achieving speed, efficiency, and pendent on those interactions to maintain knowledge-based processes at every level and for every kind of business activity. 40 See Matthew Symonds, “The Net Imperative,” and “When Companies Connect,” The Economist, June 26-July 2, Information technology has also influenced 1999. inventory strategies, and these too have national 41 Trade as a percentage of world GDP approached 15 percent security implications. Inventories are expensive in 1992. Trade as a percentage of GDP in the pre-World to carry, and businesses prefer to maintain War I era was just over 9 percent. But see Benjamin J. Cohen, “Phoenix Risen: The Resurrection of Global lighter loads in that regard. The problem is that Finance,” World Politics, January 1996, and Mark disruptions in supply for whatever reason—not Hallenberg, “Tax Competition in Wilhelmine Germany least war—leave dependent countries vulnera- and Its Implications for the European Union,” World ble. For example, should China attempt to seize Politics, April 1996.

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levels of growth and consumption. An ever sources according to market-based criteria. In larger number of countries, including the many countries this is an important new phe- United States, increasingly relies on imports nomenon, serving to advance other economic for consumer goods, export assembly, and and also political reforms. technology inputs. In addition, the prosperity of domestic companies, financial institutions, Fifth, international and multilateral insti- and individuals is increasingly tied to the tutions hold a prominence in today’s success of overseas operations. economy unparalleled in the global economic systems of the past. These institutions are re- Second, trade is less dominated by the sponsible for resolving trade disputes and exchange of commodities and manufacturing, designing national financial policies, among having spread to include the export of other functions, and these functions will services. It also now encompasses a far wider expand as the global economy becomes in- range of the world’s countries. This spreading creasingly integrated. of international commerce has been particularly profound in the developing countries, Sixth, expectations themselves are impor- the traditional suppliers of commodities to tant. Large numbers of people in most more industrialized states, which have countries are well aware of the economic emerged as important sources for a range of benefits of a more integrated world. They manufactured goods.42 have reason to pressure their governments to remove impediments, such as barriers to the Third, the cross-border reach of multina- inflow of capital, that stand between them and tional corporations and other business the presumed benefits of global economic in- production networks has accelerated. Large tegration. corporations can create truly global production networks, seeking out the lowest production Additionally, an increasingly integrated costs worldwide for major components as well global economy is speeding the spread of inter- as whole products. U.S.-based corporations are national best practices. When economies are increasingly shifting their operations overseas, linked closely to world financial markets, gov- depending more on global markets for revenues ernments cannot so easily maintain protectionist and production. More important, perhaps, policies, and they must increasingly respect the multinational corporations are increasingly discipline of the market. This is a good thing not becoming transnational corporations, the dif- just for bankers and financiers, but also for ference being in the extent to which ownership ordinary people, who have suffered far more and the flow of revenues internal to the corpo- from bad government than from the herding in- ration tend to coalesce at one hub as opposed to stincts of international investors. many hubs around the world. Taken together, these changes suggest an Fourth, stock markets have been created important political implication. That so many throughout the world, and many of them have people might be spared the miseries of already become important engines of savings poverty, and even become downright wealthy, and investment. The most significant long- opens up the possibility of more pluralist term implication of these new equity markets lies in their capacity to allocate investment re- 42 For details, see OECD, The World in 2020, p. 37.

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politics and less violence over more of the the benefits of international trade are general, globe. The wealthier a country is and the the costs are frequently distributed more deeper its integration into the global narrowly among a country’s less competitive economy, the stronger its incentives to avoid industrial sectors. As an industry feels the major conflicts with its neighbors. Of course, brunt of international competition, political economic logic does not necessarily coincide pressure is often generated to shelter it. In the with political interests, and states have often developed world, perceptions that competi- done economically irrational things for polit- tion with the lower-wage developing ical purposes. But such incentives do matter. economies will threaten traditional but rela- t would seem, then, that the prospect of tively uncompetitive industries, and thus Ian increasingly integrated global cause downward pressure on wages, are likely economy lies before us. The integrative to engender protectionist sentiment over the process, however, is not so simple. There are long term. several reasons to doubt that global economic integration will proceed rapidly or smoothly. Support for protectionism has also been It may not even proceed at all, and it may developing in the United States, which is not even retreat in some areas. Let us visit the surprising since free trade and globalization possibilities. are the main reasons for the decline of high- paying manufacturing jobs. Protectionist Resistance to change can be strong, and sentiment has manifested itself in proposals resistance to rapid change stronger still. to raise tariffs on imported steel and in oppo- Global integration, to the extent that any sition to extending presidential fast-track society engages in it, necessarily increases its authority in negotiating trade agreements. All exposure to market forces through the reduc- this is occurring at a time of record employ- tion of trade and investment barriers and the ment, high growth rates, and ebullient deregulation of the domestic economy. While economic optimism. That poses a troubling the market tends over time to reallocate re- question; as former Labor Secretary Robert sources from less to more productive Reich put it: "If free trade inspires this much endeavors, it also disrupts local communities and traditional patterns of commerce. It antipathy now, when the economy is surging, requires wrenching structural shifts within a country’s industrial base and employment 43 Some of these shifts are the function of oscillating exchange profile.43 Alterations in the patterns of wealth rates, which make products either cheaper or more dear production, and consumption invariably without any reference to the objective productivity base of destabilize the location of social status and the industry. See Dani Rodrik, “Has Globalization Gone both political and moral authority.44 Since Too Far?” California Management Review, Spring 1997, those who have status and authority are gen- pp. 29-53. 44 Mexico is lately a stellar example, from the banishing of erally reluctant to part with it, some U.S.-educated technocrats from the upper echelons of resistance to change is inevitable. party politics to the largest student strike in 40 years. See Sam Dillon, “Mexico’s Presidential Hopefuls Are All New Resistance to the spread of global Breed,” New York Times, June 24, 1999; and Julia Preston, economic integration can take many forms. “Student Strike in Capital Jarring All of Mexico,” New One historic form is protectionism. Whereas York Times, June 25, 1999.

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what will happen when the economy slows, the emerging information society with as it inevitably will?"45 American culture. In some societies, and particularly among younger generations, this Elements of protectionism can come in mul- culture is widely embraced. In other societies, tilateral as well as bilateral form. Regional ties however, this pop global culture is much are expanding and serving as a basis for resented, and it often divides generations in a economic growth, particularly through group- way that irritates and worries national elites. ings such as Mercosur, the European Union, and Such resentment is discernable not only amid NAFTA. So far, too, these groupings have obviously reactionary forces—say, the tended to reduce trade barriers not only within Taliban—but is also widely present in Europe their borders but also, with the exception of and in other countries that Americans presume agricultural products, to the world at large. to be their allies and friends. Nevertheless, should these blocs turn into de facto regional cartels when times get rough, Like it or not, we are entering an era of world growth would be threatened instead of global culture conflict, the contours of which boosted. Competing regional trading blocs could will be shaped by the pattern of how different mute, not encourage, the integration of new cultures assimilate new technologies and avail markets and resources in the global economy as themselves of emerging global economic a whole. patterns. Experience and common sense teach that it is frequently more difficult to acquire We can already see examples of protec- the attitudes—the social software, so to tionist proclivities within regional trading speak—that underlay a successful open blocs. Tensions between the EU and the economy than it is to acquire the capital and former Soviet satellites in eastern and central the desire to build one. Just as hopes were Europe owe much to this problem. EU agri- dashed 35 years ago that “technology cultural goods are subsidized and thus bribed transfer” would generate widespread sponta- into export to places like Poland and the neous indigenous economic growth in the Czech Republic, putting great pressure on Polish and Czech farmers. Meanwhile, many Third World, so today it takes more than a east European goods are effectively kept out technical process for major social innovation 46 of EU markets by tariffs and quotas that to set roots and succeed. Culture matters. As specifically target those east European with the diffusion of technology, parts of the products that are competitive within EU world are as likely to be pulled apart as markets. Obviously, in such a case trade is brought closer together in the process of limited as a whole by what amounts to a global economic integration. regional cartel. Those peoples who do not benefit from a ulture, too, can be a source of resis- more integrated global economy are unlikely tance to economic integration. C 45 Resistance to change is liable to be more See Robert B. Reich, “Trading Insecurities,” Financial Times, May 20, 1999. vigorous to the extent that the cultural carrier 46 Note Thomas Sowell, Migrations and Cultures: A World of that change is thought to be alien and dan- View (New York: Basic Books, 1996); and Lawrence E. gerous. The implements of modern technology Harrison, “The Cultural Roots of Poverty,” Wall Street are overwhelmingly Western, and many equate Journal, July 13, 1999.

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to blame their own lack of social capital; they limited, then growth in developing countries are more likely to sense conspiracy and feel could be stymied. Many regimes in the de- resentment. That, in turn, prompts the veloping world might not survive the question: Can a world half-integrated through economic shocks resulting from an unstable Western techniques and technologies and a oil market. world half-alienated by them stand together in an era of dissolving borders? If the issue Still other discontinuities could affect comes to be not just one of “haves” and “have economic integration. One, possibly an nots,” but “wants” and “want nots,” can the offshoot of biotechnology gone awry, could latter successfully spoil the brew for the be major unexpected epidemics; another former? could be the further massive spread of AIDS to countries such as India or China. Should deterioration of the security situation the world face the threat of pandemics, all Ain a given country or region would also bets would be off with respect to projecting radically affect the economic prospects of that economic growth rates. Human capital, popu- area—possibly of the whole world if the region lation distributions, and the economic is large or important enough. It almost goes interconnectedness of the planet itself could without saying that war obstructs commerce, all shift dramatically. destroys human capital and infrastructure, and diverts investment from productive to destruc- learly, then, further global economic tive sectors; capital withdraws to safer zones, Cintegration is not a certainty. Nor can undermining development and employment, we assume the absence of a major systemic thereby creating the conditions for still more in- crisis over the next 25 years. Another major stability and violence. Zones of the world that, “boom-bust” cycle in the developing world, for whatever reason, fail to stem the tide of such as was experienced in 1997-98, could violence, will fall ever farther behind in the 21st undermine political support for the market- century. The result will be even greater discrep- based policies upon which the emerging ancies between rich and poor, not just among global economy is based. But of all the regions and countries, but also within them. dangers to the new economic arrangements Bouts of warfare between major powers would we see aborning, the most critical, at least for threaten the entire global economic system. the near term, concerns the health of the U.S. economy. A major disruption in global energy For the next five to ten years, the contin- markets could also have a profound impact ued strong performance of the U.S. economy on economic growth and integration world- will be crucial to avoiding a systemic crisis. wide. Developing economies will have a In the aftermath of the financial crisis of large appetite for energy as they seek to join 1997-98, the United States is the only major the new global economy. Asia’s energy con- economy continuing to experience robust sumption will likely increase over 250 economic growth. A sharp downturn in the 47 percent between 1996 and 2020. The avail- U.S. economy, were it to occur before the ability of abundant cheap oil from the demand for goods and services picked up sig- Persian Gulf has been the major contributor to the sustained low prices of the past decade. 47 International Energy Outlook 1999 (Washington, DC: If this supply is somehow threatened or Energy Information Administration, 1999), p. 141.

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nificantly in Europe and Asia, would lead to a impact on the rest of the world could be consider- world recession.48 That would radically alter able. current rosy projections of U.S. and global prosperity. There is a related issue. The global economy as a whole is dependent on the willingness of the How likely is a severe downturn? Few serious private capital markets to continue their primary economists believe that the United States can role in circulating savings from capital rich coun- maintain its current brisk rate of economic tries to capital poor ones. As it happens, the growth, with little or no inflation, over a 25-year majority of the funds in those capital markets is period. There will be downturns. The crucial now either American money or foreign money question is how severe they will be, and that in managed by American firms—although that turn raises the question of what might cause them. could change fairly quickly. Thus, what happens in the U.S. economy will have an effect on the Some experts believe that the current vulner- willingness and the capacity of private capital ability of the U.S. economy relates to the markets to function. Economic conditions in the overvaluation of the U.S. stock market and unsus- world’s major economies, and particularly the tainable levels of consumer spending. Others U.S. economy, will still matter most in determin- disagree, believing that real gains in productivity, ing the size and nature of private capital flows.50 thanks to the cumulative impact of the information revolution, presage a surge of real growth Some further volatility in capital markets is such that the market may be undervalued. Others likely—how much, no one knows. But if there see vulnerabilities in the trade deficit on the one were an extended retrenchment of capital from hand and the capacity of the United States over developing countries, prospects for economic time to attract sufficient overseas investment to growth in many individual countries and the finance its national debt. If, for example, real global economy as a whole would be reduced.51 economic reform in Japan led to greater Japanese Without sustained economic growth, the consumer spending, that would reduce the prospects for political stability would dim in amount of capital the United States could borrow. many places. While growth cannot solve all Conjoined to the further development of a euro problems, it works well enough as a political pal- bond market, the United States might have to 49 raise interest rates to attract capital. That could 48 Japan’s economy has already picked up. See Stephanie have a serious recessionary impact that might also Strom, “Japan Grows 1.9%, to Economists’ Disbelief,” affect world growth rates. New York Times, June 11, 1999, p. C1. 49 See C. Fred Bergsten, “America and Europe: Clash of But a “hard landing” is not inevitable. The Titans?” Foreign Affairs, March/April 1999. U.S. current account deficit is only about 2 50 Foreign direct investment is the exception to this. FDI flows percent of GNP, not an extreme number, and to developing countries dropped less than 5 percent lower than was the case during much of the between the crisis years of 1997 and 1998. Global Development Finance, p. 14. 1980s. Moreover, the current period of high 51 deficits has also been a period of high investment. Capital flows to the developing world have been unevenly distributed. Therefore, since most of the flows have been But if there is a “hard landing”—in which a de- concentrated in only a few large developing markets, it is preciated U.S. dollar results in a compression of misleading to lump all developing countries together U.S. imports, lower foreign financing of the U.S. insofar as the significance of global capital flows is con- deficit, and higher domestic interest rates—its cerned.

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liative much of the time. And of course, the Further global economic integration also problem is circular: the more social and political means that there will be global economic growth, instability, the poorer the economic prospects, and a remark that sounds rather banal but, on historical the poorer the economic prospects, the more po- reflection, is not. Annual economic growth in litical and social instability—at least once people several non-OECD economies (Brazil, China, and have gotten a taste of what they are missing. India) could average between roughly 5 and 7 ut what is most likely to happen? percent. Today’s OECD countries will average BContinuing global economic integra- annual growth between 2 and 3 percent. Thus, the tion, a slowing or stalling out of the recent pace of non-OECD share of world GDP is likely to rise change, or even retrogression? from 44 percent to between 56 and 67 percent, depending on whether growth rates tend toward the Barring a major disruption of the global higher or lower end of growth predictions. Thanks economic or political system, the major trends in to its very large population, projected moderate to global finance, manufacturing, transportation, high growth rates, and a particular method of telecommunications, and trade described above making economic comparisons, some have made will not be reversed anytime soon. The cross- border web of global networks will deepen and the surprising assertion that China’s economy widen as strategic alliances and affiliates increase could overtake that of the United States as the their share of production and profits.52 The inter- world’s largest in absolute terms by 2020.53 nationalization of production networks will also continue. But the speed at which other parts of the 52 For example, the National Association of Securities Dealers globe join the integrative process, and the inclu- announced in June that it would team up with the siveness with which countries are transformed as Softbank Corporation to develop an electronic version of a result, is likely to be uneven, and in many cases its electronic Nasdaq Stock Market in Japan to trade both U.S. and Japanese stocks. This will create literally a 24- much slower than anticipated. hour market, and it is only the first of many likely joint enterprises of this sort. See Edward Wyatt, “Market What will this imply for the global economic Place,” New York Times, June 16, 1999, p. C11. system of the next century? Savings in the devel- 53 In order to make this projection, the OECD uses a metric for oped world will continue to finance growth in at comparing countries’ economies called the Purchasing least some of the developing world—unless Power Parity (PPP) standard. PPP is used now for GDP major countries suck up too much of the world’s output comparisons by the CIA, the Department of investment capital. The judgments of markets and Commerce, the World Bank, and the IMF as well as by the OECD. While this method avoids the distortions of using key market institutions, such as the major debt exchange rates to compare economies, it introduces distor- rating services, will remain critical in determining tions of its own. For details, see Murray Weidenbaum, the size and sustainability of capital flows to all e- “China’s New Economic Scenario: The Future of Sino- conomies, not just to large developing ones such American Relations,” Orbis, Spring 1999, pp. 223-4. as Russia, Mexico, and Brazil. As important, the More conventional measures suggest that China would ability of developing economies to gain access to have to grow at an average of 12.4 percent per year for 25 years to equal the size of the U.S. economy—obviously an these funds will play a major role not only in how impossibility. Finally, it almost goes without saying that they fare, but also in how advanced ones fare, OECD and other professional institutional estimates of because their fortunes are increasingly linked. economic growth have often proven fallible in the past.

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These general trends are hugely important. increasingly complex and still volatile global For at least the last century, global economic economic system. The volatility of today’s power and influence have resided in the large capital markets, well illustrated by recent crises countries of western Europe, North America, in Asia, Russia, and Brazil, has led to wide- and Japan. The global economic system in spread demands for a “new financial 2025, however, will be multipolar. In both low architecture.” Such an architecture must mesh growth and high growth scenarios, China, India, policymakers’ demands for stability with and Brazil could become significant economic market requirements for flexibility, and coming centers and attractive export markets for OECD up with an acceptable formula has been tricky.55 and non-OECD countries alike.54 This will rep- We are therefore likely to witness a continuing

An Emerging Multipolar Economic World

Source: OECD, The World in 2020, p. 92.

resent a major realignment in the patterns of global economic influence and power. Increased 54 For the purposes of the graphic, Europe is defined as the 15 tension is possible in consequence as these countries of the EU plus Iceland, Norway, and Sweden. states try to assert their newfound influence in The high and low growth scenarios differ primarily with various arenas. They are bound to want to influ- respect to whether trade barriers and export taxes/subsi- ence the rule-making processes in international dies decline to 50 percent or to zero, whether fiscal economic regimes, processes that are dominated consolidation and labor market reforms take place, and what increases occur in energy efficiency, oil prices, and today by the United States and its allies. population growth. See OECD, The World in 2020, p. 63. 55 A major new study from the Council on Foreign Relations oincident with these likely trends in the takes a stab at the problem. See Safeguarding Prosperity Ceconomic future will be ongoing in a Global Financial System: The Future International debates at the regional and international levels Financial Architecture, Report of an Independent Task concerning the integration and regulation of this Force (New York: Council on Foreign Relations, September 1999).

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debate over how to keep international capital The volatility of capital markets has impor- flowing, while, at the same time, reducing the tant security implications. First of all, the volatility of those flows. growing magnitude and nature of capital flows suggests a potential for ever bigger global waves One school of thought likens infant interna- in the movement of capital—bigger at their crests tional economic institutions to immature and also bigger at their troughs.58 It is as though national ones. According to this argument, we regional business cycles that were not harmo- should expect several sharp fluctuations in in- nious in the past may become so in the future. If ternational business cycles before the much so, such waves can be large enough to capsize more difficult task of coordinating policy entire governments and destabilize entire among many countries moves far forward. After regions. Second, and even more important, the all, the IMF was created at a time when most nature of future regulations on capital volatility, experts worried more about managing trade and how they evolve, will set the tone for how flows than capital flows and currency fluctua- states interact and for how technology and wealth tions.56 But others oppose the notion of are used. In other words, the process could shape regulating international capital flows from the results such that getting there—to a new in- above.57 The more unfettered a market, the ternational economic architecture—could be more liable it is to produce both extraordinary nearly tantamount to being there—in a stable successes and extraordinary excesses. The way security environment. to tilt reality in the former direction, many argue, is not solely through regulation, but by different approach to ameliorating the forcing actors to learn best practices, and by Anegative effects of huge and sudden exposing them to the penalties of occasionally flows in capital focuses on currency blocs. getting it wrong. Some experts believe that by 2025 the world will be dominated by dollar and euro currency This argument will not soon run its course. zones, and that such zones may be an effective Future international financial crises are there- way to allow smaller economies to enjoy the fore inevitable; but of what magnitude and benefits of increasing global capital mobility duration we do not know. As for their location, the developing world is the most likely epicen- 56 Such efforts may go hand in hand with debt reduction for the ter, for that is where banking systems and developing world, for the size of that debt not only harms internal regulatory regimes governing capital those who owe, but ultimately also those who are owed. flows are most fragile. Since the pain of disrup- See Bob Davis, “G-7 Moves to Revamp Financial Systems,” Wall Street Journal, June 21, 1999, p. A23. tions can be severe, the temptation to restrict 57 Some even propose abolishing the IMF, whose task has capital movements will continue to exist. We metastasized since the end of the era of fixed exchange have seen such a temptation at work in rates. This includes former Secretary of State and Treasury Malaysia’s application of capital controls in George Shultz. See his testimony before the Joint 1998. Nevertheless, given the importance of at- Economic Committee of the U.S. Congress, May 5, 1998. 58 tracting capital for economic development, This is not an entirely new development. The movement of “hot money” in the 1930s raised similar problems. See attempts to limit the freedom of financial Harry Gelber, Sovereignty Through Interdependence markets are unlikely to be applied to anything (London: Klewer Law International, 1997), especially but short-term capital flows. chapter 2.

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while avoiding some of its hazards.59 Through tlement. While it is too soon to say how the the course of the Mexican Peso crisis of 1995 currency bloc debate will turn out, it is not too and the 1997-98 financial crisis, fixed exchange soon to conclude that it will be a major arena of rates became increasingly associated with policy discussion and experimentation over the damaging exchange-rate volatility. While next quarter century. even large economies are not immune from such volatility, the small size of many devel- hat will be the implications for U.S. oping economies’ financial markets—often Wnational security of global economic no bigger than a regional bank in the United shifts? As noted above, these can be summed States—makes it harder for them to avoid up by reference to four basic phenomena: damage in a world of ever increasing capital greater disparities; increased interdependence; flows. Some developing countries may seek the exploitation of both trade and private capital markets for parochial purposes; and exchange-rate stability by creating currency challenges to the identity of nations and hence boards that fix the exchange rate to a given to the capacities of states to rule them. currency or basket of currencies. More radically, however, they can join with other The harnessing of ideas, knowledge, and countries to create a new currency (such as global resources has the capacity to increase the euro), or they can adopt the currency of world economic output tremendously, but with another country, as Panama has done with the it will also come greater disparities in wealth U.S. dollar.60 and income. Such disparaties will appear among countries, with significant implications The widespread implementation of any of for relative national power.63 these options would likely signify the de facto return to a largely fixed exchange rate system.61 Knowledge-based economies will also But there are problems. Should Argentina continue to create internal divergences in which formally adopt the U.S. dollar, for example, as the wealthy, well-educated, and well-placed has been widely discussed in recent months, it will tend to get richer while the poor will tend would make the U.S. Federal Reserve the to stay poor or get poorer. Middle classes, such ultimate arbiter of Argentine monetary policy as they are, will tend to split.64 This trend is dis- and reduce significantly the sovereign power of cernable already in those countries in the the Argentine state.62 The Federal Reserve vanguard of knowledge-based economies. For bristles at the former now, and the Argentine government would no doubt bristle at the latter 59 See Zanny Minton Beddoes, “From the EMU to AMU? The in the fullness of time. Case for Regional Currencies,” Foreign Affairs, July/August 1999, pp. 8-13. The debate over currency blocs has only 60 “Global Financial Survey,” The Economist, January 30, just begun, and it will probably not end for 1999, p. S15. many years. That is because, at base, interna- 61 Ibid. 62 tional monetary policy involves a relationship Argentina has already made the Federal Reserve the de facto arbiter of Argentine monetary policy. among three factors—capital mobility, the exis- 63 The key conclusion of the United Nations Human tence of independent monetary policies, and an Development Report, 1999. inclination to fixed or at least stable exchange 64 See Peter F. Drucker, “The Age of Social Transformation,” rates—that seems impervious to permanent set- Atlantic Monthly, November 1994.

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roughly twenty years, nearly 60 percent of the Economic disparities will be more visible to U.S. population has experienced falling real more people, which could be a new source of wages.65 It is also in keeping with recent trends frustration and social tension. in economic history, where disparities in per capita income within developed countries Second, interdependence will characterize outpaced those in both economies in transition relatively open economies, including the and in developing countries.66 United States. Those U.S. companies, investors, and consumers that depend on Internationally, the pockets of poverty overseas production, imports, and revenues amid wealth will also be more closely inter- will be implicated by all those events overseas

Per-Capita Income Disparities

laced than is the case today. Some regions of the world are still almost entirely devoid of the 65 For a brief discussion of recent trends, see Laura D’Andrea accoutrements of the information revolution; Tyson, “Wages and Panic Buttons,” New York Times, the huge and densely populated area within a August 3, 1999. circle drawn at a radius of 1,600 miles around 66 As defined by the United Nations, developed countries Kabul is a good example. That will almost cer- include Canada, the United States, the EU, Iceland, Israel, tainly change over the next 25 years. Once the Malta, Norway, Switzerland, Australia, New Zealand, and world is fully “wired” together, skilled labor Japan. Economies in transition include Russia, Southeastern Europe, the Baltics, the Czech Republic, will be far more mobile, both literally and in Hungary, Poland, and the CIS. Developing countries terms of who people can choose to work for include all other countries in Africa, Latin America and from computer stations in their home regions. the Caribbean, and Asia, including China.

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that affect major companies, affiliates, and other crops, we make those crops uniformly suppliers. The key point is that a globalized vulnerable to deliberate attempts to ruin economy renders all participating states more them—as well as to the lucky insect, fungal, vulnerable to exogenous shocks and disrup- or bacterial pest.68 tions, whatever their sources. The channels of transmission for such shocks are simply third national security problem growing faster than our understanding of Aconcerns the potential exploitation of them. the new scale and nature of private capital markets. The transformation of international Very much related, as multinational cor- financial markets allows governments as well porations become increasingly international in as companies to raise money in different ways character, the link between the corporation and from different sources than was the case and its country of origin will be rendered more when governments and commercial banks ambiguous. National governments, including supplied the lion’s share of such financing. that of the United States, will be increasingly Since the end of the Cold War, important subject to competing interests with constituen- states have taken advantage of this new envi- cies that represent cross-border interests and ronment. Russia, for example, has raised alliances. Such competing interests could considerable sums through private capital involve sensitive technology: transnational markets, transfers that have been facilitated by companies will seek minimal restriction in U.S. policy and international lending institu- sourcing, selling, and licensing technology tions such as the International Monetary Fund. worldwide, but the U.S. and other govern- It is unclear whether the money has helped ments will maintain an interest in controlling advance fundamental reform in Russia; some and regulating dual-use technology for believe that it may have hindered reform by military-security reasons. An already difficult rendering it less urgent. Worse, since money is problem may get worse. fungible, it is possible that funds raised from bond offerings in the United States can be Even more portentous, as global and used in ways that violate the spirit of U.S. domestic infrastructures become indispens- laws. able to modern life, their disruption can have literally life-threatening consequences. Such Even if such activities are not technically infrastructures, including crucial transporta- illegal, they can be politically sensitive. tion, health, sanitation, and financial systems, Clearly, we are entering an era in which major are bound to become targets of the disgruntled, the envious, and the evil—individuals, 67 The White House, “Protecting America’s Critical groups, and potentially hostile countries alike. Infrastructures: PDD 63,” May 22, 1998; Critical They will be very difficult targets to defend. Infrastructure Assurance Office, White Paper on Critical Cyberwar, the attempt to shut down sophisti- Infrastructure Protection, May 1998; and the Marsh cated systems with sophisticated means, is a Commission Report itself, called the President’s Commission on Critical Infrastructure Protection, Critical serious threat, well worth worrying about.67 Foundations: Protecting America’s Infrastructures Complex systems can also be disabled by (Washington, DC: GPO, October 1997). primitive explosives detonated at the “right” 68 For an edifying fright, see Paul Rogers, Simon Whitby, and time and place. And if we turn to genetic en- Malcolm Dando, “Biological Warfare against Crops,” gineering to enhance yields from cereal and Scientific American, June 1999, pp. 70-5.

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“private” financial transactions have major po- The use of private capital markets in the litical implications.69 China has issued some United States for purposes at variance with 134 bonds in global markets since 1980, U.S. economic or security interests will totaling some $26 billion. Of this $26 billion, continue. What is less clear is how to deal with $10.5 was dollar-denominated, and of these such problems without placing new restric- nearly 60 percent was offered by just three tions on capital flows. entities, all of which may be implicated either in espionage directed against the United States inally, global economic integration or in military activities inimical to U.S. Fmay bear important implications for national security interests.70 the nature of states and the state system itself. Here, too, there is disagreement as to what The Russian and Chinese governments those implications might be. have made extensive use of the private market mainly because that is where most of the Some believe that the internationalization money is. They have done so, as well, because of economic life will affect the very founda- borrowing from such sources is often less ex- tion of political identity. Commercial pensive overall, for there are no underlying organizations are becoming global, it is trade transactions or projects involved to be argued, and so are the science and technology financed. This, in turn, makes it easier to bases of those operations and their associated divert funds for non-productive or even nefar- labor markets. If people’s livelihoods become ious purposes. Until fairly recently, the use of increasingly international in source, it follows private capital markets also made it easier to that their sense of emotional attachment to the avoid conditionality, transparency, investment state will wane. This will be particularly the discipline, or the provision of collateral case where there is no obvious physical or ide- compared to using government-to-government ological threat at the state level over an funds or large commercial banks. Moreover, it extended period. The implications for civil- is easier to recruit new sources of funding, military relations, broadly construed, can such as insurance companies, pension funds, hardly be overstated: unless they feel them- and securities firms. selves directly at risk, citizens will not risk

The use of private financial markets also 69 More accurately, perhaps, re-entering such an era, for the enables the cultivation of powerful political same phenomenon was common before the present constituencies in both recipient and investor century. The manner in which Benjamin Disraeli obtained countries. Many experts have argued that the the Suez Canal for Great Britain from the penurious “bailout” packages put together for Mexico, Khedive Ismail is a picturesque case in point, but only one Korea, and Russia have encouraged creditors, of many. 70 investors, and some private sector borrowers Figures are taken from “The National Security Dimensions to think that if they stumble, the governments of the Global Capital Markets,” remarks of Roger W. Robinson before the Alaskan World Affairs Council, May of the affected states, along with assorted mul- 7, 1999; and “Can We Prevent U.S. Credit Flows From tilateral institutions, will also bail them out Fueling Russian Proliferation,” remarks of Roger W. with public funds and politically motivated Robinson before the Non-Proliferation Policy Education loan forgiveness packages. Center, May 19, 1999

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their lives for a state with which they feel little others makes it harder for governments to plan, or no emotional bond.71 predict, and control their financial futures.

While emotional bonds to the state may Fifth, interest groups operating across erode, demands made upon the state may borders, often in broad coalitions, can influence increase in an era of great economic and social the strategies of private sector entities as well as dislocation. This will put many states in a the policies of governments. Already such serious bind, with simultaneously less le- private activities—those of the Soros gitimacy from which to draw and less Foundation, Amnesty International, Doctors power to influence increasingly salient Without Frontiers, Alert International, and global economic issues. This condition, it many others—dwarf the organizational and fi- is averred, will come to define the very nancial capacities of many of the states in crucible of national security policies in which they operate. Such activity could grow most advanced countries: greater social sharply if government regulatory regimes demands and expectations with respect to cannot keep pace with business activities, as major economic stresses, combined with less may well be the case in many countries. Cross- state influence over the issues at hand. Many border uses of mass action to police business states, it is suggested, will not be able to activities may grow in rough proportion to the survive such conditions, at least not as they are decline in governmental capabilities. The po- presently constituted. tential exists for millions of individual decisions to shape the future without the medi- How convincing is this view? Parts of it ation of existing political institutions.73 Sixth, certainly make sense. It is true, for example, most governments will experience continued that most states’ control over economic power pressures to reduce budgets, improve the trans- and policy has been reduced from that of the parency of decision-making, and develop Cold War era. Six reasons come to mind.72 policies that leverage private sector resources. All else equal, this will make it harder for gov- First, while governments still matter in ernments to assist directly in income economic policy, the private sector now domi- redistribution and provide social safety nets to nates more than ever the sources of economic vulnerable segments of their populations. growth, employment, and technological innovation. As governments rely more on private But will this mean that most states—and financing and market perceptions, their ability even great powers—will necessarily be con- to manage fiscal policy without imposing strained from implementing policies that penalties on the cost and availability of capital materially interfere with this growing web of decreases. Second, the adoption of internation- economic interdependence? No, it will not. al standards that augur for liberalized and Pressures against state authority and control improved regulatory regimes translates into 71 less capacity for states to manipulate national See Peter F. Drucker, “The Global Economy and the Nation- economic policy. Third, the pressures of State,” Foreign Affairs, Sept./Oct. 1997, pp. 159-71. 72 See Saskia Sassen, Losing Control? Sovereignty in an Age of economic and political decentralization could Globalization (New York: Columbia University Press, push many national governments toward the 1996). further empowerment of local governments. 73 Noted in Jean-Marie Guéhenno, “The Impact of Fourth, increased economic dependence on Globalization on Strategy,” Survival, Winter 1998/99.

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may be taken for granted, but states will fight tion of its population, and developing an hard to retain their role as the ultimate arbitra- adequate physical infrastructure. Increasingly tor of sovereign economic policies. They have caught between local social forces, internation- done so many times in the past, and usually al business interests, and perceived national successfully. This suggests that the struggle for interests, states will retain their legitimacy by new forms of national maintenance and control delivering on their citizens’ expectations for will become the key to renewed state power. security and economic prosperity. As important, those dislocated by new global market The evidence thus far in our own era forces will inevitably turn to the state for help, suggests that at least some states have a good and the state, if it expresses a true national chance to manage the process of economic community, will want to respond. All of this change effectively.74 One reason is that soci- suggests that the role of the state may be differ- eties need them to succeed. The state is, after ent in future, but not necessarily smaller, from all, an expression of political community, with what it is today. all its historical and emotional associations, as well as a vehicle of economic functionality. It also suggests that a greater polarization Those states that rule over coherent nations of state power will probably result from the enjoy a store of symbolic capital against which uneven capacities of states to manage and they can draw. It is thus misleading to read into control economic change. Regional power a reduction of state prerogatives over economic balances may shift and some states might be issues a reduced role of the state overall, or to tempted to push their new advantages. Others assume that the core principle of state sover- may elect to use force preemptively against eignty is necessarily put at risk by increasing those seen to be rising above the pack. Thus, global economic integration. What does seem while some vectors suggest that global unarguable, however, is that if economic issues economic integration will bring the world become more important, those states that closer together, others suggest that it will be manage to master the processes of change will driven farther apart. see their relative international power increase over those that do not. National power is not the uch is at stake in the argument over same as state power, the latter being that share Mhow the state will react to global of the former that governments learn to collect, economic integration, and much needs sorting manage, and deploy. The formula for translat- out. It is usually assumed in the West that ing national power into state power is changing, democracy and free-market economics are but it is not beyond mastery. mutually supportive. But the state is the only secure locus of democracy as we know it. So In a way, too, the state’s role in shaping its what does it mean to say that the future will domestic environment to achieve market based beget a world in which states are increasingly economic growth is even more vital in an in- beholden to other authorities—that of the

creasingly integrated global economy than it 74 has been in the past. The state will be responsi- See Linda Weiss, The Myth of the Powerless State (Ithaca, NY: Cornell University Press, 1998). Weiss analyzes in ble for maintaining appropriate fiscal and detail several case studies, including South Korea, Taiwan, monetary policies, establishing coherent and Japan, Sweden, and Germany, and concludes that states market based regulatory regimes, maintaining can learn to reimpose effective governance over economic social policies that ensure the effective educa- policy.

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market, that of transnational organizations— The point is that there is nothing immutable and at the same time to celebrate the about the present arrangements wherein certain anticipated expansion and solidification of peoples are ruled within certain fixed territorial democracy that the triumph of market econom- units. It was not always so in the past, and it ics ought to support? Could it be that the may not be so in the future. The ties that bind in- liberalization of commerce on the global level dividual or group loyalty to a state can change will undermine and not support the spread of and even unravel, and the next 25 years portend democracy—that one devoutly held Western a good deal of unraveling. principle would work at cross-purposes with As illustrated above, new technologies will another, equally cherished one? Quite possibly, change the way that people do business, on yes. many levels. In some cases, those changes will There is plenty that we do not know about enhance international cooperation and regional the global economic future, that we cannot integration; in others, they will divide states and peoples. Many states will lose much of know, and that we will not know in time to their control over many economic decisions, make a policy difference. Clearly, what people limiting the means by which they can provide think and do over the next 25 years will deter- domestic economic growth or domestic peace mine the answers to most of the questions and security. Violence may increase as disaf- raised here. Ultimately, these thoughts will be fected individuals and groups within states political as well as economic in nature, and so attack the agents of change. And the territorial will the acts that produce the world stretched borders of states will not as easily keep dangers out ahead of us. And that brings us to the key at bay as they once did, given the technological questions of society and politics. advances in weaponry and the global character of potential threats. In all cases, the changes The Socio-Political Future: “How Will ahead have the potential to undermine the au- the World Be Governed?” thority of states, and the political identities and loyalties of citizens over the next quarter ndividuals have historically granted their century will be put through a series of unan- Iallegiance to the state in return for nounced, and sometimes undetected, tests. domestic peace, economic well-being, and security from external threats. Sometimes they Many observers think that several states have done so in the context of a national politi- will not pass such tests. Some suggest that the cal community, where the state is an organic principle of state sovereignty itself, and of expression of social life among kindred people. the state system, is wasting away.75 The sov- More often these days, states are composed of ereign state as the key actor in international more than one ethnic, social, and religious politics is said to be undermined by all of the group, leaving the essential social contract of following: globalization, defined as techno- government to rely either on more abstract con- logical connectivity coupled with tractual arrangements, such as those exemplified transnational economic integration; frag- by the U.S. Constitution, or on more coercive mented nationalism and a return to tribalism; means of implementation. Sometimes they 75 Wolfgang H. Reinicke, “Global Public Policy,” Foreign survive mainly by the weight of habit. Affairs, Nov./Dec. 1997, p. 137.

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ecological pressures; international terrorism; vouchsafed within the territorial state, will an "outbreak" of stable peace; and more remain the key organizing principle of inter- besides. Of all these, clearly, globalization is national politics for the next quarter century the most widely discussed and debated. and probably for long after that as well.

For some, globalization is basically good That said, the challenges ahead are many not only because it encourages global and varied, and they go right to the heart of economic growth, but because it may be a the core relationships between states, and vehicle to transcend the system of state sover- among the state, the nation, and the individ- eignty, seen to be the font of the war-system ual citizen. Even as many states face that plagues humanity. Globalization thus diminished control and authority over their represents for some the withering away of the populations, demands on the state are rising. state by the advent of other means. But others What will this mean for global politics? oppose the sovereignty-eroding elements of globalization on ideological grounds. Some do ne challenge is demographic in so because the state is the only reliable locus of Onature. Populations are growing in political accountability, others because global- many developing countries. At the same ization is destructive of local community and time, the populations of nearly all devel- community control, and still others because oped countries—and some developing they believe that the market theology behind countries, too, such as China—are rapidly globalization is being used by the corporate aging.78 rich to grow still richer at nearly everyone else’s expense.76 As a result of demographic change, many states will have very different social Evocative as these arguments may be to balances in 25 years than they do today. Labor some, and as ideologically attractive as they shortages will bring a rising demand for immi- are to others, the contention that the state is grant workers to older and wealthier societies, about to be overwhelmed as the main orga- accentuating social and cultural tensions. Still, nizational principle of global politics is not the bulk of the dependent population world- convincing. The state—whether as multina- 76 Critics of different persuasions include John Gray, False tional empire, nation-state, or any of several Dawn: The Delusions of Global Capitalism (London: other kinds of political entities that Granta, 1998); William Greider, One World, Ready or Not: preceded them both—has never been at The Manic Logic of Global Capitalism (New York: Simon complete equipoise with other social forces. & Schuster, 1997); and Zygmunt Bauman, Globalization: Its role has ebbed and flowed before other The Human Consequences (New York: Columbia challenges many times over the years. University Press, 1998). Indeed, the centralized state of the 20th 77 Note Peter F. Drucker, “The Rise, Fall and Return of century is an historic anomaly, and those Pluralism,” Wall Street Journal, June 1, 1999. 78 who foresee the end of the system of sover- While today’s ratio of working taxpayers to non-working eign states too often take as their model of pensioners in the developed world is 3:1, in thirty years, absent reform, the ratio could fall to 1.5:1 or even lower, the state a highly centralized and fixed costing an additional 9-16 percent of GDP to finance entity that does not rest comfortably with benefits for the elderly. Peter G. Peterson, “Gray Dawn: 77 historical realities. For all the challenges The Global Aging Crisis,” Foreign Affairs, Jan./Feb. 1999, ahead, the principle of sovereignty, as p. 46.

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wide will remain children rather than the aged. provide basic social services, particularly If these young people are educated and able to health care, sanitation, and education. find productive employment, economies will benefit; if not, social unrest could follow. If these tensions and dislocations are sufficiently severe and prolonged, some states could As suggested above, the policies required unravel. It was no coincidence that the Asian for economic growth, especially amid high crisis of 1997-98 was soon followed not only population growth, may result in significant by the collapse of the Suharto government in dislocation within a state and directly challenge Indonesia, but by increased strains on unity. long-held political or social values. Economic Malaysia, too, suffered a political crisis that

Population Growth in the Developing World

Source: U.S. Bureau of the Census, International Data Base.

growth will frequently be accompanied by nearly led to mass upheaval—and still may. growing disparities in income and wealth, and Even such major states as China, India, those with economic and political influence Pakistan, South Africa, the Democratic will find that influence under siege. This is Republic of Congo, Kenya, and Mexico—all of bound to generate significant social and politi- which have large and growing populations— cal strains within both developed and are not immune from partial or even complete developing states. It may also lead to increased collapse.79 corruption, including among justice and 79 security officials, which would undermine ef- See Secretary of Defense William S. Cohen, Annual Report to the President and the Congress, 1999; Edward Warner, fective government. Rapid urbanization will Assistant Secretary of Defense for Strategy and Threat accelerate in many developing countries, as Reduction, Testimony to the House National Security well, severely straining many states’ ability to Committee, January 29, 1998; and 1998 Strategic Assessment: Engaging Power for Peace (Washington, DC: National Defense University, 1998), pp. 15-6.

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ut there is also good news. An inte- and write. As one scholar has put it with refer- Bgrated global information network ence to the Muslim world, “The combination of may presage the expansion of political plural- mass education and mass communications is ism. transforming the Muslim majority world. . . . Multiple means of communication make the Consider in this regard the collapse of the unilateral control of information and opinion Soviet Union. There are many ways to account much more difficult than it was in prior eras for that collapse—not least the effectiveness of and foster, albeit inadvertently, a civil society the U.S. strategy of containment over several of dissent. . . .The result is the collapse of hier- administrations. But the inability of a closed archical notions . . . and the emergence of a new

Population 60 Years and Over

political system to accommodate itself to common public space.” The emergence of a economic imperatives based on openness, the civil society is a precondition for genuine flow of information, and new market demands democracy, and by “multiplying the possibili- was a major complementary factor. If this was ties for creating communities and networks true for an age of television and relatively prim- among them,” civil society tends to advance itive personal computers, the age of the Internet democracy’s way.80 may doom nearly all closed political systems to the ash heap of history. In short, vast new pres- One must be careful here, for literacy does sures for democratization are likely to be felt not guarantee democracy, and mass education and, where those pressures succeed, it will and authoritarian political styles can co-exist make states more responsive to the needs of for a long time. Nevertheless, seen together, the their citizens. In most cases, at least, that spread of mass communications, broad suggests both better and more legitimate gover- progress in education and literary, improving nance. economic well being, and the growth of political liberalism on a global scale have potentially The steady progress in Asia, Africa, and Latin America in mass education and literacy 80 Dale Eichelman, “The Coming Transformation of the also comes into play here. After all, the diffu- Muslim World,” The 1999 Templeton Lecture on Religion sion of information technology can only carry and World Affairs, Foreign Policy Research Institute, June social clout to the extent that people can read 9, 1999.

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huge implications. Economic logic may also life of the state. Possibly, however, such devel- join with and magnify an important social opments can have less than sanguine effects. impact of 20th century technology. Citizens of Democracy can have an illiberal and even a the advanced states are increasingly less demagogic side, and new democracies seem willing to fight or support messy wars partly prone to aggressive behavior. Pressure for because technology has made life much less democracy in heterogeneous states can also risky and frail than it once was. Since life is portend their fragmentation into smaller units no longer so “cheap,” casualties have become that better reflect cultural, ethnic, or religious far more expensive.81 The spread of such identities. Sometimes this fragmentation will characteristics to more of the world could occur without violence, but often enough it will have a similar effect, the sum being to make not—and when it does not, catalytic regional war less frequent and bloody. Some even crises could follow in its wake. Pressures for believe that, for this and other reasons, major democracy in Indonesia contributed to seces- war will soon become obsolete.82 sionist movements in East Timor, Aceh, Irian Jaya, and the South Molucca Islands. Pressure combination of increasing wealth, for democracy in China, too, will likely stoke Apersonal security, education, and independence movements in Tibet and in more widespread democracy may indeed Xinxiang province. Not only will there likely herald a new era, not one created by grand be a wider economic polarization between treaties and the solemn inauguration of multi- haves and have-nots, but also a wider polariza- lateral institutions, but one that grows from tion of legitimacy between democratically individual hearts and minds. But even if peace governed polities and authoritarian ones. and democracy do not triumph worldwide— and it is not very likely that they will in the States unable to provide economic well- next 25 years—autocrats and dictators will being, political liberty, or domestic security find it more difficult to control their citizenry for a new reason as well as for older ones. 81 A point nicely put, with some supporting data, in Janna Beyond the inability of authoritarian govern- Malamud Smith, “Now That Risk Has Become Our ments to control the flow of information Reward,” New York Times, July 25, 1999 (Week in within their borders, individuals and groups Review), p. 15. This does not mean that citizens of advanced societies are casualty averse in any absolute will be able to act internationally without ref- sense. The data show that most Americans will accept erence to the state in a way and at a level high casualties if they can be justified on the basis of heretofore unimaginable. Mass action across threats to key interests. See John Mueller, “The Common borders is already establishing new interna- Sense,” The National Interest, No. 47 (Spring 1997). tional norms, and there is a good prospect that 82 See, for example, John Mueller, Retreat from Doomsday: non-governmental organizations and grass- The Obsolescence of Major War (New York: Basic Books, roots interest groups will have influence 1989), and Michael Mandelbaum, “Is Major War across even those frontiers guarded by au- Obsolete?” Survival, Winter 1998-99. 83 A brief but vivid account, with some examples, is Barbara 83 thoritarians. Crossette, “The Internet Changes Dictatorship’s Rules,” New York Times, August 1, 1999 (Week in Review), pp. 1, In democratic states, such developments 16. See also Akita Iriye, Cultural Internationalism and may promote stability by facilitating greater World Order (Baltimore, MD: Johns Hopkins University citizen participation in the political and civic Press, 1997).

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for their citizens may also be subject to sig- placement for an enfeebled Iranian royal nificant emigration, particularly of their most regime in the 1970s did not come from radical educated citizens. Advanced states may need leftist groups, but from the pre-modern Shi`a more technically educated workers, too, the religious community. So, too, we have seen a combination giving rise to unprecedented turn to pre-modern forms in much of the levels of emigration among educated elites Muslim world, among some Jews within and from those states that do not work to those outside of Israel, and within India in the form that do. This will make successful states more of Hindu nationalism. Pressures toward secu- diverse and cosmopolitan, and others more larization inherent in the Western technology prone to failure. that will flood much of the world over the next 25 years will not necessarily overcome learly, then, there are forces at work traditional ways, but might instead reinvigo- Cstraining the mythic fabric that links rate them. One consequence of psychological society to the state. Other strains may rend dislocation in individuals may be to drive the link between the individual and the them closer to their own social mores, and to anchors of authority in society itself. the extent that the state is seen as a legitimate expression of those mores, closer to the state During periods of great tumult, people as well. frequently turn to religion or ideology to explain change and to gain some psychologi- In short, some states may elect not to join cal security from its disruptions. As noted in rapid technological innovation or an inte- above, the dislocations of the Industrial grated global economy. Among such states Revolution helped produce the socialist ide- history will not have ended, and the world of ologies of the 19th and 20th centuries. On a contending “isms” will remain very much lesser scale, the dislocations of the post- alive. There is a chance, too, that those states World War II era in Western societies created might ally to oppose these developments. parallel social and political perturbations in Geopolitics could become, in essence, a form many countries: the undermining of urban of culture politics.85 The conflicts one might economies; rising divorce, suicide, and crime expect from such culture politics would not rates; and a significant decline in voting and exactly fit the definition of a religious war, other forms of political participation.84 It but there could be some striking similarities. makes sense, then, to ask what similar reactions we might expect from the tumult in our Even if secularization does make many collective future, and what those reactions inroads, the vistas along the path will not be might mean for state cohesion and effective- the same in all cases. Every culture that ness. accepts, or cannot resist, a synthesis of the old and the new, or between the West and the Since different societies begin from dif- rest, will find its own way to cope with ferent circumstances, their reactions to rapid conflict. What seems clear, as well, is that in- change will surely differ. Many in the West

think that its notion of modernity, where the 84 Fukuyama, The Great Disruption. sacred is privatized and secular values pre- 85 This possibility is, of course, consonant with Samuel dominate, is a model that other societies must Huntington’s The Clash of Civilizations and the Remaking invariably follow. But this is not so. The re- of World Order (New York: Simon & Schuster, 1996).

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dividuals in societies will have more options all countries. Some will be able to seize tech- as individuals than before. They will have nological and economic opportunities, while greater access to other ways of thinking, they others will find themselves threatened. Some will know more about other cultures than did will be able to establish the regulatory preceding generations, and they will have regimes and the social and political infra- greater opportunity to experience them first- structure necessary for economic growth, and hand. Hence, it seems likely that in more some will be able to introduce political insti- cases than ever before, an individual’s or a tutions that are responsive to the new group’s identification with the state may be demands of their citizens. But others will not. superseded by other forms of associations Some will wish to resist change but fail, gar- beyond the state, as well as within it in the nering the worst of all worlds. And perhaps form of ethnic, religious, ideological, or tribal most important, only some will find the lead- based organizations. ership they need to guide them through an era of considerable uncertainty. It also stands to reason that states lacking a secular cultural and historical heritage will The result will be that some states will be particularly vulnerable to the increased succeed in meeting the multiple challenges of porosity of cultural boundaries. Most modern global economic integration—we know this Western polities are culturally as well as po- because some have already found formulas to litically pluralist. Most traditional, do so.86 Some states will survive, but have non-secular cultures tend not to be either. such serious difficulties that their citizens turn to other groups (ethnic, cultural) to give hat are we to make of all this? The allegiance and seek shelter, which will further most persuasive conclusion that W undercut the state’s authority and capacity to emerges from looking at the pressures liable respond to challenges. Some states will disap- to be brought to bear on states, and on how states of different capacities may respond to pear, and new ones will be formed on the those pressures, is that we will have a mosaic basis of ethnic, national, or religious identi- of consequences—as we have always had. ties. Some states will fail, and in failing fall States will differ in various ways, in their into social and political chaos, exporting power and influence, their histories, and the refugees, famine, disease, and violence across degree to which their citizens give them their neighboring borders. allegiance. They will differ in their economic he ideal of universal human rights development, strength of social and political institutions, and demographic profile. They Twill also challenge the traditional will differ, too, in the extent to which the concept of state sovereignty. A small army of national identities in their midst predispose certain NGOs is carrying forward the old idea them to exist as nation-states, as multination- that state sovereignty is more a menace to in- al empires, or as stateless nations within an dividual human rights than a protector of evolving international system. them, and this idea is gradually being armed

The role and characteristics of states in 86 See again Weiss’ The Myth of the Powerless State; and “The the next century will depend on how they Thing That Won’t Go Away,” The Economist, July 31, respond to the challenges that will confront 1999, pp. 8-10.

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institutionally, most significantly in the civil servants, professional human rights lob- proposal to create an International Criminal byists and lawyers, and aid organization Court. The contentious case of Augusto trustees—formally accountable to no one— Pinochet, too, has illustrated the “sponta- really be trusted to know what is best in every neous” evolution of international law toward case, or any case? views that undermine sovereignty in favor of undifferentiated human rights criteria. And This is a question recently born as far as while the legal spillover of the NATO military the history of international relations goes. It campaign against Serbia on behalf of the will mature rapidly over the next 25 years, as Kosovar Albanians is still evolving, it may es- will several others. For example, it may tablish a powerful precedent in validating the become necessary to design some sort of legal ascendancy of the right to self-determination personality for political entities that are less over that of sovereignty within the United than states but more than mere groups of in- Nations Charter, which, famously, includes dividuals—such as Kosovo and the Kurdish both.87 Whatever the full range of its motiva- areas of northern Iraq. If we are to see more tions, the campaign in Kosovo was the efforts by minorities to establish zones of clearest example in modern times of a major autonomy for themselves, as seems likely, power or alliance intervening militarily into then how will an increasingly salient number the internal affairs of another sovereign state, of non-national institutions, such as the World avowedly on behalf of minority rights. Bank, the International Criminal Court (should one come into being), or UNESCO, Honest people disagree over whether this deal with such ambiguous entities? is a benign legacy or not. There are those who believe that a minimally decent world order In any event, there is little doubt that cannot arise so long as depredations such as transnational actors of other sorts will grow in those of Kosovo can go on with impunity number over the next 25 years. Some will rep- anywhere in the world. They applaud the resent positive responses to technological, erosion of sovereignty over such questions, as economic, and political challenges (multina- well as others.88 There are other observers, tional corporations, non-governmental however, who point out that international sta- organizations) and others negative responses bility depends on respect for the prerogatives (drug cartels, terrorist networks, and criminal of the state. And many object to Americans

assuming the right to decide unilaterally 87 Chapter 1, Article 1, paragraph 2, as opposed to Chapter 1, when some other country’s behavior exceeds Article 2, paragraph 7. America’s self-defined moral standards.89 88 See Marianne Heiberg, ed., Subduing Sovereignty: Moreover, others worry that the denaturing of Sovereignty and the Right to Intervene (London: Pinter, sovereignty begs the question of who gets to 1994). decide when a depredation is internationally 89 See Samuel Huntington, “The Lonely Superpower,” Foreign actionable—in other words, who gets to say Affairs, March/April 1999; and David Sanger, “America what is and is not a “just war”? Nor is it at all Finds It’s Lonely At the Top,” New York Times, July 18, 1999 (Week in Review), p. 1. clear what line of democratic accountability 90 Some of these issues are discussed in David Rieff, “The at the transnational level will substitute for Precarious Triumph of Human Rights,” New York Times that of the state.90 Can a host of international Magazine, August 8, 1999.

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cells). In some cases, these latter groups will happenstance of illness and death among take on certain aspects of statehood, control- leaders. Not every historian is convinced, but ling territory, levying taxes, even raising most believe that had it not been for the armies. hypnotic political skills of Adolph Hitler, World War II would never have happened. States will also find themselves in need of While Hitler is the 20th century’s most cooperation with other states, if they are to obvious example of evil enthroned, history seize the opportunities presented by global bears other examples from this century and changes and respond to the dangers. Of this other centuries, too. It is not possible to rule we may be sure. What we do not know is out the rise of “crazy states”91 with psycho- whether and how regional groupings of logically aberrant or evil leaders in the future, various sorts may emerge, and with what and the shock to the system that such a leader kinds of responsibilities and authorities. We can produce should never be underestimated. do not know whether the United Nations and In the future, it may be that, with weapons of other global political institutions will mass destruction more widely available, even continue to exist as creatures of states, or the unglued leader of a relatively small state whether they will be empowered to act in will exceed the threshold of danger to the certain areas in place of states. We do not system as a whole. know whether regional or global regimes will be established to prevent the spread of dan- The Military-Security Domain: “How gerous technologies and weapons, and if they will have the authority and ability to enforce Will Societies Protect Themselves?” their mandates. he military-security environment of his is a lot not to know, and there is Tthe next 25 years will be shaped by a Tyet more. At the risk of seeming unique and substantially unfamiliar set of po- quaint, it behooves us to note a final uncer- litical, economic, technological, social, and tainty. Not all of what befalls the world of cultural forces described elsewhere in this states over the next quarter century will be a study. As in the past, conflict will be driven function of how leaderships and populations by perturbations in the political order, social adjust to the challenges of new technologies dislocation, passionately held beliefs, or accelerating global economic integration. economic competition, and cultural division. The beginning of wisdom is perhaps to recog- In this section, however, the purely military nize that what counts is not only what is and security dimensions of the future are changing, but also what is not. There is still brought into focus. Societies will still need to the old-fashioned problem of geopolitics, and protect themselves in 2025, and they will nowhere does this problem look clearer—and have to do so against an unprecedented range more dangerous—than in the Pacific rim, of threats and actors. where the triangular relationship between As with most periods of rapid change, Chinese, Koreans, and Japanese holds the key both the actors and the means by which to peace or war.

Within the logic of geopolitics is the un- 91 Yehezkel Dror, Crazy States: A Counterconventional Strategy predictability of personality and the (Lexington, MA: Heath Lexington Books, 1971).

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violence is used in pursuit of political goals Pakistan.93 Misperception or miscalculation may shift abruptly. Non-state actors, individ- will remain possibilities and both may be ex- uals as well as groups, will gain power and acerbated by the introduction of new military influence, and many will have at their technologies. Conflicts could arise out of disposal alarming means of destruction. efforts to right perceived wrongs or to gain s- Many states may see the coherence of trategic advantage, and wars will still be national identification lose its grip at the indi- fought over disputed borders, resources, and vidual level, with critical implications for irredentist claims. The history of the 1930s their ability to mobilize and fight, as well as remains instructive, too, for the reversion to for the structure of their civil-military rela- assertive nationalism by leaders faced with tions. unsettled social and economic conditions is not beyond imagination. Conventional war— Even in a world in which major wars are ships, tanks, and planes—will remain the less frequent, and in which growing prosperi- most relevant modus operandi for most of ty adds incentive for the peaceful resolution these conflicts. of disputes, there will still be enough unsettling change to touch off any number of wars, Violence within states, on the other hand, internal upheavals, incidents of terrorism, and could reach unprecedented levels. Generated general mayhem. The end of the Cold War did by ethnic, tribal, and religious cleavages, and not mean the end of all conflict and, with a exacerbated by economic fragmentation and decade to ponder the emerging evidence, no demographic shifts, such violence will form sentient person can doubt the potential lethal- by far the most common type of conflict in ity of future conflict. the next quarter century. Brutish, nasty, not necessarily short, and potentially genocidal in We explore these trends and patterns in scope, these conflicts—mostly but not three parts. First, we look at what sorts of entirely in non-Western domains—could states, groups, or individuals will incline to result in major disruptions, killing hundreds use force. Second, we look at what kinds of of thousands of people each year.94 military capabilities are likely to be on the Undisciplined tribal or ethnic based paramili- loose for such use. And third, we look at the tary groups will often be the primary agents environment likely to be formed by the con- of such conflicts, which will involve soldiers junction of the two. and civilians alike. They may also take place nterstate wars will not disappear over Ithe next 25 years.92 Developed nations 92 See the arguments in “Is Major War Obsolete: An will be loath to fight each other, but as proven Exchange,” Survival, Summer 1999, pp. 139-52. in 1914, neither the bonds of interdependence 93 As noted below, a war involving India, Pakistan, and nor a taste for affluence can guarantee peace possibly Iran is not so very unlikely, but analysts differ over whether such powers should be defined as “major.” and stability indefinitely. Major powers— 94 Russia and China are two obvious Not that the toll from such wars is vastly different now from Cold War times, despite a common perception to the examples—may wish to extend their regional contrary. See Yahya Sadowski, The Myth of Global Chaos influence by force or the threat of force. (Washington, DC: Brookings INstitutino Press, 1998), p. Conflicts among old adversaries may 121; and Shashi Tharoor, “The Future of Civil Conflict,” continue, such as between India and World Policy Journal, Spring 1999, pp. 1-11.

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in urban areas or in other terrain that tends to beliefs, or seething resentment. Terrorists can neutralize the current technological advantages now exploit technologies that were once the of modern militaries. sole preserve of major states and pose attacks against large domestic population centers. While such conflicts need not disrupt the core strategic interests of major powers, they The growing resentment against Western will do so if they trigger larger interstate con- culture and values in some parts of the world— flicts, grossly violate internationally accepted as well as the fact that others often perceive the norms, or create massive flows of refugees, disease, and environmental degradation. The United States as exercising its power with arro- latter is particularly likely since such conflicts gance and self-absorption—is breeding a often generate humanitarian disasters that are backlash that can take many forms. Terrorism, hard to ignore in an age of mass communications. Yet major powers cannot intervene for 95 Government studies on this topic include: Combating humanitarian purposes without also intervening Proliferation of Weapons of Mass Destruction, Report of in the underlying politics that create such the Commission to Assess the Organization of the Federal troubles in the first place. The Somalias, Government to Combat the Proliferation of Weapons of Bosnias, Rwandas, Kosovos, and Haitis of the Mass Destruction, July 14, 1999; “Executive Summary,” Report of the Commission to Assess the Ballistic Missile world will not disappear, and neither will the Threat to the United States, July 15, 1998; Transforming dilemmas they pose. Defense: National Security in the 21st Century, Report of the National Defense Panel, December 1997; and W. here will also be a greater probability Cohen, Proliferation: Threat and Response, OSD Report Tof a far more insidious kind of violence to Congress, November 1997. Major private research in the next millennium: catastrophic terror- studies include: Fred C. Iklé, Homeland Defense ism.95 While terrorism itself is nothing new, the (Washington, DC: CSIS, 1999); and William Webster, et nature of terrorism and the means available to al., Wild Atom: Nuclear Terrorism (Washington, DC: tomorrow’s terrorists are changing. CSIS, 1998). Key periodical literature includes: Fred C. Iklé, “The Problem of the Next Lenin,” The National Future terrorists will probably be even less Interest, No. 46, Spring 1997; and Walter Laqueur, “The hierarchically organized, and yet better net- New Face of Terrorism,” The Washington Quarterly, worked, than they are today. Their diffuse Autumn 1998. Recent books include: Joshua Lederberg, ed., Biological Weapons: Limiting the Threat (Cambridge, nature will make them more anonymous, yet MA: MIT Press, 1999); Richard Danzig and Pamela their ability to coordinate mass effects on a Berkowsky, Biological Weapons—Limiting the Threat global basis will increase. Teamed with states (Cambridge, MA: MIT Press, 1999); Jessica Stern, The in a regional contingency, they could become Ultimate Terrorists (Cambridge, MA: Harvard University the “ultimate fifth column.”96 Terrorism will Press, 1999); Richard A. Falkenrath, et al., America’s appeal to many weak states as an attractive Achilles’ Heel (Cambridge, MA: MIT Press, 1998); Philip asymmetric option to blunt the influence of B. Heyman, Terrorism and America: A Commonsense major powers. Hence, state-sponsored terrorist Strategy for a Democratic Society (Cambridge: MIT Press, attacks are at least as likely, if not more so, than 1998); Ken Alibeck with Stephen Handelman, Biohazard: The Chilling True Story of the Largest Covert Biological attacks by independent, unaffiliated terrorist Weapons Program in the World (New York: Random groups. Still, there will be a greater incidence House, 1999), and Bruce Hoffman, Inside Terrorism (New of ad hoc cells and individuals, often moved by York: Columbia University Press, 1998). religious zeal, seemingly irrational cultish 96 Hoffman, Inside Terrorism, p. 196.

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however, appears to be the most potentially ultimate demise of stealthy systems and large lethal of such forms. Therefore, the United platforms. But “ultimate” can mean a long time, States should assume that it will be a target of and, as opponents try to defeat existing U.S. tech- terrorist attacks against its homeland using nologies, new technologies and ways of weapons of mass destruction.97 The United employing these weapons will abet the continua- States will be vulnerable to such strikes. tion of current U.S. advantages. The widespread adoption of MEMs into U.S. military technology, f that were not a sobering enough for example, may provide significant new quali- Iprospect, most advanced conventional military weapons and systems will also be tative advantages over a broad range of more broadly distributed between now and capability. New intelligence capabilities derived 2025. Domestic political and economic incen- from biotechnology, including the use of insects tives will lead to the development and sales of for selected purposes, may also be at hand. advanced aircraft, modern ground fighting vehicles, and new naval systems throughout the Nonetheless, many states will pursue world. Only cutting-edge systems will remain strategies to acquire today’s modern weapons. closely held. These weapons will no longer be cutting-edge technology by the 2015-2025 timeframe, but It is not even clear whether the major arms they may be widely available and, in local wars, exporters will cooperate to prevent the sales of could prove decisive.99 Just as likely, the rela- such weapons systems to states and other tively rapid spread of modern conventional groups that pose major potential threats to weapons could destabilize several trouble regional stability and peace. A minimal export zones and make regional wars both more likely control regime already in operation, the and far more destructive.100 The acquisition of Wassenaar Arrangement, could be enhanced, but this depends on the positive evolution of the such weapons will probably be pursued with international political climate. It also depends alacrity by military regimes and other regimes to some degree on the ability of the exporting 97 states to find alternatives to legacy industries See Ian O. Lesser, Bruce Hoffman, John Arquilla, David Ronfeldt, and Michele Zanini, Countering the New still heavily in the business of manufacturing Terrorism (Santa Monica, CA: RAND, 1999); and Zalmay weapons. Khalilzad, David Shlapak, and Ann Flanagan, “Overview of the Future Security Environment,” Sources of Conflict Conventional weapons systems will be char- in the 21st Century: Regional Futures and U.S. Strategy, acterized by an increasing emphasis on speed, Zalmay Khalilzad and Ian O. Lesser, eds. (Santa Monica, stealth, lethality, accuracy, range, and networked CA: RAND, 1998). operations. The era of Industrial Age platforms 98 See Michael G. Vickers, Warfare in 2020: A Primer operating with impunity in the open may become (Washington, DC: Center for Strategic and Budgetary outdated, as long-range precision capabilities Assessments, 1996). 99 proliferate in all dimensions of warfare (air, sea, Obtaining equipment is one thing, assimilating it intelligent- and land).98 There will be a greater premium on ly is another. See Chris C. Demchak, Military Organizations, Complex Machines: Modernization in the highly integrated and rapidly deployable forces. U.S. Armed Services (Ithaca, NY: Cornell University The age-old interaction of capabilities and Press, 1991). counter-measures will continue, of course, and 100 See John Weltman, World Politics and the Evolution of War physics probably favors detection and the (Baltimore, MD: Johns Hopkins University Press, 1995).

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for whom robust military capabilities play a effectively. Their effectiveness is subject to major role in internal security. uncontrollable climatic elements and the lethality of chemical weapons per unit of While the market for 20th century conven- weight is generally low.103 This makes tional weapons will remain brisk, some chemical weapons generally suitable for use important states will choose acquisition strate- in attacking conventional armies concentrated gies to compete asymmetrically against major in the field, or against small groups of sur- powers. These potential adversaries will invest prised or immobile civilian populations. But in relatively inexpensive systems intended to such weapons are unlikely to be a preferred deny the United States the advantages that nat- tool for terrorizing entire cities. urally accrue with technological superiority. Weapons of mass destruction would serve this Biological weapons are the most likely purpose.101 Developing such weapons does not choice of means for disaffected states and require a large industrial base or extensive sci- groups of the 21st century. They are nearly as entific research support as it once did. The easy to develop as chemical weapons, they are international norms against the spread of these far more lethal, and they are likely to become weapons are being challenged, and the global easier to deliver.104 At present, many biologi- export control regimes covering nuclear, cal agents require special technical expertise to chemical, and biological weapons will not ef- distribute them effectively, such as drone fectively keep them from state and non-state aircraft that are capable of dispersing agents in 102 actors that are determined to acquire them. the right concentrations at the right altitudes and Some countries will supply these weapons, or under the right meteorological conditions. This components for them, for commercial and po- is not simple, as extensive but unimpressive litical purposes. Problems will also exist in Iraqi efforts in the 1990s have shown. On the ensuring the security of these weapons and other hand, given enough time, perfecting weapons components in individual countries. methods of dispersal will take far less technical he extent to which nuclear, biologi- sophistication than that required to build a Tcal, and chemical weapons will be nuclear bomb. developed and used will depend on a variety Moreover, bio-weapons can be produced at of factors. Nuclear materials and technology small, dual-use facilities, and then reproduced are available, but the cost of producing nuclear weapons is high, as are the risks of 101 Cohen, “Preparing for a Grave New World.” detection. The development and use of radio- 102 SECDEF address at the Conference on Terrorism, Weapons logical weapons would be easier and cheaper. of Mass Destruction, and U.S. Strategy, University of By pairing conventional explosives with ra- Georgia, April 28, 1997; SECDEF News Conference, dioactive materials like plutonium, such a Release of OSD Report on WMD Proliferation, November weapon could generate both a major explo- 25, 1997; SECDEF Annual Report to the President and the sion and contaminate a large surrounding area Congress, March 1998, p. 26; and Acting CIA Director for an extended period. George Tenet, Testimony to the Senate Armed Services Committee, February 5, 1997. 103 There are some exceptions, VX being the most important. Chemical weapons are much easier to 104 produce than nuclear and radiological Weight for weight, microbial agents such as anthrax are thousands of times more potent than nerve gasses such as weapons, but they are harder to store and use sarin. Lederberg, p. 286.

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in mass quantities using technologies and pro- likely increase. Whether states take such a step cedures common to micro-breweries and will be a function of many factors, primarily civilian pharmaceutical labs. A bio-weapon related to the threats they see within their own arsenal can be acquired for as little as $10,000- region. The literal costs of developing nuclear $100,000.105 Several countries are pursuing weapons, the political costs associated with biological agents, and some are getting help their use, and the difficulty of hiding their de- from outside their borders. Biological weapons velopment, make them less likely to emerge as experts formerly employed by the Soviet Union a primary instrument of state policy. Still, have testified that the extent of the Soviet given their vast destructive power, the United program was massive, but that control of the States will continue to deal with the threat physical and intellectual assets of the former posed by nuclear weapons throughout the next program is virtually nonexistent. Accordingly, 25 years. There will be no abolition, and even a variety of improved toxins and biological the existence of the Non-Proliferation Treaty agents are becoming more widely available. and wide ratification of test ban treaties will Technological developments in genetics and not significantly reduce the problem. biotechnology portend even more sinister advances with the design and deployment of Non-state actors will also use these genetically engineered pathogens that could weapons in direct attacks. Such attacks expose thwart most antibiotics and vaccines, and the Achilles’ heel of the modern world. All readily outcycle our detection, antidote devel- open societies are vulnerable to extensive psy- opment, and distribution timelines. These could chological and physical harm from weapons of mass destruction. The potential for covert include genetically-altered smallpox.106 delivery of these sinister products will be high, Given such circumstances, the prevention much higher than during the last half century. of the proliferation of biological weapons Covert threats are more likely than overt ones through treaties and a regime of export controls since they avoid easy attribution and hence is unlikely to be effective. A Biological likely reprisal. The immense lethality, portability, Weapons Convention (officially, the Convention and accessibility of WMD will be major sources of concern over the whole of the next quarter on the Prohibition of the Development, century. Production and Stockpiling of Bacteriological [Biological] Toxin Weapons and on Their issile threats will also continue to pro- Destruction) has been signed and ratified by 140 Mliferate. While the regime of missile countries. But since the treaty was open to sig- producers, known as the Missile Technology nature in April 1972, the number of countries Control Regime (MTCR), will survive and may known to have or suspected of having biological weapons has doubled.107 The BWC has no en- 105 forcement or inspection mechanism, although Falkenrath et al., p. 112. 106 See Richard Preston, “The Demon in the Freezer,” The New negotiations are underway to provide for them. Yorker, July 12, 1999, pp. 44-61. 107 J.D. Holum, Remarks for the Fourth Review Conference of U.S. deterrence policy will remain effec- the Biological Weapons Convention (Geneva: U.S. Arms tive against acknowledged nuclear states, and Control and Disarmament Agency, November 26, 1996). the deliberate use of these weapons will See also Robert P. Kadlec, Allan P. Zelicoff, and Ann M. remain a low probability. But as other states Vrtas, “Biological Weapons Control: Prospects and acquire nuclear weapons, that probability will Implications for the Future,” in Lederberg, pp. 95-111.

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be strengthened, it is becoming increasingly easy nerable to such methods since our economies for states not party to the MTCR to master the and military forces are heavily, and increasingly, technology necessary for such production. If Iran, reliant on advanced information technologies. Iraq, North Korea, Pakistan, and India can foil the While countermeasures can be developed, this best efforts of the MTCR, the prospect is that even new form of warfare will be an important part of less technologically sophisticated states may be the military landscape for some time. able to do so in future. In addition to weapons of mass destruction, Ballistic and cruise missiles are liable to be there is a new concept—the “weapon of mass the long-range weapons of choice, given their ca- disruption”—to which modern societies, rather pabilities to threaten land and sea targets from than their militaries, are increasingly vulnera- afar. The accuracy and lethality of such systems ble.111 As noted above, the computational and will increase significantly between now and 2025, information processing capacities generated by even for the delivery of conventional ordnance.108 the computer revolution are critical to modern fi- The competition between missile developments nancial, banking, energy, telecommunications, and defensive systems will be a key operational medical, and transportation networks. The health, challenge over the next several decades. Large- welfare, and prosperity of the citizens of the de- scale missile attacks will be able to overwhelm veloped world depend upon this infrastructure. defensive systems, despite considerable improve- But that infrastructure is an enticing target to dis- ments to them. American bases abroad will affected states and terrorists, who can achieve become vulnerable to these weapons.109 almost as much damage with a keyboard as with Additionally, a number of new lethal and non- a bomb. Imagine, for example, a well-planned lethal technologies will be developed and fielded, including microwave, directed energy, and 108 Center for Counterproliferation Research, The NBC Threat chemical/biological agents that could give small in 2025 (Washington, DC: National Defense University, powers the ability to thwart power projection op- 1997). erations by any major power. 109 See Paul Bracken, “America’s Maginot Line,” The Atlantic Monthly, December 1998, pp. 85-93; and Paul Kugler, In addition to “traditional” weapons of mass Changes Ahead: Future Directions for the U.S. Overseas destruction, new forms of Strategic Information Military Presence (Santa Monica, CA: RAND, 1998). Warfare (SIW) will be developed and perhaps 110 See Frank J. Cilluffo, et al., Cybercrime, Cyberterrorism, used as a new form of offensive warfare. SIW Cyberwarfare….Averting an Electronic Waterloo involves cyber-attacks against major national (Washington, DC: CSIS, 1998); and Roger C. Molander, command systems and military-related operating Peter A. Wilson and Robert H. Anderson, "U.S. Strategic systems.110 Bytes will not replace bullets and Vulnerabilities: Threats Against Society," in Zalmay M. bombs in conflict, but those who cannot match Khalilzad and John P. White, Strategic Appraisal: The the conventional strength of major powers will Changing Role of Information in Warfare (Washington, DC: RAND, 1999), pp. 253-80. have strong incentives for such asymmetric 111 st attacks. Given that the commercial world, not Including the United States. See Preparing for the 21 Century, Commission on the Roles and Capabilities of the governments, is developing these technologies, United States Intelligence Community, 1996, p. 27; and that military telecommunications are heavily Organisation for Economic Cooperation and Development, dependent on commercial access, the potential 21st Century Technologies—Promises and Perils of a exists for serious disruption of routine military Dynamic Future (Paris: OECD, 1998), pp. 14-5; and operations in both peacetime and war. The Walter B. Wriston, “Bits, Bytes, and Diplomacy,” Foreign United States and its allies are particularly vul- Affairs, September/October 1997, p. 172.

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attack against the air-traffic control network on its own continued access to space.113 But the the east coast of the United States as more than number of states and groups capable of exploit- 200 commercial aircraft are trying to land in rain ing space as an environment is expanding as a and fog on any given weekday morning. result of commercialization. More than two- thirds of today’s 600 satellites are foreign-owned, Numerous incidents of computer penetration and of the more than 1,500 new vehicles that will have already occurred, often mounted by be launched over the next decade, most will be teenagers using relatively unsophisticated internationally owned or operated by various systems. Better educated or well-financed consortia. This raises a major intelligence chal- “automata assassins” could do far more damage, lenge, for, as space systems proliferate, it will be especially if they are abetted by insider person- more difficult to determine their capabilities and nel. A plethora of new tactics and techniques to who has access to their data. “infovade” critical systems now exist. Modern hacker techniques such as “sniffers,” logic Since satellites are the ultimate pre-posi- bombs, mutating viruses, and Trojan horses, are tioned asset and, because they are so central to increasingly common. The innate complexity military operations, what happens in space will and connected nature of information-based be critical.114 Most likely, weapons will be systems generate opportunities for hackers, ter- deployed in space. Some systems may be rorists, or antagonistic states to cause mischief capable of direct fires from space against and harm. Our increased reliance on these infor- targets on earth. It is possible that international mation systems ensures that disruption to them treaties will ban such weapons, as is the case will create serious dislocations within our today for weapons of mass destruction, but society. No nation in the world is more vulnera- that is not assured. What is clear is that space ble in this regard, or has more to lose, than the will become permanently manned. United States. Space will also enter into competitive uter space, as well as cyberspace, will planning and strategies in ways that are Obecome a warfare environment. Space- based systems are increasingly critical to both barely conceived today. Future adversaries international commerce and military capabilities. By the early 21st century, such systems will offer 112 See Lt. Gen. Patrick M. Hughes, Director, Defense such an invaluable advantage that continued Intelligence Agency, “Global Threats and Challenges to access to space will be considered synonymous the United States and Its Interests Abroad,” Statement for with national security. Space access will become the Senate Select Committee on Intelligence, February 5, as important as access to the open seas was for 1997. 113 Institute for National and Strategic Studies, Strategic major powers in the 18th,19th, and 20th centuries. Assessment 1999 (Washington, DC: National Defense Not surprisingly, therefore, there are complica- University, 1999) tions ahead. 114 See Thomas T. Bell, Weaponization of Space: Understanding Strategic and Technological Inevitabilities, The benefits to global commerce derived Occasional Paper No. 6 (Air University, Maxwell Air from space have vastly increased investment in Force Base: Center for Strategy and Technology, Air War space technology and expertise, a trend that will College, January 1999); Dana J. Johnson, Scott Pace, and no doubt continue. The national security implica- C. Bryan Gabbard, Space Emerging Options for National 112 tions of such investments are dramatic. With Power (Santa Monica, CA: RAND, 1998); and more than $100 billion invested today, the United Christopher Lay, “Can We Control Space?” presentation to States has a clear economic interest in ensuring Electronics Industry Association, October 1997.

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will realize that assured access to information essentially a bilateral interaction between two is a key component of U.S. military strategy superpowers with shared vulnerabilities and and, specifically, to the sort of military oper- known capabilities. Such conditions no longer ations envisioned by the Joint Chiefs of exist, nor will they in future. A wide diffusion Staff.115 Thus, negating U.S. conventional su- of actors and destructive capabilities will periority through the denial or negation of instead characterize the context of deterrence. information sources based in space is an Exactly who is being deterred, exactly which obvious and lucrative strategy for some coun- value hierarchies and decision systems need to tries or groups to employ. be affected, what relative costs and benefits are at issue, and what behaviors are supposed to be All of this suggests that information superi- shaped by deterrence, will all be very problem- ority will be relative. While the United States will atic questions.117 Rogue irrationality and the retain relative superiority in C4ISR (command, potential for misperception or ignorance control, communications, computers, intelli- remain possibilities, as well. In short, Cold War gence, surveillance, and reconnaissance) systems concepts will have to be revised, adapted, or in development and integration, the nature of infor- some cases abandoned in the face of new cir- mation technologies and their ubiquity in the cumstances. commercial market place make any presump- tions about assured information superiority Of crucial importance, too, the deterrence unwise. Globally, military forces will rely on problem is also likely to be inverted and thrown highly networked, space-based and ground-based back at the United States by many actors and in intelligence and reconnaissance systems, but several forms. It is one thing for the United States backup systems will be available to protect to deter others by threatening use of nuclear against successful anti-space operations. Due to weapons or massive force, and to make such the wide availability of commercial sources of threats not only credible to others but also ac- space-supported information, by 2025 the United ceptable to Americans. But it is an entirely States will no longer enjoy a monopoly in space- different matter to avoid being deterred by threats based C4ISR. It will, however, maintain a to use weapons of mass destruction against the preponderant edge, using its technical systems to United States, against U.S. forces abroad, or produce timely and usable information.116 against U.S. allies. While the United States will remain superior to all rivals in measurable hat do these developments portend military capabilities over the next 25 years, there for the strategic environment of the W are ways that “bronze” technology in the hands future? Most essentially, they mean that both of a potential adversary can blunt “gold” technol- conventional and nuclear deterrence will ogy in our own hands. If more countries acquire remain a priority in the coming century, but weapons of mass destruction, and the ability to will be harder to achieve than ever before. The predictability of deterrence cannot be assumed 115 U.S. Department of Defense, Joint Chiefs of Staff, Joint based on Cold War experience for several Vision 2010 (Washington, DC: USGPO, 1996). reasons. 116 See Roger C. Molander, Peter A. Wilson, David A. Mussington, and Richard F. Mesic, Strategic Information First, the convenience of focusing on a Warfare Rising (Washington, DC: RAND, 1998). single antagonist has been eclipsed, along with 117 Keith Payne, Deterrence in the Second Nuclear Age the comforting knowledge that deterrence was (Lexington: University of Kentucky Press, 1996).

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deliver those weapons in a wide variety of intelligence and a bulwark against catastrophic venues, the flexibility and credibility of U.S. surprise in the future. Antagonists who share our regional security policies could be sharply strategic culture and values, who have similar limited despite overall U.S. military superiori- political institutions, and who maintain the same ty. This is the problem of inverted deterrence. sense of proportionality or rationality about their interests and the means employed to secure e should also expect to be both them, are not our likeliest adversaries in the Wstrategically and tactically surprised future. To assume otherwise, as one strategist despite our prowess in the information revolu- has noted, reflects "an a priori detachment from tion. History is in many ways little more than a the well-springs of conflict and violence in the cavalcade of such surprises. As suggested modern world."118 above, no amount of technology will ensure perfect intelligence about the capabilities or in- hile new actors and new weapons tentions of every possible opponent. Wwill change the character of conflict Generating knowledge and insight from raw in the next century, the essence of war will data requires the analytical capacity of the remain the same. States, groups within states, human mind, and human intelligence will and extra-national organizations will still rely remain a key component of any first-rate intel- on force and the threat of force to pursue a ligence operation. We should remain humble variety of political, economic, and military about the ability to predict events or the reac- aims. Asymmetries in both capabilities and ob- tions of adversaries to our own initiatives. The jectives will be exploited in the onset, range of variables is endless, and our potential prosecution, and termination of conflict. Since enemies will be both intelligent and adaptive. human emotions will still infuse warfare, They will try to deny or distort any information conflict will not be limited to purely rational that we may process into useful intelligence. If goals, nor can we count on rough proportional- history is any measure, specific predictions will ity between ends and means. Fear, uncertainty, never unfold exactly as foretold. risk, and ambiguity will still characterize conflict despite the advent of unprecedented One underlying reason for this is cultural. levels of information technology.119 That is Strategic surprise is abetted by mirror imaging— because, not least, clever and determined ad- viewing future opponents as having similar versaries will find new methods of deception values or beliefs to one’s own when they in fact and denial to thwart superior U.S. technical ca- do not. Some leaders and societies are motivated pabilities—such as burying communications by values and goals that are different if not anti- cables so that U.S. intelligence assets cannot thetical to our own, and their resort to extreme “hear” from space. Ultimately, as in the past, violence—often against civilian populations— the character and conduct of future conflict will doubtless surprise and shock us in the future will be influenced by who is fighting whom, as it has in the past. We may not comprehend how, and over what. Surprise will remain a either the stakes or the commitments that some opponents may make in using such violence. 118 Lawrence Freedman, "The Revolution in Strategic Affairs," Since conflicts frequently occur from miscalcu- Adelphi Papers 318, 1998, p. 77. lations borne of ignorance or misperception 119 See Barry Watts, Clausewitzian Friction and Future War, about opposing views, knowledge of foreign McNair Paper 52 (Washington, DC: National Defense cultures is a necessary component of strategic University, October, 1996).

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risk, not because technology will fail us, but gaps, potential challenges to alliance relation- because our judgments may not anticipate the ships could also arise from burden sharing and full range of strategic contingencies.120 risk sharing disputes. As always, unequal burdens and risks will make creating coalitions Nevertheless, presuming continued invest- of the willing more difficult. ment at roughly today’s resource levels, no state will acquire the strategic mobility and ex- Nor will the causes of war change in their peditionary capabilities that currently provide essence. Men have always fought for reasons the United States with global reach and sus- that some other men could not understand. tained combat power. But U.S. military That will still be the case. New forms of ideo- superiority will continue to rest on the perfor- logical struggle cannot be ruled out, and mance of educated and well-trained military neither will religion disappear. Such motiva- forces and appropriate military doctrines as tions will generate intense passions and will well as modern equipment. While technology ensure that tomorrow’s conflicts are not fought is a crucial enabler, it is only one component of solely according to American definitions and 121 military capability. Military power is more rules of conflict. War will not be like a video than the sum of the various armed services or game, and although American forces may face the size of the defense budget. Continued some contingencies with dispassion, we national support for the military and the cannot count on our adversaries taking the preservation of the political will to pursue same attitude.123 national interests will remain necessary ingre- dients of success. learly, there are new challenges in our future, especially for a U.S. military The United States will also retain its tradi- C strategy that has relied on forward-based and tional advantage in high technology, but the forward-deployed forces as a key component of blurring of man, machines, and information that strategy. The permanent stationing of U.S. systems will accelerate.122 As has always been forces abroad will become more difficult to the case, having new devices is one thing, and sustain. The political cost of such bases within integrating them into the human subculture of the military is another. American commercial American alliances will likely rise, as will the successes should also keep the United States vulnerability of such forces to attack with bal- the leader in command and intelligence system development, systems integration, and infor- 120 See “Making Intelligence Smarter: The Future of U.S. mation management. Intelligence,” Report of an Independent Task Force, Council on Foreign Relations, February 1996. At the same time, however, America’s coali- 121 For eloquent testimony to this point, see Stephen Ambrose, tion partners will lag behind American collective Citizen Soldiers (New York: Simon & Schuster, 1997). achievements in high technology and the inte- 122 But this will not happen automatically, and there are bu- gration of advanced computational capabilities reaucratic impediments to its progress. See Andrew into advanced military systems. This will lead to Krepinevich, “Emerging Threats, Revolutionary Capabilities, and Military Transformation,” Testimony widening gaps in compatibility and interoper- before the Senate Armed Services Committee on ability that will affect the ability of allies to Emerging Threats and Capabilities, March 5, 1999. operate with the United States in an integrated 123.See Robert H. Scales, Future Conflict (Carlisle, PA: U.S. fashion. In addition to technologically-driven Army War College, 1999).

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listic missiles, cruise missiles, terrorism, and definition of national security is appropriate to weapons of mass destruction. The latter cir- such a circumstance. cumstance may erode support for such bases from the home front. Taken together, the pres- In short, we have entered an age in which sures against the permanent forward basing of many of the fundamental assumptions that U.S. military forces have profound implica- steered us through the chilly waters of the Cold tions for U.S. strategy, power projection War require rethinking. In the decade since the capabilities, and alliance relationships. fall of the Berlin Wall a start has been made, but a start is not good enough. The very facts of The future strategic environment will there- military reality are changing, and that bears fore be one of considerable turbulence. Stability serious and concentrated reflection. The reflex- may simply not be achievable at small cost—or ive habits of mind and action that were the at any cost—and riding out the storm at anchor foundation for U.S. Cold War strategy and is not an option. The international system will be force structures may not be appropriate for the so fluid and complex that even to think intelli- coming era. How the United States and other gently about military issues will mean taking an states respond to these changing dynamics will integrated view of political, social, technologi- determine the relative peace and security of the cal, and economic developments. Only a broad next century.

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II: A World Astir undertaken below in five sections, is still necessary to capture the shape of the world ahead.

f nothing else, the intellectual investment Greater Europe Irepresented by the preceding section proves that the world is a vast and complicated uring the past century, Europe has had place about which our knowledge is limited and Da very significant impact on U.S. our powers of forecasting uncertain. But it offers national security. The United States fought two more than that. A composite picture of global world wars and sustained a 40-year Cold War dynamics suggests a plausible range of influ- with the Soviet Union to prevent Europe from

ences that will affect regions and countries. It being dominated by a power with interests suggests, too, that regions will not be as self- inimical to its own. In so doing, the United contained in 2025 as they are today. States expended enormous financial and military resources and risked its own survival Nevertheless, global dynamics are not as a state. wholly determinative, and they are not uniform across the globe. That is why a regional analysis,

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Greater Europe—which includes the coun- European Union manages to transform itself tries of western Europe, eastern and central into a federal state with a unitary foreign and Europe, and Russia—will retain lasting impor- security policy, or whether a failed effort to do tance for U.S. security interests in the next so leads to re-nationalized security policies.128 quarter century for an array of reasons.124 Second, Russia’s post-communist future could Greater Europe will have a population of ap- mire Europe in pressing security concerns if proximately 761 million by 2025.125 An that future produces either chaos and disinte- economically integrated European Union gration or a reborn authoritarianism prone to would have an economy slightly larger than imperial ambition. A third source of trouble that of the United States.126 This region will could come from the states located between remain an important center of international western Europe and Russia, where the trade and finance, a pivot of scientific and tech- prospects of economic and political reform nological innovation, a region capable of vary markedly. deploying sophisticated military capabilities, and a significant actor in global politics. 124 In this study we use “western Europe,” not “Western Europe’s importance to the United States Europe,” and the same goes for eastern and central also rests on cultural factors. Most Americans Europe. We have a specific reason for so doing. Capitalization of these terms, which settled into a pattern trace their historical and cultural roots to during early Cold War times, indicated a political/ideolog- Europe, and will continue to do so throughout ical disposition: West meant democratic and East meant st most of the early 21 century. More important, Communist. This made sense, for through capitalization America’s political institutions and philoso- English usage gave us the ability to distinguish between phies are essentially European, and the region the merely geographical and the abstract. Today, obvious- will remain the largest and strongest communi- ly, this distinction no longer applies—although we still use ty of states sharing the basic democratic values the cultural phrase the West, as distinct from the geo- that undergird U.S. political culture. It is also graphical term the west, to indicate the domain of the region of the world most tightly bound to free-market democratic countries whose intellectual origins are to be found in the Renaissance and the the United States by an unprecedented array of Enlightenment. 127 economic, cultural, and political ties. 125 U.S. Bureau of the Census figures and projections, 1999. 126 1996 base GDP figures by country are drawn from 1998 For all these reasons, Greater Europe’s evo- World Development Indicators (Washington, DC: The st lution in the 21 century and its relationship World Bank, 1998), pp. 180-2. For growth rates used to with the United States will be as important to derive 2025 figures, see OECD, The World in 2020, p. 92. U.S. national security interests as it has ever It is worth noting that these OECD statistics were been. But there is yet another reason why this compiled before the 1997-98 Asia crisis. But at the time of region is liable to be important: it could become this writing, there is no inclusive post-crisis data set from which to draw. a major source of trouble—trouble that could 127 take three intersecting forms. See Paul S. Schroeder, “The New World Order?” Washington Quarterly, Spring 1994; and Daniel Deudney First, the evolution of west European insti- and G. John Ikenberry, “The Logic of the West,” World Policy Journal, Winter 1994. tutions over the next quarter century will likely 128 See generally Robert Blackwill, ed., The Future of spark economic competition, diverging politi- Transatlantic Relations: Report of an Independent Task cal interests, and serious tensions with the Force (New York: Council on Foreign Relations, February United States. This will be so whether the 1999).

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n the coming decades, three critical over 60 by 2025—and shrink from approxi- Imacro-social, economic, and political mately 148 million in 1995 to approximately forces will strongly affect the states of Greater 139 million in 2025 largely due to low birth Europe. First will be changing demographic rates and acute health and environmental patterns and the resulting need for new social crises.130 Russia’s aging population will policies. increase pressures for social spending, but problems of unemployment and a non-func- With the exception of Turkey, no state in tional tax collection system will make it hard to Europe today even maintains a population re- raise adequate funds. Worse, Russia’s dire placement rate, and this trend is unlikely to economic conditions will probably stymie the

change through 2025. Aging populations strain adoption of anything more than stopgap existing pension provisions as the number of measures across the range of social policy. workers paying into the system declines Moscow’s inability to address such problems relative to the number of retirees.129 Fears of will add to those social tensions, reducing politically unsettling migrations from the EU’s further the legitimacy of the central govern- periphery are likely to yield immigration ment. policies far more restrictive than those in operation today, closing off one available means of In the states of eastern and central Europe, countering prevailing demographic trends. It is the critical challenge will be two-fold: whether not even clear that unrestricted immigration governments can rebuild the social safety nets within the EU will last 25 years, due in part to that were destroyed after the fall of the Berlin different historical and cultural dispositions toward immigration. 129 Sheetal K. Chand and Albert Jaeger, IMF Occasional Paper 147: Aging Populations and Public Pension Schemes East of the European Union, a similar de- (Washington, DC: International Monetary Fund, 1996), mographic story yields a different set of p. 12. possible outcomes. Russia’s population will 130 All population figures, here and below, are drawn from the both age—25 percent of the population will be U.S. Census Bureau’s International Database.

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Wall; and whether societies can maintain their relationship between improving economic nascent democratic political cultures in the face prospects and the institutionalization of demo- of episodic economic stress. cratic governance is to some extent circular. Economic prosperity cannot guarantee political Second, economic growth rates will be a stability—but it helps. So whether in Russia or major factor in the region’s prospects. The Romania or Latvia or Poland, good times will achievement of a common EU foreign and make it easier for reformers to gain support for security policy, as well as the success of the their future visions, and lean times will make it euro, will require a growth rate at the upper end harder. The level of integration between eastern of the current OECD forecast range—an and central Europe, including Russia, with the average of 2.5 percent or better over 25 rest of the world will also play an important years.131 Lower growth rates could limit the role in the area’s prospects. If global economic European Union to the creation of common dynamics are essentially healthy, there will be a economic, fiscal, and monetary policies, and it greater impetus to adopt international best could possibly doom the euro. These lower practices, and that will spur positive policies growth rates could also place at risk the ability for the region. If international economic of current members or EU aspirants to attain dynamism stumbles, such incentives will be the economic targets required by the Union—a weaker and their positive impact smaller. condition states may be unwilling to resolve through difficult structural adjustments. Third, political leadership will play a vital role in determining the region’s future. For the For the west Europeans, it will be especial- European Union, bold leaders reared mostly in ly critical whether they find a way to reconcile the post-Cold War period could build on their their deeply embedded views on welfare with experience with a common European currency the new macroeconomic orthodoxy sweeping and the unimpeded movement of goods and the world. The future of the euro may well be at persons across state boundaries to create a stake. Some believe that the initial fall in the common foreign and security policy. Absent euro’s value over the first six months of 1999 such leadership, states in the European Union was mainly the result of an expectation that may be unwilling to yield sovereignty to a U.S. interest rates would rise. Others, however, supra-national body. have seen a structural cause in the relationship between the size of Europe’s welfare function While Russia’s political system will and the foreign exchange value of its currency. probably not achieve a fully institutionalized Expensive welfare states tend to have low democracy, strong leadership committed to de- growth economies, which leads central bankers mocratic ideals will be crucial to prevent to lower interest rates in order to stimulate the disastrous backsliding. Such leadership would economy. That creates trade surpluses, but it enable the central government to retain some also devalues the currency, making efforts to re- measure of control over newly empowered structure the EU’s approach to welfare crucial regions. It could also help to ensure continued to the future economic success of the European aid and investment from the OECD countries Union. and international financial institutions to what will remain a precarious economic and political Economic growth rates will also have a major impact elsewhere on the continent. The 131 OECD, The World in 2020, p. 92.

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system. Without a democratically oriented icant leadership role within the international leadership, Russia may disintegrate, or a strong arena. authoritarian leadership may emerge in its stead. If the political integration and economic expansion of the EU go as planned, it could The danger posed by poor or divided lead- help to institutionalize democratic governance ership elsewhere in Europe will be a freezing of and market economies in at least some neigh- national futures in limbo between the democra- boring countries to the south and east. As tic West and the problematics of Russia. The important, it would finally put to rest any lin- Czech Republic, Poland, and several other gering fears that the major European countries states “in the middle,” so to speak, have deep would ever again go to war with each other. Western cultural roots, whether through the Many believe that it would also create a like- impact of religion, history, geographical minded and similarly powerful partner for the propinquity, or all three. Others, to one extent United States with which to share the burden of or another, do not. At the outer edge of the Cold global leadership. War, all these societies are being pulled toward the West, but not equally or with similar results. By 2025, a mature European Union could The quality of political leadership over the next be a successful economic, monetary, and trade 25 years will be critical to determining which union, with a common justice and legal struc- of these societies find the will and way to ture. It would pursue a common foreign and change themselves into the states they now security policy under the leadership of its wish to be, and which will not. The result will Secretary-General of the European Council and mark a new cultural and political boundary for High Representative for the Common Foreign the future. and Security Policy. It would assume primary What follows is an analysis of a range of responsibility for Europe’s own security, based plausible alternative futures for Greater on a unified headquarters and staff for an all- Europe. It begins by depicting a region European defense force. It would most likely enjoying relative stability and prosperity and include some twenty states, with new members assays the conditions conducive to such good coming from central and eastern Europe. There fortune. It next turns to less positive alterna- is no more than a fifty-fifty chance, however, tives from the U.S. point of view, similarly that Turkey will become a member of the EU seeking to isolate likely causal factors. during this period.

n one view of the region’s future, the Uncertain is whether the EU will invite the IEuropean Union would continue to be at Baltic States or Ukraine to join, given their the forefront of many of the positive trends proximity and historical ties to Russia. highlighted in the discussion of global Economically, the Baltic States will probably dynamics. It will continue to be the prototypi- meet the criteria, but Ukraine probably will not. cal case of a group of states, committed to Russian opposition will be a significant market-based liberal democracy, that relinquish obstacle, especially as the EU accrues serious increasing degrees of sovereignty to achieve military-strategic functions. If the EU takes in greater economic success. That effort, in turn, the Baltic States and Ukraine, it risks a signifi- would result in the EU assuming a more signif- cant further deterioration of its relationship

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with Russia. If it does not take them in, it per- NATO’s operational military command struc- petuates a series of unsettled relationships. tures would gradually disappear. The U.S. military presence would probably diminish hatever its precise size, a mature sharply, though the United States might still WEuropean Union would be a global remain engaged in peacetime through periodic political, economic, and technological force. deployments. The political entry to Europe that Annual growth rates averaging over 2.5 percent, U.S. leadership of NATO provides today would and concomitant productivity gains, would drive diminish. a successful euro and rival U.S. GDP growth.132 If this occurs, the euro would become a main Even if the EU were to build a unified and reserve currency and unit of international independent military structure, a significant exchange. Unless the euro appreciated too military technology gap would exist between rapidly against the dollar, this would further EU the United States and its European allies. The competitiveness in international trade and United States would continue to spend more on finance. Such economic success would provide a defense than its EU associates combined. The sound basis for addressing social welfare establishment of a single, integrated European problems brought on by aging populations. defense industry could increase European self- sufficiency in defense, but only if the Europeans The EU would be responsible for the were prepared to expand their defense spending defense of its members and capable of re- and procure their arms and equipment almost sponding effectively to regional security exclusively from this industry. threats. It would have developed the ability to conduct multi-divisional peace enforcement, ver the period through 2025, Russia is peacekeeping, and humanitarian assistance op- Ounlikely to achieve a fully institutional- erations within Europe. Most EU states would ized democracy. The time is not at hand for have small, professional militaries. Their force corruption-free political and economic institu- structures would be bifurcated between high- tions, investment-fueled economic development, readiness forces available for such missions as and a foreign policy oriented toward full integra- peacekeeping and larger national defense tion with the democratic world. But Russia forces requiring significant reconstitution to be could evolve in such a way as to be neither a effective. Because of the newness of the great democratic success nor a great threat to European Union’s common security policies Europe. That is a condition well described as and stronger military capabilities, its policies either status quo-plus or status quo-minus. would probably have a regional focus aimed to prevent the spilling over of instabilities and While still facing enormous problems, chaos on its periphery. Russia in a condition of status quo-plus would have acquired a post-sclerotic leadership In such a world, NATO’s future would be 132 uncertain. It is hard to see how a truly integrated The OECD under a high-growth scenario predicts long- and independent European defense force could term U.S. GDP growth rates to be 2.6 percent per annum. A weighted average of high-growth estimates for current coexist with NATO, as it is presently constituted. EU members and for the newly admitted states envisioned NATO could remain formally the ultimate guar- by this paper yields a GDP growth rate for the European antor of European security, based on Article 5 of Union of 2.6 percent, as well. See OECD, The World in the North Atlantic Treaty. But in this case, 2020, p. 92.

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capable of some political and psychological HIV/AIDS would debilitate the work force, dynamism. It will also have created a governing lower national morale, and cost large sums of political party able to accomplish institutional scarce capital to control, if not resolve. Health reform. An active and reasonably popular pres- risks owing to environmental conditions will ident, supported by his party in the Duma, grow. Thousands of former biological, chemical, would finally be in a position to firmly estab- and nuclear weapons sites will exist, but little lish the rule of law, privatize land, and enact tax money will be available for remediation. legislation that could give the government a Chemicals and toxins in the soil and water left stable expectation of essential resources. As a over from industrial processes now abandoned result, Russia’s increasingly autonomous will have direct and possibly serious effects on regions would likely be drawn back toward the the health of Russians as well as many north and center. This is not beyond possibility over a 25- east Europeans. year period, and it could occur far more quickly than that. Even under such conditions, however, The result of the combination of economic, Russia could not grow economically at more health, and environmental trends could be an than 2 percent a year. But at least the malaise so increase in Russia’s existing political and social pervasive today would lift, and a new post- strains. In some regions, such strains could Communist generation could begin to inherit spark backlashes against the country’s formal social and economic power in an environment but largely dysfunctional experiment in democ- dotted with islands of hope and progress. racy.

Why would growth be so slow even if a Given Russia’s importance to Europe, the more propitious political environment were major European countries as well as the United created? Because Russia faces an enormous States are likely to persevere in their efforts to problem in renewing and diversifying its indus- help Russia develop institutionalized democra- trial and commodity base after 70 years of cy, a more robust civil society, and a more distorted markets and under-investment. It is effective economy. But even extensive external also likely to continue to suffer chronic unem- aid is likely to achieve little more than a rough ployment, pervasive corruption, and massive preservation of the status quo—whether plus or tax evasion even under the best of circum- minus—and it could end up holding off just stances. In such an environment, status enough pain in Russia to delay real reform. quo-minus is just as likely as status quo-plus. In this case, Russia’s share of global GDP would Under most any circumstance, the Russian contract and growth would stall, with occasion- government’s control of its national borders al periods of severe economic contraction, will be problematic. Central authority could between now and 2025. This would hamper well be limited to matters of national defense Russia’s ability to attract private foreign invest- policy, monetary policy, and the coordination ment, causing continued reliance on assistance of inter-regional transportation and communi- from international lenders such as the IMF. cations. Political violence within Russia and along its periphery will likely attract and subse- In this view of Russia’s future, mostly un- quently coexist with widespread, highly treated health and environmental problems entrepreneurial criminal syndicates that may would grow very serious. The spread of Multi- develop strong economic and political ties to Drug Resistant Tuberculosis (MDRTB) and regional and local elites. These dynamics, in

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combination with the lack of financial re- where they are today. The OECD expects an sources available to maintain the quality and average economic growth rate over this period professionalism of its military and nuclear of 4.9 percent.133 Such growth, if it occurs, forces, will cause continuing concern within will likely be facilitated by continued invest- Europe and the United States. “Loose nukes” ment by EU countries, the United States, and and “loose bugs” are obvious problems, but so other global economic players who will is the lack of effective oversight for the many continue to view the future of a market of still functioning Chernobyl-design nuclear about 194 million people as an important in- energy plants. vestment priority. Free from Communism only about five years, their combined GDP in Some of Russia’s regions could become 1996 amounted to about $423 billion—around political power centers in their own right, per- 2 percent of the global share.134 In the coming forming most vital public functions. In the 25 years, this region will very likely increase event that Moscow cannot exert effective its global standing in GDP and other control over its own federation, regional elites economic terms. will play a major role in the selection of military commanders and their staffs. Regional Politically, most of central and eastern leaders would most likely develop their own Europe will benefit from the positive trends of foreign policies as well, seeking closer ties to deepening democracy and expanded interna- wealthier neighboring powers and other poten- tional commerce, even if many states do not tial allies. The Far East regions may gravitate achieve full global competitiveness. Many, if toward Korea and Japan, and those in Central not most, central and eastern European states Asia (such as Tatarstan) may move closer to will have mature democratic systems by 2025. their Muslim neighbors, particularly Turkey, There will be regular fair elections, the insti- Iran, Pakistan, and Uzbekistan. The regions tutionalization of the rule of law, democratic closest to Europe would most likely seek and civilian control over military institutions, closer ties to the European Union and to respect for civil liberties, and a willingness to Germany in particular, but also with the Baltic pursue peaceful solutions to territorial states, Ukraine, and other Slavic states disputes and irredentist claims. Even if some (Bulgaria, and even Belarus) that may be doing are not full members, most of the these states better than Russia. The question of Russia’s will be linked politically with both the stability and national cohesion will have a European Union and NATO. major impact on the security calculus of all the states on Russia’s periphery. Russia will have At the same time, the situation in the st become the “sick man” of early 21 century Balkans will remain tenuous even in the Eurasia—sick enough to worry everyone, but rosiest of futures. Only Slovenia and Greece neither so deathly ill nor so imperially healthy have a good chance to escape economic stag- as to pose the kind of threat to the rest of nation and political instability, because they Europe that could decisively throw it off track. are relatively stable democracies and have n this view of Greater Europe’s future, enough highly educated people to succeed in Imost of the states between the European 133 OECD, The World in 2020, p. 92. Union and Russia would improve economical- 134 World Development Indicators (Washington, DC: The ly and politically—in absolute terms—from World Bank, 1998), pp. 180-2.

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an age of economic integration.135 Bulgaria, growth at rates of at least 2 percent. Such slow Romania, Serbia, and Croatia face greater growth could arise from a loss of confidence, challenges but may still succeed. But else- growing disillusionment among political where, Balkan countries will continue to leaders and their citizens, and likely popular re- experience economic dislocations and more sistance to further funding any joint policies. A than occasional bad government, complete with collapse could occur, as well, as a result of corruption, manipulation of state finances, sup- shifts in leadership with a concurrent reluc- pression of the media, and a lack of elite tance to yield national sovereignty over critical concern for pressing national problems. political and economic policies. The unwillingness of a population to endure the pain of No enduring settlements to the conflicts in meeting economic targets, or of undertaking Bosnia or Kosovo are likely to emerge from the structural changes to address failures in the U.S. and NATO-brokered agreements that social safety net, might also serve as occasion ended the wars there. As a result, ethnic for leadership changes. tensions and the security fears that go with them will remain, regularly threatening to erupt Another possibility is the specter that a co- into outright conflict. Moreover, with Bosnia alescing governmental authority at the EU level and Kosovo stuck in a state of suspended polit- might be essentially undemocratic. Currently, ical animation, problems in Macedonia, the European parliament does not have binding Montenegro, and Albania will become more authority over national member governments, likely. As a result, it is highly improbable that but the EU bureaucracy in Brussels does in any of these countries will be integrated into selected policy areas. Already the creation of a western Europe’s political and economic insti- European central bank and currency has greatly tutions within the next quarter century. diminished the power of national legislatures to affect crucial pocketbook issues such as interest more dour future for Greater Europe is rates and money supply, which in turn dimin- also possible. It would turn on three A ishes the significance of citizens’ votes for basic elements of potential bad fortune. The those legislatures. Unless EU political institu- first is that the European Union collapses, tions manage to keep pace with economic and leading to the rise of re-nationalized economic security ones, a significant popular and elite and possibly security policies. The second is backlash against integration could ensue, espe- that the Russian state disintegrates altogether or cially in times of economic adversity. acquires a revanchist authoritarian leadership. The third is that the lands between the EU and More than that could go wrong, as well, in Russia fall into a pattern of economic failure, the form of external pressures on young EU in- governmental ennui, internal violence, and stitutions. Conflict in North Africa could result cross-border wars sufficient to generate a in the movement of large numbers of migrants steady stream of strategic and humanitarian to southern Europe and points north, upsetting crises for most of the next 25 years. Any one of political equilibria and fracturing common im- these developments could encourage the other migration and social policies. A significant two. security threat from Europe’s periphery, from

A collapse of the European Union could 135 We use the term Balkans here in a strictly geographical result from a failure to sustain annual economic sense.

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Russia or the Balkans, might empower a strong While such a situation might increase the preference for NATO—which is to say, importance of the U.S. dollar, of NATO, and of American—leadership, and sharply diminish the U.S. role in Europe, many negative conse- interest in pan-European solutions and institu- quences would flow as well. The collapse of the tions. euro could send major shocks through the international financial system. A failure of the Regardless of the precipitating events, the European Union would also send a signal, and implications of lost European confidence in the at worst deal a mortal blow, to other more inevitability of a federated Europe would be nascent regional organizations trying to achieve significant. Outside Europe, the euro would free trade and other common arrangements. lose value as demand waned for holding The United States might be forced to undertake European assets. Lower growth rates and a much of NATO’s financial burden. Tensions weaker euro would limit domestic consump- between a Europe perceived to be shirking its financial responsibilities and a United States tion, while higher interest rates would dampen being asked to contribute more to European investment. In the face of this loss of confi- defense would strain the trans-Atlantic link dence and resulting economic effects, and with despite a U.S. willingness to pay and do more. no alternative plan in place, the EU could begin Alliance coherence would be harder to to unravel. Germany would probably reassert maintain during the transition period as old its national interests politically, economically, national biases and animosities resurfaced. and possibly even militarily both within and outside Europe. France might move sharply to he second concern at the more dour the right as it finds that it can no longer use in- Tend of our continuum is two-fold: ternational processes and institutions to limit either the collapse of the Russian state or the Germany’s return to independent major power rise of a new authoritarianism. Both could be status. The far right would probably prosper disastrous, albeit in different ways. more generally, too, in countries such as Spain, Russia’s disintegration would have serious Portugal, Italy, and Austria. Additionally, the consequences. Unemployment in Russia would United Kingdom might attempt to separate reach severe levels. Corruption and inadequate itself from Europe and focus instead on its tax collection efforts would leave insufficient special relationship with North America and funds for even basic social services. Economic the wider English-speaking Commonwealth. growth would plummet to negative rates over sustained periods. The magnitude of its social If any of these events occurred singly or in and economic problems would probably be so combination, competition among European great, and the decentralized power of the states would most likely become the norm, with regions so comparatively strong, that Russia’s significant undertones of national chauvinism central government might essentially disappear. and regional and global economic protection- Regional and ethnic tensions, compounded by ism. Elements of the re-nationalization of sharp economic disparities, would fuel erup- European defense would soon emerge, if not on tions of conflict and the mass migration of the scale of the pre-World War II period, then civilians fleeing instability and violence. much more vigorously than in the post-World Military forces, including tactical nuclear War II period. weapons, might come under the control of local

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military commanders and political warlords. able to crack down successfully on corruption The last Russian civil war and collapse, from and organized crime. But this is not clear. Such 1917 to 1921, was horrible. A future one might a regime might be such an international pariah be even worse, and not just for Russians. that it could not successfully connect to the international economy, making its economic A significant Eurasian power vacuum prospects dire. If the government were not able would flow from a Russian collapse, encourag- to solve the unemployment problem or ensure ing states with ties to various Russian regions, domestic security, it is hard to see how any such such as Iran, Turkey, and Japan, to seek means “solution” could produce stability. Such a of furthering their own interests in the face of “solution” would also be likely to generate sep- Russian weakness. Faced with Russian disinte- aratist movements in non-Slavic areas of the gration and the unlikely possibility of restoring Russian Federation, particularly in the Russian central authority, the European Union Caucasus. and NATO might draw the Baltic States and Ukraine into their organizations, in effect re- This would be particularly true given that a dividing Europe in order to prevent the spillover post-“democratic” Russia would probably be of Russian instability into other areas of Europe. resentful of those who tried to help the Yeltsin Diplomatically and economically, the United regime. In such a scenario, the already wide- States and other countries would have to negoti- spread belief that Western aid was part of a plot ate with multiple entities and factions with to keep Russia weak and to invade its geo- claims to statehood, and deal simultaneously graphical spheres of traditional influence with massive economic dislocations. Finally, would likely become accepted truth. Not only the dangers associated with wildly diffused would such a Russia be a nuclear power, it control over nuclear weapons, fissile materials, might also elect to emphasize military spending and biological agents would present a security as a means to national industrial regeneration. crisis of the first order. After all, what remains of the old Soviet military-industrial complex is today virtually The resurrection of an imperial Russia, on the only Russian economic sector still breath- the other hand, however much it strains the ing, if barely so. It would be a natural focus of imagination to credit the possibility, would investment and political patronage for a new, pose other dangers. It would feature centralized and nationalistic, authoritarian Russian regime. controls and a new leadership that would tap into rekindled nationalist sentiments and nos- While such a regime could not credibly talgia for Russia’s great power prerogatives. threaten Europe as a whole with conventional Political structures and the creation of military force, it could nevertheless pose economic dynamics designed to provide for obvious new threats to Russia’s closest neigh- basic human and social needs would be gov- bors. Russia could turn Peronist, or it could ernmental priorities, but at the expense of turn fascist, and the difference in the implica- democratic values. tions for the world at large is not trivial. A weak corporatist regime would be unlikely to do very Authoritarian control in Russia could result much harm outside Russia’s borders, but a form in greater internal stability, if it were to succeed of Russian national socialism, emboldened by a in maintaining near full-employment and in revived form of pan-Slavism, could do providing essential welfare needs. It might be enormous harm over all of Eurasia and beyond.

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In either event, Russia would cast a signifi- only rise. Obviously, too, the specter of re-na- cant political shadow over the region in a way tionalized security policies in western Europe that it does not do now, and in a way that neither seeking agents and allies to the east—repeating muddling along or disintegration would the patterns of the interwar years—will not produce. An authoritarian Russia could pose an make things any easier. Nor will a Russia in the effective challenge to the West and act to rein- throes of collapse, exporting refugees, crimi- force its image as a power whose geostrategic nals, drugs, and weapons westward. interests and calculations must be taken into consideration. If this future develops, the United mid the various possibilities sketched States will have lost its investment in fostering Aout above, the most dramatic changes liberal democracy and in creating the economic are probably the least likely. The EU will neither preconditions of a free-market system in Russia. collapse nor achieve a fully unified foreign and The apparently conclusive failure of democracy security policy. Habit and hope will prevent the in Russia might even trigger a reconsideration former, while British reluctance, differences of of the presumed universality of core American interest, and an unwillingness to buy the military principles and beliefs—with unknown conse- assets necessary to undergird such a policy will quences for our own future. brake the latter. Hence, a rebalanced NATO is likely to remain the premier institution of inally, the third misfortune that might Atlantic relations and the main instrument of st Fplague Europe in the 21 century U.S. power in Europe. The political and concerns those very diverse lands in between economic profile of the EU is likely to rise, the European Union and Russia. The Balkans however, and insofar as there are differences in have furnished a nearly non-stop political and U.S. and European perspectives, it will make the humanitarian crisis since the early 1990s, and political management of trans-Atlantic relations things might get even worse despite the EU’s re- a more challenging task.136 Similarly, in all like- doubled determination to funnel major amounts lihood, Russia will muddle through. In central of aid to the region. Albania, Macedonia, and eastern Europe, what is today a very mixed Montenegro, Bosnia, and Serbia are ripe for picture will likely change in its particulars, but further violence and chaos. Belarus, Moldova, remain mixed in its overall circumstances. and especially Ukraine are new states with unproven track records and many problems. merican policies will clearly be impor- Romania has made only sporadic progress tant to Greater Europe over the next despite the end of the Ceaucesçu regime, and A quarter century. Keeping the trans-Atlantic link both Slovakia and Bulgaria have struggled hard alive even as Europe bears more responsibility to get even a little ahead of where they were in for its own security will require tact and forbear- 1989. Ethnic and border questions aplenty ance on all sides. It will be worth a major effort, remain unresolved, and the quality of future for Greater Europe will remain very important to leadership is unknown. the United States. U.S. political leadership If the global economy falters, all of these through NATO has been a vehicle to organize the countries would be hit hard. If NATO acquires a continent’s overall security and to mollify jeal- reluctance to intervene in such domains after the 136 See Peter W. Rodman, Drifting Apart? Trends in U.S.- experiences of Bosnia and Kosovo, the potential European Relations (Washington, DC: The Nixon Center, for on-going violence and cross border wars can 1999).

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ousies and historical fears among the European is far from ideal. Russia will not be robustly de- members. American military forces in Europe mocratic and prosperous, a unified European have been instrumental to these purposes. Union will present challenges as well as oppor- Determining the extent and nature of the U.S. tunities, and eastern and central Europe will military presence in Europe will therefore be one compose a patchwork of successes and failures. of the key issues for the United States and its The alternatives, on the other hand, provide allies over the next 25 years. The general tenor of warning as to how bad things could get—and the U.S.-EU relationship will determine whether this is in the part of the world that most closely this and other critical alliance issues are managed shares U.S. values and civilization, and that is as in a relatively cooperative or a more adversarial advanced economically and politically as any manner. other continent. It is a sobering visage.

U.S.-European cooperation will also be East Asia crucial in the case of Russia, which will depend upon the continued willingness of international ast Asia—here defined as including institutions to provide financial and other kinds ENortheast Asia, Southeast Asia, of assistance. Without it, the potential for Australasia, and all their oceanic appendages— economic collapse will loom larger and make contains not only upwards of a third of the the emergence of an undemocratic future more world’s population, but also what is widely taken likely. On the other hand, overly vigorous U.S. to be the most likely future politico-military near- involvement in the management of Russia’s peer competitor for the United States (China), problems may risk provoking a backlash. A two of its most critical allies (Japan and South careful balance will be critical. Korea), and one of its most intractable problems (North Korea). The region’s importance to the American policy will also be critical to the United States will grow between now and 2025, future of the countries of eastern and central whether due to its successes and strengths, or to Europe. If the United States remains economi- the problems it could generate from weakness cally engaged, it could help offset the and strife. Asia, and particularly Northeast Asia, in-between status that these states are liable to is the region of the world most likely to witness a have with the EU for many years ahead. And if major war. It is the only region in which signifi- the United States remains culturally and politi- cant territorial disputes among major powers cally engaged, it will continue to buttress the exist, in which the use of military force would evolving democratic political cultures in many alter the regional balance, and in which an alter- of these countries. The American example, as ation of the regional balance would invariably well as that of the EU states, is crucial to their affect the world as a whole. evolution as democracies. It is all the more important, then, that U.S. policy deal with states in Recent trends suggest that East Asia their own right, rather than cast them as strategic embodies vast potential for economic growth, adjuncts of Russia to the one side and its NATO peaceful development, and scientific as well as partners to the other. cultural achievement in the decades ahead. In the last quarter of the 20th century we have wit- he range of futures for Greater Europe is nessed a stunning, if lately stunted, economic Twide indeed, but even the most positive performance there. With it has come significant view that one could reasonably take of the future social change, much of it tumultuous but most of

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it positive. There have been notable improve- West. This is a major datum, for aside from a few ments in education and basic health care, as well isolated examples (Turkey, Japan, Finland, as more equal opportunity for citizens of most Israel), no cultural area as vast as East Asia has nations irrespective of gender or ethnic origin. heretofore replicated the sharp growth of living We have also seen the transformation of some of standards occasioned by the Industrial the region’s erstwhile dictatorships into fledg- Revolution. The last four decades of East Asian ling democracies, and, not least, East Asia has history prove that economic modernity comes in managed to avoid major interstate violence.137 more than one cultural form.

In short, we have witnessed strikingly successful modernization over most of a vast region, 137 The Vietnamese invasion and occupation of Cambodia and we have seen it take place mainly on its own (1979-89), and the Sino-Vietnamese border war of 1979 cultural terms—while influenced by those of the are the partial and somewhat peculiar exceptions.

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These accomplishments represent only a America by 2020. Almost half the world’s in- foretaste of the harvest of prosperity and intellec- crement in energy consumption will come from tual and cultural achievements that could arise in developing Asia. East Asia by 2025. By then the region may well be the largest and most powerful economic No doubt, the proven facility of East Asian grouping in the world.138 East Asian economies peoples to adapt and develop science-driven may grow at an annual average of about 6 technologies will lie at the heart of the region’s percent over the next two decades, more rapidly economic dynamism—if it comes to pass. If the than any other area.139 If so, the region’s share information revolution continues its long march of global GDP could increase to slightly less through the economic institutions of the world,

Increased Demand for Oil in Asia Will Outpace World

Source: International Energy Outlook 1996, Washington, DOE, EIA-0484(96), May 1996, p. 92, and International Energy Outlook 1997, April 1997, DOE/EIA-484(97), Reference Case, p. 119.

than one-third, with Europe, the next largest regional economy, accounting for about one- fifth. Significant Asian trade and investment 138 Population expansion will in part drive the absolute size of among the countries in the region as well as East Asian economies. The populations of the five largest with the United States, Europe, the Near East, states in the region in 2025 will have changed from 1999 roughly as follows: China from 1.2 to 1.4 billion; and Latin America would be assured. East Asia Indonesia from 213 to 288 million; Japan from 126 down is also likely to be the largest source of capital to about 120 million; the Philippines from roughly 80 to for international markets. 121 million; and Vietnam from 76 to about 104 million people. East Asia’s population as a whole in 2025 will be At the same time, energy consumption in 4.84 times the size of that of North America, and 6.56 developing Asia will surpass that of North times the size of the European Union’s. 139 OECD, The World in 2020, p. 92.

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and if an essentially liberal global economic from less developed and urbanized countries of order is maintained, then it is clear that ex- the region to more rapidly developing ones.140 tremely lucrative cutting-edge technology of Such labor migrations could also boost the ed- virtually every kind will be available in East ucational levels of the migrants, allowing them Asia. Japan is likely to be a leading global in- in turn to raise the labor and educational stan- novator and manufacturer of technologies such dards of their home countries. as micro-electromechanical systems (MEMS), artificial intelligence (AI), robotics, and com- Barring major political upheaval and puters. Japan’s commercial space industry will economic collapse, China will compete with provide launch capability to many states and U.S. firms in space launches, and have several private licensees worldwide. Korea and Taiwan world-class high-technology firms engaging in will continue to produce world-class communi- a wide range of corporate partnerships world- cations and information technology, in some wide. China will also most likely be cases challenging U.S. and Japanese technolog- well-linked into the global communications ical superiority and marketing success. grid, and will be in a position to use surveillance, communications, and positioning Australia, New Zealand, Singapore, the technologies for commercial and military ap- Philippines, Thailand, Vietnam, Indonesia, and plications. Also, under almost any imaginable Malaysia may also play major secondary roles political regime, China is likely to pursue in the region’s technology-driven growth by biotechnology for commercial, medical, and providing a mix of raw materials, human military purposes. capital, financial services, affordable labor, and major expanding local markets. Rural areas as Along with economic and technological well as the cities and major towns of the region dynamism, East Asia over the next 25 years will be even more deeply linked electronically could become a zone of relatively peaceful re- than they are today, providing an important lations, characterized by predominately economic multiplier effect. As these economies democratic governments well connected to a grow, they will be able to afford infrastructures range of global economic and political institu- that provide wide access to regional and global tions. The Association of Southeast Asian

communication grids and media resources. As a 140 By 2025 more than half of the region’s population will live result, expectations regarding quality of life are in cities, up from 35 percent in 1999. The graying of East liable to rise steadily. First in cities and later in Asian populations is a major phenomenon to be coped rural areas, people will aspire to better public with in the next 25 years. Between 1995 and 2025, the services, education, environmental quality, numbers of 15-64 year olds per person 65 years and older crime control, medical care, and job-training. will have fallen as follows: China, from 11 to 6; Japan, In addition, greater access to media and infor- from 5 to 2; Indonesia, from 14 to 8; South Korea, from mation will whet appetites for political news 12 to 4; North Korea, from 14 to 6; Australia/New and participation. In short, new and expanding Zealand, from 6 to 4; Malaysia, from 14 to 8; and the Philippines, from 17 to 10. For more detail and some middle classes will want what such classes likely social implications, see Nick Eberstadt, “Asia always want: economic stability and a piece of Tomorrow, Gray and Male,” The National Interest, No. 53 the political action. (Fall 1998), pp. 56-65. On Japan specifically, see Milton Ezrati, Kawari: How Japan’s Economic and Cultural Greater information linkages within the Transformation Will Alter the Balance of Power Among region will also encourage labor migrations Nations (Reading, MA: Perseus Books, 1999).

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Nations (ASEAN), the ASEAN Regional conduce to positive changes in the social atti- Forum (ARF), and the Asia-Pacific Economic tudes of younger generations. This does not Cooperation (APEC) forum will have matured imply that economic modernization points to and expanded their functions. Multilateral insti- one set and one set only of attitudinal tutions could arise to address new transnational patterns—i.e., Western ones. But many tradi- issues. It is possible, too, that East Asia will at tional East Asian attitudes—the emphasis on least begin to develop security and arms control community and extended family as opposed arrangements comparable to those in Europe. to the individual; toward social hierarchies expressed through traditional occupational, Problems and tensions will persist. The age, and gender roles; toward educational in- mutual suspicions bequeathed by some hard stitutions; toward paternalist social authority history will not disappear. Not every state will vested in government—would probably be a democracy, and very destructive weapons change. Thus, East Asian cultures could come will be available to ambitious leaders without to accept, on indigenous cultural terms, their countries having to first establish a large values more harmonious with representative or sophisticated industrial and scientific infra- democracy and greater personal liberty than structure. Economic competition could get has heretofore been the case. nasty between similarly endowed nations. Vested political leaderships with a lot to lose f East Asia develops in such a fashion, or from rapid change could fail occasionally to Isomething like it, nearly everyone in the rise to enlightened levels, and the social region and beyond it will be better off, and U.S. stresses of modernization could still over- national security concerns with East Asia will whelm some of them even if they are probably be modest. But there is no guarantee enlightened. that it will develop so benignly. Plenty of things could go wrong, and some of them probably But there is a good prospect that, with so will. much more to lose, governments in the region will find ways to bound their difficulties short An optimistic appraisal of East Asia’s of war and beggar-thy-neighbor economic future is predicated in large part on an assump- policies—as has been the case in western tion: that the rising tide of economic Europe for the past half century. Presumably, development, buoyed by both a dynamism too, such an evolution in East Asia would be infused by major technological innovations and encouraged by timely help from the United a more integrated international economy, will States and other major global players with an bring benign political and social developments interest in the region’s peace and prosperity— in its wake. There are plenty of examples in again, just as Europe’s postwar success is partly human history, however, of parochial political explained by U.S. policy during the Cold War. interests—if not sheer irrationality, ideological rigidity, and myopic leadership—foiling such Finally in this view of East Asia’s future, scenarios. After all, if enabling global a growth in living standards, higher educa- economic patterns and a skilled population tional levels supporting a technologically with an affinity for science and technology driven economy, and the relative openness of were all that really mattered, then it would be governments required to sustain an entrepre- impossible to explain the Japanese economic neurially-minded business culture, would all doldrums of the past eight years. Sclerotic in-

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stitutions and poor executive decisions clearly commercial, and cultural pursuits would trans- matter. late at the least into fewer gains from trade, fewer investment opportunities, and fewer East So what could go wrong for East Asia over Asian children nurtured to contribute positively the next quarter century? Three things come to to global knowledge and culture. mind: economic meltdown, major upheaval in China, and a serious spiraling downward of Widespread East Asian economic trouble geopolitical stability among China, Japan, and could also lead to virulent anti-Americanism. A Korea. Let us take them in turn. backlash against the United States could be based on claims of U.S. insensitivity to East large-scale Asian or global recession Asian suffering or to U.S. “cultural imperial- Acould occur, leading to widespread ism,” particularly as expressed through U.S. unemployment, social instability, increasing influence over International Monetary Fund nationalism and protectionism, and heightened (IMF) and World Bank policies. U.S. public political repression in several East Asian coun- opinion, in turn, could move increasingly against tries. To see how the latter could occur, all one liberalized trade in view of mounting U.S. trade need do is examine the case of Indonesia. As deficits and losses of American jobs, as East Indonesia’s economy began its free fall in late Asians once again try to export their way out of 1997, the wheels were set in spin for the fall of their economic problems. U.S. protectionism its government, murderous attacks on its ethnic would worsen any regional or incipient global Chinese minority, and the rise or reanimation of economic recession many times over, leading to several secessionist movements. a vicious downward spiral.141 Protectionist sentiments, were they to be deep and long lasting In contemplating the social and political enough, could also encourage isolationist volatility that could issue from an economic impulses, and lead the United States to disen- downturn in East Asia, one must start not from gage from East Asia. theoretical speculations but from the actual situation extant today. Despite recent signs of How likely is that possibility? An answer recovery, large parts of the region remain in may start from the simple observation that the disastrous shape following the financial crisis Asian economic crisis that began in July 1997 is of 1997, with falling incomes and sharply still under the analytical knife. Some argue that rising poverty levels. Meanwhile, the rapid structural defects in East Asian economies social change and attendant dislocations caused caused the crash, and that once bloated to a suf- by earlier bouts of globalization, urbanization, ficient level, the bubble economies of the region and rising educational and economic expecta- inevitably had to burst. Others argue that the tions continue to flow through the affected herd instincts and poor risk management of societies. Seen against the dashed hopes of Western speculators and financiers were princi- recent years, another cycle of boom and bust pally to blame. And still others believe that the could touch off significant violence and a sharp international economic policies of the U.S. gov- backlash against enemies of the region, per- ernment were insufficiently attentive to the ceived or real, between now and 2025. That, in limits of East Asian institutions, and that IMF turn, would amount to a huge waste of human potential. Lives preoccupied by fearful, embat- 141 See Peter Schwartz and Peter Leyden, “The Long Boom: A tled conditions rather than engaged in scientific, History of the Future, 1980-2020,” Wired, July 1997.

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policies made things worse than they otherwise globe, China would conduct itself as a major would have been. Depending on which explana- world power, with active policies outside of tion one accepts, divergent explanations for why Asia. some countries were not hit as hard as others, and why some have recovered faster than others, Such a China would not necessarily have ir- follow in turn. Proposals over how to regulate in- reconcilable conflicts of interest with the United ternational financial exchanges and reform the States or other major powers. Presumably, even IMF also invariably raise contentious debate, all a China energized by broad, rekindled national- of which shows that there is no consensus about ist sentiment would be constrained by its many what went wrong or how to prevent it from hap- crucial linkages with international economic and pening again. Since the urgency of reform has political institutions. China will require an waned as many countries have managed to set enormous amount of energy, more than twice themselves aright, even without fixing most of what it consumed in the late 1990s when it their structural flaws, it could very well happen burned one of every three tons of coal world- again. wide. Even with better-developed hydroelectric, ut of all the potential problems that coal, and domestic oil resources as principal Bcould throw East Asia for a proverbial sources, China’s requirements for imported oil loop, none is as portentous or controversial as will rise from a projected 1.4 million barrels a the future of China. China is so huge, even day in 2000 to 5.2 million barrels a day by relative to its Japanese and Korean neighbors, 2020.144 The parade of supertankers streaming that it is bound to affect East Asia’s future. If to Chinese ports would be vulnerable to inter- Chinese authoritarianism decompresses as per diction in a crisis. China would share with other capita income reaches around $7,000, (as several major oil importers in East Asia, such as Japan, observers have predicted), and the political a strong interest in keeping oil flowing from key system moves toward bounded pluralism even if sources and keeping strategic sea-lanes open. not genuine democracy, optimism about East Beijing might also foster positive economic, po- Asia’s future would receive a major boost.142 If litical, and security relationships with key oil China undergoes major political reform after the producers around the globe, especially in terminal but essentially peaceful crisis of the Central Asia, Russia, and the Near East. That communist system, leading to the creation of a parliamentary system no less democratic than may lead China to fashion policies toward these that in Taiwan, then so much the better still. regions similar to those of the west European countries; namely, a policy aimed at appeasing Under either scenario, with its state-owned major regional actors in search of preferred com- enterprises and its banking system successfully, mercial status. if painfully, reformed, China’s GDP could be the largest in the world in absolute terms in 2025.143 142 For example, Minxin Pei, “Is China Democratizing?” China’s share of global GDP could shoot up Foreign Affairs, Jan./Feb. 1998, and Henry Rowen, “China: A Short March to Democracy?” The National from about 8 percent in the late 1990s to about Interest, No. 45 (Fall 1996). 14 percent. China would also be a major source 143 See note 53 for references and detail. of international financial liquidity. With depen- 144 International Energy Outlook 1999 (Washington, DC: dencies and economic interests around the Energy Information Administration, 1999), Tables A4, D1.

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Still, historically, rising economic powers So will China’s relationship with Russia. have often caused the most trouble politically, Should Russia develop a form of nationalist au- and nations sometimes put national pride and thoritarianism as it picks itself up from its place before objective material goals. Even a rel- present state of political lethargy and economic atively liberal China will require American decay, China may resume a strategic entente vigilance. Should China spend most of the next with the United States. The logic of doing so two and a half decades focusing on economic would be a variant on that which defined the development rather than military modernization, Sino-American relationship between 1972 and it will still be a major regional military power by 1989. Especially under circumstances in which 2025. It will possess a strategic nuclear arsenal, China was drawing heavily on U.S., European, a robust theater missile capability, and regional and Japanese resources and institutions to power projection capabilities in the form of a tackle its internal problems, Beijing might limited blue water navy and an enhanced air assume a generally benign leadership role in force. As a result, China will be a natural focus East Asian security affairs and in the United of security concern for all states in the region as Nations. In other words, China could become well as for the United States. In consequence, an incipient great power with a moderately or relative economic prosperity would enable other fundamentally more liberal political order. states in the region, including Indonesia, the Philippines, Vietnam, and perhaps even Japan to ut there are at least two other possibil- increase spending on conventional weapons so Bities for China’s future, and they are as to expand their regional power projection ca- far less positive from a U.S. perspective. pabilities as a hedge against China. One is that China continues to get rich, but In such a circumstance, a liberalized, if still Chinese authoritarianism remains. For rising not fully democratic China, would enjoy a mixed income levels to translate into political plural- relationship with the United States, one not rad- ism, an intervening process must occur: the ically different from that of the past decade. creation of a middle class ready and willing to Sino-U.S. ties would feature some cooperative articulate its interests. For a variety of reasons, bilateral agreements, including most likely con- this might not happen in China.145 The country fidence-building measures in the security could instead metastasize from what was a arena, arms control agreements, trade and in- communist command economy into a looser vestment, and scientific and cultural exchanges. corporatist system, bound together by a At the same time, the relationship would be network of interwoven political, military, and characterized by vigorous competition and economic elites, and sustained at large by periodic episodes of significant mutual suspi- appeals to nationalism. Such a polity, founded cion over issues such as managed trade, on the greed of the elite, the will to power, and intellectual property rights, arms sales policies, the manipulation of the masses, would not industrial and security-related espionage, and endear itself to the leadership of other major human rights. Chinese regional power, as it economic powers. Nor could it expect particu- applies to the Spratly Islands and the South larly close and sustained linkages to the

China Sea more generally, or to Taiwan, or to 145 See David Zweig, “Undemocratic Capitalism: China and China’s geostrategic competition with India, the Limits of Economism,” The National Interest, No. 56 will also be part of the broader picture. (Summer 1999).

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growing international economy. Should it fail Another possibility is that China collapses to deliver the goods economically, such a politically and violence erupts. Elements of a po- regime could all the more easily end up falling tential collapse are not hard to find. They include into aggressive regional policies, as have past all of the following: the loss of ideological legit- corporatist and especially fascist and neo- imacy on the part of the Communist Party, fascist states. massive corruption among the political and economic elites, the pressure of separatism in Such a new nationalist China could become Tibet and Xinjiang, a failure to reform the state- decidedly hostile to the United States, and that owned enterprises that produce simultaneously a hostility could be reciprocated. Several triggers budget default and massive unemployment, infor such hostility exist even today, and they will creasing economic demands from a graying not go away soon. One is a crisis over Taiwan population, the continued rise of anti-modern rein which the United States strongly sides with ligious/martial arts cults, and a series of poor Taipei, a crisis made much more likely by political judgments. A collapse could produce a Taiwan’s renouncing of its “one China” policy return to warlordism, economic disaster, human- in July 1999. A second is a Chinese movement itarian catastrophe, the potential scattering of to seize the Spratly or the Diaoyu islands, ac- China’s weapons of mass destruction, terrorism, companied by clashes against Filipino, and massive black markets run by organized Vietnamese, or Japanese forces. A third is an ag- criminals with links to crime syndicates outside gressive Chinese military armament program. A of China. Just as Russian weakness has come to fourth is domestic turmoil that Chinese political plague U.S. national security policy, so acute impresarios rush to blame on the United States. Chinese weakness might do the same. A fifth is the bloody repression of political reformers or ethnic minorities. And another is a No one knows what China will look like spate of U.S. policies that make small irritants over the next 25 years. The only thing that seems worse instead of major problems better. truly clear is that the status quo cannot persist. The notion that China could grow economically In this degenerative case, the United States between 6 and 10 percent each year for 25 years would probably seek to balance a hostile China and still be governed by a sclerotic Chinese by strengthening bilateral security agreements Communist Party is simply beyond credence. with regional states and seeking additional Something has to give, but the predicates for basing facilities in the area. The United States what that something will be remain unclear. might also sharply limit private sector trade, investment, and transfers of technology to China, side from a regional or global as well as place sharp limits on U.S. travel to Aeconomic downturn and the possible China and on the numbers of Chinese nationals transformation of China into a major problem, a studying in the United States. Whether U.S. third worry is rather old-fashioned: the destabi- allies in or outside of Asia would support such lization or mismanagement of the regional actions is uncertain, absent a major Chinese balance of power. provocation. For this reason alone, and also because there would be only a limited commu- In East Asia, three nations form the true nist ideological component to Sino-American pivot of regional geopolitics: China, Japan, and hostility, it would be misleading to analogize Korea. It may seem odd to minimize the impor- such a situation as a “new Cold War” or a new tance of such major states as Indonesia (213 form of “containment.” million people), the Philippines (78 million

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people), and Thailand (60 million people), to ily complex, yet familiar, triangle. In a world name just three. And yet it is true. where global economic integration and technological dynamism take rhetorical pride of place, Of course, this does not mean that other and where economics is often believed to trump countries are of trivial significance. Indonesia is the hoariest political legacies, geopolitics the world’s fourth most populous country and seems to grow pale. But the level of mistrust home to the world’s largest Muslim population. and outright fear among these three countries is It has played pivotal roles in ASEAN, ARF, and a reality that will endure. Chinese political APEC, has supported UN peacekeeping opera- elites and intellectuals resent Japanese success- tions, has been involved in global disarmament es and yearn to reestablish Chinese national efforts, is rich in oil, and straddles some of the dignity, somewhat at Japan’s expense. Nearly world’s most critical sea lines of communica- all Koreans resent Japan as well, but fear tion.146 The outcome of Indonesia’s economic moving too close to China. The Japanese fear and political restructuring will play an impor- Chinese and Korean revanchism, and their tant role in the future stability of East Asia. A pacific and generally mercantilist attitudes democratic Indonesia that peacefully resolves since World War II have been unable to fully separatist claims could capitalize on its demo- overcome historical legacies. Added to this mix graphic and economic potential and be a is the influence of both Russia and the United stabilizing force in the region. Conversely, if Indonesia’s military turns against the democ- States, which for reasons both geographical and ratic process or if separatist movements historical are bound to and will invariably in- multiply and undermine the cohesion of the fluence this triangle. state, this archipelago could inundate its The spark that could ignite a conflagration neighbors with refugees and become a harbor among this triangle could fly from a nationalis- for international criminal and other elements. tic and aggressive China, a nationalistic and The break-up of the country, or its collapse nuclear-armed reunified Korea, or a militarily into a multifaceted civil war, would be both a assertive Japan. It could also arise from a political and humanitarian nightmare for the steady accretion of Chinese strategic military entire region. power that comes to undermine the credibility Southeast Asia, too, is important to U.S. in- of both explicit and implicit U.S. security guar- terests. Not only is this region likely to play a antees to Japan, Korea, the Philippines, and more important global economic role, but it is other countries. But as historical analysis an area to which competition among China, teaches us, the timing and the order of such India, Japan, and Korea could flow, especially shifts would be crucial, and knowing that if the area itself becomes unstable. It is also an timing and order beforehand is virtually im- area in which elite attitudes toward democracy possible. are very mixed, and it may thus become an im- Korea seems the most likely starting point portant stage of ideological drama over the next for major change. But we do not know exactly quarter century. what change in Korea will look like. If the Nevertheless, the geopolitical triangle aging Stalinist regime in North Korea formed by China, Korea, and Japan matters 146 U.S. Department of Defense, The United States Security most to the United States. It is an extraordinar- Strategy for the East Asia-Pacific Region 1998, p. 36.

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suddenly collapses under the weight of its stasis in Tokyo might finally break open. own atavisms, and a new leadership in Having persuaded the country to reemphasize Pyongyang essentially throws itself upon the Japan’s military traditions, a new party could mercies of the government in Seoul, Korean come to power dedicated to restoring national reunification will still be a mammoth task. It pride and competing with a rising China. Such would be even greater, however, if reunifica- a coalition of conservative leaders would break tion is preceded by a desperate war launched Japan’s bilateral security agreement with the by a panicky North Korean leadership. United States. Meanwhile, American leaders Japanese reactions to such a war would either could miss the early signs of major change, vindicate or deeply erode the U.S.-Japanese frustrating the Japanese even further and con- security relationship. tributing to their alienation from the postwar partnership. It does not take much imagination to envision a major shift in the East Asian So a shift in the triangular relationship geopolitical triangle if Korea does not dis- might commence from a point other than mantle the North’s nuclear weapons program Korean unification. It is also altogether upon reunification. That shift would be even possible that Korean unification could be greater in magnitude if Japan and the United delayed for another 20 years or more. Beyond States part ways as a result of the events sur- rebuilding the economic infrastructure, the rounding Korean unification. Under such South understands the huge task of integrating circumstances, Japan would face pressures to such a poor population of 25 million people, become a nuclear weapons state. The triangle not to speak of the enormous difficulty of de- could then be composed of three mutually mobilizing, retraining, and employing the suspicious, nuclear-armed states. hosts of a 1,144,000-man North Korean It is not hard to see the predicates for a standing military force. And unlike Germany, “go it alone” scenario in Tokyo, even though, where nationalism drove reunification, Korean on balance, it is not very likely to occur. It nationalism sits better historically with a could go something like this. Under the best divided peninsula. Seoul may thus be content of circumstances, Japan’s share of global to let the United States and others tend to a GDP will have dropped from about 8 percent decrepit North Korea as an international ward, in the late 1990s to roughly 4.5 percent by a tack the North Korean leadership would un- 2025.147 For a political culture that has based 147 The Ministry for International Trade and Industry (MITI) its self-image almost exclusively on economic estimates that even if Japan emerges from its current success since 1946, this is not good news. eight-year recession, it cannot expect more than a 1.8 percent growth rate between 2000 and 2010, and a paltry But the best of circumstances cannot be 0.8 percent thereafter. These estimates, which take into guaranteed. The economy may shrink dramati- account Japan’s sharply aging population, its bank debts, cally if Japanese leaders fail to introduce and its decline in productivity are optimistic. The well- effective economic and financial reforms. The regarded nonprofit affiliate of the Nikkei newspaper group in Tokyo, the Japan Center for Economic Research, political system could remain essentially para- projects near zero growth through 2003, and then a long, lyzed. After years of negative economic gradual shrinkage in GDP after that out to 2025. See Peter growth and a severe pension crisis touched off Harcher, The Ministry (Cambridge: Harvard Business by Japan’s graying population, the political School Press, 1998).

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doubtedly prefer to the “East German alterna- a U.S. military presence in East Asia is no tive” of closing up shop for good. If that longer a necessary or a wise investment. happens, Korean unification could be a very protracted, perilous, and expensive task. ltimately, however, whether the Upositive potential of East Asia is If the tectonics of this triangle do shift, it realized, or whether a less sunny future is in will set off major changes with which the prospect, depends less on U.S. policy than on United States, by dint of the entanglements of the initiative, discipline, and foresight of postwar history, will have to deal. This is East Asians themselves. Those prospects will because the United States remains the only also be affected powerfully by the course of country external to the region with both the the global economy, over which U.S. govern- power and the desire to balance off local states ment policy has an important but limited and promote stability through reassurances to influence. It will also be affected by whether all three countries. The U.S. presence in East the potential for significant internal and in- Asia has been, and will continue to be, critical ternational violence in the region is to the region’s stability and prosperity. restrained, and here the skill with which the Regional fears of China could lead to a con- United States serves as an engaged balancer tinuing and even an expanded U.S. military could be a major factor. presence in East Asia. Yet a host of regional and national changes could place pressure on Clearly, a reduction of U.S. commitment the United States to reduce or withdraw that and engagement in East Asia, especially if it presence. It is even possible that pressures for is simultaneously abrupt and deep, will and against the U.S. military presence in Asia increase the likelihood of instability as states will be brought to bear simultaneously. struggle to define a new regional balance of power. From a strategic point of view, the es- One general source of pressure for sential U.S. choice may boil down to this: reducing the U.S. military presence is that either remain engaged at greater short-term overseas basing is becoming more vulnerable peril and political cost to ourselves, or disen- to a wider number of countries that could use gage at the potential cost of greater long-term ballistic missiles armed with weapons of mass peril to everyone. destruction. That could make U.S. bases potential sources of danger rather than bulwarks The Greater Near East against it, and raise their political and he Greater Near East—defined here as monetary costs.148 Overlapping political pres- the Arab world, Israel, Turkey, Iran, sures could also arise. As noted, a major sea T Central Asia, the Caucasus, and the change in Japanese politics could lead to a Subcontinent—is the site of the world's largest sharp reduction or even an elimination of U.S. supply of fossil fuels and a place where several bases in Japan. A reconciliation on the Korean ambitious powers actively seek regional peninsula would eliminate the most obvious and immediate justification for U.S. bases 148 See Bracken, “America’s Maginot Line.” 149 there. Reunification could also stoke Korean 149 It would also put U.S. forces in a country with a land nationalism, and simultaneously convince border with China, obviously affecting the political inter- American public opinion and the Congress that pretation of those forces.

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hegemony. It is a region where the United also the site of politically radical, militarized States has key allies as well as important inter- Islam, which, if not a mortal threat to its host ests, and where weapons of mass destruction societies and to neighbor states alike, is at least are being actively developed. Not entirely by a significant irritation and source of instability. coincidence, too, it is the place where the Several parts of the region—Lebanon’s Bek`a United States fought its last major war, in 1991, valley at one end and south central Afghanistan and it is the only region of the world where toward the other end—supply a large volume of more or less permanent U.S. forward-based illicit drugs to many parts of the world. The military deployments have expanded since the area is also a cauldron of sectarian rivalries end of the Cold War. among Sunni and Shi`a Muslims; between

Hence, the Greater Near East is appreciat- Muslims and Hindus, Jews, Coptic Christians, ed in the West as a region of great importance and Bahais; and between Hindus and Buddhists but also great trouble. This is undoubtedly so, in Sri Lanka. Ethnic violence within and among even if one sketches the region without refer- countries involving Kurds, Turks, Arabs, ence to U.S. interests. Despite unprecedented Persians, Armenians, Azeris, Singhalese, prospects for Arab-Israeli reconciliation, the Tamils, and others is bountiful. Finally, one is area still exhibits many and sundry depreda- hard pressed to think of any 25-year period in tions. It has a high concentration of despotic the documented history of this diverse region regimes and, aside from Israel, India, and when there has not been at least one major Turkey, no institutionalized democracies. It is spasm of civil or cross-border warfare.

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s one looks toward the future, such a to appear more reminiscent of the 15th and 16th Alegacy is perhaps disheartening. But centuries than of the 18th or 19th. Not only have there is yet more. Beyond the region’s check- Muslim Central Asia and the Muslim peoples ered past, the next 25 years pose potentially of the Caucasus been reunited with the rest of wrenching and destabilizing change. That the Near East, so to some extent have the change will come in at least three forms. Muslims of the Balkans thanks to the extremely painful slow-motion collapse of Yugoslavia. First, whenever a great empire collapses it produces a shatterbelt of instability around its Farther east, the collapse of the Soviet periphery, one that usually lasts for many years. Union left India without a superpower patron to

Areas of Conflict

The headlong collapse of Russian power is a balance China, which in turn accelerated pertinent example for the Greater Near East. India’s desire to demonstrate open nuclear For the first time in more than three centuries, weapons possession. This is a fact of geopoliti- three core countries of the region no longer cal life no less clear than the fact that the Soviet directly abut Russian power: Afghanistan, Iran, collapse has allowed China to rebalance its and Turkey. Traditional commercial and military attentions away from the Russian cultural contacts between lands south of the border and toward the South China Sea. India’s Oxus River and those beyond it in Central Asia test was also the spark for Pakistan’s public have been restored after nearly a century of in- nuclear arrival, and that, in turn, has made terruption. The Silk Road is slowly being Iranian aspirations to acquire a strategic revived, and patterns of exchange have begun balancer virtually impossible to slake—and

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that aside from the threat to Iran from the all A third source of change has been re- too obvious Iraqi efforts to obtain weapons of hearsed in some detail above: the tumult we mass destruction. may expect from the continuing economic integration of the globe. Even a mainly benign, So far, the post-Communist shatterbelt has successful process of integration will introduce produced or prolonged war “only” in the many stresses to the non-Western cultures of Balkans, the Caucasus, Tajikistan, and this area. Secularization is but one; new neo- Afghanistan. By historical standards, universal norms of Western origin concerning however, it is still too soon to conclude that human rights, minority rights, and particularly the dust has settled. The number of wars, women’s rights are another. Should global small and not-so-small, that even reasonably economic integration produce repeated cycles sanguine analysts may justifiably expect to of boom and bust, should it produce patchwork see in this region over the next 25 years is polarizations of success stories and failures large. Several could be attributed to the after- within regions and countries, or should it shocks of the Soviet collapse. empower certain states and groups militarily so as to produce sudden perturbations in A second source of change has been noted security relations, the region could succumb to above: demography. For the first half of the very harrowing times. period out to 2025, most of the countries of the Greater Near East will experience rapid ne might gather from the foregoing population growth and a significant drop in Othat the Greater Near East will not be the mean population age. A youth bulge is a prime zone for enterprising Americans, making its way through many populations in Japanese, or Europeans to go sell insurance or the region, due in part to health and sanitation take leisurely vacations. Not necessarily. Just improvements and in part to the demographic as in Greater Europe and East Asia there are momentum from an earlier population boom optimistic as well as pessimistic possibilities in the 1970s and 1980s. Such population with which one may view the future, such is dynamics pose severe challenges for many so- also the case in viewing the Greater Near East. cieties. They strain the natural and social What could go right amid so many possi- environments through the need for potable bilities for trouble? The answer is plenty, and water, housing, education, and medical one of the main reasons, interestingly enough, services.150 Unemployment, income dispari- lies in the social power of religion to absorb ties, and ethnic tensions generated by such the shocks of globalization. problems may also contribute to significant internal migrations, largely from countryside Some large and important countries in the to towns and cities, and some cross-border mi- region may well break the spell of étatism and gration as well—including into Europe.151 tie themselves more fully into the global Toward the middle of this period through 150 2025, increased urbanization and female See Population and the World Bank: Adapting to Change (Washington, DC: The World Bank, 1999), pp. 8-9. literacy will probably cause birth rates to pro- 151 Of the 170 million people living around the Mediterranean gressively drop, and pressures on services will in 2025, 10 percent will be European, 22 percent will be subside to some extent. Turkish, and about 68 percent will be Arab.

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economic system. At the least, the top manage- fossil fuel deposits, in the first quarter of the rial echelons of business and government will 21st century even greater differences will be be fully up-to-date in nearly all oil-rich coun- explained mainly by different levels achieved tries and most others as well. Israel and a few in the development of human capital, of the Arab states (most likely Qatar and the economic openness, and political dynamism. United Arab Emirates, and possibly Iraq and But the most important thing is that all coun- Saudi Arabia as well) will feature fully modern tries in the region will see that real change, and economies; India, Iran, Egypt, Turkey, and a real success, are possible. If Saudi Arabia, few other regional states will have, at the least, Iran, Turkey, Israel, Egypt, and India, to name very modern sectors within their economies. As the major players, achieve an economic take- a result, both extra-regional and intra-regional off in tandem with the tides of global economic trade as a percentage of national gross domestic integration, the region will never again be the product will climb from late 20th century same. levels. Several countries in North Africa— Morocco, Tunisia, a recovered Algeria, and a There is no question, in any event, that the post-Qadaffi Libya—may attract substantial raw resources will be in place to finance such funds from East Asia both as investment in growth. Some $500 billion in Arab money rest their energy resources and as ways to penetrate in banks and investments outside the Arab into Europe via European Union trade agree- world. If economic rationalization can bring ments with North African states. most of that money back into the region, the pool of investment funds will be enormous. Led by a new generation of mainly Turkey may attract funds as well from other Western-educated elites, some countries—es- Turkic-speaking regions: Turkmenistan, rich pecially but not exclusively oil-rich in natural gas, Azerbaijan, which sits on oil countries—may also become both successful and gas, and even Uzbekistan, the largest and niche producers and major international finan- perhaps in the future the most economically cial hubs, following the 1990s model of the dynamic of the Turkic-speaking states of United Arab Emirates. Economic restructuring Central Asia. India is so large that it can and advancement could transform several generate most of its own capital, although its regional states into important capital markets, tremendous infrastructure requirements could and better than 4 percent yearly growth rates in easily absorb all its capital and more. Israel GDP are not out of the question even for the will attract funds from the world over due to majority of regional states. The establishment its special richness in human capital attuned to of an effective Middle East Development Bank the information age. that would help stabilize the region’s oil have- nots is not out of the question either. And that is not all. Japan, Europe, India, China, and most of developing East Asia will One result of rapid growth, no doubt, will remain heavily dependent on oil and natural gas be greater economic disparity among regional from this region. Chinese dependence on both states between those that are plugged into the Persian Gulf and Caspian Basin oil and gas will world economy and those that are not. grow sharply. Investment in the Near East by Whereas in the last quarter of the 20th century, East Asians should also expand. In short, there intra-regional economic differences were ex- will be plenty of money around to finance real plained mostly by the chance occurrence of growth.

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oreover and more important, new corruption, and new reactions to that corruption. Mwealth may have significant positive Also, to the extent that growing literacy rates and political implications. Virtually all national elites, urbanization connect over time with increased and much of the middle class strata, will be con- computer literacy and the availability of technol- nected technologically to the developed world. ogy for large numbers of people, authoritarian The demonstration effect of such new technolo- control will grow more difficult still.152 This is gy, including its pop cultural forms, will initially because such a connection may challenge both exacerbate social divisions within countries and traditional government control of significant make the task of authoritarian control more diffi- commerce as well as traditional attitudes toward cult. New wealth will also likely spawn new education and educational authority; significant Global Shares of Oil Production

Sources: Adapted from International Energy Outlook 1999 (Washington, DC: Energy Information Administration, 1999), Appendix D; and British Petroleum, Statistical Review of World Energy, 1997.

152 The Al-Jazira television network, based in Doha, Qatar, has become enormously popular in the 22 Arab countries where it can be viewed. It has also generated much fear and loathing among authoritarian governments for whom objective news programming and intellectual openness is a threat.

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anti-authoritarian social implications flow from but mostly in the form of neo-orthodoxy, not fun- both. The weakening and potential transforma- damentalism—and the differences between them tion of Near Eastern autocracies, if it does not are crucial. Islamic neo-orthodoxy is neither come too suddenly, stands to do enormous good militant nor expressly political in nature, but for the region. exerts an increasingly powerful social force in several societies (including current U.S. allies The political implications of such a weaken- such as Pakistan, Egypt, and Turkey) that ing, however, could include a danger of populist strongly influences—and at times embodies— demagoguery as well as greater political plural- political movements, alignments, and moods. ism. But if the latter should dominate the next 25 Meanwhile, highly politicized fundamentalist years, the politics of the region will have taken a challenges to states are waning, and no Muslim major step forward. The very dangers of social countries, beyond Iran, Afghanistan, and Sudan, disruption will perhaps furnish the incentive to are likely to develop theocratic governments over change if economic, social, and demographic the next quarter century. pressures are strong enough to persuade governments to open up, but not strong enough to Contrary to what some outside the region overwhelm them before their new approaches think, there is no plausible means of social man- can bear fruit. Political liberalization largely agement and adjustment to vast change in the driven by economic reform could well take root Muslim world outside of Islam. For these in a number of Arab countries (Morocco, Jordan, cultures, the process of secularization, associated and Tunisia are likely near-term candidates), organically in the West with the Enlightenment, leading to still further pressures against authori- the Reformation, and the Industrial Revolution, tarianism in neighboring states. simply never happened, and so carries almost no social resonance.153 But Islam is potentially Governments may also usefully employ the capable of supplying such a means of adjust- growing social authority of Islam to reinforce po- ment. Judging by what engaged middle classes litical community rather than try to control, in almost all regional societies are reading and manipulate, or extirpate Islam as many have done debating nowadays—where a tremendous in the past. As one country after another opens up interest in adapting religion to modernity is without triggering massive political tumult, others underway—there is some prospect that these are more likely to follow suit. With prudent traditions will be up to the task.154 Add to that economic and political encouragement from outside the region, each opening would reinforce 153 See Ernst Gellner, Nationalism (Washington Square, NY: the other economically and psychologically, and New York University Press, 1997), chapter 13. in time the large majority of regional societies 154 There is foremostly the remarkable example of Muhammed would find ways to adjust to new circumstances. Shahrur’s Al-Kitab wa-l-Qur’an (“The Book and the Their Islamic societies cohere, and by and large Qur’an”), which has sold tens of thousands of copies their governments, sensitive to religious strictures, throughout the Arab world since it was published in 1992. Shahrur, a Syrian engineer, argues for a reformist Islam would work. that comes to terms as equal partners with modernity. Some clerics have banned it and pronounced it heresy, but ne cannot stress too much the potential that has not stopped people from reading and discussing it Osignificance of religious culture here. in unprecedented numbers. Similar phenomenon may be Islam is an increasingly significant social force noted in Turkey, Bangladesh, Indonesia, Morocco, Egypt, throughout the Muslim states within the region, and elsewhere

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the impact of mass education and mass commu- form the landscape. One reason for thinking this nication, and it becomes clear that vast and possible is the vast generational change now potentially very positive changes are afoot in the taking place throughout the region. Sometime in region where it matters most: on the street. the next 25 years, for example, there will be generational change in the political leaderships One crucially important aspect of change of Iraq and Iran (as well as those in Egypt, Saudi within Islamic cultures over the past several Arabia, and Syria), following recent successions decades concerns the role of women within in Jordan and Morocco. If those changes are a Islam. This has become the touchstone social prelude to reform and political moderation, both and theological issue in many societies, and countries could come to focus more on internal one that is widely misunderstood outside the economic and political development and less on Muslim world. When an Egyptian, Turkish, or regional rivalries and investments in armaments. Pakistani woman chooses to don a headscarf, it does not necessarily mean that she or her It is also possible—even likely—that the husband has become an “Islamic fundamental- Iranian theocracy will collapse in the next ist.” More likely, this is an example of quarter century. Iran is an Islamic Republic at neo-orthodoxy in action. She usually does it not present, but it cannot remain both for long: it because her mother and grandmother did, but will either stop being a republic and descend because they did not. In other words, such into truly medieval-style rule, or it will stop behavior today is generally associated with being an Islamic theocracy. The battle for that upward mobility, urbanization, and greater future has already been joined, but how it will literacy. Increased personal piety is thus often a turn out no one knows. Should the current function of the movement from a mimetic to a regime collapse, however, it would send shock textual reading of religious tradition. This waves through the Islamic world and under- movement is aided not only by increased mine radical Islamist movements everywhere. literacy but also by urbanization, for urbaniza- It would open the way for a U.S.-Iranian rap- tion represents the shift from the prochement that could have broadly positive Sufi-influenced folk-religion of the countryside effects in the region and beyond. In turn, if the to the “high” literate Islamic traditions of the theocratic regime in Iran and the Ba’athi city.155 Neo-orthodoxy is not socially regres- regime in Iraq are deposed or sharply moder- sive, nor is it primarily political in motive. It ated before they acquire and deploy nuclear or also suggests more, not less, participation in biological weapons, the pressures on other public life by women, particularly as the per- states to match step may dissipate. The threat centage of literate women continues to increase to use all such weapons would also decline if throughout the Muslim world. regional political disputes fall to diplomatic amelioration. The status of weapons of mass f Islamic reformism, propelled by destruction would suffer, and the diplomatic Ichanges in technology, economy, and 155 society, comes to dominate the political Here see Ernst Gellner, Post-Modernism, Reason, and processes of most majority Muslim cultures, it Religion (London: Routledge, 1992). A similar phenomenon in the movement from mimetic to literary tradition is at least possible that no major war will have has been occurring in Judaism, with some parallel effects. occurred in the majority Muslim states of the See Haim Soleveichik, “Rupture and Revolution: The region by 2025. That would create a sense of Transformation of Modern Orthodoxy,” Tradition 28:4 optimism and security that can further trans- (Summer 1992).

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and domestic political costs of building them ment between India and Pakistan to abolish might come to exceed the presumed benefits. their nuclear weapons is not likely, unless somehow China and others would agree to do The last stages of the Arab-Israeli conflict the same—which is even less likely. But their could finally be set to rest with an agreement constraint could be formalized, and the United that creates a semi-independent Palestinian States and the EU might play important roles in state. Peace would not be warm, and not all helping the two sides come to agreement. Palestinians or Israelis would be reconciled to the compromises involved. But the ongoing Positive domestic developments may also be dispute would be effectively isolated from in store for India. Many analysts believe that more portentious regional considerations India might be able to maintain economic growth largely by dint of an Israeli-Jordanian under- rates between 6 and 9 percent for most of the standing supported by the United States. period. If so, its aggregate economic strength will equal that of the present day Chinese and Neither peace nor war will probably ASEAN economies combined. By 2025, India continue between Israel and Syria, as Syrian will be more populous than China and, despite politics remains in Alawi hands and Lebanon, appalling poverty, will have the largest educated for all practical purposes, remains in Syrian middle class in the world in absolute terms.156 hands. A real peace would be likely only India may also remain a democracy, a techno- should there be a regime change in Syria, but logically innovative society, and a proud and at present there is no discernable and effective confident cultural entity despite its many opposition to Alawi rule. On the other hand, enduring problems. Under such circumstances, were peace agreements with Syria and India will play a larger and more varied role in Lebanon to occur along with political normal- the region, one that could find itself in general ization with Saudi Arabia—allowed by a consonance with U.S. interests. Israel and symbolic compromise over Muslim holy India might also become important allies.157 places in Jerusalem—Israel might agree to limit its nuclear program. It might even open Having paid our dues to optimism, we it to international inspection. would be remiss not to note the more pessimistic possibilities for the region. As suggested above, Whether Israel makes peace with Syria or there are many. not, closer economic and security ties between Israel and Turkey are likely. An even wider as- The Greater Near East is a place—not sociation that might include Jordan, Azerbaijan, unlike many others—where a very few positive and Kazakhstan is also possible. but seminal developments can go a long way to

Even reconciliation between India and 156 India also has, however, a large majority of the world’s illit- Pakistan is conceivable, not least because the erate—nearly 500 million people. For a brief demographic threat of nuclear destruction may force both sketch, see Barbara Crossette, “In Days, India, Chasing parties to ultimately transform their enmity, or China, Will Have a Billion People,” New York Times, August 5, 1999. at least to pursue it by non-violent means. That, 157 Israeli-Indian cooperation has grown markedly, if quietly, in turn, could lead to restraints on the part of since 1994. See Ze’ev Schiff, “The Complex Israel-India both countries in their further deployment of Connection,” Ha’aretz, August 19, 1998; and “India and nuclear weapons and missiles. Mutual agree- Israel vs Pakistan,” Foreign Report, June 11, 1998.

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insure peace and stability, but a few negative contest would develop. In all this we see a ones can similarly cause enormous trouble. The quintessential example—one of a great key to which direction the future will take many—of the mixing of internal conflict with comes down to a relatively small number of possible cross-border violence. contingent events, namely whether major wars can be avoided and whether regime changes in India and Pakistan might fall into a major major countries can proceed peaceably. war as a result of miscalculation when fighting erupts in Kashmir—as it did in June 1999. Avoiding major warfare and the occasion- Another Sino-Indian border war is also possible; al violent regime collapse will not be easy India believes that a slice of Kashmir is occupied over the next 25 years. There are many by China. pitfalls along the way. More than one major regional war will probably occur, causing a Iran and Iraq will likely remain generally deterioration of the general regional security hostile to each other and might again fight environment, and making it more difficult for over historical and ethno-religious enmity as any power or combination of powers to well as territorial disputes. Iraq and Turkey moderate political enmities and minimize could find themselves at war over some com- local arms races. Consider the following list, bination of the Kurdish issue, water rights, set down in rough order of the seriousness of and the ownership of Mosul and its oil rich the potential conflicts. These conflicts are environs. Syria and Turkey could also fall to discussed in conditional terms because, while blows over some combination of Kurdish the potential exists for all of them to occur, it issues, water rights, and the future of Hatay. A is not possible to predict exactly which of Greco-Turkish war over the future of Cyprus, them will occur. too, might subsequently lead Syria and possibly Iraq to launch a revanchist military Iran and Afghanistan could well find campaign against Turkey. themselves at war over Taliban policies toward Afghanistan's Shi'a Hazara population, In Central Asia, Kazakhstan and Russia drug and weapons running, interpretations of might struggle over northern Kazakhstan, Islam, and sheer geostrategic rivalry. Such a which is overwhelmingly ethnic-Russian in war might also involve Tajikistan and population. The post-Soviet states of Central Uzbekistan, each thinking to absorb the ethnic Asia could also become roiled in conflict over Tajik and Uzbek populations of Afghanistan the fertile and ethnically mixed Ferghana north of the Hindu Kush, where the writ of the Valley. Uzbek nationalism may become disrup- mainly Pashtun Taliban does not run deep. It tive, clashing with a rising Tajik nationalism could also pull in Pakistan, which in turn supported by Iran. Uzbekistan’s relations with could help destroy that country in its current Kyrgyzstan might decline over water disputes, territorial configuration. The collapse of a and the Kyrgyz may turn to a closer relation- nuclear-capable Pakistan would quickly ship with China for this and other reasons. become an urgent international security issue. Turkey and Iran could find themselves support- Such events, too, might then open the way for ing proxy warfare between Uzbek and Tajik an Indo-Iranian competition over the Punjab, interests, or being drawn into war themselves Sind, and Baluchistan. Both countries could over spheres of influence and client relation- have nuclear capabilities by the time such a ships in Central Asia. In the Caucasus, the

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Azeri-Armenian war over Ngorno-Karabakh noted above, and examine their potential could flare up again, for it is unlikely to be downside. finally settled soon. Continuing Russian meddling in Georgia and Tajikistan cannot be It is possible that generational leadership ruled out. Iranian-Azeri conflict over Azeri ir- successions occur throughout the Arab world, redentist claims is not out of the question either. Iran, Central Asia, the Caucasus, and South Asia, but the political characteristics and Existing Arab-Israeli political arrange- global orientations of the major regimes nev- ments could also collapse. Egypt might defect ertheless remain basically unchanged. from the peace arrangement with Israel on Currently autocratic regimes may well remain account of a change of regime in Cairo. A civil autocratic without having instituted signifi- war could erupt in the area of the Palestinian cant changes in their political structures. They may resist pressures to change, and catalyze Authority after the passing of Yasir Arafat, no little violence in the process. Thus, with the consequent reshaping of Israeli and episodic social unrest, religious violence, and Jordanian regional strategies. Contrarily, an ir- ethnic conflict could characterize the domestic redentist Palestinian state might manage to conditions of several states in the region. overshadow and envelop Hashemite Jordan, and make common cause with both a post- That unrest would most likely be trig- Alawi Syria and with a post-Saddam Iraq to gered in part by high population growth, but recreate an eastern front against Israel. Israel also by economic stagnation. The elites of might also be attacked by either Iraq or Iran in major states may react to globalization pres- a missile war over existential religious and sures with new forms of corruption and fake, historical issues. crony privatization schemes. This is already the case in some respects, and it is not hard to Even small wars could have serious con- see why.158 Many regional elites are simply sequences depending on where they are or doing what they have always done—taking, who fights them. A Saudi-Yemeni war over not making—in accordance with an attitude the still disputed region of Asir is an example. toward civic duty embedded deeply in the So would be fighting inside the Persian Gulf fabric of the local political economy. Here between the United Arab Emirates, possibly states have more often than not functioned ac- with Bahraini and ultimately Saudi support, cording to a rentier model. While in most against Iran over Abu Musa and the Greater countries citizens pay taxes to the state and the and Lesser Tunbs Islands, UAE territory state provides services, in many Arab countries occupied by Iran since 1971. the flow of money has been the other way around. States accrue resources from external It is highly unlikely that all or most of sources—oil revenues, port fees, banking these conflicts will actually break out over the services, and so forth—and then distribute the next 25 years. But it is even less likely that money as patronage down into the population. none of them will. The rentier model functions as a means of

158 See Ali R. Abootalebi, “Middle Eastern Economies: A s for regime change and national co- Survey of Current Problems and Issues,” Middle East Aherence, here we must return to the Review of International Affairs (Ramat Gan), September sources of social and political instability 1999.

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control for the state elite, but it vitiates the markets, either because turmoil and conflict ties of citizenship produced by a more have disrupted their flow or because alterna- standard model of reciprocal obligation tive sources of energy are developed. If that between citizen and government. 159 were to happen, these countries could become dramatically poorer, and the stability of these This is an important factor militating economies and regimes would eventually against elite support for any form of technol- become less important to the United States ogy-driven entrepreneurship that the elite and other major advanced countries, their cannot control. All non-hierarchical forms of own lingering investment portfolios notwith- social power would upset traditional arrange- standing. In any event, some of the smaller ments, and most elites will oppose it even at Gulf producers may reach the bottom of their the cost of overall economic stagnation. reserves over the next 25-years, and if they have not managed to diversify by then, they It is even possible that at least some will go bust. nervous governments will seek to maintain a near total insularity against social pressures Contrarily, the absence of energy alterna- and external allurements alike. They might tives, set against the inexorable limits of fossil simply refuse to condone, let alone advance, a fuel reserves, could lead to another sharp rise more open attitude toward the outside world. in prices between now and 2025. Oil-rich They may shun foreign investment despite the countries might then use bloated revenues to knowledge that they may miss a great wave of pursue regional political and military compe- regional prosperity. If such an attitude is titions, as they did in the 1970s. Corruption limited to countries like Afghanistan, Yemen, would likely increase, as would resentment or Oman, the implications would be modest. against elites. Surely, another oil shock would If it should come to influence Saudi Arabia, send the international economy, or much of it, Iran, and even an Islamist Pakistan, that once again into the doldrums, and that in turn would be another matter altogether.160 would again spell disaster for the non-oil rich It is also possible that Islam will not states of the region. provide a means to soften and advance social change. One could argue that Islamic soci- ery bad things could happen in the eties tend to cling to the two anchors of social Vbroader security sphere as well. The authority they best know and trust to ward off Greater Near East will remain heavily armed, chaos: religion and extended family. But and could be the region where the majority of these anchors cannot solve the demographic and social problems before them, and a 159 See Lisa Anderson, “Obligations and Accountability: downward spiral of insularity and dysfunc- Islamic Politics in North Africa,” Daedelus, Summer tional government may end up dividing such 1991. The same is true to a certain extent in India, where only a quarter of 1 percent of the population pays taxes. societies ever further from the world’s suc- 160 Oman and Saudi Arabia have been the two most deliberate- cessful models of development. ly insular Arab states in modern times. Oman began reducing its insularity in the 1970s; as a sign of the times While it is not likely, it is possible that oil in Saudi Arabia, in the fall of 1998 it became possible for and natural gas supplies from the region will the first time for foreigners to get a tourist visa into the no longer figure prominently in global country.

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new nuclear states emerge. Iran and Iraq are of these states—might suffer major political real possibilities. Other states, too, such as upheaval and be transformed into actively Egypt, Syria, Libya, Algeria, Saudi Arabia anti-U.S. regimes. In addition, and possibly si- and Morocco are keeping their options open, multaneously, the internal stability of Pakistan even while remaining parties to the Non- could come unglued in the face of political Proliferation Treaty. Prospects also exist for paralysis and economic distress, with Pashtun, states and terrorist groups in the region to Baluch, and even mohajir groups seeking their acquire chemical and biological weapons. own states. Long range missiles are under development in many countries as well. Over the coming 25 An anti-American regime in Saudi years, we should expect that such weapons Arabia, one so antagonistic that it would will be used in regional conflicts, as well as in refuse to sell its oil abroad, is not very likely. attacks against Americans abroad and But were it to come to pass and be allowed to possibly at home. stand, it would represent a major blow to the liberal economic order brought into being Extra-regional influences might also alter after World War II. the course of regional engagement for the worse. Such forces, consisting mainly of the It is also possible that the internal stabili- United States, Russia, Japan, China, Turkey, ty of India will decline sharply as Hindu and the EU, might engage in sharp competi- nationalism roils the implicit social compact tion over regional energy resources and of the multiethnic, multisectarian state. Even political loyalties, leading local states to act though the electorate may turn the ultra-na- recklessly and violently. tionalists out of office, they may not accept the verdict, but instead resort to extra-parlia- Political changes in regimes, especially mentary violence that severely undermines those in major states such as India, Egypt, Indian democracy. India could even break Saudi Arabia, Turkey, Pakistan, Iraq, and Iran, down as a national state, generating enormous could also lead to dramatic shifts in military political and humanitarian crises over the balances. This is a concern because, except in entire region for an extended period. India and Turkey, the processes of political Obviously, a failure to prevent a major war succession are not well institutionalized. with Pakistan or China could trigger such a Some of these regimes could be overthrown disaster. by revolution. It could be, for example, that after two generations of a flowering of Islamic eyond these two major potential neo-orthodoxy, the stage will have been set for Breasons for pessimism—the possibil- the reemergence of fundamentalist move- ity of regional wars and destabilizing regime ments amid economic depression and the change—there is a specific cause for concern failure of secular political parties to provide in the coming conflicts over water resources. viable political leadership. Regime upheavals might therefore produce several ultra-conserv- Such conflicts are particularly likely ative religious regimes in the region, each between Turkey on the one hand and Syria and successive case gaining moral and possibly Iraq on the other, and also potentially among literal support from the ones before. Egypt, Egypt, Sudan, and Ethiopia. There is little po- Turkey, Saudi Arabia, or Pakistan—or several tential for agricultural expansion in Egypt,

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which already achieves some of the highest power in the Persian Gulf or Southwest Asia. productivity-per-acre rates in the world, and Domestic political turbulence would continue there is much potential for both drought and to exacerbate interstate, inter-sectarian, and for more Nile water being used by upstream inter-ethnic relations. As a result, the United riparians.161 States would retain a significant military presence and diplomatic profile in the region. Water stress in the Jordan/Yarmouk valley system among Israel, Jordan, and the But two other possibilities exist. In one, Palestinian Authority will likely be ameliorat- the United States would not only persist with ed by some combination of regional current policies, but either definitively cooperation on infrastructure modernization, succeed or fail with them. In the second, the economic restructuring away from irrigated a- United States would choose not to persist. griculture, sewage water recycling, water imports, and desalination programs. Even If the United States persists and succeeds, with present technology and at current costs, it will mean that U.S. policies will have it would cost about $4 billion (including the brought stable peace not only between Israel major initial capital investments) to produce and all the major Arab states, but also in 700,000 million cubic meters of drinking helping to shepherd transitions to peaceful quality water through desalination for the first polities in Iran and Iraq, and a peaceful reso- year, and much less for each succeeding year. lution of the Indo-Pakistani conflict. Success That amounts to about half of the annual dis- would allow the United States to substitute charge of the Jordan river system, and would much or most of its military presence in the make up most of the region’s prospective region for a more robust diplomatic, cultural, water deficit. $4 billion is a lot of money for and commercial presence. Contrarily, U.S. a small region, but it pales besides the amount policies could fail to prevent more serious of money spent on arms imports. If human threats from arising, and the United States needs truly require it, governments and soci- might then increase its military presence eties will find it affordable. either to support a beleaguered Israel, to contain the rise of a regional hegemon, or It is also possible that within 25 years e- prevent certain countries from acquiring conomically sound ways will be found to tap weapons of mass destruction. From such a into large resources of fossil water deep failure the United States would risk, or go to, below the surface. Some geologists estimate war. that beneath the the Negev and Sinai deserts there may be reserves of potable fossil water The major alternative is that the United sufficient to last the entire Levant for more States might pull back from involvement in the than 250 years at current rates of utilization. region. Two interwoven sources for such a change exist. A lessening of common purpose inally, it almost goes without saying with the regional states is one. An unwilling- Fthat U.S. policy in the region will ness on the part of the American public to make a difference. One possibility is that U.S. policies, similar to current ones, will lead to 161 See Arnon Soffer, Rivers of Fire: The Conflict Over Water further pacification of the Arab-Israeli in the Middle East (New York: Rowman & Littlefield, dispute, but not to a stable natural balance of 1999), pp. 49-50.

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support expeditionary military deployments is than in all of sub-Saharan Africa.164 And another. That unwillingness could follow ter- economic growth has been anemic for the rorist attacks on Americans or from perceptions most part, as populations have grown rapidly. of U.S. vulnerabilities to missile attacks from such countries as Iran, Iraq, Egypt, Pakistan, Such conditions are headlines for the all- and India. In short, the possibility exists that we too-familiar bleak African story. Yet there is might not persist, succeed, or fail, but rather another story to be told. If one takes the disengage. longer view, the independence period in sub- Saharan Africa can be seen as a movement Sub-Saharan Africa from mostly single-party government backward to no-party military rule, and then ub-Saharan Africa’s last four decades, from military rule forward to more democrat- Sthe decades of the independence ic rule and more open societies. Potentially period for most of the countries in the region, far-reaching positive changes have been oc- have been characterized by rampant instabili- curring in many African states in recent years. ty, mostly despotic military rule, and Countries such as Benin, Botswana, Cape corruption unsurpassed in its sheer Verde, Malawi, Mali, Mauritius, Namibia, venality.162 The region has experienced Uganda, Ghana, Kenya, Tanzania, and frequent violent conflicts, including genocide Swaziland have been cultivating more demo- of Africans by Africans. While bloody cratic, market-based institutions.165 disputes over colonially drawn borders have Reformist leaders in these states are empha- been less frequent than might have been sizing the criticality of high standards of expected, such conflicts have taken place and governance, and they are plainly dedicated to have recently grown in frequency and scale. the serious improvements in the quality of life They pale only in comparison to the huge number of internal upheavals, lately evi- 162 Many African states fall near the bottom of global “corrup- denced by major troubles in Angola, the tion” rankings. See, for example, the “1998 Corruption Democratic Republic of the Congo, Rwanda, Perception Index” prepared by Transparency International Burundi, Mozambique, Sierra Leone, Liberia, and Goettingen University’s Internet Center for Corruption and elsewhere. The continent has also been Research. 163 home to massive organized criminal activity. Current HIV/AIDS cases in sub-Saharan Africa are estimat- Infectious disease, malnutrition, and both en- ed at about 14 million, fully two thirds of the world estimated total of 21.8 million. See UNAIDS Program vironmental and refugee problems have data, World Almanac, 1998, p. 840. As to refugees, 35 163 soared to catastrophic levels. Access to percent of the people of greatest concern to the UN High quality education has been a rare privilege in Commission of Refugees (UNHCR) globally are in sub- most countries. Shortages of fundamental in- Saharan Africa, the largest regional percentage by far. frastructure—roads, telephone services, UNHCR, The State of the World’s Refugees: A power, clean water, health care facilities and Humanitarian Agenda (Oxford: Oxford University Press, trained personnel, trustworthy police forces— 1997), p. 3. 164 Susan Rice, “Bram Fischer Memorial Lecture,” Rhodes have been chronic and severe in cities and Scholars’ Southern Africa Forum, May 13, 1999. villages throughout the region. Today, for 165 See Freedom in the World 1997-1998 (New York: Freedom example, there are more telephones in the House, 1998), pp. 600-1; and the 1999 Index of Economic Borough of Manhattan, or in central London, Freedom (Washington, DC: Heritage Foundation, 1999).

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for their countrymen. They are also often troduces people to new consumption patterns asking for the best international advice in for food, clothing, and other goods. The result building transparent, rule-of-law-based systems has been to stimulate demand, and that has of governance. As a result, these economies are aided economic growth in several countries attracting important outside investments166 and over the past decade. have been growing at very respectable rates, in several cases 7 percent or more a year.167 In Beyond the successes of several small and light of these accomplishments, some observers medium sized countries, there are also encourag- now herald an African renaissance. ing developments in two sub-Saharan giants— South Africa and Nigeria.168 South Africa is by

There is still more good news. Literacy 166 rates are growing throughout the continent and During 1990-94 the average annual return on book value of U.S. direct investment was nearly 28 percent, about three the communications revolution is underway. times the rate of worldwide return in that period. See While urbanization strains the capacity of gov- Department of State, “U.S. Trade and Investment in Sub- ernment to deliver services, it can also be a Saharan Africa,” December 1997. crucial element in the building of national 167 For example, 1998 GDP growth for Mauritius was over 10 identity. When people leave their regions, they percent, Botswana’s was about 7 percent, and Ghana’s leave the pull of clan and tribal authority about 6 percent. IMF, World Economic Outlook, October behind as well. While tribal groups tend to live 1998, p. 188. in certain districts of cities, in time they tend to 168 The approximate populations of these two states in 1999 mix together far more thoroughly than is were: Nigeria (113 million), South Africa (43 million). possible in rural areas. In some parts of Africa, Democratic Republic of Congo (50 million) and Ethiopia (59 million) are the other very populous non-Arab states too—most notably the Sahel—urbanization in- on the continent.

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far the economically dominant state in the would become the economic engine of West region.169 Nonetheless, it is experiencing sig- Africa, and a benign security presence for the nificant problems: very high unemployment region as well. rates, the highest (and still rising) crime rate in the world, and a majority of the population still n short, things may well come together. in poverty. Moreover, the post-apartheid period IPolitical and economic shifts of this is only six years old, and those six years were kind—toward democratic, market-based insti- spent under the remarkable influence of Nelson tutions—could potentially transform large parts Mandela. It is therefore too soon to make de- of Africa over the next 25 years, providing the finitive judgments about the future. But there basis for effective integration into the global are also positive events and trends. South economy. The small and medium sized core Africa is making the transition to a multi-racial states, which have already achieved a degree of democracy. A peaceful, second democratic democracy and made progress against corrup- presidential election took place in June 1999. tion, can serve both as magnets for more Developments in South Africa have also aided foreign investment in Africa and as role models the settlement of the civil war in Mozambique. of successful governance and economic policies for other regional states. If South For the first time in many years, too, Africa continues to make strong economic and Nigeria—a country with more than three times political progress, and if Nigeria can move de- the population of South Africa although a GDP cisively toward a more open, democratic only one-third as large—has at least a credible system and a vigorous economic revival, then chance to move away from an era of pervasive the prospects for this region could brighten sig- corruption, human rights abuse, and economic nificantly. mismanagement. Important positive develop- Crafting institutions of governance that are ments are in the works. The newly elected viewed with confidence by Africans will be a president, Olusegun Obasanjo, has committed complex task. Harnessing the capabilities in himself to breaking Nigeria’s crippling cycle of this region for effective democratic institutions corruption, to introducing fair governance prac- and free market development will depend over- tices, and to reviving the economy. His whelmingly on the leadership abilities of ambitious agenda includes designing and sus- African statesmen, civil servants, businessmen, taining an effective federal system, balancing and scholars. Strong leaders could construct ef- the interests of diverse regions with that of the fective coalitions both within the states and central government; bringing the military under with other governments and international civilian control; establishing an independent ju- agencies. Regional role models of integrity and diciary; and ensuring a continued pattern of commitment to good governance, with effec- open and fair elections. He will need help from the international community, and current indi- 169 South Africa’s 1998 GDP was $306.5 billion (in Purchasing cations suggest that he is ready to accept it. Power Parity terms), about one-third of Sub-Saharan Nigeria’s oil resources are a huge potential aid, Africa’s total (of $903 billion). The sub-Saharan African as is the cooperation of the companies that are country with the next largest GDP in 1998 was Nigeria, with $112 billion 170 involved in the exploitation of that oil. If 170 A short but interesting feature on Chevron’s relationship Nigeria can get on track, and has the help and with Nigeria is Norimitsu Onishi, “Deep in the Republic good fortune to remain on track, in 25 years it of Chevron,” New York Times Magazine, July 4, 1999.

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tive civilian control over the military, could be much harder to achieve, given the increase in shared throughout the continent, and built the number of children there will be to nurture. upon. Africa’s population is projected to nearly double by 2025—from 620 million people to One means of achieving effective informa- about 1.1 billion—even despite the AIDS tion sharing is through regional and sub-regional epidemic that is sweeping through much of the organizations. Such groupings, particularly continent. In that case, Africa would be almost those with a small number of similar states in the as populous as China today. Sensible family same sub-region, provide some of the best op- planning, and far-reaching educational portunities for furthering and supporting programs to facilitate such planning, thus democratic and economically liberal policies. At appear to be indispensable elements in a present, these groupings are very fragile. strongly positive evolution for Africa over the However, if they are reinforced by bold African next quarter century. It is not clear that such leadership and by proper incentives from abroad, programs will be forthcoming, but the advent then the region could potentially develop into a of good government throughout the region rad- markedly more important and constructive ically improves the chances that they will be player in the global economy. undertaken.

For the region as a whole, 4 percent real For a positive future, too, the epidemics that growth per year through 2010, and potentially 5 now plague Africa need to be brought under to 6 percent real growth per year from then better control. Unfortunately, AIDS, as well as a 171 through 2025 is plausible. To achieve this, variety of other major diseases, are likely to African statesmen and businessmen must work remain major problems even in the best case for hard to attract and nurture partnerships with the region.172 Of the 34 countries currently most private investors—to take full advantage of what plagued by AIDS, 29 are in sub-Saharan the global economy has to offer. If they can, then Africa.173 Making significant headway will they will also have a real chance to stanch and require that children as well as adults be treated even reverse the current “brain drain” of on a massive scale. Strong help from interna- talented, educated Africans that has so seriously tional health organizations, both governmental crippled states such as Nigeria over the last few and private, will be essential. decades. If South Africa and Nigeria make strong, steady progress in governance, stability, entral to this positive evolution will also infrastructure development, and economic be stemming the conflict and instability reform, then aggregate growth rates in the 7-8 C that has wracked so much of the region for too percent annual range may be possible for the long. This instability has come in a variety of region. Sub-regional or even regional common forms: intra-state crises as in Rwanda; state markets can certainly help significantly here; failures in such West African states as Sierra they can help exploit economies of scale and provide the advantage of what amounts to a 171 See IMF, Global Economic Prospects, October 1998, p. common currency. 189. 172 For details, see the United Nations population figures for Significant improvements in Africa’s stan- 1998. dards of living, infrastructure, education, and 173 Noted in “The Demographic Impact of HIV/AIDS,” United health between now and 2025 will clearly be Nations Population Division, 1998.

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Leone and Liberia; and protracted civil wars, as political and economic foci to include security in Sudan. Taken together, such conflicts have dis- concerns. The OAU’s Conflict Resolution placed upwards of 4 million people.174 All of Center, the Southern African Development these types of conflict may well continue through Community’s Political, Defense and Security the first part of the 21st century. Together with Organization, and the Economic Community of rising domestic crime in many states and the in- West African States’ operation in Liberia hold creasing prevalence of transnational problems promise for promoting African solutions to such as narcotics and money laundering, they regional conflicts and security concerns. Future clearly pose serious security challenges to all efforts can advance intra-regional cooperation African states. Indeed, the general problem of while seeking to spread positive political- corruption—at the top as well as elsewhere in economic gains throughout sub-regional areas.

AIDS Deaths and HIV Infections Total Cases to Date

Source: UNAIDS, AIDS Epidemic Update, December 1998.

society—may be the region’s most serious At the same time, Africa will need to be problem. engaged with states outside the region to take full advantage of global opportunities for devel- Progress in addressing fundamental politi- opment and security—through bilateral cal and social problems can help resolve the relationships and constructive partnerships in in- root causes of many conflicts in the region. ternational organizations. The United States has Here, too, there have also been a number of en- established programs such as the African Crisis couraging conflict resolution initiatives—both Response Initiative and the new African Center from within the region as well as by other con- for Security Studies. Such relationships can cerned parties—that will need to be reinforced for this positive evolution to have any real 174 UNHCR, The State of the World’s Refugees: A chance. Several African inter-governmental or- Humanitarian Agenda (New York: Oxford University ganizations have expanded their traditional Press, 1997), pp. 286-7.

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provide a basis for strengthening trends toward Emerging patterns of democratic governance democracy and economic liberalization, while may not survive. At worst, some of these states providing additional forums in which to seek could become havens for organized criminals conflict resolution. and political/religious extremist groups in possession of increasingly lethal weapons. he overall challenges for Africa are Tclearly daunting. Looking out to 2025, African economic growth, moreover, will a number of pessimistic futures are not difficult have a difficult time keeping pace with the to envision. Things might not come together, region’s rapidly growing population. Economic but fly further apart. growth at levels around 6 to 7 percent per Areas of Conflict

One or more of the populous states in the annum will be necessary in many countries just region, especially Nigeria or South Africa, but to keep up with population growth. Thus, some also Kenya or Tanzania, may fail to make of the robust figures on African economic economic and political progress. The all too growth in recent years are deceptive. Gross frequent conflicts in the region may persist or economic activity always increases with popu- intensify. HIV/AIDS may not be brought under lation, but it is per capita figures that matter control. Soaring population growth rates may most, and in this regard Africa’s progress is far continue despite the ravages of disease. less impressive.

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Such adverse outcomes would, of course, Events in the Democratic Republic of represent an enormous waste of Africa’s Congo and Ethiopia have violated the taboo human and natural resources. If significant against the violent changing of frontiers in headway cannot be made on many of these Africa. This could lead to more conflict. fronts, the United States and the rest of the Among those most vulnerable to ethnic con- world could face terrorist threats, refugee flagration and territorial reconfiguration are problems, an increase in organized crime, and some major ones, including Kenya, Uganda, health epidemics spilling out of the sub-con- Senegal, Angola, Tanzania, South Africa, and tinent to climes far and wide. Sudan—the last of which has suffered from more than 20 years of a civil war that still erhaps the central problem that may shows little sign of ending. Parise in and from sub-Saharan Africa is the splitting asunder of state frontiers. It is also possible that the examples of the Social pressures, bad government, and the Democratic Republic of Congo and Ethiopia spread of various transnational dangers could will strengthen the will of African elites to fracture many of the territorial states that maintain the territorial status quo, having now have been basically stable since the indepen- seen the costs of change. But if that does not dence period. The war in and over the happen, the weakening of respect for the Democratic Republic of the Congo may rep- existing territorial state system in sub- resent a major watershed for the worse in this Saharan Africa could trigger civil wars in as respect. In no regional fracas before the many as half a dozen African states. Such collapse of Mobutu’s Zaire has there been so strife could easily spill across borders as much serious and varied military intervention various ethnic groups seek to unite them- by African states into the internal affairs of selves under a single flag. Once the fighting another. The interests of Zimbabwe, Uganda, stopped, such a reconfiguration of states into Angola, and other states are so sharply at more homogeneous ethnic units could make variance, and the Congo’s ethnic diversity subsequent attempts at nation-building mar- and geographical swath are such challenges ginally easier. But the long-term to state-building, that the Congo may never consequences could be disastrous, for elites come back together as a single political unit that can more easily build nations on the basis in the shape it held in 1995. of ethnic solidarity can also more easily take them to war against alien groups. The ongoing war between Ethiopia and Eritrea is another cautionary example. The humanitarian fallout from such wars Eritrean independence was achieved in would be dramatic, easily overwhelming the unison with the Ethiopian government that existing capacities of non-governmental orga- overthrew the heinous regime of Mengistu nizations to manage them. As a world leader, Haile Mariam. But even though Ethiopia’s the problem would doubtless queue up to the borders were changed by consent, and even U.S. foreign policy agenda and, given the though the two leaderships professed friend- nature of American society and contemporary ship and peace toward each other, it was not electronic media culture, the U.S. government very long before the two countries fell into a would have to take up that agenda at least to ruinous border war. some extent. This would be so even if no

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concrete national interest, narrowly con- States. The region is home to the two largest strued, were at risk. U.S. trading partners—Canada and Mexico— and the destination of over 40 percent of all Another real possibility, probably more U.S. exports. The United States imports natural likely than the collapse of the territorial status resources from the region, including petroleum quo, is that the information revolution in from Mexico, Venezuela, and Trinidad. Africa will make borders increasingly mean- Additionally, cultural ties between the United ingless. State capacities are modest in this States and Latin America are strong; the United region, and they are unlikely to keep up with States has the fifth-largest Spanish-speaking new patterns of licit and illicit commerce. The population in the world, now some 17.3 million advent of mass communications in Africa will strong.175 At the same time, the geographical hasten the expansion of business competence propinquity of Canada, the Caribbean, Mexico, far faster than the expansion of government and Central America to the United States often competence. Thus, Africa is likely to be a makes the problems of one country a domestic prime example of states losing control over the concern for others—the United States included. levers of economic life, and having their legitimacy and longevity called into question as a Latin America, the Caribbean, and Canada consequence. are very distinct from each other. Latin America’s cultural and political roots were t is not at all clear whether sub-Saharan molded by their Spanish and Portuguese colo- IAfrica’s future will turn out to be bright nizers. The mix of indigenous tribes with or tenebrous. It could well be mixed, with Europeans created the social base that exists in some states achieving their goals of peace, Latin America today, but the mixing is differ- prosperity, and cultural renaissance, while ent in different countries. Less than one others descend into the pit of bad government percent of Costa Rica’s population is made up and social decay. In any event, as is usually the of indigenous people, for example, but indige- case, the future is up to the peoples of the nous groups constitute 44 percent of the region, and their leaderships. In a world where population of Guatemala, and substantial per- regions no longer have automatic strategic sig- centages also in Mexico, Peru, Bolivia, and nificance on account of the global competition Ecuador.176 among great powers, outsiders will not make or break Africa’s future. Nevertheless, the po- In contrast, the Caribbean islands trace tential for cooperation is great because African their roots primarily to English, French, and states may need and warrant outside assis- Dutch colonizers, and also to the institution of tance, and because the Western countries slavery as practiced by Europeans from the could, and should, see such assistance as self- 17th through the early 19th centuries. interested as well as charitable. An Africa in Parliamentary systems are the norm in the chaos is in no one’s best interest. Caribbean and, unlike Latin America, the

The Americas 175 The number of Hispanics in the United States is even larger—22 million—but not all Hispanics, a catchall term The Americas—defined here as Latin meaning those whose forebears came from Spanish- America, Canada, and the Caribbean—is a speaking countries, speak Spanish. region of unique importance to the United 176 CIA World Factbook, 1998.

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primary language is English. Canada also has has replaced protectionism in most countries a parliamentary system based on British tradi- as the chosen path for long-term economic tions. growth, a major shift in attitude from two decades ago. Steps have been taken toward n the last 20 years, Latin America has economic integration, most notably through Iundergone profound transformations. the Southern Cone Common Market or All of the 35 countries in the region have de- Mercosur, whose members are Brazil, mocratically elected governments, with the Argentina, Paraguay, and Uruguay. This has exception of Cuba. Free market economics earned the region much respect from in-

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vestors worldwide; some $40 billion per year, tion of military institutions, and the rights to on average, entered the area in the 1990s.177 free speech and organization are still tender Human rights abuses in the region have been shoots in many of the area’s formal democra- significantly curtailed, and several insurgen- cies. A sign of this fragility is the difficulty that cies in Central America have been ended by free media have had conducting objective polit- negotiation. Armies have for the most part ical polling in many countries.180 The citizenry stayed in their barracks, another shift in his- in many Latin American countries have not torical patterns. In short, Latin America has become fully comfortable with the attitudes, the gone far in transforming itself from an area “habits of the heart,” that ultimately undergird a dominated by authoritarian regimes with democratic polity. closed economic policies into a model of progressive political and economic development. Notwithstanding this mixed situation, the Americas will be an increasingly important Despite these positive trends, many Latin region for the United States over the next two Americans have yet to see the fruits of change. decades. U.S. trade and investment will increase. Income disparities in the region are the greatest Latin America and the Caribbean are projected to of anywhere in the world. A quarter of all have over 690 million people by 2025, roughly national income is in the hands of 5 percent of the twice the size of the European Union. An OECD population, and the top 10 percent absorb 40 study projects growth rates for Brazil’s economy percent of the wealth.178 The poorest 30 percent as high as 5.6 percent over the next 20 years.181 of the population receive only 7.5 percent of Should this projection prove accurate, Brazil will national income, and only a small middle class emerge as a major global economic power, with exists in most countries.179 Social conflict a GDP roughly equivalent to Japan’s today. In between native populations and those of addition, U.S. cultural ties with Latin America European origin is endemic in many countries, will grow stronger in the coming decades. In including Bolivia, Colombia, Ecuador, 2025, the Hispanic population in the United Nicaragua, Mexico, Peru, Guatemala, Honduras, States will be the largest minority group in the and Brazil. country.

Meanwhile, violence and crime are perva- What, then, will the future hold for the sive. The region also suffers from high levels of Americas, and how will that future affect the governmental corruption and graft. With United States? Four factors will be most economic growth uneven in most countries, the critical: how the economies of the major possibility of economically failed states—states that cannot reliably provide rudimentary services and that default on their international 177 Figure cited in Abraham Lowenthal, “Latin America in a obligations—cannot be ruled out over the next Time of Global Financial Turmoil,” March 1999 (unpub- 25 years. lished draft). 178 Inter-American Development Bank Report, Economic and Perhaps most important, Latin American Social Progress in Latin America: Facing Up to Inequality in Latin America (Washington, DC: 1998), p. 1. democratization is still fragile, except in Chile, 179 Ibid. Costa Rica, and Uruguay. The rule of law, 180 See here Humphrey Taylor, “Pollution,” The National respect for basic civil liberties, the existence of Interest, No. 51 (Spring 1998). mass-based political parties, the de-politiciza- 181 Projections based on data in OECD, The World in 2020.

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players fare in the context of the new global accounts for over 40 percent of Mexico’s GDP economy; whether liberal democratic and free and over 50 percent of Chile’s.184 Both the market principles prevail; how Mexico and Central American Common Market (CACM) Brazil evolve politically; and what role the and the Caribbean Common Market United States plays. We take these in turn, (CARICOM) have shown interest in strength- looking at both optimistic and pessimistic pos- ening their ties with NAFTA, which could lead sibilities. to their accession to the trade pact. The United ecent trends suggest that Latin States, Latin America, the Caribbean, and RAmerica will enter the 21st century Canada have already agreed on a concept of a from a positive economic base. Reforms initi- Free Trade Area of the Americas. Mercosur ated as a result of the region-wide debt crisis of will probably add new members over the next the 1980s have resulted in greater fiscal and 25 years.185 monetary discipline, lower inflation, a compressed public sector, and diminished barriers Hemispheric free trade is also progressing to international and regional trade. If the on a bilateral basis. Chile has free trade agree- region can sustain annual growth rates of 6 ments with nearly every country in the percent, as some observers have projected, its Americas, including Canada. Mexico has nego- countries will be better able to address wide- tiated a number of free trade agreements in spread poverty, poor educational and health addition to NAFTA, including ones with Costa systems, and other problematic social condi- Rica, Chile, Venezuela, and Brazil. tions. Since successful trade associations have Latin America has a demographic often been associated with positive political “window of opportunity” with which to attain outcomes, an Americas region tied together by these goals. Fertility rates are dropping and free trade might also cooperate effectively in population growth rates are decreasing. Between 1995 and 2025, average annual popu- dealing with other transnational issues such as lation growth rates are projected to fall from drugs, crime, and the environment. Also, 1.73 percent to 1.07 percent in Mexico, from regional economic interdependence might 1.33 percent to 0.76 percent in Brazil, and lessen the possibility of interstate conflict, from 2.71 percent to 1.41 percent in although history is replete with cases where Honduras.182 As a result, the number of this has not happened. working age people will rise in proportion to the number of children. A shrinking youth 182 The World Bank, World Development Indicators 1998. bulge, a larger work force, and a yet-to-have 183 Knight Kiplinger, World Boom Ahead: Why Business and aged population suggest a smaller financial Consumers Will Prosper (Washington, DC: Kiplinger burden on state resources and the chance to ac- Books, 1998), pp. 94-8. 184 1996 figures. Trade accounts for 75 percent of Canada’s cumulate domestic capital needed to finance GNP. education and other social projects. 185 The other regional associations are the Andean Group (Bolivia, Colombia, Ecuador, Peru, and Venezuela) and the The prospects for expanding free trade are Central American Common Market (Guatemala, also good, particularly given the importance of Honduras, Nicaragua, El Salvador, Panama, and Costa international commerce in the region.183 Trade Rica.

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In addition to trade integration, the and economic mainstream will help determine Americas will experience greater monetary in- if stability or conflict characterize these soci- tegration. Proposals for dollarization are being eties in the future. debated by the public and/or private sectors in Argentina, Mexico, and El Salvador. Currently, On a different level, many countries in the Latin Americans hold a majority of their region depend heavily on commodity exports, savings in dollars, and 70 percent of banking and in some cases on only a single commodity. assets and liabilities are dollar-denominated in The volatility of the commodity market leaves Argentina, Bolivia, Peru, and Uruguay.186 these economies vulnerable to the whims of the While dollarization is likely to be hotly debated global economic environment. Moreover, many both domestically and abroad, global trends countries lack the resources necessary to move indicate that a regional currency bloc is a strong beyond a commodity-based economy and are possibility by 2025. If a currency bloc in Latin unlikely to develop them over the next 25 years. America does emerge, it could prove to be a strong source of economic stability and help Second, the region suffers from a scarcity further unify the region. of capital and is likely to remain significantly dependent on external sources of capital over urdles to the region’s positive the next 25 years. This dependency is aggravat- Heconomic future should not be under- ed by the fact that the bond rating agencies do estimated, however. The most important is the not give most states in the region high marks. prospect that globalization will widen social di- The more positive climate for business that is visions and abet economic polarization. developing in Argentina, Uruguay, Bolivia, Existing class divisions in most Latin American Peru, Ecuador, Panama, El Salvador, Costa countries could be increased. The rich and well Rica, and Chile has improved their economic placed would be in a position to acquire the freedom rankings over the last five years. knowledge-based skills, the technological Higher bond ratings may well follow.187 devices, and the international contacts that Nevertheless, while sound fiscal policy is pro- would propel them into the world of cyber-pros- ducing somewhat higher rates of domestic perity. Meanwhile, the majority of the savings, these rates are not likely to increase population would remain in the barrios, getting significantly. Moreover, any increases in poorer and more distant from the opportunities income will tend to go toward relieving the of the early 21st century. This is a formula for burdens of protracted sacrifice rather than to social and political upheaval, and hence, ulti- capital savings. mately, for economic instability as well. Third, most Latin American countries are Even more daunting, sharp income differ- saddled with inefficient tax structures and high entiation divides many Latin American states rates of tax evasion. Therefore, the region’s along cultural lines. Many of the rural poor in Latin America are members of indigenous economic future will partly be determined by groups who remain largely outside the political its success in broadening the tax base and im- spectrum and represent a large portion of the proving collection. population in countries such as Bolivia, Peru, 186 David Ignatius, “Dollarization in Latin America,” Mexico, Guatemala, and Ecuador. Whether Washington Post, April 28, 1999, p. A25. these groups are incorporated into the political 187 Kiplinger, World Boom Ahead, p. 95.

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Finally, in order for national and intra- and has typically left matters under civilian regional trade in Latin America to flourish, the control. They have accepted post-transition region will need to develop a more effective defense reforms and budget cuts. They have transportation infrastructure. Good roads are in adopted new roles, including participation in short supply; many of them are so rough that peacekeeping operations. The border between large trucks and automobiles cannot drive on Ecuador and Peru, for example, is monitored them during the long rainy season. There are by a multilateral peacekeeping force that few trains connecting interstate trade centers includes soldiers from Argentina, Brazil, and and, as a result, Latin American producers Chile. In short, most Latin American military often have difficulty getting their goods to leaders have come to understand the impor- market. New projects take time and cost much tance of maintaining a democracy in order for money, and even the seemingly successful their country to be an accepted and respected ones, such as the Hidrovia waterway involving member of the international community. mainly Argentina, Uruguay, and Brazil, churn up opposition and many opportunities for graft. The democratization process has also been It is also the case that, as with other parts of the effective in reducing conflict in the region. It Latin American economy, infrastructure invest- has facilitated the peace process in Central ment relies heavily on foreign money. America by enabling former guerrillas in El Salvador, Nicaragua, and Guatemala to use he next 25 years will determine politics as a means to voice their concerns. whether Latin America’s march toward T Gross human rights abuses committed under democracy is successful or not, and the consol- closed, authoritarian regimes have been signif- idation of democracy is probably the most icantly reduced as democratically elected important overall determinant of the region’s governments have chosen dialogue with oppo- prospects for security and stability. The rela- sition groups over repression. Aside from a tionship between democratic governance and limited war between Ecuador and Peru, the economic growth is complex. In the case of Latin America, its prosperity may well be con- continent has been at peace ever since its de- nected to the capacity of its countries to open mocratic turn accelerated in the 1980s. themselves to the world economy. That is Latin American militaries will not likely be because international best practices tend to called upon to save their countries from aggres- reward accountability, transparency, and con- sive neighbors in the future. On balance, major sistency—all hallmarks of democratic rather interstate conflicts are unlikely over the next 25 than authoritarian governance. years. Border problems may still lead to tension One important sign that Latin American and even small skirmishes, as we have seen in democracy may prosper in the years ahead has the recent past between Ecuador and Peru. But been the transformation of military institutions. the chances for such conflicts are dwindling, Many military leaders in Latin America have symbolized by the fact that Argentina and Chile donned civilian clothes and turned to electoral finally managed in the spring of 1999 to de- politics in order to wield legitimate power, marcate their border to mutual agreement after which is a long way from the strongman more than a century of dispute. For the most (caudillo) style of the past. The military itself part, too, any such border problems will not be has shunned intervention over the last decade traditional conflicts over territory as such, but

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rather over water rights, pollution, and migra- beyond the tight, if formally democratic, elite tion issues. that has run the country since 1960. But his own democratic credentials are unclear, and his As a result, the major security threats to sympathy for protectionist economic policies is regional states will generally not be from their well known. It is still unclear whether he is neighbors, but rather from domestic insurgen- trying to consolidate power in order to bring the cies, drug trafficking, organized crime, and fruits of democracy to all of Venezuela’s natural environmental disasters such as hurri- canes and earthquakes. These natural disasters, people, or to re-establish authoritarian rule of course, are exacerbated by human foibles: under his own fist. deforestation and excessive building in flood- Perhaps the most vexing challenge to the prone areas. But except for natural disasters, progress on the economic front and strong de- development of Latin American democracy, as mocratic institutions will be more important for well as society as a whole, is the proliferation addressing these challenges than military of crime, corruption, and illegal drug traffick- forces. ing. In countries such as Colombia and Mexico, organized crime groups have penetrated the Defense budgets will probably continue to upper echelons of government. Corruption in fall in real terms and as a percentage of GNP.188 Latin America stems mainly from the practice In some cases, these budget trends will make of clientilism, an historic patron-client relation- significant military modernization impossible. ship where some members of the elite obtain Weapons of mass destruction programs are also public office by trading promises of patronage very unlikely to commence. In the 1980s and and largesse. Consequently, some state officials early 1990s, Brazil and Argentina eliminated often accept bribes or promotions as common their nuclear programs and no other state to doing business, a practice that tends to mis- (except for Cuba) is even suspected of wanting to develop weapons of mass destruction of any allocate resources and to undermine the kind. legitimacy of state institutions. Latin American drug cartels have turned drug trafficking into a nfortunately, not all signs are positive profitable and highly developed industry, Ufor the development of democracy. If netting them hundreds of millions of dollars a Latin American engagement in the global year. While Latin American politicians ac- economy widens inequalities, democracy could knowledge the gravity of these problems, many fall before the deepening of oligopoly as vested Latin Americans view their governments as ap- elites try to protect themselves from change. Or athetic and ineffective in combating these democracy could fall before a potentially threats. The result in the future could be social violent populism that would reverse market unrest, a greater centralization of government reforms, and whose own respect for democrat- control, and even calls for strong presidents to ic norms is shallow. rule by decree. Venezuela may provide a test case. The 188 See Stockholm International Peace Research Institute, current president, elected as a populist in SIPRI Yearbook 1998:Armaments, Disarmament and December 1998, promised to widen the International Security (Oxford: Oxford University Press, country’s political system to include those 1998), p. 214.

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he United States has an interest in Brazil to devalue the real and raise interest TLatin America as a whole, but two rates. Credit could then dry up, limiting invest- countries are especially critical: Brazil, because ment and forcing the economy into a recession. it is so large, and Mexico, because it is so close. Steep interest rates would increase the number of non-performing loans and could push the Brazil is responsible for approximately 40 banking sector to collapse. The hardest hit percent of Latin America’s total GDP. A deep would be the poor and the middle class, de- and prolonged economic recession in Brazil stroying the ability of the latter to generate the would have serious effects on the regional domestic savings necessary to reduce Brazil’s economy, especially for its Mercosur trading dependence on foreign capital. A severe partners. Even in the more positive future, economic downturn in Brazil is a real possibil- several factors may obstruct Brazil’s achieving ity, well within 25 years. the economic success many have predicted for it: deeply entrenched vested interests within Extended negative GDP growth in Latin state and federal levels of government that America’s largest economy also would have complicate economic policymaking; the poten- region-wide repercussions. Lack of investor tial for monetary instability; dependence on confidence in Brazil would likely result in less external capital; and the worst distribution of investment for all Latin American countries as income of any nation in the world. domestic and foreign investment seeks safer havens. This could result in a region-wide re- While Brazil has moved to correct these cession, which in turn could affect American problems and is likely to make much progress commercial ventures in Latin America and over the next 25 years, investor confidence reduce U.S. exports to the region. could still plummet, sending Brazil’s economy spiraling downward as foreign and domestic in- In sum, Brazil’s economic well-being vestors shift to lower-risk environments. First, remains a key question mark over Latin doubts persist about the viability of Brazil’s America’s future, and would affect U.S. banking system. Second, the Brazilian economic well-being, too. If the country is able economy could stumble if the privatization of to perform to its potential, it can help drive the state-owned enterprises either falters or fails to region toward a more prosperous future. If the increase industrial efficiency and global com- Brazilian economy falters, the entire region petitiveness. Third, poor exchange rate policy will suffer the consequences. could result in an overvalued real. Lastly, the richest one percent of Brazilians control nearly exico has made many economic and half the land; land reform is critical, but it is by Mpolitical strides over the past two no means clear that it will occur.189 decades. It has replaced its import substitution industrialization strategy with free market Furthermore, Brazil’s economic stability is oriented policies, culminating with its acces- dependent on market perceptions, given its sion to NAFTA in 1994. Additionally, its high level of dependence on external capital to 189 Allen Hammon, Which World? Scenarios for the 21st 190 finance its current account deficit. If in- Century (Washington, DC: Island Press, 1998), p. 131. vestors lose confidence in the Brazilian 190 According to World Bank figures, Brazil’s current account economy, it could provoke a serious economic deficit in 1996 was $24.3 billion before official capital crisis. Excessive capital flight could force transfers.

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political system has gradually liberalized, mount widespread and effective protests. That becoming more pluralistic and competitive. could seriously strain U.S.-Mexican political Both of these developments have made and economic relations. If the cycle of protest Mexico’s economy more robust, as demonstrat- and repression were to get out of hand, it could ed by its successful weathering of the recent send many more Mexicans across their Asian and Russian financial crises. northern border than are liable to come anyway.

Nevertheless, Mexico remains vulnerable On the other hand, and probably just as on several fronts. The economy is not solid. It likely if not more so, democratization could will take years to develop a well-regulated continue on its current path, with more power banking sector, as a result of the careless devolving from the executive to other federal lending that preceded the 1995 debt crisis. Like branches and the states. Given Mexico’s het- Brazil, Mexico’s financial well-being is also erogeneous character, such a devolution could highly dependent on external capital. eventually result in the country’s break-up. Furthermore, its fiscal stability is overly depen- State governors might take on greater responsi- dent on the world oil market. As a result, a bilities for providing public services and number of internal weaknesses and external domestic security. While not very likely, shocks could cause severe economic difficulty Mexico might even split into northern and for Mexico over the next 25 years. southern parts. Today, the income generation of the northern border states largely subsidizes the Mexico could also face acute political in- poorer southern states. If the northern states stability, either through an over-centralization gained more control over their tax dollars, it is or a decentralization of power. For the past 70 possible that they would be less interested in years, power has been centralized within the shouldering the economic burden of their presidency under the control of the PRI (Partido Revolucinario Institucional). In the southern brethren. 1990s, Mexico moved toward a multiparty nother closely related realm of poten- democracy, with opposition parties winning a tial instability is social in nature. number of state governorships and control of A Mexico has one of the highest measures of the lower house of the national legislature. But income inequality in Latin America and has the PRI has not relinquished the Presidency already faced a number of uprisings in the since it took power in 1929. While some other largely rural southern states of Chiapas, party might win a presidential election, the ruling party is still strong and, faced with poli- Oaxaca, and Guerrero over poor standards of tical defeat, it could execute an internal living, lack of job opportunities, and govern- coup—an autogolpe—to keep itself in power. ment disinterest in the well-being of peasants That may have already happened once: many and indigenous peoples. Urban unrest is also a Mexicans believe that Carlos Salinas stole the possibility as more people move to the cities 1988 presidential election from Cuauhtémoc and frustrations mount because their rising ex- Cárdenas. pectations cannot be met. The combination of a restive rural and urban population that per- If the PRI were to hijack a future national ceives the federal government as failing to meet election, the sizeable and well organized oppo- its economic needs or provide sufficiently for sition that has developed in recent years could its personal security, could be a volatile mix.191

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Clearly, the United States cares deeply American States. But such an extreme contin- about acute instability to its immediate south. gency is very unlikely over the next 25 years. Mexico is the second largest trading partner of the United States, and economic chaos there inally the role of the United States will would depress American exports. Profits of the Fbe important to how this region numerous commercial ventures in Mexico develops in the future. Latin America will not would shrink. Economic or political instability be a major strategic-military concern, but the in Mexico would increase pressures for more political and economic future of the region will migration to the United States and evoke matter a great deal. The United States will care American resistance in many forms. Moreover, as to whether free trade and democratic institu-

U.S. Trade with NAFTA Increasing

Source: U.S. Census Bureau, U.S. Trade in Goods and Services - Annual Revision for 1991-1998, May 1999. Note: NAFTA went into effect Jan. 1, 1994.

lack of political control and economic hardship tions survive. It will also wish to avoid any would also encourage the drug trade to flourish, major polarization between the northern and along with other criminal enterprises, and southern parts of the hemisphere. would certainly infest the U.S.-Mexican border region with crime and violence. There are several ways free trade could be threatened. If global economic integration Political, economic, and social instability comes unstuck and a prolonged economic in Mexico would arguably be the most serious meltdown occurs, Latin American leaders national security threat to the United States that could emanate from Latin America. Given 191 The number of crimes reported to the police grew 36 Mexico’s size, such a debilitated environment percent from 1994 to 1995 and 14 percent more in 1996, would be difficult to contain and could even but most crimes in Mexico go unreported. See “A Stain raise the specter of a U.S. military interven- Spreads Across Latin America,” Los Angeles Times, April tion in tandem with the Organization of 25, 1999.

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might look inward for economic growth, Such instability would create an opportuni- adopting protectionist economic policies to ty for nationalist political leaders. Such shield their countries from external threats. A aspirants will likely be populist, guaranteeing protectionist regional policy could also emerge tangible results, while also appealing to Latin as a result of growing popular resentment to America’s traditional sense of personal politics. external prescriptions for the region’s ailing e- Even today, populism has shown a resurgence conomies. Many of the IMF and World Bank in Venezuela, where Hugo Chavez utilizes ref- policies include politically unpopular measures erendums, social promises, and a packed such as cutting subsidies and improving tax constituent assembly to govern. collection practices. Or South American leaders could become increasingly disenchant- The election of a nationalist Latin ed with U.S. trade policy, and shift their trading American president under such circumstances links to Europe. Currently, over 27 percent of could have an important economic side effect. Mercosur’s exports go to Europe. Imports from Whether for domestic political reasons or the European Union to Mercosur increased 104 simply a desire to change economic directions, percent between 1993 and 1996—32 percent populist leaders might pursue protectionist more than imports from the United States.192 economic policies to shield themselves from U.S. and world influence. That could signifi- There is also a broad political route to cantly reduce trade between Latin America and trouble. Inward looking economic policies could the United States, Europe, and Japan. emerge as a result of weak economic performance over a prolonged period of time, Relations between the United States and a bolstering the notion that free market trade protectionist Latin American country (or sub- policies hinder rather than promote income region) could become particularly strained. equality and poverty reduction. At a popular level Latin American leaders would reduce ties to the this view could generate support for political can- United States and other developed countries to didates who adopt less globalist and more placate domestic political opinion. The lack of protectionist platforms.193 economic cooperation could also hamper cooperation on immigration, drugs, pollution, and Resentment against neoliberal policies other transnational issues. could be channeled through the political system and outside of it. Radical political parties might The most likely area where such negative develop more support and polarize a political developments could occur is the Andean landscape generally dominated by two elite region. Today the Andes is one of the most parties. These radical parties might also have economically depressed areas of South military arms much akin to IRA or the ETA, which have committed terrorist attacks to 192 Sam Laird, “Mercosur: Objectives and Achievements,” attract public attention. Popular anger toward World Trade Organization paper, May 23, 1997. 193 the state could also be channeled outside the In brief, populism has led to economic failure in the past political spectrum through armed guerrilla for Latin America mainly because the state did not have enough revenue to support service-driven political movements. Increasing financial and popular policies. A single country could not implement these sorts support for new and existing guerrilla groups of policies if capital inflow dried up and loans were not could foment violent attacks against the state available. It is conceivable, however, that this capital could and civilians alike. come from the growing regional trade now taking place.

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America. If poverty and social inequality inally, a few words about the Caribbean continue at the current pace, by 2025 the Fand Canada. Andean region could be wracked with violence, corruption, and instability. In the last 40 years, The states of the Caribbean are, for the guerrilla movements have been prominent in most part, very different culturally from Latin the region, including an insurgency in Bolivia America. Except for Cuba and the Dominican led by Che Guevara, and, more recently, the ac- Republic, Spanish is not the language of most tivities of the Sendero Luminoso and Tupac of its lands. Their economies are small, as is the Amaru in Peru. size of most countries’ land masses, and their resources are generally scant—save for oil in Given the rough terrain and poorly guarded Trinidad. Democracy is widespread but often frontiers in the region as a whole, there are few fragile, and population and social pressures are constraints on guerrilla movement back and many and growing. Also, the Caribbean is forth across state borders. That raises the possi- unique in that a few of its islands are still bility of non-state actors re-aggravating ruled as colonies of France, Great Britain, historical grievances and sparking a broader and the Netherlands.194 regional conflict. The fact that armed guerrillas in Colombia have already violated the border For the most part, this nearby area of the world poses non-traditional security with Panama and Venezuela illustrates the problems for the United States. One concerns problem. Additionally, it is possible for a illegal immigration and another the role of the populist government, elected through democra- islands in the drug trade and money laundering. tic means, to evolve into an authoritarian If there is reason to worry about criminality regime as a result of societal stresses and a overwhelming relatively large states such as general loss of confidence in democracy. Russia or Nigeria, there is even more reason to An uncooperative relationship between the worry about the Caribbean, where government United States and Latin America could arise capacities are small relative to the syndicates not only from poor economic performance, but they sometimes face. There is even a question also due to resentment stemming from U.S. po- of fundamental viability for many of the litical and economic policies in the region. smaller island states in the region, and this is reflected in the growing number of shiprider a- Leaders in Peru, Bolivia, Ecuador, Colombia, greements that have been negotiated with the or the Caribbean could become increasingly United States. Such agreements allow local of- frustrated with U.S. drug policies. Combined ficials to board U.S. Navy or Coast Guard with popular nationalist sentiment, this frustra- vessels operating in their own territorial waters tion could produce a widespread anti-American against smugglers and thieves—to deputize attitude. Countries like Chile could also exude an anti-American position due to its mounting 194 Specifically, French possessions in the Western hemisphere frustration with U.S. economic policies. A are Martinique, Guadaloupe (and, much farther north, St. powerful South American economic pact might Pierre y Miquelon); the Dutch include Aruba and the Dutch Antilles (Curaçao, Bonaire, Saba, St. Eustatius, and even put its principal members in a position to part of St. Martin); and the British possessions are the demand political and economic concessions Falklands, Montserrat, the Cayman Islands, Anguilla, from the United States, and to threaten to take Bermuda, the Turks and Caicos Island, and the British its business to the EU if Washington demurs. Virgin Islands.

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them, so to speak.195 There are also gangs from prepared to expand further its economic and various islands residing in the United States political ties with the international community. who are used by friends at home to smuggle goods and launder money. But Raúl may not succeed Fidel, and in this case, post-Castro Cuba could fall into a bitter Haiti is a special problem. Its condition is power struggle between traditionalists and its poor in almost every regard, and that is despite would-be reformers. Although the length and in- marked improvement since the end of the tensity of such a struggle is uncertain, it would Duvalier era. Political violence and related im- engender short-term, and possibly longer-term, migration pressures could recur at any time, instability. Organized criminal groups could take and the likelihood that they will sometime in advantage of such instability to establish them- the next quarter century is high. selves on the island, using Cuba as a base for immigrant and narcotic smuggling to the United Cuba is a special problem, too, but in a dif- States. If the reformers were to come out on top, ferent way. Haiti and Cuba have in common the the prospects for democratic politics in Cuba fact that their difficulties get translated into U.S. would rise, even in a struggle fought ostensibly domestic, not foreign, politics thanks to sizeable over the proper path to socialism. But such a émigré communities resident in the United struggle could lead to economic collapse, social States. What happens in Cuba over the next 25 violence, and massive, panic-driven attempts to years will not have dramatic national security emigrate on the part of tens of thousands of implications for the United States. There will be people. The Florida Straits would once again no foreign military bases on Cuban soil, no become a mixed scene of misery and heroism, fearsome Cuban weapons program, no export of and the United States could be forced once again venomous anti-Americanism from a revived, post-Fidel communist vanguard. But the to take action. country is a political lightning rod, not just A third post-Castro Cuba envisions Cuba’s because of pressures from the Cuban-American expatriate population in the United States community, but also because of Cuba’s emo- taking control of the island. But this would not tional Cold War legacy. happen easily, and it is on balance unlikely. The Various scenarios are possible. Raúl Cuban population of the United States that has Castro, Fidel’s brother and leader of Cuba’s its eyes and heart set on ruling Cuba after Fidel armed forces, is Castro’s heir apparent. He came largely from the pre-Communist elite. would likely rule indirectly by selecting a While most Cubans are less than thrilled with pliable civilian to run Cuba’s daily affairs, Communism, they do not remember the Batista while he maintained control over the the dictatorship and those associated with it with country’s military and internal security forces fondness either. They consider those who left to as well as the levers of economic power. Cuba’s be something less than fully patriotic, battle- atavistic Communism would probably evolve scarred, and worthy of political power. To the into some form of “institutionalized commu- extent that the expatriot community appears nism” without ideological pretense or energy. It powerful in the context of a post-Castro Cuba,

would become a one-party authoritarian state, 195 See Elliott Abrams, “The Shiprider Solution: Policing the not unlike China and Vietnam, that would be Caribbean,” The National Interest, No. 43 (Spring 1996).

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it may even convince various factions in Cuba poorer eastern maritime provinces of Canada— to avoid exploitable divisions. Nova Scotia, New Brunswick, and Prince Edward Island—might seek such a course out of As for the rest of the region—the islands— a mix of desperation and self-interest. And unlike it is possible that state failure and colonial some small Caribbean islands, which have few fatigue in London, Amsterdam, and even Paris significant natural resources, Canada has large will enjoin the United States to take a more fossil fuel deposits, rich minerals, fisheries and active security role in the region than it does timber preserves, and, perhaps most valuable of now. Even the U.S. acquisition of territory as all, about 20 percent of the world’s fresh water well as responsibility by mutual consent resources. Given the stakes involved for the cannot be ruled out. Since the Danish Virgin United States, it is a matter worthy of some Islands were sold to the United States in 1918, the political status quo of the region has not serious thought. changed from a strictly U.S. perspective. It is, of course, very unlikely that any U.S. While not very likely, in the next 25 years it government would seek such an outcome. It is just might. a long way from 1812, and if the United States he same might even be the case with has a best friend, and a partner in spirit as well Tregard to Canada. It is alarming to as basic interest, it is Canada. Canada is most contemplate, but within 25 years the Canadian likely to cohere and to prosper, and because it confederation might collapse. It is not only the does some things differently from the United issue of Quebec that might cause such a thing, States, it may serve as a most helpful mirror although it is the most likely catalyst.196 for us in many policy areas. The likelihood that Despite different political traditions, the the United States and Canada would further western provinces of Canada are already more coordinate foreign and security policy over closely attached, economically and even cul- global humanitarian and environmental issues turally, to their cousins in the western United of mutual interest is also very high. States than they are to Canada’s eastern provinces. Vancouver is pulled in many ways more toward Seattle, as well as to Tokyo and Hong Kong, than it is toward Ottawa.

Canada’s breakup, which even many Canadians concede is possible, could send strong shock waves through the United States. After all, there is no society in the world more like our own than Canada’s, and its dissolution may add fissures to American solidarity. Already western-

ers of both countries speak about the “imperial 196 Technically, this is already the case, for Quebec never capitals” in Washington and Ottawa. While signed the 1982 constitution. unlikely, it is at least possible that British 197 Perhaps Manitoba, the Yukon, and the Northwest Columbia, Alberta, and Saskatchewan might Territories, too. The combined population of British become part of the United States within 25 Columbia, Alberta, Saskatchewan, Manitoba, the Yukon, years.197 Perhaps as likely, if not more so, the and the Northwest Territories is about 9.3 million.

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III. The U.S. Domestic Future The sensible place to begin a forecast of the American domestic future is by examining the demographic, social, technological, economic, and he United States will likely remain the political trends emerging today. What follows is Tmost powerful country in the internation- such an examination, tempered by an awareness of al arena over the next quarter century, and it will be possible discontinuities. That examination is bound to the rest of the world through a web of po- followed, in turn, by a brief discussion highlight- litical, cultural, technological, and economic ties. ing the key trends affecting U.S. national security. Hence, the future U.S. domestic environment will ineluctably influence the world around it, just as Social Trends events outside U.S. borders will affect the environment here. ome aspects of social change are more Spredictable than others, and the elemental America, then, will be in and of the world, but point of departure for examining social reality is which America? Who will we be? What will we thus usually the demographic one. This is because want as a nation, for ourselves and for others? Will people form political communities, and their we have the means, the social cohesion, and the numbers and nature are crucial to any forecast requisite leadership to achieve our aims? about those communities.

Analyzing the impact of future domestic con- The central datum about the American popu- ditions on U.S. national security is a formidable lation is that it is expanding and will continue to undertaking. While some of the domestic determi- grow over each of the next 25 years. This may nants of national security are obvious—economic seem a banal statement, but it is not, for most other capacity, for example—others are more subtle and advanced societies will experience stable or di- difficult to measure. A lack of social cohesion, for minishing populations during the same period. example, would affect national morale and, ulti- Today, the American population numbers about mately, the economic performance of the country, 273 million; by 2025 it should grow to some 335 as well. Changes in deeper values and attitudes million.198 could affect the willingness of Americans to sacrifice for national goals. As always, too, public The growth of the American population has opinion will play a role, and here the evolution of important economic implications, one of which the American media culture in shaping that concerns the aging of the nation. Between 1990 opinion is obviously relevant. and 1998 the median age of Americans rose 10 percent to a record high of 35.2.199 By 2025, the This latter issue, which amounts to forecasting national median age will rise another 10 percent if the popular will at any given moment some years life spans follow recent trends—though medical hence, is notoriously difficult to handle. While advances could raise the median even higher.200 values and attitudes change only slowly, public 198 opinion over particular issues or courses of action U.S. Bureau of the Census, International Data Base at can oscillate abruptly in response to unforeseen www.census.gov/ipc/www/idbprint.html. 199 “Americans’ Median Age Is 35.2, the Highest Ever,” New events. If history and experience are any guide, it York Times, June 15, 1999. surely will oscillate, because in the future no less 200 “Global Aging in the 21st Century,” U.S. Bureau of the than in the past, American society will experience Census (Washington, DC: U.S. Department of Commerce, any number of shocks and surprises. December 1996).

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While the United States will be the last of the eligible for Medicare, and by 2030 Medicare developed nations to experience the aging of will be the primary insurer for one out of four its population, by 2025 nearly 18 percent of Americans.205 As the country ages, costs for 201 all Americans will be over the age of 65. health care will constitute an increasing fiscal As a result, the ratio of those in the work- burden and will stand in competition with other force for every person receiving retirement spending, including spending for defense and benefits will drop to about 2.3 to 1 from 3.9 foreign policy. to 1 in 1995.202

Other trends will offset some of the effects and costs of an aging America, however. One is The Aging of the U.S. Population

Source: Population Projections of the United States by Age, Sex, Race, and Hispanic Origin: 1995 to 2050 (Washington, DC: U.S. Bureau of the Census, 1996), p. 12.

immigration, but the extent to which it will do 201 so is a function of yet to be determined immi- Peter G. Peterson, Gray Dawn: How the Coming Age Wave Will Transform America—and the World (New York: gration policies. Another is a likely shift in the Random House, 1999), p. 29. retirement age as more Americans remain 202 Marilyn Moon, "Medicare, Medicaid, and the Health Care healthy and active for longer periods. There is System," Life in an Older America, Robert N. Butler, also the venerable American tradition of private Lawrence K. Grossman, and Mia R. Oberlink, eds. (New plans to supplement the retirement income of York: The Century Foundation Press, 1999), p. 42. middle- and upper-income families.203 But 203 In 1970 the foreign born percentage of the U.S. population problems will persist. Health care costs will stood at 4.7 percent; by 1997, it was 7.9 percent. continue to increase on account of both an Campbell J. Gibson and Emily Lennon, Historical Census Statistics on the Foreign-Born Population of the United aging population and the advent of new treat- States: 1850-1990 (Washington, DC: U.S. Bureau of the ments made possible by scientific discoveries Census, February 1999). 204 and technological innovations. In 2010, the 204 Peterson, Gray Dawn. first of the baby-boom generation will become 205 Moon, “Medicare, Medicaid, and the Health Care System,” p. 41.

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he racial and ethnic composition of What these data do not tell us is whether TAmerica will also change. Minority such changes will be accompanied by greater racial and ethnic groups will constitute a larger or less social harmony. Objective realities with proportion of the population as the non- regard to relations between racial and ethnic Hispanic white category falls from 72 percent groups do not always match the perceptions of to 62 percent of the total population in 2025.206 those groups. For example, while nearly every Hispanics will become the largest minority socio-economic and attitudinal indicator shows group by 2025, increasing their percentage of the considerable progress made by black the population from around 11 percent to Americans over the past four decades, polls nearly 18 percent. The Asian/Pacific Islander show that large numbers of blacks believe that

Increasing U.S. Ethnic Diversity

Source: Population Projections of the United States by Age, Sex, Race, and Hispanic Origin: 1995 to 2050 (Washington, DC: U.S. Bureau of the Census, 1996), p. 12.

population will increase from almost 4 percent their relative situation is worse than it used to to more than 6 percent. The black percentage of be.207 Perceptions matter, and they have poten- the population is projected to remain fairly tial national security implications. Those who stable, rising from about 12 to 13 percent. At feel alienated from others in their society are, on the same time, intermarriage is also changing balance, less likely to sacrifice for the common the country’s racial mix. Demographic data welfare. suggest considerable intermarriage between Hispanics and non-Hispanic whites and 206 All data in this paragraph are drawn from Population between Asians and non-Hispanic whites. Projections of the United States by Age, Sex, Race, and Intermarriage rates are much lower between Hispanic Origin: 1995 to 2050 (Washington, DC: U.S. blacks and other groups. Taken together, these Bureau of the Census, 1996). data suggest a more racially mixed American 207 Analyzed in Orlando Patternson, The Paradox of society by 2025. Integration (Washington, DC: Civitas, 1997). . 118 NEW WORLD COMING 71730_DAPS_RSRCH.qx 9/22/99 4:24 PM Page 119

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ducation, too, will be a critical factor in percent are functionally illiterate. Unless EAmerican social life, for it will affect progress is made in this regard, the transforma- the quality of leadership in all spheres as well tive potential of the information revolution will as the technological competitiveness of be proportionately limited.211 American society. Here the trends are mixed. American society is experiencing some The United States ranks first among the industrialized countries in the size, scope, and positive social trends, among them sharply excellence of its undergraduate and graduate e- falling crime rates and strong job creation that ducation. Hundreds of thousands of foreign has permeated all social strata. But other students are enrolled in American universities, problems loom. The number of children being making U.S. schools the most sought after in reared without both parents has grown the world. Indeed, large numbers of Ph.D. markedly in recent years, tracking with both in- students in natural sciences and engineering creased divorce rates and out-of-wedlock programs are foreign born—in excess of 30 births. In 1970, 14.8 percent of children did not percent in mathematics, computer science, live with both parents; today, this figure stands chemistry, physics, chemical engineering, elec- at 42 percent—nearly a tripling in less than 30 trical engineering, and mechanical years.212 This trend is especially pronounced engineering.208 Many graduates stay in the in some minority communities, where as many United States after completing their studies. as 80 percent of all children will spend a sig- These general trends are projected to continue nificant part of their childhood with a single over the next 25 years. parent.213 At the same time, below the university This trend is worrisome because numerous level U.S. education compares poorly with that studies have shown that children from single in other countries in several key aspects. In parent households are far more likely to be mathematics and science, for example, U.S. poor, inadequately educated, and involved in high school seniors have scored well below the criminal activities than those that grow up with international average, with students from the both parents. Some 45 percent of children Netherlands, Sweden, Iceland, France, Canada, living with a single parent live in poverty Israel, Slovenia, Germany, Russia, and the compared to less than 10 percent in two-parent Czech Republic regularly outperforming Americans.209 The poor U.S. performance in 208 National Science Foundation, National Science Board, high school math and science may jeopardize Science and Engineering Indicators, 1998, NSB-98-1, America’s future economic and technological 1998, pp. 3-19. 209 competitiveness. More worrisome, the percent- National Center for Education Statistics, “The Condition of age of American students who take college Education 1999 (NCES1999-022),” (Washington, DC: U.S. Department of Education, 1999), p. 6. degrees in the hard sciences, mathematics, and 210 Ibid., p. 122 210 engineering is declining. 211 See National Center for Education Statistics, 1992 National Significant problems also remain with Adult Literacy Survey (Washington, DC: U.S. Department of Education, 1992). adult illiteracy, with future effects that are hard 212 Current Population Reports P20-496 (Washington, DC: to quantify but that could be severe. Roughly U.S. Bureau of the Census, 1996). one-fifth of American adults have only rudi- 213 Noted in Michael Kelly, “A National Calamity,” mentary reading and writing skills, and 4 Washington Post, June 16, 1999, p. A37.

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households.214 Such children are more likely to American society is likely to remain in the suffer malnutrition and lack adequate medical forefront of the information revolution. Most of treatment. Children from single-parent house- the seminal scientific research and technological holds also do less well academically, are more innovation is done in the United States, and likely to drop out of high school, suffer from in- American society and the economy are very creased levels of depression, stress, anxiety, receptive to new innovations. Nevertheless, and aggression, and are far more likely to be America’s relative lead in this field will likely imprisoned.215 decrease as other societies adapt to the information age. Already, some other countries have The sharp spike in the numbers of single- shown a special talent and affinity for a “wired” parented children over the past 30 years suggests world, among them Finland, Australia, Israel, that as these children become adults between Japan, and Taiwan. But the spread of information now and 2025, the level of social dysfunction culture around the world will not harm the United may rise proportionately. Such social problems States; more likely its leading role will help affect the nation’s overall health and social spread its influence. cohesion and therefore will capture the energies, Biotechnology will redefine the meaning of attention, and financial resources of various “old,” but it will do more than extend life spans levels of government, the national security com- and revolutionize medicine. As noted above, it is munity included. rapidly developing the potential to change human Technology Trends nature itself in fundamental ways, as well as significantly modify many species of plants and merican preeminence in science and animals.218 Biotechnology is keeping America Atechnology will continue into the on the innovative edge of the agricultural, coming century. At the same time, global trends medical, and chemical industries, which will in technology will deeply influence American maintain the United States as a dominant actor in society. these sectors for at least the next quarter century. With over 60 percent of the world’s Internet 214 Eileen Poe-Yamagata, “Children in Single-Parent Homes, users located in North America, the United States 1970-1996, adapted from the 1996 Green Book (Washington, DC: U.S. Congress, 1998); and Current plays a central role in the global network.216 No Population Reports P20-496 (Washington, DC: U.S. country is as widely “wired” as America, or as de- Bureau of the Census, 1996). pendent on information systems for basic 215 Studies noted in Jason Fields and Kristin Smith, “Poverty, economic and social functions. Many more Family Structure, and Child Well-Being Indicators From American households and businesses will be con- the SIPP” (Washington, DC: U.S. Bureau of the Census, nected in the future as extensive high-capacity 1998). fiber optic lines are laid across the continent and 216 See “Internet Development” in International along our coasts.217 Increased amounts of infor- Telecommunications Union, Challenges to the Network mation will be available at decreasing costs. The (Geneva: ITU, 1997), chapter 2. 217 See Thomas P.M. Barnett and Pat A. Pentland, “Digital Internet will not only have a major impact on Weave: Future Trends in Navigation, Telecommunications, education, research, and business life in America, and Computing,” CAB 98-52, Center for Naval Analyses, but it will also alter patterns of social interaction June 1998. within the United States, and those between 218 See the special feature issue of Scientific American, “Your Americans and the world. Bionic Future,” Fall 1999.

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However, it will also raise basic and divisive cohesion will suffer. If, on the other hand, these ethical questions such as those involving access trends are guided in such a way as to increase po- to new and expensive technologies. litical participation on the local level, bolster the economy, and reverse income inequality, then Another divisive issue will concern the in- social cohesion may grow stronger. creasingly blurred line between medical necessity and “cosmetic” or elective remedial What we can predict with fair assurance is procedures. It will be particularly difficult for that America’s overall edge in military and experts in medical ethics, insurance company military-related technologies will endure for the executives, doctors, and government administra- next 25 years. This is directly related to the size tors—separately and especially together—to of U.S. military research and development decide how to allocate limited medical resources spending, which amounted to $32 billion in to a population deeply desirous of securing 1996, nearly 70 percent of military R&D invest- 219 access to new means of longevity. The inter- ments worldwide.220 There is no reason to expect national dimension to this problem may be just as dramatic changes in such trends. Moreover, since troublesome. How will the United States and R&D spending in general has shifted away from certain other fortunate countries manage the po- government and toward industry—and since the litical and diplomatic implications of the U.S. lead in private sector R&D investment is widening gap between life spans in their midst also considerable221 —the relative U.S. techno- and those in other countries? logical edge may actually grow over Similarly, those countries that are able to the next quarter century. Still, whether the U.S. fabricate and apply MEMs (micro-electro- government will succeed in applying that edge mechanical devices) and nanotechnology are intelligently to its military capabilities remains likely to have a significant economic and 219 This technology is growing rapidly. Note Nicholas Wade, military edge over those who cannot. American “New Study Hints at Way to Prevent Aging,” New York scientists and engineers will compete with their Times, August 27, 1999. Japanese counterparts to lead the drive to 220 Frank Killelea, “International Defense Trends and Threat miniaturization through micro-fabrication. So Projections: R&D Spending Trends,” briefing at the Johns revolutionary is the potential for nanotechnolo- Hopkins University Advanced Physics Laboratory, February 26, 1999. gy that it may propel U.S. economic growth 221 According to National Science Foundation and OECD sta- rates above the high-mark predictions of most tistics, all non-governmental spending on science and experts. technology R&D in the United States (including business, higher education, and private non-profit investment) Taken together, these trends in science and amounted to about $159 billion (in 1990 dollars) in 1997. technology could change America in fundamen- By way of comparison, Japan invested in total about $70 tal ways, from the way we get our food and our billion, Germany invested about $33 billion, France about news to how our national culture itself develops. $25 billion, the United Kingdom about $20 billion, Italy Even the cohesion of the nation—the emotional about $11 billion, and Canada about $9 billion. In other bonds that link us to our past and to each other— words, U.S. non-governmental R&D investment nearly equaled the total R&D investment of its next six closest will not be immune from these trends. If, as competitors. See National Science Foundation, Science suggested earlier, technological trends narrow and Engineering Indicators, 1998, Appendix A, table 4- our public space, eviscerate democracy, and 42; and “Basic Science and Technology Statistics” at isolate social classes from each other, national www.oecd.wash.org.

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to be seen. This may depend on developing new over which we have little control and one that ways to insure that America’s burgeoning cannot be predicted with any assurance. private-sector technological assets are properly inventoried, shared, and utilized for the overall What can be predicted is the growing in- national good. ternationalization of the U.S. economy. U.S. investment will remain a major factor in the Economic Trends global economy, and the international share of the U.S. economy will increase because of he most dramatic effect of new tech- a growing dependence on foreign trade, in- Tnology on American society is likely vestment, and foreign ownership of U.S. to be felt through its impact on the economy. economic assets. Between 1994 and 1998, A stream of new innovations could spur very foreign direct investment in the United States 225 strong economic growth over much, if not rose from $45 to $189 billion. U.S. foreign all, of the next 25 years. trade as a percentage of GNP rose from 11 percent in 1970 to 24 percent in 1998.226 This U.S. gross domestic product (GDP) in upward trajectory will continue so long as 1998 exceeded $8.5 trillion.222 As to the global economic growth continues to average future, one group of experts predicts 3 at least 2 to 4 percent over the next 25 years. percent annual growth as the likely upper Despite likely strong economic growth, limit of American economic expansion over problems of income distribution within the the next 25 years, which would double the United States could become significant. size of the American economy by 2025. If Trends in income distribution matter because correct, this forecast would mean that the perceptions of basic fairness may affect GDP would reach at least $16 trillion by American social cohesion. Americans tradi- 2025, creating the possibility of retiring the tionally feel some ambiguity about extreme entire national debt before 2025.223 Others speculate that growth could even be higher 222 U.S. Department of Commerce, Bureau of Economic owing to the revolutionary technological in- Analysis, “National Data Accounts,” August 26, 1999. novations in our future, and recent studies 223 President Clinton first raised this possibility publicly on showing the effect of the information revolu- June 28, 1999. See David E. Sanger, “Clinton Sees the tion in gains in productivity tend to bolster Possibility of Zero U.S. Debt by 2015,” New York Times, June 29, 1999. 224 such speculation. 224 See Lohr, “Computer Age Gains Respect of Economists.” 225 Department of Commerce, Bureau of Economic Analysis, On the other hand, sharply curtailed “International Investment Data, Foreign Direct Investment economic performance in the United States is in the United States: Capital Flows,” at www. not impossible. A massive technological bea.gov/bea/di1.htm. failure, the advent of unexpected pandemics, 226 “U.S. Aggregate Foreign Trade Data, GDP and U.S. a major war, or consistently bad economic International Trade in Goods and Services, 1987-98,” U.S. policies could all produce much slower Department of Commerce, Bureau of Economic Analysis, at www. ita.doc.gov/industry/otea/usfth/tabcon.html.226 growth—under 2 percent per annum. “U.S. Aggregate Foreign Trade Data, GDP and U.S. Moreover, American growth rates depend at International Trade in Goods and Services, 1987-98,” U.S. least to some extent on economic perfor- Department of Commerce, Bureau of Economic Analysis, mance in the rest of the world, a phenomenon at www. ita.doc.gov/industry/otea/usfth/tabcon.html.

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disparities in income: they resent the rich and sector could leave many Americans in the long to emulate them at the same time. As lurch.230 Not everyone is equally adept at long as the gains of the wealthy are perceived acquiring the skills that are most important in to be made fairly, on the basis of equality of knowledge-based economies, and not everyone opportunity, their achievements have been will have access to quality education. Second, respected by most in the past. They also the internationalization of labor sources and in- tend to be tolerated more easily if the vestment opportunities could direct new job fortunes of those lower down on the socio- and wage growth overseas, thus contributing to economic ladder are also improving. There the sharpening of class divisions and income is no reason to suspect that these basic atti- disparities in the United States. tudes will change in the future. Nevertheless, wider income disparities Beyond that, emerging domestic invest- increase pressures for social service ment trends influenced largely by spending, potentially limiting the resources opportunities in new technologies appear to available for other domestic and military have a mixed impact on income inequality. On programs. What does the future look like in the one hand, new business start-ups and the this regard? job creation that goes with them will probably remain strong, contributing to continuing, or Between 1968 and 1994, the difference in income levels between the wealthiest and the 227 This metric defines the average national income and looks 227 poorest Americans grew 22.4 percent. In at the distribution of people making more than the 1947, the top 5 percent of American families average, relative to those making less. Establishing any owned 15.5 percent of the national income; by year arbitrarily as a base, the index counts the movement 1967 that figure reached 16.4 percent, and by of income distribution from one side of the mean to the 1994 20.1 percent. Put another way, the data other. show the inflation-adjusted income of the 228 Daniel H. Weinberg, Current Population Reports: A Brief bottom fifth of working families in America Look at Postwar U.S. Income Inequality (Washington, DC: dropped by 21 percent between 1947 and 1995, U.S. Census Bureau, June 1996). 229 while the income of the top fifth rose by 30 Noted in Tyson, “Wages and Panic Buttons.” 230 As of 1996, about 2.8 percent of Americans were engaged 228 percent. As important, real wages for a in agriculture, fisheries, and forestry. About 23.8 percent sizable percentage of the American population were engaged in manufacturing, and the rest, some 73.3 were stagnant for the better part of the last 15 percent, were engaged in services (including public years. Recent data suggest that both of these services at the federal, state, and local level). See OECD, trends may have been halted and even Labor Force Statistics, 1976-1996 (Paris: OECD, 1997). reversed.229 But these new trend lines are too The Bureau of Labor Statistics projects that by 2006 high- new to project them confidently into the future, tech employment will be nearly 16 percent of total and there is reason to doubt their continuation. employment. Employment generated by the purchases of goods and services by high-tech industries for use as Global economic trends, in particular, may inputs in their production process will grow faster than contribute to a worsening of income inequality high-tech employment, increasing by 54 percent between 1996-2006. See, Daniel Hecker, “High-technology em- in the United States. First, the continued ployment: a broader view,” Monthly Labor Review, June movement of the workforce away from 1999, pp. 18-28, and especially U.S. Department of physical labor related to traditional industry Commerce, Falling Through the Net: Defining the Digital and toward information-age jobs in the service Divide (Washington, DC: USGPD, 1999).

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increasing, social mobility.231 This could lead cultural facets of American society has led to a greater equalization of income over time over time to a growing inclination for many within the top half to two-thirds of the U.S. Americans to think of themselves as members labor force. But that might not translate into of social subgroups. A shift toward celebrat- significant numbers of new jobs at lower ing differences, rather than commonalities, economic echelons since much new technolo- among Americans has changed the balance gy is aimed at minimizing low-end human between national and sub-group identities. participation in commercial processes. Hence, Paradoxically, as America has become less an American economic underclass will not strictly “color” conscious over the past 40 disappear and may even grow. It is too early to years, it may have become more ethnically say whether such trends will increase unrest or conscious. The unrestrained assertion of dif- social fragmentation in American communi- ferences could push a benign impulse toward ties, but the possibility will doubtless pluralism into fragmentation, undermining command the attention of America’s leader- the sense of a shared national purpose.232 ship in the years ahead. The effect on foreign policy, some argue, is already evident. As James Schlesinger has put Values, Attitudes, and National Will it: “Rather than reflecting a hammered-out vision of the national interest, America’s The cohesiveness of a society, its will, present policy consists largely of the stapling and its civic consciousness form the bedrock together of the objectives of individual con- of national power. The United States is stituencies. . . .The new intellectual fashions unusual among nations in that its national weaken and, in a sense, delegitimize the identity hinges more on shared ideals rather search for [a] common purpose. They abet the than common ethnicity. But while the founda- fragmentation of society.”233 tion of U.S. national power might appear less secure than in more ethnically homogeneous There is concern, too, about changes in the societies, experience does not bear out that attitudes of younger generations. The strength- prognosis. For all our disagreements and divi- ening of group consciousness has not expunged individualism as a principal American trait, but sions, Americans have demonstrated the members of Generation X—those born historically that they possess a strong collec- between 1965 and 1978—seem to exhibit an tive identity and that they rise to challenges individualism of a different sort. According to when necessary. The key question for the some observers, it is a more cynical individual- future is this: When we are next challenged, perhaps in a manner beyond our historical ex- 231 Entrepreneurship in the United States far outpaces that in perience and powers of anticipation, will our most other societies. In the case of Europe, American social cohesion endure or will it erode? There business start-ups per capita overshadow those in EU is considerable disagreement over the answer. countries by a factor of more than 4 to 1. See 1999 Global Entrepreneurship Monitor, summarized in Julia Flynn, Some observers are quite worried, based “Gap Exists Between Entrepreneurship in Europe, North on the view that American society has America, Study Shows,” Wall Street Journal, July 1, 1999. 232 See Arthur Schlesinger, Jr., The Disuniting of America become dangerously fragmented along (New York: W.W. Norton, 1992). ethnic, racial, and sectarian lines. In this view, 233 James Schlesinger, “Fragmentation and Hubris,” The the growing cultural emphasis on the multi- National Interest, No. 49 (Fall 1997), pp. 4, 6.

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ism aimed at shielding the young from what others that without any explicit ideological they often perceive to be the excessive hype challenge to American values, as there was and hypocrisy of contemporary American during the Cold War, there is less reason to culture.234 Such “ragged” as opposed to learn and to cherish those values. Others note “rugged” individualism may not be conducive that as the heroic generation of World War II to a healthy engagement in civil society. The passes from the scene, ever fewer Americans 1998 Final Report of the National Commission will have models of those who served in on Civic Renewal, co-chaired by William J. uniform in an unambiguously “good war.” As Bennett and Sam Nunn, noted a significant Stephen Ambrose has written: “My greatest decline in the nation’s willingness to participate fear about today’s young people is that they in civic activities over the last 25 years, partic- will grow to adulthood without the sense of a ularly among the young, and warned that “we common past or a common experience.”238 are in danger of becoming a nation of spectators.”235 Harvard political scientist Robert Finally, many of those worried about the Putnam, too, has argued that civic engagement future coherence of American society find little to comfort them in the American foreign policy is diminishing. He notes that voter participation tradition itself. The United States has little ex- in national elections has declined by 25 percent perience of an active foreign policy strategy over the last 30 years, and that 75 percent of outside this hemisphere except under condi- Americans said in 1992 that they had little or tions of national emergency or ideological no trust in the federal government—an increase mobilization. We have had the luxury of being of about 45 percent since the mid-1960s.236 able to protect our security through strategies That fact that political participation at local and that were primarily responsive to foreign state levels may be increasing, though good threats. In the absence of such a threat, we have news in some important respects, does not nec- experienced mostly periods of heated but in- essarily augur well for the coherence of policy conclusive debate over the American mission in 237 at the national level. the world. Some observers believe that, with the end of the Cold War, we are headed back In addition, some fear that the propensity of into such a period—this despite the fact that the average American to identify with this global trends suggest that threats to Americans country and its government may be waning. and their homeland are increasing. As a result, Several reasons are cited, one being that as some believe, foreign policy questions are as America’s economic life becomes increasingly

internationalized, political loyalties will follow 234 See Ted Halstead, “A Politics for Generation X,” The the source of paychecks. Others point to the Atlantic Monthly, August 1999. diminution of overt acts of national identifica- 235 A Nation of Spectators: How Civic Disengagement Weakens tion, such as school children saying the pledge America and What We Can Do About It, Final Report of of allegiance, voting, attending a July 4th cele- the National Commission on Civic Renewal (Washington, bration, the traditional observance of Memorial DC: June 1998). 236 Day, the willingness to serve on a jury, and Robert Putnam, “Bowling Alone: America’s Declining Social Capital,” Journal of Democracy, January 1995. saying a prayer for the country in one’s house of 237 See Deconstructing Distrust: How Americans View worship. Relatedly, others fear that public edu- Government. cation in the United States does not emphasize 238. Stephen Ambrose, “The End of the Draft, and More,” the teaching of civics as it once did, and still National Review, August 9, 1999.

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likely to divide us as bring us together, and The dignity and worth of the individual still heated argument as likely to emaciate the counts, and commitment to social justice national will as fortify it. remains robust. The entrepreneurial spirit remains strong, as does the belief that hard Taken together, multicultural fragmenta- work pays off. As a nation of immigrants, tion, the internationalization of the economy, Americans still exalt merit over the happen- shifts in generational attitudes, the decline in stance of birth. Polling data also suggests that overt manifestations of national identification, Americans remain generally positively and our traditional inattention to foreign policy disposed toward themselves, regarding the issues in the absence of a crisis, suggest to nation as a generous, moral, and just one that is some a serious undermining of American well worthy of emulation by others.241 identity and national will. If so, we would thus behold a country that, though strong and Still others note that organized religion also wealthy, would be less willing to sacrifice for provides a basis for social cohesion, and it the common good. remains a powerful force across the country. As the Founding Fathers understood, community he jury is still out, however, as to the religious life brings people together, transmits Ttrue extent of the problem—and its moral values across and among generations, future. Despite lower voting numbers, some encourages community action, and supports scholars see little decline in volunteerism and family life. The data show clearly that community involvement.239 There has been no Americans actively participate in organized re- fundamental change in basic civic values, ligious organizations more than any people in either. As in the past, Americans remain a the developed world.242 nation of “joiners” who have excelled in coming together in “intermediate organiza- Insofar as the American diplomatic traditions” to enrich the relationship between tion is concerned, many argue that even here individual citizens, their communities, and the 239 John Hall and Charles Lindholm, Is America Breaking larger national society. Americans are more Apart? (Princeton: Princeton University Press, 1999). involved in volunteer, philanthropic, and com- 240 See James E. Curtis, Douglas E. Baer, and Edward G. munity organizations per capita than any other Grabb, “Voluntary Association Membership in Fifteen people in the world.240 Countries: A Comparative Analysis,” American Sociological Review, Vol. 57 (1992), pp. 139-52; and Individual identity with the country, as ex- Virginia A. Hodgkinson and Murray S. Weitzman, Giving pressed through individual expressions of and Volunteering in the United States (Washington, DC: concordance with fundamental American Independent Sector, 1996). values, also seems to be strong. Survey data 241 Relevant polling data may be found in Gallup polls. See, show that Americans have not ceased seeing for example, “Satisfaction with U.S.,” and “Religion: their country as exceptional, have not stopped Gallup Social and Economic Indicators, 1999,” at www.gallup.com. honoring those who have served in uniform, 242 and have not abandoned the conviction that See American Religious Data Archive, Lilly Endowment, Dept. of Sociology and Anthropology, Purdue University, America is a benign force in the world. Queens 1996 Survey. Also see Richard Cimino and Don Americans today seem to place no less impor- Lattin, “Choosing My Religion,” American Demographics tance in the rule of law, democratic governance, Magazine, April 1999, and Shelly Reese, “Religious and the protection of liberty than they ever did. Spirit,” American Demographics Magazine, August 1998.

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there is cause for optimism. In the past, it is society might fragment or lack the will for true, U.S. expeditionary military forces and common action when it is required in the foreign commitments were downsized or ended future. It would depend on how current trends as soon as a foreign danger had passed. But, so evolve, on the nature of the challenge that the argument goes, it has been a long time since America will confront, and on the qualities of that pattern was visible. It was overshadowed American leadership between now and then. following World War II, and now that the Cold War is over, America’s economic and political That we fear fragmentation is probably a commitments have cast it as the apparent guar- healthy thing—as long as we do not go over- antor of global stability. In recent years, and board—for it leads us to guard against it. In any despite the military downsizing that followed event, this is our legacy: For good reason, the the Cold War, U.S. troops have operated in over fear of fragmentation has a long history in one hundred different countries. American political and social thought.245 The reality, however, may not be so dire. For all of The American people appear to support that our problems, one fact stands out: Large posture. One recent survey notes that Americans numbers of people around the world still long prefer a policy of “guarded engagement”: to come to America, and they long to become clearly committed to American participation in Americans. It is not just the prospect of greater world affairs when such participation is seen to material wealth that attracts so many, but the be in pursuit of their own interests.243 Other prospect for freedom and human dignity that studies characterize public support for an active goes along with it. This suggests that American American role in the world as one of “support- culture retains at least some degree of coher- ive indifference.” In other words, the body ence and underlying unity. politic evinces little feeling for or against most foreign policy or defense issues as long as they Finally, it almost goes without saying that exact no great cost in blood. This appears to be the American national will to remain an active borne out now by more than a decade’s experi- force in global affairs depends to some degree ence. Since the end of the Cold War, the United on the state of the world. The emergence of a States has embarked on nearly four dozen relatively benign international environment military interventions in the past decade as would sit well with American values, self- opposed to only 16 during the entire period of image, and assumptions about how the world the Cold War.244 Many of these interventions, works. In circumstances where American power such as those in Somalia, Haiti, Bosnia, and Kosovo, were launched into areas traditionally 243 John E. Rielly, ed., American Public Opinion and U.S. considered marginal to U.S. interests. None Foreign Policy (Chicago: Chicago Council on Foreign rallied the national will nor captured the public Relations, 1999). 244 imagination even in the way the Gulf War did, For the list as it stood before the Bosnia and Kosovo inter- and few post-Cold War interventions have had ventions, see Richard F. Grimmett, Instances of the United of United States Armed Forces Abroad, 1798-1995, the support of the majority of the public. Yet Congressional Research Service Report 96-119F, February only one ended abruptly due to a lack of politi- 6, 1996, pp. 18-25. cal support. 245 See Barry Glassner, The Culture of Fear (New York: Basic Books, 1999), and David Whitman, The Optimism Gap: n the face of this debate, we simply do The I’m OK-They’re Not Syndrome and the Myth of Inot know the extent to which American American Decline (New York: Walker and Co., 1998).

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can advance the values we hold to be universal decades. Short thousands of recruits, the in application, an active global U.S. role is services have lowered entrance standards and assured. The challenge would be to leaven reinvigorated recruiting efforts, prompting a American exuberance with patience and renewed debate about mandatory national probity. But in a world that mocks our values, service and the return of the draft. Retention is deflates our optimism, threatens our life and also problematic. A booming economy and a limb, and seems unresponsive to our best efforts heightened operational tempo are siphoning to help, a return of the isolationist impulse is not off large numbers of trained personnel and beyond imagination. Rather than an America lowering re-enlistments, as has been particu- radiating light from Governor Winthrope’s “city larly the case with pilots in recent years. on a hill,” Americans may convince themselves that Hobbes’ adjectives for political life in a In the future, challenges to recruitment and state of nature, “nasty, brutish, and short,” far retention will be formidable, although these better describe global realities and decide that will depend to a considerable extent on deci- all forms of charity should indeed begin at sions made about force structure and readiness home. This is an important difference, for what requirements. The Pentagon’s most recent Americans believe about the world and their attitude surveys show that the willingness of role in it will constitute a major datum in the 16 to 21-year old men to serve—especially global story that will unfold over the next 25 African-American men, who have constituted years. a disproportionate percentage of the all-volunteer force for the last quarter century—has Trends Affecting National Security dropped sharply over the past decade. Moreover, Hispanics, the fastest growing he social, economic, and technologi- segment of the American population, are Tcal trends noted above suggest that, in greatly underrepresented and show no signs of a broad sense, America will not want for increasing their inclination to serve.246 means. We will be wealthy, and we will be Although the percentage of women in the healthy. But they suggest that social problems armed forces will continue to rise, their and a general inattention to issues of national numbers are unlikely to make up for the decline security could systematically prejudice in male enlistments. Data show that 45 percent of national budgets away from investments in the women who enlist leave the military before national defense. Both of those potential the end of their first tour of duty, as compared problems would in turn worsen a third, struc- with the average of 34 percent of men. They are tural problem: the way we organize military also less deployable, at least under current oper- manpower. ational guidelines.247 Efforts to further Since the nation abolished conscription a “outsource” certain military functions to civilian quarter century ago, our military forces have 246 depended successfully on volunteers. Recent See David Segal, Jerald Bachman, Peter Freedman-Doan, and Patrick O’Malley, “Propensity to Serve in the U.S. data indicate that the American population Military: Temporal Trends and Subgroups Differences,” will not be as obliging as in the past, especial- Armed Forces & Society, Spring 1999, p. 421; and Lloyd ly if the economy continues to prosper. For a Matthews, “Primer on Future Recruit Diversity,” in variety of reasons, recruiting has been a Population Diversity and the U.S. Army (Carlisle, PA: U.S. steadily growing problem for nearly two Army War College, 1999), pp. 1-6.

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contractors cannot compensate for the recruiting in domestic missions such as drug interdiction, shortfall in military combat specialties, most of law enforcement, or border security. In certain which women and civilians cannot fulfill under circumstances, however, such as the protection current policy. It is not clear how the military es- of the homeland from a clear threat, that rela- tablishment, then, will sustain the volunteer tionship could be enhanced. Assigning force over the next generation, and particularly, domestic missions to the armed forces could how it will manage to recruit and retain enough also erode military readiness for wartime oper- highly skilled personnel to meet the increasing ations abroad. There are formidable legal technical needs of an advanced military. hurdles to the assigning of such missions, as well, but some American leaders seem willing These trends portend—and in some ways to jump them.248 reflect—a growing distance between America and its military. With ever fewer Americans A weaker societal understanding of the serving in the military, society’s understanding military, combined with the downtrend in re- of the military’s purpose and relationship to the cruiting, has led some prominent Americans to country and the government is bound to suggest a return to conscription, programs of weaken. While the military remains one of the national service, or a militia-based force.249 most admired public institutions in America, it Others, while acknowledging that such ap- is admiration from afar—appreciation from a proaches would strengthen civic participation, mostly non-participating populace. The impact point out that a conscript military might limit of this divide may be felt most keenly at elite an active foreign policy that frequently puts levels. The number of leaders in almost every conscripted American soldiers, sailors, airmen, walk of American public or private life who and marines in harm’s way. have served their country in uniform is rapidly declining. The profile of national leaders The ability to carry out effective foreign dealing with strategic affairs reflects these and military policies requires not only a skilled trends. The House of Representatives had 320 military, but talented professionals in all forms veterans in 1970, but fewer than 130 in 1994. of public service as well. Government institu- For the first time in the 20th century, the per- tions face similar challenges as they compete centage has now fallen below the percentage of for people with the corporate sector. veterans in the population at large. If these trends continue, a small professional military 247 See Military Attrition: Better Data, Coupled with Policy will stand increasingly apart from the country Changes, Could Help the Services Reduce Early and its leaders. Such a civil-military balance Separations, GAO Report NSIAD-98-13, September 1998; could further divorce Americans from their and F. E. Garcia, K. S. Lawler, and D. L. Reese, Women government and serve to loosen identification at Sea: Unplanned Losses and Accession Planning, Center for Naval Analyses Research Memorandum 98-182, with, and participation in, a common national March 1999. purpose. 248Sam Nunn proposed domestic roles for the U.S. military in The changing role of the American military 1992 and Bob Dole and Lamar Alexander made similar proposals during the 1996 presidential campaign. See is part of this picture, both in terms of civil- Charles Dunlap, “The Origins of the American Military military relations and in terms of readiness. The Coup of 2012,” Parameters, Winter 1992-93, pp. 2-20. relationship between the military and society 249 One example is Gary Hart, The Minuteman: Restoring an could be affected by the use of the armed forces Army of the People (New York: Free Press, 1998).

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Employment trends for those entering the field been something that mainly happened “there,” of international relations show that growing in Europe or Asia or the Near East. Domestic numbers of graduates of foreign affairs security was something that happened “here,” programs are entering the private rather than and it was the domain of law enforcement and the public sector.250 the courts. Rarely did the two mix. The distinction between national security policy and hat does all of this come to? One domestic security is already beginning to blur, observation is unarguable: the sta- W and in the next quarter century it could alto- bility and direction of American society and gether disappear. If it does, if such threats politics will shape U.S. foreign policy goals become reality, or even if they merely become and capabilities, and hence the way the United more apparent, Americans are likely to States will affect the world's future. Beyond abandon their attitude of “supportive indiffer- that, one other major theme stands forth. ence.” That would affect demands on The United States has a certain spirit, and leadership to respond to such threats, and it it is the spirit of the first and greatest mass would likely affect national budgetary priori- democracy in history. And yet since the end of ties, as well. Depending on the nature of such the Cold War we have taken on, however reluc- threats, very divisive arguments could erupt tantly and even absent-mindedly, a world role over the proper role of the military in internal that requires much potential sacrifice and the security operations. mobilization of substantial national resources and will. Can this role coexist for very long If the stakes rise in such a fashion, one with an America that does not feel threatened, thing is likely to become vividly clear: The and that is focused instead on domestic issues? American people will be ready to sacrifice Perhaps it can, but if so, it must be shown, not blood and treasure, and come together to do so, assumed, to be the case. That is a challenge not if they believe that fundamental interests are yet seriously taken up at the level of national imperiled. But they will not be prepared to debate. make such sacrifices over indirect challenges, or over what seem to them to be abstract moral Notwithstanding the post-Sputnik dangers imperatives. That is the history of American re- of a nuclear missile attack from afar, U.S. sponses to foreign challenges, and that appears national security policy in the 20th century has also to be its future.

250 Over the 1991-1997 period, the proportion of those graduates entering the private sector increased 10 percent (up from 32 percent to 42 percent), and student demand for business and finance courses in these programs is on the rise. Although the number of candidates taking the U.S. State Department’s foreign service exams has shown little change, those entering the Foreign Service are serving shorter tours due to increasing competition with private industry.

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IV: Worlds in Prospect emergence of a global economy encourages international cooperation and interdependency, but it can also lead to economic competition s we noted at the outset of this study, and even disintegration. States will succeed or Ahuman history is contingent. We fail depending on whether they are able to seize cannot know what the world will look like over the opportunities of globalization and at the a quarter century away because many of the de- same time deal with the accompanying disloca- cisions that will shape that world have not yet tions. In the social world, the integrating forces been made. Moreover, there are too many dif- of secularization may or may not win out over ferent interactive causal factors involved, the divisive forces of parochial nationalism and encompassing geophysical, economic, politi- other ideologies. Global security will be cal, social, and military elements, to know enhanced if economies grow and political liber- which single, composite “world” will issue alism expands, or endangered if the world forth from them. Alas, perfect knowledge of the divides amid major tensions and conflicts. future is impossible, and Nietzsche came close to hitting on the reason: “No one can dream The different ways in which these uncer- more out of things, books included, than he tainties are resolved form the basis for four already knows. A man has no ears for that worlds: The Democratic Peace; Protectionism which experience has given him no access.” In and Nationalism; Globalization Triumphant; other words, our repertoire of expectations is and Division and Mayhem. The first two are limited by our repertoire of knowledge. evolutionary scenarios, one tilted toward the optimistic side of life, the other toward the One way to overcome this difficulty is to more pessimistic. The last two are revolution- tease our imaginations into walking ahead of ary scenarios, also tilted in positive and our experience. We can do this by constructing negative directions. To a great extent, the third logical models of alternative futures, in this scenario is an extension of the first, and the case, by building global scenarios. We do this fourth extends the second. These are, in turn, not at random, but by defining clusters of like- followed by a speculation that the first quarter lihood derived from what we know about how of the 21st century will be a patchwork of the the world works. The scenarios can then be four worlds. used as heuristic devices to help us understand the ways in which the world may evolve over A Democratic Peace the coming 25 years. future world of a Democratic Peace The global scenarios that follow describe Ahas three essential elements. First, the integrated interplay of developments in democratic norms predominate, and these are technology and economics with the social, po- conducive to economic cooperation and litical, and military environments. By giving us general prosperity. Second, sharp ideological essentially real-time connectivity with anyone conflict does not exist, and while cultural dif- anywhere, technology has provided a venue for ferences remain real, they appear to be unifying the world and influencing events converging rather than widening. Third, an globally. Yet the adoption of new technologies advanced level of political cooperation among generates pressures to transform or even over- states is achieved and maintained. War among throw existing political and social orders. The major powers would be unlikely, and war

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among most democracies even more normative order will be able to do far more unlikely.251 The principle of national sover- physical harm than heretofore. eignty is tested by new problems and eclipsed somewhat by the introduction of new interna- But a world characterized by greater op- tional arrangements. But the principle portunities for cooperation among major states endures. will be a world in which multilateral action is the rule rather than the exception. At the global Economically, moderate growth is level, states will advance the formulation and assumed, with developed countries averaging enforcement of normative international law. around 2-3 percent annually and developing The United Nations is a chief instrument in re- countries averaging 4 to 5 percent annually. solving transnational issues. Regional trade Economic crises continue to occur in develop- entities will increasingly coordinate their ing countries, but their severity is lessened foreign and security policies. Multilateral through improved transparency and regulatory efforts stress conflict prevention. Major states measures gradually introduced over time, and devise ways to deal with the demands of ag- through essentially benign pressure from grieved ethnic or sectarian minorities. reformed and increasingly well respected inter- Like-minded governments cooperate, and insti- national financial institutions. Key countries, tutionalize that cooperation, to respond to rather than international institutions or multina- “rogue” regimes or armed terrorists. tional corporations, still control global economic policies, but multilateral economic In the absence of significant security cooperation is expanded through the IMF, the tensions, military power functions more to World Bank, the WTO, and a G-9 grouping that reassure and deter than to compel. Military includes China. spending worldwide declines as a share of GDP, but not precipitously so. Governments The information revolution continues and maintain modest research and development deepens, creating a world of integrated intra- efforts in leading edge technology areas, such nets existing on the overall edifice of the global as space exploration. But modernization will Internet. States adopt new standards to help improve protection of the critical information have slowed down and military arsenals will infrastructure. The revolution in biotechnology have been reduced. The proliferation of proceeds, with most governments—and all the weapons of mass destruction is curbed and, in major ones on whose soil biotechnological some cases, rolled back. research is proceeding—having managed to es- This world is a positive evolution of tablish minimum controls over areas of today’s world. The United States continues to particularly contentious ethical concern. emphasize support for democracy and free There will still be plenty to worry about in markets. It remains militarily strong, while such a world. Global inequalities will prove adapting its force posture to this more peaceful vexing. Economic infrastructures will be vul- 251 This scenario should not be equated directly with the nerable to attack. Some dangerous technologies version of the political theory of the same name that will still evade control. The few remaining argues that war between democracies is virtually impossi- holdouts from the increasingly institutionalized ble. Charles Dunlap, “The Origins of the American Military Coup of 2012,” Parameters, Winter 1992-93, pp. 2-20.

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world. U.S. self-restraint helps prevent a peer a Latin American regional grouping. Given its competitor or regional grouping of powers significant domestic savings rate and growing from arising to challenge the United States. populations, Asia seeks to provide its own regional source of growth. Assuming greater Protectionism and Nationalism global dependence on fossil fuels, the Near East becomes a pivotal focus of global courting he stalling of global economic integra- and potential contention. But protectionism tion, the eventual creation of regional T mingled with parochial nationalism has more power blocs, and the rise of nationalism char- baneful effects within regions, and that is acterize a world of Protectionism and where the danger of conflict and violence is Nationalism. Such a world comes into being on greatest. account of a protracted global financial crisis, a major environmental or technological disaster, With protectionism on the rise, many states or widespread political and social backlash impose controls and other regulations on the against globalization and Western—and specif- spread of technology. That feeds the economic ically American—pretensions to hegemony. slowdown and limits somewhat the “interna- tionalizing” effects of the information There is global economic growth, but revolution. The Internet fragments globally and living standards in much of the developing becomes localized in the developed countries. world decline. The failure of governments to Governments, corporations, and individuals see deliver on social needs, as populations grow little benefit to being connected. Rather than and resources dwindle, produces social unrest sharing information, they hoard it. in many countries. Latin America, Asia, and Africa are particularly hard hit, given their high In this world, economic, social, and politi- dependence on external financing and export cal dislocations are widespread. Nationalism markets. and ethnic rivalries increase in number and importance. Significant political changes occur in The so-called Washington Consensus, some key states, leading to the creation of based on the belief in the saving power of highly nationalistic, fundamentalist religious, global commerce and international economic and even fascist political regimes. Some impor- institutions, has come to an end. States instead tant states fragment or fail, giving rise to seek to protect their citizens from the ill effects violence, humanitarian disasters, major catalyt- of unfettered trade, capital movements, and the ic regional crises, and the spread of dangerous spread of technology. Many states, including weapons. possibly the United States, abandon international trade agreements, such as the WTO. A Military capabilities and alliances increase fundamental ingredient for global growth—the in importance. Spending on military forces relatively free flow of trade and capital across rises as states placed renewed emphasis on ac- borders—is significantly decreased in scope, quiring and using military force. Developments given the increased risks to capital and the in- in military technology have produced advance- troduction of protectionist trade barriers. ments in nanotechnologies, miniaturization, stealth, and anti-stealth. Weapons of mass de- Cross regional alliances emerge, perhaps a struction proliferate to a number of smaller NAFTA-Europe political and economic pact or regional powers. Space is weaponized and

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becomes a locus of competition and conflict developed countries. Tariffs are eased and trade among the more technically advanced coun- increases globally. Global energy prices remain tries. stable or drop due to major technological innovation. No major protracted downturn in any This world is a negative evolution of today’s major industrialized country or region occurs, world. Initially, the United States is unequalled and no major conflicts between states or within in economic and military power. However, states arise to destabilize the global economy or within 15 years, a number of regional economic financial flows. Some transnational threats still competitors arise, as well as a peer competitor remain, including those from cultists, terrorists, or hostile coalition with the military means to drug traffickers, and other criminals. Economic challenge the United States. The United States infrastructures also are vulnerable, but with retains a large military force capable of re- fewer disgruntled groups and more effective sponding to a range of contingencies, including voluntary controls on trade in dangerous sub- future inter-state conflicts. stances, that vulnerability is modest and receding. Globalization Triumphant The combination of global economic inte- n a world of Globalization Triumphant, gration and the diffusion of technology leads to Ithe world economy grows at an unprece- a fundamental change in the ability of states to dented pace. Modern technology spreads influence events on the world stage. In essence, worldwide. All national economies, with few information and economic power become truly exceptions, are networked into the global globalized, while military and diplomatic market. Trade in goods and services along with power remain the prerogatives of states. In capital flows expand globally, as do multilater- addition, supra-national organizations and non- al institutions and international agreements governmental organizations increase their designed to manage the new economy. influence.

On the national level, states will have been Individuals and governments in this world able to design and introduce responsive systems share such goals as a reasonably equitable dis- of governance capable of preventing major tribution of income, equal educational and job economic dislocations and social tensions. They opportunities, the peaceful resolution of con- will have adopted policies conducive to flicts, sustainable environmental policies, and economic growth, including appropriate legal individual human rights. Nearly everyone systems and economic regulations. Despite accepts as second nature the benefit of being in- some lingering tensions, governments around tegrated and connected, and, like the web itself, the world will have continued to move toward political and economic structures are increas- free trade, advancing overall global prosperity ingly decentralized. That offers a greater and supporting political liberalization. opportunity for local political participation of individual citizens. Economically, growth in the developed world is assumed to be at or above 2 percent a Security establishments around the world, year, and in the developing world 5-6 percent a including that of the United States, are faced year. The share of global GDP held by devel- with a dilemma. Technological advancements oping countries comes to exceed that of and economic growth create new possibilities

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for advanced weaponry. But the world has trade is vastly reduced with the drop in market evolved in such a way that dramatic reductions demand and dramatic increase in protectionist in threats have occurred and interstate wars have policies. International lending institutions lack become increasingly unlikely. The United funds. The world is characterized by the cohab- Nations or a similarly representative body itation of a small cluster of relatively rich, assumes a central role in conflict prevention and developed—and mainly Western—states, and a resolution. As resources shift to social programs large group of struggling and often very poor and the protection of critical infrastructures, states. These states also experience extensive there is tremendous downward pressure on uncontrolled urbanization, environmental defense budgets. Classic conventional military degradation, and political fragmentation. forces atrophy. Space becomes a realm of cooperation. International regimes have established The lofty internationalist principles behind far more effective controls on the proliferation of the Internet are rejected; information is weapons of mass destruction. marketed and hoarded instead of cultivated and shared. Most developing countries are denied The United States is an active “partner” access to technological innovations, either with states around the world in promoting co- because they cannot afford them, or for fear operation through international institutions. In that they cannot control them properly. In the its military posture, the United States focuses developed world certain technological develop- primarily on defensive measures aimed at re- ments, especially in biotechnology, outpace the sponding to the few remaining threats. As ethical debate over their implications. A new Americans exercise influence through coopera- class of biotechnology criminals and cyberter- tive international mechanisms, resentment of rorists appears and is linked to officials in American and Western culture subsides. demoralized and divided governments. Disaffected individuals and groups acquire the Division and Mayhem technologies necessary to develop the most dangerous weapons, and some are used. world of Division and Mayhem could Acome about by any of several routes. Many states fragment along ethnic, One is uncontrolled technological diffusion cultural, and religious lines. Disparities in re- that outpaces the legal, moral, and ethical stric- sources lead to or aggravate conflict between tures of societies around the world. A second is groups within societies and among regional the accentuation of strains in the globalization states. Increased numbers of displaced persons process, to the point of touching off a world- produce extensive humanitarian disasters and wide economic recession and, in time, global exacerbate environmental problems. Military chaos. A third is a compound global environ- conflict between and especially within states mental crisis. The three sources of division and increases. mayhem could occur simultaneously, each rein- forcing the other two. Private and non-state militaries are on the rise, while the United Nations and other collec- In this world, however it comes to be, tive security organizations decline. Military global economic growth plummets. Private establishments around the world confront a sector investors worldwide experience a deep variety of threats. Some are well-funded but crisis in confidence. Investment is limited, and others are not, giving rise to abruptly shifting

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balances of power, miscalculations, and The Democratic Peace is the world that ruinous wars. could exist for those states where today democracy has firm roots and where economic While frequently called on to conduct hu- policies are based on market principles. It may manitarian missions and operations other than be that certain parts within that domain even war, the U.S. military also confronts a number move into the world of Globalization of states, acting alone or in alliance, seeking the Triumphant. States in these domains will final removal of American military power and continue to have differences, and some serious influence from their respective regions. threats will remain. But these will be amenable Throughout this period, the United States to peaceful resolution. The prospects for major invests heavily in military modernization, but interstate war would be small. low economic growth limits the size of military budgets. In this environment U.S. foreign and But a more pessimistic future is also possible for democratic, free-market states, and defense policy establishments are under in- it is more likely for the rest of humanity. creasing strain. The United States also finds Societies and governments will find themselves itself increasingly isolated and overstretched in torn between new opportunities and old habits. attempting to meet its security needs both at Particularly critical will be what happens over home and abroad. the next quarter century in major countries such Under such circumstances, deadly attacks as Russia, China, India, Indonesia, the Philippines, Vietnam, North Korea, Malaysia, on U.S. cities by a terrorist group using Thailand, Egypt, Iran, Turkey, Pakistan, weapons of mass destruction cause a sharp re- Mexico, Brazil, South Africa, and Nigeria. orientation of basic U.S. policy. The United These states could find themselves in regions States reaches out in anger to punish and to root characterized by the world of Nationalism and out future sources of such attacks but otherwise Protectionism or even by the world of Division pulls back from its commitments in the world at and Mayhem. The prospect for major interstate large. Thus deprived of American good will and war in these domains would be large. active involvement in global leadership, a world already plagued by division and mayhem In short, all four scenarios would play out, falls further into a spiral of poverty, violence, but in parts. Taken together, the world in the and fear. coming 25 years would be regionalized, not in economic terms, but in terms of overarching A Patchwork Future performance.

he foregoing scenarios are clusters of erhaps what matters most will be the Tlikelihood designed to stimulate our Pworld’s elemental trajectory. Today’s imagination. They do not exhaust all the possi- world is divided more or less between a zone of bilities in our future. Just as the world today democratic peace and a zone of chronic trouble. simultaneously evinces integration and frag- Will many members of the former world fall mentation, so too may we expect that future away into the latter, or will many members of trends will combine to produce a patchwork of the latter find their way into the former? And consequences rather than any single, logically what will be the relationship between the parts coherent whole. of such a divided world? Can a zone of pros-

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perity and relative tranquility remain isolated gies to be adopted by countries around the from the pain, the heartbreak, the refugees, and world. The role that the United States will play possibly the diseases of the zone of hardship will be critical as well. But here we must stop, and turmoil? Answers to all of these questions for that is the subject of this Commission’s cannot be known with certainty. They will Phase II Report. depend importantly on the policies and strate-

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V: Major Themes and actual use in non-traditional attacks. Moreover, Implications as our society becomes increasingly dependent on knowledge-based technology for producing goods and providing services, new vulnerabilities to such attacks will arise. he foregoing analysis leads us to the following general conclusions about T 3. New technologies will divide the world as the world that is now emerging, and the well as draw it together. American role in it for the next 25 years. In the next century people around the world in 1. America will become increasingly vul- both developed and developing countries will nerable to hostile attack on our be able to communicate with each other almost homeland, and our military superiority instantaneously. New technologies will will not entirely protect us. increase productivity and create a transnational The United States will be both absolutely and cyberclass of people. We will see much greater relatively stronger than any other state or com- mobility and emigration among educated elites bination of states. Although a global competitor from less to more developed societies. We will to the United States is unlikely to arise over the be increasingly deluged by information, and next 25 years, emerging powers—either singly have less time to process and interpret it. We or in coalition—will increasingly constrain will learn to cure illnesses, prolong and enrich U.S. options regionally and limit its strategic life, and routinely clone it, but at the same time, influence. As a result, we will remain limited advances in bio-technology will create moral in our ability to impose our will, and we will be dilemmas. An anti-technology backlash is possible, and even likely, as the adoption of vulnerable to an increasing range of threats emerging technologies creates new moral, against American forces and citizens overseas cultural, and economic divisions. as well as at home. American influence will increasingly be both embraced and resented abroad, as U.S. cultural, economic, and politi- 4. The national security of all advanced cal power persists and perhaps spreads. States, states will be increasingly affected by the terrorists, and other disaffected groups will vulnerabilities of the evolving global acquire weapons of mass destruction and mass economic infrastructure. disruption, and some will use them. Americans The economic future will be more difficult to will likely die on American soil, possibly in predict and to manage. The emergence or large numbers. strengthening of significant global economic actors will cause realignments of economic 2. Rapid advances in information and power. Global changes in the next quarter- biotechnologies will create new vulnera- century will produce opportunities and bilities for U.S. security. vulnerabilities. Overall global economic growth will continue, albeit unevenly. At the Governments or groups hostile to the United same time, economic integration and fragmen- States and its interests will gain access to tation will co-exist. Serious and unexpected advanced technologies. They will seek to economic downturns, major disparities of counter U.S. military advantages through the wealth, volatile capital flows, increasing vul- possession of these technologies and their

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nerabilities in global electronic infrastructures, still be committed to upholding the integrity of labor and social disruptions, and pressures for their borders. Global connectivity will allow increased protectionism will also occur. Many "big ideas" to spread quickly around the globe. countries will be simultaneously more wealthy Some ideas may be religious in nature, some and more insecure. Some societies will find it populist, some devoted to democracy and difficult to develop the human capital and human rights. Whatever their content, the stage social cohesion necessary to employ new tech- will be set for mass action to have social impact nologies productively. Their frustrations will be beyond the borders and control of existing po- endemic and sometimes dangerous. For most litical structures. advanced states, major threats to national security will broaden beyond the purely 7. The sovereignty of states will come military. under pressure, but will endure. The international system will wrestle constant- 5. Energy will continue to have major ly over the next quarter century to establish the strategic significance. proper balance between fealty to the state on Although energy distribution and consumption the one hand, and the impetus to build effective patterns will shift, we are unlikely to see transnational institutions on the other. This dramatic changes in energy technology on a struggle will be played out in the debate over world scale in the next quarter century. international institutions to regulate financial Demand for fossil fuel will increase as major markets, international policing and peace- developing economies grow, increasing most making agencies, as well as several other rapidly in Asia. American dependence on shared global problems. Nevertheless, global foreign sources of energy will also grow over forces, especially economic ones, will continue the next two decades. In the absence of events to batter the concept of national sovereignty. that alter significantly the price of oil, the sta- The state, as we know it, will also face chal- bility of the world oil market will continue to lenges to its sovereignty under the mandate of depend on an uninterrupted supply of oil from evolving international law and by disaffected the Persian Gulf, and the location of all key groups, including terrorists and criminals. fossil fuels deposits will retain geopolitical sig- Nonetheless, the principle of national sover- nificance. eignty will endure, albeit in changed forms.

6. All borders will be more porous; some 8. Fragmentation or failure of states will will bend and some will break. occur, with destabilizing effects on New technologies will continue to stretch and neighboring states. strain all existing borders—physical and social. Global and regional dynamics will normally Citizens will communicate with and form alle- bind states together, but events in major coun- giances to individuals or movements anywhere tries will still drive whether the world is in the world. Traditional bonds between states peaceful or violent. States will differ in their and their citizens can no longer be taken for ability to seize technological and economic op- granted, even in the United States. Many coun- portunities, establish the social and political tries will have difficulties keeping dangers out infrastructure necessary for economic growth, of their territories, but their governments will build political institutions responsive to the as-

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pirations of its citizens, and find the leadership ties, carnage, and death; it will not be like a necessary to guide them through an era of un- video game. What will change will be the certainty and risk. Some important states may kinds of actors and the weapons available to not be able to manage these challenges and them. While some societies will attempt to could fragment or fail. The result will be an limit violence and damage, others will seek to increase in the rise of suppressed nationalisms, maximize them, particularly against those soci- ethnic or religious violence, humanitarian dis- eties with a lower tolerance for casualties. asters, major catalytic regional crises, and the spread of dangerous weapons. 12. U.S. intelligence will face more challenging adversaries, and even excellent 9. Foreign crises will be replete with atroc- intelligence will not prevent all surprises. ities and the deliberate terrorizing of Micro-sensors and electronic communications civilian populations. will continue to expand intelligence collection Interstate wars will occur over the next 25 years, capabilities around the world. As a result of the but most violence will erupt from conflicts proliferation of other technologies, however, internal to current territorial states. As the desire many countries and disaffected groups will for self-determination spreads, and many gov- develop techniques of denial and deception in ernments fail to adapt to new economic and an attempt to thwart U.S. intelligence efforts— social realities, minorities will be less likely to despite U.S. technological superiority. In any tolerate bad or prejudicial government. In conse- event, the United States will continue to quence, the number of new states, international confront strategic shocks, as intelligence protectorates, and zones of autonomy will analysis and human judgments will fail to increase, and many will be born in violence. The detect all dangers in an ever-changing world. major powers will struggle to devise an accountable and effective institutional response to such 13. The United States will be called upon crises. frequently to intervene militarily in a time of uncertain alliances and with the 10. Space will become a critical and compet- prospect of fewer forward-deployed itive military environment. forces. The U.S. use of space for military purposes will Political changes abroad, economic considera- expand, but other countries will also learn to tions, and the increased vulnerability of U.S. exploit space for both commercial and military bases around the world will increase pressures purposes. Many other countries will learn to on the United States to reduce substantially its launch satellites to communicate and spy. forward military presence in Europe and Asia. Weapons will likely be put in space. Space will In dealing with security crises, the 21st century also become permanently manned. will be characterized more by episodic "posses of the willing" than the traditional World War II-style alliance systems. The United States will 11. The essence of war will not change. increasingly find itself wishing to form coali- Despite the proliferation of highly sophisticat- tions but increasingly unable to find partners ed and remote means of attack, the essence of willing and able to carry out combined military war will remain the same. There will be casual- operations.

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14. The emerging security environment in conflict, and augur for a more peaceful world. the next quarter century will require dif- All of that is very much in the American ferent military and other national interest and provides real opportunities for the capabilities. United States in the future. The United States must act together with its As to values, a world opened up by the in- allies to shape the future of the international en- formation revolution is a world less hospitable vironment, using all the instruments of to tyranny and friendlier to liberty. A less American diplomatic, economic, and military socially rigid, freer, and self-regulating world power. The type of conflict in which this may also be in prospect, a joint result of the country will generally engage in the first anti-hierarchical implications of the information quarter of the 21st century will require sustain- revolution and the post-Cold War normative tide able military capabilities characterized by toward representative government. If so, such a stealth, speed, range, unprecedented accuracy, world would accord with our deepest political lethality, strategic mobility, superior intelli- beliefs and our central political metaphor—that gence, and the overall will and ability to of the dynamic equilibrium— which finds ex- prevail. It is essential to maintain U.S. techno- pression in the “invisible hand” of the market, logical superiority, despite the unavoidable our social ideal of E Pluribus Unum, the checks tension between acquisition of advanced capa- and balances of our Constitution, and in the bilities and the maintenance of current concept of federalism itself. capabilities. The mix and effectiveness of overall American capabilities need to be Nevertheless, a world amenable to American rethought and adjusted, and substantial changes interests and values will not come into being by in non-military national capabilities will also itself. Much of the world holds different interests be needed. Discriminating and hard choices and values. They also resent and oppose us for will be required. the simple fact of our preeminence, and because they often perceive the United States as exercis- n many respects, the world ahead seems ing its power with arrogance and self-absorption. Iamenable to basic American interests There will also be much apprehension and con- and values. As to interests, the spread of know- fusion as the world changes. Fragmentation and ledge, the development of new technologies, integration will proceed simultaneously at differ- and the expansion of global cooperation will ent levels, as will centralization and present vast opportunities for economic growth de-centralization. Our vocabularies will fail us as and the rise of political liberalism. The size of old boundaries blur: between homeland defense the world’s middle class may increase many and foreign policy; between sovereign states and times over, lifting literally tens of millions of a spectrum of protectorates and autonomous people from the depredations of poverty and zones; between virtual and literal communities. disease. Authoritarian regimes will founder as they try to insulate their populations from a All of this suggests that threats to American world brimming with free-flowing information. security will be more diffuse and harder to an- We may thus bear witness to the rise of new ticipate than ever before. While the likelihood democracies and the strengthening of older of major conflicts between powerful states will ones. Taken together, these developments could decrease, conflict itself will likely change in reduce sharply the prospects for violent character and increase in frequency. Deterrence

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will not work as it once did. In many cases it prevent conflict so that there will be less need may not work at all. for diplomatic triage after the fact. A great nation that does not try to influence the future In navigating the new world, the United may end up as its victim. That will be as true States will need to find a proper balance for the next 25 years as it has been for at least between activism and self-restraint. No power, the last 2,500. no matter how strong, will be able to manage or control international politics. American prag- The world that lies in store for us over the matism and historic optimism have their limits. next quarter century will surely challenge To overreach is to fall prey to hubris, and if we received wisdom about how to protect seek to exercise control over events beyond American interests and advance American what reality can bear, we will end in frustration, values. In such an environment, the United recrimination, and ruin. States needs a sure understanding of its objectives, and a coherent strategy to deal with both But humility is not a prescription for policy the dangers and the opportunities ahead. It is passivity. If we are agile in the new century that from this Phase I Report that the U.S. stands before us, change will be our ally. It Commission on National Security/21st Century makes sense for the United States to bias the s- will develop that understanding, and build that trategic environment in its favor to the extent strategy. We do so from what we believe is a possible and prudent, and to try harder to firm foundation.

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U.S. Commission on National Security/21st Century Commission and Study Group Staff Roster Co-Chairs Gary Hart Richard Haass Warren Rudman Keith Hahn John Hillen Frank Hoffman Commissioners Robert Killebrew Anne Armstrong Richard Kohn Norm Augustine Bill Lewis John Dancy Martin Libicki John Galvin Jim Locher Leslie Gelb Charles Moskos Newt Gingrich Williamson Murray Lee Hamilton Barry Posen Lionel Olmer Peter Rodman Donald Rice Barbara Samuels James Schlesinger Kori Schake Harry Train James Thomason Andrew Young Ruth Wedgwood Executive Director Research Associates Charles G. Boyd Mark Burles Erin Conato Deputy Executive Director Chris Dishman Arnold Punaro William Foster Christopher Hall Chief-of-Staff Kelly Lieberman William Lippert Hank Scharpenberg Geoffrey Megargee Philip Ritcheson Study Group DirectorÐPhase One Kathleen Robertson Lynn Davis Rachel Schiller Betsy Schmid Study Group Coordinator Pat Allen Pentland Support Staff

Study Group Members Marilyn Bridgette, Administrative Officer Patti Antsen Elizabeth Ellingboe, Travel Coordinator Lyntis Beard Jamie Finley, Executive Assistant to Jeff Bergner Executive Director Coit Blacker Marvin Goodwin, Contract Administrator Barry Blechman John Gardner, Information Management Specialist Chris Bowie James Harris, Budget Manager Ivo Daalder Michele Hutchins, Administrative Specialist Jacquelyn Davis Donald Kinder, Supply Specialist Rhett Dawson Diane Long, Commissioner Liaison Keith Dunn Jonathan Nemceff, Director, Information Charles Freeman Management Adam Garfinkle Tom Prudhomme, Security Manager Cynthia Waters, Study Group Liaison

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Commission and Study Group Staff Roster Acknowledgements The Department of Justice and the Federal Many U.S. government agencies assisted in Bureau of Investigation assisted with several Phase One of the study. Within the Department workshops, as did the Department of the of Defense, we especially note the Office of the Treasury. Other government agencies who Secretary of Defense staff to include organiza- assisted with the work of this commission tions in the Under Secretary of Defense for included: the National Security Council; the Policy, the Joint Staff, especially J5, and all Central Intelligence Agency and the National Service staffs; the Defense Intelligence Intelligence Council; the National Security Agency; National Defense University and the Agency; the National Reconnaissance Office; Institute for National Strategic Studies; the the U.S. Coast Guard; the National Institutes of Army War College; Joint Theater Air and Health; the Center for Disease Control; the Missile Defense Organization; and the Defense Office of National Drug Control Policy; the Information Security Agency. Department of Office of Emergency Preparedness; and the Defense assistance was also received from: Critical Infrastructure Assurance Office. U.S. European Command; U.S. Pacific Command; U.S. Atlantic Command; U.S. Foreign government ministries and ministers, as well as opposition parties and Central Command; U.S. Southern Command; non-governmental organizations and business U.S. Space Command; U.S. Strategic leaders, were also crucial in providing inputs to Command; U.S. Special Operations Command; the Commission. We especially note those from U.S. Transportation Command; U.S. Forces the United Kingdom, France, Italy, Germany, Korea; the U.S. Mission to the North Atlantic Belgium, the Russian Federation, Ukraine, the Treaty Organization; the George C. Marshal People’s Republic of China, Taiwan, South European Center for Security Studies; the Asia- Korea, Japan, Turkey, Georgia, Azerbaijan, Pacific Center; and the Center of Excellence in Israel, Egypt, Pakistan, India, Singapore, and Disaster Management and Humanitarian Indonesia. Other officials from the Western Assistance. European Union, the North Atlantic Treaty Organization, the United Nations High The Department of State provided support Commission for Refugees, and the International for the many regional workshops and assisted Committee of the Red Cross also provided assis- with trip itineraries and clearances for the tance. Commission’s foreign travel. The Commission’s international trips depended on critical assis- The Commission and Staff worked with tance from the American embassies, consulates, many non-profit organizations, corporations, institutes, missions, and country teams at the fol- and public policy institutions. These include: lowing locations: Hong Kong, Shanghai, the International Institute for Strategic Studies; Beijing, Taipei, Seoul, Tokyo, London, Paris, the Woodrow Wilson Center; the Nixon Center; Geneva, Rome, Bonn, Berlin, Brussels, Kiev, the Brookings Institution; RAND; the Center Moscow, Ankara, Istanbul, Tel Aviv, Cairo, for Naval Analyses; the Institute for Defense Baku, Tbilisi, Islamabad, Lahore, New Delhi, Analyses; the Center for Strategic and Bangalore, Singapore, and Jakarta. International Studies; the Center for Strategic

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and Budgetary Assessments; the Carnegie with itineraries and contacts, and countless Corporation; the National Institute for Public others provided information, made presenta- Policy; the CATO Institute; the Center for tions, or reviewed draft papers. Defense Information; Toffler Associates; Science Applications International Corporation; Thousands of people in this country and Global Business Network; DFI International; around the world have also assisted us over our Lockheed-Martin Corporation; the World Bank; interactive website. Since the site opened to the the International Monetary Fund; Organisation world in March 1999, it has been “hit” over for Economic Co-operation and Development; 700,000 times. We have also received more Standard and Poors’ DRI Group; Wharton than 400 archived substantive comments from Economic Forecasting Associates; the National all over the country and some from outside the Guard Association; the East-West Center; and country as well. The “Future Tech Forum” was the International Foundation for Election especially helpful in generating sources of in- Systems. formation for this report. This is the first time that any U.S. national commission has devel- The Commission met with many individu- oped a means of communicating interactively als from governments as well as public and with the American public-at-large during the private organizations in the United States and active research phase of a study. The website overseas in the course of workshops, seminars, will remain open and operating for the duration and interviews. Others assisted the Commission of the Commission’s work at www.nssg.gov.

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146 NEW WORLD COMING

SEEKING A NATIONAL STRATEGY:

A CONCERT FOR PRESERVING SECURITY AND PROMOTING FREEDOM

The Phase II Report on a U.S. National Security Strategy for the 21st Century

The United States Commission on National Security/21st Century

April 15, 2000

U.S. Commission on National Security/21st Century

Introduction Thinking about Strategy e must disenthrall ourselves,Ó said his CommissionÕs Phase I report “WAbraham Lincoln, at a time of Tpointed to two contradictory trends much greater peril to the Republic than we face ahead: a tide of economic, technological, and today. As the times are new, said Lincoln, Òso we intellectual forces that is integrating a global must think anew.Ó At the dawn of this new cen- community, amid powerful forces of social and tury, the nation faces a similar necessity. No con- political fragmentation.4 While no one knows cern of American society is more in need of cre- what the mix of these trends will produce, the ative thinking than the future security of this new world coming will be dramatically differ- country, but in no domain is such thinking more ent in significant respects. Governments are resistant to change. The very term ÒsecurityÓ under pressure from below, by forces of ethnic suggests caution and guardedness, not innova- separatism and violence, and from above, by tion. We know that major countries rarely engage economic, technological, and cultural forces in serious rethinking and reform absent a major beyond any governmentÕs full control. We are defeat, but this is a path the United States cannot witnessing a transformation of human society take. Americans are less secure than they believe on the magnitude of that between the agricul- themselves to be. The time for reexamination is tural and industrial epochsÑand in a far more now, before the American people find them- compressed period of time. selves shocked by events they never anticipated. Such circumstances put a special premi- During the last half century, the national um on strategic wisdom, particularly for a security strategy of the United States was country of the size and character of the derived largely from, focused on, and commit- United States. In this Commission’s view, the ted to the containment of Soviet Communism. essence of American strategy must compose a Since the fall of the Berlin Wall in 1989, and the dramatic transformation of world politics resulting from the dissolution of the Soviet Union 1 This Commission, established to examine comprehensively two years later, our leaders have been searching how this nation will ensure its security in the next 25 years, for a unifying theme to provide a strategic has a threefold task. Phase I, completed on September 15, framework appropriate to current and future cir- 1999, described the transformations emerging over the next quarter-century in the global and domestic U.S. security cumstances. That search has not been easy. environment. Phase II, concerning U.S. interests, objectives, and strategy, is contained in this document. Phase III, The U.S. Commission on National Security/ which will examine the structures and processes of the U.S. 21st Century has been tasked with thinking national security apparatus for 21st century relevancy, will be delivered on or before February 15, 2001. anew about AmericaÕs national security for the 2 1 In the interest of brevity, this Commission has compressed con- next 25 years. In this report, we suggest the siderable discussion and detail into this document. Further strategic precepts that should guide the formula- discussion of the implications of several main themes in tion of U.S. strategy, and then take a fresh look this report will be presented in the CommissionÕs Phase III at U.S. national interests and priority objectives. findings. On that basis, we propose the framework of a 3 This report is built upon a consensus involving all members of new national security strategy.2 This report is the Commission, but not every Commissioner subscribes with equal enthusiasm to every statement contained herein. intended to contribute to a new consensus on 4See New World Coming: American Security in the 21st Century national security strategy to carry the United (Washington, DC: U.S. Commission on National States forward into a challenging future.3 Security/21st Century, September 15, 1999).

5 U.S. Commission on National Security/21st Century balance between two key aims. The first is to American strengthÑsocial, military, eco- reap the benefits of a more integrated world in nomic, and technologicalÑwill not sustain order to expand freedom, security, and prosper- themselves without conscious national ity for Americans and for others. But, second, commitment. Assuring American prosperi- American strategy must also strive to dampen ty is particularly critical; without it, the the forces of global instability so that those United States will be hobbled in all its benefits can endure. Freedom is the quintes- efforts to play a leading role internationally. sential American value, but without security, and the relative stability that results there- The United States faces unprecedented from, it can be evanescent. American strategy opportunities as well as dangers in the should seek both security and freedom, and it new era. American strategy must rise to must seek them increasingly in concert with positive challenges as well as to negative others. Hence our title: A Concert for Pre- ones. Working toward constructive rela- serving Security and Promoting Freedom. tions among the major powers, preserving the dynamism of the new global economy ur assessment of the new world and spreading its benefits, sharing responsi- Oemerging, and the core interests and bility with others in grappling with new values of the American people, lead us to offer transnational problemsÑthis is a diplomat- the following precepts as a guide to the formu- ic agenda that tests American statesman- lation of national strategy: ship and creativity. As in the late 1940s, the United States should help build a new inter- Strategy and policy must be grounded national system in which other nations, in the national interest. The national inter- freely pursuing their own interests, find it est has many strandsÑpolitical, economic, advantageous to do so in ways that coincide security, and humanitarian. National inter- with American interests. ests are nevertheless the most durable basis for assuring policy consistency. Gaining and Since it cannot bear every burden, the sustaining public support for U.S. policy is United States must find new ways to join best achieved, too, when American princi- with other capable and like-minded ples are coupled with clearly visible nation- nations. Where America would not act al interests. Moreover, a strategy based on itself, it retains a responsibility as the lead- national interest, properly conceived, ing power to help build effective systems of engenders respect for the interests of others. international collaboration. America must therefore overcome its ambivalence about The maintenance of America’s strength international institutions and about the is a long-term commitment and cannot strength of its partners, questioning them be assured without conscious, dedicated less and encouraging them more. effort. If America does not make wise investments in preserving its own strength, This nation must set priorities and well within 25 years it will find its power apply them consistently. To sustain public reduced, its interests challenged even more support and to discipline policy, America than they are today, and its influence erod- must not exhaust itself by limitless com- ed. Many nations already seek to balance mitments. Especially with respect to mili- AmericaÕs relative power, and the sinews of tary intervention abroad, a finer calculus of

6 U.S. Commission on National Security/21st Century

benefits and burdens must govern. industrial, scientific-technologicalÑthat under- Resisting the ÒCNN effectÓ may be one of lie AmericaÕs political, economic, and military the most important requirements of U.S. position in the world. policymaking in the coming period. Critical U.S. national interests include the Finally, America must never forget that continuity and security of those key internation- it stands for certain principles, most al systemsÑenergy, economic, communica- importantly freedom under the rule of tions, transportation, and public health (includ- law. Freedom is today a powerful tide in ing food and water supplies)Ñon which the the affairs of mankind, and, while the lives and well being of Americans have come to means chosen to serve it must be tempered depend. It is a critical national interest of the by a realistic appreciation of limits, it is not United States that no hostile power establish ÒrealismÓ to ignore its power. At the same itself on U.S. borders, or in control of critical time, if America is to retain its leadership land, air, and sea lines of communication, orÑ role, it must live up to its principles consis- in todayÕs new worldÑin control of access to tently, in its own conduct and in its rela- outer space or cyberspace. It is a critical nation- tions with other nations. al interest of the United States that no hostile hegemon arise in any of the globeÕs major regions, nor a hostile global peer rival or a hos- The National Interest in a New tile coalition comparable to a peer rival. The Century security of allies and friends is a critical national interest of the United States, as is the ability he first of these precepts is the most to avert, or check, the proliferation of weapons Tcrucial of all: American national secu- of mass destruction into the hands of actors hos- rity strategy must find its anchor in U.S. nation- tile or potentially hostile to the United States. al interests, interests that must be both protect- ed and advanced for the fundamental well Significant U.S. national interests include being of American society. We define these the deepening and institutionalization abroad of interests at three levels: survival interests, with- constitutional democracy under the rule of law, out which America would cease to exist as we market-based economics, and universal recogni- know it; critical interests, which are causally tion of basic human rights. The United States one step removed from survival interests; and also has a significant interest in the responsible significant interests, which importantly affect expansion of an international order based on the global environment in which the United agreed rules among major powers to manage States must act. There are, of course, other common global problems, not least those national interests, though of lesser importance involving the physical environment. It is a sig- than those in the above three categories. nificant national interest of the United States that there be economic growth abroad, to raise the U.S. survival interests include AmericaÕs living standards of the poorest and to mitigate safety from direct attack, especially involving economic and political conflict. It is a significant weapons of mass destruction, by either states or national interest of the United States that inter- terrorists. Of the same order of importance is national terrorism and criminality (including the preservation of AmericaÕs Constitutional illicit drug trade) be minimized, but without order and of those core strengthsÑeducational, jeopardizing the openness of international eco-

7 U.S. Commission on National Security/21st Century nomic and cultural exchanges. It is a significant attacks on all states. But should prevention and national interest of the United States that neither deterrence fail, the United States must have mass murder nor gross violations of human means of active defense against both mortal rights be acceptable in the worldÕs political life. danger and blackmail. U.S. military, law It is a significant national interest of the United enforcement, intelligence, economic, financial, States that immigration across American bound- and diplomatic means must be effectively inte- aries not be uncontrolled. Finally, the free and grated for this purpose. safe movement of American citizens abroad is a significant national interest of the United States. The United States should seek enhanced international cooperation to combat the growing proliferation of weapons of mass destruc- Key Objectives tion. This should include an effective and he United States seeks to assure its enforceable international ban on the creation, Town freedom under law, its safety, and transfer, trade, and weaponization of biological its prosperity. But Americans recognize that pathogens, whether by states or non-state these goals are best assured in a world where actors. Also, when available and implemented others achieve them, too. American strategy, with rigor, cooperative programs to deal with therefore, must engage in new waysÑand in existing stockpiles of nuclear, biological, and concert with othersÑto consolidate and chemical weapons are cost-effective and polit- advance the peace, prosperity, democracy, and ically attractive ways to reduce the dangers of cooperative order of a world now happily free weapons and weapons matŽriel proliferation. from global totalitarian threats. At the same time, howeverÑalso in concert with othersÑ The United States should also strive to American strategy must strive to stabilize those deepen the international normative consensus parts of the world still beset by acute political against terrorism and state support of terrorism. conflict. To fulfill these strategic goals in a new It should work with others to strengthen coop- age, AmericaÕs priority objectivesÑand key eration among law enforcement agencies, intel- policy aimsÑmust be these: ligence services, and military forces to foil terrorist plots and deny sanctuary to terrorists by FIRST, TO DEFEND THE UNITED STATES AND attacking their financial and logistical centers. ENSURE THAT IT IS SAFE FROM THE DANGERS OF A NEW ERA. The United States should build comprehensive theater missile defense capabilities. It n light of the new dangers arising from should also build national defenses against a Ithe proliferation of weapons of mass limited ballistic missile attack to the extent destruction and terrorism, the United States technically feasible, fiscally prudent, and polit- must focus anew on how to maintain a robust ically sustainable. As cruise missile and other and powerful deterrent to all forms of attack on sophisticated atmospheric technologies spread, its territory and its critical assets. Non-prolifer- the United States must address the problem of ation of weapons of mass destruction is of the devising defenses against such capabilities. highest priority in U.S. national security policy The United States must also develop methods in the next quarter century. A higher priority, to defend against other, covert means of attack- too, should be given to preventing, through ing the United States with weapons of mass diplomatic and other means, unconventional destruction and disruption.

8 U.S. Commission on National Security/21st Century

The United States must also have specialized o ensure the vitality of all its core insti- forces capable of combating threats and black- Ttutions, the United States must make it mail from those possessing weapons of mass a priority of national policy to improve the qual- destruction and from terrorism. The magnitude of ity of primary and secondary education, partic- the danger posed by weapons of mass destruction ularly in mathematics and the sciences. More- compels this nation, as well, to consider careful- over, in an era when private research and devel- ly the means and circumstances of preemption. opment efforts far outstrip those of government, the United States must create more advanced The protection of U.S. and international and effective forms of public/private partner- access to outer space and cyberspace must ships to promote public benefit from scientific- become a high priority of U.S. security plan- technological innovation. ning. Outer space and cyberspace are the main arteries of the worldÕs evolving information The United States must strive to reduce its and economic systems, and the ability to move dependence on foreign sources of fossil fuel ideas and information through them freely is a energy that leaves this country and its allies prerequisite for expanding global freedom and vulnerable to economic pressures and political prosperity. Secure access to outer space and blackmail. Steady development of alternative cyberspace is also now the sine qua non of the sources of energy production, and greater effi- U.S. militaryÕs ability to function effectively. ciencies in energy transmission and conserva- Through both technological and diplomatic tion, are thus national security as well as eco- means, the United States needs to guard against nomic and environmental necessities. the possibility of ÒbreakoutÓ capabilities in space or cyberspace that would endanger U.S. The United States must strengthen the survival or critical interests. bonds between the American people and those of its members who serve in the armed forces. It Despite the political obstacles, the United must also strengthen government (civil and mil- States should redouble its efforts to deal multi- itary) personnel systems in order to improve laterally with the diffusion of dangerous dual- recruitment, retention and effectiveness at all use technologies. It must improve its capability levels. Executive-Legislative relations regard- to track the destinations and final uses of its ing national security policy need to foster effec- own high-technology exports, and it must be tive collaboration. prepared to aid allies in similar efforts. THIRD, TO ASSIST THE INTEGRATION OF KEY To deal medically and psychologically with MAJOR POWERS, ESPECIALLY CHINA,RUSSIA, potentially large losses of American lives in AND INDIA, INTO THE MAINSTREAM OF THE attacks against the American homeland, U.S. EMERGING INTERNATIONAL SYSTEM. public health capabilities need to be augmented. In addition, programs to ensure the continuity of he United States should engage China Constitutional government should be bolstered. Tconstructively and with a positive attitude, politically and economically. But it must SECOND, TO MAINTAIN AMERICA’S SOCIAL recognize that the potential for competition COHESION, ECONOMIC COMPETITIVENESS, between the United States and China may TECHNOLOGICAL INGENUITY, AND MILITARY increase as China grows stronger. ChinaÕs STRENGTH. increasing adherence to global economic, legal,

9 U.S. Commission on National Security/21st Century and cultural institutions and norms will be a respond to chemical and biological threats with positive factor, and the United States should nuclear weapons and the U.S. commitment to encourage and assist this process of integration. protect non-nuclear states from blackmail and At the same time, the United States should attack by nuclear weapons states. maintain its deterrent strength and its alliance system in the Asia/Pacific region. It should India is the worldÕs largest democracy and remain committed to the peaceful resolution of soon will be the worldÕs most populous coun- the Taiwan question, consistent with the terms try. Therefore, India is and must be dealt with of the three Sino-American CommuniquŽs and as a major power. Pakistan, too, remains a piv- the Taiwan Relations Act. otal country in its own right, and good U.S. relations with Pakistan are in the U.S. national The United States should support Russian interest. The United States should also encour- economic reform and democratic political age India and Pakistan to settle their differ- development on a realistic basis, recognizing ences short of violence, and should make its that these goals are first and foremost for good offices available to that end. Russians themselves to accomplish. It is also in the U.S. interest to assist Russian integration It is unlikely that American policy can per- into global economic institutions, no less than suade any Indian or Pakistani government to is the case with China. abandon its nuclear capacity. But the United States, together with other major powers, can Clearly, too, relations with Russia should be play a more active role in discouraging future appropriate to its importance as a major power. testing and the further production of fissile It does not benefit the United States to pursue materials not under safeguards. The United policies that weaken or humiliate Moscow. Still, States should also encourage mutual adoption the United States must assert its own interests of measures to ensure the safety and security of when they are affected adversely by Russian both countriesÕ nuclear capabilities. policiesÑas they are, for example, by policies that encourage or allow the proliferation of Beyond its efforts to bring these three weapons of mass destruction. The United States major states into the mainstream of a new and its allies should also support the continued cooperative international order, the United political independence and territorial integrity States has a strong interest in limiting the fur- of the newly independent former Soviet states. ther proliferation of sophisticated conventional weapons around the world. It should therefore In addition, arms control remains an impor- seek support for a multilateral approach to tant facet of U.S. national security policy. But devising limitations on such proliferation first the United States needs a new calculus for with its closest allies and friends, and thereafter developing future strategic nuclear arms control with Russia, China, India, and other significant strategy beyond START II. Such a calculus arms producing countries. must include analysis of the implications of the increase in the number and prospective capabil- FOURTH, TO PROMOTE, WITH OTHERS, THE ities of nuclear weapons powers in the world. It DYNAMISM OF THE NEW GLOBAL ECONOMY AND must take account of new Chinese and Russian IMPROVE THE EFFECTIVENESS OF INTERNATION- nuclear weapons capabilities. It must also take AL INSTITUTIONS AND INTERNATIONAL LAW. into account both the potential U.S. need to

10 U.S. Commission on National Security/21st Century

he United States, in concert with the parts of the world now cut off from them. The TG-7, must strive to manage the ele- United States should also employ new technolo- ments of turbulence that accompany economic gies creatively to improve its public diplomacy globalization in order to spread its benefits, in the new Information Age. while minimizing social and political dislocations and the systemÕs vulnerability to financial The United States should continue to pro- crisis. This must include building political mote strong international efforts against state legitimacy as well as an economic architecture. corruption and transnational criminality, and should help the international community Continuing trade liberalization remains a respond more effectively to humanitarian relief key to global economic advance, particularly for crises. To do this will require not only working in those regions, countries, and selected economic new ways with other governments but also with sectors in advanced countriesÑincluding the the burgeoning community of non-governmental United StatesÑwhose trade remains shackled organizations (NGOs), particularly in areas by protectionist policies. Bilateral and regional where U.S. official representation is sparse. approaches (in addition to the global system represented by the WTO) should be encouraged. The United States should, as it has tradi- Environmental concerns and labor rights must tionally, support the growth of international be addressed, although not in a manner that law and remain willing to subscribe to interna- blocks or reverses trade liberalization. tional agreements where they promote overall U.S. interests. But the United States must Similarly, economic sanctions should not always reserve the right to define its own inter- unduly inhibit trade. But, while this Com- ests, even if it requires withdrawing fromÑbut mission is skeptical of the efficacy of broad and not violatingÑselected treaty obligations. U.S. especially unilateral U.S. economic sanctions, policy coherence and democratic accountabili- specifically targeted financial sanctions, partic- ty under the Constitution must be preserved. ularly when employed multilaterally, have a better chance of working. As the United States and The United States has a strong stake in a its closest allies erect a new financial architec- reformed and more effective United Nations ture, the capability to impose financial sanctions system, and should engage constructively to should be built into the system. that end. The UN, when properly supported, can be an effective instrument for the enhance- The United States, in cooperation with oth- ment of international stability and humanitari- ers, must continue to ensure that the price and an ends. In addition, the United States must be supply of Persian Gulf and other major energy willing to lead in assembling ad hoc coalitions supplies are not wielded as political weapons outside UN auspices if necessary. directed against the United States or its allies and friends. FIFTH, TO ADAPT U.S. ALLIANCES AND OTHER REGIONAL MECHANISMS TO A NEW ERA Because this Commission believes that pub- IN WHICH AMERICA’S PARTNERS SEEK GREATER lic diplomacy is an important part of American AUTONOMY AND RESPONSIBILITY. diplomacy, the United States should help spread information technology worldwide, to bring the he cornerstone of AmericaÕs regional benefits of globalization and democracy to those Tpolicies must be the maintenance and

11 U.S. Commission on National Security/21st Century enhancement of existing U.S. alliances and compose a regional security community resting friendships. By strengthening relations with solidly on the assurance provided by U.S. allies and friends, the United States extends engagement and power. The United States both its influence and the zone of peace and should also support the growth of multilateral stability. institutions for regional security and prosperity, including the Association of Southeast Asian In Europe, the United States should be pre- Nations (ASEAN), the ASEAN Regional pared to support the evolution of an independ- Forum (ARF), and the Asia-Pacific Economic ent European Union defense policy in a manner Cooperation (APEC ). consistent with the unity of the Atlantic Alliance. Forward-stationed forces, as the The United States should plan now for the embodiment of overall U.S. capabilities and possibility of Korean reunification. Some commitments in Europe, should remain an American troops should remain in a unified essential ingredient in that regional security Korea as a factor of reassurance and stability in alliance. The United States should also pro- the region, including for the purpose of ensur- mote the concept of a Transatlantic Free Trade ing that a unified Korea remains without Area (TAFTA), as well as encourage the inte- nuclear weapons. gration of East and Central European democracies into Atlantic and European economic insti- The United States has a continuing critical tutions based on free trade. interest in keeping the Persian Gulf secure, and must accept its share of the burden for so doing. The United States should expand the North In that light, it must be a high priority to prevent American Free Trade Agreement (NAFTA) to either Iraq or Iran from deploying deliverable all the democracies of the Western Hemisphere. weapons of mass destruction. The United States It should deepen its ties within this hemisphere should also support the emerging collaboration and seek to strengthen the Organization of of friendly statesÑnotably Israel, Turkey, and American States (OAS). Whatever the merits JordanÑand seek to broaden such a collabora- of ÒexportingÓ democracy, there can be little tion to include Egypt and Saudi Arabia, among doubt that helping to bolster democracies others. Assisting the diplomatic settlement of the where they have come to exist of their own Arab-Israeli dispute will advance that prospect. exertions should be high on the list of U.S. priorities. Nowhere is such an effort more impor- In collaboration with other OECD coun- tant than in the Western Hemisphere. tries, the Organization of African Unity (OAU), and international development institutions, the In the Asia/Pacific area, the U.S.-Japan United States should assist sub-Saharan Africa alliance should remain the keystone of U.S. pol- to build stronger economies and strengthen icy. The United States should seek a more equal institutional cohesion and democratic ideals. In strategic partnership and a free trade agreement the economic field, emphasis should be put on with Japan. In a region where old rivalries per- promoting private investment, helping to devel- sist and reconciliation and integration have not op West AfricaÕs offshore energy resources, and advanced as far as they have in Europe, U.S. providing debt relief and humanitarian aid alliance and security ties with Korea, Australia (including resources to combat the AIDS epi- and New Zealand, Thailand, Singapore, the demic). The United States should promote the Philippines, and others remain critical. Such ties professionalization of African militaries within

12 U.S. Commission on National Security/21st Century a framework of democratic values, and encour- problem of failed states. One such mechanism age African governments to engage their mili- should include standing procedures to facilitate taries in constructive tasks of infrastructure organizing peacekeeping operations and UN building. Major emerging democracies such as Òconservatorships.Ó South Africa and Nigeria will be key players as partners with the United States and its allies. In all cases, the United States should resort first to preventive diplomacy: acting with polit- SIXTH, TO HELP THE INTERNATIONAL COM- ical and economic tools, and in concert with MUNITY TAME THE DISINTEGRATIVE FORCES others, to head off conflict before it reaches the SPAWNED BY AN ERA OF CHANGE. threshold of mass violence.

he disruptive new forces of globaliza- Preventive diplomacy will not always Ttion are subjecting many governments work, however, and the United States should be to extraordinary pressures. In many states, prepared to act militarily in conjunction with what used to be governmental monopolies on other nations in situations characterized by the the use of force, on law making, and over the following criteria: supply of money are now ÒprivatizedÓ in various ways. Even the spread of the idea of free- ¥ when U.S. allies or friends are imperiled; dom, while positive in the long run, is often ¥ when the prospect of weapons of mass accompanied by destabilization. The disruption destruction portends significant harm to of the political and territorial status quo in civilian populations; much of the world will be one of the distinctive ¥ when access to resources critical to the features of international affairs over the next global economic system is imperiled; quarter century. ¥ when a regime has demonstrated intent to do serious harm to U.S. interests; To address these spreading phenomena of ¥ when genocide is occurring. weak and failed states, ethnic separatism and violence, and the crises they breed, the United If all or most of these conditions are pres- States needs first to establish priorities. Not ent, the case for multilateral military action is every such problem must be primarily a U.S. strong. If any one of these criteria is serious responsibility, particularly in a world where enough, however, the case for military action other powers are amassing significant wealth may also be strong. and human resources. There are countries whose domestic stability is, for differing reasons, of major importance to U.S. interests Implications for National Security (such as Mexico, Colombia, Russia, and Saudi he strategy outlined here bears impor- Arabia). Without prejudging the likelihood of Ttant implications for the political, eco- domestic upheaval, these countries should be a nomic, and military components of U.S. nation- priority focus of U.S. planning in a manner al security policy. From the political perspec- appropriate to the respective cases. tive, American diplomacy must recognize that the increasingly integrated nature of global For cases of lesser priority, the United exchanges will render traditional analytical States should help the international community divisions of the world obsolete. While impor- develop innovative mechanisms to manage the tant relations will continue to take place on a

13 U.S. Commission on National Security/21st Century bilateral basis, many more international phe- s to military implications, the world nomena will be increasingly regional in nature Awe see emerging, and the strategy and more will be fully global. The proliferation appropriate to that environment suggest that of non-state actors will also strain the tradition- the United States needs five kinds of military al categories within which American diplomacy capabilities: is organized. ¥ nuclear capabilities to deter and protect As this Commission emphasized in its the United States and its allies from attack; Phase I report, the economic dimensions of ¥ homeland security capabilities; statecraft are also becoming more important. ¥ conventional capabilities necessary to Among the democracies in what is known as win major wars; the Òzone of democratic peace,Ó economic ¥ rapidly employable expeditionary/inter- issues can rival the importance of military vention capabilities; and ones. But economic issues are also of critical ¥ humanitarian relief and constabulary importance to the prospect that other emerging capabilities. or developing states will succeed or fail with fundamental political and social reform. American strategy must also recognize the Fundamental to U.S. national security strat- importance of technology as the basic under- egy is the need to project U.S. power globally pinning of economic health and military with forces stationed in the United States, and prowess the world over. those stationed abroad and afloat in the forward presence role. Owing to the proliferation of new All this means that the integrating function defense technologies in the hands of other of U.S. policymaking processes will be chal- states, effective power projection will become lenged as never before. Traditional national more difficult for the U.S. armed forces in the security agencies (State, Defense, CIA, NSC 21st century. U.S. forces must therefore possess staff) will need to work together in new ways, greater flexibility to operate in a range of envi- and economic agencies (Treasury, Commerce, ronments, including those in which the enemy U.S. Trade Representative) will need to work has the capability to employ weapons of mass more closely with the traditional national secu- destruction. U.S. forces must be characterized rity community. In addition, other playersÑ by stealth, speed, range, accuracy, lethality, especially Justice and TransportationÑwill agility, sustainability, reliabilityÑand be sup- need to be integrated more fully into national ported by superior intelligenceÑin order to security processes. Merely improving the inter- deal effectively with the spectrum of symmetri- agency process around present structures may cal and asymmetrical threats we anticipate over not suffice. the next quarter century.

Moreover, the U.S. government must learn This Commission believes that the Òtwo to build more effective partnerships with state major theater warsÓ yardstick for sizing U.S. and local governments, and government as a forces is not producing the capabilities needed whole must develop new partnerships with non- for the varied and complex contingencies now governmental organizationsÑthough without occurring and likely to increase in the years sacrificing its ultimate responsibility and ahead. These contingencies, often calling for accountability for determining national policy. expeditionary interventions or stability opera-

14 U.S. Commission on National Security/21st Century tions, require forces different from those to these demands cannot be sustained by cur- designed for major theater war. We believe these rent levels of spending. contingencies will occur in the future with sufficient regularity and simultaneity as to oblige the To Phase III—Building for Peace United States to adapt portions of its force structure to meet these needs. The overall force he strategy articulated here requires would then have the ability to engage effective- Tthat the United States lead in the con- ly in contingencies ranging from humanitarian struction of a world balanced between the assistance and disaster relief, to peace and expe- expansion of freedom, and the maintenance of ditionary combat operations, to large-scale, underlying stability. To do so it must concert its high-intensity conventional warfare. Finally, we efforts with others and, to the extent possible, recommend that the force structure designed to in a way consistent with the interests of others. address these needs be developed on the basis of real-world intelligence assessments rather than Having become a global power, the United illustrative scenarios. States now holds a responsibility it will not abandon, both for the safeguarding of American In short, the capabilities mandated by these interests and the broader interests of global requirements will result in forces able to deploy peace and security. The United States is the first rapidly, be employed immediately, and prevail nation with fully global leadership responsibili- decisively in expeditionary roles, prolonged sta- ties, but there are more and less effective ways bility operations, and major theater wars; a force to lead. Tone matters. Leadership is not the to deter wars, to preclude crises from evolving same as dominance; everyone elseÕs business into major conflicts, and to win wars rapidly need not also be AmericaÕs. Just as riches with- and decisively should it become necessary. out integrity are unavailing, so power without wisdom is unworthy. As Shakespeare put it: America must also enhance the civil (that is, non-military) aspects of homeland security. O, it is excellent These functions must be adequately funded and To have a giantÕs strength; but it is organized along appropriate lines of authority, tyrannous responsibility, and accountability. The National To use it like a giant.5 GuardÑsuccessor to the militia, and acknowledged in the Second Amendment as the historic he strategy outlined here for U.S. defender of the RepublicÑmust be trained and Tnational security differs from the equipped to assume, among its other responsi- strategic habits of the past half-century. It puts bilities, a significant role in defending the new emphasis on the economic and other non- homeland in the 21st century. military components of national security; it focuses on opportunities as much as on threats; It is imperative, too, that the United States and it reminds us of the domestic foundations develop and fund these five kinds of capabili- of U.S. international strength. It attempts to ties consistent with the level of need created by clarify U.S. strategy and purposes, and to changing political and security realities. Given match them to a prudent sense of limits. It is the demands now placed upon this nationÕs military, or those anticipated in the next quarter 5 century, it is evident that modern forces equal Measure for Measure, Act II, Scene 2.

15 U.S. Commission on National Security/21st Century not clear to us that the U.S. government is now Fourth, the U.S. government needs the organized in such a way that it can execute this agility to adapt rapidly to changes in the global strategy, or any other strategic concept that environment. departs significantly from past practices. The world is changing fast, and if the U.S. govern- Fifth, the U.S. government needs new ment does not change with it, it may find itself organizational mechanisms to manage the forced into one bewildered reaction after increased blurring of lines among military, another. If the United States loses the capacity police, and legal jurisdictions, and among new to respond to dynamic change, the day will forms of warfare. come when we will regret it dearly. Sixth, the U.S. government needs effective In Phase III of its work, therefore, this means to assess critically its own performance, Commission will examine current structures draw lessons from its experience, and adjust and processes to determine their relevance to resources, as appropriate. the 21st century. We will apply the following criteria: Seventh, the U.S. government needs coherence between domestic policies with core First, the U.S. government needs to be national security implications and national adept at anticipating national security chal- security policies directed outside U.S. borders. lenges. This requires the best possible system of intelligence, from collection to analysis to Phase III of this CommissionÕs work will dissemination to policy review. offer recommendations for enhancing the U.S. governmentÕs ability to function effectively in a Second, the U.S. government needs the rapidly changing political and technological ability to calculate the longer-term implications environment. As with any kind of travel, clari- of intervention abroad. It is not enough to be ty with respect to destination and route will selective; we must be wisely selective, which prove unavailing if oneÕs vehicle is not up to requires a better matching of the instruments of the journey. It is to that vehicleÑthe structures national power to the problems at hand. and processes of the U.S. national security apparatusÑthat this Commission now turns its Third, the U.S. government needs to inte- attention. grate effectively all non-traditional elements of national security policy with traditional ones.

Road Map for National Security: Imperative for Change

The Phase III Report of the U.S. Commission on National Security/21st Century

The United States Commission on National Security/21st Century

February 15, 2001

U.S. Commission on National Security/21st Century1

Gary Hart Warren B. Rudman Co-Chair Co-Chair

Anne Armstrong Norman R. Augustine Commissioner Commissioner

John Dancy John R. Galvin Commissioner Commissioner

Leslie H. Gelb Newt Gingrich Commissioner Commissioner

Lee H. Hamilton Lionel H. Olmer Commissioner Commissioner

Donald B. Rice James Schlesinger Commissioner Commissioner

Harry D. Train Andrew Young Commissioner Commissioner

1 Disclaimer: This Commission has striven successfully to achieve consensus on all major issues, and each Commissioner stands by all the major recommendations made in this report. However, as is to be expected when discussing complex issues, not every Commissioner agrees completely with every statement in the text that follows.

Contents

Foreword, Gary Hart and Warren B. Rudman………………………...………………………….iv Preface, Charles G. Boyd…………...….………………………………………….……………....v

EXECUTIVE SUMMARY……………………………………………………………………....…..viii

Introduction: Imperative for Change………..……..……………………………………...……2

I. Securing the National Homeland ……………………..………………………………….….10

A. The Strategic Framework……….…………………………………………..………...11 B. Organizational Realignment…….…………………………………………………….14 C. Executive-Legislative Cooperation……………………………………….………..…26

II. Recapitalizing America’s Strengths in Science and Education…………………………...30

A. Investing in Innovation…………………………………………….………….……...31 B. Education as a National Security Imperative ……….………………………….…….38

III. Institutional Redesign…………………………..………..…. …...………..………………..47

A. Strategic Planning and Budgeting………..…………………………………………...48 B. The National Security Council………………….…...………………………………..49 C. Department of State…………………………………..…………………….…………52 D. Department of Defense………………………………..……………………………...63 E. Space Policy……………………………………………..……………………………78 F. The Intelligence Community……………………………..…………………………...81 . IV. The Human Requirements for National Security…………………………………………86 = A. A National Campaign for Service to the Nation………….……………………....…..88 B. The Presidential Appointments Process………………………………………………89 C. The Foreign Service……………………………………………………...…………...94 D. The Civil Service………………………………………………….………….……....96 E. Military Personnel…………...……………………………………………...…….…102

V. The Role of Congress……………………………………………………………….……...110

A Final Word……………….…………………………………………………………………..116

Index…………………………………………………………………………………………….118

Appendix 1: The Recommendations………..…………………………………………….……..124 Appendix 2: The USCNS/21 Charter…………………………….………………………….…..130 Appendix 3: Commissioner Biographies and Staff Listing………………………..…………….135

iii

Foreword

merican power and influence have been decisive factors for democracy and security Athroughout the last half-century. However, after more than two years of serious effort, this Commission has concluded that without significant reforms, American power and influence cannot be sustained. To be of long-term benefit to us and to others, that power and influence must be disciplined by strategy, defined as the systematic determination of the proper relationship of ends to means in support of American principles, interests, and national purpose.

This Commission was established to redefine national security in this age and to do so in a more comprehensive fashion than any other similar effort since 1947. We have carried out our duties in an independent and totally bipartisan spirit. This report is a blueprint for reorganizing the U.S. national security structure in order to focus that structure’s attention on the most important new and serious problems before the nation, and to produce organizational competence capable of addressing those problems creatively.

The key to our vision is the need for a culture of coordinated strategic planning to permeate all U.S. national security institutions. Our challenges are no longer defined for us by a single prominent threat. Without creative strategic planning in this new environment, we will default in time of crisis to a reactive posture. Such a posture is inadequate to the challenges and opportunities before us.

We have concluded that, despite the end of the Cold War threat, America faces distinctly new dangers, particularly to the homeland and to our scientific and educational base. These dangers must be addressed forthwith.

We call upon the new President, the new administration, the new Congress, and the country at large to consider and debate our recommendations in the pragmatic spirit that has characterized America and its people in each new age.

Gary Hart Warren B. Rudman Co-Chair Co-Chair

Preface

he U.S. Commission on National Security/21st Century was born more than two years Tago out of a conviction that the entire range of U.S. national security policies and processes required reexamination in light of new circumstances. Those circumstances encompass not only the changed geopolitical reality after the Cold War, but also the significant technological, social, and intellectual changes that are occurring.

Prominent among such changes is the information revolution and the accelerating discontinuities in a range of scientific and technological areas. Another is the increased integration of global finance and commerce, commonly called “globalization.” Yet another is the ascendance of democratic governance and free-market economics to unprecedented levels, and another still the increasing importance of both multinational and non-governmental actors in global affairs. The routines of professional life, too, in business, university, and other domains in advanced countries have been affected by the combination of new technologies and new management techniques. The internal cultures of organizations have been changing, usually in ways that make them more efficient and effective.

The creators of this Commission believed that unless the U.S. government adapts itself to these changes—and to dramatic changes still to come—it will fall out of step with the world of the 21st century. Nowhere will the risks of doing so be more manifest than in the realm of national security.

Mindful of the likely scale of change ahead, this Commission’s sponsors urged it to be bold and comprehensive in its undertaking. That meant thinking out a quarter century, not just to the next election or to the next federal budget cycle. That meant searching out how government should work, undeterred by the institutional inertia that today determines how it does work. Not least, it meant conceiving national security not as narrowly defined, but as it ought to be defined—to include economics, technology, and education for a new age in which novel opportunities and challenges coexist uncertainly with familiar ones.

The fourteen Commissioners involved in this undertaking, one that engaged their energies for over two years, have worked hard and they have worked well.2 Best of all, despite diverse experiences and views, they have transcended partisanship to work together in recognition of the seriousness of the task: nothing less than to assure the well-being of this Republic a quarter century hence.

This Commission has conducted its work in three phases. Phase I was dedicated to understanding how the world will likely evolve over the next 25 years. From that basis in prospective reality, Phase II devised a U.S. national security strategy to deal with that world. Phase III aims to reform government structures and processes to enable the U.S. government to implement that strategy, or, indeed, any strategy that would depart from the embedded routines of the last half-century.

Phase I concluded in September 1999 with the publication of New World Coming: American Security in the 21st Century.3 Phase II produced the April 2000 publication, Seeking a

2 See Appendix 3 for Commissioner biographies and a staff listing. 3 Publication consisted of two documents: Major Themes and Implications and Supporting Research and Analysis.

National Strategy: A Concert for Preserving Security and Promoting Freedom. Phase III, presented in these pages, is entitled Road Map for National Security: Imperative for Change. This report summarizes enough of the Commission’s Phase I and Phase II work to establish an intellectual basis for understanding this Phase III report, but it does not repeat the texts of prior phases in detail. For those seeking fuller background to this report, the Commission’s earlier works should be consulted directly.4

n Road Map for National Security, the Commission has endeavored to complete the Ilogic of its three phases of work, moving from analysis to strategy to the redesign of the structures and processes of the U.S. national security system. For example, in Phase I the Commission stressed that mass-casualty terrorism directed against the U.S. homeland was of serious and growing concern. It therefore proposed in Phase II a strategy that prioritizes deterring, defending against, and responding effectively to such dangers. Thus, in Phase III, it recommends a new National Homeland Security Agency to consolidate and refine the missions of the nearly two dozen disparate departments and agencies that have a role in U.S. homeland security today.

That said, not every Phase I finding and not every Phase II proposal has generated a major Phase III recommendation. Not every aspect of U.S. national security organization needs an overhaul. Moreover, some challenges are best met, and some opportunities are best achieved, by crafting better policies, not by devising new organizational structures or processes. Where appropriate, this report notes those occasions and is not reluctant to suggest new policy directions.

Many of the recommendations made herein require legislation to come into being. Many others, however, require only Presidential order or departmental directive. These latter recommendations are not necessarily of lesser importance and can be implemented quickly.

The Commission anticipates that some of its recommendations will win wide support. Other recommendations may generate controversy and even opposition, as is to be expected when dealing with such serious and complex issues. We trust that the ensuing debate will ultimately yield the very best use of this Commission’s work for the benefit of the American people.

rganizational reform is not a panacea. There is no perfect organizational design, no Oflawless managerial fix. The reason is that organizations are made up of people, and people invariably devise informal means of dealing with one another in accord with the accidents of personality and temperament. Even excellent organizational structure cannot make impetuous or mistaken leaders patient or wise, but poor organizational design can make good leaders less effective.

Sound organization is important. It can ensure that problems reach their proper level of decision quickly and efficiently and can balance the conflicting imperatives inherent in any national security decision-system—between senior involvement and expert input, between speed and the need to consider a variety of views, between tactical flexibility and strategic consistency. President Eisenhower summarized it best: “Organization cannot make a genius out of a dunce. But it can provide its head with the facts he needs, and help him avoid misinformed mistakes.”

Most important, good organization helps assure accountability. At every level of organization, elected officials—and particularly the President as Commander-in-Chief—must be

4 All of this Commission’s reports may be found on its web page at www.nssg.gov.

able to ascertain quickly and surely who is in charge. But in a government that has expanded through serial incremental adjustment rather than according to an overall plan, finding those responsible to make things go right, or those responsible when things go wrong, can be a very formidable task. This, we may be sure, is not what the Founders had in mind.

This Commission has done its best to step up to the mandate of its Charter. It is now up to others to do their best to bring the benefits of this Commission’s effort into the institutions of American government.

Charles G. Boyd, General, USAF (Ret.) Executive Director

vii

Executive Summary

fter our examination of the new strategic environment of the next quarter century A(Phase I) and of a strategy to address it (Phase II), this Commission concludes that significant changes must be made in the structures and processes of the U.S. national security apparatus. Our institutional base is in decline and must be rebuilt. Otherwise, the United States risks losing its global influence and critical leadership role.

We offer recommendations for organizational change in five key areas:

● ensuring the security of the American homeland; ● recapitalizing America’s strengths in science and education; ● redesigning key institutions of the Executive Branch; ● overhauling the U.S. government’s military and civilian personnel systems; and ● reorganizing Congress’s role in national security affairs.

We have taken a broad view of national security. In the new era, sharp distinctions between “foreign” and “domestic” no longer apply. We do not equate national security with “defense.” We do believe in the centrality of strategy, and of seizing opportunities as well as confronting dangers. If the structures and processes of the U.S. government stand still amid a world of change, the United States will lose its capacity to shape history, and will instead be shaped by it.

Securing the National Homeland

he combination of unconventional weapons proliferation with the persistence of Tinternational terrorism will end the relative invulnerability of the U.S. homeland to catastrophic attack. A direct attack against American citizens on American soil is likely over the next quarter century. The risk is not only death and destruction but also a demoralization that could undermine U.S. global leadership. In the face of this threat, our nation has no coherent or integrated governmental structures.

We therefore recommend the creation of an independent National Homeland Security Agency (NHSA) with responsibility for planning, coordinating, and integrating various U.S. government activities involved in homeland security. NHSA would be built upon the Federal Emergency Management Agency, with the three organizations currently on the front line of border security—the Coast Guard, the Customs Service, and the Border Patrol—transferred to it. NHSA would not only protect American lives, but also assume responsibility for overseeing the protection of the nation’s critical infrastructure, including information technology.

The NHSA Director would have Cabinet status and would be a statutory advisor to the National Security Council. The legal foundation for the National Homeland Security Agency would rest firmly within the array of Constitutional guarantees for civil liberties. The observance of these guarantees in the event of a national security emergency would be safeguarded by NHSA’s interagency coordinating activities—which would include the Department of Justice—as well as by its conduct of advance exercises.

The potentially catastrophic nature of homeland attacks necessitates our being prepared to use the extensive resources of the Department of Defense (DoD). Therefore, the department

viii

needs to pay far more attention to this mission in the future. We recommend that a new office of Assistant Secretary for Homeland Security be created to oversee DoD activities in this domain and to ensure that the necessary resources are made available.

New priorities also need to be set for the U.S. armed forces in light of the threat to the homeland. We urge, in particular, that the National Guard be given homeland security as a primary mission, as the U.S. Constitution itself ordains. The National Guard should be reorganized, trained, and equipped to undertake that mission.

Finally, we recommend that Congress reorganize itself to accommodate this Executive Branch realignment, and that it also form a special select committee for homeland security to provide Congressional support and oversight in this critical area.

Recapitalizing America’s Strengths in Science and Education

mericans are living off the economic and security benefits of the last three Agenerations’ investment in science and education, but we are now consuming capital. Our systems of basic scientific research and education are in serious crisis, while other countries are redoubling their efforts. In the next quarter century, we will likely see ourselves surpassed, and in relative decline, unless we make a conscious national commitment to maintain our edge.

We also face unprecedented opportunity. The world is entering an era of dramatic progress in bioscience and materials science as well as information technology and scientific instrumentation. Brought together and accelerated by nanoscience, these rapidly developing research fields will transform our understanding of the world and our capacity to manipulate it. The United States can remain the world’s technological leader if it makes the commitment to do so. But the U.S. government has seriously underfunded basic scientific research in recent years. The quality of the U.S. education system, too, has fallen behind those of scores of other nations. This has occurred at a time when vastly more Americans will have to understand and work competently with science and math on a daily basis.

In this Commission’s view, the inadequacies of our systems of research and education pose a greater threat to U.S. national security over the next quarter century than any potential conventional war that we might imagine. American national leadership must understand these deficiencies as threats to national security. If we do not invest heavily and wisely in rebuilding these two core strengths, America will be incapable of maintaining its global position long into the 21st century.

We therefore recommend doubling the federal research and development budget by 2010, and instituting a more competitive environment for the allotment of those funds.

We recommend further that the role of the President’s Science Advisor be elevated to oversee these and other critical tasks, such as the resuscitation of the national laboratory system and the institution of better inventory stewardship over the nation’s science and technology assets.

We also recommend a new National Security Science and Technology Education Act to fund a comprehensive program to produce the needed numbers of science and engineering professionals as well as qualified teachers in science and math. This Act should provide loan

forgiveness incentives to attract those who have graduated and scholarships for those still in school and should provide these incentives in exchange for a period of K-12 teaching in science and math, or of military or government service. Additional measures should provide resources to modernize laboratories in science education, and expand existing programs aimed at helping economically-depressed school districts.

Institutional Redesign

he dramatic changes in the world since the end of the Cold War have not been Taccompanied by any major institutional changes in the Executive Branch of the U.S. government. Serious deficiencies exist that only a significant organizational redesign can remedy. Most troublesome is the lack of an overarching strategic framework guiding U.S. national security policymaking and resource allocation. Clear goals and priorities are rarely set. Budgets are prepared and appropriated as they were during the Cold War.

The Department of State, in particular, is a crippled institution, starved for resources by Congress because of its inadequacies, and thereby weakened further. Only if the State Department’s internal weaknesses are cured will it become an effective leader in the making and implementation of the nation’s foreign policy. Only then can it credibly seek significant funding increases from Congress. The department suffers in particular from an ineffective organizational structure in which regional and functional policies do not serve integrated goals, and in which sound management, accountability, and leadership are lacking.

For this and other reasons, the power to determine national security policy has steadily migrated toward the National Security Council (NSC) staff. The staff now assumes policymaking roles that many observers have warned against. Yet the NSC staff’s role as policy coordinator is more urgently needed than ever, given the imperative of integrating the many diverse strands of policymaking.

Meanwhile, the U.S. intelligence community is adjusting only slowly to the changed circumstances of the post-Cold War era. While the economic and political components of statecraft have assumed greater prominence, military imperatives still largely drive the collection and analysis of intelligence. Neither has America’s overseas presence been properly adapted to the new economic, social, political, and security realities of the 21st century.

Finally, the Department of Defense needs to be overhauled. The growth in staff and staff activities has created mounting confusion and delay. The failure to outsource or privatize many defense support activities wastes huge sums of money. The programming and budgeting process is not guided by effective strategic planning. The weapons acquisition process is so hobbled by excessive laws, regulations, and oversight strictures that it can neither recognize nor seize opportunities for major innovation, and its procurement bureaucracy weakens a defense industry that is already in a state of financial crisis.

n light of such serious and interwoven deficiencies, the Commission’s initial Irecommendation is that strategy should once again drive the design and implementation of U.S. national security policies. That means that the President should personally guide a top-down strategic planning process and that process should be linked to the allocation of resources throughout the government. When submitting his budgets for the various

national security departments, the President should also present an overall national security budget, focused on the nation’s most critical strategic goals. Homeland security, counter- terrorism, and science and technology should be included.

We recommend further that the President’s National Security Advisor and NSC staff return to their traditional role of coordinating national security activities and resist the temptation to become policymakers or operators. The NSC Advisor should also keep a low public profile. Legislative, press communications, and speech-writing functions should reside in the White House staff, not separately in the NSC staff as they do today. The higher the profile of the National Security Advisor the greater will be the pressures from Congress to compel testimony and force Senate confirmation of the position.

To reflect how central economics has become in U.S. national security policy, we recommend that the Secretary of Treasury be named a statutory member of the National Security Council. Responsibility for international economic policy should return to the National Security Council. The President should abolish the National Economic Council, distributing its domestic economic policy responsibilities to the Domestic Policy Council.

ritical to the future success of U.S. national security policies is a fundamental Crestructuring of the State Department. Reform must ensure that responsibility and accountability are clearly established, regional and functional activities are closely integrated, foreign assistance programs are centrally planned and implemented, and strategic planning is emphasized and linked to the allocation of resources.

We recommend that this be accomplished through the creation of five Under Secretaries with responsibility for overseeing the regions of Africa, Asia, Europe, Inter- America, and Near East/South Asia, and a redefinition of the responsibilities of the Under Secretary for Global Affairs. The restructuring we propose would position the State Department to play a leadership role in the making and implementation of U.S. foreign policy, as well as to harness the department’s organizational culture to the benefit of the U.S. government as a whole. Perhaps most important, the Secretary of State would be free to focus on the most important policies and negotiations, having delegated responsibility for integrating regional and functional issues to the Under Secretaries.

Accountability would be matched with responsibility in senior policymakers, who in serving the Secretary would be able to speak for the State Department both within the interagency process and before Congress. No longer would competing regional and functional perspectives immobilize the department. At the same time, functional perspectives, whether they be human rights, arms control, or the environment, will not disappear. The Under Secretaries would be clearly accountable to the Secretary of State, the President, and the Congress for ensuring that the appropriate priority was given to these concerns. Someone would actually be in charge.

We further recommend that the activities of the U.S. Agency for International Development be fully integrated into this new State Department organization. Development aid is not an end in itself, nor can it be successful if pursued independently of other U.S. programs and diplomatic activities. Only a coordinated diplomatic and assistance effort will advance the nation’s goals abroad, whether they be economic growth, democracy, or human rights.

The Secretary of State should give greater emphasis to strategic planning in the State Department and link it directly to the allocation of resources through the establishment of a

Strategic Planning, Assistance, and Budget Office. Rather than multiple Congressional appropriations, the State Department should also be funded in a single integrated Foreign Operations budget, which would include all foreign assistance programs and activities as well as the expenses for all related personnel and operations. Also, all U.S. Ambassadors, including the Permanent Representative to the United Nations, should report directly to the Secretary of State, and a major effort needs to be undertaken to “right-size” the U.S. overseas presence.

The Commission believes that the resulting improvements in the effectiveness and competency of the State Department and its overseas activities would provide the basis for the significant increase in resources necessary to carry out the nation’s foreign policy in the 21st century.

s for the Department of Defense, resource issues are also very much at stake in Areform efforts. The key to success will be direct, sustained involvement and commitment to defense reform on the part of the President, Secretary of Defense, and Congressional leadership. We urge first and foremost that the new Secretary of Defense reduce by ten to fifteen percent the staffs of the Office of the Secretary of Defense, the Joint Staff, the military services, and the regional commands. This would not only save money but also achieve the decision speed and encourage the decentralization necessary for any organization to succeed in the 21st century.

Just as critical, the Secretary of Defense should establish a ten-year goal of reducing infrastructure costs by 20-25 percent through steps to consolidate, restructure, outsource, and privatize as many DoD support agencies and activities as possible. Only through savings in infrastructure costs, which now take up nearly half of DoD’s budget, will the department find the funds necessary for modernization and for combat personnel in the long-term.

The processes by which the Defense Department develops its programs and budgets as well as acquires its weapons also need fundamental reform. The most critical first step is for the Secretary of Defense to produce defense policy and planning guidance that defines specific goals and establishes relative priorities.

Together with the Congress, the Secretary of Defense should move the Quadrennial Defense Review (QDR) to the second year of a Presidential term. The current requirement, that it be done in an administration’s first year, spites the purpose of the activity. Such a deadline does not allow the time or the means for an incoming administration to influence the QDR outcome, and therefore for it to gain a stake in its conclusions.

We recommend a second change in the QDR, as well; namely that the Secretary of Defense introduce a new process that requires the Services and defense agencies to compete for the allocation of some resources within the overall defense budget. This, we believe, would give the Secretary a vehicle to identify low priority programs and begin the process of reallocating funds to more promising areas during subsequent budget cycles.

As for acquisition reform, the Commission is deeply concerned with the downward spiral that has emerged in recent decades in relations between the Pentagon as customer and the defense industrial base as supplier of the nation’s major weapons systems. Many innovative high-tech firms are simply unable or unwilling to work with the Defense Department under the weight of its auditing, contracting, profitability, investment, and inspection regulations. These regulations also impair the Defense Department’s ability to function with the speed it needs to keep abreast of

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today’s rapid pace of technological innovation. Weapons development cycles average nine years in an environment where technology now changes every twelve to eighteen months in Silicon Valley—and the gap between private sector and defense industry innovation continues to widen.

In place of a specialized “defense industrial base,” we believe that the nation needs a national industrial base for defense composed of a broad cross-section of commercial firms as well as the more traditional defense firms. “New economy” sectors must be attracted to work with the government on sound business and professional grounds; the more traditional defense suppliers, which fill important needs unavailable in the commercial sector, must be given incentives to innovate and operate efficiently. We therefore recommend these major steps:

● Establish and employ a two-track acquisition system, one for major acquisitions and a “fast track” for a modest number of potential breakthrough systems, especially those in the area of command and control.

● Return to the pattern of increased prototyping and testing of selected weapons and support systems to foster innovation. We should use testing procedures to gain knowledge and not to demonstrate a program’s ability to survive budgetary scrutiny.

● Implement two-year defense budgeting solely for the modernization element (R&D/procurement) of the defense budget and expand the use of multi-year procurement.

● Modernize auditing and oversight requirements (by rewriting relevant sections of U.S. Code, Title 10, and the Federal Acquisition Regulations) with a goal of reducing the number of auditors and inspectors in the acquisition system to a level commensurate with the budget they oversee.

Beyond other process reforms for the Defense Department, the Commission offers its suggestions on the force structure process. We conclude that the concept of two major, coincident wars is a remote possibility supported neither by actual intelligence estimates nor by this Commission’s view of the likely future. It should be replaced by a new approach that accelerates the transformation of capabilities and forces better suited to the security environment that predominantly exists today. The Secretary of Defense should direct the DoD to shift from the threat-based, force sizing process to one which measures requirements against recent operational activity trends, actual intelligence estimates of potential adversaries’ capabilities, and national security objectives as defined in the new administration's national security strategy.

The Commission furthermore recommends that the Secretary of Defense revise the current categories of Major Force Programs (MFPs) used in the Defense Program Review to correspond to focus on providing a different mix of military capabilities.

Ultimately, the transformation process will blur the distinction between expeditionary and conventional forces, as both types of capabilities will eventually possess enhanced mobility. For the near term, however, those we call expeditionary capabilities require the most emphasis. Consequently, we recommend that the Defense Department devote its highest priority to improving and further developing its expeditionary capabilities.

here is no more critical dimension of defense policy than to guarantee U.S. Tcommercial and military access to outer space. The U.S. economy and military are

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vitally dependent on communications that rely on space. The clear imperative for the new era is a comprehensive national policy toward space and a coherent governmental machinery to carry it out. We therefore recommend the establishment of an Interagency Working Group on Space (IWGS).

The members of this interagency working group would include not only the relevant parts of the intelligence community and the State and Defense Departments, but also the National Aeronautics and Space Administration (NASA), the National Oceanic and Atmospheric Administration (NOAA), the Department of Commerce, and other Executive Branch agencies as necessary.

Meanwhile, the global presence and responsibilities of the United States have brought new requirements for protecting U.S. space and communications infrastructures, but no comprehensive national space architecture has been developed. We recommend that such responsibility be given to the new interagency space working group and that the existing National Security Space Architect be transferred from the Defense Department to the NSC staff to take the lead in this effort.

he Commission has concluded that the basic structure of the intelligence community Tdoes not require change. Our focus is on those steps that will enable the full implementation of recommendations found elsewhere within this report.

First in this regard, we recommend that the President order the setting of national intelligence priorities through National Security Council guidance to the Director of Central Intelligence.

Second, the intelligence community should emphasize the recruitment of human intelligence sources on terrorism as one of its highest priorities, and ensure that existing operational guidelines support this policy.

Third, the community should place new emphasis on collection and analysis of economic and science/technology security concerns, and incorporate more open source intelligence into its analytical products. To facilitate this effort, Congress should increase significantly the National Foreign Intelligence Program (NFIP) budget for collection and analysis.

The Human Requirements for National Security

s it enters the 21st century, the United States finds itself on the brink of an Aunprecedented crisis of competence in government. The declining orientation toward government service as a prestigious career is deeply troubling. Both civilian and military institutions face growing challenges, albeit of different forms and degrees, in recruiting and retaining America’s most promising talent. This problem derives from multiple sources—ample private sector opportunities with good pay and fewer bureaucratic frustrations, rigid governmental personnel procedures, the absence of a single overarching threat like the Cold War to entice service, cynicism about the worthiness of government service, and perceptions of government as a plodding bureaucracy falling behind in a technological age of speed and accuracy.

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These factors are adversely affecting recruitment and retention in the Civil and Foreign Services and particularly throughout the military, where deficiencies are both widening the gap between those who serve and the rest of American society and putting in jeopardy the leadership and professionalism necessary for an effective military. If we allow the human resources of government to continue to decay, none of the reforms proposed by this or any other national security commission will produce their intended results.

We recommend, first of all, a national campaign to reinvigorate and enhance the prestige of service to the nation. The key step in such a campaign must be to revive a positive attitude toward public service. This will require strong and consistent Presidential commitment, Congressional legislation, and innovative departmental actions throughout the federal government. It is the duty of all political leaders to repair the damage that has been done, in a high-profile and fully bipartisan manner.

Beyond changes in rhetoric, the campaign must undertake several actions. First, this Commission recommends the most urgent possible streamlining of the process by which we attract senior government officials. The ordeal that Presidential nominees are subjected to is now so great as to make it prohibitive for many individuals of talent and experience to accept public service. The confirmation process is characterized by vast amounts of paperwork and many delays. Conflict of interest and financial disclosure requirements have become a prohibitive obstacle to the recruitment of honest men and women to public service. Post-employment restrictions confront potential new recruits with the prospect of having to forsake not only income but work itself in the very fields in which they have demonstrated talent and found success. Meanwhile, a pervasive atmosphere of distrust and cynicism about government service is reinforced by the encrustation of complex rules based on the assumption that all officials, and especially those with experience in or contact with the private sector, are criminals waiting to be unmasked.

We therefore recommend the following:

● That the President act to shorten and make more efficient the Presidential appointee process by confirming the national security team first, standardizing paperwork requirements, and reducing the number of nominees subject to full FBI background checks.

● That the President reduce the number of Senate-confirmed and non-career SES positions by 25 percent to reduce the layering of senior positions in departments that has developed over time.

● That the President and Congressional leaders instruct their top aides to report within 90 days of January 20, 2001 on specific steps to revise government ethics laws and regulations. This should entail a comprehensive review of regulations that might exceed statutory requirements and making blind trusts, discretionary waivers, and recusals more easily available as alternatives to complete divestiture of financial and business holdings of concern.

Beyond the appointments process, there are problems with government personnel systems specific to the Foreign Service, the Civil Service, and to the military services. But for all three, there is one step we urge: Expand the National Security Education Act of 1991 (NSEA) to include broad support for social sciences, humanities, and foreign languages in exchange for civilian government and military service.

This expanded Act is the complement to the National Security Science and Technology Education Act (NSSTEA) and would provide college scholarship and loan forgiveness benefits for government service. Recipients could fulfill this service in a variety of ways: in the active duty military; in National Guard or Reserve units; in national security departments of the Civil Service; or in the Foreign Service. The expanded NSEA thus would provide an important means of recruiting high-quality people into military and civilian government service.

An effective and motivated Foreign Service is critical to the success of the Commission’s restructuring proposal for the State Department, yet 25 percent fewer people are now taking the entrance exam compared to the mid-1980s. Those who do enter complain of poor management and inadequate professional education. We therefore recommend that the Foreign Service system be improved by making leadership a core value of the State Department, revamping the examination process, and dramatically improving the level of on-going professional education.

The Civil Service faces a range of problems from the aging of the federal workforce to institutional challenges in bringing new workers into government service to critical gaps in recruiting and retaining information technology professionals. To address these problems, the Commission recommends eliminating recruitment hurdles, making the hiring process faster and easier, and designing professional education and retention programs worthy of full funding by Congress. Retaining talented information technology workers, too, will require greater incentives and the outsourcing of some IT support functions.

The national security component of the Civil Service calls for professionals with breadth of experience in the interagency process and with depth of knowledge about policy issues. To develop these, we recommend the establishment of a National Security Service Corps (NSSC) to broaden the experience base of senior departmental managers and develop leaders who seek integrative solutions to national security policy problems. Participating departments would include Defense, State, Treasury, Commerce, Justice, Energy, and the new National Homeland Security Agency—the departments essential to interagency policymaking on key national security issues. While participating departments would retain control over their personnel, an interagency advisory group would design and monitor the rotational assignments and professional education that will be key to the Corps’ success.

With respect to military personnel, reform is needed in the recruitment, promotion, compensation, and retirement systems. Otherwise, the military will continue to lose its most talented personnel, and the armed services will be left with a cadre unable to handle the technological and managerial tasks necessary for a world-class 21st century force.

Beyond the significant expansion of scholarships and debt relief programs recommended in both the modified National Security Education Act and the newly created National Security Science and Technology Education Act, we recommend substantial enhancements to the Montgomery GI Bill and strengthening recently passed and pending legislation that supports enhanced benefits—including transition, medical, and homeownership—for qualified veterans. The GI Bill should be restored as a pure entitlement, be transferable to dependents if desired by career service members, and should equal, at the very least, the median tuition cost of four-year U.S. colleges. Payments should be accelerated to coincide with school term periods and be indexed to keep pace with college cost increases. In addition, Title 38 authority for veterans benefits should be modified to restore and substantially improve medical, dental, and VA home ownership benefits for all who qualify, but especially for career and retired service members.

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Taken as a package, such changes will help bring the best people into the armed service and persuade quality personnel to serve longer in order to secure greater rewards for their service.

While these enhancements are critical they will not, by themselves, resolve the quality recruitment and retention problems of the Services. We therefore recommend significant modifications to military personnel legislation governing officer and enlisted career management, retirement, and compensation—giving Service Secretaries more authority and flexibility to adapt their personnel systems and career management to meet 21st century requirements. This should include flexible compensation and retirement plans, exemption from “up-or-out” mandates, and reform of personnel systems to facilitate fluid movement of personnel. If we do not decentralize and modernize the governing personnel legislation, no military reform or transformation is possible. We also call for an Executive-Legislative working group to monitor, evaluate and share information about the testing and implementation of these recommendations. With bipartisan cooperation, our military will remain one of this nation’s most treasured institutions and our safeguard in the changing world ahead.

The Role of Congress

hile Congress has mandated many changes to a host of Executive Branch Wdepartments and agencies over the years, it has not fundamentally reviewed its own role in national security policy. Moreover, it has not reformed its own structure since 1949. At present, for example, every major defense program must be voted upon no fewer than eighteen times each year by an array of committees and subcommittees. This represents a very poor use of time for busy members of the Executive and Legislative Branches.

To address these deficiencies, the Commission first recommends that the Congressional leadership conduct a thorough bicameral, bipartisan review of the Legislative Branch’s relationship to national security and foreign policy. The House Speaker, Majority, and Minority leaders and the Senate Majority and Minority leaders must work with the President and his top aides to bring proposed reforms to this Congress by the beginning of its second session.

From that basis, Congressional and Executive Branch leaders must build programs to encourage members to acquire knowledge and experience in national security. These programs should include ongoing education, greater opportunities for serious overseas travel, more legislature-to-legislature exchanges, and greater participation in wargames.

Greater fluency in national security matters must be matched by structural reforms. A comprehensive review of the Congressional committee structure is needed to ensure that it reflects the complexity of 21st century security challenges and of U.S. national security priorities. Specifically we recommend merging appropriations subcommittees with their respective authorizing committees so that the new merged committees will authorize and appropriate within the same bill. This should decrease the bureaucratic redundancy of the budget process and allow more time to be devoted to the oversight of national security policy.

An effective Congressional role in national security also requires ongoing Executive- Legislative consultation and coordination. The Executive Branch must ensure a sustained effort in consultation and devote resources to it. For its part, Congress must make consultation a higher priority, in part by forming a permanent consultative group composed of the Congressional leadership and the Chairpersons and Ranking Members of the main committees involved in

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national security. This will form the basis for sustained dialogue and greater support in times of crisis.

he Commission notes, in conclusion, that some of its recommendations will save Tmoney, while others call for more expenditure. We have not tried to “balance the books” among our recommendations, nor have we held financial implications foremost in mind during our work. We consider any money that may be saved a second-order benefit. We consider the provision of additional resources to national security, where necessary, to be investments, not costs, in first-order national priorities.

Finally, we strongly urge the new President and the Congressional leadership to establish some mechanism to oversee the implementation of the recommendations proffered here. Once some mechanism is chosen, the President must ensure that responsibility for implementing the recommendations of this Commission be given explicitly to senior personnel in both the Executive and Legislative Branches of government. The press of daily obligations is such that unless such delegation is made, and those given responsibility for implementation are held accountable for their tasks, the necessary reforms will not occur. The stakes are high. We of this Commission believe that many thousands of American lives, U.S. leadership among the community of nations, and the fate of U.S. national security itself are at risk unless the President and the Congress join together to implement the recommendations set forth in this report.

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Introduction: Imperative for Change

he U.S. Commission on National Security/ 21st Century was chartered to be the most Tcomprehensive examination of the structures and processes of the U.S. national security apparatus since the core legislation governing it was passed in 1947. The Commission’s Charter enjoins the Commissioners to “propose measures to adapt existing national security structures” to new circumstances, and, if necessary, “to create new structures where none exist.” The Commission is also charged with providing “cost and time estimates to complete these improvements,” as appropriate, for what is to be, in sum, “an institutional road map for the early part of the 21st century.”5

This Phase III report provides such a road map. But Phase III rests on the first two phases of the Commission’s work: Phase I’s examination of how the world may evolve over the next quarter century, and Phase II’s strategy to deal effectively with that world on behalf of American interests and values.

In its Phase I effort, this Commission stressed that global trends in scientific- technological, economic, socio-political, and military-security domains—as they mutually interact over the next 25 years—will produce fundamental qualitative changes in the U.S. national security environment. We arrived at these fourteen conclusions:

● The United States will become increasingly vulnerable to hostile attack on the American homeland, and U.S. military superiority will not entirely protect us.

● Rapid advances in information and biotechnologies will create new vulnerabilities for U.S. security.

● New technologies will divide the world as well as draw it together.

● The national security of all advanced states will be increasingly affected by the vulnerabilities of the evolving global economic infrastructure.

● Energy supplies will continue to have major strategic significance.

● All borders will be more porous; some will bend and some will break.

● The sovereignty of states will come under pressure, but will endure as the main principle of international political organization.

● The fragmentation and failure of some states will occur, with destabilizing effects on entire regions.

● Foreign crises will be replete with atrocities and the deliberate terrorizing of civilian populations.

● Space will become a critical and competitive military environment.

● The essence of war will not change.

5 See Appendix 2 for the full text of the Charter.

● U.S. intelligence will face more challenging adversaries, and even excellent intelligence will not prevent all surprises.

● The United States will be called upon frequently to intervene militarily in a time of uncertain alliances, and with the prospect of fewer forward-deployed forces.

● The emerging security environment in the next quarter century will require different U.S. military and other national capabilities.

The Commission’s stress on communicating the scale and pace of change has been borne out by extraordinary developments in science and technology in just the eighteen-month period since the Phase I report appeared. The mapping of the human genome was completed. A functioning quantum computing device was invented. Organic and inorganic material was mated at the molecular level for the first time. Basic mechanisms of the aging process have been understood at the genetic level. Any one of these developments would have qualified as a “breakthrough of the decade” a quarter century ago, but they all happened within the past year and a half.

This suggests the possible advent of a period of change the scale of which will often astound us. The key factor driving change in America’s national security environment over the next 25 years will be the acceleration of scientific discovery and its technological applications, and the uneven human social and psychological capacity to harness them. Synergistic developments in information technology, materials science, biotechnology, and nanotechnology will almost certainly transform human tools more dramatically and rapidly than at any time in human history.

While it is easy to underestimate the social implications of change on such a scale, the need for human intellectual and social adaptation imposes limits to the pace of change. These limits are healthy, for they allow and encourage the application of the human moral sense to choices of major import. We will surely have our hands full with such choices over the next quarter century. In that time we may witness the development of a capacity to guide or control evolution by manipulating human DNA. The ability to join organic and inorganic material forms suggests that humans may co-evolve literally with their own machines. Such prospects are both sobering and contentious. Some look to the future with great hope for the prospect of curing disease, repairing broken bodies, ending poverty, and preserving the biosphere. But others worry that curiosity and vanity will outrun the human moral sense, thus turning hope into disaster. The truth is that we do not know where the rapidly expanding domain of scientific-technological innovation will bring us. Nor do we know the extent to which we can summon the collective moral fortitude to control its outcome.

hat we do know is that some societies, and some people within societies, will be at Wthe forefront of future scientific-technological developments and others will be marginal to them. This means more polarization between those with wealth and power and those without—both among and within societies. It suggests, as well, that many engrained social patterns will become unstable, for scientific-technological innovation has profound, if generally unintended, effects on economic organization, social values, and political life.

In the Internet age, for example, information technologies may be used to empower communities and advance freedoms, but they can also empower political movements led by

charismatic leaders with irrational premises. Such men and women in the 21st century will be less bound than those of the 20th by the limits of the state, and less obliged to gain large industrial capabilities in order to wreck havoc. For example, a few people with as little as a $50,000 investment may manage to produce and spread a genetically-altered pathogen with the potential to kill millions of people in a matter of months. Clearly, the threshold for small groups or even individuals to inflict massive damage on those they take to be their enemies is falling dramatically.

As for political life, it is clear that the rapidity of change is already overwhelming many states in what used to be called the Third World. Overlaid on the enduring plagues of corruption and sheer bad government is a new pattern: information technology has widened the awareness of democracy and market-driven prosperity, and has led to increasing symbolic and material demands on government. These demands often exceed existing organizational capacities to meet them. One result is that many national armies do not respond to government control. Another is that mercenaries, criminals, terrorists, and drug cartel operators roam widely and freely. Meanwhile, non-governmental organizations (NGOs) along with global financial institutions sometimes function as proxy service and regulatory bureaucracies to do for states that which they cannot do for themselves—further diminishing governmental control and political accountability.

As a result of the growing porosity of borders, and of the widening scope of functional economic integration, significant political developments can no longer be managed solely through the vehicle of bilateral diplomatic relations. A seemingly internal crisis in Sierra Leone, carefully observed, implicates most of West Africa. A problem involving drug cultivation and political rebellion in Colombia cannot be addressed without involving Panama, Venezuela, Bolivia, Ecuador, Peru, Brazil, and Mexico. Financial problems in Thailand tumble willy-nilly onto Russia, Brazil, Japan, Indonesia, Malaysia, and the United States.

Demography is another major driver of global political change. Population growth tends to moderate with increased literacy, urbanization, and especially changes in traditional values that attend the movement of women into the workplace. Thanks to these trends, the world’s rate of population increase is slowing somewhat, but the absolute increases over the next quarter century will be enormous and coping with them will be a major challenge throughout much of the world. In some countries, however, the problem will be too few births. In Japan and Germany, for example, social security and private pension systems may face enormous strain because too few young workers will be available to support retirees living ever-longer lives. The use of foreign workers may be the only recourse for such societies, but that raises other political and social difficulties.

Yet another driver of change may be sustained economic growth in particular parts of the world. Asia may well be the most economically dynamic region on earth by 2025. Much depends on China’s ability to reform further the structure of its economy and on India’s ability to unleash its vast economic potential. But if these two very large countries achieve sustained economic growth—and if the economies of Japan, Korea, Taiwan, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam also grow—the focus of world power will shift away from the dominant Western centers of the past five centuries. While America is itself increasingly diverse, it still shares more philosophically and historically with Europe than with Asia. The challenge for the United States, then, may rest not only in a geostrategic shift, but in a shift in the cultural fabric of international politics itself.

n Phase II the Commission moved from describing objective conditions to prescribing Ia strategy for dealing with them. Subtitled A Concert for Preserving Security and Promoting Freedom, the Commission stressed that America cannot secure and advance its own interests in isolation. The nations of the world must work together—and the United States must learn to work with others in new ways—if the more cooperative order emerging from the Cold War epoch is to be sustained and strengthened.

Nonetheless, this Commission takes as its premise that America must play a special international role well into the future. By dint of its power and its wealth, its interests and its values, the United States has a responsibility to itself and to others to reinforce international order. Only the United States can provide the ballast of global stability, and usually the United States is the only country in a position to organize collective responses to common challenges.

We believe that American strategy must compose a balance between two key aims. The first is to reap the benefits of a more integrated world in order to expand freedom, security, and prosperity for Americans and for others. But second, American strategy must also strive to dampen the forces of global instability so that those benefits can endure and spread.

On the positive side, this means that the United States should pursue, within the limits of what is prudent and realistic, the worldwide expansion of material abundance and the eradication of poverty. It should also promote political pluralism, freedom of thought and speech, and individual liberty. Not only do such aims inhere in American principles, they are practical goals, as well. There are no guarantees against violence and evil in the world. We believe, nonetheless, that the expansion of human rights and basic material well-being constitutes a sturdy bulwark against them. On the negative side, these goals require concerted protection against four related dangers: the proliferation of weapons of mass destruction; international terrorism; major interstate aggression; and the collapse of states into internal violence, with the associated regional destabilization that often accompanies it.

These goals compose the lodestone of a U.S. strategy to expand freedom and maintain underlying stability, but, as we have said, the United States cannot achieve them by itself. American leadership must be prepared to act unilaterally if necessary, not least because the will to act alone is sometimes required to gain the cooperation of others. But U.S. policy should join its efforts with allies and multilateral institutions wherever possible; the United States is wise to strengthen its partners and in turn will derive strength from them.

The United States, therefore, as the prime keeper of the international security commons, must speak and act in ways that lead others, by dint of their own interests, to ally with American goals. If it is too arrogant and self-possessed, American behavior will invariably stimulate the rise of opposing coalitions. The United States will thereby drive away many of its partners and weaken those that remain. Tone matters.

o carry out this strategy and achieve these goals, the Commission defined six key Tobjectives for U.S. foreign and national security policy:

First, the preeminent objective is “to defend the United States and ensure that it is safe from the dangers of a new era.” The combination of unconventional weapons proliferation with the persistence of international terrorism will end the relative invulnerability of the U.S. homeland to catastrophic attack. To deter attack against the homeland in the 21st century, the

United States requires a new triad of prevention, protection, and response. Failure to prevent mass-casualty attacks against the American homeland will jeopardize not only American lives but U.S. foreign policy writ large. It would undermine support for U.S. international leadership and for many of our personal freedoms, as well. Indeed, the abrupt undermining of U.S. power and prestige is the worst thing that could happen to the structure of global peace in the next quarter century, and nothing is more likely to produce it than devastating attacks on American soil.

Achieving this goal, and the nation’s other critical national security goals, also requires the U.S. government, as a second key objective, to “maintain America’s social cohesion, economic competitiveness, technological ingenuity, and military strength.” That means a larger investment in and better management of science and technology in government and in society, and a substantially better educational system, particularly for the teaching of science and mathematics.

The United States must also take better advantage of the opportunities that the present period of relative international stability and American power enable. A third key objective, therefore, is “to assist the integration of key major powers, especially China, Russia, and India, into the mainstream of the emerging international system.” Moreover, since globalization’s opportunities are rooted in economic and political progress, the Commission’s fourth key U.S. objective is “to promote, with others, the dynamism of the new global economy and improve the effectiveness of international institutions and international law.”

A fifth key objective also follows, which is “to adapt U.S. alliances and other regional mechanisms to a new era in which America’s partners seek greater autonomy and responsibility.” A sixth and final key objective inheres in an effort “to help the international community tame the disintegrative forces spawned by an era of change.” While the prospect of major war is low, much of the planet will experience conflict and violence. Unless the United States, in concert with others, can find a way to limit that conflict and violence, it will not be able to construct a foreign policy agenda focussed on opportunities.

Achieving all of these objectives will require a basic shift in orientation: to focus on preventing rather than simply responding to dangers and crises. The United States must redirect its energies, adjust its diplomacy, and redesign its military capabilities to ward off cross-border aggression, assist states before they fail, and avert systemic international financial crises. To succeed over the long run with a preventive focus, the United States needs to institutionalize its efforts to grasp the opportunities the international environment now offers.

An opportunity-based strategy also has the merit of being more economical than a reactive one. Preventing a financial crisis, even if it involves well-timed bailouts, is cheaper than recuperating from stock market crashes and regional recessions. Preventing a violent conflict costs less than responsive peacekeeping operations and nation-building activities. And certainly, preventing mass-casualty attacks on the American homeland will be far less expensive than recovering from them.

hese six objectives, and the Commission’s strategy itself, rest on a premise so basic Tthat it often goes unstated: democracy conduces generally to domestic and international peace, and peace conduces to, or at least allows, democratic politics. While this premise is not a “law,” and while scholars continue to study and debate these matters, we believe they are strong tendencies, and that they can be strengthened further by a consistent and determined national policy. We know, that a world characterized by the spread of genuine

democracy would not be flawless, nor signal “the end of history.” But it is the best of all possible worlds that we can conceive, and that we can achieve.

In Phase I, this Commission presented four “Worlds in Prospect,” agglomerations of basic trends that, we believed, might describe the world in 2025. The Democratic Peace was one. Nationalism and Protectionism was a second, Division and Mayhem a third, and Globalism Triumphant the fourth. We, and presumably most observers, see the Democratic Peace as a positive future, Nationalism and Protectionism as a step in the wrong direction, Division and Mayhem as full-fledged tragedy. But the Globalism Triumphant scenario divides opinion, partly because it is the hardest to envision, and partly because it functions as a template for the projection of conflicting political views.

Some observers, for example, believe that the end of the nation-state is upon us, and that this is a good thing, for, in this view, nationalism is the root of racism and militarism. The eclipse of the national territorial state is at any rate, some argue, an inevitable development given the very nature of an increasingly integrated world.

We demur. To the extent that a more integrated world economically is the best way to raise people out of poverty and disease, we applaud it. We also recognize the need for unprecedented international cooperation on a range of transnational problems. But the state is the only venue discovered so far in which democratic principles and processes can play out reliably, and not all forms of nationalism have been or need be illiberal. We therefore affirm the value of American sovereignty as well as the political and cultural diversity ensured by the present state system. Within that system the United States must live by and be ready to share its political values—but it must remember that those values include tolerance for those who hold different views.

broader and deeper Democratic Peace is, and ought to be, America’s aspiration, but Athere are obstacles to achieving it. Indeed, despite the likely progress ahead on many fronts, the United States may face not only episodic problems but also genuine crises. If the United States mismanages its current global position, it could generate resentments and jealousies that leave us more isolated than isolationist. Major wars involving weapons of mass destruction are possible, and the general security environment may deteriorate faster than the United States, even with allied aid, can redress it. Environmental, economic, and political unraveling in much of the world could occur on a scale so large as to make current levels of prosperity unsustainable, let alone expandable. Certain technologies—biotechnology, for example—may also undermine social and political stability among and within advanced countries, including the United States. Indeed, all these crises may occur, and each could reinforce and deepen the others.

The challenge for the United States is to seize the new century’s many opportunities and avoid its many dangers. The problem is that the current structures and processes of U.S. national security policymaking are incapable of such management. That is because, just below the enormous power and prestige of the United States today, is a neglected and, in some cases, a decaying institutional base.

The U.S. government is not well organized, for example, to ensure homeland security. No adequate coordination mechanism exists among federal, state, and local government efforts, as well as those of dozens of agencies at the federal level. If present trends continue in elementary and secondary school science and mathematics education, to take another example, the United States may lose its lead in many, if not most, major areas of critical scientific-technological

competence within 25 years. We are also losing, and are finding ourselves unable to replace, the most critical asset we have: talented and dedicated personnel throughout government.

Strategic planning is absent in the U.S. government and its budget processes are so inflexible that few resources are available for preventive policies or for responding to crises, nor can resources be reallocated efficiently to reflect changes in policy priorities. The economic component of U.S. national security policy is poorly integrated with the military and diplomatic components. The State Department is demoralized and dysfunctional. The Defense Department appears incapable of generating a strategic posture very different from that of the Cold War, and its weapons acquisition process is slow, inefficient, and burdened by excess regulation. National policy in the increasingly critical environment of space is adrift, and the intelligence community is only slowly reorienting itself to a world of more diffuse and differently shaped threats. The Executive Branch, with the aid of the Congress, needs to initiate change in many areas by taking bold new steps, and by speeding up positive change where it is languishing.

he very mention of changing the engrained routines and structures of government is Tusually enough to evoke cynicism even in a born optimist. But the American case is surprisingly positive, especially in relatively recent times. The reorganizations occasioned by World War II were vast and innovative, and the 1947 National Security Act was bold in advancing and institutionalizing them. Major revisions of the 1947 Act were passed subsequently by Congress in 1949, 1953, and 1958. Major internal Defense Department reforms were promulgated as well, one in 1961 and another, the Department of Defense Reorganization Act (Goldwater-Nichols) in 1986. The essence of the American genius is that we know better than most societies how to reinvent ourselves to meet the times. This Commission, we believe, is true to that estimable tradition.

Despite this relatively good record, resistance will arise to changing U.S. national security structures and processes, both within agencies of government and in the Congress. What is needed, therefore, is for the new administration, together with the new Congress, to exert real leadership. Our comprehensive recommendations to guide that leadership follow.

First, we must prepare ourselves better to defend the national homeland. We take this up in Section I, Securing the National Homeland. We put this first because it addresses the most dangerous and the most novel threat to American national security in the years ahead.

Second, we must rebuild our strengths in the generation and management of science and technology and in education. We have made Recapitalizing America’s Strengths in Science and Education the second section of this report despite the fact that science management and education issues are rarely ranked as paramount national security priorities. We do so to emphasize their crucial and growing importance.

Third, we must ensure coherence and effectiveness in the institutions of the Executive Branch of government. Section III, Institutional Redesign, proposes change throughout the national security apparatus.

Fourth, we must ensure the highest caliber human capital in public service. U.S. national security depends on the quality of the people, both civilian and military, serving within the ranks of government. If we are unsuccessful in meeting the crisis of competence before us, none of the other reforms proposed in this report will succeed. Section IV, The Human Requirements for National Security, examines government personnel issues in detail.

Fifth, the Congress is part of the problem before us, and therefore must become part of the solution. Not only must the Congress support the Executive Branch reforms promulgated here, but it must bring its own organization in line with the 21st century. Section V, The Role of Congress, examines this critical facet of government reform.

Each section of this report carries an introduction explaining why the subject is important, identifies the major problems requiring solution, and then states this Commission’s recommendations. All major recommendations are boxed and in bold-face type.6 Related but subordinate recommendations are italicized and in bold-face type in the text.

As appropriate throughout the report, we outline what Congressional, Presidential, and Executive department actions would be required to implement the Commission’s recommendations. Also as appropriate, we provide general guidance as to the budgetary implications of our recommendations but, lest details of such consideration confuse and complicate the text, we will provide suggested implementation plans for selected areas in a separately issued addendum. A last word urges the President to devise an implementing mechanism for the recommendations put forth here.

Finally, we observe that some of our recommendations will save money, while others call for more expenditure. We have not tried to “balance the books” among our recommendations, nor have we held financial implications foremost in mind during our work. Wherever money may be saved, we consider it a second-order benefit. Provision of additional resources to national security, where necessary, are investments, not costs, and a first-order national priority.

6 The recommendations are listed together in Appendix 1, pp. 124-129.

I. Securing the National Homeland

ne of this Commission’s most important conclusions in its Phase I report was that Oattacks against American citizens on American soil, possibly causing heavy casualties, are likely over the next quarter century.7 This is because both the technical means for such attacks, and the array of actors who might use such means, are proliferating despite the best efforts of American diplomacy.

These attacks may involve weapons of mass destruction and weapons of mass disruption. As porous as U.S. physical borders are in an age of burgeoning trade and travel, its “cyber borders” are even more porous—and the critical infrastructure upon which so much of the U.S. economy depends can now be targeted by non-state and state actors alike. America’s present global predominance does not render it immune from these dangers. To the contrary, U.S. preeminence makes the American homeland more appealing as a target, while America’s openness and freedoms make it more vulnerable.

Notwithstanding a growing consensus on the seriousness of the threat to the homeland posed by weapons of mass destruction and disruption, the U.S. government has not adopted homeland security as a primary national security mission. Its structures and strategies are fragmented and inadequate. The President must therefore both develop a comprehensive strategy and propose new organizational structures to prevent and protect against attacks on the homeland, and to respond to such attacks if prevention and protection should fail.

Any reorganization must be mindful of the scale of the scenarios we envision and the enormity of their consequences. We need orders-of-magnitude improvements in planning, coordination, and exercise. The government must also be prepared to use effectively—albeit with all proper safeguards—the extensive resources of the Department of Defense. This will necessitate new priorities for the U.S. armed forces and particularly, in our view, for the National Guard.

he United States is today very poorly organized to design and implement any Tcomprehensive strategy to protect the homeland. The assets and organizations that now exist for homeland security are scattered across more than two dozen departments and agencies, and all fifty states. The Executive Branch, with the full participation of Congress, needs to realign, refine, and rationalize these assets into a coherent whole, or even the best strategy will lack an adequate vehicle for implementation.

This Commission believes that the security of the American homeland from the threats of the new century should be the primary national security mission of the U.S. government. While the Executive Branch must take the lead in dealing with the many policy and structural issues involved, Congress is a partner of critical importance in this effort. It must find ways to address homeland security issues that bridge current gaps in organization, oversight, and authority, and that resolve conflicting claims to jurisdiction within both the Senate and the House of Representatives and also between them.

7 See New World Coming, p. 4, and the Report of the National Defense Panel, Transforming Defense: National Security in the 21st Century (Washington, DC: December 1997), p. 17.

Congress is crucial, as well, for guaranteeing that homeland security is achieved within a framework of law that protects the civil liberties and privacy of American citizens. We are confident that the U.S. government can enhance national security without compromising established Constitutional principles. But in order to guarantee this, we must plan ahead. In a major attack involving contagious biological agents, for example, citizen cooperation with government authorities will depend on public confidence that those authorities can manage the emergency. If that confidence is lacking, panic and disorder could lead to insistent demands for the temporary suspension of some civil liberties. That is why preparing for the worst is essential to protecting individual freedoms during a national crisis.

Legislative guidance for planning among federal agencies and state and local authorities must take particular cognizance of the role of the Defense Department. Its subordination to civil authority needs to be clearly defined in advance.

In short, advances in technology have created new dimensions to our nation's economic and physical security. While some new threats can be met with traditional responses, others cannot. More needs to be done in three areas to prevent the territory and infrastructure of the United States from becoming easy and tempting targets: in strategy, in organizational realignment, and in Executive-Legislative cooperation. We take these areas in turn.

A. THE STRATEGIC FRAMEWORK

homeland security strategy to minimize the threat of intimidation and loss of life is Aan essential support for an international leadership role for the United States. Homeland security is not peripheral to U.S. national security strategy but central to it. At this point, national leaders have not agreed on a clear strategy for homeland security, a condition this Commission finds dangerous and intolerable. We therefore recommend the following:

● 1: The President should develop a comprehensive strategy to heighten America’s ability to prevent and protect against all forms of attack on the homeland, and to respond to such attacks if prevention and protection fail.

In our view, the President should:

● Give new priority in his overall national security strategy to homeland security, and make it a central concern for incoming officials in all Executive Branch departments, particularly the intelligence and law enforcement communities;

● Calmly prepare the American people for prospective threats, and increase their awareness of what federal and state governments are doing to prevent attacks and to protect them if prevention fails;

● Put in place new government organizations and processes, eliminating where possible staff duplication and mission overlap; and

● Encourage Congress to establish new mechanisms to facilitate closer cooperation between the Executive and Legislative Branches of government on this vital issue.

We believe that homeland security can best be assured through a strategy of layered defense that focuses first on prevention, second on protection, and third on response.

Prevention: Preventing a potential attack comes first. Since the occurrence of even one event that causes catastrophic loss of life would represent an unacceptable failure of policy, U.S. strategy should therefore act as far forward as possible to prevent attacks on the homeland. This strategy has at its disposal three essential instruments.

Most broadly, the first instrument is U.S. diplomacy. U.S. foreign policy should strive to shape an international system in which just grievances can be addressed without violence. Diplomatic efforts to develop friendly and trusting relations with foreign governments and their people can significantly multiply America's chances of gaining early warning of potential attack and of doing something about impending threats. Intelligence-sharing with foreign governments is crucial to help identify individuals and groups who might be considering attacks on the United States or its allies. Cooperative foreign law enforcement agencies can detain, arrest, and prosecute terrorists on their own soil. Diplomatic success in resolving overseas conflicts that spawn terrorist activities will help in the long run.

Meanwhile, verifiable arms control and nonproliferation efforts must remain a top priority. These policies can help persuade states and terrorists to abjure weapons of mass destruction and to prevent the export of fissile materials and dangerous dual-use technologies. But such measures cannot by themselves prevent proliferation. So other measures are needed, including the possibility of punitive measures and defenses. The United States should take a lead role in strengthening multilateral organizations such as the International Atomic Energy Agency.

In addition, increased vigilance against international crime syndicates is also important because many terrorist organizations gain resources and other assets through criminal activity that they then use to mount terrorist operations. Dealing with international organized crime requires not only better cooperation with other countries, but also among agencies of the federal government. While progress has been made on this front in recent years, more remains to be done.8

The second instrument of homeland security consists of the U.S. diplomatic, intelligence, and military presence overseas. Knowing the who, where, and how of a potential physical or cyber attack is the key to stopping a strike before it can be delivered. Diplomatic, intelligence, and military agencies overseas, as well as law enforcement agencies working abroad, are America’s primary eyes and ears on the ground. But increased public-private efforts to enhance security processes within the international transportation and logistics networks that bring people and goods to America are also of critical and growing importance.

Vigilant systems of border security and surveillance are a third instrument that can prevent those agents of attack who are not detected and stopped overseas from actually entering the United States. Agencies such as the U.S. Customs Service and U.S. Coast Guard have a critical prevention role to play. Terrorists and criminals are finding that the difficulty of policing the rising daily volume and velocities of people and goods that cross U.S. borders makes it easier for them to smuggle weapons and contraband, and to move their operatives into and out of the United States. Improving the capacity of border control agencies to identify and intercept potential threats without creating barriers to efficient trade and travel requires a sub-strategy also with three elements.

8 See International Crime Threat Assessment (Washington, DC: The White House, December 2000).

First is the development of new transportation security procedures and practices designed to reduce the risk that importers, exporters, freight forwarders, and transportation carriers will serve as unwitting conduits for criminal or terrorist activities. Second is bolstering the intelligence gathering, data management, and information sharing capabilities of border control agencies to improve their ability to target high-risk goods and people for inspection. Third is strengthening the capabilities of border control agencies to arrest terrorists or interdict dangerous shipments before they arrive on U.S. soil.

These three measures, which place a premium on public-private partnerships, will pay for themselves in short order. They will allow for the more efficient allocation of limited enforcement resources along U.S. borders. There will be fewer disruptive inspections at ports of entry for legitimate businesses and travelers. They will lead to reduced theft and insurance costs, as well. Most important, the underlying philosophy of this approach is one that balances prudence, on the one hand, with American values of openness and free trade on the other. 9 To shield America from the world out of fear of terrorism is, in large part, to do the terrorists’ work for them. To continue business as usual, however, is irresponsible.

The same may be said for our growing cyber problems. Protecting our nation’s critical infrastructure depends on greater public awareness and improvements in our tools to detect and diagnose intrusions. This will require better information sharing among all federal, state, and local governments as well as with private sector owners and operators. The federal government has these specific tasks:

● To serve as a model for the private sector by improving its own security practices;

● To address known government security problems on a system-wide basis;

● To identify and map network interdependencies so that harmful cascading effects among systems can be prevented;

● To sponsor vulnerability assessments within both the federal government and the private sector; and

● To design and carry out simulations and exercises that test information system security across the nation’s entire infrastructure.

Preventing attacks on the American homeland also requires that the United States maintain long-range strike capabilities. The United States must bolster deterrence by making clear its determination to use military force in a preemptive fashion if necessary. Even the most hostile state sponsors of terrorism, or terrorists themselves, will think twice about harming Americans and American allies and interests if they fear direct and severe U.S. attack after—or before—the fact. Such capabilities will strengthen deterrence even if they never have to be used.

Protection: The Defense Department undertakes many different activities that serve to protect the American homeland, and these should be integrated into an overall surveillance system, buttressed with additional resources. A ballistic missile defense system would be a useful addition and should be developed to the extent technically feasible, fiscally prudent, and

9 Note in this regard Stephen E. Flynn, “Beyond Border Control,” Foreign Affairs (November/December 2000).

politically sustainable. Defenses should also be pursued against cruise missiles and other sophisticated atmospheric weapon technologies as they become more widely deployed. While both active duty and reserve forces are involved in these activities, the Commission believes that more can and should be done by the National Guard, as is discussed in more detail below.

Protecting the nation’s critical infrastructure and providing cyber-security must also include:

● Advanced indication, warning, and attack assessments;

● A warning system that includes voluntary, immediate private-sector reporting of potential attacks to enable other private-sector targets (and the U.S. government) better to take protective action; and

● Advanced systems for halting attacks, establishing backups, and restoring service.

Response: Managing the consequences of a catastrophic attack on the U.S. homeland would be a complex and difficult process. The first priority should be to build up and augment state and local response capabilities. Adequate equipment must be available to first responders in local communities. Procedures and guidelines need to be defined and disseminated and then practiced through simulations and exercises. Interoperable, robust, and redundant communications capabilities are a must in recovering from any disaster. Continuity of government and critical services must be ensured as well. Demonstrating effective responses to natural and manmade disasters will also help to build mutual confidence and relationships among those with roles in dealing with a major terrorist attack.

All of this puts a premium on making sure that the disparate organizations involved with homeland security—on various levels of government and in the private sector—can work together effectively. We are frankly skeptical that the U.S. government, as it exists today, can respond effectively to the scale of danger and damage that may come upon us during the next quarter century. This leads us, then, to our second task: that of organizational realignment.

B. ORGANIZATIONAL REALIGNMENT

esponsibility for homeland security resides at all levels of the U.S. government— Rlocal, state, and federal. Within the federal government, almost every agency and department is involved in some aspect of homeland security. None have been organized to focus on the scale of the contemporary threat to the homeland, however. This Commission urges an organizational realignment that:

● Designates a single person, accountable to the President, to be responsible for coordinating and overseeing various U.S. government activities related to homeland security;

● Consolidates certain homeland security activities to improve their effectiveness and coherence;

● Establishes planning mechanisms to define clearly specific responses to specific types of threats; and

● Ensures that the appropriate resources and capabilities are available.

Therefore, this Commission strongly recommends the following:

● 2: The President should propose, and Congress should agree to create, a National Homeland Security Agency (NHSA) with responsibility for planning, coordinating, and integrating various U.S. government activities involved in homeland security. The Federal Emergency Management Agency (FEMA) should be a key building block in this effort.

Given the multiplicity of agencies and activities involved in these homeland security tasks, someone needs to be responsible and accountable to the President not only to coordinate the making of policy, but also to oversee its implementation. This argues against assigning the role to a senior person on the National Security Council (NSC) staff and for the creation of a separate agency. This agency would give priority to overall planning while relying primarily on others to carry out those plans. To give this agency sufficient stature within the government, its director would be a member of the Cabinet and a statutory advisor to the National Security Council. The position would require Senate confirmation.

Notwithstanding NHSA’s responsibilities, the National Security Council would still play a strategic role in planning and coordinating all homeland security activities. This would include those of NHSA as well as those that remain separate, whether they involve other NSC members or other agencies, such as the Centers for Disease Control within the Department of Health and Human Services.

We propose building the National Homeland Security Agency upon the capabilities of the Federal Emergency Management Agency (FEMA), an existing federal agency that has performed well in recent years, especially in responding to natural disasters. NHSA would be legislatively chartered to provide a focal point for all natural and manmade crisis and emergency planning scenarios. It would retain and strengthen FEMA’s ten existing regional offices as a core element of its organizational structure.

hile FEMA is the necessary core of the National Homeland Security Agency, it is Wnot sufficient to do what NHSA needs to do. In particular, patrolling U.S. borders, and policing the flows of peoples and goods through the hundreds of ports of entry, must receive higher priority. These activities need to be better integrated, but efforts toward that end are hindered by the fact that the three organizations on the front line of border security are spread across three different U.S. Cabinet departments. The Coast Guard works under the Secretary of Transportation, the Customs Service is located in the Department of the Treasury, and the Immigration and Naturalization Service oversees the Border Patrol in the Department of Justice. In each case, the border defense agency is far from the mainstream of its parent department’s agenda and consequently receives limited attention from the department’s senior officials. We therefore recommend the following:

● 3: The President should propose to Congress the transfer of the Customs Service, the Border Patrol, and Coast Guard to the National Homeland Security Agency, while preserving them as distinct entities.

Bringing these organizations together under one agency will create important synergies. Their individual capabilities will be molded into a stronger and more effective system, and this realignment will help ensure that sufficient resources are devoted to tasks crucial to both public safety and U.S. trade and economic interests. Consolidating overhead, training programs, and maintenance of the aircraft, boats, and helicopters that these three agencies employ will save money, and further efficiencies could be realized with regard to other resources such as information technology, communications equipment, and dedicated sensors. Bringing these separate, but complementary, activities together will also facilitate more effective Executive and Legislative oversight, and help rationalize the process of budget preparation, analysis, and presentation.

Steps must be also taken to strengthen these three individual organizations themselves. The Customs Service, the Border Patrol, and the Coast Guard are all on the verge of being overwhelmed by the mismatch between their growing duties and their mostly static resources.

The Customs Service, for example, is charged with preventing contraband from entering the United States. It is also responsible for preventing terrorists from using the commercial or private transportation venues of international trade for smuggling explosives or weapons of mass destruction into or out of the United States. The Customs Service, however, retains only a modest air, land, and marine interdiction force, and its investigative component, supported by its own intelligence branch, is similarly modest. The high volume of conveyances, cargo, and passengers arriving in the United States each year already overwhelms the Customs Service’s capabilities. Over $8.8 billion worth of goods, over 1.3 million people, over 340,000 vehicles, and over 58,000 shipments are processed daily at entry points. Of this volume, Customs can inspect only one to two percent of all inbound shipments. The volume of U.S. international trade, measured in terms of dollars and containers, has doubled since 1995, and it may well double again between now and 2005.

Therefore, this Commission believes that an improved computer information capability and tracking system—as well as upgraded equipment that can detect both conventional and nuclear explosives, and chemical and biological agents—would be a wise short-term investment with important long-term benefits. It would also raise the risk for criminals seeking to target or exploit importers and cargo carriers for illicit gains.10

The Border Patrol is the uniformed arm of the Immigration and Naturalization Service. Its mission is the detection and prevention of illegal entry into the United States. It works primarily between ports of entry and patrols the borders by various means. There has been a debate for many years about whether the dual functions of the Immigration and Naturalization Service—border control and enforcement on the one side, and immigration facilitation on the other—should be joined under the same roof. The U.S. Commission on Immigration Reform concluded that they should not be joined.11 We agree: the Border Patrol should become part of the NHSA.

The U.S. Coast Guard is a highly disciplined force with multiple missions and a natural role to play in homeland security. It performs maritime search and rescue missions, manages vessel traffic, enforces U.S. environmental and fishery laws, and interdicts and searches vessels

10 See the Report of the Interagency Commission on Crime and Security in U.S. Seaports (Washington, DC: Fall 2000). 11 See the Report of the U.S. Commission on Immigration Reform (Washington, DC: 1997).

suspected of carrying illegal aliens, drugs, and other contraband. In a time of war, it also works with the Navy to protect U.S. ports from attack.

Indeed, in many respects, the Coast Guard is a model homeland security agency given its unique blend of law enforcement, regulatory, and military authorities that allow it to operate within, across, and beyond U.S. borders. It accomplishes its many missions by routinely working with numerous local, regional, national, and international agencies, and by forging and maintaining constructive relationships with a diverse group of private, non-governmental, and public marine-related organizations. As the fifth armed service, in peace and war, it has national defense missions that include port security, overseeing the defense of coastal waters, and supporting and integrating its forces with those of the Navy and the other services.

The case for preserving and enhancing the Coast Guard’s multi-mission capabilities is compelling. But its crucial role in protecting national interests close to home has not been adequately appreciated, and this has resulted in serious and growing readiness concerns. U.S. Coast Guard ships and aircraft are aging and technologically obsolete; indeed, the Coast Guard cutter fleet is older than 39 of the world's 41 major naval fleets. As a result, the Coast Guard fleet generates excessive operating and maintenance costs, and lacks essential capabilities in speed, sensors, and interoperability. To fulfill all of its missions, the Coast Guard requires updated platforms with the staying power, in hazardous weather, to remain offshore and fully operational throughout U.S. maritime economic zones.12

The Commission recommends strongly that Congress recapitalize the Customs Service, the Border Patrol, and the Coast Guard so that they can confidently perform key homeland security roles.

HSA’s planning, coordinating, and overseeing activities would be undertaken Nthrough three staff Directorates. The Directorate of Prevention would oversee and coordinate the various border security activities, as discussed above. A Directorate of Critical Infrastructure Protection (CIP) would handle the growing cyber threat. FEMA’s emergency preparedness and response activities would be strengthened in a third directorate to cover both natural and manmade disasters. A Science and Technology office would advise the NHSA Director on research and development efforts and priorities for all three directorates.

Relatively small permanent staffs would man the directorates. NHSA will employ FEMA’s principle of working effectively with state and local governments, as well as with other federal organizations, stressing interagency coordination. Much of NHSA’s daily work will take place directly supporting state officials in its regional offices around the country. Its organizational infrastructure will not be heavily centered in the Washington, DC area.

NHSA would also house a National Crisis Action Center (NCAC), which would become the nation’s focal point for monitoring emergencies and for coordinating federal support in a crisis to state and local governments, as well as to the private sector. We envision the center to be an interagency operation, directed by a two-star National Guard general, with full-time representation from the other federal agencies involved in homeland security (See Figure 1).

12 See Report of the Interagency Task Force on U.S. Coast Guard Roles and Missions, A Coast Guard for the Twenty First-Century (Washington, DC: December 1999).

National Homeland Security Agency

Directorates National Crisis Action Center Prevention Critical Infrastructure Protection Emergency Preparedness & Response

Customs Service Border Patrol Coast Guard

Regional Regional Offices Offices

Figure 1: National Homeland Security Agency

NHSA will require a particularly close working relationship with the Department of Defense. It will need also to create and maintain strong mechanisms for the sharing of information and intelligence with U.S. domestic and international intelligence entities. We suggest that NHSA have liaison officers in the counter-terrorism centers of both the FBI and the CIA. Additionally, the sharing of information with business and industry on threats to critical infrastructures requires further expansion.

HSA will also assume responsibility for overseeing the protection of the nation’s Ncritical infrastructure. Considerable progress has been made in implementing the recommendations of the President’s Commission on Critical Infrastructure Protection (PCCIP) and Presidential Decision Directive 63 (PDD-63). But more needs to be done, for the United States has real and growing problems in this area.

U.S. dependence on increasingly sophisticated and more concentrated critical infrastructures has increased dramatically over the past decade. Electrical utilities, water and sewage systems, transportation networks, and communications and energy systems now depend on computers to provide safe, efficient, and reliable service. The banking and finance sector, too, keeps track of millions of transactions through increasingly robust computer capabilities.

The overwhelming majority of these computer systems are privately owned, and many operate at or very near capacity with little or no provision for manual back-ups in an emergency.

Moreover, the computerized information networks that link systems together are themselves vulnerable to unwanted intrusion and disruption. An attack on any one of several highly interdependent networks can cause collateral damage to other networks and the systems they connect. Some forms of disruption will lead merely to nuisance and economic loss, but other forms will jeopardize lives. One need only note the dependence of hospitals, air-traffic control systems, and the food processing industry on computer controls to appreciate the point.

The bulk of unclassified military communications, too, relies on systems almost entirely owned and operated by the private sector. Yet little has been done to assure the security and reliability of those communications in crisis. Current efforts to prevent attacks, protect against their most damaging effects, and prepare for prompt response are uneven at best, and this is dangerous because a determined adversary is most likely to employ a weapon of mass disruption during a homeland security or foreign policy crisis.

As noted above, a Directorate for Critical Infrastructure Protection would be an integral part of the National Homeland Security Agency. This directorate would have two vital responsibilities. First would be to oversee the physical assets and information networks that make up the U.S. critical infrastructure. It should ensure the maintenance of a nucleus of cyber security expertise within the government, as well. There is now an alarming shortage of government cyber security experts due in large part to the financial attraction of private-sector employment that the government cannot match under present personnel procedures.13 The director’s second responsibility would be as the Critical Information Technology, Assurance, and Security Office (CITASO). This office would coordinate efforts to address the nation’s vulnerability to electronic or physical attacks on critical infrastructure.

Several critical activities that are currently spread among various government agencies and the private sector should be brought together for this purpose. These include:

● Information Sharing and Analysis Centers (ISACs), which are government-sponsored committees of private-sector participants who work to share information, plans, and procedures for information security in their fields;

● The Critical Infrastructure Assurance Office (CIAO), currently housed in the Commerce Department, which develops outreach and awareness programs with the private sector;

● The National Infrastructure Protection Center (NIPC), currently housed in the FBI, which gathers information and provides warnings of cyber attacks; and

● The Institute for Information Infrastructure Protection (I3P), also in the Commerce Department, which is designed to coordinate and support research and development projects on cyber security.

In partnership with the private sector where most cyber assets are developed and owned, the Critical Infrastructure Protection Directorate would be responsible for enhancing information sharing on cyber and physical security, tracking vulnerabilities and proposing improved risk management policies, and delineating the roles of various government agencies in preventing, defending, and recovering from attacks. To do this, the government needs to institutionalize better its private-sector liaison across the board—with the owners and operators of critical

13 We return to this problem below in Section IV.

infrastructures, hardware and software developers, server/service providers, manufacturers/producers, and applied technology developers.

The Critical Infrastructure Protection Directorate’s work with the private sector must include a strong advocacy of greater government and corporate investment in information assurance and security. The CITASO would be the focal point for coordinating with the Federal Communications Commission (FCC) in helping to establish cyber policy, standards, and enforcement mechanisms. Working closely with the Office of Management and Budget (OMB) and its Chief Information Officer Council (CIO Council), the CITASO needs to speak for those interests in government councils.14 The CITASO must also provide incentives for private-sector participation in Information Sharing and Analysis Centers to share information on threats, vulnerabilities, and individual incidents, to identify interdependencies, and to map the potential cascading effects of outages in various sectors.

The directorate also needs to help coordinate cyber security issues internationally. At present, the FCC handles international cyber issues for the U.S. government through the International Telecommunications Union. As this is one of many related international issues, it would be unwise to remove this responsibility from the FCC. Nevertheless, the CIP Directorate should work closely with the FCC on cyber issues in international bodies.

he mission of the NHSA must include specific planning and operational tasks to be Tstaffed through the Directorate for Emergency Preparedness and Response. These include:

● Setting training and equipment standards, providing resource grants, and encouraging intelligence and information sharing among state emergency management officials, local first responders, the Defense Department, and the FBI;

● Integrating the various activities of the Defense Department, the National Guard, and other federal agencies into the Federal Response Plan; and

● Pulling together private sector activities, including those of the medical community, on recovery, consequence management, and planning for continuity of services.

Working with state officials, the emergency management community, and the law enforcement community, the job of NHSA’s third directorate will be to rationalize and refine the nation’s incident response system. The current distinction between crisis management and consequence management is neither sustainable nor wise. The duplicative command arrangements that have been fostered by this division are prone to confusion and delay. NHSA should develop and manage a single response system for national incidents, in close coordination with the Department of Justice (DoJ) and the FBI. This would require that the current policy, which specifies initial DoJ control in terrorist incidents on U.S. territory, be amended once Congress creates NHSA. We believe that this arrangement would in no way contradict or diminish the FBI’s traditional role with respect to law enforcement.

14 The Chief Information Officer Council is a government organization consisting of all the statutory Chief Information Officers in the government. It is located within OMB under the Deputy Director for Management.

The Emergency Preparedness and Response Directorate should also assume a major resource and budget role. With the help of the Office of Management and Budget, the directorate’s first task will be to figure out what is being spent on homeland security in the various departments and agencies. Only with such an overview can the nation identify the shortfalls between capabilities and requirements. Such a mission budget should be included in the President’s overall budget submission to Congress. The Emergency Preparedness and Response Directorate will also maintain federal asset databases and encourage and support up-to-date state and local databases.

EMA has adapted well to new circumstances over the past few years and has gained a Fwell-deserved reputation for responsiveness to both natural and manmade disasters. While taking on homeland security responsibilities, the proposed NHSA would strengthen FEMA’s ability to respond to such disasters. It would streamline the federal apparatus and provide greater support to the state and local officials who, as the nation’s first responders, possess enormous expertise. To the greatest extent possible, federal programs should build upon the expertise and existing programs of state emergency preparedness systems and help promote regional compacts to share resources and capabilities.

To help simplify federal support mechanisms, we recommend transferring the National Domestic Preparedness Office (NDPO), currently housed at the FBI, to the National Homeland Security Agency. The Commission believes that this transfer to FEMA should be done at first opportunity, even before NHSA is up and running.

The NDPO would be tasked with organizing the training of local responders and providing local and state authorities with equipment for detection, protection, and decontamination in a WMD emergency. NHSA would develop the policies, requirements, and priorities as part of its planning tasks as well as oversee the various federal, state, and local training and exercise programs. In this way, a single staff would provide federal assistance for any emergency, whether it is caused by flood, earthquake, hurricane, disease, or terrorist bomb.

A WMD incident on American soil is likely to overwhelm local fire and rescue squads, medical facilities, and government services. Attacks may contaminate water, food, and air; large- scale evacuations may be necessary and casualties could be extensive. Since getting prompt help to those who need it would be a complex and massive operation requiring federal support, such operations must be extensively planned in advance. Responsibilities need to be assigned and procedures put in place for these responsibilities to evolve if the situation worsens.

As we envision it, state officials will take the initial lead in responding to a crisis. NHSA will normally use its Regional Directors to coordinate federal assistance, while the National Crisis Action Center will monitor ongoing operations and requirements. Should a crisis overwhelm local assets, state officials will turn to NHSA for additional federal assistance. In major crises, upon the recommendation of the civilian Director of NHSA, the President will designate a senior figure—a Federal Coordinating Officer—to assume direction of all federal activities on the scene. If the situation warrants, a state governor can ask that active military forces reinforce National Guard units already on the scene. Once the President federalizes National Guard forces, or if he decides to use Reserve forces, the Joint Forces Command will assume responsibility for all military operations, acting through designated task force commanders. At the same time, the Secretary of Defense would appoint a Defense Coordinating Officer to provide civilian oversight and ensure prompt civil support. This person would work for the Federal Coordinating Officer. This response mechanism is displayed in Figure 2.

National NHSA Secretary of Crisis Action Defense Director Center

ASD Regional State/Local Officials CJCS Directors (incl. National Guard) HLS

Federal Coordinating Defense USJFCOM Coordinating Other Federal Officer Officer Support: (EPA, H&HS, DOE, DOJ, etc.) JTF Local Response Civil Support

Federal Response

Figure 2: Emergency Response Mechanisms

To be capable of carrying out its responsibilities under extreme circumstances, NHSA will need to undertake robust exercise programs and regular training to gain experience and to establish effective command and control procedures. It will be essential to update regularly the Federal Response Plan. It will be especially critical for NHSA officials to undertake detailed planning and exercises for the full range of potential contingencies, including ones that require the substantial involvement of military assets in support.

HSA will provide the overarching structure for homeland security, but other Ngovernment agencies will retain specific homeland security tasks. We take the necessary obligations of the major ones in turn.

Intelligence Community. Good intelligence is the key to preventing attacks on the homeland and homeland security should become one of the intelligence community’s most important missions.15 Better human intelligence must supplement technical intelligence, especially on terrorist groups covertly supported by states. As noted above, fuller cooperation and more extensive information-sharing with friendly governments will also improve the chances that would-be perpetrators will be detained, arrested, and prosecuted before they ever reach U.S. borders.

15 We return to this issue in our discussion of the Intelligence Community in Section III.F., particularly in recommendation 37.

The intelligence community also needs to embrace cyber threats as a legitimate mission and to incorporate intelligence gathering on potential strategic threats from abroad into its activities.

To advance these ends, we offer the following recommendation:

● 4: The President should ensure that the National Intelligence Council: include homeland security and asymmetric threats as an area of analysis; assign that portfolio to a National Intelligence Officer; and produce National Intelligence Estimates on these threats.

Department of State. U.S. embassies overseas are the American people’s first line of defense. U.S. Ambassadors must make homeland security a top priority for all embassy staff, and Ambassadors need the requisite authority to ensure that information is shared in a way that maximizes advance warning overseas of direct threats to the United States.

Ambassadors should also ensure that the gathering of information, and particularly from open sources, takes full advantage of all U.S. government resources abroad, including diplomats, consular officers, military officers, and representatives of the various other departments and agencies. The State Department should also strengthen its efforts to acquire information from Americans living or travelling abroad in private capacities.

The State Department has made good progress in its overseas efforts to reduce terrorism, but we now need to extend this effort into the Information Age. Working with NHSA’s CIP Directorate, the State Department should expand cooperation on critical infrastructure protection with other states and international organizations. Private sector initiatives, particularly in the banking community, provide examples of international cooperation on legal issues, standards, and practices. Working with the CIP Directorate and the FCC, the State Department should also encourage other governments to criminalize hacking and electronic intrusions and to help track hackers, computer virus proliferators, and cyber terrorists.

Department of Defense. The Defense Department, which has placed its highest priority on preparing for major theater war, should pay far more attention to the homeland security mission. Organizationally, DoD responses are widely dispersed. An Assistant to the Secretary of Defense for Civil Support has responsibility for WMD incidents, while the Department of the Army’s Director of Military Support is responsible for non-WMD contingencies. Such an arrangement does not provide clear lines of authority and responsibility or ensure political accountability. The Commission therefore recommends the following:

● 5: The President should propose to Congress the establishment of an Assistant Secretary of Defense for Homeland Security within the Office of the Secretary of Defense, reporting directly to the Secretary.

A new Assistant Secretary of Defense for Homeland Security would provide policy oversight for the various DoD activities within the homeland security mission and ensure that mechanisms are in place for coordinating military support in major emergencies. He or she would work to integrate homeland security into Defense Department planning, and ensure that adequate

resources are forthcoming. This Assistant Secretary would also represent the Secretary in the NSC interagency process on homeland security issues.

Along similar lines and for similar reasons, we also recommend that the Defense Department broaden and strengthen the existing Joint Forces Command/Joint Task Force- Civil Support (JTF-CS) to coordinate military planning, doctrine, and command and control for military support for all hazards and disasters.

This task force should be directed by a senior National Guard general with additional headquarters personnel. JTF-CS should contain several rapid reaction task forces, composed largely of rapidly mobilizable National Guard units. The task force should have command and control capabilities for multiple incidents. Joint Forces Command should work with the Assistant Secretary of Defense for Homeland Security to ensure the provision of adequate resources and appropriate force allocations, training, and equipment for civil support.

On the prevention side, maintaining strong nuclear and conventional forces is as high a priority for homeland security as it is for other missions. Shaping a peaceful international environment and deterring hostile military actors remain sound military goals. But deterrent forces may have little effect on non-state groups secretly supported by states, or on individuals with grievances real or imagined. In cases of clear and imminent danger, the military must be able to take preemptive action overseas in circumstances where local authorities are unable or unwilling to act. For this purpose, as noted above, the United States needs to be prepared to use its rapid, long-range precision strike capabilities. A decision to act would obviously rest in civilian hands, and would depend on intelligence information and assessments of diplomatic consequences. But even if a decision to strike preemptively is never taken or needed, the capability should be available nonetheless, for knowledge of it can contribute to deterrence.

We also suggest that the Defense Department broaden its mission of protecting air, sea, and land approaches to the United States, consistent with emerging threats such as the potential proliferation of cruise missiles. The department should examine alternative means of monitoring approaches to the territorial United States. Modern information technology and sophisticated sensors can help monitor the high volumes of traffic to and from the United States. Given the volume of legitimate activities near and on the border, even modern information technology and remote sensors cannot filter the good from the bad as a matter of routine. It is neither wise nor possible to create a surveillance umbrella over the United States. But Defense Department assets can be used to support detection, monitoring, and even interception operations when intelligence indicates a specific threat.

Finally, a better division of labor and understanding of responsibilities is essential in dealing with the connectivity and interdependence of U.S. critical infrastructure systems. This includes addressing the nature of a national transportation network or cyber emergency and the Defense Department’s role in prevention, detection, or protection of the national critical infrastructure. The department’s sealift and airlift plans are premised on largely unquestioned assumptions that domestic transportation systems will be fully available to support mobilization requirements. The department also is paying insufficient attention to the vulnerability of its information networks. Currently, the department's computer network defense task force (JTF- Computer Network Defense) is underfunded and understaffed for the task of managing an actual strategic information warfare attack. It should be given the resources to carry out its current mission and is a logical source of advice to the proposed NHSA Critical Information Technology, Assurance, and Security Office.

National Guard. The National Guard, whose origins are to be found in the state militias authorized by the U.S. Constitution, should play a central role in the response component of a layered defense strategy for homeland security. We therefore recommend the following:

● 6: The Secretary of Defense, at the President’s direction, should make homeland security a primary mission of the National Guard, and the Guard should be organized, properly trained, and adequately equipped to undertake that mission.

At present, the Army National Guard is primarily organized and equipped to conduct sustained combat overseas. In this the Guard fulfills a strategic reserve role, augmenting the active military during overseas contingencies. At the same time, the Guard carries out many state- level missions for disaster and humanitarian relief, as well as consequence management. For these, it relies upon the discipline, equipment, and leadership of its combat forces. The National Guard should redistribute resources currently allocated predominantly to preparing for conventional wars overseas to provide greater support to civil authorities in preparing for and responding to disasters, especially emergencies involving weapons of mass destruction.

Such a redistribution should flow from a detailed assessment of force requirements for both theater war and homeland security contingencies. The Department of Defense should conduct such an assessment, with the participation of the state governors and the NHSA Director. In setting requirements, the department should minimize forces with dual missions or reliance on active forces detailed for major theater war. This is because the United States will need to maintain a heightened deterrent and defensive posture against homeland attacks during regional contingencies abroad. The most likely timing of a major terrorist incident will be while the United States is involved in a conflict overseas.16

The National Guard is designated as the primary Department of Defense agency for disaster relief. In many cases, the National Guard will respond as a state asset under the control of state governors. While it is appropriate for the National Guard to play the lead military role in managing the consequences of a WMD attack, its capabilities to do so are uneven and in some cases its forces are not adequately structured or equipped. Twenty-two WMD Civil Support Teams, made up of trained and equipped full-time National Guard personnel, will be ready to deploy rapidly, assist local first responders, provide technical advice, and pave the way for additional military help. These teams fill a vital need, but more effort is required.

This Commission recommends that the National Guard be directed to fulfill its historic and Constitutional mission of homeland security. It should provide a mobilization base with strong local ties and support. It is already “forward deployed” to achieve this mission and should:

● Participate in and initiate, where necessary, state, local, and regional planning for responding to a WMD incident;

● Train and help organize local first responders;

● Maintain up-to-date inventories of military resources and equipment available in the area on short notice;

16 See the Report of the National Defense University Quadrennial Defense Review 2001 Working Group (Washington, DC: Institute for National Strategic Studies, November 2000), p. 60.

● Plan for rapid inter-state support and reinforcement; and

● Develop an overseas capability for international humanitarian assistance and disaster relief.

In this way, the National Guard will become a critical asset for homeland security.

Medical Community. The medical community has critical roles to play in homeland security. Catastrophic acts of terrorism or violence could cause casualties far beyond any imagined heretofore. Most of the American medical system is privately owned and now operates at close to capacity. An incident involving WMD will quickly overwhelm the capacities of local hospitals and emergency management professionals.

In response, the National Security Council, FEMA, and the Department of Health and Human Services have already begun a reassessment of their programs. Research to develop better diagnostic equipment and immune-enhancing drugs is underway, and resources to reinvigorate U.S. epidemiological surveillance capacity have been allocated. Programs to amass and regionally distribute inventories of antibiotics and vaccines have started, and arrangements for mass production of selected pharmaceuticals have been made. The Centers for Disease Control has rapid-response investigative units prepared to deploy and respond to incidents.

These programs will enhance the capacities of the medical community, but the momentum and resources for this effort must be extended. We recommend that the NHSA Directorate for Emergency Preparedness and Response assess local and federal medical resources to deal with a WMD emergency. It should then specify those medical programs needed to deal with a major national emergency beyond the means of the private sector, and Congress should fund those needs.

C. EXECUTIVE-LEGISLATIVE COOPERATION

olving the homeland security challenge is not just an Executive Branch problem. SCongress should be an active participant in the development of homeland security programs, as well. Its hearings can help develop the best ideas and solutions. Individual members should develop expertise in homeland security policy and its implementation so that they can fill in policy gaps and provide needed oversight and advice in times of crisis. Most important, using its power of the purse, Congress should ensure that government agencies have sufficient resources and that their programs are coordinated, efficient, and effective.

Congress has already taken important steps. A bipartisan Congressional initiative produced the U.S. effort to deal with the possibility that weapons of mass destruction could “leak” out of a disintegrating Soviet Union.17 It was also a Congressional initiative that established the Domestic Preparedness Program and launched a 120-city program to enhance the capability of federal, state, and local first responders to react effectively in a WMD emergency.18 Members of Congress from both parties have pushed the Executive Branch to identify and

17 Sponsored by Senators Sam Nunn and Richard Lugar. 18 Public Law 104-201, National Defense Authorization Act for FY 1997: Defense Against Weapons of Mass Destruction. This legislation, known as the Nunn-Lugar-Domenici Amendment, was passed in July 1996.

manage the problem more effectively. Congress has also proposed and funded studies and commissions on various aspects of the homeland security problem.19 But it must do more.

A sound homeland security strategy requires the overhaul of much of the legislative framework for preparedness, response, and national defense programs. Congress designed many of the authorities that support national security and emergency preparedness programs principally for a Cold War environment. The new threat environment—from biological and terrorist attacks to cyber attacks on critical systems—poses vastly different challenges. We therefore recommend that Congress refurbish the legal foundation for homeland security in response to the new threat environment.

In particular, Congress should amend, as necessary, key legislative authorities such as the Defense Production Act of 1950 and the Communications Act of 1934, which facilitate homeland security functions and activities.20 Congress should also encourage the sharing of threat, vulnerability, and incident data between the public and private sectors—including federal agencies, state governments, first responders, and industry.21 In addition, Congress should monitor and support current efforts to update the international legal framework for communications security issues.22

Beyond that, Congress has some organizational work of its own to do. As things stand today, so many federal agencies are involved with homeland security that it is exceedingly difficult to present federal programs and their resource requirements to the Congress in a coherent

19 We note: the Rumsfeld Commission [Report of the Commission to Assess the Ballistic Missile Threat to the United States (Washington, DC: July 15, 1998)]; the Deutch Commission [Combating Proliferation of Weapons of Mass Destruction (Washington, DC: July 14, 1999)]; Judge William Webster’s Commission [Report on the Advancement of Federal Law Enforcement (Washington, DC: January 2000)]; the Bremer Commission [Report of the National Commission on Terrorism, Countering the Changing Threat of International Terrorism (Washington, DC: June 2000)]; and an advisory panel led Virginia Governor James Gilmore [First Annual Report to the President and the Congress of the Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction (Washington, DC: December 15, 1999)]. 20 The Defense Production Act was developed during the Korean War when shortages of critical natural resources such as coal, oil, and gas were prioritized for national defense purposes. [See Defense Production Act of 1950, codified at 50 USC App. § 2061 et seq. Title I includes delegations to prioritize and allocate goods and services based on national defense needs.] Executive Order 12919, National Defense Industrial Resources Preparedness, June 6, 1994, implements Title I of the Defense Production Act. Congressional review should focus on the applicability of the Defense Production Act to homeland security needs, ranging from prevention to restoration activities. Section 706 of the Communications Act of 1934 also needs revision so that it includes the electronic media that have developed in the past two decades. [See 48 Stat. 1104, 47 USC § 606, as amended.] Executive Order 12472, Assignment of National Security and Emergency Preparedness Telecommunications Functions, April 3, 1984, followed the breakup of AT&T and attempted to specify anew the prerogatives of the Executive Branch in accordance with the 1934 Act in directing national communications media during a national security emergency. It came before the Internet, however, and does not clearly apply to it. 21 For more than four years, multiple institutions have called on national leadership to support laws and policies promoting security cooperation through public-private partnerships. See, for example, the President’s Commission on Critical Infrastructure Protection, Critical Foundations, Protecting America’s Infrastructures (Washington, DC: October 1997), pp. 86-88 and Report of the Defense Science Board Task Force on Information Warfare (Washington, DC: November 1996). 22 This includes substantial efforts in multiple forums, such as the Council of Europe and the G8, to fight transnational organized crime. See Communiqué on principles to fight transnational organized crime, Meeting of the Justice and Interior Ministers of the Eight, December 9-10, 1997.

way. It is largely because the budget is broken up into so many pieces, for example, that counter- terrorism and information security issues involve nearly two dozen Congressional committees and subcommittees. The creation of the National Security Homeland Agency will redress this problem to some extent, but because of its growing urgency and complexity, homeland security will still require a stronger working relationship between the Executive and Legislative Branches. Congress should therefore find ways to address homeland security issues that bridge current jurisdictional boundaries and that create more innovative oversight mechanisms.

There are several ways of achieving this. The Senate’s Arms Control Observer Group and its more recent NATO Enlargement Group were two successful examples of more informal Executive-Legislative cooperation on key multi-dimensional issues. Specifically, in the near term, this Commission recommends the following:

● 7: Congress should establish a special body to deal with homeland security issues, as has been done effectively with intelligence oversight. Members should be chosen for their expertise in foreign policy, defense, intelligence, law enforcement, and appropriations. This body should also include members of all relevant Congressional committees as well as ex-officio members from the leadership of both Houses of Congress.

This body should develop a comprehensive understanding of the problem of homeland security, exchange information and viewpoints with the Executive Branch on effective policies and plans, and work with standing committees to develop integrated legislative responses and guidance. Meetings would often be held in closed session so that Members could have access to interagency deliberations and diverging viewpoints, as well as to classified assessments. Such a body would have neither a legislative nor an oversight mandate, and it would not eclipse the authority of any standing committee.

At the same time, Congress needs to systematically review and restructure its committee system, as will be proposed in recommendation 48. A single, select committee in each house of Congress should be given authorization, appropriations, and oversight responsibility for all homeland security activities. When established, these committees would replace the function of the oversight body described in recommendation 7.

n sum, the federal government must address the challenge of homeland security with Igreater urgency. The United States is not immune to threats posed by weapons of mass destruction or disruption, but neither is it entirely defenseless against them. Much has been done to prevent and defend against such attacks, but these efforts must be incorporated into the nation’s overall security strategy, and clear direction must be provided to all departments and agencies. Non-traditional national security agencies that now have greater relevance than they did in the past must be reinvigorated. Accountability, authority, and responsibility must be more closely aligned within government agencies. An Executive-Legislative consensus is required, as well, to convert strategy and resources into programs and capabilities, and to do so in a way that preserves fundamental freedoms and individual rights.

Most of all, however, the government must reorganize itself for the challenges of this new era, and make the necessary investments to allow an improved organizational structure to work. Through the Commission’s proposal for a National Homeland Security Agency, the U.S. government will be able to improve the planning and coordination of federal support to state and

local agencies, to rationalize the allocation of resources, to enhance readiness in order to prevent attacks, and to facilitate recovery if prevention fails. Most important, this proposal integrates the problem of homeland security within the broader framework of U.S. national security strategy. In this respect, it differs significantly from issue-specific approaches to the problem, which tend to isolate homeland security away from the larger strategic perspective of which it must be a part.

We are mindful that erecting the operational side of this strategy will take time to achieve. Meanwhile, the threat grows ever more serious. That is all the more reason to start right away on implementing the recommendations put forth here.

II. Recapitalizing America’s Strengths in Science and Education

he scale and nature of the ongoing revolution in science and technology, and what Tthis implies for the quality of human capital in the 21st century, pose critical national security challenges for the United States. Second only to a weapon of mass destruction detonating in an American city, we can think of nothing more dangerous than a failure to manage properly science, technology, and education for the common good over the next quarter century.

Current institutional arrangements among government, higher education, and business have served the nation well over the past five decades, but the world is changing. Today, private proprietary expenditure on technology development far outdistances public spending. The internationalization of both scientific research and its commercial development is having a significant effect on the capacity of the U.S. government to harness science in the service of national security and to attract qualified scientific and technical personnel. These changes are transforming most facets of the American economy, from health care to banking to retail business, as well as the defense industrial base.

The harsh fact is that the U.S. need for the highest quality human capital in science, mathematics, and engineering is not being met. One reason for this is clear: American students know that professional careers in basic science and mathematics require considerable preparation and effort, while salaries are often more lucrative in areas requiring less demanding training. Non-U.S. nationals, however, do find these professions attractive and, thanks to science, math, and technical preparation superior to that of many Americans, they increasingly fill American university graduate studies seats and job slots in these areas. Another reason for the growing deficit in high-quality human capital is that the American kindergarten through 12th grade (K-12) education system is not performing as well as it should. As a result too few American students are qualified to take these slots, even were they so inclined.

This is an ironic predicament, since America’s strength has always been tied to the spirit and entrepreneurial energies of its people. America remains today the model of creativity and experimentation, and its success has inspired other nations to recognize the true sources of power and wealth in science, technology, and higher education. America’s international reputation, and therefore a significant aspect of its global influence, depends on its reputation for excellence in these areas. U.S. performance is not keeping up with its reputation. Other countries are striving hard, and with discipline they will outstrip us.

This is not a matter merely of national pride or international image. It is an issue of fundamental importance to national security. In a knowledge-based future, only an America that remains at the cutting edge of science and technology will sustain its current world leadership. In such a future, only a well-trained and educated population can thrive economically, and from national prosperity provide the foundation for national cohesion. Complacency with our current achievement of national wealth and international power will put all of this at risk.

A. INVESTING IN INNOVATION

any nations in the world have the intellectual assets to compete with those of the MUnited States. However, as many leaders abroad recognize, their social, political, and economic systems often prevent them from capitalizing on these intellectual assets. The creative release of individual energies for the public good is not possible without a political, social, and economic system that frees talent and nurtures innovation.23

We have before us the negative example of the former Soviet Union. Its state scientific establishment was the largest in the world and very talented, yet the attitudes and institutions required to nurture and disseminate innovation in a broad sense were missing, and it never fulfilled its potential. Today, many national leaders around the world are determined not to repeat the Soviet failure. They are studying the American business and innovation environment in hopes of extracting its secrets. Lessons are being learned and adopted throughout the world. As a result, global competition is growing significantly and will continue to do so.

Meanwhile, however, many critical changes are occurring within the United States:

● While basic research remains primarily a government-funded activity, private and proprietary technology development in the United States is increasing relatively and absolutely compared to that of the government.

● The internationalization of basic science and technology (S&T) activities, assets, and capabilities is accelerating, and current U.S. advantages in many critical fields are shrinking and may be eclipsed in the years ahead.

● New classes of defense-relevant technologies are developing in which the major U.S. defense companies and national labs have scant experience. There are far fewer institutional linkages between government scientists and those innovative businesses generating and adapting cutting-edge technologies (e.g., genetic engineering, materials science, nanotechnology, and robotics).

uring the 1980s, America recognized the need to change business models that had Droots in the Industrial Age. It embarked on a path of deregulation and experimentation that has led to the networked economy that is still taking shape today. While U.S. reform at the microeconomic level has been primarily a private sector achievement, government has played an important role. It is also clear the government and the private sector will have to continue to work in concert to fill many critical needs: e.g., telecommunication and cyber-infrastructure policies; information assurance and protection; and policies to preserve the defense industrial base. This nation must increase its public research and development budget in order to remain a world leader. But opportunity and resources will not come together by themselves. Wise public policies are needed to enhance creative investment and promote intense experimentation.

23 This is why it is not possible to establish a direct correlation between educational achievement and either productivity or economic growth indices. For the last two decades, for example, U.S. educational achievements have lagged behind those of many other countries even as U.S. productivity and growth measures have outdistanced them.

In particular, we need to fund more basic research and technology development. As is clear to all, private sector R&D investments in the United States have increased vastly in recent years. That is good, but private R&D tends to be more development-oriented than research- oriented. It is from investment in basic science, however, that the most valuable long-run dividends are realized. The government has a critical role to play in this regard, as the “spinoff” achievements of the space program over the years illustrate. That role remains not least because our basic and applied research efforts in areas of critical national interest will not be pursued by a civil sector that emphasizes short- to mid-term return on investment.

If the United States does not invest significantly more in public research and development, it will be eclipsed by others. Recent failures in this regard may return to haunt us. The decision not to invest in a large nuclear accelerator, the Superconducting Super Collider, already means that the most significant breakthroughs in theoretical physics at least over the next decade will occur in Europe and not in the United States. The reduction of U.S. research and development in basic electronics engineering has ensured that the next generation of chip processors and manufacturing technology will come from an international consortium (U.S.- German-Dutch) rather than from the United States alone.

We must not let such examples proliferate in the future, nor should we squander the enormous opportunities before us. We stand on the cusp of major discoveries in several interlocking fields, and we stand to benefit, as well, from major strides in scientific instrumentation. As a result, the way is clear to design large-scale scientific and technological experiments in key fields—not unlike the effort of the International Geophysical Year in 1958, the early space program, or the project to decode the human genome. In the judgment of this Commission, the U.S. government has not taken a broad, systematic approach to investing in science and technology R&D, and thus will not be able to sustain projects of such scale and boldness. We therefore recommend the following:

● 8: The President should propose, and the Congress should support, doubling the U.S. government’s investment in science and technology research and development by 2010.

Building up an adequate level of effort for major, long-term research for the public good will require an increased investment on the order of 100 percent over the next decade. In other words, a government-wide R&D budget of about $160 billion by fiscal year 2010 would be prudent and appropriate.

t would not be prudent or appropriate, however, to combine the government’s science Iand technology capabilities into a single agency, as some have suggested doing, or to entirely centralize the government’s research and development budget. But we do need to infuse within the U.S. national R&D program a sense of responsible stewardship and vision. The government has to better coordinate its own public research and development efforts among the more than two dozen government departments and agencies that play major roles in the field.24

24 The President’s FY2001 budget allocates U.S. government research monies to its major players as follows: 43 percent NIH, 12 percent NASA, 12 percent DoE, 11 percent DoD, 8 percent NSF, 4 percent USDA, 10 percent all others. See AAAS Report XXV, Research and Development FY2001 (Washington, DC: American Association for the Advancement of Science, 2000), p. 35. These are research budget figures only, not total R&D accounts.

The coordinating body for that purpose, the White House Office of Science and Technology Policy (OSTP), which houses within it the National Science and Technology Council (NSTC). The White House OSTP has three main functions: to help design the public R&D budget in conjunction with the Office of Management and Budget (OMB); to facilitate interagency efforts involving science and technology and research and development; and to win support for the administration’s science and technology initiatives in Congress.

The National Science and Technology Council, which includes virtually every cabinet official and Executive Branch agency head, has a committee structure designed to facilitate interagency cooperation. Committees are headed by OSTP personnel, but the participants from other departments and agencies have other, usually more pressing duties. Hence, with the exception of their chairmen, NSTC committees are populated by part-timers.

The President may also use the President’s Council of Advisors on Science and Technology (PCAST), composed of non-governmental experts, to help him decide science and technology policy. Its use, as with the use of the NSTC, is largely dependent on the interests and inclinations of the President. The relationships among the OSTP, the NSTC, and the PCAST vary from administration to administration.

While these coordinating and advisory bodies do exist, they are inadequately staffed, funded, and utilized to carry out their significant functions. The current OSTP is not small by White House standards, but it will increasingly be unable to keep up with its mandate as science and technology issues become more important to the national welfare. The NSTC permanent administrative staff is too small to support its committee work, and it has no permanent science and technology professional staff at all. The NSTC itself meets relatively rarely and only episodically takes on specific subjects of interest; e.g., more fuel-efficient automobiles or nanotechnology research. 25

One main reason to improve these organizations, in this Commission’s view, is to enable the Executive Branch to strengthen its grip on the R&D process. Three changes are required:

● The R&D budget has to be rationalized, and in order to do that a much better effort at physical and human/intellectual inventory stewardship is required.

● Those organizations responsible for rationalizing and managing the R&D process should more systematically review and redesign, as necessary, the science and technology personnel profile of Executive Branch agencies.

● The R&D budget has to be allocated through a more creative and competitive process than is the case today.

We take these issues in turn.

he ability of the White House Office for Science and Technology Policy, together Twith OMB and other relevant agencies, to rationalize R&D investment presupposes

25 There is, in addition, a Federally-Funded Research and Development Center mandated by Congress—the Critical Technologies Institute located within RAND—that acts as a think-tank for the OSTP. It plays a useful role and should be preserved, but it cannot substitute for a more capable OSTP itself.

the ability to identify the best, generative opportunities for the investment of government R&D monies. Unfortunately, this is not the case.

Rationalizing the way that public R&D money is spent must include better accounting of both human and physical capital. It is not possible to spend $80 billion wisely each year, let alone twice that much, unless we know where research bottlenecks and opportunities exist. There is no one place in the U.S. government where such inventory stewardship is performed. Rather, elements are dispersed in the National Science Foundation, in the Commerce Department (the Patent and Trademark Office, the National Technical Information Service, and the National Institute of Standards and Technology), in the Departments of Defense, Energy, Agriculture, Health and Human Services, and in parts of the intelligence community. We believe that collating and analyzing this information in one place, and using the conclusions of that analysis to inform the R&D budget process, is the sine qua non of a more effective public R&D effort.

Moreover, without such a basic inventory of the nation’s science and technology “property,” the United States could lose critical knowledge-based assets to competitors and adversaries without ever knowing it, and without understanding the implications of their loss. In an age when private, proprietary technology development outpaces publicly-funded R&D, high- end science and technology espionage is a growth industry in which both foreign corporations and governments participate. The United States therefore needs to take seriously the protection of such assets to the extent possible and practical—but it cannot protect what it cannot even identify.26

To achieve effective inventory stewardship for science and technology, we recommend that OSTP, in conjunction with the National Science Foundation—and with the counsel of the National Academies of Science27—design a system for the ongoing basic inventory stewardship of the nation’s capital knowledge assets. The job of inventory stewardship could be vouchsafed to the National Science Board, the governing body of the National Science Foundation, were it to be provided staff for this purpose.

n addition, this Commission urges a more systematic effort at functional budgeting for IR&D so that we know how we are spending the public’s money in this area. More effective R&D portfolio management for research is needed with emphasis on critical R&D areas with high potential long-term benefits. We therefore recommend the following:

● 9: The President should empower his Science Advisor to establish non-military R&D objectives that meet changing national needs, and to be responsible for coordinating budget development within the relevant departments and agencies.

This budget, we believe, should emphasize research over development, and it should aim at large- scale experimental projects that can make best use of new synergies between theoretical advances and progress in scientific instrumentation.

26 We believe that the creation of a counterintelligence “czar,” announced by the out-going Clinton Administration on January 4, 2001, is a step in the right direction for this purpose. But proper inventory stewardship is a precondition for such a “czar” to be effective. 27 Founded in 1863 by Abraham Lincoln, the National Academy of Sciences today consists of four parts: the National Academy of Science, the National Academy of Engineering, the Institute of Medicine, and the National Research Council. The NAS advises the government, but it is not a government organization.

We also believe that the President, in tandem with strengthening the White House Office of Science and Technology Policy, should raise the profile of its head—the Science Advisor to the President. The Science Advisor needs to be empowered as a more significant figure within the government, and we believe the budget function we have recommended for him will be instrumental for this purpose.

here is yet another task that a strengthened OSTP should adopt. As things stand Ttoday, more than two dozen U.S. government agencies have science and technology responsibilities, meaning that they have personnel slots for science and engineering professionals and budget categories to support what those professionals do. (Of the several thousand such personnel in government, some 80 of these slots are for senior scientists and engineers who must be appointed by the President and confirmed by the Senate.)

Despite the significant numbers of science and technology (S&T) personnel and their obvious criticality, there is no place in the U.S. government where S&T personnel assets as a whole are assessed against changing needs. In the past two decades, the Congressional Research Service, the General Accounting Office, and the now-defunct Office of Technology Assessment have all explored this issue. The Office of Management and Budget, too, has looked regularly at individual departments and agencies, but not at the government’s S&T personnel structure as such. It appears, then, that no one above the departmental level examines the appropriateness of the fit between missions and personnel in this area as a whole.

Dealing with government S&T personnel issues in a disaggregated manner is no longer adequate. It is hard for senior department and agency managers—and for the Office of Personnel Management (OPM) or the OMB staff—who are themselves not scientists or engineers, to know if they are operating with the right numbers and kinds of science and technology professionals. Hence, the Commission recommends that the President, with aid from his Science Advisor directing NSF’s National Science Board, should reassess and realign, as necessary, government needs for science and technology personnel for the next quarter century.

Indeed, such a review ought to be made routine. The Science Advisor with the National Science Board and OPM, in consultation with the National Academies of Science, should periodically reevaluate Executive Branch needs for science and technology personnel. They should also suggest means to ensure the recruitment and retention of the highest quality scientists, engineers, and technologists for government service—a general subject we have noted above, and to which we return below in Section IV in the context of recommendation 42.

t present, as we have said, the U.S. government spends more than $80 billion each Ayear in publicly funded R&D, of which about half is defense related. Much of the budgeting, however, still reflects legacies of the Cold War and the Industrial Age. We do not suggest that this money is being wasted in any direct sense, but its benefits are not being maximized. For example, we believe that defense-related R&D should go back to funding more basic research, for in recent years it has tilted too much toward the “D” over the “R” in R&D.28

28 Research accounts for approximately ten percent of DoD’s $38 billion R&D budget for fiscal year 2001. See AAAS Report XXV, Research and Development FY 2001, p. 71.

More important, we could derive more benefit from our investment in non-defense R&D if the context for it were a more competitive one. The Commission holds competition to be an important ingredient for the creative use of new ideas. Though we believe centralization of budget development is unnecessary, tailoring the various R&D budgets to meet overall national objectives would be beneficial. Different organizations address different needs and bring different perspectives, as do those working in different scientific disciplines. We therefore recommend that the President’s Science Advisor, beyond his proposed budget coordination role, should lead an effort to revise government R&D practices and budget allocations to make the process more competitive.

One barrier to a more competitive, opportunity-based environment for R&D is institutional inertia. The current structure of public R&D funding is partly a result of inherited arrangements. We do not suggest disrupting important relationships between particular government agencies and, say, the Lincoln Laboratory at M.I.T., for the turbulence created would not be worth the advantages. But if innovation is to be encouraged, we need greater competition for government R&D funds. Hence, we propose that the government foster a “creative market” for a greater number of research institutions to bid on government research funds.

To create a more competitive market means narrowing the gap between the two tiers of research institutions that currently exist: the relatively small number of high-prestige major schools with ample endowments, and the larger number of less capable institutions. There are several ways to do this. One is through direct federal investment in or subsidization of second-tier institutions. Another is to encourage second-tier institutions to concentrate effort on new fields of inquiry in which older, more established institutions do not have comparative advantages. We see no reason, as well, to prevent amateurs from competing, because the history of science and technology is laden with the genius of the professionally uninitiated.

In addition, we recommend that a strengthened and more active National Science and Technology Council preside over an on-going effort to multiply creative, targeted R&D programs within government. The Council’s enlarged professional staff should identify areas of priority research that the private sector is unlikely to pursue, and challenge those government agencies with R&D capabilities to form coalitions to bid on R&D monies set aside for such purposes. To meet such challenges, the National Aeronautics and Space Administration and the Defense Advanced Research Projects Agency might combine talents, in league with their associates outside of government, to bid against a Department of Energy-NSF team. The national laboratory system should also be involved in such competitions—a topic to which we now turn.

he U.S. national laboratory system is badly in need of redefinition and new Tinvestment. The national laboratories, though vestiges of the Cold War, remain a national R&D treasure. Unfortunately, they are a treasure in danger of being squandered.

Without any compelling force analogous to that of the Cold War to drive government funding and the direction of R&D, the labs have been left to drift. Nuclear research has given way mostly to maintenance of the nation’s nuclear arsenal and efforts to dismantle nuclear weapons and manage their radioactive wastes. But however important, these are tasks that a single major laboratory can handle. Many of the other large and small laboratories within the system no longer have the sense of purpose and shared vision that drove the tremendous scientific accomplishments that advanced national security during the Cold War.

Compounding the labs’ identity problem is the fact that the highest rewards and most interesting scientific and technical work now take place in the private sector. The Commission found broad consensus that the labs are no longer competitive in attracting and keeping new scientific talent. The physical circumstances in which lab professionals work have also deteriorated, in many instances, to unacceptable levels.29 The security breaches and the subsequent series of investigations in recent years have produced a serious morale problem—and made recruitment and retention problems even more acute. If this cycle is not broken, our national advantage in S&T will suffer further.

The labs remain critical in fulfilling America’s S&T national security needs and in addressing S&T issues pertinent to the public good. Each major laboratory needs a clearly defined mission area. The smaller labs, among the several hundred that exist, need to be better connected to one another so that their staffs share a sense of common purpose; in some cases, smaller labs may benefit from consolidation. The Commission therefore recommends the following:

● 10: The President should propose, and the Congress should fund, the reorganization of the national laboratories, providing individual laboratories with new mission goals that minimize overlap.

The President’s Science Advisor, aided and advised by the OSTP, the NSTC, the PCAST, and the National Academy of Science, should lead this effort. For example, one lab could focus on nuclear weapons maintenance, while others could specialize in such fields as energy and environmental research, biotechnology, and nanotechnology. Whatever goals are determined, more resources are clearly needed to ensure that the national laboratories remain world class research institutions, with facilities, resources, and salaries to fulfill their missions.

inally, the potential for good and ill stemming from many of the recent developments Fin the scientific and technical domain is at least as great, if not greater, than that of atomic energy in 1945-46. As this Commission stressed in its Phase I report, new scientific discovery and innovation in information technologies, nanotechnology, and biotechnologies will have a major impact on social, economic, and political life in the United States and elsewhere.

It is not in the public or the national interest to allow these impacts to be determined exclusively by the private sector. The United States prides itself on having a system of government that does not smother or try to shape the social or moral life of the nation. But we have always granted government a role in managing science and technology under special or extreme circumstances—as for example in the creation of the U.S. Atomic Energy Commission after World War II. As was the case then, a public-trust institution is needed to gather knowledge and to develop informed judgment as the basis for public policy. We especially need a permanent framework that brings public sector, private sector, and higher education together to examine the implications of today’s technological revolution.

Now as then, there is a pointed national security dimension to this requirement. As was the case in the late 1940s, if the United States does not maintain leadership in this area, the country will forefeit its ability to protect itself from those countries that do.

29 About 43 percent of the labs’ physical facilities is more than forty years old, and 73 percent is more than twenty years old.

At present, there is a National Bioethics Advisory Commission to study the moral implications of bioscience. This commission is composed of distinguished and committed members. But the composition of that commission is narrow, consisting only of bioethicists. It meets only episodically, operates on a small budget, has no permanent professional staff aside from its executive director, works on a limited mandate, and is soon scheduled to go out of existence. In practice, this commission cannot influence or communicate as an equal with the National Institutes of Health, the Food and Drug Administration, the Department of Agriculture, or other government bodies that play major roles in monitoring and regulating the products of bioscience. Nor can it spend time anticipating issues when its meetings and reports are consumed almost entirely with responding to concerns that have already been raised. In short, the vehicle we now have to deal with the social, ethical, and public safety dimensions of biotechnology is inadequate for the task.

We need an institution that provides a forum for the articulation of all responsible interests in the implications of new biotechnology and other new technologies. Without such a forum, it is doubtful whether public confidence in the progression of bioscience can be sustained amid all the controversies it will surely provoke over the next 25 years. We need a place where government officials, scholars, theologians, and corporate executives can meet regularly to discuss issues of concern. We need an institution that can deal effectively with the other governmental agencies regularly involved in these issues; otherwise its findings will remain peripheral to the actual processes of decision. We therefore recommend that Congress transform the current National Bioethics Advisory Commission into a much strengthened National Advisory Commission on Bioscience (NACB).

The NACB should focus on the intersection of bioscience with information science and nanotechnology for, as we have said, it is this intersection that will form the pivot of major transformation. Such change will affect a wide range of public policy issues, including health, social security, privacy, and education. Nor should the NACB’s mandate be limited to ethical questions. It should concern itself, as well, with the social and public safety implications of bioscience.

For now, we envision no regulatory authority for such a strengthened commission such as that possessed by the Atomic Energy Commission. However, should the Executive and Legislative Branches together come to believe that an institution along such lines is needed for biotechnology, this strengthened commission could serve as a basis for it.

B. EDUCATION AS A NATIONAL SECURITY IMPERATIVE

he capacity of America’s educational system to create a 21st century workforce Tsecond to none in the world is a national security issue of the first order. As things stand, this country is forfeiting that capacity. The facts are stark:

● The American educational system needs to produce significantly more scientists and engineers, including four times the current number of computer scientists, to meet anticipated demand.30

30 National Commission on Mathematics and Science Teaching for the 21st Century, Before It’s Too Late (Washington, DC: September 27, 2000), p. 12.

● To do this, more than 240,000 new and qualified science and mathematics teachers are needed in our K-12 classrooms over the next decade (out of a total need for an estimated 2.2 million new teachers).31

● However, some 34 percent of public school mathematics teachers and nearly forty percent of science teachers lack even an academic minor in their primary teaching fields.32

● In 1997, Asia alone accounted for more than 43 percent of all science and engineering degrees granted worldwide, Europe 34 percent, and North America 23 percent. In that same year, China produced 148,800 engineers, the United States only 63,000.33

Education is the foundation of America’s future. Quality education in the humanities and social sciences is essential in a world made increasingly “smaller” by advances in communication and in global commerce. But education in science, mathematics, and engineering has special relevance for the future of U.S. national security, for America’s ability to lead depends particularly on the depth and breadth of its scientific and technical communities.

At the base of American national security, clearly, is the strength of the American economy. High-quality preparation of Americans for the working world is more important than ever. The technology-driven economy will add twenty million jobs in the next decade, many of them requiring significant technical expertise. The United States will need sharply growing numbers of competent knowledge workers, many of them in information sciences, an area in which there are already significant shortages.34 But it is misleading to equate “information science” with “science” itself. It was basic science and engineering excellence that brought about the information revolution in the first place and, over the next quarter century, the interplay of bioscience, nanotechnology, and information science will combine to reshape most existing technologies. The health of the U.S. economy, therefore, will depend not only on professionals that can produce and direct innovation in a few key areas, but also on a populace that can effectively assimilate a wide range of new tools and technologies. This is critical not just for the U.S. economy in general, but specifically for the defense industry, which must simultaneously develop and defend against these same technologies.

he American educational system does not appear to be ready for such challenges and Tis confronted by two distinct yet inter-related problems. First, there will not be enough qualified American citizens to perform the new jobs being created today—including technical jobs crucial to the maintenance of national security. Already the United States must search abroad for experts and technicians to fill positions in the U.S. domestic economy, and Congress has often increased category limits for special visas (H-1B) for that purpose. If current trends are not stanched and reversed, large numbers of specialized foreign technicians in critical positions in the U.S. economy could pose security risks. More important, however, while the United States should take pride in educating, hosting, and benefiting from foreign scientific and

31 Ibid., p. 21. 32 U.S. Department of Education, National Center for Education Statistics, 1993-1994 Schools and Staffing Survey (Teacher Questionnaire) (Washington, DC: 1997), p. 26. 33 National Science Board, Science and Engineering Indicators—1998 (Arlington, VA: National Science Foundation, 1998), p. A-36. 34 We discuss these shortages and their implications for government below in Section IV.

technical expertise, it should take even more pride in being able to educate American citizens to operate their own economy at its highest level of technical and intellectual capacity.

Our ability to meet these needs is threatened by a second problem—that we do not now have, and will not have with current trends, nearly enough qualified teachers in our K-12 classrooms, particularly in science and mathematics. The United States will need roughly 2.2 million new teachers within the next decade.35 A continued shortage in the quantity and quality of teachers in science and math means that we will increasingly fail to produce sufficient numbers of high-caliber American students to advance to college and post-graduate levels in these areas. Therefore we will lack not only the homegrown science, technology, and engineering professionals necessary to ensure national prosperity and security, but also the next generation of teachers of science and math at the K-12 level.

A chronic shortage of teachers presages severe consequences in all fields, but is especially hurtful in science. Too few teachers means teaching loads and class sizes that exceed optimum levels. Having too many classes and too many students invariably translates into insufficient time to prepare, which is a critical variable in effective teaching—especially so in hands-on science classrooms. It also means the necessity to press into service teachers who are not adequately prepared for classroom rigors.

The broad effect of the shortages in science and math teachers, and of other deficits in curricula and method, is already evident. Mathematics and science exam scores for U.S. students have been rising, but not fast enough to keep up with a large number of other countries. The lag is particularly significant for the nation’s high school students. Americans have performed relatively well in both mathematics and science at the 4th grade level, and slightly above the international average at the 8th grade level, but show a sharp relative decline in the high school years.36 The most recent test shows a relative decline at the 8th grade level as well.37 This, as former Secretary of Education William Bennett has pointed out, creates the impression that the longer students remain in the American education system, the poorer their relative performance becomes.

Another major concern is that not all American citizens have the benefits of an adequate education. Wide economic disparity persists among K-12 public school districts. Fully 34 percent of the total public school student population (seventeen million children) is being educated in economically-depressed school districts that face the greatest shortages of teachers. Many teachers in these districts are not qualified by a degree in the field they teach, and many lack teaching certification as well. The disparity in the availability of qualified science and math teachers between regular and economically-depressed school districts is particularly alarming.

35 This is because the majority of public school teachers are currently in their forties, with the normal retirement age being around 65 years old. U.S. Department of Education, National Center for Education Statistics, “Schools and Staffing Survey.” 36 In 1995, the Third International Mathematics and Science Study (TIMSS) ranked the performance of American 12th graders in general mathematics and science knowledge among the lowest of all participating countries. Americans placed 19th out of 21 in general mathematics and 17th out of 21 in general science. In advanced mathematics and physics knowledge, American 12th graders placed 15th out of 16 in mathematics and dead last in physics. In all content areas of physics and advanced mathematics, the American students’ performance was among the lowest of all the nations participating in the TIMSS. Some observers question the utility of these tests on the grounds that in many other countries only the brightest students take the test because children are separated into vocational and college tracks at an early age. Most believe, however, that the test results are instructive of general trends. 37 See Diana Jean Schemo, “Students in U.S. Do Not Keep Up in Global Tests,” The New York Times, December 6, 2000, pp. A1, A18.

n short, our problems in this area are becoming cumulative. The nation is on the verge Iof a downward spiral in which current shortages will beget even more acute future shortages of high-quality professionals and competent teachers. The word “crisis” is much overused, but it is entirely appropriate here. If the United States does not stop and reverse negative educational trends—the general teacher shortage, and the downward spiral in science and math education and performance—it will be unable to maintain its position of global leadership over the next quarter century.

Resolving these cumulative problems will require a multi-faceted set of solutions. Educational incentive programs are needed to encourage students to pursue careers in science and technology, and particularly as K-12 teachers in these fields. Yet such incentives alone will not be adequate to avert the looming teacher shortage. Therefore, a set of additional actions must be taken to restore the professional status of educators and to entice those with science and math backgrounds into teaching. Only by addressing the systemic need to increase the number of science and math teachers will we ensure the supply of qualified science and technology professionals throughout our economy and in our national security institutions, both governmental and military.

As a major first step, we therefore recommend the following:

● 11: The President should propose, and Congress should pass, a National Security Science and Technology Education Act (NSSTEA) with four sections: reduced-interest loans and scholarships for students to pursue degrees in science, mathematics, and engineering; loan forgiveness and scholarships for those in these fields entering government or military service; a National Security Teaching Program to foster science and math teaching at the K-12 level; and increased funding for professional development for science and math teachers.

Section one of the National Security Science and Technology Education Act should provide incentives for students at all levels—high school, undergraduate, graduate, and post- graduate—to pursue degrees in the fields of science, mathematics, and engineering.

Section two should provide substantial incentives to bring talented scientists, mathematicians, and engineers into government service—both civil and military. [The social science complement to this section is discussed in recommendation 39.]

Section three should address the need to recruit quality science and math teachers at the K-12 level. To accomplish this goal, Congress should create a National Security Teaching Program through which graduates and experienced professionals in the fields of science, math, and engineering will commit to teach in America’s public schools for three to five years. In return, NSTP Fellows will receive fellowships to an accredited education certification program, a loan repayment or cancellation option, and a signing bonus to supplement entry-level salaries. A national roster of districts in need of qualified teachers should be compiled and matched with the roster of NSTP Fellows.

The National Security Teaching Program will place teachers in the classroom who have both a teaching certification and a degree in their field. It will also encourage experienced professionals to teach, bringing deep subject matter expertise and a wealth of experience into

America’s classrooms.38 These lateral entrants might be Ph.Ds who have not found other suitable professional niches and “young” retired people, such as those who leave the military in their forties and fifties.39 Enabling this latter group to teach will also require further changes in tax laws so that those receiving retirement and pension benefits are not penalized unduly for taking on a second educational career.

Section four must emphasize professional development focused on the needs of science and mathematics teachers. On-going professional development for science teachers is particularly important, as they must prepare their students to contend with the rapidly evolving pace of scientific innovation and discovery. The Eisenhower Program run by the Department of Education to meet the professional development needs of science and math teachers is a good example of a program that works.40 It should be expanded and resourced accordingly.

Professional development that involves a substantial number of contact hours over a long period has a stronger impact on teaching practice than professional development of limited duration. Today, however, more than half of all science teachers in the United States report receiving no more than two days of professional development per year.41 For this reason, we believe the emphasis of the National Commission on Mathematics and Science Teaching for the 21st Century (the Glenn Commission) on continuing professional education is right on the mark. The Glenn Commission emphasized Summer Institutes as well as Inquiry Groups and distance learning through a dedicated Internet portal for on-going professional education.42

Congress should also establish and fund a National Math & Science Project to provide additional support for continuing professional development. Such a program can be modeled after the National Writing Project, an outstanding example of university/district collaboration. Its goal has been to improve student writing and learning in K-12 and university classrooms by providing schools, colleges, and universities with an effective professional development model. The National Writing Project also suggests itself as a model because it has been both cost- effective and has focused significant resources on traditionally-neglected impoverished areas.43

All fifty states should also fund professional enrichment sabbaticals of various durations for science teachers, and should do so wherever possible in concert with local universities, science museums, and other research institutions. The federal government should strongly

38 The National Academy of Sciences/National Research Council, through its Center for Science, Mathematics, and Engineering Education, has completed the Defense Reinvestment Initiative (DRI) funded by the Department of Defense. The program worked with the Los Angeles Unified School District to build a model for the transition of professional scientists, mathematicians, and engineers from military duty, defense-related and aerospace industries, and national laboratories into careers teaching secondary school science and mathematics. See the Final Report to the U.S. Department of Defense on the Defense Reinvestment Initiative, Defense Reinvestment Initiative Advisory Board, National Research Council, 1999. http://www.nap.edu. 39 As recommended by the National Academy of Science in Attracting Science and Mathematics Ph.Ds to Secondary School Education (Washington, DC: National Academy Press, 2000). 40 The Eisenhower Professional Development Program (Title II of the Elementary and Secondary Education Act, as amended by the Improving America’s Schools Act of 1994) focuses on the professional development of mathematics and science teachers. See U.S. Department of Education, Office of the Under Secretary, Planning and Evaluation Service, Designing Effective Professional Development: Lessons from the Eisenhower Program, Executive Summary (Washington, DC: 1999). 41 “ETS Report Discusses Teacher Quality,” NSTA Reports, Dec. 2000-Jan. 2001, p. 11. 42 Before It’s Too Late, pp. 19, 26-30. 43 National Writing Project, 1999 Annual Report.

encourage and support the states in such endeavors. A more widespread sabbatical system for science educators would also improve liaison between secondary school teachers of science and math and university faculties adept in such subjects. Some metropolitan areas in the United States have developed excellent working relationships between high school teachers and both university and science museum faculties, and we encourage Education Department officials to carefully study and model these success stories.

We recognize that the widespread institution of enrichment sabbaticals for science teachers would be expensive, for it would require a personnel “float” to compensate for teachers who are on sabbatical. But this should be a long-term goal for science educators in at least grades 7-12, which should come to resemble professional standards at universities to the extent possible.

hile the National Security Science and Technology Education Act would provide Weducational benefits and ongoing professional development opportunities for those who choose to teach, a range of additional actions are needed to improve both teacher recruitment and retention and the overall strength of school districts.

The anticipated shortage of quality teachers is a challenge, but it also offers tremendous opportunity. As we renew our pool of teachers, we can produce and train the best teachers with the best curricula, the best texts, and the best teaching methods. It is clear, too, that if the general national teacher shortage problem is not addressed, efforts to address deficiencies in the science and mathematics arena will not be met either. One cannot significantly improve the quality of science and math education without improving education in general. After all, science and math are taught in the same buildings, working under the same systems and budgets, and in the same general environment as that in which all other subjects are taught. That is why ensuring a superior scientific and technical community, one that satisfies both national economic and security needs, must start with reforming the educational system as a whole.

In this light, the Commission recognizes the need to take immediate steps, beyond the National Security Teaching Program, to attract much greater numbers of qualified graduates into the teaching profession, and to raise the quality of professional achievement across the board. We therefore recommend:

● 12: The President should direct the Department of Education to work with the states to devise a comprehensive plan to avert a looming shortage of quality teachers. This plan should emphasize raising teacher compensation, improving infrastructure support, reforming the certification process, and expanding existing programs targeted at districts with especially acute problems.

First, we must raise salaries for teachers, science and mathematics teachers in particular, to or near commercial levels.44 As long as sharp salary inequities exist between what science and math teachers are paid and what equivalently-educated professionals make in the private sector, the nation’s schools will lack the best qualified teachers in science and mathematics. Given the exigencies of the market, we see no reason why science and math teachers should not earn more than other teachers even in the same school system.

44 In lieu of or in addition to raising salaries, which may be restricted in some places by issues of inter- jurisdictional equity and union complications, signing bonuses can be used to attract people to teaching.

While increased funding from the federal and state governments is needed to achieve this, public-private and community-wide partnerships that link universities and businesses with local school districts could help fulfill both faculty and student needs through endowments and other programs.45 Endowments are a proven means for enhancing professional competitiveness. Beyond their contribution to funding higher teacher salaries, they involve corporate and private philanthropy more effectively in improving American education. K-12 education should develop a resource base similar to that of higher education with which to meet educational needs. The federal government—through the Department of Education, the National Science Foundation, and the National Research Council—can also help by standing ready to provide supplementary or matching funds for communities that take bold local initiatives to recruit and retain quality teachers. National, state, and local leaders should encourage corporate and private philanthropists to match disbursed endowment money, and Congress should work to ensure enhanced corporate tax benefits for monies provided for NSSTEA science/math education purposes of all sorts.

Endowment and other partnership programs could be used in several important ways, in addition to raising teacher salaries. They can provide the up-to-date laboratory facilities that are essential to effective discovery-based learning, and that are usually more expensive than most local school districts choose to bear. Without investment by the federal government and through these partnership programs in the modernization of high school laboratory facilities, even the highest quality science teachers will be unable to maximize their talents. Funds could also be used to develop innovative uses for technology such as up-to-date modular texts in science that can be conveyed nationwide through the Internet.

Finally, these programs can provide student incentives to choose science and math careers. This may be through summer co-op programs—somewhat analogous to co-op programs on the university level—where students take summer jobs or internships related to their interests at companies and foundations that help endow the schools. Alternatively endowments might be used to pay students at the high school level for taking courses in science and math beyond minimal requirements. Some believe that it is foolish to let students work at fast food chains, for example, when they could be induced for similar rewards to study physics and calculus. In lieu of, or in addition to, direct payment, students may be offered scholarship money to be set aside for university tuition.

Second, we must improve infrastructure support. Other knowledge-workers in the general economy are the beneficiaries, on average, of ten times the basic infrastructure investment than that afforded to teachers. This is a national disgrace. Beyond the laboratory facilities already mentioned, administrative support and resources are needed to ensure a disciplined and safe environment, and to provide such seemingly basic services as desk space, telephones, and copying facilities. This will not only help provide a better educational environment but, along with salary increases, will also help restore full professional status to the teaching profession. This will go a long way toward attracting and retaining high-quality teachers.

45 We note the successful example of the Long Beach Unified School District. Over the past five years, it has partnered with California State University Long Beach (CSULB), and Long Beach City College, in collaboration with additional local, regional, and national partners, to developed a seamless (preK-18) approach that has aligned content standards, learning methodology, and assessment from pre-school through the masters level. The aim is to ensure coherent exit and entry expectations among the three institutions. They have collaborated to address curriculum, preparation, and professional development issues as well.

Third, we must create more flexible certification procedures to attract lateral entrants into education. We have already discussed the benefits of encouraging experienced professionals to become K-12 educators and certification procedures should reflect these benefits. In general they should be changed to emphasize teacher mastery of substance over matters of pedagogy at least at the grade 7-12 level.

Fourth, we should supplement these measures by expanding existing specially-targeted federal programs for geographical and socio-economic zones with especially acute problems. Through the National Security Teaching Program, we should strengthen federal loan repayment and cancellation options for recent college graduates engaged in these programs and increase their salary and housing benefits. Supplementary teacher training and certification programs should be provided, as well, in exchange for an additional commitment to teaching in selected public school systems. At the same time, we recommend the following:

● 13: The President and Congress should devise a targeted program to strengthen the historically black colleges and universities in our country, and should particularly support those that emphasize science, mathematics, and engineering.

Clearly, serious educational improvement will cost money. It will also require changes in attitudes toward education professionals. But if the American people want quality education and a truly professional environment in schools that is conducive to educational success, they will have to demand it, pay for it, and show greater respect to those professionals who deliver it.

We believe, however, that while more money for is a necessary condition for major improvement in the education system, it is not a sufficient condition. Despite significant investments in special programs, much professional attention, and significant expenditure of resources, many results of the educational system are still disappointing. New and creative approaches are needed, including approaches that harness the power of competition. As important, local communities must be empowered and involved more fully in education, for nothing tracks more directly with high student performance as parental involvement in their children’s education.

n addition to the previous recommendations, this Commission believes that core Isecondary school curricula should be heavier in science and mathematics, and should require higher levels of proficiency for all high school students. Many specialists believe that tracking math and science students sometimes leads to a sharp deterioration of expectations, and hence discipline, in the lower tracks. According to nearly all professional evaluations, such a deterioration of expectations is lethal to the attitudes necessary to make the classroom experience work.46 Given the exigencies of advanced 21st century economies, it is not good enough that we produce a sufficient elite corps of science, math, and engineering professionals. We must raise levels of math, science, and technology literacy throughout our society. Among other things, that means changing enduring perceptions that taking four years of science and math in high school is only for the “brainy” elite. This is a perception that, ultimately, could cause an economic disaster in this country.

46 “New Study Examines Why Minnesota Eighth Graders Scored High in TIMMS,” NSTA Reports, Dec. 2000-Jan. 2001, p. 23.

Finally in this regard, as with nearly every other commission and professional study that has looked at this problem, we favor more rigorous achievement goals for both American teachers and students in science and math, and we favor making both accountable for improvements. We also believe that science curricula, in particular, must be better designed to teach science for what it is: a way of thinking and not just a body of facts. In our judgment, too much high school science curricula is still distorted by inappropriate evaluation methods. If testing and evaluation methods for science education better reflect the reality of science as a discovery-based rather than as a fact-based activity, it would be easier to reform curricula in an appropriate fashion as well.

ne related matter must be addressed. As noted earlier, increasing numbers of the Oqualified engineers and scientists educated in the United States are coming from outside U.S. borders. Far from being negative, the cycle of their coming and going to and from the United States helps sustains U.S. needs. However, should they stop coming, or further accelerate their return home, the American population alone may not be able to sustain the needs of the U.S. economy over the next decade.

Fully 37 percent of doctorates in natural science, 50 percent of doctorates in mathematics and computer science, and 53 percent of doctorates in engineering at U.S. universities—the best in the world—are awarded to non-U.S. citizens.47 However, the percentage of science and engineering doctoral recipients with firm plans to stay in the United States is declining.48 The growing emphasis on science and technology in many foreign countries is enticing many U.S- trained foreign students to return to their countries of origin, or to go to other parts of the world. They are doing so in increasing numbers.

Given the uncertainty as to whether U.S. nationals alone can fill U.S. economic needs, Congress should adjust the appropriate immigration legislation to make it easier for those non- U.S. citizens with critical educational and professional competencies to remain in the United States, and to become American citizens should they so desire. The White House Office of Science and Technology Policy, along with the Immigration and Naturalization Service and the appropriate Congressional committees, is the proper place to design such adjustments.

e believe strongly that America’s future depends upon the ability of its educational Wsystem to produce students who constantly challenge current levels of innovation and push the limits of technology and discovery. They are the seed corn of our future. Presidential leadership will be critical in addressing the initiatives in education addressed by this Commission. That is why the Commission is heartened to learn that the new administration has declared education to be its first priority. It is the right choice.

47 National Science Board, Science & Engineering Indicators 2000, National Science Foundation, 2000 (NSB-00-1). 48 Ibid. According to the best estimates available, the numbers are 47.9 percent for China, 27.5 percent for Taiwan, 22.6 percent for Korea, 54.7 percent for India, 52.6 percent for the United Kingdom, and 40.5 percent for Germany.

III. Institutional Redesign

eyond the pressing matter of organizing homeland security, and of recapitalizing core BU.S. domestic strengths in science and education, this Commissions recommends significant organizational redesign for the Executive Branch. This redesign has been conceived with one overriding purpose in mind: to permit the U.S. government to integrate more effectively the many diverse strands of policy that underpin U.S. national security in a new era—not only the traditional agenda of defense, diplomacy, and intelligence, but also economics, counter-terrorism, combating organized crime, protecting the environment, fighting pandemic diseases, and promoting human rights worldwide.

The key component of any Executive Branch organizational design is the President. As one of only two elected members of the Executive Branch, the President is responsible for ensuring that U.S. strategies are designed to seize opportunities and not just to respond to crises. He must find ways to obtain significantly more resources for foreign affairs, and in particular those resources needed for anticipating threats and preventing the emergence of dangers. Without a major increase in resources, the United States will not be able to conduct its national security policies effectively in the 21st century.

To that end, the nation must redesign not just individual departments and agencies but its national security apparatus as a whole. Serious deficiencies exist that cannot be solved by a piecemeal approach.

● Most critically, no overarching strategic framework guides U.S. national security policymaking or resource allocation. Budgets are still prepared and appropriated as they were during the Cold War.

● The power to determine national security policy has migrated toward the National Security Council (NSC) staff. The staff now assumes policymaking and operational roles, with the result that its ability to act as an honest broker and policy coordinator has suffered.

● Difficulties persist in ensuring that international political and security perspectives are considered in the making of global economic policy, and that economic goals are given proper attention in national security policymaking.

● The Department of State is a crippled institution that is starved for resources by Congress because of its inadequacies and is thereby weakened further. The department suffers in particular from an ineffective organizational structure in which regional and functional goals compete, and in which sound management, accountability, and leadership are lacking.

● America’s overseas presence has not been adjusted to the new economic, social, political, and security realities of the 21st century. The broad statutory authority of U.S. Ambassadors is undermined in practice by their lack of control over resources and personnel.

● The Department of Defense has serious organizational deficiencies. The growth in staff and staff activities creates confusion and delay. The failure to outsource or privatize many defense support activities wastes huge sums of money. The programming and

budgeting process is not guided by effective strategic planning. The weapons acquisition process is so hobbled by excessive laws, regulations, and oversight strictures that it can neither recognize nor seize opportunities for major innovation, and it stifles a defense industry already in financial crisis. Finally, the force structure development process is not currently aligned with the needs of today’s global security environment.

● National security policymaking does not manage space policy in a serious and integrated way.

● The U.S. intelligence community is adjusting only slowly to the changed circumstances of the post-Cold War era. While the economic and political components of statecraft have assumed greater prominence, military imperatives still largely drive the collection and analysis of intelligence.

We offer recommendations in several areas: strategic planning and budgeting; the National Security Council; the Department of State; the Department of Defense; space policy; and the intelligence community. We take these areas in turn.

A. STRATEGIC PLANNING AND BUDGETING

trategic planning is largely absent within the U.S. government. The planning that does Soccur is ad hoc and specific to Executive departments and agencies. No overarching strategic framework guides U.S. national security policy or the allocation of resources.

Each national security department and agency currently prepares its own budget. No effort is made to define an overall national security budget or to show how the allocation of resources in the individual budgets serves the nation’s overall national security goals. The Office of Management and Budget (OMB) does on occasion consider tradeoffs in the allocation of resources among the various national security departments and agencies, but this is not done systematically. Nor are department budgets presented in a way that Congress can make these tradeoffs as it fulfills its responsibilities in the budgeting process.

There is an increasing awareness of this deficiency throughout the national security community but, so far, only very preliminary steps have been taken to produce crosscutting budgets. These preliminary steps have been limited to special transnational issues such as counter-terrorism. At present, therefore, neither the Congress nor the American people can assess the relative value of various national security programs over the full range of Executive Branch activities in this area.

To remedy these problems, the Commission’s initial recommendation is that strategy should once again drive the design and implementation of U.S. national security policies:

● 14: The President should personally guide a top-down strategic planning process and delegate authority to the National Security Advisor to coordinate that process.

Such a top-down process is critical to designing a coherent and effective U.S. national security policy. In carrying out his strategic planning responsibilities on the President’s behalf, the National Security Advisor must enlist the active participation of the members and advisors of the National Security Council. This group should translate the President’s overall vision into a set

of strategic goals and priorities, and then provide specific guidance on the most important national security policies. Their product would become the basis for the writing of the annual, legislatively-mandated U.S. National Security Strategy.

Carrying out this guidance would rest with the senior-level deputies in the departments and agencies, facilitated by the NSC staff. They would be specifically responsible for designing preventive strategies, overseeing how the departments carry forward the President’s strategic goals, and reviewing contingency planning for critical military and humanitarian operations.

The Commission believes that overall strategic goals and priorities should also guide the allocation of national security resources, and therefore recommends the following:

● 15: The President should prepare and present to the Congress an overall national security budget to serve the critical goals that emerge from the NSC strategic planning process. Separately, the President should continue to submit budgets for the individual national security departments and agencies for Congressional review and appropriation.

The OMB, with the support of the NSC staff, should undertake the task of formulating this national security budget. Initially, it should focus on a few of the nation’s most critical strategic goals, involving only some programs in the departmental budgets. Over time, however, it could evolve into a more comprehensive document. Homeland security, counter-terrorism, nonproliferation, nuclear threat reduction, and science and technology should be included in the initial national security budget. This process should also serve as a basis for defining the funds to be allocated for preventive strategies.

Such goal-oriented budgets would help both the administration and Congress identify the total level of government effort as well as its composition. Gaps and duplication could be more readily identified. Such budgets would also enable the Congress to prioritize the most critical national security goals when they appropriate funds to departments and agencies.

To modernize the nation’s strategic planning and budgeting process, greater coordination and connectivity is required among all executive departments and agencies. For this purpose, the President should call for the creation of a national security affairs network analogous to the Secret Internet Protocol Router Network (SIPRNET) of the Department of Defense.

The President would be able to implement these recommendations on his own authority as they involve White House staff activities. As far as the budgetary implications go, this reform would not cost money but, by rationalizing the strategy and budgeting process, go far toward assuring that money is spent more efficiently and wisely.

B. THE NATIONAL SECURITY COUNCIL

n exercising his Constitutional power, the President’s personal style and managerial Ipreferences will be critical in how he relates to his Cabinet secretaries and in how he structures his White House staff. But the organization and the characteristics of the national security apparatus will importantly affect the policies that emerge.

The National Security Council was created as part of the 1947 National Security Act to advise the President on the integration of domestic, foreign, and military policies, and to help coordinate the activities of the national security departments and agencies. Its statutory members currently include the Vice President, the Secretary of State, and the Secretary of Defense. The Director of Central Intelligence and the Chairman of the Joint Chiefs of Staff are statutory advisers. The NSC staff authorized by the 1947 Act has evolved over time into a major instrument of Presidential governance, wielded by the Assistant to the President for National Security Affairs (the National Security Advisor or NSC Advisor), not specified in any statute, who has become increasingly powerful.

Obviously, this evolution has been affected by the degree of Presidential involvement in foreign and national security policy as well as by their various personalities and leadership styles. Over the past decade, Presidents have increasingly centralized power with the NSC staff for the making and execution of national security policy. In many ways, the NSC staff has become more like a government agency than a Presidential staff. It has its own views and perspectives on the myriad of national security issues confronting the government. It has its own press, legislative, communication, and speechmaking “shops” to enable it to conduct ongoing relations with the media, Congress, the American public, and foreign governments. Aside from staffing the President, the NSC staff’s primary focus has become the day-to-day management of the nation’s foreign and national security policy.

Why has this centralization of power occurred? First, with the end of the Cold War, national security issues now involve even more policy dimensions—financial and trade issues, environmental issues, international legal issues, for example—and each dimension has proponents within the Executive Branch. It has become harder, therefore, to assign any one department as the leading actor for a given policy area. The traditional dividing lines between foreign and domestic policy have also blurred further. Of all the players, only the NSC staff, in the name of the President, is in a position to coordinate these disparate interests effectively.

Second, foreign policy is also now very politicized. Few, if any, issues are easily separated from domestic political debate: not military intervention, not diplomatic relations, and certainly not trade and economic interactions with the outside world. Political oversight of these policies naturally falls to the White House, with the NSC staff acting as its foreign policy arm.

Finally and most importantly, the State Department over the past few decades has been seriously weakened and its resources significantly reduced. Foreign aid programs, as well as representational responsibilities, are now dispersed throughout the government. It therefore has fallen to the NSC staff to manage the conduct of America’s foreign policy that was once the prerogative of the Department of State.

This description of the origin of the problem clearly illustrates a key principle in any attempt to set it aright; namely, that the NSC Advisor and staff cannot be redirected unless the Department of State is also set aright.

The Commission views with alarm the expansion of the role of the NSC staff and recommends the following:

● 16: The National Security Council (NSC) should be responsible for advising the President and for coordinating the multiplicity of national security activities, broadly defined to include economic and domestic law enforcement activities as well as the traditional national security agenda. The NSC Advisor and staff should resist the temptation to assume a central policymaking and operational role.

The National Security Advisor and NSC staff should give priority to their traditional and unique roles, namely coordinating the policymaking process, so that all those with stakes are involved, and all realistic policy options are considered and analyzed.49 The NSC Advisor and staff should provide advice privately to the President and oversee the implementation of Presidential decisions. They should also assume those roles that are unique to the President’s staff, such as preparations for overseas trips and communications with foreign leaders.

At the same time, the NSC advisor and staff should resist pressures toward the centralization of power, avoid duplicating the responsibilities of the departments, and forego operational control of any aspect of U.S. policy. Assuming a central policymaking role seriously detracts from the NSC staff’s primary roles of honest broker and policy coordinator.

The National Security Advisor should also keep a low public profile. Legislative, press, communications, and speech writing functions should reside in the White House staff. These functions should not be duplicated separately in the NSC staff as they are today.

The President, not his personal staff or advisors, is publicly accountable to the American people. To the degree that the role of the National Security Advisor continues to be one of public spokesman, policymaker, and operator, the Commission wishes the President to understand that pressure is growing in the Congress for making the National Security Advisor accountable to the American people through Senate confirmation and through formal and public appearances before Congressional committees. Returning to a lower-profile National Security Advisor will be difficult, but such an approach will produce the best policy results and deflate this pressure.

very President in the last thirty years has devised some organizational approach to Eintegrating international economic policies with both domestic economic policies and national security considerations. Many methods have been tried. Most recently, in 1993 the Clinton Administration created the National Economic Council (NEC) as a parallel coordinating institution to the NSC.

The NEC experiment has been a disappointment. The Treasury Department dominates global financial policy, and its decisions have often neglected broader national security considerations—most critically, for example, in the early stages of the recent Asian economic crisis. Meanwhile, the United States Trade Representative (USTR)—and not the NEC—retains responsibility for coordinating trade policies and negotiations. The small NEC staff, as well, finds itself bureaucratically weaker than the NSC staff and (even when the staffers are dual-hatted) the NSC perspective has predominated.

49 These recommendations parallel those of the Tower Commission. See Report of the Tower Commission (Washington, DC: February 1987), pp. 90-93.

The policy process should ensure that the coordination of national security activities reflects the new centrality of economics. This Commission therefore offers the following two recommendations:

● 17: The President should propose to the Congress that the Secretary of Treasury be made a statutory member of the National Security Council.

Consistent with our strong preference for Cabinet government, this Commission believes the Secretary of the Treasury should be the President’s right arm for international economic policy. But the Treasury’s actions should be coordinated within the National Security Council process. In the NSC system of supporting subcommittees, Treasury should chair an interagency working group that manages international economic and financial policies (including managing financial crises), but it is a Presidential interest that decisions be fully coordinated with other relevant national security agencies. We understand that Secretaries of the Treasury have been routinely invited to National Security Council meetings. But designation as a statutory member of the NSC would signify the importance of truly integrating economic policy into national security policy.

● 18: The President should abolish the National Economic Council, distributing its domestic economic policy responsibilities to the Domestic Policy Council and its international economic responsibilities to the National Security Council.

The NSC staff should assume the same coordinating role for international economic policy as for other national security policies. To emphasize its importance, the Commission recommends the appointment of a Deputy National Security Advisor with responsibility for international economics. We also believe that to integrate properly the economic component of statecraft in the NSC staff system, more experts in international economics need to be recruited and placed in offices throughout the NSC staff. To ensure the integration of domestic and international economic policies, the staffs of the Domestic Policy Council, the Council of Economic Advisers, and the NSC will need to work together very closely.

C. DEPARTMENT OF STATE

ver the past few decades, the Department of State has been seriously weakened as Omany of its core functions were parceled out to other agencies. The Agency for International Development, Treasury, and Defense assumed responsibility for foreign assistance programs, the USTR took over trade negotiations, and the Commerce Department began to conduct foreign commercial activities. For many years, too, arms control and public diplomacy were managed by separate agencies. Other departments, as well as the NSC staff, have also acquired foreign policy expertise and regularly pursue representational activities all around the world.

The State Department’s own effort to cover all the various aspects of national security policy—economic, transnational, regional, security—has produced an exceedingly complex organizational structure. Developing a distinct “State” point of view is now extremely difficult and this, in turn, has reduced the department’s ability to exercise any leadership.

Over the past decade, the impulse to create individual functional bureaus was useful substantively and politically; e.g., in the cases of human rights, democracy, law enforcement, refugees, political-military affairs, and nonproliferation. The problem is that overall organizational efficiency and effectiveness have been lost in the process.

More fundamentally, the State Department’s present organizational structure works at cross-purposes with its Foreign Service culture. The Foreign Service thinks in terms of countries, and therein lies its invaluable expertise. But the most senior officials have functional responsibilities. The department’s matrix organization makes it unclear who is responsible for policies with both regional and functional elements. The department rarely speaks with one voice, thus reducing its influence and credibility in its interactions with the Congress and in its representation abroad.

As a result of these many deficiencies, confidence in the department is at an all-time low. A spiral of decay has unfolded over many years in which the Congress, reacting to inefficiencies within the department, has consistently underfunded the nation’s needs in the areas of representation overseas and foreign assistance. That underfunding, in turn, has deepened the State Department’s inadequacies. This spiral must be reversed.

oreign assistance is a valuable instrument of U.S. foreign policy, but its present Forganizational structure, too, is a bureaucratic morass. Congress has larded the Foreign Assistance Act with so many earmarks and tasks for the U.S. Agency for International Development (AID) that it lacks a coherent purpose. Responsibility today for crisis prevention and responses is dispersed in multiple AID and State bureaus, and among State’s Under Secretaries and the AID Administrator. In practice, therefore, no one is in charge.

Over $4 billion is spent on the State Department’s bilateral assistance programs (Economic Support Funds) and AID’s sustainable development programs. Neither the Secretary of State nor the AID Administrator is able to coordinate these foreign assistance activities or avoid duplication among them. More important, no one is responsible for integrating these programs into broader preventive strategies or for redeploying them quickly in response to crises. The Congress, too, has no single person to hold accountable for how the monies it appropriates are spent. Moreover, the majority of AID funding is expended through contracts with non- governmental organizations (NGOs) who often lobby Congress over various AID programs, further undermining the coherence of the nation’s assistance programs.

Take the case of a potential response to a humanitarian disaster in Africa, similar in nature and scale to the 1999 floods in Mozambique. Today, should some such disaster recur, three AID bureaus would be involved: those dealing with Africa, Global Programs, and Humanitarian Response. Responsibility would be dispersed among at least three Under Secretaries of State (Global Affairs, Political Affairs, and International Security Affairs), and four State bureaus (Africa; Democracy, Human Rights, and Labor; Population, Refugees, and Migration; and Political-Military). Neither the Secretary of State nor the AID Administrator would be in a position to commit the resources found to be necessary, or to direct related humanitarian and refugee assistance operations. As Figure 3 on page 57 suggests, other government agencies, and especially the Defense Department, would be at a loss to know where and how to coordinate their activities with those of the State Department.

his Commission believes that the Secretary of State should be primarily responsible Tfor the making and implementation of foreign policy, under the direction of the President. The State Department needs to be fundamentally restructured so that responsibility and accountability are clearly established, regional and functional activities are closely integrated, foreign assistance programs are centrally planned and implemented, and strategic planning is emphasized and linked to the allocation of resources. While we believe that our NSC and State Department recommendations make maximal sense when taken together, the reform of the State Department must be pursued whether or not the President adopts the Commission’s recommendations with respect to the NSC Advisor and staff.

Significant improvements in its effectiveness and competency would provide the rationale for the significant increase in State Department resources necessary to carry out the nation’s foreign policy in the coming quarter century. In our view, additional resources are clearly needed to foster the nation’s critical goals: promoting economic growth and democracy, undertaking preventive diplomacy, providing for the security of American officials abroad, funding the shortfalls in personnel and operating expenses, and installing the information technologies necessary for the U.S. national security apparatus to operate effectively in the 21st century. The United States will be unable to conduct its foreign policy in all its dimensions without the commitment of such new resources. A failure to provide these funds will be far more costly to the United States in the long term.

ore specifically, then, this Commission strongly recommends the following State MDepartment redesign:

● 19: The President should propose to the Congress a plan to reorganize the State Department, creating five Under Secretaries, with responsibility for overseeing the regions of Africa, Asia, Europe, Inter-America, and Near East/South Asia, and redefining the responsibilities of the Under Secretary for Global Affairs. These new Under Secretaries would operate in conjunction with the existing Under Secretary for Management.

The new Under Secretaries, through the Secretary of State, would be accountable to the President and the Congress for all foreign policy activities in their areas of responsibility. Someone would actually be in charge.

On behalf of the Secretary, the new Under Secretaries would formulate a “State” view and represent the department in NSC meetings. They would appear before Congressional committees. They would be positioned to orchestrate preventive diplomatic strategies as well as crisis responses. They would oversee the implementation of all the various assistance programs (development aid, democracy building, and security assistance) and explain them coherently before Congress. They would assemble the various political and security considerations that need to be factored into U.S. government decisions on global financial crises and other international economic policies. They would be able to tailor public diplomacy to policy goals and integrate these activities with other aspects of America’s diplomacy. They would be able to liaise effectively with the growing number of NGOs engaged in national security activities. (To show how this would work, we have provided below illustrative responsibilities for a regional Under Secretary and for the Under Secretary for Global Affairs.)

Under Secretary Regional—Asia

Illustrative Responsibilities

ECONOMIC &TRANSNATIONAL POLITICAL AFFAIRS SECURITY AFFAIRS AFFAIRS

China-human rights Japan Taiwan arms sales Investment treaties China China nonproliferation Economic sanctions North Korea Japan base negotiations Asian currency crisis ASEAN Security assistance China Ex-Im bank loans Indonesia Burma counter-narcotics Indonesia economic assistance Taiwan N. Korea Framework Links with NGOs APEC

Under Secretary Global Affairs

Illustrative Responsibilities

ECONOMIC &TRANSNATIONAL POLITICAL AFFAIRS SECURITY AFFAIRS AFFAIRS

Oceans, environment UN General Assembly Conference on Disarmament Refugees, humanitarian assistance UN Security Council Nonproliferation regimes Paris Club debt negotiations Intl. Labor Organization Law enforcement International relief organizations Defense trade controls Assistance to multilateral banks Counter-terrorism Global climate change—Kyoto Crisis management AID’s global assistance programs UN peacekeeping Fulbright’s exchange programs International narcotics UNHCR

As Figure 4 on page 58 shows, each Under Secretary would have a Deputy, so as to provide depth in crisis situations, or to take on critical diplomatic assignments. Three bureaus would support the Under Secretaries, each organized to achieve functional goals (political affairs, security affairs, and economic and transnational affairs). The new Under Secretary for Global Affairs would be designated as the third-ranking official in the department to emphasize the importance of global issues and activities. Consistent with past practice, this designation would not represent another organizational layer; the Under Secretary for Global Affairs would simply be the one designated as Acting Secretary when the Secretary and Deputy Secretary are away. The functions of the Under Secretary for Management would need to be redefined in light of the responsibility being given for programs and budgets to the other Under Secretaries.

his reorganization should be accompanied by, and will be strengthened by, the full Tintegration of the nation’s foreign assistance activities into the overall framework of U.S. national security. We therefore recommend strongly that:

● 20: The President should propose to the Congress that the U.S. Agency for International Development be consolidated into the State Department.

Development aid is not an end in itself, nor can it be successful if pursued independently of other U.S. programs and activities. It is part of the nation’s overall effort to eradicate poverty, encourage the adoption of democratic norms, and dampen ethnic and religious rivalries. To be effective, U.S. development assistance must be coordinated with other diplomatic activities, such as challenging corrupt government practices or persuading governments to adopt more sensible land-use policies. Only a coordinated diplomatic and assistance effort will advance the nation’s goals abroad, whether they be economic growth and stability, democracy, human rights, or environmental protection.

Such a fundamental organizational redesign must have a strategic planning and budgetary process aligned with it. We therefore recommend the following:

● 21: The Secretary of State should give greater emphasis to strategic planning in the State Department and link it directly to the allocation of resources through the establishment of a Strategic Planning, Assistance, and Budget Office.

This office would work directly for the Secretary of State and represent the department in NSC-led government-wide strategic planning efforts. Within that framework, the office would define the department’s overall foreign policy goals and priorities. It would plan and prioritize all the department’s assistance programs. It would be responsible for coordinating the budget planning process and adjudicating any differences among the Under Secretaries.

Take the case of a Congressional appropriation involving worldwide population programs. This new office would ask the Under Secretary for Global Affairs to make the initial recommendation as to how the funds would be distributed. The regional Under Secretaries would then have an opportunity to appeal. Once the Secretary decided, the Under Secretary for Global Affairs would have line responsibility for implementing those programs destined for international organizations, and the other Under Secretaries for programs within their regions.

By integrating strategic and resource planning, the Secretary of State would have a more effective means for managing the activities of the department as well as U.S. embassies abroad.

This office would essentially combine the offices of Resources, Plans & Policy, and Policy Planning in the current organizational set-up, eliminating the major design flaw of segregating planning from resource allocation. But it would retain the responsibility for housing and encouraging a small group of officers to do longer-range and strategic thinking, as has been the principal task of the Policy Planning Staff for half a century.

Secretary of State

Deputy U.S. Permanent USAID Representative to Administrator United Nations Deputy

Asia & the Near East Humanitarian Response Latin America & the Caribbean Global Programs Europe & Eurasia

Africa

Resources, Plans,

U/S U/S Counselor U/S U/S U/S U/S & Policy Economics, Arms Global Political Management Public Policy Planning Business, & Affairs Affairs Control Diplomacy/ Agriculture & Int’l Public Legal Adviser Affairs Security Affairs Legislative Democracy, Human African Arms Intelligence & Public Rights, & Labor Control Research Economic European Non- Affairs Int’l Narcotics & Counter Terrorism & Business Law Enforcement Near Eastern proliferation Int’l Affairs Western Political Information New Independent Oceans, International Programs States Environment, & Science Hemisphere Military Educational & Population, Refugees, South Asian Verification & Compliance Cultural Affairs & Migration International Organizations East Asian & Pacific

Figure 3. Current Organization of Department of State50

50 Administrative and management offices are not included in Figures 3 & 4. For the official organization chart of the U.S. Department of State, see www.state.gov; for USAID, see www.usaid.gov.

Secretary of State Deputy Strategic Planning, Assistance, and Legislative Affairs Budget Office

Intelligence & Public Affairs Research Inspector General Legal Adviser

U/S U/S U/S U/S U/S U/S U/S Inter-American Near East & Asia Management Global Affairs Europe Africa Affairs South Asia

Political Affairs Security Affairs Economic & Transnational Affairs

Figure 4: Proposed Organization of Department of State

t follows from a reform that integrates many of the nation’s foreign policy activities Iunder the Secretary of State that a similar logic should be applied to the State Department budget. We therefore recommend the following:

● 22: The President should ask Congress to appropriate funds to the State Department in a single integrated Foreign Operations budget, which would include all foreign assistance programs and activities as well as all expenses for personnel and operations.

The State Department’s International Affairs (Function 150) Budget Request would no longer be divided into separate appropriations by the Foreign Operations subcommittee on the one hand, and by a subcommittee on the Commerce, State, and Justice Departments on the other. The Congressional leadership would need to alter the current jurisdictional lines of the Appropriations subcommittees so that the Foreign Operations subcommittee would handle the entire State Department budget. Such a reform would give the administration the opportunity to:

—Allocate all the State Department’s resources in a way to carry out the President’s overall strategic goals;

—Ensure that the various assistance programs are integrated, rather than simply a collection of administrations’ political commitments and Congressional earmarks; and

—Replace the existing budget categories with purposeful goals.51

e cannot emphasize strongly enough how critical it is to change the Department of WState from the demoralized and relatively ineffective body it has become into the President’s critical foreign policymaking instrument. The restructuring we propose would position the State Department to play a leadership role in the making and implementation of U.S. foreign policy, as well as to harness the department’s organizational culture to the benefit of the U.S. government as a whole. Perhaps most important, the Secretary of State would be free to focus on the most important policies and negotiations, having delegated responsibility for integrating regional and functional issues to the Under Secretaries.

Accountability would be matched with responsibility in senior policymakers, who in serving the Secretary would be able to speak for the State Department both within the interagency process and before Congress. No longer would competing regional and functional perspectives immobilize the department. At the same time, those functional perspectives, whether human rights, arms control, or the environment, would not disappear. The Under Secretaries would be clearly accountable to the Secretary of State, the President, and the Congress for ensuring that the appropriate priority was given to these functional tasks.

By making work on functional matters a career path through the regional hierarchy, the new organization would give Foreign Service officers an incentive to develop functional expertise in such areas as the environment, arms control, and anti-drug trafficking. Civil servants in the State Department would have new opportunities to apply their technical expertise in regional settings. The ability to formulate and integrate U.S. foreign policies in a regional context, too, will give their skills greater coherence and improve their professional effectiveness.

The Under Secretary for Global Affairs, as redefined, would give priority and high-level attention to working with international organizations. In particular, this office would consolidate humanitarian and refugee assistance programs, thereby remedying the lack of leadership and coordination in past operations. This new organization would bring together all the department’s crisis management operations: counter-terrorism Foreign Emergency Support Teams (FEST) teams, humanitarian assistance Disaster Assistance Response Teams (DART) teams, and military over-flight clearances.

The overall restructuring of the State Department would vastly improve its management. It would rationalize the Secretary’s span of control through a significant reduction in the number of individuals reporting directly to the Secretary, and it would abolish Special Coordinators and Envoys. The duplication that exists today in the regional and functional bureaus would be eliminated. The number of bureaus would be reduced significantly. One new Under Secretary would be created, but the AID Administrator position would be eliminated.

51 Today, the Function 150 budget categories are defined in terms of titles such as Export and Investment Assistance, Bilateral Economic Assistance, Military Assistance, and Multilateral Economic Assistance. More purposeful titles should be put in their place; e.g., economic development or international security.

e are aware that our proposed restructuring of the State Department will give rise to Wthe concern that such functional goals as nonproliferation and human rights will be diminished in importance. Indeed, the primary motivation for establishing the functional Under Secretaries and their bureaus was to counter the prevailing culture of the department, which tends to give priority to maintaining good bilateral relations rather than pressing foreign governments on these contentious matters.

But in the restructuring reform offered here, proponents for these functional goals will still exist. Indeed, they will be in a better position to affect policies by being involved in their formulation early on in the process, and not at the last moment by intercession with the Secretary. The Under Secretaries will be responsible for ensuring that the priorities of the President, Secretary, and Congress are being achieved. If these involve counter-terrorism, refugees, the environment, or some other functional goal, it is hard to imagine that they would be neglected.

Another possible concern is that organizing in terms of regional Under Secretaries is inconsistent with globalizing trends. The Commission’s Phase I Report forecasts that global forces, especially economic ones, will continue to challenge the role and efficacy of states. More important, however, it affirms that “the principle of national sovereignty will endure.”52 States will remain the main venue for diplomatic activity for a long time. This restructuring proposal is based on the reality that the United States will need to continue to deal with states around the world while being able, as well, to integrate policies in both regional and global contexts. The new Strategic Planning, Assistance, and Budget Office, along with the Global Affairs Under Secretary and Assistant Secretaries, will also be available to ensure that global perspectives are given sufficient attention.

Defining the geographical coverage of the regions will necessarily be somewhat arbitrary, but the same problem exists under any arrangement. Russia will be integrated again into Europe and South Asia joined again with the Middle East. The most difficult decisions will involve where to place Turkey; whether to keep India and Pakistan in the same region or separate them; how to divide up the newly independent states of the former Soviet Union; and whether northern Africa is part of the Middle East or Africa. Setting up the new organization will provide an opportunity to make these decisions anew in light of prospective developments in the coming decades, and, if at all possible, to build in some degree of flexibility for the years ahead.

Issues will certainly arise that span regions or require the integration of regional and global perspectives. Planning for G-8 meetings, for example, will have to involve all the Under Secretaries. The Under Secretaries of Global Affairs, Europe, the Americas, and Asia would have a role in policies bearing on national missile defense. Global financial crises would almost certainly engage more than one Under Secretary. Jurisdictional disputes may well arise that the Secretary (or the Deputy Secretary) will have to address. What the restructuring will have done, however, is to make the number of those cases requiring intervention far fewer than today. That is how senior management is most effectively employed in any successful private corporate organization; so why not in the U.S. Department of State?

Another concern that some may have is that development programs will be neglected if AID is integrated into the State Department. Some may worry, as well, that the State Department will direct foreign assistance to programs promising immediate political returns. This is not so. In the new organization, the Secretary of State could directly instruct the Strategic Planning, Assistance, and Budget Office to ensure that priority is given to development aid—if that is the

52 New World Coming, p. 38.

wish of the President and the Congress. The demise of AID would also mean that no single person, apart from the Secretary of State, would be accountable for the implementation of development programs. It is true that each Under Secretary would oversee development aid for only their area of responsibility. But they would be able to integrate these activities with all the other regional or global assistance programs far more effectively than is the case today.

Indeed, AID’s current decentralized structure would fit well with the overall State restructuring. AID’s regional and global offices would become part of the new Economic and Transnational Bureaus. AID regional and global planning and budgeting offices would be retained as part of the Under Secretaries’ staffs. AID’s budget officials would join the Strategic Planning, Assistance, and Budget Office, and their procurement and contracting officials would be integrated into State Department offices with similar responsibilities. The actual planning and administration of AID programs would be very similar to current practices.

he United States is represented overseas in 160 countries, with over 250 embassies, Tconsulates, and missions. Over 14,000 Americans and about 30,000 foreign nationals are employed in these posts. More than thirty U.S. government agencies operate overseas. This Commission believes that the U.S. overseas presence has been badly short-changed by shortsighted budget cuts to the point where the security and prosperity of the American people are ill-served. But it also believes that the U.S. presence must be adjusted to new and prospective economic, social, political, and security realities. Only with such changes will Congressional confidence be restored, and the necessary funding provided, to support these critical activities.

We also believe that in order for the State Department to run efficiently in an increasingly “wired world,” its worldwide information technology assets must be updated. There has been progress in this area, but more could be done. This Commission urges Congress to provide sufficient funding to ensure the full completion of this effort.53

U.S. Ambassadors and embassies play critical roles in promoting U.S. national security goals overseas. We therefore recommend that all other Ambassadors, including the U.S. Permanent Representative to the United Nations, be brought under the authority of the Secretary of State for policymaking and implementation, without altering their representational role on behalf of the President.

The President should also take steps to reinforce the authorities of all U.S. Ambassadors. Ambassadors should be responsible for planning and coordinating the activities of all the agencies at each mission, including U.S. assistance and law enforcement activities. The Ambassadors should formulate a comprehensive, integrated mission plan and recommend to the Cabinet secretaries an integrated country budget. The new State Department Under Secretaries should be advocates for their Ambassadors’ budget priorities in Washington’s interagency budget deliberations. We further recommend the following:

53 The Commission supports the recommendation of the Overseas Presence Advisory Panel to upgrade immediately the State Department’s information and communications technologies by providing all overseas staff with Internet access, e-mail, a secure unclassified Internet website, and shared applications, permitting unclassified communications among all agencies around the globe. See the Report of the Overseas Presence Advisory Panel, America’s Overseas Presence in the 21st Century (Washington, DC: November 1999), p. 7.

● 23:The President should ensure that Ambassadors have the requisite area knowledge as well as leadership and management skills to function effectively. He should therefore appoint an independent, bipartisan advisory panel to the Secretary of State to vet ambassadorial appointees, career and non-career alike.

This Commission also believes that the Secretary of State, on behalf of the President, should pursue urgently the process of “right-sizing” all American posts overseas. The process must ensure that embassy activities are responsive to emerging challenges and encourage greater flexibility in the size and concept of embassies and consulates to serve specialized needs.54 Embassies should also be reorganized into sections reflecting the new State Department organization: political, security, and economic/transnational affairs.

egions will become more important in the emerging world of the 21st century. State Rborders no longer contain the flow of refugees, the outbreak of ethnic violence, the spread of deadly diseases, or environmental disasters. Humanitarian and military operations will often depend on access rights in many different countries. As regional political and economic organizations gradually evolve outside Europe, they may begin to take on roles in fighting such transnational dangers as crime, drugs, and money laundering. The United States needs flexible ways to deal with these regional problems.

Today, U.S. Ambassadors are accredited to individual states. No mechanism exists for them to coordinate their activities regionally. The unified military commands are regionally based, but their planning and operations are focused primarily on military contingencies. Every regional Commander-in-Chief (CINC) does have a Political Adviser from the State Department, but there is no systematic civilian foreign policy input into military planning. When a crisis occurs, coordinating the various civilian activities (humanitarian assistance and police forces) with military activities (transport or peacekeeping operations) remains very uneven. More fundamentally, a gap exists between the CINC, who operates on a regional basis, and the Ambassador, who is responsible for activities within one country.

In light of these circumstances, and fully mindful of the need to reinforce the goals of the new State Department organization proposed above, the Commission encourages the departments and agencies involved in foreign operations—State, Defense, Treasury, Commerce, and Justice— to cooperate more fully in regional planning. Specifically the President should:

● Establish NSC interagency working groups for each major region, chaired by the respective regional Under Secretary of State, to develop regional strategies and coordinated government-wide plans for their implementation;

● Direct the Secretary of Defense to have regional CINCs institute a process through their Political Advisers to involve the Ambassadors in their region in their military planning; and

54 The Overseas Presence Advisory Panel made this recommendation in November 1999. The Panel concluded that significant savings are achievable from right-sizing U.S. embassies; e.g., a ten percent reduction in all agencies’ staff would save almost $380 million annually. The Secretary of State has taken steps to implement this recommendation.

● Direct the Secretary of State to instruct the regional Under Secretaries to meet at least semi-annually with the ambassadors located in their region (with one such meeting each year being held in the same general location as the regional CINCs).

he implementation of these recommendations concerning the Department of State in Tall its various aspects, and their budgetary implications, is a complex undertaking. As noted, the Commission’s recommendations involving the NSC processes and staff could be implemented immediately. The problem will be that, to have any chance of returning to the NSC’s more traditional roles, the State Department needs to be strengthened well beyond the designation of a strong Secretary of State. Congressional action will be required to implement the proposed reorganization. With respect to the U.S. overseas presence, the President has the authority to carry out the Commission’s recommendations. We urge him to use that authority forthwith.

D. DEPARTMENT OF DEFENSE

he Department of Defense (DoD) protects the American people and advances the Tnation’s interests and values worldwide. It also plays a critical role in maintaining global peace. And it stands in dire need of serious reform.

DoD’s current organization, infrastructure, business practices, and legal and regulatory structure evolved during the Cold War in ad hoc and incremental ways. Many commissions have addressed DoD structure over the years and offered recommendations for reform. Some have been implemented, but this Commission believes that much still needs to be done. In particular:

● DoD’s policy organization is outdated and overly complex;

● Major staff roles and responsibilities are ill-defined, with duplication and redundancy the rule, not the exception;

● Supporting infrastructure is highly inefficient and consumes a major portion of the DoD budget;

● The present process for programming and budgeting military forces generates strategic postures not very different from those of the Cold War despite vastly changed strategic realities;

● The weapons acquisition process, which is slow, inefficient, and burdened by excessive regulation and politicization, has become a burden on a defense industry is already in the midst of a financial crisis; and

● The process by which force structure planning occurs is not appropriately aligned with the current global security realities.

The key to the success of any program of reform will be direct, sustained involvement and commitment to defense reform on the part of the President, Secretary of Defense, and Congressional leadership. The new Secretary of Defense will need to be personally engaged. The challenges are too great to delegate responsibility to others. His central task will be to persuade Congress to accord him the flexibility he needs to carry out the Commission’s recommendations,

and to contain Congress’ desire to micro-manage DoD processes through crippling laws and regulations.

Resource issues are also at stake in Defense Department reform. America’s global commitments are so extensive, and the costs of future preparedness are so high, that significantly more resources will be required to match means to ends. The potential mismatch ahead between strategy and resources can be mitigated in the longer run by generating savings from within the Defense Department through extensive management reform. Not only will the Defense Department save money that it needs for its core responsibilities, it may also increase Congress’ willingness to shrink the mismatch between means and ends in the nearer term.

Policy Reform

he Under Secretary of Defense for Policy supports the Secretary of Defense in his Trole as a member of the National Security Council, and helps him to ensure that the multiplicity of DoD’s defense and military activities are guided by the President’s overall national security policies. The structure of the Policy staff has evolved over many years as a result of the wishes of individual Secretaries and various Congressional mandates. Today, the office retains its traditional focus on security assistance and alliance relations. It has also expanded its mandate to foster defense relationships throughout the world as well as to participate in such functional activities as nuclear threat reduction, humanitarian assistance, and counter-drug efforts. At the same time, such policy activities as export controls and arms control verification have been given to the recently consolidated Defense Threat Reduction Agency.

The most recent reorganization places little emphasis on strategic planning, though the Strategy and Threat Reduction office is involved to some extent in defense strategy and contingency planning. Regional and functional responsibilities are dispersed among Policy’s three offices. The office of International Security Affairs covers Europe, Asia, Middle East, and Africa. A Congressionally-mandated assistant secretary deals with Special Operations and Low- Intensity Conflict (SOLIC) as well as Inter-American affairs, terrorism, drugs, peacekeeping, and humanitarian operations. The Strategy and Threat Reduction office focuses on the functional areas of nuclear weapons and missile defense, counter-proliferation and threat reduction, and the regional areas of Russia, Ukraine, and Eurasia. The result is a very complex structure that makes coordination difficult within the Defense Department and with other government agencies.

This Commission therefore recommends some modest but important reforms, as follows:

● 24: The Secretary of Defense should propose to Congress a restructuring plan for the Office of the Under Secretary of Defense for Policy that would abolish the office of the Assistant Secretary for Special Operations and Low-Intensity Conflict (SOLIC), and create a new office of an Assistant Secretary dedicated to Strategy and Planning (S/P).

We believe that a separate Assistant Secretary of Defense for Special Operations and Low Intensity Conflict is no longer needed, for these activities are now widely integrated into U.S. strategy, plans, and forces. Special operations can and should be addressed like all other mature missions within the department’s Major Force Program process. The other regional activities of SOLIC would be transferred to other parts of the policy office. But a new office of Strategy and Planning (S/P) should be created, with responsibility for leading and coordinating

DoD planning processes. This office would also support the Secretary of Defense in the NSC-led strategic planning process as well as the Joint Staff’s military contingency planning process.

Structural Reform

ast efforts to reform the Defense Department have emphasized the following three P general principles.55 DoD civilian and military staffs need to focus on their core roles and responsibilities. The department should eliminate unnecessary layers, avoid duplication of activities, and encourage the delegation of authority. Many defense support activities should be outsourced to the private sector and others fully privatized. The Commission supports these overall goals and, more specifically, recommends the following:

● 25: Based on a review of the core roles and responsibilities of the staffs of the Office of the Secretary of Defense (OSD), the Joint Staff, the military services, and the CINCs, the Secretary of Defense should reorganize and reduce those staffs by ten to fifteen percent.56

A comprehensive review of staff sizes and structures must follow from clear definitions of each staff’s mission, and core competencies should be established around those missions. All activities peripheral to a staff’s main missions should be curtailed or eliminated.57 In the Commission’s view, mandatory reductions will force the staffs to eliminate redundancies among them and unnecessary layers within them. Staff activities that can be downsized include:

—OSD program management involving special operations, humanitarian assistance, and counter-drug programs;

—Joint Staff regional and manpower offices, as well as their use of the Joint Requirements Oversight Council (JROC) and the Joint Warfighting Capability Assessment (JWCA) processes, to evaluate infrastructure and service support programs;

—Service regional planning offices, some acquisition oversight, as well as the duplicate manpower activities of the military and OSD staffs;

—CINC program analysis activities and some sub-unified and component command headquarters.

55 Many studies have endorsed such principles, including GAO studies in 1976, 1978, 1996, 1999, and 2000, as well as the Rockefeller Committee, the Rice Report, the Packard Commission, the Senate Armed Services Committee study leading up to Goldwater-Nichols, the Commission on Roles and Missions, the Hicks & Associates study, the Defense Reform Initiative, and the BENS (Business Executives for National Security) Tail-to-Tooth Commission. 56 We are speaking only of these specific staff roles, not of DoD civilian personnel in general. We are aware that, in this more general category, there has been a reduction of approximately 35 percent since 1990. 57 At the same time, our discussion of the Civil Service in Section IV.D, specifically in recommendation 42, calls for a 10-15 percent personnel float to allow for adequate professional training should be introduced in civilian staff offices within OSD. In other words, while we advocate cutting staff slots by 10-15 percent, the actual number of civilian employees working in OSD staffs need not change significantly.

In the case of Joint Forces Command (JFCOM), the Commission strongly urges that its responsibilities be carefully defined and limited. Many Joint Staff activities have been divested to JFCOM and new missions have been added, including homeland security, joint training, and joint experimentation. Some have suggested further that JFCOM represent the CINCs in the requirements definition process. Since the JFCOM commander is already dual-hatted as NATO’s Supreme Allied Commander-Atlantic (SACLANT), a span of control problem looms with the steady expansion of his duties.

ut realigning these staffs is not enough. DoD’s supporting infrastructure needs to be Breduced as well, both because it holds the promise of giving better support to the nation’s military forces and because it will free up significant resources for modernization.58

Roughly half of DoD’s infrastructure falls into two categories: central logistics and installation support. More than 75 percent of DoD’s infrastructure resides within the military services and, in this fiscal year, will consume $134 billion. This system consists of approximately two-dozen defense agencies and field activities whose accounts are scattered across various program and budgeting elements.

Since these infrastructure activities do not operate according to market forces, it should come as no surprise that business costs and practices are not competitive with the civilian sector. Most defense agencies place little emphasis on achieving performance goals based on measurable outputs. Many also suffer from conflicting supervision from OSD and the military services, while at the same time receiving strong advocacy from the Congress bent on protecting local constituent jobs and installations. Several defense agencies and field activities have a combat support role, which adds the difficulty of having to harmonize business efficiency with military effectiveness.

Efforts over the years to reduce DoD’s infrastructure have focused in part on outsourcing various activities to the private sector. Outsourcing guidelines are found in OMB Circular A-76, but the process is cumbersome and bureaucratic, often taking two to four years to complete for each major initiative. Moreover, the Circular A-76 process involves competition between the private sector and an ongoing government activity. The “competition” is inherently biased against private business because the government’s “bid” deflates true operating costs and hides overhead expenses. This sharply limits the applicability of the Circular A-76 process.

Given the significant obstacles to reducing, consolidating, and restructuring the Defense Department’s supporting infrastructure, the Commission recommends the following:

● 26: The Secretary of Defense should establish a ten-year goal of reducing infrastructure costs by 20 to 25 percent through outsourcing and privatizing as many DoD support agencies and activities as possible.

Given the political sensitivities surrounding such steps, an independent and bipartisan commission should be established to produce a plan to achieve this goal. We propose that implementation of the plan rely on a joint Executive-Legislative Branch mechanism similar to the Base Realignment and Closures (BRAC) process.

58 Infrastructure is defined as non-combat activities and support services that commonly operate from fixed locations (e.g., installation support, central training, central medical, central logistics, acquisition infrastructure, central personnel, and central command, control, and communications.)

In putting together such a plan, this new commission will need to explain to Congress what the process will entail. This plan should develop common definitions of what constitutes a “support activity.” It should include all the various categories of supporting infrastructure, including both Service and civilian DoD agencies. It should then define in general terms what should remain government owned and operated, what should be outsourced, and what should be privatized.59 In principle, it would seem that intelligence, acquisition, and criminal investigation should be consolidated, but remain government owned and operated. Some aspects of health, personnel, and many support functions on local installations should be outsourced. Logistics, accounting, auditing, aspects of defense communications, military exchanges, and commissaries should be privatized.60 Finally, the plan should lay out a five-year road map for accomplishing the outsourcing, and a ten-year road map for privatization—recognizing that outsourcing can be a useful step toward privatization.

In the meantime, DoD and the Office of Management and Budget need to revamp the Circular A-76 guidelines in ways to make the selection process quicker and the competition more equitable. This will require working with Congress, because steps to privatize substantial portions of the DoD infrastructure will invite intense Congressional scrutiny.

The failure to significantly reduce DoD’s infrastructure could prove very injurious in the long run. Attempts to save money merely by squeezing savings from the current system—but without fundamentally restructuring that system—will eventually jeopardize the provision of adequate funding for core needs such as modernization and personnel. If the Congress will not provide the funding needed to compensate for departmental inefficiencies, then it will need to explain why it also obstructs the department’s own efforts to become more efficient.

Process Reform

hree major areas of DoD responsibility cry out for particular scrutiny: the Tprogramming and budgeting process, the acquisition process, and the force planning process. We take these in turn.

For the past thirty years, the Defense Department has produced its budget through its Planning, Programming, and Budgeting System (PPBS) process. Theoretically, the PPBS process is top-down in design, beginning with the National Security Strategy (NSS) as guidance for both the National Military Strategy (NMS) and the Defense Planning Guidance (DPG).61 In reality, however, the PPBS process is predominantly a “bottom-up” system driven by existing programs and budgets.

The problems of the PPBS process are well known. The PPBS phases operate semi- autonomously rather than supportively, creating unnecessary turbulence and encouraging the

59 Outsourcing combines government ownership with private contracting. Privatization means reducing or eliminating government ownership and getting DoD out of the process of competing with private industry. Outsourcing can achieve 10 percent savings; privatization may achieve savings of up to 20 percent in some sectors. 60 Commissaries and exchanges would still exist, but they would be privately owned and operated. 61 Goldwater-Nichols mandated the National Security Strategy as a way for the President to describe the country’s broad national security directions. Required by law every January, the NSS is habitually late, and its objectives and goals have never been prioritized. By this Commission’s definition, the NSS is not a “strategy” document because it fails to relate ends to means.

repeated revisiting of prior decisions. Guidance to the Services and other DoD components for program and budget development tends to be both vague and late. Major program decisions are often delayed until the end of the budget development phase, in turn causing hurried and often inaccurate adjustments to budgets and to the Future Years Defense Program (FYDP). Frequently, long-term modernization plans are disrupted during annual budget cycles. Minor details receive inordinate attention. As a result, the PPBS process fails to provide the Secretary with the means to guide the budget process strategically. It has contributed much to the department’s tendency to replicate existing force structure and its inability to advance the transformation of U.S. forces to deal with a post-Cold War environment.

The PPBS must be restructured to link it directly to strategic goals and to reduce its obsession with mundane program and budgeting details. The department’s planning should be informed by the strategic guidance emanating from the President and NSC principals, as specified above in Section III.A, and then the Secretary of Defense should translate that guidance into the various internal DoD processes that produce Defense Department programs and budgets.

The most critical step is for the Secretary of Defense to produce defense policy and planning guidance that defines specific goals and establishes relative priorities. He needs to do this through a departmental process that involves serious analysis and debate of the most critical issues. Real strategic choices must be defined and decisions made. The program review phase of the PPBS could then measure progress in achieving his policy and planning objectives. This Secretarial guidance would also provide the basis for defining the National Military Strategy and for conducting the Quadrennial Defense Review (QDR).

The Commission believes that the QDR should then become the foundation of the PPBS. To be truly effective, we recommend:

● 27: The Congress and the Secretary of Defense should move the Quadrennial Defense Review to the second year of a Presidential term.

By statute, the QDR is to be completed in the first year of a new administration. Such a deadline, however, does not allow the time or the means for an incoming administration to influence the QDR’s outcome. The Presidential appointment process now extends six to nine months.62 The new President’s overall vision and strategic goals also take time to develop and so cannot inform the review. Meanwhile, the new team inherits the supporting analysis from the previous administration and Joint Staff. Past practice suggests that the DoD bureaucracy has figured out how to use the QDR process to preserve the status quo, while outgoing senior officials have rarely acquired any stake in the process. Postponing the QDR until the second year would remedy these problems, and would still be available in time to influence the second of four budgets that an administration develops entirely on its own.

For the department to be able to develop true strategic alternatives, it will need to focus on resources. We therefore recommend a second change in the QDR.

Despite the end of the Cold War and the emergence of a newer, less certain strategic environment, the percentage of budget resources that is allotted to the Services and defense agencies—called Total Obligation Authority (TOA) in the defense budget—has not changed appreciably over the last ten years. Only minor force structure alternatives have been generated;

62 In our discussion of Presidential appointments in Section IV, we recommend shortening this period.

defense programs remain essentially unchanged, and modernization funding keeps getting pushed into the future. Therefore, we recommend the following:

● 28: The Secretary of Defense should introduce a new process that would require the Services and defense agencies to compete for the allocation of some resources within the overall Defense budget.

A structured process of competition for resources, moored within the QDR process and focused on the allocation of TOA, would produce innovative choices to fill broad mission requirements. One way this competition could be accomplished is for OSD to retain five to ten percent of the TOA and then reallocate it during the QDR to promising systems and initiatives— be they those of the Services, DARPA, or Joint programs. The Secretary must accompany the TOA holdback with the identification of his high-priority strategic requirements that must be funded. Moreover, in this process, the Services and defense agencies would be required to identify their highest and lowest priority programs.63 This would give the Secretary a means of killing low-priority programs and reallocating the resulting savings to more promising areas during subsequent PPBS cycles.

For any TOA reallocation process to be viable, two things must happen. First, the Secretary will need to rely on his OSD staff, and not rely only on the Service and Joint Staffs. The OSD staff will also need to coordinate the analysis that will inform the discussion of the alternatives. OSD internal reforms will be key to its ability to carry out these tasks.

The Commission proposes a final change to improve the QDR process. The QDR should be restructured so that it defines defense modernization requirements for two distinct planning horizons: near-term (one to three years) and long-term (four to fifteen years). The CINCs should have primary influence on readiness in the near-term execution horizon. The Services should focus on modernization, personnel, and infrastructure throughout the long-term planning horizon. The Joint Staff should focus on joint issues and force interoperability planning. The OSD staff would exercise broad oversight and ensure that QDR planning followed the President’s and the Secretary’s strategic guidance and was based on realistic political and resource assumptions.

Flowing from the QDR process, the PPBS process must be reoriented in ways to conform to political reality and achieve better coordination among the civilian and military staffs. To do this, the calendar should be revamped. Policy and planning guidance should be issued biennially and prior to when the Services start building their initial programs and budgets. The Joint Staff and OSD would then develop the most critical issues for review by the Secretary in the April to August time frame. Final decisions would then be postponed until after Congress had done its markup of the previous year’s budget, so as to integrate their decisions into the upcoming budget. Final Presidential approval would occur by the end of the year. High-speed computers now allow the programming and budgeting phases to be compressed and to take account of Congressional action. The PPBS need not be wholly linear in execution.

he United States equips its military forces through a complex process that depends to Ta large degree on the private sector, but also involves an enormous number of laws

63 Note the Services and defense agencies must identify “programs,” rather than “funds.” Otherwise they will stretch programmed procurement to free budget year “funds,” but increase future unit costs by doing so.

and regulations that compose a thick web of government oversight. The acquisition process is a hybrid process, with characteristics of both a free enterprise system and a government arsenal system. Operating within this environment is a small group of primarily defense-oriented companies, a larger number of basically commercial companies with some involvement in defense procurement, and a growing number of companies, particularly high-tech companies, to which dealing with the Department of Defense is an anathema. Importantly, all of these companies must compete in the open marketplace for both financial capital and skilled workers and managers.

A worrisome number of studies in recent years have pointed to the precarious health of many of the nation's most critical defense suppliers.64 Many businesses are unable to work profitably with DoD under the weight of its auditing, contracting, profitability, investment, and inspection regulations. These regulations also impair DoD’s ability to keep abreast of the current pace of technological innovation. Weapons development cycles today average nine years in an environment where technology changes markedly every twelve to eighteen months in Silicon Valley—and the trend lines continue to diverge.

Competition is essential within the defense sector to achieve both affordability and innovation. Yet the current low level of modernization activity often makes competition impractical. In addition, competition is affected adversely by the exacting social and ethical standards to which DoD is held. Such standards impose restrictions that make it virtually impossible for DoD to be efficient and aggressive in achieving cost savings.

Despite some recent improvements, the trends of the last decade are very troubling and, if they continue, could severely endanger America’s long-term military capability. A strategy of standing back and totally relying on the forces of the marketplace will likely fail. The United States must look to the health of the U.S. defense industrial base just as it takes responsibility for the viability of its Army, Navy, Air Force, Marine Corps, and Coast Guard. This does not mean government management of the defense industrial base. It does mean creating an environment where good performers can succeed and prosper.

In place of a specialized “defense industrial base,” the nation needs a national industrial base for defense composed of a broad cross-section of commercial firms as well as the more traditional defense firms. The “new technology” sectors must be attracted to work with the government on sound business and professional grounds; the more traditional defense suppliers, who fill important needs unavailable in the commercial sector, must be given incentives to innovate and operate more efficiently.

f this is to be accomplished, the defense acquisition process will need fundamental Ireform. To guide this reform, the Commission offers these overarching principles.

64 See John Harbison, Thomas Moorman Jr., Michael Jones, and Jikun Kim, “U.S. Defense Industry Under Siege—An Agenda for Change,” Booz-Allen & Hamilton Viewpoint, July 2000; “Preserving a Healthy and Competitive U.S. Defense Industry to Ensure our Future National Security,” Defense Science Board Task Force briefing to USCNS/21, June 2000; “U.S. Space Industrial Base Study,” DoD and NRO Co-sponsored Study by Booz-Allen & Hamilton, briefed to USCNS/21, June 2000; “The National Crisis in the Defense Industry,” study briefed by the Scowcroft Group and DFI International to USCNS/21, June 2000.

● The nation needs to restore the balance of funding among modernization, readiness, and force structure. The procurement “holiday” affecting modernization has produced a highly unbalanced force for the future.

● The government should encourage small, agile, high-tech companies to enter defense competitions, as they represent both a source of innovation and an inspiration to new efficiencies.

● The department’s overall modernization strategy should give priority to fundamental research; substantially increase prototyping; stress the evolutionary upgrading of platforms throughout their life; and keep commitments to long-term, stable production.

● To the extent practicable, the acquisition system needs to be open to continuous competition, and open to new ideas from companies of all sizes. It should focus on “outputs”—i.e., measurable products, time, and cost—as opposed to “process.”

● The weapons development process should rely on competition to solve performance problems and keep down costs, with commensurate rewards for those who succeed.

● The acquisition system should use the market to decrease system costs and improve schedule and system performance. The current system of centralized planning, the inappropriate use of government agencies to perform commercial tasks, and the lack of managerial accountability stifles efficiency.

● The government, not the private sector, should pay the costs that result from explicit government demands and requirements in the acquisition process. At the same time, companies deserve no proprietary entitlement to publicly-financed designs and technology.

Turning to more specific recommendations, this Commission is concerned that the current acquisition system does not support the timely introduction of new technologies. Developing and producing weapon systems takes too long.65 Some major systems are not even completed before the parts they depend on from the commercial sector are outmoded and no longer available. Worse, while the commercial world is shortening cycle times, DoD is not—so the gap between commercial and government practice continues to widen. This is the case in large part because of the inflexibility built into federal regulations. We therefore recommend the following:

● 29: The Secretary of Defense should establish and employ a two-track acquisition system, one for major acquisitions and a second, “fast track” for a limited number of potential breakthrough systems, especially in the area of command and control.

The two-track system would accept an accelerated, higher-risk approach to the development of breakthrough capabilities, especially in areas undergoing rapid change in the state of the art. Simultaneously, a more conservative approach is appropriate for more conventional programs. One size does not fit all.

65 In DoD acquisition jargon, the period from requirement definition to production of a weapon system is referred to as its “cycle time.”

The Commission also believes that the development of new technologies must be emphasized and properly financed. Development programs should generally be administered through contracts that pay for the costs plus a fee, with the fee being tied not only to system performance but also to meeting the schedule within costs. We must eliminate the pressures whereby firms need to recover R&D costs and losses during the production phase. Full funding of R&D programs is an essential part of the acquisition process. Correspondingly, fixed-price contracts are appropriate for programs whose scope and risk are well understood and manageable. As we have already suggested in Section II above, the nation must also invest heavily in basic research in university, corporate, and government laboratories.

rototyping of a weapon system, which allows the possibility that some attempts will Pfail, and then developing and producing the most promising concepts, will get the “kinks” out of systems early and shorten the development cycle time. The initial costs are higher to the Services, which is why prototyping is often resisted, but the total program costs promise to be lower. In addition, it will help create and maintain viable defense suppliers and their critical design teams, even in a low-production environment. We therefore recommend the following:

● 30: The Secretary of Defense should foster innovation by directing a return to the pattern of increased prototyping and testing of selected weapons and support systems.

Prototyping should be paired with incremental delivery and evolutionary upgrades of existing operational systems. This will allow the product to remain current with continuing technological developments. It has the further advantages of reducing the time needed to deliver a new capability to the war fighter and of decreasing production risks significantly.

The Defense Department cannot depend entirely on speeding up its integration with the commercial sector. The nation also needs to invest in selected research programs where military systems have no commercial counterparts. Unfortunately, large and complex DoD research and development projects generally suffer from a distortion of cost competition since companies often underbid the R&D phase in hopes of securing funding in more profitable production phases. The Commission thus recommends that the laws prohibiting the use of Independent R&D (IR&D) funding for program support be more broadly interpreted and more strictly enforced.

rogram turbulence, often stemming from lack of funds or from budgetary instability, Pis the primary cause of inefficiencies and cost overruns in DoD programs. This budgetary instability has several sources. One is the current reality of the resource allocation process itself within DoD, which unfortunately often takes all resources into account during budget reductions—including acquisition programs. This normally results in a known and deliberate underfunding of previously approved programs. Another problem is the acquisition system itself, which suffers from cost overruns and program extensions. Lastly, the Congress often uses small “takes” from large programs to reallocate funds to other priorities without realizing or understanding the problems this creates in having to reprogram funds, write new contracts, and establish new schedules.

We realize that many commissions, and ever more studies, over the past several years have recommended two-year budgeting and multiyear procurement as a way of limiting program turbulence. If these forms of budgeting were introduced, the disincentive to disrupt acquisition programs would appropriately be very high. We also know that Congress has doggedly refused to

take such proposals seriously. Congress lacks confidence in DoD’s ability to execute such a budget given past weapons cost overruns. Furthermore, appropriating funds on a yearly basis gives Congress a greater ability to influence the Defense Department’s policies and programs.

Therefore, rather than propose two-year budgeting across the entire Department of Defense, we focus on the single area where two-year budgeting makes the most sense and stands to do the most good. We recommend the following:

● 31: Congress should implement two-year defense budgeting solely for the modernization element of the DoD budget (R&D/procurement) because of its long-term character, and it should expand the use of multiyear procurement.

Such steps would markedly increase the stability of weapons development programs and result in budgetary savings in the billions of dollars. For this to happen, however, the Secretary of Defense must impose discipline in the decision-making process. It is already difficult to start new engineering development programs. It should be made even more demanding, ensuring that the military requirements are understood and enduring, and that the technology, concepts, and funding are all well in hand. Once a program is approved, it should be equally difficult to change it. The Commission also notes that it is sometimes better to eliminate some programs early than to absorb the costs of constantly extending programs and procuring limited numbers of weapons at high unit costs. To accomplish this, Congress will need to let decisions to kill programs stand as well as support DoD budgeting and procurement reforms.

If the government will not take the measures to improve program stability by introducing two-year budgeting in modernization and R&D accounts, and more broadly adopt multiyear funding, it cannot expect private industry to obligate itself to suppliers, or to assume risks on its own investments with little prospect of long-term returns.

stimating costs is very difficult, especially in the early stages of weapons Edevelopment. As a result, costs often escalate significantly. Introducing immature technologies and concepts into engineering development can lead to a major waste of resources. Constant modifications in program specifications can significantly drive up costs. The acquisition system today is characterized by underfunding, turbulence, occasional lack of competition, and a propensity to follow routine processes rather than focus on producing on-time results. In addition, the current system gives incentives to program offices to spend all their annual appropriation regardless of need. We therefore recommend that the Defense Department allocate resources for weapon development programs by phase rather than in annual increments.

This approach to resource allocation within DoD should include the provision of financial reserves to resolve unanticipated problems, as is common commercial practice. This can be accomplished by providing contingency funds in advance to deal with program uncertainties. To ensure their proper use, such funds should be placed not in the program office, but under the control of the Service acquisition official. Fully funding programs during each phase—and especially the early phases—will decrease program turbulence and provide a basis for more reliable budget and schedule forecasting. It will also allow better program management and produce significant cost savings.

obust experimentation and exploration of innovative technologies are essential, but Rthere must also be an effective screening process for the selection of mature, affordable technologies before entering full-scale development. DoD currently uses a complex acquisition schedule, where problems associated with technology generation, prototyping, and engineering development often migrate into production. The acquisition system inadequately addresses concurrent risk. Worst of all, testing procedures are generally viewed (and feared) as report cards in the weapon development process. This discourages program managers from using tests to attain knowledge, demonstrate technology maturity, and assure the viability of key manufacturing processes.

We therefore recommend that the recently adopted three-phase acquisition process be institutionalized. Those three phases are technology development, product development, and production. Testing should be a key part of the technology development process as well as the last two phases.

A three-phase system would focus on maturing robust technologies prior to decisions on development, and then on identifying problems earlier in engineering development to minimize risk and cost in production. Some overlap between phases is inevitable, but steps can be taken to control the concurrent risk. This will require that DoD adopt a “knowledge-based” evaluation and testing procedure to establish technology maturity, to evaluate risks, costs, and operational limitations. Testing should follow commercial practices, which test early, hard, and often to identify problems, to generate “knowledge,” and to guide subsequent program development. Commercial testing is also more systematic. Subcomponents are thoroughly tested before they are combined into components, components are thoroughly tested before they are combined into subsystems, and so forth.

We believe that a clear three-phrase process—with bright red stop signs erected to prevent premature entry into subsequent phases—will help in every respect, and we applaud DoD’s recent move in this direction. More importantly, this Commission recommends that program reviews focus on the need, merit, and maturity of the program, and not be used to reopen past debates about the wisdom of the original program approval.

ongress and others have put in place an accumulation of laws and regulations to Cprotect against fraud, waste, and abuse, the net effect of which is to create a system of requirements and acquisition oversight that creates the very waste it was intended to prevent.

The “regulation cost” in DoD and the defense industry has been estimated by various observers to be on the order of 30 percent of the acquisition budget, while the indirect management and oversight burden in the nation’s commercial sector ranges from 5 to 15 percent—and is falling. The Defense Contract Audit Agency (DCAA) and the Defense Contract Management Command (DCMC) employ a “division equivalent” of auditors, and these are complemented by multitudes of various Service auditing organizations. They create costly inefficiencies and often lead to inferior products.

Moreover, the DoD oversight process, by engendering an adversarial system, encourages timid decision-making and forces industry to go to extremes in accounting and business procedures. This system, which is based on institutional and individual distrust, needs to be replaced with one that conforms better to normal business practices. The Defense Department needs to mimic the nation’s private sector—again, to the extent possible—in reducing costs, improving product development cycles, and adapting rapidly to new technologies.

Specifically, federal acquisition regulations must no longer weigh down business with so much gratuitous paperwork and regulation that they discourage firms from doing business with the government. While the requirement for public accountability can never allow the defense acquisition system to mirror image the private sector completely, excess regulation can and should be significantly reduced. We therefore recommend the following:

● 32: Congress should modernize Defense Department auditing and oversight requirements by rewriting relevant sections of U.S. Code, Title 10, and the Federal Acquisition Regulations (FARs).

The goal should be to reduce the numbers of auditors and inspectors for the DoD weapons acquisition system to a level commensurate with the marginal benefits produced by such auditing and inspection. Compared to leading companies in the commercial sector, this would entail an approximate reduction within DoD of 50 to 60 percent.

Rewriting the FARs should be premised on two principles. First, the government must pay for the legitimate costs that it causes to be incurred for what it demands in the acquisition process. The government must reimburse legitimate costs so that contractors may invest in new technology. The government must also share cost savings to create incentives for efficiency. Progress payments, covering a legitimate cost of business, should be automatically indexed to interest rates. Second, the FARs must encourage competition and provide incentives for timely production. The rewritten FARs must have the flexibility that promote a profit policy under which firms that perform well are rewarded well—and firms that perform poorly are penalized or terminated, or both.66

To make this recommendation work, DoD will have to exercise significant leadership and work with Congress and industry to change the existing culture throughout the acquisition and procurement infrastructure. But that is not the only problem. Both industry and government officials often fail to take advantage of flexibilities in government regulations because it is less risky for them to follow old procedures. Positive actions taken in the past decade have paid off only when both DoD program managers and industry changed their way of doing business.

DoD’s goal to expand participation in the defense industrial base will be helped significantly by introducing competition, placing emphasis on timely output versus process, increasing the funding for technology experimentation, transitioning more quickly from technology development into production, fostering program stability, reducing the oversight burden, changing regulations, and revamping the penalty focus of today’s system.

inally, beyond the other structure and process recommendations, this Commission Fwould offer its suggestions on the force structure process. As the Commission indicated in its Phase Two report, the concept of fighting two major theater wars (2MTW) near- simultaneously, the current threat basis for U.S. military force planning, is not producing the

66 It might be appropriate for the revised FARs to test a modified version of the award fee process tied to schedule, cost, and performance. This discretionary award could range from a higher-than-present level to a moderately negative level. The determining evaluation would be based upon separate periodic input from the program manager, the contractor, and outside auditors who would advise either the Service acquisition official or an independent board with authority to determine the fee.

military capabilities this nation requires.67 It is difficult to envision, at this period in history, two opponents capable of challenging the United States at the theater level of conflict, although we see the value in maintaining the capability to deter opportunists who might seek advantage while the United States was otherwise engaged. Indeed, the commitment for concurrent, all-out engagement in two regions of the world, without strategic prioritizing and sequencing of campaigns, is in itself an extraordinary notion. We believe it more useful to plan and retain readiness for a major conflict, while also securing the homeland and responding to small or medium-scale conflicts, international terrorism, peacekeeping, humanitarian actions, and other commitments requiring U.S. military support.

We conclude that the concept of two major, coincident wars is a remote possibility supported neither by actual intelligence estimates nor by this Commission’s view of the likely future. Thus, it is no longer an appropriate basis for U.S. force structure planning and should be replaced by a new approach that accelerates the transformation to capabilities and forces better suited to the present and prospective security environment.

The Commission believes that the military challenges of the next ten to twenty years will be an extension of those of the last decade. The United States will have no peer competitor, but it will face increasing threats to its homeland from a widening array of actors on the global stage with access to weapons of mass destruction and disruption. The likelihood of interstate conflict threatening to U.S. interests will remain diminished, while intrastate conflict in areas important to U.S. security will increase.

This Commission believes the United States should maintain full capabilities of the kind it now possesses to prevail against the possible emergence of a theater-level opponent. The United States, however, must further improve its ability to deal with small to medium violent conflicts, often occurring simultaneously, which require very rapid, forced entry response capabilities, as well as long-term stability operations in tense, post-conflict scenarios. We should thus strive to achieve land, sea, and air capabilities suitable to this security environment that possess speed, agility, lethality, ease of deployment and sustainment, and highly networked connectivity. Demand for peacekeeping and humanitarian duties will likely continue, with their inherent constabulary requirements, and the United States must organize and train for these missions. Finally, new emphasis must be placed on the special needs of homeland security. Accordingly, the Commission recommends that:

● 33: The Secretary of Defense should direct the DoD to shift from the threat-based, 2MTW force sizing process to one which measures requirements against recent operational activity trends, actual intelligence estimates of potential adversaries’ capabilities, and national security objectives once formulated in the new administration’s national security strategy.

In such a capability-based sizing process, force structure planning would proceed from a strategic vision of the current and projected security environment and the national security objectives the new administration seeks to achieve. Sizing would take into account intelligence projections of potential adversary’s capabilities plus actual operational activity trends, reflecting recent demands. Finally, adoption of updated modeling techniques, which this Commission

67 While the military departments have never defined the term MTW, we infer it to require all forms of military capability (land, sea, air) on the scale equivalent to the Gulf War or that envisioned in the past for North Korea.

recommends, would value the synergistic effects of joint forces with modern weapons that are employable in a networked environment.

It would be inappropriate for the Commission to dictate the exact number and type of divisions, wings, and naval battle groups that this nation needs to execute its strategy. We can, however, provide guidance and a mechanism to help the Department move in the necessary direction. Accordingly, the Commission recommends that the Secretary should revise the current categories of Major Force Programs (MFPs) used in the Defense Program Review to focus on providing a different mix of military capabilities. Given the need for transformation, the Major Force Programs should be updated, and new ones created corresponding to the five military capabilities the Commission prescribed in its Phase II report. We expand on those capabilities below.

Strategic nuclear forces must retain the capability to perform the classic role of nuclear deterrence. The future security environment and probable strategic nuclear arms reduction efforts, however, likely will call for appropriately lower numbers of nuclear weapons and delivery systems.

Homeland security forces must possess the ability to deter, protect, and respond to threats to the American homeland. Homeland security is not just a military function; it requires the capabilities and expertise of numerous government agencies, best integrated by this Commission’s proposed National Homeland Security Agency. For DoD’s contribution to this vital mission, the Commission recommends that reserve component forces should be assigned a primary role. They should be trained and equipped to respond as deployable forces to natural, manmade, and/or WMD-triggered disasters. Active duty military forces should be trained to perform these missions in augmenting the reserve component forces.

Conventional forces must be sized and tailored to threats defined by realistic needs and updated force modeling. For the near future, conventional forces of the types now possessed can provide this capability. Fewer such forces, however, will be required to dominate potential threats than have been previously required by current assumptions and models. Given likely limitations on strategic air mobility assets, fast sealift and pre-positioned equipment in regions at risk should receive higher funding priority.

Expeditionary capabilities should be distinguished from “current conventional capabilities” insofar as they are designed to respond to crises very rapidly, operate with much lower logistic requirements in a network-centric environment, and possess technological superiority to dominate any potential adversary in the foreseeable future. Rapid power projection with forced entry ability, from forward locations and afar, must characterize these capabilities which, in the Commission’s view, describes few of the forces the U.S. military now possesses.

Humanitarian relief and constabulary operations will involve all the military services, including the support that has been customarily provided by naval, air, and ground forces. Other government and non-government organizations will undoubtedly be involved, and this should be anticipated in preparing for such missions. The constabulary capabilities should be vested primarily in Army and Marine Corps elements trained and equipped with weapons and mobility resources that will enhance the conduct of such missions, which should be additive to other force structure requirements.

his Commission recognizes the transformation process will produce these five Tcapabilities over time, yet some must mature at a faster rate. Ultimately, the transformation process will blur the distinction between expeditionary and conventional forces, as both types of capabilities will eventually possess enhanced mobility. For the near term, however, those we call expeditionary capabilities require the most emphasis. Consequently, we recommend that:

● 34: The Defense Department should devote its highest priority to improving and further developing its expeditionary capabilities.

This Commission has identified what the U.S. military needs to achieve for the future— how to get there is best left to the responsible experts. We may discover that a transformed U.S. force structure will require a resource and capabilities baseline that is higher than that derived through the current 2MTW construct. Moreover, these transformed forces will be the ones this nation uses to fight all its conflicts, large and small, one at a time or simultaneously. Clearly, the transformation process will require a reprioritization of current resources. Ultimately, the result may be a larger force, or a smaller one, but we are confident that it will be a better force, appropriate to the environment in which it must serve.

E. SPACE POLICY

n its earlier work, this Commission has recognized space as a critical national security Ienvironment.68 In so doing, it affirms current U.S. National Security Strategy, which considers “unimpeded access to and use of space” a vital national interest.69

The United States relies on space for the viability of both its economy and its national defense. Space technologies, such as the Global Positioning System, are already revolutionizing several major industries. The nation’s military and intelligence activities, too, depend increasingly on space. U.S. superiority in space makes possible a military doctrine based on information superiority. U.S. military forces exploit space as the “high ground” for command, control, computers, communications, intelligence, surveillance, and reconnaissance (C4ISR) activities. The U.S. military cannot undertake any major operation, anywhere in the world, without relying on systems in space. Key elements of the U.S. strategic deterrent posture will be maintained in space as will the nation’s ISR systems critical to avoiding strategic surprise. Space will also be a crucial component to any layered defense the United States may construct in the next quarter century against ballistic missiles.

That is why the nation’s space architecture—the infrastructure required to conduct space activities—must serve a multiplicity of commercial, civil, military, and intelligence purposes. Its protection must also be assured against threats that are clearly on the horizon.

Unfortunately, the superiority the United States enjoys today in space is unlikely to persist. Many countries have space capability or access to space. A few states already have the satellite and weapons technology to threaten U.S. space assets, and more will acquire such technology in due course.

68New World Coming, pp. 53-4, and Seeking a National Strategy, p. 9. 69A National Security Strategy for a New Century (Washington, DC: The White House, December 1999), pp. 12.

In terms of defining its space strategy, the United States must balance two related goals. On the one hand, it seems prudent for the United States to seek space superiority, defined by the Defense Department as “that degree of dominance in space of one force over another, which permits the conduct of operations by the former and its related land, sea and air forces at a given time and place without prohibitive interference by the opposing force.”70 On the other hand, the United States should continue to support general international norms that protect space as an international domain where all participants are free to pursue peaceful activities. The problem is that unilateral U.S. steps taken to assure military superiority in space may be seen by others as implying an ability to deny access to space and freedom of action there. Even if that ability is never used, it could complicate the ability of the United States to shape a benign international environment. The United States recognizes space as a global commons, but if it does so without qualification, it risks being surprised and overtaken militarily in a crucial environment by some future adversary.

At the very least, this Commission believes that the United States should pursue a robust ground- and space-based C4ISR capability.71 Because space capabilities take a long time to develop, the United States must also take, in the near- and middle-term, the steps necessary to protect its space assets within the current international legal framework should the need arise.72

n our view, now is the time to reevaluate how both space activities and assets serve Ibroader U.S. national security needs, and then how the U.S. government is organized to manage these assets. The first is required because science and technology are generating a rapid rate of innovation, and that innovation has both commercial and military implications the interplay of which we do not yet fully comprehend. The second is required because, frankly, the current state of affairs is inadequate.

As it happens, other commissions or boards have recently addressed or are currently addressing space issues, and they are doing so in a more comprehensive way than this Commission.73 We endorse their work and offer recommendations that bear, in particular, on issues of structure and process.

Most important, this Commission finds serious problems with the way the existing interagency procedures in the U.S. government deal with space. No standing interagency process for space exists. Neither the NSC staff nor the White House Office of Science and Technology Policy is adequately manned to coordinate space issues. This means that space issues are addressed as they arise on an ad hoc basis. Neither the NSC, the National Science and

70This is how the 1999 DoD promulgated space policy defined space superiority. 71 See Report of the Defense Science Board Task Force on Space Superiority (Washington, DC: Office of the Under Secretary of Defense for Acquisition and Technology, February 2000.) 72 The Outer Space Treaty bans only the deployment of weapons of mass destruction in space, and the ABM Treaty only limits interference with national means of verification with respect to arms control agreements. Meanwhile, even the United Nations Charter, in Article 51, states explicitly that no nation is precluded from taking appropriate defensive measures in any environment. 73 Recent or ongoing examinations of space issues include: Report of the Defense Science Board Task Force on Space Superiority (Washington, DC: Office of the Under Secretary of Defense for Acquisition and Technology, February 2000); “U.S. Space Industrial Base,” Booz-Allen Hamilton report to the NRO and DoD, June 2000; and the Congressionally-mandated “Commission to Assess United States National Security Space Management and Organization.”

Technology Council (NSTC), or the National Economic Council (NEC) integrates U.S. space activities. Hence, the Commission recommends the following:

● 35: The President should establish an Interagency Working Group on Space (IWGS) at the National Security Council to coordinate all aspects of the nation’s space policy, and place on the NSC staff those with the necessary expertise in this area.

Such a working group would include key representatives from the Executive Office of the President (NSC, OSTP, OMB) and stakeholder representatives: the Departments of Defense, State, Transportation, and Commerce, the Director of Central Intelligence, and the Chairman of the Joint Chiefs of Staff.74 The creation of the IWGS would allow space to be considered systematically and consistently as a critical element of U.S. national security policy.

he global presence and responsibilities of the United States, and the demands of the Tinformation age, have placed enormous new requirements for space and information infrastructures. These will create major demands for resources in both the Defense Department and the intelligence community. The problem is that the nation has not developed the concept of a comprehensive national space architecture to guide the allocation of resources.75

A national intelligence Future Imagery Architecture (FIA) does exist, but it has been given woefully inadequate means either to fully process or to disseminate the information collected for its clients in the intelligence community, DoD, and other agencies.76 Rectifying these problems is estimated to cost several billion dollars and no funds have so far been earmarked for this purpose. At present, then, the system for national intelligence imagery collection, processing, and dissemination is not fully integrated. The National Reconnaissance Office (NRO) and the National Imagery and Mapping Agency (NIMA) have failed to provide imagery capability that meets U.S. security needs.77 As currently envisioned, too, the National Missile Defense (NMD) architecture focuses solely on engagement, not on an architecture that integrates the entire spectrum of national and defense-related intelligence, or that covers pre- engagement and post-strike assessments and reconstitution activities. Other space activities, such as those of NASA and NOAA, have been given little attention in thinking about the nation’s space architecture. This is also the case for commercial space activities.

There is within the Defense Department a National Security Space Architect (NSSA) with responsibility for the design and oversight of the nation’s defense and intelligence space infrastructure.78 But this official lacks the means to affect the non-DoD/intelligence space

74 The representation of relevant agencies would be achieved through their departments; e.g., FAA representation through the Department of Transportation, and that of the National Oceanic and Atmospheric Administration (NOAA) through the Department of Commerce. 75 A more detailed definition of space architecture includes: the on-orbit force structure and missions; configurations to include type of sensors, on-board processing, and dissemination; ground control systems and downloading/processing capabilities; frequency spectrum use and deconfliction; multi-mission capabilities; and system protection measures and security requirements. 76 The national Future Imagery Architecture [FIA] is sponsored by the National Reconnaissance Office (NRO). 77 The NRO is responsible for satellite, constellation, and ground operations design and acquisition; NIMA is responsible for imagery product development and dissemination. 78 The NSSA currently reports to the Assistant Secretary of Defense for Command, Control, Communications, and Intelligence ASD(C3I) for DoD-related issues, and coordinates with the Deputy

architecture, much less influence decisions in other departments and agencies. The NSSA does not directly influence programs and budgets and, hence, cannot influence the allocation of resources. This Commission therefore recommends that the existing National Security Space Architect (NSSA) should be transferred from DoD to the NSC staff and take the lead in this effort.

Moreover, the problem of organizing for space policy must also be addressed at levels below the interagency. In the Department of Defense, responsibility for space policy and oversight is dispersed among various elements of the Office of the Secretary of Defense’s (OSD) staff. We recommend establishing one office responsible for oversight of the department’s R&D, acquisition, and launch/operation of its space assets. Coordination of military intelligence activities and long-range intelligence requirements, both within the department and with the intelligence community, should reside in this office. This official would therefore develop all defense-specific space, intelligence, and space architecture policy for DoD, and coordinate these issues at the interagency level. Accordingly, we recommend the Department of Defense create an Under Secretary of Defense for Space, Intelligence, and Information by consolidating current functions on the OSD staff.79

ne of the nation's most valuable forms of critical infrastructure is its space-based Osatellite constellation and ground support facilities. It is also our most vulnerable. Nowhere else does our defense capability rest on such an insecure firmament, even though warning and imagery are unquestionably critical. The concept of critical infrastructure protection highlighted in Section I must be extended to U.S. space networks as well. In light of U.S. reliance on these assets and the present dearth of means to protect them, the Commission endorses the conclusions of the recent Commission to Assess U.S National Security Space Management and Organization, and recommends increased investment in the protection of U.S. space assets, including deployment of a space-based surveillance network.

Such a network will require, first, that the United States be able to detect when its systems are being attacked and then respond. Protective methods must be developed and fielded. Second, the nation's access to space must be expanded in ways that are more cost-effective. The more robust U.S. space launch capability, the more able the United States will be to retain its space superiority, reconstitute systems after attack, and reduce its vulnerabilities. The Commission strongly recommends that the modernization of the nation’s space-launch capability be accelerated.

F. THE INTELLIGENCE COMMUNITY

he basic structure of the U.S. intelligence community does not require change. The Tcommunity has implemented many of the recommendations for reform made by other studies. This Commission’s focus is on those changes in intelligence policy, operations, and resources needed for the full implementation of recommendations found elsewhere within this report.

Director of Central Intelligence (DDCI) and the DDCI for Collection Management on intelligence-related issues. 79 The primary elements would come from the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)), and the Assistant Secretary of Defense for Command, Control, Computers, and Intelligence (ASD(C3I)). In essence ASD(C3I) would transfer to the proposed reorganization.

While the intelligence community is generally given high marks for timely and useful contributions to policymaking and crisis management, it failed to warn of Indian nuclear tests or to anticipate the rapidity of missile developments in Iran and North Korea. U.S. intelligence has, at times, been unable to respond to the burgeoning requirements levied by more demanding consumers trying to cope with a more complex array of problems. Steep declines in human intelligence resources over the last decade have been forcing dangerous tradeoffs between coverage of important countries, regions, and functional challenges. Warfighters in theater are often frustrated because the granulated detail of intelligence that they need rarely gets to them, even though they know that it exists somewhere in the intelligence system.

It is a commonplace that the intelligence community lost its focus when the Berlin Wall fell. Since then, three other problems have compounded its challenges. First, the world is a more complex place, with more diffuse dangers requiring different kinds of intelligence and new means of acquiring them. Second, its resources—personnel and monetary—have been reduced. Third, the dangers of terrorism and proliferation, as well as ethnic conflicts and humanitarian emergencies, have led to a focus on providing warning and crisis management rather than long- term analysis.

The result of these three developments is an intelligence community that is more demand-driven than it was two decades ago. That demand is also more driven by military consumers and, therefore, what the intelligence community is doing is narrower and more short- term than it was two decades ago. Given the paucity of resources, this means that important regions and trends are not receiving adequate attention and that the more comprehensive analytical tasks that everyone agrees the intelligence community should be performing simply cannot be done properly.

This Commission has emphasized that strategic planning needs to be introduced throughout the national security institutions of the U.S. government. We have also emphasized the critical importance of preventive diplomacy. Both require an intelligence community that can support such innovations, but current trends are leading in the opposite direction.

This Commission has also stressed the increasing importance of diplomatic and especially economic components in U.S. statecraft. The intelligence community as a whole needs to maintain its level of effort in military domains, but also to do much more in economic domains. In a world where proprietary science and technology developments are increasingly the sinews of national power, the intelligence community needs to be concerned more than ever with U.S. technological security, not least in cyberspace. And here, too, the trends within the intelligence community point not toward, but away from, the country’s essential needs. Resources devoted to handling such economic and technical issues are not increasing, but declining.

o respond to these challenges, some have recommended strengthening the Director of TCentral Intelligence (DCI) through organizational changes, such as vesting greater budgetary authority in him and giving him greater control over personnel throughout the community. We believe, however, that current efforts to strengthen community management while maintaining the ongoing relationship between the DCI and the Secretary of Defense are bearing fruit. We recommend no major structural changes, but offer certain recommendations to strengthen the DCI’s role and the efficiency of the process.

The National Security Act of 1947 gave the National Security Council responsibility for providing guidance with respect to intelligence functions. In practice, however, administrations have varied widely in their approach to this function—sometimes actively setting priorities for intelligence collection and analysis and sometimes focusing simply on coordinating intelligence response in times of crisis.

To achieve the strategy envisioned in our Phase II report, and to make the budgetary recommendations of this section most effective, more consistent attention must be paid to the setting of national intelligence priorities. To do this, we recommend the following:

● 36: The President should order the setting of national intelligence priorities through National Security Council guidance to the Director of Central Intelligence.

In recommending this, we echo the conclusion of the Commission on the Roles and Capabilities of the United States Intelligence Community (the Brown-Rudman Commission). While we do not want to dictate how future Presidents might use the National Security Council, we believe this is a crucial function that must be filled in some way. The President’s authority to set strategic intelligence priorities should be exercised through continuous NSC engagement with the DCI, from which the DCI can establish appropriate collection and analysis priorities. Such an approach would ensure consistent policymaker input into the intelligence effort and, if policymakers come to feel a part of the intelligence process, it should enable greater support for the intelligence community, as well. We believe that this function would be best fulfilled by a true strategic planning staff at the NSC—as per our recommendation 14. The point is that policy and strategic guidance for intelligence should be formulated in tandem.

e have emphasized the importance of securing the homeland in this new century Wand have urged, specifically in recommendation 4, that it be a higher intelligence priority. Making it so means greatly strengthening U.S. human intelligence (HUMINT) capability. This involves ensuring the quality of those entering the community’s clandestine service, as well as the recruitment of foreign nationals as agents with the best chance of providing crucial information about terrorism and other threats to the homeland.

Along with the National Commission on Terrorism, we believe that guidelines for the recruitment of foreign nationals should be reviewed to ensure that, while respecting legal and human rights concerns, they maximize the intelligence community’s ability to collect intelligence on terrorist plans and methods. We recognize the need to observe basic moral standards in all U.S. government conduct, but the people who can best help U.S. agents penetrate effectively into terrorist organizations, for example, are not liable to be model citizens of spotless virtue. Operative regulations in this respect must balance national security interests with concern for American values and principles. We therefore recommend the following:

● 37: The Director of Central Intelligence should emphasize the recruitment of human intelligence sources on terrorism as one of the intelligence community’s highest priorities, and ensure that operational guidelines are balanced between security needs and respect for American values and principles.

he DCI must also give greater priority to the analysis of economic and science and Ttechnology trends where the U.S. intelligence community’s capabilities are inadequate. While improvements have been made, especially in the wake of the Asian financial crisis, the global economic and scientific environments are changing so rapidly and dramatically that the United States needs to develop new tools merely to understand what is happening in the world. The Treasury Department has made important strides in this regard, but it has a long way to go. Treasury and CIA also need to coordinate better efforts in this critical area. We therefore recommend the following:

● 38: The intelligence community should place new emphasis on collection and analysis of economic and science/technology security concerns, and incorporate more open- source intelligence into analytical products. Congress should support this new emphasis by increasing significantly the National Foreign Intelligence Program (NFIP) budget for collection and analysis.

In order to maintain U.S. strength in traditional areas while building new capabilities, the President and the Congress should give priority to economic and science/technology intelligence. We need to increase overall funding in these areas significantly and the DCI needs to emphasize improvement in the collection and analysis of this intelligence. This will require, in turn, a major investment in the community’s long-term analytical capacities, but these capacities are crucial in any event to supporting the strategic planning that we have emphasized throughout this report.

Better analysis in non-military areas also means ensuring that open-source intelligence is a vital part of all-source analysis. Many new challenges, but especially economic, scientific, and technological ones, call for greater attention to the wealth of openly available information. Analyses of the failure of the community to anticipate India’s nuclear tests, when clear indications were available in open-source publications, demonstrate that this capability has relevance for traditional security issues as well.

e thus urge the strengthening of HUMINT capabilities, the broadening of analytical Wefforts across a range of issues, and the incorporation of more open-source information into all-source analysis. Meeting the nation’s future intelligence needs, however, will also require changes in the community’s technological capabilities.

Technological superiority has long been a hallmark of U.S. intelligence. Yet some agencies within the National Foreign Intelligence Program spend as little as three to four percent of their budget on all aspects of research and development, and as little as one percent on advanced research and development. This reflects a decline in overall intelligence expenditures in real terms, while salaries and benefits for intelligence personnel have been on the rise. Concerted effort is needed to ensure that research and development receive greater funding.

At the same time, the intelligence community must think about its technological capabilities in new ways. During the Cold War, the National Security Agency (NSA) and other agencies derived a great wealth of information through signals and communications intelligence. In today’s Internet age, global networks, cable, and wireless communications are increasingly ubiquitous, with attendant improvements in encryption technologies. Together these trends make signal intelligence collection increasingly difficult. The United States must possess the best platforms and capabilities to ensure that it can collect necessary information consistent with respecting Americans’ privacy. It must also have high-quality technical and scientific personnel

able to respond to future challenges. To these ends, we recommend that the DCI should provide the President a strategic assessment of the effectiveness of current technical intelligence capabilities to ensure the fullest range of collection across all intelligence domains, particularly as they relate to cyberspace and new communications technologies.

Should the U.S. intelligence community lack a full-spectrum capability either in collection or analysis, the United States would forfeit the depth of intelligence coverage it enjoyed during the Cold War. Maintaining this edge will require greater funding and expertise in the information and communication sciences. We must also pursue innovative approaches with the private sector to establish access to new technologies as they become available.

his Commission, in sum, urges an overall increase in the NFIP budget to Taccommodate greater priority placed on non-military intelligence challenges. Military intelligence needs also remain critical, however, so a simple reallocation of existing resources will not suffice. To ensure the continuing technological strength of the community, and to build cutting-edge intelligence platforms, there is no escaping the need for an increase in overall resources for the intelligence community.

IV. The Human Requirements for National Security

s it enters the 21st century, the United States finds itself on the brink of an Aunprecedented crisis of competence in government. The maintenance of American power in the world depends on the quality of U.S. government personnel, civil and military, at all levels. We must take immediate action in the personnel area to ensure that the United States can meet future challenges.

In its Phase I report, this Commission asserted that “the ability to carry out effective foreign and military policies requires not only a skilled military, but talented professionals in all forms of public service as well.”80 We reaffirm here our conviction that the quality of personnel serving in government is critically important to U.S. national security in the 21st century. The excellence of American public servants is the foundation upon which an effective national security strategy must rest—in large part because future success will require the mastery of advanced technology, from the economy to combat, as well as leading-edge concepts of governance. We therefore repeat our conclusion from the Phase II report, that the United States “must strengthen government (civil and military) personnel systems in order to improve recruitment, retention, and effectiveness at all levels.”81

In this light, the declining orientation toward government service as a prestigious career is deeply troubling. The problem manifests itself in different ways throughout various departments, agencies, and the military services, yet all face growing difficulties in recruiting and retaining America’s most promising talent. These deficits are traceable to several sources, one of which is that the sustained growth of the U.S. economy has created private sector opportunities with salaries and advancement potential well beyond those provided by the government. This has a particular impact in shaping career decisions in an era of rising student debt loads. The contrast with the private sector is also organizational. In government, positions of responsibility and the ability to advance are hemmed in by multiple layers, even at senior levels; in the private sector, both often come more quickly. Rigid, lengthy, and arcane government personnel procedures— including those germane to application, compensation, promotion, retirement, and benefits systems—also discourage some otherwise interested applicants.

Another source of the problem is that there is no single overarching motivation to entice patriotic Americans into public service as there was during the Cold War. Careers in government no longer seem to hold out the prospect for highly regarded service to the nation. Meanwhile, the private and non-profit sectors are now replete with opportunities that have broad appeal to idealistic Americans who in an earlier time might have found a home within government service. Government has to compete with the private sector not only in salary and benefits, then, but often in terms of the intrinsic interest of the work and the sense of individual efficacy and fulfillment that this work bestows.

At the same time, the trust that Americans have in their government is buffeted by worrisome cynicism. Consistent criticism of government employees and agencies by politicians and the press has magnified public dissatisfaction and lowered regard for the worthiness of

80 New World Coming, p. 130. 81 Seeking a National Strategy, p. 9.

government service. Political candidates running “against Washington” have fueled the impression that all government is prone to management and services of a quality below that of similar organizations in the private sector. This is not the case, but virtually every Presidential candidate in the past thirty years has deployed campaign rhetoric criticizing “the bloated bureaucracy” as a means of securing “outsider” status in the campaign. Neither critics nor their audiences often differentiate between performance failures based on political maneuvering and the efforts of apolitical professional public servants striving to implement policy. The cumulative effect of this rhetoric on public attitudes toward the government is demonstrated in a 1999 study highlighting American frustration with “the poor performance of government” and “the absence of effective public leadership.”82

A final reality is that today’s technological age has created sweeping expectations of speed, accuracy, and customization for every product and service. Government is not immune to these expectations, but its overall reputation remains that of a plodding bureaucracy. Talented people seeking careers where they can quickly make a difference see government as the antithesis to best management practices, despite many government improvements in this area. Part of the recruitment and retention problem, therefore, flows from the image of overall government management and must be addressed by making government more effective and responsive at every level.

The effect of these realities on recruiting and retention problems is manifest. The number of applicants taking the Foreign Service entrance exam, for example, is down sharply and the State Department shows signs of a growing retention problem. The national security community also faces critical problems recruiting and retaining scientific and information technology professionals in an economy that has made them ever more valuable. The national security elements of the Civil Service face similar problems, and these problems are magnified by the fact that the Civil Service is doing little recruiting at a time when a retirement wave of baby-boomers is imminent.

For the armed services, the aforementioned trends have widened the cultural gap between the military and the country at large that continues to be affected by the abolition of the draft in the 1970s. While Americans admire the military, they are increasingly less likely to serve in it, to relate to its real dangers and hardships, or to understand its profound commitment requirements. With a total active strength of 1.4 million, only one-half of one percent of the nation serves in the military. Military life and values are thus virtually unknown to the vast majority of Americans.

The military’s capabilities, professionalism, and unique culture are pillars of America’s national strength and leadership in the world. Without a renewed call to military service and systemic internal personnel reform to retain quality people, the requisite leadership and professionalism necessary for an effective military will be in jeopardy. For this reason, the Commission asserted in its Phase II report that the “United States must strengthen the bonds between the American people and those of its members who serve in the armed forces.”83 We reaffirm that assertion here.

82 Panel on Civic Trust and Citizen Responsibility, A Government to Trust and Respect: Rebuilding Citizen-Government Relations for the 21st Century (Washington, DC: National Academy of Public Administration, 1999), p. iii. 83 Seeking a National Strategy, p. 9.

A. A NATIONAL CAMPAIGN FOR SERVICE TO THE NATION

o remedy these problems, the Commission believes that a national campaign to Treinvigorate and enhance the prestige of service to the nation is necessary to attract the best Americans to military and civilian government service. The key step in such a campaign must be to revive a positive attitude toward public service. It has to be made clear from the highest levels that frustrations with particular government policies or agencies should not be conveyed through the denigration of federal employees en masse. Calls for smaller government, too, should not be read as indictments of the quality of government servants. Instead, specific issues should be addressed on the merits, while a broader campaign should be waged to stress the importance of public service in a democracy.

Implementing such a campaign requires strong and consistent Presidential commitment, Congressional legislation, and innovative departmental actions throughout the federal government. We know this is a tall order, but we take heart in previous examples of such leadership. The clarion call of President John F. Kennedy, encompassed in but a few well-chosen remarks spread over several speeches, had enormous impact and inspired an entire generation to public service. We also remember how President Ronald Reagan reinvigorated the spirit of the U.S. military after the tragedies of the Vietnam War and subsequent periods of low funding and plummeting morale. What the President says, and how he says it, matters. Moreover, only the President can shape the Executive Branch agenda to undertake the changes needed in U.S. personnel systems.

While the President’s involvement is central, other leaders must help build a new foundation for public service. Congress must be convinced not only to pass the legislative remedies proffered below, but also to change its own rhetoric to support national service. It must work with department heads and other affected institutions to ensure that a common message is conveyed, and that Executive departments and agencies have the flexibility they need to make real improvements.

Rhetoric alone, however, will not bring America’s best talent to public service. The Commission believes that unless government service is made competitively rewarding to 21st century future leaders, words will surely fade to inaction. Section II of this report highlighted the urgent national need for outstanding science and technology professionals. So, too, does government need high-quality people with expertise in the social sciences, foreign languages, and humanities. The decreased funding available for these programs from universities and foundations may threaten the ability of the government to produce future leaders with the requisite knowledge—in foreign languages, economics, and history to take several examples—to meet 21st century security challenges.

Therefore this Commission proposes a complement to the National Security Science and Technology Education Act (NSSTEA) presented in recommendation 11 of this report. As in the case of the NSSTEA, which applies to math and hard science majors, we would extend scholarship and debt relief benefits to those social science, foreign language, and humanities students who serve the nation. We therefore make the following recommendation:

● 39: Congress should significantly expand the National Security Education Act (NSEA) to include broad support for social sciences, humanities, and foreign languages in exchange for military and civilian service to the nation.84

The current National Security Education Act (NSEA) of 1991 provides limited undergraduate scholarships and graduate fellowships for students to study certain subjects, including foreign language and foreign area studies. The Act also allows the use of funds at institutions of higher learning to develop faculty expertise in the languages and cultures of less commonly studied countries. Recipients of these funds incur an obligation either to work for an office or agency of the federal government involved in national security affairs, or to pursue careers as educators for a period equal to the time covered by the scholarship.85

An expanded Act would increase the subjects currently designated for study, offering one- to four-year scholarships good for study at qualified U.S. universities and colleges. Upon completion of their studies, recipients could fulfill their service in a number of ways: in the active duty U.S. military; in National Guard or Reserve units; in national security departments and agencies of the Civil Service; or in the Foreign Service. To prepare students to fulfill their service requirements, the scholarship program should include a training element. One model of this training might be a civilian equivalent of the Reserve Officers Training Corps (ROTC) or Platoon Leader Course (PLC).86

The Act should also provide for those who choose government service after completing their education. In those cases, the Act could offer several sorts of incentives in lieu of scholarships foregone. One such incentive would be the deferral of educational loan repayment while individuals serve in government. Another would reduce school loan principal amounts by a set percentage for every year the individual stays in government service up to complete repayment.87 In such cases, the government would assume the financial obligations of the graduate, so that neither financial nor educational institutions suffer.

The Commission believes the combination of the NSSTEA for math and science, and for other majors this significantly expanded NSEA will prepare Americans for many forms of service and more generally help recruit high-quality civil service and military personnel.

B. THE PRESIDENTIAL APPOINTMENTS PROCESS

concerted campaign to improve the attractiveness of service to the nation is the first Astep in ensuring that talented people continue to serve in government. However, fundamental changes are also needed to personnel management systems throughout the national

84 Our model is the National Defense Education Act of the late 1950s and 1960s, which provided loan forgiveness incentives for those willing to serve in the military or teach in schools with disadvantaged students or in disadvantaged areas. That act provided scholarships to those studying hard sciences and mathematics, as well as those studying critical foreign languages where the country at large confronted significant deficiencies. 85 National Security Education Act 1991 (Public Law 102-183—December 4, 1991.) 86 The Marine Corps PLC scholarship program is similar to the ROTC program, but is not affiliated with a particular learning institution and is not tied to an actual cadre unit at a specific school. 87 A limited version of this loan reduction concept is currently under development in a portion of the Civil Service. See “Proposed Rules—Repayment of Student Loans,” Federal Register, June 22, 2000, pp. 38791- 38794.

security agencies of government. Not least among the institutions needing reform is the Presidential appointments system.

The problem with government personnel starts at the top. Unlike many other countries, the United States staffs the high levels of its national government with many outside, non-career personnel. The most senior of these are Presidential appointees whose positions require Senate confirmation. While career personnel provide much-needed expertise, continuity, and professionalism, Presidential appointees are a source of many valuable qualities as well—fresh ideas, experience outside government, specialized expertise, management skills, and often an impressive personal dynamism. They also ensure political accountability in policy execution, by transmitting the President’s policies to the departments and agencies of government. Indeed, the tradition of public-spirited citizens coming in and out of government is an old and honorable one, serving the country well from the days of George Washington. This infusion of outside skills is truly indispensable today, when the private sector is the source of so much of the country’s managerial and technological innovation.

What a tragedy, then, that the system for recruiting such outside talent has broken down. According to a recent study, “the Founders’ model of presidential service is near the breaking point” and “the presidential appointments process now verges on complete collapse.”88 The ordeal to which outside nominees are subjected is so great—above and beyond whatever financial or career sacrifice is involved—as to make it prohibitive for many individuals of talent and experience to accept public service. To take a vivid recent example: “The Clinton Administration . . . had great difficulty filling key Energy Department positions overseeing the disposal of nuclear waste because most experts in the field came directly or indirectly from the nuclear industry and were thus rejected for their perceived conflicts of interest.”89 The problem takes several forms.

First, there are extraordinary—and lengthening—delays in the vetting and confirmation process. On average, the process for those appointees who required Senate confirmation has lengthened from about two and one-half months in the early 1960s to an extraordinary eight and one-half months in 1996—suggesting that many sub-cabinet positions in the new administration will be fortunate to be in place by the fall of 2001.90 As Norman Ornstein and Thomas Donilon point out: “The lag in getting people into office seriously impedes good governance. A new president’s first year—clearly the most important year for accomplishments and the most vulnerable to mistakes—is now routinely impaired by the lack of supporting staff. For executive agencies, leaderless periods mean decisions not taken, initiatives not launched, and accountability not upheld.”91 The result is a gross distortion of the Constitutional process; the American people exert themselves to elect a President and yet he is impeded from even beginning to carry out his mandate until one-sixth of his term has elapsed.

Second, the ethics rules—conflict of interest and financial disclosure requirements—have proliferated beyond all proportion to the point where they are not only a source of excessive delay but a prohibitive obstacle to the recruitment of honest men and women to public service.

88 Paul C. Light and Virginia L. Thomas, The Merit and Reputation of an Administration: Presidential Appointees on the Appointments Process (Washington, DC: The Brookings Institution and The Heritage Foundation, April 28, 2000), p. 3. 89 Norman Ornstein and Thomas Donilon, "The Confirmation Clog," Foreign Affairs, November/December 2000, p. 91. 90 Defense Science Board, Final Report of the Defense Science Board Task Force on Human Resources Strategy (Washington, DC: Office of the Secretary of Defense, February 2000), p. 41. 91Ornstein and Donilon, p. 89.

Stacks of different background forms covering much of the same information must be completed for the White House, the Senate, and the FBI (in addition to the financial disclosure forms for the Office of Government Ethics). These disclosure requirements put appointees through weeks of effort and often significant expense. The Defense Department and Senate Armed Services Committee routinely force nominees to divest completely their holdings related to the defense industry instead of exploring other options such as blind trusts, discretionary waivers, and recusals.92 This impedes recruiting high-level appointees whose knowledge of that industry should be regarded as a valuable asset to the office, not reason for disqualification.

The complexity of the ethics rules is not only a barrier and a time-consuming burden before confirmation; it is a source of traps for unwary but honest officials after confirmation. This is despite the fact that the U.S. federal government is remarkable for the rarity of real corruption in high office compared to many other advanced societies. Yet we proliferate “scandals” because of appearances of improprieties, or inadvertent breaches of highly technical provisions. Worse, these rules are increasingly matters of criminal rather than administrative remedies. It appears to us that those who have written these conflict of interest regulations themselves have little conflict of experience in such matters.

Third, and closely related, are the post-employment restrictions that a new recruit knows he or she must endure, particularly appointees subject to Senate confirmation. We will simply cease to attract talented outsiders who have a track record of success if the price for a few years of government service is to forsake not only income but work in the very fields in which they had demonstrated talent and found success. The recent trend has been to add to the restrictions. However, we applaud the recent revocation of Executive Order 12834 as an important step in removing some unnecessary restrictions.93

A fourth dimension of the problem is the proliferation of Presidential-appointee positions. In the last 30 years, the number of Senate-confirmable Presidential-appointee positions throughout the federal government has quadrupled, from 196 to 786. Within the Defense Department, the figure has risen from 31 to 45 during the same period.94 The growing number of appointees contributes directly to the backlog that slows the confirmation process. It also makes public service in many of these positions less attractive; as the Defense Science Board noted in the case of the Defense Department, “an assistant secretary post may be less attractive buried several layers below the secretary than as a number two or three job.”95 Moreover, Presidential appointments can hardly serve as a transmission belt of Presidential authority if multiple layers of political appointees diffuse accountability and make departments and agencies more cumbersome and less responsive. And it runs glaringly counter to the trend in today’s private sector toward flatter and leaner management structures.

92 Defense Science Board, p. D-6. 93 The recently-rescinded Executive Order 12834, signed by President Clinton on January 20, 1993, his first day in office, extended to five years the previous one-year ban on an ex-official’s appearance before his or her former agency. This restriction was placed on the most senior presidential appointees. All former employees face certain limitations, but Senate-confirmable employees paid at the EL-V or EL-IV level (and non-career SES appointees whose salaries fall within this range) face additional regulations potentially very harmful to their post-service careers. Under Executive Order 12834, they could not lobby their former agency for five years, while other appointees are restricted only for one year. See Defense Science Board, p. D-7 and the relevant section of the U.S. Code, 18 USC §207. 94 Defense Science Board, pp. 42-43. 95 Ibid., p. 43.

Finally, the appointments process feeds the pervasive atmosphere of distrust and cynicism about government service. The encrustation of complex rules is based on the presumption that all officials, and especially those with experience in or contact with the private sector, are criminals waiting to be unmasked. Congress and the media relish accusations or suspicions, whether substantiated or not. Yet the U.S. government will not be able to function effectively unless public service is restored to a place of honor and prestige, especially for private citizens who have achieved success in their chosen fields.

We need to rebuild the present system nearly from the ground up, and the beginning of a new administration is the ideal time to start. Our recommendations support those made in the Defense Science Board’s Human Resource Study, in the joint survey undertaken by the Brookings Institution and the Heritage Foundation, and by Norman Ornstein and Thomas Donilon. We therefore recommend the following:

● 40: The Executive and Legislative Branches should cooperate to revise the current Presidential appointee process by reducing the impediments that have made high- level public service undesirable to many distinguished Americans. Specifically, they should reduce the number of Senate confirmed and non-career SES positions by 25 percent; shorten the appointment process; and moderate draconian ethics regulations.

Reducing non-career positions would, as the Defense Science Board has noted, “allow more upward career mobility for Senior Executive Service employees and provide greater continuity and corporate memory in conducting the day-to-day business affairs of the Defense Department during the transition between administrations.”96 Recommendation 43 below to create a National Security Service Corps should help ensure that career employees develop the qualifications to be eligible to hold senior positions throughout the government.

The aim of reducing the number of Presidential appointees is not to weaken Presidential political authority over the bureaucracy, but to eliminate the excessive layering that clogs the government’s functioning in addition to slowing the appointment process. That said, an exact balance between political and career appointees cannot be specified in the abstract. Both groups include skilled and talented people. But Presidents should be held to a qualitative standard—that political appointees, whether for Ambassadors or for policymaking positions in Washington, should be chosen for the real talents they will bring and not the campaign contributions they brought. [See recommendation 23]

To streamline and shorten the current appointment process, the President and leaders of the new Congress should meet as soon as possible to agree on the following measures.

● CONFIRM THE NATIONAL SECURITY TEAM FIRST. By tradition, the Senate Foreign Relations, Armed Services, and Intelligence committees hold hearings before inauguration on the nominees for Secretaries of State and Defense and the Director of Central Intelligence, and vote on inauguration day. This practice should continue. Future Presidents should also present to the Senate no later than inauguration day his nominees for the top ten positions at State and at Defense and the top three posts at CIA. Leaders of the relevant committees should agree to move the full slate of appointments to the full

96Ibid., p. 44.

Senate within 30 days of receiving the nomination (barring some serious legitimate concern about an individual nominee).97

● REDUCE AND STANDARDIZE PAPERWORK REQUIREMENTS. The “Transition to Governing Project” jointly undertaken by the American Enterprise Institute and the Brookings Institution is developing software that will enable appointees to collect information once and direct it to the necessary forms. The new President should direct all relevant agencies and authorities to accept these computerized forms and to streamline the paperwork requirements for future appointees.98

● REDUCE THE NUMBER OF NOMINEES SUBJECT TO FULL FBI BACKGROUND CHECKS. Full field investigations should be required only for national security or other sensitive top- level posts. Most other appointees need only abbreviated background checks, and part- time or lesser posts need only simple identification checks.99 The risks to the Republic of such an approach are minor and manageable, and are far outweighed by the benefit that would accrue in saved resources and expedited vetting.

● LIMIT ACCESS TO FULL FBI FILES. Distribution of raw FBI files should be severely restricted to the chairman and ranking minority member of the confirming Senate committee.100 Nothing deters the recruitment of senior people more than the fear that their private lives will be shredded by the leakage of such material to the national media.

To significantly revise current conflict-of-interest and ethics regulations, the President and Congressional leaders should meet quickly and instruct their top aides to make recommendations within 90 days of January 20, 2001. This Commission endorses retention of basic laws and regulations that prevent bribery and corrupt practices as well as the restrictions in the U.S. Code that ban former officials from lobbying their former agencies for one year. We also endorse lifetime prohibitions against acting as a representative of a foreign government and against making a formal appearance in reference to a “particular matter” in which he or she participated personally and substantially, or a matter under his or her official responsibilities. However, the Commission recommends two important actions:

● Conduct a comprehensive review of the regulations and statutory framework covering Presidential appointments to ensure that regulations do not exceed statutory requirements.

● Make blind trusts, discretionary waivers, and recusals more easily available as alternatives to complete divestiture of financial and business holdings of concern.

The conflict of interest regime should also be decriminalized. Technical or inadvertent misstatements on complex disclosure forms, or innocent contacts with the private sector, should not be presumptively criminal. The Office of Government Ethics should be enabled and

97 Ornstein and Donilon, p. 97. We also advocate accelerating the appointment process for the 80 key science and technology personnel in government. See Section II above, and Science and Technology in the National Interest: The Presidential Appointments Process (Washington, DC: National Academies of Science, June 30, 2000). The 80 positions of which we speak are listed on p. 8. 98Ornstein and Donilon, p. 94. 99 Ibid., p. 95. 100 Former FBI (and CIA) Director William Webster has noted that these files are “often freighted with hearsay, rumor, innuendo, and unsubstantial allegations.” Quoted in ibid., p. 95.

encouraged to enforce the disclosure and post-employment statutes as civil or administrative matters; to decide questions expeditiously; and to see its job as clearing the innocent, as well as pursuing wrongdoers.

These recommendations can be accomplished through Executive Branch action, such as that which rescinded Executive Order 12834. Other recommendations, however, will require Congressional concurrence and action. We therefore urge the new President to take the initiative immediately with Congress to agree on future statutory reforms.

C. THE FOREIGN SERVICE

n effective and motivated Foreign Service is critical to the success of the ACommission’s restructuring proposal for the State Department [see Section III above].Yet among career government systems, the Foreign Service, which is set apart from other civilian personnel systems by its specialized entrance procedures and up-or-out approach to promotion, is most in need of repair.

While some believe the Foreign Service has retained much of its historical allure and cachet, many close observers contend that the Foreign Service no longer attracts or retains the quality of people needed to meet the diplomatic challenges of the 21st century. Overall educational competence in areas crucial to a quality Foreign Service—including history, geography, economics, humanities, and foreign languages—is declining, resulting in a shrinking pool of those with the requisite knowledge and skills for this service.101 The proposed revision to the National Security Education Act [recommendation 39 above] is one response to this deficit.

Data indicate that recruitment is currently the Foreign Service’s major concern.102 There are now 25 percent fewer people taking the entrance exam as there were in the mid-1980s. Other careers, in corporations and non-governmental organizations, now offer many of the same opportunities on which the Foreign Service used to hold the monopoly: living overseas, learning foreign languages, and developing negotiating experience. These other opportunities generally pay better, do not entail the same level of austerity and danger often faced by Foreign Service officers posted abroad, and do not impose the same constraints on two-career families.

Beyond this lack of flexibility, many of the State Department’s own policies are detrimental to attracting and keeping the highest quality people. The recruiting process is exceedingly slow, often taking two years from written exam to the first day of work. At a time when potential officers have many other career choices they may elect, this is a fatal weakness.

101 According to the National Center for Education Statistics, 30 to 35 percent of students at three different grade levels performed below the “basic” level of civics knowledge. 38 percent at the 4th grade level, 41 percent at the 8th grade level, and 59 percent at the 12th grade level performed below the “basic” level of U.S. history knowledge. Roughly 30 percent of students at all grade levels performed below the “basic” level in geography. 102 There are indications that retention may be a looming concern as well. According to data provided by the State Department, while most Foreign Service entering classes have shown attrition rates between 12 and 17 percent by the eighth year of service, two recent classes show figures at 23 and 32 percent. These indications are not conclusive but they are supported by two major studies on departmental talent management, one completed by McKinsey & Company for the department and the other by the Overseas Presence Advisory Panel. Both found that while qualified applicants valued faster advancement and greater autonomy, it is precisely those things, along with quality management and respect for their family situations, they found lacking once in the Foreign Service.

The oral exam also works at odds with the goal of attracting those with the range of knowledge (foreign policy, economics, cultural studies) and skills (languages, leadership, technology) necessary to an effective Foreign Service. The exam’s “blindfolding” policy, whereby the examiners who decide who enters the Service know nothing about an applicant’s background, has the admirable goal of ensuring a level playing field. But it runs completely counter to common sense in selecting the most qualified applicants.

The lack of professional educational opportunities currently afforded Foreign Service officers is also a problem both for the quality of those who stay and as a reason for those who leave. While the Foreign Service certainly needs more training in languages and emerging global issues, recent studies find an additional problem involving the lack of effective management and leadership throughout the State Department.103 We therefore recommend the following:

● 41: The President should order the overhauling of the Foreign Service system by revamping the examination process, dramatically improving the level of on-going professional education, and making leadership a core value of the State Department.

In order to revamp the exam process, changes must be made to shorten the hiring process dramatically without compromising the competitiveness of the system. The Commission is encouraged by the use of the shorter Alternative Examination Program (AEP) which allows applicants (now limited to current government employees) to advance to the oral examination on the basis of their professional experience. Contingent upon evaluation of its success, this program should be broadened and other innovative approaches encouraged. If the written exam is retained, it might be administered by computer, allowing applicants to sit for the test at different times throughout the year.

In addition, the oral exam’s blindfolding policy should end. While we sympathize with the aim of fair consideration for all, and with the State Department’s eagerness to avoid legal harassment, this approach seriously damages the effectiveness of the examination process. It omits consideration of the professional and other experiences candidates may bring to the Foreign Service. It also makes it impossible for examiners to counsel applicants on the appropriateness of their backgrounds to particular cones (political, economic, consular, public diplomacy, or administrative). There is no legal requirement for this practice.

A successful Foreign Service also requires officers who are consistently building new knowledge and skills. As we recommend below for the Civil Service, the Commission endorses a 10-15 percent increase in personnel to allow for that proportion of the overall service to be in training at any given point.104 Current State Department professional development, focused mostly on languages, must be greatly expanded to ensure a diplomatic corps on the cutting edge of 21st century policy and management skills. We agree with the recommendations of McKinsey

103 The State-commissioned report by McKinsey & Company, The War for Talent: Maintaining a Strong Talent Pool, emphasized that for the State Department to sustain its talent base, it must improve talent management. The final report of the Overseas Presence Advisory Panel built on McKinsey’s finding and highlighted that “private sector managers were almost twice as likely as public-sector managers to give high performers the best development opportunities and fast-track growth. More than 70 percent of the private-sector managers viewed motivating and attending to people as a prime priority, while less than 30 percent of State Department managers interviewed considered it a top priority.” [Overseas Presence Advisory Panel, p. 52.] 104 Ibid., p. 55.

and the Overseas Presence Advisory Panel that call for a full range of mandatory educational courses in functional topics, languages, leadership, and management. Training milestones should be met in advance of promotions or advancements to supervisory positions.

Beyond problems with the exam process and the lack of professional development programs, all levels of the State Department suffer from a lack of focus on leadership and management. Improvements will require a cultural shift that must flow from the top. We urge future Presidents and Secretaries of State in selecting senior State Department officials to consider management strengths and departmental leadership abilities in addition to substantive expertise. Our proposal for restructuring the State Department [recommendation 19] is also aimed at fostering better management skills.

At lower levels, too, the State Department must develop sound talent management practices. We endorse many of the McKinsey report’s findings: allow leaders more discretion in making key talent decisions; reduce time-in-grade requirements to allow the best performers to advance more quickly; and improve feedback to allow managers to gain from insights provided both from above and below.

Most of these problems can be handled effectively by the State Department without additional legislative mandate; yet some of these changes, particularly promoting professional education, require Congress to appropriate additional funds. The Department of State estimates that it would cost $200 million annually to create a 10-15 percent training float. The Commission endorses such an investment.

Additionally, the Commission believes we must restore the external reputation of those who serve our nation through diplomatic careers. As a means of achieving this, we recommend changing the Foreign Service’s name to the U.S. Diplomatic Service. This rhetorical change will serve as a needed reminder that this group of people does not serve the interest of foreign states, but is a pillar of U.S. national security.

105 D. THE CIVIL SERVICE

hile there is disagreement as to the extent of the crisis in Civil Service quality, Wthere are clearly specific problems requiring substantial and immediate attention.106 These include: the aging of the federal workforce; the institutional challenges of bringing new workers into government service; and critical gaps in recruiting and retaining information technology professionals and those with less-common language skills. Most striking is how many of these problems are self-inflicted to the extent that departmental authority already provides some remedy if only the institutional will and budgetary resources were also available. Fixing these problems will make a major contribution to improving recruitment and retention.

105 The Commission considers personnel from the Departments of State (excluding the Foreign Service), Defense, Commerce, Justice, and Treasury and members of the Intelligence Community to constitute the core national security members of the Civil Service. Members of the Intelligence Community are governed by separate personnel regulations and authorities. 106 On the general question, compare the pessimistic study led by Paul Volcker [The National Commission on the Public Service, Leadership for America: Rebuilding the Public Service (Washington, DC: The National Commission on the Public Service, 1989)] with the more optimistic assessment of Joel D. Aberbach and Bert A. Rockman [In the Web of Politics: Three Decades of the U.S. Federal Executive (Washington, DC: Brookings Institution Press, 2000).]

A prominent problem confronting all of the Civil Service is its aging workforce. The post-World War II baby-boomer generation heeded President Kennedy’s call to government service in unprecedented numbers, but the first of this age cohort will turn 55 in 2001. A retirement wave that will continue for the next eighteen years will reach crisis proportions in many departments. Nearly 60 percent of the entire civilian workforce is eligible for early or regular retirement today.107 Within that overall figure, 27 percent of the career Senior Executive Service (SES) is eligible for regular retirement now; 70 percent will be eligible within five years.108 This growing retirement wave is exacerbated by the small numbers of employees in their twenties and thirties in most agencies. When agencies such as the Department of Defense and those within the Intelligence Community chose to downsize through hiring freezes, they contributed to this trend.

While some have argued that the “Generation X” cohort is less inclined toward government employment, our analysis suggests that this cohort does see government as one of several desirable career tracks. If recruiting were resumed, many within this age group would seek federal jobs. This is suggested by the fact that the one current mechanism for bringing graduate students into government—the Presidential Management Internship program—has remained highly competitive.109

Yet there are still two major problems in converting interest in government positions to actual service. First, many young adults have completed or are enrolled in graduate school, and thus carry a much heavier student loan burden than their predecessors. Our recommendations for expanding student loan forgiveness programs [recommendations 11 and 39] should help mitigate this problem.

Second, the length and complexity of most application and security clearance processes is devastating in an economy where private sector firms can make on-the-spot offers. In a survey of employees from the Departments of Commerce and the Treasury, fully 54 percent of Treasury respondents and 73 percent of Commerce respondents reported that it took at least four months to receive an offer from the time they submitted an application.110 Departments must shorten the appointment and security clearance process.

Yet a third major problem for the civil service is the difficulty of attracting and retaining information technology (IT) professionals who are in great demand throughout the economy. To meet expected demand, the nation will need an additional 130,000 new IT workers each year through at least 2006. The federal government will also need more IT capability, requiring constant hiring to keep up with requirements. The strong demand for IT professionals in the private sector will insure a continuing pay gap between public and private opportunities, making

107 U.S. Office of Personnel Management, The Fact Book: Federal Civilian Workforce Statistics (Washington, DC: Office of Personnel Management, September 1999). 108 U.S. Office of Personnel Management and Senior Executives Association, Survey of Senior Executive Service (Washington, DC: Office of Personnel Management, 1999); United States General Accounting Office, Senior Executive Service: Retirement Trends Underscore the Importance of Succession Planning (Washington, DC: General Accounting Office, May 2000), p. 2. This latter document offers startling figures for individual departments: 77 percent of those at the Department of Commerce, 74 percent of those at the Department of Defense, and 71 percent of those at the Department of the Treasury will be eligible for regular retirement by 2005 (p. 46). 109 The Office of the Secretary of Defense has received between 100 and 140 applications each year since 1997 for six to eight open PMI positions. Data provided by the OSD, July 7, 2000. 110 Booz-Allen & Hamilton, Inc., Employee Recruitment and Retention Survey Results, August 30, 2000, pp. 33.

it even more difficult for the government to attract needed talent. This is compounded by a growing “speed-to-seat metric”—a measure of the time taken to recruit, hire, and place an employee. It means that some government IT projects with compressed life-cycles, including some too sensitive to contract out, may expire before a new hire can even start the project.111

Beyond recruiting difficulties, the federal government faces significant IT retention challenges. Deficiencies in governmental occupational structures and position descriptions contribute to the loss of IT personnel to the private sector. Corporations can alter the role of IT personnel rapidly as technology advances, while government position structures are comparatively sluggish. As a result, IT position descriptions in the government often do not match those in the private sector.112

These trends pose particular problems for the national security community. IT professionals are needed not only for crucial support functions but also to help run sophisticated intelligence platforms. Lengthy security clearance processes and less competitive compensation packages make recruiting high-quality IT personnel for these purposes very difficult. There are also retention problems as younger IT civil servants are lured away by the private sector. The National Security Agency (NSA) reports growing attrition rates particularly among young professionals, the group most skilled in new technologies and most in demand.113

There is a corresponding problem, though of lesser magnitude, for less common (“low density”) languages. The United States faces a broader range of national security challenges in the post-Cold War world, requiring policy analysts and intelligence personnel with expertise in more countries, regions, and issues. The people most likely to bring these skills are native speakers of other languages with direct cultural experiences; yet members of this group often face the greatest difficulties in getting a security clearance. We therefore recommend the following:

● 42: The President should order the elimination of recruitment hurdles for the Civil Service, ensure a faster and easier hiring process, and see to it that strengthened professional education and retention programs are worthy of full funding by Congress.

The federal government must significantly increase recruiting programs through programs like the National Security Education Act [recommendation 39], which will link educational benefits to a service requirement. To anticipate the coming bow wave of retirements, the government needs to adopt a range of policies that make hiring and promotion practices more flexible.

Some progress has been made, particularly in the IT field, in shortening the length of the hiring process. This is crucial to improving government competitiveness. Organizations like the Central Intelligence Agency (for its non-clandestine employees) have authorized recruiters to negotiate on-the-spot offers—including compensation packages—contingent upon successful completion of background investigation and polygraph requirements. These programs should be generalized throughout the national security community, not least for critical science and technology personnel.

111 CIO Council, Meeting the Federal IT Workforce Challenge (Washington, DC: CIO Council, June 1999), p. 15. 112 Ibid., p. 11. 113 Evidence provided by the National Security Agency.

The security clearance process itself must be revamped to provide for more efficient and timely processing of applications. There are several ways to go about this. One is to re-code intelligence community positions to allow some employees to start work before receiving the most sensitive security clearances. A bipartisan Executive-Legislative commission could be helpful in examining other methods of streamlining the security clearance process, while maintaining the rigor required for national security positions.

The U.S. Office of Personnel Management (OPM) and individual agency personnel offices have designed many incentive programs to recruit and retain quality employees.114 But many departments and agencies have not used these programs for lack of funds. Because all incentive programs are drawn from the same pool of money as that for salaries, administrators must trade off incentives for some employees against the ability to hire additional personnel. Additional funds must be provided to maximize agencies’ options in recruiting and retaining high-quality personnel.

Similarly, existing authorities provide funds for professional education. Such opportunities are crucial in maintaining a knowledgeable cadre of national security professionals. Supporting employees’ desire for professional development is also a means of ensuring retention. Yet the degree of downsizing in national security agencies has yielded a system whereby the workload of an employee on training must be split among others in the office, creating a powerful disincentive for managers to allow their best employees to pursue these opportunities. As a complement to proposals made for the Foreign Service, the Commission would apply the recommendation of the U.S. Overseas Presence Panel to all national security departments and agencies: that “the workforce structure and resources available for staff should take into account the 10-15 percent of employees who will be in training. . .at any given time.”115 Thus “full staffing” of a department or agency should be defined as a number ten to fifteen percent greater than the number of available positions.

e also need to give special priority to measures to secure and retain information Wtechnology (IT) talent in the most mission-critical areas while finding ways to outsource support functions.

For the mission-critical areas, this means using existing and seeking additional authorities to allow direct-hiring and to provide for more market-based compensation. While the government cannot completely close the pay gap with the private sector, higher salaries, signing bonuses, and performance rewards can narrow it. Some agencies have begun this effort by paying senior IT professionals market-based salaries.116

Further, the Commission endorses the recommendation of the CIO Council, a group of departmental and agency Chief Information Officers, to use and expand existing OPM authorities

114 Examples include recruitment and retention bonuses, the use of special pay scales for specific types of professionals, and pay banding whereby agencies would have greater flexibility in allocating personnel funds among employees of different quality and skills. New regulations currently under review at OPM would allow departments to repay federally funded student loans by $6,000 a year up to a maximum of $40,000. See “Proposed Rules—Repayment of Student Loans.” 115 Overseas Presence Advisory Panel, p. 55. 116 The Director of Central Intelligence (DCI) currently has the authority and funding to conduct a five-year pilot program through which he can hire up to 39 technical specialists in critical functions and pay them on the basis of market standards rather than on the federal pay scale. The Federal Bureau of Investigation has a similar program.

to lift pay cap restrictions on former Civil Service and military employees.117 For entry-level talent, we recommend expanding the newly authorized Cyber Corps, akin to the Reserve Officer Training Corps (ROTC) program, whereby the government would pay for two years of a student’s schooling in exchange for two years of governmental IT service.

Efforts to retain young IT professionals should recognize that their career plans will likely not include a 30-year or even a ten-year stint in government service. OPM developed departmental flexibility for Y2K programs, including temporary appointments (one to four years) within the competitive service.118 We believe such authorities should be instituted and expanded for IT professionals. In its own interest, the government needs to maximize the ease with which transitions can be made between government service and the private sector. Young employees’ interest in staying may be prolonged through performance-based retention bonuses and through the establishment of a unique and adaptive career path for IT professionals that includes rotational assignments and better opportunities for education and responsibility. Such an effort might also permit the government to move IT capabilities more fluidly across departments and agencies.

Where appropriate, outsourcing IT support functions is still needed. NSA has already turned development and management of non-classified technology over to a private-sector contractor, allowing NSA to focus its in-house IT talent on developing and overseeing core intelligence technologies. More programs like this can be used to supplement the other steps outlined here.

The implementation of these proposals for the civil service will require a multifaceted approach. We believe the endorsement of these recommendations by the President would set a proper tone of importance and urgency. Because many recommendations will affect many departments, an interagency coordinating group should be convened to help OPM develop new provisions. From there, heads of departments and agencies can take steps to implement them. We know that some recommendations, such as improving the recruitment and retention of IT professionals, cannot be fully implemented in the near term. In such cases, we urge departments to set timelines for reaching goals and, for those issues that cross agency lines such as IT needs, departments and agencies should work collaboratively.

These recommendations also presuppose greater Congressional appropriations devoted to making these changes possible. The preceding analysis demonstrates that, in order to allow for critical professional education, agency end-strengths must be increased by 10-15 percent, requiring a significant increase in personnel funding.

Beyond training, an aggressive recruitment campaign will require additional funds as well. In proposing the information technology “cyber corps” program, the Clinton Administration requested $25 million annually to pay for two years of college for 300 students. IT positions that pay close to market rates will have considerably higher salaries than is currently the case; however, this group would be relatively small. Finally, IT outsourcing proposals are likely to save the government money on a net basis since the cost of contracted labor is less than that of paying civil servant salaries, benefits, and retirement contributions.119

117 CIO Council, p. 13. On the CIO Council, see note 14 in Section I. 118 Ibid., p. 15. 119 Recent NSA outsourcing is estimated to save the government $1 billion over the ten-year life of the contract.

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he national security component of the Civil Service is faced with an additional Tproblem: the need to develop professionals with breadth of experience in the interagency process, and with depth of knowledge about substantive policy issues. Both elements are crucial to ensuring the highest quality policy formulation and analysis for the United States across a range of issues. They are also key to maintaining a robust national security workforce as professionals seek a diversity of experiences along their career paths.

The Commission’s Phase II report argued that “traditional national security agencies (State, Defense, CIA, NSC staff) will need to work together in new ways, and economic agencies (Treasury, Commerce, U.S. Trade Representative) will need to work closely with the national security community.”120 Better integration of these agencies in policy development and execution requires a human resource strategy that achieves the following objectives: expanded opportunities to gain expertise and to experience the culture of more than one department or agency; an assignment and promotion system that rewards those who seek broad-based, integrative approaches to problem solving instead of those focused on departmental turf protection; and the erasure of artificial barriers among departments.

The current Civil Service personnel system does not achieve these objectives because career civilians in the national security field rarely serve outside their parent department.121 We therefore recommend the following:

● 43: The Executive Branch should establish a National Security Service Corps (NSSC) to enhance civilian career paths, and to provide a corps of policy experts with broad- based experience throughout the Executive Branch.

Such a National Security Service Corps would broaden the experience base of senior departmental managers and develop leaders skilled at producing integrative solutions to U.S. national security policy problems.

Participating departments would include Defense, State, Treasury, Commerce, Justice, Energy, and the new National Homeland Security Agency—the departments essential to interagency policymaking on key national security issues. Members of the NSSC would not hold every position within these departments. Rather, each department would designate Corps positions. Members of the participating departments could choose to stay in positions outside the NSSC without career penalty. They would continue to be governed by the current Civil Service system.

In order to preserve the firewall that exists between intelligence support to policy and policymaking, intelligence community personnel would not be part of the NSSC. A limited number of rotational spots, however, should be held in selected interagency intelligence community centers (such as the Non-Proliferation Center and the Counter-Terrorism Center) to allow members of the Corps to understand better intelligence processes and products.

While the Foreign Service will remain separate from the NSSC, an organic relationship between the Foreign Service and the NSSC needs to exist. Members of the Corps would be

120 Seeking A National Strategy, p. 14. 121 For example, a recent OPM survey of SES personnel indicates that only nine percent of those surveyed have changed jobs to work in another agency since becoming an SES member, despite the fact that 45 percent said that mobility would improve job performance. See U.S. Office of Personnel Management and Senior Executives Association, pp. 27-8.

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eligible to compete for all policy positions at the Department of State’s headquarters while Foreign Service officers would be able to compete for NSSC positions in all the participating departments. In addition, NSSC personnel could fill select positions in some overseas embassies and at military unified commands. Over time, the difference between the Foreign Service and the NSSC could blur.

A rotational system and robust professional education programs would characterize the NSSC. In designating positions for Corps members, departments will need to identify basic requirements in education and experience. Rotations to other departments and interagency professional education would be required in order to hold certain positions or to be promoted to certain levels.122 Of course, a limited number of waivers could be granted to allow departments to fill particular gaps as necessary.

While the participating departments would still retain control over their personnel and would continue to make promotion decisions, an interagency advisory group will be key to the NSSC’s success. This group would ensure that promotion rates for those within the NSSC were at least comparable to those elsewhere in the Civil Service. They would help establish the guidelines for rotational assignments needed for a Corps member to hold a given position and for the means of meeting the members’ educational requirements. Such guidance and oversight will help ensure that there are compelling incentives for professionals to join the NSSC. For this type of interagency program to be successful, employees must see it as being in their own best interest to meet these new requirements.

The Commission believes such a Corps can be established largely through existing departmental authorities and through new regulations from OPM. Specific legislative authority is not necessary.

E. MILITARY PERSONNEL

oday the military is having even greater difficulty recruiting quality people than the Tcivilian sector of the government. Despite significant post-Cold War force reductions in recruiting goals, the Services have missed their quotas in some recent years.123 Moreover, recruiting costs have risen by nearly one-third over the last four years, while DoD quality indicators of those enlisting have declined by 40 percent.124 Some Services, struggling to fill ROTC programs with officer candidates, will continue to fall short for the next three years despite a much larger college population and reduced quotas for officer accessions.125

122 For example, departments might designate that personnel must hold one assignment outside his or her parent department in order to become a member of the SES and another such assignment to be promoted to SES-4. [SES pay scales are numbered one through six. An additional rotation is suggested for promotion to SES-4 because this is the pay grade at which many SES members serve during their final tours, when they generally have the highest level of responsibility for interagency activities.] 123 Data provided by the Office of the Secretary of Defense, showing both active and reserve recruiting results, July 2000. See also William S. Cohen, Annual Report to the President and the Congress (Washington DC: Department of Defense, 2000), chapter 4. 124 Statement of the Honorable Rudy De Leon, Under Secretary of Defense (Personnel and Readiness) before the Military Personnel Subcommittee of the Armed Service Committee, “Sustaining the All- Volunteer Force: Military Recruiting and Retention,” March 8, 2000. 125 Department of Defense, Quarterly Readiness Report to Congress, January-March 2000.

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Even more ominous are the problems in retaining quality personnel. Increased operational commitments are being carried out by a smaller number of military forces, which— along with aging equipment, stringent budgets, depleted family benefits, healthcare deficiencies, and spousal dissatisfaction—has engendered an atmosphere of widespread frustration throughout military ranks.126 Job satisfaction has declined significantly, and increasing numbers of quality people are leaving military service well in advance of retirement, or, in other cases, are retiring as soon as they are eligible.127 Moreover, data indicate that it is not just the junior officers who are leaving; retention of senior non-commissioned officers (NCOs) has declined as well.128

The Commission believes retention in the Services is a growing problem in part because the triple systems of “up-or-out” promotion, retirement, and compensation do not fit contemporary realities. The Defense Officer Personnel Management Act (DOPMA) of 1980129 mandates retirement at a specific time in an officer’s career depending on rank,130 or, in many cases, separation before retirement in cases of non-promotion up until the grade of O-4. This system itself stems, in part, from a 1947 assumption of a virtually unlimited pool of manpower geared for total war mobilization. The current environment, however, is very different. The supply of incoming personnel is limited and the skills required more specialized. Moreover, older people are not “unfit” for many of today’s critical military tasks, and the country cannot afford to squander the investment in training and experience that military professionals possess. The military services do not need to retain everyone, but they do need most of all to retain superior talent for longer periods.

Without decentralizing the career management systems, introducing new compensation incentives, and providing an array of institutional rewards for military service, the Commission

126 Some numbers illustrate the problem. The Navy is nine hundred pilots short of necessary levels, while the Air Force reported the largest peacetime pilot shortage in its history (1,200 pilots short of operational requirements). The Air Force pilot loss rate is projected to double by 2002 [William Taylor, S. Craig Moore, and C. Robert Roll, Jr., The Air Force Pilot Shortage: A Crisis for Operational Units? (Washington, DC: RAND, 2000, pp. iii and 1]. Over the past ten years, the Army has experienced a 58 percent increase in the percentage of Captains voluntarily leaving the military before promotion to Major [Information Paper TAPC-ARI-PS, October 22, 1999]. High-quality junior officers are also leaving military service earlier. In 1987, 38 percent of the Army’s West Point graduates left military service before ten years of active duty—the best retention rate among all Army commissioning sources. In 1999, 68 percent of West Point graduates left before the ten-year point, the lowest retention rate among all Army commissioning sources. [DMDC West DoD Officer Retention Data, July 2000, verified by Army Personnel Branch, July 2000]. High-quality Lieutenant Colonels/Colonels and their Navy equivalents (O-5s and O-6s who have had Department/Battalion/Squadron/Ship-level commands in their careers) are leaving early, as well. The Navy reports that both post-department officers and post-squadron Commanders are separating at a rate three times higher than a decade ago. 127 See “Spring 1999 Sample Survey of Military Personnel: Career Intent,” U.S. Army Research Institute for the Behavioral and Social Sciences Survey Report, October 1999. 128 Garnered from ten-year point junior officer retention data provided by Defense Manpower Data Center to USCNS/21, July 2000. 129 DOPMA Public Law 96-513. 130 Those Majors/Lieutenant Commanders not selected for promotion must normally retire at twenty years; Lieutenant Colonels and Navy Commanders must retire at 28 years if not selected for promotion to Colonel/Captain; Colonels, and Navy Captains have until the 30-years point to make promotion to flag officer rank before mandatory retirement; and most flag officers that remain in grade have a 35-year limit of commissioned service. It should be noted that most Colonels/Navy Captains know by the time of their promotion to O-6 whether they have a chance at further promotion. Most do not, and the incentives currently in place encourage those officers to retire at the earliest possible time. The result is a significant talent drain of officers who, under the current system, could have served at least five or six additional years.

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believes that the United States will be unable to recruit and retain the technical and educated professionals it needs to meet 21st century military challenges.

hese problems call for four sets of changes. First, the enhancement of the Tprofessional military must proceed hand in hand with the reinvigorization of the citizen soldier. Indeed, confronting many threats to our national security, including those to the American homeland, will necessarily rely heavily on reserve military components, as we have specified above in Section I, recommendation 6 in particular.

Second, we must change the ways we recruit military personnel. This means putting greater effort into seeking out youth on college campuses and providing grants and scholarships for promising candidates. The military must also innovate in such areas as rapid promotion, atypical career paths and patterns, and flexible compensation to attract and retain talented candidates. The Services must also offer a greater variety of enlistment options, including short enlistments designed to appeal to college youth, and far more attractive educational inducements.131 This may include scholarships, college debt deferral and relief, and significantly enhanced GI Bill rewards in exchange for military service.

Third, we must change the promotion system. Promotion has been, and remains, a primary way to reward performance. But the rigidity of the promotion system often has the effect of either taking those with technical specialties away from the job for which they are most valuable, or failing to provide timely and sufficient incentives for quality personnel to stay in military service. In the Commission’s view, the promotion system needs to be more flexible. Current law states that promotion rates must comply with Congressionally-mandated grade tables, which specify the number of personnel permitted in each grade by Service.132 This denies needed flexibility. Moreover, promotion should be only one of many rewards for military service. The Services need the flexibility, beyond new forms of fair and competitive compensation, to provide institutional benefits, including more flexible assignments, incentive retirement options, advanced education, alternative career paths, negotiable leaves of absence, and rewards for career- broadening experiences.

The fourth set of changes must address the military retirement system, which is centered on a twenty-year career path. If one serves fewer than twenty years or fails promotion to minimum grades, no retirement benefits are forthcoming either for officers or those in the enlisted ranks.133 In this “all-or-nothing” system, junior personnel have to commit themselves to a long- duration career. For those who make a twenty-year career choice, the system induces them to

131 Charles Moskos, Military Recruitment Survey, Northwestern University Students,” report prepared for the Commission, March 2000. 132 See DOPMA Public Law 96-513 §3202, 8202, 5444, 5442. 133 Military Retirement Act of 1986 (Public Law 99-348). This authorizes military benefits for personnel after twenty years of service at 40 percent of their five years’ highest basic pay. Effective October 1, 1999, the Military Retirement Act of 1986 (REDUX), U.S. Code, Title 10, §1409(b), was repealed by the National Defense Authorization Act 1999 (Public Law 106-65; U.S. Code, Title 10, §1409 (b) which restored to the military service members who entered military service after July 31, 1986, 50 percent of the highest three years average basic pay for twenty years of active duty service, rather than 40 percent under REDUX. Also, it provided for full cost of living adjustments (COLAs) rather than the Consumer Price Index (CPI) minus one percentage point under REDUX.

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leave the military in their early forties.134 In other words, the current system either requires separation at mandatory points for each grade, or actively entices all personnel who do make it to twenty years of service to leave at or just beyond that point.135

Talented people in uniform, generally in their early forties, thus confront a choice between working essentially at “half pay,” or beginning a second career at a time when they are generally most marketable.136 To those with particularly marketable skills (e.g., pilots, information technology professionals, and medical personnel), the inducements to leave often prove irresistible. But such cases are only the most visible portion of a widespread problem that induces high performers of every description to abandon the military profession. Thus the armed services lose enormous investments in training, education, and experience at the very moment that many mid-grade officers and mid-grade and senior NCOs are poised to make their most valuable contributions.

We urge the President and the Congress to give the Services the flexibility to adapt and dramatically reshape their personnel systems to meet 21st century mission needs. The 1947/1954/1980 legislation137 that defines military career management, coupled with legislation that governs military retirement and compensation, gives the Services too little authority to modernize and adapt their personnel systems at a time of accelerating change.138 Mandatory promotion rates, officer grade limitations for each Service, required separation points under “up- or-out,” rigid compensation levels, special pay restrictions and retirement limits, collectively bind the Services to the point of immobility. Similar restrictions and disincentives apply to enlisted careers and particularly affect senior NCOs and technical specialists.

Earlier in this section we strongly recommended a major expansion of the National Security Education Act (NSEA), as well as the creation of the National Security Science and Technology Education Act (NSSTEA), to provide significantly better incentives for quality personnel to serve in government—civil and military. The Commission believes that these Acts are especially relevant to the recruitment of high-caliber military personnel. In particular, programs offering either college scholarships or college loan repayments in exchange for service after graduation will make uniformed service more attractive to all segments of the population. In addition to the enactment of an expanded NSEA and the creation of a NSSTEA, we propose the following complement:

● 44: Congress should significantly enhance the Montgomery GI Bill, as well as strengthen recently passed and pending legislation supporting benefits—including transition, medical, and homeownership—for qualified veterans.

134 There is 2.5 percent increase in the retirement percentage of base pay for each year of service past twenty years, which stops at 30 years. In addition, 26 years of service is where the last bi-yearly longevity salary increase occurs. 135 DOPMA Public Law 96-513, §633 requires that Lt. Colonels and Navy Commanders who are not listed for promotion to the next higher grade be retired upon completion of 28 years of active commissioned service. 136 Half-pay is a term of art referring to the fact that after twenty years’ service, a soldier is entitled to 50 percent of pay upon retirement. Since a soldier would get half pay even if he were not still in service, staying in service can be characterized as working for the other 50 percent—hence the phrase “working for half pay.” 137 See Bernard Rostker, Harry Thie, James L. Lacy, Jennifer H. Kawata, and S.W. Purnell, The Defense Officer Personnel Management Act of 1980: A Retrospective (Santa Monica, CA: RAND, 1993). 138 Defense Science Board, p. 79

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The current version of the Montgomery GI Bill (hereafter GI Bill) is an educational program in which individuals first perform military service and then are eligible for educational benefits. While in military service, participants must authorize deductions from their salaries, to which the government then adds its contribution.139 To receive benefits while still in service, service men and women must remain on active duty for the length of their enlistment. To receive benefits after service, one must receive an honorable discharge. The GI Bill is both a strong recruitment tool and, more importantly, a valuable institutional reward for service to the nation in uniform.

Another important source of reward for military service is Title 38, which provides a range of veterans’ benefits including medical and dental care, transition training, and authorization for Veterans Administration (VA) homeownership loans. Collectively, VA benefits are an institutional reward for honorable military service and integral to the covenant between those who serve in the military and the nation itself. Given the historical value, relevance, and proven utility of these programs, we recommend restoration and enhancements to them as a way of rewarding and honoring military service.

GI Bill entitlements should equal, at the very least, the median education costs of four- year U.S. colleges, and should be indexed to keep pace with increases in those costs.140 Such a step would have the additional social utility of seeding veterans among the youth at elite colleges. The Bill should accelerate full-term payments to recipients, extend eligibility from ten to twenty years, and support technical training alternatives. The GI Bill’s structure should be an institutional entitlement that does not require payments or cost-sharing from Service members. It should allow transferability of benefits to qualified dependents of those Service members who serve more than fifteen years on active duty. In addition, it should carry a sliding scale providing automatic full benefits for Reserve and National Guard personnel who are called to active duty for overseas contingency operations.

We also believe that funding for these GI Bill institutional entitlements is not sufficient and should be separated within the defense budget to give the department more flexibility.141

139 The program is administered by the Veterans Administration, under agreements with the Secretary of Defense and the Secretary of Transportation, who submit an annual request to Congress detailing the necessary appropriations. Funds are transferred to the Veterans Administration from the Department of Defense Education Benefits Fund administered by the Treasury Department, or from appropriations made to the Department of Transportation in the case of the Coast Guard. 140See Veterans Administration web site October 2000, Summary of Educational Benefits under the Montgomery GI Bill Active Duty Educational Assistance Program, Chapter 30 of Title 38 U.S. Code and Selected Reserve Educational Assistance Program Chapter 1606 of Title 10 U.S. Code. Active duty servicemen and women can elect a $100/month reduction in pay for twelve months in exchange for up to 36 months of educational entitlements. The maximum entitlement rate is $552 per month. However, servicemen do not necessarily receive the full $552. Monthly rates are calculated according to the cost of tuition. Recipients are entitled to a full 36 months of benefits, not the compounded total of $552 for 36 months. Reservists do not contribute $100 per month, but receive a maximum of only $263 per month. Bill S1402, currently pending Presidential approval, would increase the Active Duty Rate to $650 per month in educational entitlements. In the event of death, the $1,200 reduction in pay is refunded, but benefits are non-transferable. 141 The College Board, Trends in College Pricing 2000. The College Board report indicates 2000-01 annual costs for a commuter student at a public four-year institution is $9,229 and $7,024 for a two-year institution. This far exceeds the current maximum GI Bill entitlement of $552 per month for active duty members.

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Additionally, Title 38, should be modified to reinforce medical, transition, and VA homeownership benefits for career and retired service members. We support recently proposed legislation on this and other veterans benefits, but believe that additional measures are still needed.

Taken together, such changes would fulfill the nation’s promise of real educational opportunities and place greater value on the service of military personnel. In addition, those in uniform are likely to serve longer to secure these greater benefits.

he laws that make military personnel systems rigid and overly centralized must be Taltered to provide the required flexibility to meet 21st century challenges. The Commission recommends the following:

● 45: Congress and the Defense Department should cooperate to decentralize military personnel legislation dictating the terms of enlistment/commissioning, career management, retirement, and compensation.

Specifically, revised legislation should include the following acts:

● 1980 DEFENSE OFFICER PERSONNEL MANAGEMENT ACT (DOPMA): Provide Service Secretaries increased authority to selectively exempt personnel from “up-or out” career paths, mandatory flight assignment gates, the double pass-over rule,142 mandatory promotion and officer/enlisted grade sizes, the mandatory retirement “flowpoints” by grade, and active duty service limits. The individual Services should be funded to test alternative career and enlistment paths that are fully complemented by modified compensation, promotion, and retirement/separation packages.

● 1999 NATIONAL DEFENSE AUTHORIZATION ACT: Permit testing of a conversion of the defined benefit systems to a partial defined contribution system, as well as early vesting schedules and other progressive alternatives to the current military retirement system. Allow the Services to shape modified retirement plans to complement alternative career paths and specialty service.

● U.S. CODE TITLE 37 (Compensation): Correct immediately the pay compression of senior NCOs in all the Services and test merit pay systems and alternative pay schedules based on experience, performance, and seniority.143 Allow Service Secretaries discretion concerning continued flight pay for pilots undergoing non-flying career-broadening billets by modifying the 1974 Aviation Career Incentive Act.

142 The double pass over rule refers to officers who have been in the primary zone for promotion to the next higher grade but who have been passed over for promotion for two consecutive years. Once such officers are passed over twice, they become subject to DOPMAs mandatory “up-or-out” exit flowpoints. 143 In 1964 senior enlisted leader (E-8s) pay was by comparison to junior enlisted (E-2’s) pay a 7:1 ratio. With the pay increases associated with the All-Volunteer Force, the ratio of senior to junior enlisted pay is currently 3:1. In other words, in relation to the junior personnel they supervise, senior enlisted service members are paid significantly less than senior NCOs were in the draft military. In addition, the advent of large enlistment and reenlistment bonuses for junior enlisted personnel menas that ratio of senior to junior enlisted pay has compressed even further.

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● SYSTEM INTEGRATION: Reconcile a new DOPMA system (active duty) with ROPMA (Reserves), with the Technician Act (1968), the Guard AGR Act (National Guard), and with Civil Service personnel systems to facilitate and encourage increased movement among branches.

his Commission understands that implementing these recommendations will take Ttime and require the support of the President, Congress, senior military officers, and Defense Department civilian leadership. We urge the creation of an Executive-Legislative working group that would set guidelines for service-centered trial programs. The working group should also evaluate new forms of enlistment options, selective performance pay, new career patterns, modified retirements for extended careers, and other initiatives that may support the Services. The group should undertake to estimate the projected costs as well as assess any unintended consequences that may result. At the same time, the Congressional Budget Office should further define and detail the costs of our proposed enhancements to the GI Bill and other veterans’ benefits.

These recommendations will cost money. Treating the GI Bill’s benefits as an entitlement, indexing tuition allotments with rising education costs, extending benefits to dependents, and enhancing veteran benefits to include medical, dental, and homeownership benefits will incur substantial costs. But we believe that the cost of inaction would be far more profound. If we do not change the present system, the United States will have to spend increasingly more money for increasingly lower-quality personnel.

Moreover, balanced against the initial costs of an enhanced National Security Education Act and a National Security Science and Technology Education Act would be long-term gains in recruiting and retaining quality personnel that would more than offset these costs. A 1986 Congressional Research Service study indicated that the country recouped between $5.00 and $12.50 for every dollar invested in the original GI Bill enacted after World War II.144 We believe this would also be the case under our proposed legislation. Moreover, there will be significant budgetary savings associated with reducing high first-term attrition, as well as with improving the retention of both mid-level enlisted personnel and junior officers, particularly in technical specialties.145

n sum, the Commission recommends major personnel policy reforms for both the Icivilian and the military domains. For the former, we emphasize the urgent need to revamp the Presidential appointment process for senior leadership, to attract talented younger cohorts to government service, to fix the Foreign Service, and to establish a National Security Service Corps that strengthens the government’s ability to integrate the increasingly interconnected facets of national security policy. With respect to military personnel, our recommendations point to increasing the attractiveness of government service to high-quality youth, providing enhanced rewards for that service, and modernizing military career management, retirement, and compensation systems. Each of this Commission’s recommendations in the area of the human requirements for national security aims to expand the pool of quality individuals, to decrease early attrition, and to increase retention.

144 This resulted from increased taxes paid by veterans who achieved higher incomes made possible by college education. 145 About one-third of all recruits do not complete their initial military obligation.

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The need is critical, but these reforms will go along way to avert or ameliorate the crisis. In a bipartisan spirit, we call upon the President and Congress to confront the challenge. Let it be their legacy that they stepped up to this challenge and rebuilt the foundation of the nation’s long- term security.

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V. The Role of Congress

his Commission has recommended substantial change in Executive Branch Tinstitutions, change that is needed if America is to retain its ability to lead the world and to assure the nation’s safety. A number of prominent leaders have exhausted themselves and frustrated their careers by too aggressively seeking to reform the House or Senate. The Legislative Branch, however, must change as well.

It is one thing to appeal to Congress to reform the State Department or the Defense Department, quite another to call on Congress to reform itself. Over the years since World War II, the Legislative Branch has been reformed and modernized much less than the Executive Branch. Indeed, the very nature of power in Congress makes it difficult for legislators to reform their collective institution. Yet American national security in the 21st century, and the prominent role of daily global involvement that is the nature of American life in our generation, mandates a serious reappraisal of both the individual and collective efforts of Congress and its members.

Such a reappraisal must begin with a shared understanding of the Legislative Branch’s role in the development and assessment of post-Cold War foreign policy. Divided Constitutional responsibilities require the Executive and Legislature to work together in order for U.S. foreign policy to have coherence. Yet the Executive Branch has at times informed rather than consulted Congress. It has often treated Congress as an obstacle rather than as a partner, seeking Congressional input mostly in times of crisis rather than in an ongoing way that would yield support when crises occur. For its part, Congress has not always taken full responsibility for educating its members on foreign policy issues. It is not often receptive to consultation with the Executive Branch, as well, and has sustained a structure that undermines rather than strengthens its ability to fulfill its Constitutional obligations in the foreign policy arena.

Several measures are needed to address these shortcomings and they are described below. But as an immediate first step we recommend that:

● 46: The Congressional leadership should conduct a thorough bicameral, bipartisan review of the Legislative Branch relationship to national security and foreign policy.

The Speaker of the House, the Majority and Minority leaders of the House, and the Majority and Minority leaders of the Senate should form a bipartisan, bicameral working group with select staff and outside advisory panels to review the totality of Executive-Legislative relations in the real-time global information age we are entering. Only by having the five most powerful members of the Congress directly involved is there any hope of real reform. They should work methodically for one year and, by the beginning of the second session of this Congress, they should report on proposed reforms to be implemented by the next Congress. The President, the Vice President, the National Security Advisor, and senior cabinet officers should work directly with this unique panel to rethink the structure of Executive-Legislative relations in the national security and foreign policy domains.

With that as a basis, reforms can and must be undertaken in three crucial areas: improving the foreign policy and national security expertise of individual members of Congress; undertaking organizational and process changes within the Legislative Branch; and achieving a sustained and effective Executive-Legislative dialogue on national security issues.

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espite the range of foreign policy challenges facing the United States, many current D members of Congress are poorly informed in this area. Their main electoral priorities are generally within domestic policy; foreign policy concerns are often limited to issues of concern to special interests or to prominent ethnic groups in their districts. Once in office, attention to foreign policy issues generally focuses on pending votes and looming crises. To build a broad base of informed and involved members on foreign policy issues, we recommend the following:

● 47: Congressional and Executive Branch leaders must build programs to encourage individual members to acquire knowledge and experience in both national security and foreign policy.

In particular, this means that:

● The Congressional leadership should educate its members on foreign policy and national security matters beyond the freshman orientation provided for new members. Such education should emphasize Congress’ foreign policy roles and responsibilities. We must reinforce the principle of minimal partisanship on foreign policy issues: that politics stops at the water’s edge. Effective education of members will ensure a more knowledgeable debate and better partnership with the Executive Branch on foreign policy issues. It also will allow members to become more effective educators of their constituencies about the importance of national security concerns.

● Members should be encouraged to travel overseas for serious purposes and each member should get letters from the President or from the head of their body formally asking them to undertake trips in the national interest. A concerted effort should be made to distinguish between junkets (pleasure trips at taxpayer expense) and the serious work that members need to undertake to learn about the world. A major effort should be made to ensure that every new member of Congress undertakes at least one serious trip in his or her first term, and is involved in one or more trips each year from the second term on.

● Legislature-to-legislature exchanges and visits should be encouraged and expanded. More funding and staffing should be provided to both accommodate foreign legislators visiting the United States and to encourage American legislators and their spouses to visit foreign legislatures. Much is to be gained by strengthening the institutions of democracy and by improving understanding among elected officials. This should get a much greater emphasis and much more institutional support than it currently does.

● The wargaming center at the National Defense University should be expanded so that virtually every member of Congress can participate in one or more war games per two- year cycle. By role-modeling key decision-makers (American and foreign), members of Congress will acquire a better understanding of the limits of American power, and of the reality that any action the United States takes invariably has multiple permutations abroad. Giving members of Congress a reason to learn about a region, about the procedures and systems of Executive Branch decision-making, and about crisis interactions will lead eventually to a more sophisticated Legislative Branch. On occasion, particularly useful or insightful games should lead to a meeting between the participating Congressmen and Senators and key Executive Branch officials.

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embers’ increased fluency in national security issues is a positive step but one that Mmust be accompanied by structural reforms that address how Congress organizes itself and conducts its business. Several recommendations concerning Congressional structure have already been made in this report: to create a special Congressional body to deal with homeland security issues (recommendation 7); to consider all of the State Department’s appropriations within the Foreign Operations subcommittee (recommendation 22); and to move to a two-year budget cycle for defense modernization programs (recommendation 31). To meet the challenges of the next quarter century, we recommend Congress take additional steps.

● 48: Congress should rationalize its current committee structure so that it best serves U.S. national security objectives; specifically, it should merge the current authorizing committees with the relevant appropriations subcommittees.

Our discussion of homeland security highlights the complexity and overlaps of the current committee structure. The Congressional leadership must review its structure systematically in light of likely 21st century security challenges and of U.S. national security priorities. This is to ensure both that important issues receive sufficient attention and oversight and the unnecessary duplication of effort by multiple committees is minimized.

Such an effort would benefit the Executive Branch, as well, which currently bears a significant burden in terms of testimony. The number of times that key Executive Branch officials are required to appear on the same topics in front of different panels is a minor disgrace. At a minimum, we recommend that a public record should be kept of these briefings and published annually. If that were done, it would become obvious to all observers that a great deal of testimony could be given in front of joint panels and, in some cases, bicameral joint panels. While we emphasize the need for strong consultation with the Legislative Branch, we need a better sense of what constitutes a reasonable amount of time that any senior Executive Branch official should spend publicly educating Congress.

Specifically, in terms of committee structure, we believe action must be taken to streamline the budgeting and appropriations processes. In 1974, Congress developed its present budget process as a way of establishing overall priorities for the various authorizations and appropriations committees. Over time, however, the budget process has become a huge bureaucratic undertaking and the authorization process has expanded to cover all spending areas. In light of this, there is no longer a compelling rationale for separate authorization and appropriations bills.

This is why we believe that the appropriations subcommittees should be merged with their respective authorizing committees. The aggregate committee (for example, the Senate Armed Services Committee) should both authorize and appropriate within the same bill. This will require realigning appropriations subcommittees. For example, appropriations relating to defense are currently dealt with in three subcommittees (defense, military construction, and energy and water); under this proposal, all appropriations would be made within the Senate Armed Services Committee.

This approach has at least two important merits. First, it furthers the aim of rationalizing committee jurisdiction because all appropriating and authorizing elements relating to a specific topic are brought within one committee. Second, it brings greater authority to those charged with oversight as well as appropriations. In the current system, power has shifted from the authorizing committees to the appropriating committees with a much-narrower budgetary focus. By

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combining the two functions, more effort may be paid to examining how foreign policy laws have been implemented, what their results have been, and how policy objectives can be better achieved. Finally, this new structure may facilitate adoption of two-year budgeting if efforts such as those proposed for defense modernization programs prove successful. The merged committee could authorize, in less detail, for the two-fiscal-year period while appropriating, in greater detail, for the first fiscal year.146

If this important reform were undertaken, then the budget committees in each house of Congress would consist of the Chairman and ranking member of each new combined committee. As part of the budget function, these two committees would distribute the macro-allocations contained in the budget resolution.

nce Congress has gotten its own house in order, it still remains to ensure that there is Oongoing Executive-Legislative consultation and coordination. Efforts to do so are beneficial not only so that both branches can fulfill their Constitutional obligations but also because effective consultation can improve the quality of U.S. policy. We have acknowledged this, for example, in our Defense Department planning recommendation, which defers detailed program and budget decisions until Congress has marked up the previous year’s submission.147 Because Congress is the most representative branch of government, Executive Branch policy that considers a range of Congressional views is more likely to gain public support. The objections raised by differing Congressional opinions can refine policy by forcing the administration to respond to previously unconsidered concerns. Finally, Congress can force the President and his top aides to articulate and explain administration policy—so the American people and the world can better understand it.

Given these benefits, efforts must be undertaken to improve the consultative process. Indeed, a coherent and effective foreign policy requires easy and honest consultation between the branches. The bicameral, bipartisan panel put forward in recommendation 46 is a good first step in this process, but additional processes must be established to ensure that such efforts are ongoing. Therefore, we recommend the following:

● 49: The Executive Branch must ensure a sustained focus on foreign policy and national security consultation with Congress and devote resources to it. For its part, Congress must make consultation a higher priority and form a permanent consultative group of Congressional leaders as part of this effort.

A sustained effort at consultation must be based on mutual trust, respect, and partnership and on a shared understanding of each branch’s role. The Executive Branch must recognize Congress’ role in policy formulation and Congress must grant the Executive Branch flexibility in the day-to-day implementation of that policy. Congress must also ensure that if it is consulted and its criticisms are taken seriously, it will act with restraint and allow the Executive Branch to lead. For his part, the President must convey to administration officials the importance of ongoing, bipartisan consultation and dialogue. Efforts must not be limited to periods of crisis. Further, administration officials should take into consideration the differences in knowledge and perspective among members.

146 Two-year budgeting specifically for DoD modernization accounts would entail authorization and appropriation for both fiscal years simultaneously, if our recommendation 31is adopted. 147 See the discussion on page 69 following recommendation 28.

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Beyond these general principles, specific mechanisms can facilitate better consultation:

● Congress should create a permanent consultative group composed of the Congressional leadership and the Chairmen and ranking members of the main Congressional committees involved in foreign policy. Other members with special interest or expertise could join the group’s work on certain issues. The group would meet regularly—in informal and private sessions—with representatives of the Executive Branch. While these may regularly be Cabinet officials, they may often be at the Under Secretary level. This will make possible a regular dialogue with knowledgeable administration officials, allowing the Congressional group not only to respond to crises but to be part of the development of preventive strategies. The agenda for these meetings would not be strictly limited, allowing members to raise issues they are concerned about. The group would also meet on an emergency basis whenever the President considers military action abroad or deals with a foreign policy crisis.

● Beyond this interaction between the leadership of both branches, the administration must reach out to consult with a broader Congressional group. This will involve increasing the number of administration representatives working to consult with Congress and assigning high-quality people to that task. The Executive must send mid-level, as well as high-level, officials to Capitol Hill and keep closer track of the foreign policy views and concerns of every member of Congress. Only through such concerted efforts, combined with the aforementioned education initiatives, will there be a critical mass of members knowledgeable of and engaged in foreign policy issues.

● Finally, in order for Congress to be most effective in partnering with the Executive Branch, it must undertake its own consultation with a broad group of leaders in science, international economics, defense, intelligence, and in the high-technology, venture- capital arena. Congress is far more accessible to this expertise than the Executive Branch and should work to bring these insights into consultations. To do this, however, Members of Congress need regular and direct dialogue with experts without the screen of their staffs. The best experts in these fields are vastly more knowledgeable than any Congressional staff member, and there needs to be a routine system for bringing members of Congress in touch with experts in the areas in which they will be making decisions.148 All four parts of the National Academies of Science should play key roles in bringing the most knowledgeable scientists and engineers in contact with members of the Legislative Branch.149 Policy institutions with deep reservoirs of expertise on defense and foreign policy, too, can help build Congressional fluency with these issues with a measure of detachment and independent perspective. Similar institutions need to be engaged in other areas.

n effective national security policy for the 21st century will require the combined Aresources of the Executive and Legislative Branches. While much of this report has rightly focused on the needs for reform within Executive Branch structures and processes, corresponding efforts must be undertaken for Congress. We believe that a tripartite effort focused on the foreign policy education of members, the restructuring of the Congressional committee

148 A problem well described years ago in C.P. Snow, Science and Government (Cambridge, MA: Harvard University Press, 1961). 149 Note 27 in Section II, on page 34, lists these four constituent parts.

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system, and stronger Executive-Legislative consultative efforts will go a long way to ensuring that the United States can meet any future challenges.

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A Final Word

ased on its assessment of the next 25 years (Phase I), this Commission has devised a B strategy (Phase II) and a program of reform to aid in the achievement of that strategy (Phase III). We propose significant change, and we know that change takes time. We also know that some proposals, however insightful and practical they may be, are never implemented for lack of determined leadership or appropriate method.

We are optimistic that the new administration and the new Congress will pursue the recommendations made here because we believe those recommendations are persuasive on the merits. We are also mindful that, following the 2000 election, the opportunity for the Executive and Legislative Branches together to concentrate on bipartisan efforts to advance the national interest will be particularly appealing. Our recommendations, from a Commission composed of seven Democrats and seven Republicans, fall entirely into that category.

ut what of a method? The President may choose any of several models for B implementing this Commission’s recommendations: an independent advisory commission overseen by the Vice President or some other senior official; a prestigious Special Advisor working with the Executive Office of the President; a joint Executive-Legislative commission with one co-chairman appointed by the President and one by the House and Senate leadership; a group of “Wise Men” drawn from former high government officials of both parties and from the private sector; a special NSC committee; or some combination of these possibilities.

The specific method adopted, however, is a secondary matter. What is crucial is that the President create some mechanism to ensure the implementation of the recommendations proffered here. We therefore recommend the following:

● 50: The President should create an implementing mechanism to ensure that the major recommendations of this Commission result in the critical reforms necessary to ensure American national security and global leadership over the next quarter century.

The reason this is necessary is that the President, along with all of his top national security advisors, will be busy enough dealing with immediate policy issues. Unless the job of implementing reform is taken seriously, and unless the chosen mechanism designates senior officials to be responsible and accountable for guiding reform, the momentum for real change will quickly dissipate.

In our view, this would be tragic. The difference, for example, between a properly reformed Defense Department and the one we have today may be measured in tens of billions of dollars saved each and every year. The difference between a more effective organization for the Department of State and the crippled organization of today may be measured by opportunities lost in preventing devastating crises abroad that affect American interests and values alike. The difference between a better way of managing science and education and the way it is done now may be measured by the capacity for U.S. global leadership a quarter century hence. The difference between a government personnel system that can attract and keep the highest caliber human capital and one that cannot may be measured by the success or failure of the full range of U.S. national security policies. The difference between modern government organization for

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homeland security and the diffuse accretion of agencies and responsibilities we have today may be measured in tens of thousands of American lives saved or lost. The stakes of reform are very high.

This Commission has done its best to propose serious solutions for deadly serious problems. It is now up to others to do their best to ensure that our efforts are put to their best use for the sake of the American people. That is a task measured in leadership.

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Index

2 MTW, 76, 78 Acquisition process, x, 8, 63, 70, 71, 73, 74, 75, 78 Agency for International Development, U.S., xi, 52, 53, 54, 59, 60, 61 Agriculture, Department of, 34, 38 Ambassadors, United States, xii, 23, 47, 61, 62, 92, see also United Nations, Permanent Representative to the Appropriations subcommittees, xvii, 58, 111 Arms control, 12, 52 Army, 77 Atomic Energy Commission, U.S., 37-38 Authorizing committees, xvii, 111 Ballistic-missile defense, see National Missile Defense Base Realignment and Closures (BRAC), 66 Bioscience, 38-39, see also National Advisory Commission on Bioscience Biological agents, 11, 16 Biotechnology, 2, 3, 7, 37-38 Border Patrol, viii, 15-18 Brown-Rudman Commission (Commission on the Roles and Capabilities of the United States Intelligence Community), 83 Budget, 16, 47, 48, 55, 59 functional budgeting, 34 Department of Defense budget, 68, 73, see also Planning, Programming, and Budgeting System (PPBS) two-year budgeting, xiii, 73, 112 Department of State budget, 55-56 National Foreign Intelligence Program (NFIP) budget, xiv, 84 national security budget, 49 R&D budget, 32, 33, 34; Centers for Disease Control, 15, 26 Central Intelligence Agency (CIA), 18, 84, 92, 98, 101 Chemical agents, 16 Circular A-76, see Office of Management and Budget (OMB) Citizen soldier, 104 Civil liberties, 11 Civil Service, xv, xvi, 86, 87, 89, 95, 97, 98, 100, 101, 108 Civilian personnel, see Personnel, civilian Clinton Administration, 90, 100 Coast Guard, U.S., viii, 12, 16, 17, 18 Commander-in-Chief (CINC), regional, 62-63, 65-66, 69 Supreme Allied Commander-Atlantic (SACLANT), 66 Commerce, Department of, xiv, xvi, 34, 52, 58, 62, 80, 97, 101 Congress, x, xi, xvii, xviii, 8-11, 17, 26-28, 32, 39, 42, 47, 49, 53, 54, 58-59, 63-64, 66- 67, 72- 75, 78, 84, 88, 92, 94, 98, 100, 107-108, 110-116 Congressional Reform, viii, 110-117 Congressional leadership, xvii, 110 Congressional Budget Office, 108 Congressional Research Service, 35 Counter-terrorism, see terrorism

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Critical infrastructure, 10, 13, 14, 18, 19, 23, 24, 81 Critical Infrastructure Assurance Office (CIAO), 19 President’s Commission on Critical Infrastructure Protection (PCCIP), 18 Customs Service, viii, 12, 15-18 Cyber, 10, 13, 14, 17, 19, 23, 31, 82 Cyber Corps, 100 Defense, Department of, viii, x, xii, xiii, xiv, xvi, 8, 10-11, 13, 18, 20, 23-25, 34, 47-48, 52-53, 62-81, 91-92, 94, 101-102, 107-108, 110, 113, 116 Secretary of, xii, xiii, 21-22, 25, 63, 65-66, 68-69, 71-73, 92 Office of the Secretary of Defense (OSD), 23, 65, 76, 81 Assistant Secretary of Defense for Strategy and Planning, 64 Office of the Under Secretary for Policy, 64 Special Operations Low-Intensity Conflict (SOLIC) Under Secretary for Space, Intelligence, and Information, 81 See also homeland security, Assistant Secretary of Defense for Defense Advanced Research Projects Agency (DARPA), 36, 69 Defense industrial base, xii, xiii, 30, 31, 70 Defense Officer Personnel Management Act (DOPMA), 103, 107, 108 Defense Planning Guidance (DPG), 67 Defense Program Review, 77 Defense Threat Reduction Agency (DTRA), 64 Director of Central Intelligence, see intelligence Domestic Policy Council, xi, 52 Economics, v, xi, 47, 51-52, 88, 94, 95, 113 Education, science and mathematics, v, viii, 30-46, 47 Department of Education, 42, 43, 44, 116 Endowments, 36, 44 Educational incentives, see National Security Science and Technology Education Act and National Security Education Act of 1991 Energy, Department of, xvi, 2, 22, 34, 36, 90, 101 Engineering, see science and technology Environmental Protection Agency, 22 Executive Branch, ix, x, xviii, 8-11, 16, 26-28, 33, 47-48, 50, 88, 92, 101, 110-116 Executive-Legislative, xvii, 11, 26, 28, 66, 99,108, 109, 112, 114, 115 Executive Order 12834, 92 Federal Acquisition Regulations (FARS), xiii, 75 Federal Bureau of Investigation (FBI), 18-21, 91, 93 Federal Communications Commission (FCC), 20, 23 Federal Emergency Management Agency (FEMA), viii, 15, 17, 21, 26 Federal Response Plan, 20, 22 Food and Drug Administration, 38 Force Structure, 48, 63, 68, 71, 76-78, 99 Foreign assistance programs, 50, 52-53, 55-56, 58-59, 61 Foreign Operations subcommittee, 58, 112 Foreign Service, xv, xvi, 52, 59, 87, 89, 94-96, 102, 108, see also U.S. Diplomatic Service General Accounting Office, 35 Glenn Commission (National Commission on Mathematics and Science Teaching for the 21st Century), 42 Health and Human Services, Department of, 15, 22, 26, 34 Historically Black Colleges and Universities, 45 Homeland security, vi; xi, 10-29, 49, 76

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Assistant Secretary of Defense for, ix, 23, 24 Congressional role in, ix, 26-29, 112 Medical Community, role in, 20, 26 National Homeland Security Agency (NHSA), vi, viii, xvi, 15, 17-20, 25, 28, 77, 101 Critical Information Technology, Assurance, and Security Office (CITASO), 19, 20, 24 Directorate for Critical Infrastructure Protection, 17-20, 23 Directorate for Emergency Preparedness and Response, 18, 20-21, 26 Directorate of Prevention, 17-18 Defense Coordinating Officer, 21-22 Federal Coordinating Officer, 21-22 House of Representatives, 10, 110, 116 House leadership, see Congressional leadership Immigration and Naturalization Service, Department of, 15, 16, 46 Information technology (IT), 16, 24, 37, 61, see also personnel, information technology Information Sharing and Analysis Centers (ISACs), 19, 20 Institutional Redesign, viii, x-xiv, 47-85 Intelligence, 3, 12-13, 16, 18, 20, 22, 24, 28, 47, 78-79, 81, 114; community, x, xiv, 8, 11, 22-23, 48, 80, 82-85, 97, 101; Director of Central Intelligence, xiv; 49, 80, 82, 84, 92 human intelligence (HUMINT), 22, 83-84 intelligence estimates, 23, 76 National Intelligence Council, 23 technical intelligence, 22, 84-85 International Affairs Budget (Function 150), 58 Joint Chiefs of Staff, Chairman of the, 49, 80 Joint Forces Command, 21, 24, 66 Joint Requirements Oversight Council (JROC), 65 Joint Staff, xii, 65, 69 Joint Task Force-Civil Support, 22, 24 Joint Warfighting Capability Assessment (JWCA), 65 Justice, Department of, viii, xvi, 15, 20, 22, 58, 62, 101 Law enforcement, 11, 17, 20, 28, 50, 52 Legislative Branch, xviii, 11, 16, 28, 92, 110, 114-116 Major Force Programs, xiii, 64, 77 Marine Corps, 77 Military, xiv, xv, xvi, 41-42, 49, 62, 65-66, 70, 78-79, 87 Military Personnel, see personnel, military Montgomery GI Bill (GI Bill), xvi, 104, 106-108, see also personnel, military Nanotechnology, 3, 31, 33, 37, 39 National Academy of Science, 34, 35, 37, 114 National Advisory Commission on Bioscience, 38 National Aeronautics and Space Administration (NASA), xiv, 36, 81 National Bioethics Advisory Commission, 38 National Crisis Action Center (NCAC), 17, 18, 21, 22 National Defense University, 111 National Domestic Preparedness Office, 21 National Economic Council, xi, 51, 52, 80 National Foreign Intelligence Program (NFIP), see budget National Guard, ix, xvi, 10, 14, 17, 20, 21, 24, 25, 26, 89, 106, 108

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Army National Guard, 25 National Imagery and Mapping Agency (NIMA), 80 National Infrastructure Protection Center (NIPC), 19 National Institutes of Health, 37 National Institute of Standards and Technology, 34 National Intelligence Council, see intelligence National laboratories, ix, 37 National Math and Science Project, 42 National Military Strategy (NMS), 67-68 National Missile Defense (NMD), 13, 80 National Oceanic and Atmospheric Administration (NOAA), xiv, 81 National Reconnaissance Office (NRO), 80 National Research Council, 44 National Science Board, 34, 35 National Science Foundation, 34, 44 National Science and Technology Council, 33, 36-37, 80 National Security Act of 1947, 8, 49, 83 National Security Advisor, xi, 48, 50-51, 53, 110 Deputy National Security Advisor, 52 National Security Agency (NSA), 98, 100 National Security Council (NSC), viii, x, xi, xiv, 15, 24, 26, 48-49, 51-53, 62-64, 68, 80, 83, 116 National Security Council staff, 47, 49-50, 80-81, 101 National Security Education Act of 1991 (NSEA), xv, xvi, 89, 94, 98, 105, 106, 108 National Security Science and Technology Education Act, ix, xvi, 41, 43, 44, 86, 88-89, 97, 104- 106, 108 National Security Service Corps (NSSC), xvi, 92, 101, 102, 108 National Security Space Architect (NSSA), 81 National Security Strategy (NSS), 67, 78 National Security Teaching Program, 41-43, 45 National Technical Information Service, 34 National Writing Project, 42-43 Navy, 17 New World Coming, see Phase I Non-Commissioned Officers (NCOs), 103, 105, 107 Non-governmental organizations (NGOs), 3, 53, 54 nonproliferation, 12, 49, 52, 60 Non-Proliferation Center, 102 Quadrennial Defense Review, xii, 68-69 Office of Government Ethics, see Presidential appointment process Office of Management and Budget (OMB), 20-21, 33-35, 48-49, 67, 80 Circular A-76, 66-67 Office of Personnel Management (OPM), 35, 99, 100, 102 Office of Science and Technology Policy (OSTP), 33-35, 37, 46, 80 President’s Science Advisor, ix, 35-37 Office of the Secretary of Defense (OSD), see Defense, Department of Overseas Advisory Presence Panel, 96, 99 Patent and Trademark Office, U.S., 34 President’s Commission on Critical Infrastructure Protection (PCCIP), see critical infrastructure Personnel, 19, 35, 86-109, 116 civilian, 86-89, see also Civil Service, Foreign Service, National Security Service Corps, and Presidential appointment process

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information technology, 96-100 military, 86, 88-89, 102-109 recruitment 86-87, 89 retention, 103, 109 professionalism, 86, 90, 104 recruitment, 86-88, 90, 94, 98, 102 retention, 86-89, 103, 109 scientific and technical personnel, 30, 35 Phase I, v, vi, viii, 2, 6, 10, 60, 86, 116 Phase II, v, vi, viii, xiii, 2, 5, 77, 83, 86-87, 101, 116 Planning, Programming, and Budgeting System (PPBS), 67-69 Political appointment process, see Presidential appointment process President, x-xii, xv, xviii, 14-15, 21, 25, 32, 35, 46-50, 52, 55, 58, 61-63, 68-69, 80, 83- 84, 88, 90, 93-94, 96, 98, 108, 110, 113-114, 116 Presidential appointment process, xv, 68, 89-94 Presidential Decision Directive 63 (PDD-63), 18 Public-private, 12, 13 Research and development, 30-34, 36, 72-73, 84 Reserves, xvi, 21, 89, 104, 106, 108 Reserve Officer Personnel Management Act (ROPMA), 108 Reserve Officer Training Corps (ROTC), 89, 100, 103 Science and technology, viii, 11, 17, 30-46, 49, 84, 86-88, 114, 116 President’s Council of Advisors on Science and Technology (PCAST), 33, 37 See also National Science and Technology Council (NSTC), National Security Science and Technology Education Act (NSSTEA), and White House Office of Science and Technology Policy (OSTP) Seeking a National Strategy, see Phase II Senate, 10, 90, 91, 110, 116 Services Armed Services Committee, 91, 112 Senate Arms Control Observer Group, 28 Senate leadership, see Congressional leadership Senior Executive Service (SES), 92, 97 Service, government, 86-109 Institutional rewards for, Space, xiv, 2, 8, 48 Space Policy, 78-81 Interagency Working Group on Space, xiv, 80 National Security Space Architect, xiv, 81 State, Department of, x-xi, xiv, xvi, 8, 23, 47-48, 50, 52-63, 80, 87, 94-96, 101-102, 110, 112, 116 Secretary of, xi- xii, 49, 53-55, 57-59, 62-63, 92, 96 Strategic Planning, Assistance, and Budget Office, 56, 58, 60-61 Under Secretaries of State, 53-54, 57-60 Strategic planning, iv, viii, xi-xii, 48-49, 55, 64, 82, see also State, Strategic Planning, Assistance, and Budget Office Teachers, 39-46 National Security Teaching Program, 41-43, 45 Terrorism, xiv, 5, 12-14, 16, 21-23, 25, 26, 81 Counter-terrorism, xi, 18, 28, 47-49, 59 Counter-Terrorism Center, 102 Trade Representative, United States (USTR), 51, 52, 101

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Transportation, Department of, 15, 80 Treasury, Department of, xvi, 15, 51-52, 84, 97, 101 Secretary of, xi, 51-52, 62 United Nations, Permanent Representative to the, xii, 61 “Up or Out” personnel systems, 94, 103, 105, see also personnel U.S. Agency for International Development, see Agency for International Development, U.S. U.S. Code, 93 Title 37, 107 Title 38, 106-107 U.S. Diplomatic Service, 96 Veterans, xvi, 105, 106, 108 Veterans Administration (VA), 106-107 Weapons of mass destruction, 5, 7, 10, 12, 18, 21, 23, 25-28, 30, 77 Weapons of mass disruption, 10, 28 White House staff, 49-51, 91

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APPENDIX 1 The Recommendations

his appendix lists all of the Phase III Report’s major recommendations in order of Ttheir presentation. The recommendations are numbered sequentially and grouped by Section. The page on which the recommendation appears in the report is noted in the box. Those recommendations in red type indicate recommendations on which Congressional action is required for implementation. Those in blue type can be implemented by Executive Order. Those in green type can be implemented by the head of an Executive Branch department or agency, or by the Congressional leadership, as appropriate.

Securing the National Homeland

1: The President should develop a comprehensive strategy to heighten America’s ability to prevent and protect against all forms of attack on the homeland, and to respond to such attacks if prevention and protection fail. (p. 11)

2: The President should propose, and Congress should agree to create, a National Homeland Security Agency (NHSA) with responsibility for planning, coordinating, and integrating various U.S. government activities involved in homeland security. The Federal Emergency Management Agency (FEMA) should be a key building block in this effort. (p. 15)

3: The President should propose to Congress the transfer of the Customs Service, the Border Patrol, and Coast Guard to the National Homeland Security Agency, while preserving them as distinct entities. (p. 15)

4: The President should ensure that the National Intelligence Council: include homeland security and asymmetric threats as an area of analysis; assign that portfolio to a National Intelligence Officer; and produce National Intelligence Estimates on these threats. (p. 23)

5: The President should propose to Congress the establishment of an Assistant Secretary of Defense for Homeland Security within the Office of the Secretary of Defense, reporting directly to the Secretary. (p. 23)

6: The Secretary of Defense, at the President’s direction, should make homeland security a primary mission of the National Guard, and the Guard should be organized, properly trained, and adequately equipped to undertake that mission. (p. 25)

7: Congress should establish a special body to deal with homeland security issues, as has been done with intelligence oversight. Members should be chosen for their expertise in foreign policy, defense, intelligence, law enforcement, and appropriations. This body should also include members of all relevant Congressional committees as well as ex-officio members from the leadership of both Houses of Congress. (p. 28)

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Recapitalizing America’s Strengths in Science and Education

8: The President should propose, and the Congress should support, doubling the U.S. government’s investment in science and technology R&D by 2010. (p. 32)

9: The President should empower his Science Advisor to establish non-military R&D objectives that meet changing national needs, and to be responsible for coordinating budget development within the relevant departments and agencies. (p. 34)

10: The President should propose, and the Congress should fund, the reorganization of the national laboratories, providing individual laboratories with new mission goals that minimize overlap. (p. 37)

11: The President should propose, and Congress should pass, a National Security Science and Technology Education Act (NSSTEA) with four sections: reduced-interest loans and scholarships for students to pursue degrees in science, mathematics, and engineering; loan forgiveness and scholarships for those in these fields entering government or military service; a National Security Teaching Program to foster science and math teaching at the K- 12 level; and increased funding for professional development for science and math teachers. (p. 41)

12: The President should direct the Department of Education to work with the states to devise a comprehensive plan to avert a looming shortage of quality teachers. This plan should emphasize raising teacher compensation, improving infrastructure support, reforming the certification process, and expanding existing programs targeted at districts with especially acute problems. (p. 43)

13: The President and Congress should devise a targeted program to strengthen the historically black colleges and universities in our country, and should particularly support those that emphasize science, mathematics, and engineering. (p. 45)

Institutional Redesign

14: The President should personally guide a top-down strategic planning process and delegate authority to the National Security Advisor to coordinate that process. (p. 48)

15: The President should prepare and present to the Congress an overall national security budget to serve the critical goals that emerge from the NSC strategic planning process. Separately, the President should continue to submit budgets for individual national security departments and agencies for Congressional review and appropriation. (p. 49)

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16: The National Security Council (NSC) should be responsible for advising the President and for coordinating the multiplicity of national security activities, broadly defined to include economic and domestic law enforcement activities as well as the traditional national security agenda. The NSC Advisor and staff should resist the temptation to assume a central policymaking and operational role. (p. 51)

17: The President should propose to the Congress that the Secretary of Treasury be made a statutory member of the National Security Council. (p. 52)

18: The President should abolish the National Economic Council, distributing its domestic economic policy responsibilities to the Domestic Policy Council and its international economic responsibilities to the National Security Council. (p. 52)

19: The President should propose to the Congress a plan to reorganize the State Department, creating five Under Secretaries, with responsibility for overseeing the regions of Africa, Asia, Europe, Inter-America, and Near East/South Asia, and redefining the responsibilities of the Under Secretary for Global Affairs. These new Under Secretaries would operate in conjunction with the existing Under Secretary for Management. (p. 54)

20: The President should propose to the Congress that the U.S. Agency for International Development be consolidated into the State Department. (p. 56)

21: The Secretary of State should give greater emphasis to strategic planning in the State Department and link it directly to the allocation of resources through the establishment of a Strategic Planning, Assistance, and Budget Office. (p. 56)

22: The President should ask Congress to appropriate funds to the State Department in a single integrated Foreign Operations budget, which would include all foreign assistance programs and activities as well as all expenses for personnel and operations. (p. 58)

23: The President should ensure that Ambassadors have the requisite area knowledge as well as leadership and management skills to function effectively. He should therefore appoint an independent, bipartisan advisory panel to the Secretary of State to vet ambassadorial appointees, career and non-career alike. (p. 62)

24: The Secretary of Defense should propose to Congress a restructuring plan for the Office of the Under Secretary of Defense for Policy that would abolish the office of the Assistant Secretary for Special Operations and Low-Intensity Conflict (SOLIC), and create a new office of an Assistant Secretary dedicated to Strategy and Planning (S/P). (p. 64)

25: Based on a review of the core roles and responsibilities of the staffs of the Office of the Secretary of Defense, the Joint Staff, the military services, and the CINCs, the Secretary of Defense should reorganize and reduce those staffs by ten to fifteen percent. (p. 65)

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26: The Secretary of Defense should establish a ten-year goal of reducing infrastructure costs by 20 to 25 percent through outsourcing and privatizing as many DoD support agencies as possible. (p. 66)

27: The Congress and the Secretary of Defense should move the Quadrennial Defense Review to the second year of a Presidential term. (p. 68)

28: The Secretary of Defense should introduce a new process that would require the Services and defense agencies to compete for the allocation of some resources within the overall Defense budget. (p. 69)

29: The Secretary of Defense should establish and employ a two-track acquisition system, one for major acquisitions and a second, “fast track” for a limited number of potential breakthrough systems, especially those in the area of command and control. (p. 71)

30: The Secretary of Defense should foster innovation by directing a return to the pattern of increased prototyping and testing of selected weapons and support systems. (p. 72)

31: Congress should implement two-year defense budgeting solely for the modernization element of the DoD budget (R&D/procurement) because of its long-term character, and it should expand the use of multiyear procurement. (p. 73)

32: Congress should modernize Defense Department auditing and oversight requirements by rewriting relevant sections of U.S. Code, Title 10, and the Federal Acquisition Regulations. (p. 75)

33: The Secretary of Defense should direct the DoD to shift from the threat-based 2MTW force sizing process to one which measures requirements against recent operational activity trends, actual intelligence estimates of potential adversaries’ capabilities, and national security objectives once formulated in the new administration’s national security strategy. (p. 76)

34: The Defense Department should devote its highest priority to improving and furthering expeditionary capabilities. (p. 78)

35: The President should establish an Interagency Working Group on Space (IWGS) at the National Security Council to coordinate all aspects of the nation’s space policy, and place on the NSC staff those with the necessary expertise in this area. (p. 80)

36: The President should order the setting of national intelligence priorities through National Security Council guidance to the Director of Central Intelligence. (p. 83)

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37: The Director of Central Intelligence should emphasize the recruitment of human intelligence sources on terrorism as one of the intelligence community’s highest priorities, and ensure that operational guidelines are balanced between security needs and respect for American values and principles. (p. 83)

38: The intelligence community should place new emphasis on collection and analysis of economic and science/technology security concerns, and incorporate more open source intelligence into analytical products. Congress should support this new emphasis by increasing significantly the National Foreign Intelligence Program (NFIP) budget for collection and analysis. (p. 84)

The Human Requirements for National Security

39: Congress should significantly expand the National Security Education Act (NSEA) to include broad support for social sciences, humanities, and foreign languages in exchange for military and civilian service to the nation. (p. 89)

40: The Executive and Legislative Branches should cooperate to revise the current Presidential appointee process by reducing the impediments that have made high-level public service undesirable to many distinguished Americans. Specifically, they should reduce the number of Senate confirmed and non-career Senior Executive Service (SES) positions by 25 percent; shorten the appointment process; and revise draconian ethics regulations. (p. 92)

41: The President should order the overhauling of the Foreign Service system by revamping the examination process, dramatically improving the level of on-going professional education, and making leadership a core value of the State Department. (p. 95)

42: The President should order the elimination of recruitment hurdles for the Civil Service, ensure a faster and easier hiring process, and see to it that strengthened professional education and retention programs are worthy of full funding by Congress. (p. 98)

43: The Executive Branch should establish a National Security Service Corps (NSSC) to enhance civilian career paths, and to provide a corps of policy experts with broad-based experience throughout the Executive Branch. (p. 101)

44: Congress should significantly enhance the Montgomery GI Bill, as well as strengthen recently passed and pending legislation supporting benefits—including transition, medical, and homeownership—for qualified veterans. (p. 106)

45: Congress and the Defense Department should cooperate to decentralize military personnel legislation dictating the terms of enlistment/commissioning, career management, retirement, and compensation. (p. 107)

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The Role of Congress

46: The Congressional leadership should conduct a thorough bicameral, bipartisan review of the Legislative Branch relationship to national security and foreign policy. (p. 110)

47: Congressional and Executive Branch leaders must build programs to encourage individual members to acquire knowledge and experience in both national security and foreign policy. (p. 111)

48: Congress should rationalize its current committee structure so that it best serves U.S. national security objectives; specifically, it should merge the current authorizing committees with the relevant appropriations subcommittees. (p. 112)

49: The Executive Branch must ensure a sustained focus on foreign policy and national security consultation with Congress and devote resources to it. For its part, Congress must make consultation a higher priority and form a permanent consultative group of Congressional leaders as part of this effort. (p. 113)

50: The President should create an implementing mechanism to ensure that the major recommendations of this Commission result in the critical reforms necessary to ensure American national security and global leadership over the next quarter century. (p. 116)

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APPENDIX 2 Charter of the U.S. Commission on National Security/21st Century

SEC. 1. ESTABLISHMENT AND PURPOSE.

The Department of Defense recognizes that America should advance its position as a strong, secure, and persuasive force for freedom and progress in the world. Consequently, there is a requirement to: 1) conduct a comprehensive review of the early 21st Century global security environment, including likely trends and potential "wild cards"; 2) develop a comprehensive overview of American strategic interests and objectives for the security environment we will likely encounter in the 21st Century; 3) delineate a national security strategy appropriate to that environment and the nation's character; 4) identify a range of alternatives to implement the national security strategy, by defining the security goals for American society, and by describing the internal and external policy instruments required to apply American resources in the 21st Century; and 5) develop a detailed plan to implement the range of alternatives by describing the sequence of measures necessary to attain the national security strategy, to include recommending concomitant changes to the national security apparatus as necessary. A Commission, the U.S. Commission on National Security/21st Century (USCNS/21), will be established to fulfill this requirement, supported by a Study Group. Two individuals who have national recognition and significant depth of experience and public service will oversee the efforts of this Commission and serve as its Co-chairpersons. The study effort shall be conducted by a Study Group, composed of individuals who will be appointed as Department of Defense (DoD) personnel, in accordance with Section VI below. Based on the results of this study and the Commission's consideration thereof, the USCNS/21 will advance practical recommendations that the President of the United States, with the support of the Congress, could begin to implement in the Fiscal Year 2002 budget, if desired.

SEC. II. BOARD OF COMMISSIONERS (a) CO-CHAIRPERSONS.- The Secretary of Defense, in consultation with the Assistant to the President for National Security Affairs and the Secretary of State, shall select two Co-chairpersons to oversee the study effort and to co-chair the U.S. Commission on National Security/21st Century. The Co-chairpersons shall be prominent United States citizens, with national recognition, significant depth of experience, and prior public service.

(b) MEMBERSHIP.- The Secretary of Defense, in consultation with the Assistant to the President for National Security Affairs and the Secretary of State, shall select 15-17 individuals to serve as a board of Commissioners to the study, drawing on accomplished and prominent United States citizens and reflecting a cross-section of American public and private sector life.

(c) OPERATION.- The Commissioners shall meet at the discretion of the Co-chairpersons to provide visionary leadership and guidance for the study effort, and to consider appropriate recommendations to the Secretary of Defense and the President, based on the results of the study. The Co-chairpersons shall provide oversight for the study effort.

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The USCNS/21 will be chartered separately and operated as a Federal advisory committee in accordance with the Federal Advisory Committee Act (Public Law 92-463), as amended.

(d) PERIOD OF APPOINTMENT; VACANCIES.- All Commissioners shall be appointed for the life of the study effort. Vacancies shall be filled in the same manner as the original appointment, in accordance with the Commission's charter.

SEC. III. DUTIES. (a) COMPREHENSIVE REVIEW.- The study will define America's role and purpose in the first quarter of the 21st Century through an integrated analysis, and identify the national security strategy in political, economic, military, societal, and technological terms that must be implemented for America to fulfill that role and achieve its purpose. This study shall include the following:

(1) A description of the national security environments that the United States will likely encounter in the 21st Century, and an evaluation of the security threats which can be reasonably expected in political, economic, military, societal, and technological terms.

(2) A comprehensive overview of American domestic and international strategic interests and objectives for the security environment we will likely encounter in the 21st Century.

(3) Delineation of the national security strategy that must be implemented to achieve America's objectives in the 21st Century.

(4) Identification of the range of alternatives to implement the national security strategy, by defining the domestic security goals for American society, and by describing the internal and external policy instruments required to apply American resources in the 21st Century.

(5) Development of a detailed plan to implement the range of alternatives by describing the sequence of measures necessary to attain the national security strategy.

(b) MATTERS TO BE CONSIDERED.- In carrying out the study, the USCNS/21 shall develop specific findings and recommendations for each of the following:

(1) Identification of nations, supranational groups, and trends that may assist the fulfillment of U.S national security strategy.

(2) Identification of nations, supranational groups, and trends that may pose military, economic, or technological threats to fulfillment of the United States national security strategy.

(3) Identification of societal forces that enable the attainment of United States national security strategy, and recommendations to exploit those forces.

(4) Identification of societal forces that inhibit the attainment of the United States national security strategy, and recommendations to overcome those inhibitors.

(5) Identification of the roles to be played by the Armed Forces and Federal civilian agencies of the United States in attainment of the United States national security strategy.

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(6) The adequacy of the current national security apparatus to meet early 21st Century security challenges, and recommendations to modify this apparatus as necessary.

(7) Examination of existing and/or required international security arrangements, to include recommendations for modification, as appropriate.

(8) Recommended course(s) of action to secure the active support of an informed American public for the implementation of our national security strategy in the 21st Century.

SEC. IV. METHODOLOGY. The USCNS/21 will accomplish its mission in three phases, as set forth below.

(a) PHASE ONE.- Phase One will examine and describe the kind of nation the United States will be in the early 21st Century and the range of likely international security environments that we can reasonably anticipate. The goal will be to establish the domestic and international contexts in which the United States will exist in the next century. The study will seek to identify the most likely domestic and international trends, taking account of less likely or "wild card" events, such as the spread of weapons of mass destruction, technological breakthroughs, natural disasters, or regime changes abroad. This phase will predict the possible international security environments with consideration of the interrelationships of the various sectors involved. Phase One will terminate with the submission by the Co-chairpersons, after consultation with the board of Commissioners, of a report to the Secretary of Defense describing the range of potential domestic and international environments as they relate to national security.

(b) PHASE TWO.- Existing national interests and objectives will be reviewed and analyzed for applicability in the early part of the next century. If appropriate, modifications will be recommended to bring the policy objectives into line with the anticipated global environment. Where necessary objectives and interests have not yet been clearly articulated for security arenas in which the United States must function in the future, the USCNS/21 will recommend appropriate objectives. These objectives should encompass all critical American security concerns. Delineation of national security strategy (or strategies) for the early part of the 21st Century will complete Phase Two of the study. A proposed strategy will be constrained by only the following factors: it must support attainment of our national security objectives, it must be acceptable to the American people, and it must be feasible within current (or projected) resource availability. (For the purposes of this study, an acceptable national security strategy is one that is reasonably consistent with the projected values and desires of the American people, taking into account the ability of confident national leaders to move public opinion in the direction of rational responses to new national challenges). The goal of Phase Two is to describe America’s interests and objectives in a comprehensive, attainable, and supportable national security strategy that gives the Executive and Legislative Branches policy options for allocation of national resources and for domestic and international strategic initiatives. Phase Two will terminate upon the submission by the Co-chairpersons, after consultation with the board of Commissioners, of a report to the Secretary of Defense which meets this goal.

(c) PHASE THREE.- As needed, the USCNS/21 will propose measures to adapt existing national security structures or to create new structures where none exists. These measures must be appropriate to the range of anticipated international environments identified in Phase One and the national security objectives identified in Phase Two. Selected measures may require some modification of certain institutions, processes and structures in order to improve their relevance in the first two decades of the 2lst Century and enhance their positive impact upon the national security process. When appropriate, cost and time estimates to complete these improvements and

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a recommended sequence of actions will be provided. The end result of Phase Three will be an institutional road map for the early part of the 21st Century, provided as a report from the U.S. Commission on National Security/21st Century to the Secretary of Defense, with detailed recommendations for each major segment of the United States government's national security apparatus.

SEC. V. REPORTS. All reports shall be submitted in unclassified form, but may include classified annexes. The Secretary of Defense will transmit a copy of each report to the Congress.

(a) PHASE ONE.- The Co-chairs shall submit to the Secretary of Defense a report on Phase One of the study, as outlined in Section IV(a), not later than September 15, 1999.

(b) PHASE TWO.- The Co-chairs shall submit to the Secretary of Defense a report on Phase Two of the study, as outlined in Section IV(b), not later than April 14, 2000.

(c) FINAL REPORT.- The Co-chairs shall submit to the Secretary of Defense a final report, including assessments and recommendations and the institutional road map outlined in Section IV(c), not later than February 16, 2001.

SEC.VI. PERSONNEL AND ADMINISTRATIVE SUPPORT. (a) ADMINISTRATIVE AND SUPPORT SERVICES.- The U.S. Commission on National Security/21st Century will be supported by the Study Group and its staff. The Study Group, as a DoD organizational element, will receive administrative and other support services from the Director, Administration and Management, including four individuals detailed to support the Study Group, consistent with the budgetary parameters established in Section VIII. Additional administrative and support services requested by the Co-chairpersons or the Executive Director (which position is provided for in paragraph (d)(1), below) in support of the USCNS/21 will be furnished by DoD as necessary and appropriate. These support requirements will be administered by the Director, Administration and Management, in conjunction with other DoD officials, as appropriate.

(b) SECURITY CLEARANCES.- Insofar as expeditious processing of personnel security clearances is essential to the timely completion of the study, DoD will expedite personnel security clearance procedures for access to classified information for Study Group personnel and staff to the extent permitted by law and Executive Order, when requested by the Executive Director.

(c) BOARD OF COMMISSIONERS APPOINTMENT AND COMPENSATION.- Commissioners of the USCNS/21, including the Co-chairpersons, who are not full-time officers or employees of the United States shall be appointed by the Secretary of Defense as special government employees. Such members may serve with or without compensation and shall be allowed travel expenses, including per diem in lieu of subsistence, in accordance with the Board's charter.

(d) STUDY GROUP APPOINTMENT AND COMPENSATION.

(1) EXECUTIVE DIRECTOR.- The Secretary of Defense, upon advice of the Co-chairpersons, shall select an Executive Director. The Executive Director shall be appointed to a limited term (not to exceed three years), Senior Executive Service position within DoD. The Executive Director shall supervise the Study Group and its staff, with full authority, in accordance with applicable law and regulations, and merit system principles.

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(2) MEMBERSHIP.- The Secretary of Defense, in consultation with the Assistant to the President for National Security Affairs, the Secretary of State and the Executive Director, will select sufficient individuals with diverse experience and expertise to fill positions as members of the Study Group. All Study Group members shall be United States citizens with widely-recognized expertise in fields relevant to the Study Group's national security objectives. Members should be innovative and creative practitioners or strategists in their respective fields of endeavor. The Study Group members shall be appointed under an appropriate authority which allows for an assignment of a temporary duration. Terms for such appointments shall not exceed the length of the study, but may be such shorter period of time as determined by the Executive Director. Vacancies shall be filled by the Executive Director, with the approval of the Secretary of Defense.

(e) STAFF APPOINTMENT AND COMPENSATION.- The Executive Director may select for appointment as DoD employees, in accordance with paragraph VI(a), above, and applicable Civil Service laws and regulations and DoD policies, up to twelve individuals. Selectees who are not currently full time DoD military or civilian personnel will be given limited term appointments for up to the length of the study, in accordance with section VI(a) above, to support the study Group.

(f) TEMPORARY AND INTERMITTENT SERVICES.- The Executive Director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at a rate of pay not to exceed the daily rate of pay for a GS-15, step 10 in accordance with such title.

SEC. VII. TERMINATION OF THE STUDY. The study will terminate not later than 30 days after the Co-chairpersons submit the final report to the Secretary of Defense, or no later than March 15, 2001, whichever is earlier.150

SEC. VIII. FUNDING. Except as provided herein, the operating costs of the study, including the compensation, travel, and per diem allowances for the Commissioners and the Study Group members and staff, will be paid by the Department of Defense. The overall cost for this project (excluding the cost of the four detailees described in section VI(a) above) may not exceed $10.44 Mil, without prior approval by the Secretary of Defense or designee. These funds are expected to be obligated as follows: FY 1999-$1.43 Mil; FY 1999-$3.76 Mil; FY 2000-$3.73 Mil; and FY 2001-$1.52 Mil.

William S. Cohen, Secretary of Defense SEPT 2, 1999

150 The termination date of the study was moved to July 31, 2001 in October 2000.

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APPENDIX 3 Commissioner Biographical Sketches and Staff Listing

Anne Armstrong, Regent, Texas A&M University System and Trustee and Chairman of the Executive Committee, Center for Strategic and International Studies. Previous positions and affiliations: Counselor to the President under the Nixon and Ford Administrations; U.S. Ambassador to the United Kingdom; Chairman, President’s Foreign Intelligence Advisory Board; Commissioner, Commission on the Organization of Government for the Conduct of Foreign Policy; Commissioner, Commission on Integrated Long-Term Strategy.

Norman R. Augustine, Chairman, Executive Committee Lockheed Martin Corporation. Previous positions and affiliations: Under Secretary of the Army; Assistant Director of Defense Research and Engineering, Office of the Secretary of Defense; Chairman, American Red Cross; Chairman, National Academy of Engineering; President, Boy Scouts of America; Chairman, Defense Policy Advisory Committee on Trade; Chairman, Defense Science Board; Member of Faculty, Princeton University.

John Dancy, Director of International Media Studies and Visiting Professor of Communications, Brigham Young University. Previous positions and affiliations: Chief Diplomatic Correspondent, NBC News; Congressional Correspondent, NBC News; Senior White House Correspondent, NBC News; Member, Federal Advisory Committee on Gender-Integrated Training and Related Issues; Fellow, Joan Shorenstein Center for Press, Politics, and Public Policy, Harvard University.

John R. Galvin, Dean Emeritus, Fletcher School of Law and Diplomacy at Tufts University. Previous positions and affiliations: General, United States Army (Retired); Supreme Allied Commander Europe; Commander in Chief, United States European Command; Commander in Chief, United States Southern Command; State Department Special Envoy (Rank of Ambassador) negotiations, Bosnia; Olin Distinguished Professor of National Security, United States Military Academy; Distinguished Policy Analyst, Mershon Center, Ohio State University.

Leslie H. Gelb, President, Council on Foreign Relations. Previous positions and affiliations: Editor, New York Times Op-Ed page; Columnist for New York Times; New York Times National Security and Diplomatic Correspondent; Senior Associate, Carnegie Endowment for International Peace; Assistant Secretary of State, Director of the Bureau of Politico-Military Affairs; Director of Policy Planning and Arms Control for International Security Affairs at the Department of Defense.

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Newt Gingrich, CEO of The Gingrich Group, an Atlanta based management consulting Firm; political commentator for FOX News Network; Senior Fellow at The American Enterprise Institute in Washington, D.C.; distinguished Visiting Fellow at The Hoover Institution at Stanford University in Palo Alto, California. Previous positions and affiliations: Former Speaker of the United States House of Representatives; United States House of Representatives, Georgia; former Professor of History and Environmental Studies, West Georgia College.

Lee H. Hamilton, Director, Woodrow Wilson International Center for Scholars and Director of The Center on Congress at Indiana University. Previous positions and affiliations: United States House of Representatives, Ninth District, Indiana; Ranking Democratic Member, Committee on International Relations; Member and Former Chairman, Joint Economic Committee; Former Chairman, Committee on Foreign Affairs; Joint Committee on the Organization of Congress; October Surprise Task Force; Select Committee to Investigate Covert Arms Transactions with Iran; Permanent Select Committee on Intelligence.

Gary Hart, Counsel to Coudert Brothers. Previous positions and affiliations: United States Senator, Colorado; Senate Armed Services Committee; Senate Intelligence Committee; Author: America Can Win: The Case for Military Reform (with William S. Lind, 1985), and The Minuteman (1998).

Lionel H. Olmer, Senior partner in the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Previous positions and affiliations: Undersecretary of Commerce for International Trade; Executive Secretary, President’s Foreign Intelligence Advisory Board; international business development associations; U.S. Navy officer specializing in cryptology.

Donald B. Rice, President and CEO of UroGenesys, Inc. Previous positions and affiliations: Secretary of the Air Force; President and Chief Executive Officer, the RAND Corporation; President and Chief Operating Officer, Teledyne, Inc.; Assistant Director, Office of Management and Budget; Deputy Assistant Secretary of Defense (Resource Analysis); Director of Cost Analysis, Department of Defense; President, Institute of Management Sciences; Director of the Defense Resource Management Study; Chairman, National Commission on Supplies and Shortages; Director of Amgen, Inc.; Wells Fargo & Company, Vulcan Materials Company, Scios Inc. (Chairman of the Board), Unocal Corp., and Pilkington Aerospace.

Warren B. Rudman, Partner in the law firm of Paul, Weiss, Rifkind, Wharton and Garrison; Chairman, President’s Foreign Intelligence Advisory Board; Co-chair of the Concord Coalition; Member, Sharm el-Sheikh Fact Finding Committee (examining the recent crisis between the Israelis and Palestinians). Previous positions and affiliations: United States Senator, New Hampshire; Chairman, Special Oversight Board for DoD Investigations of Gulf War Chemical and Biological Incidents; Vice Chairman, Commission on Roles and Capabilities of the U.S. Intelligence Community; Co-author of

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1985 Gramm-Rudman-Hollings Deficit Reduction Law; Vice-Chairman of Senate Select Committee Investigating Arms Transfers to Iran; Chair, Senate Ethics Committee; Senate Appropriations Committee; Senate Intelligence Committee; Senate Government Affairs Committee and Senate Permanent Subcommittee on Investigations; Attorney General of New Hampshire; President, National Association of Attorneys General; United States Army (Captain, Retired); Platoon Leader and Company Commander during the Korean War.

James R. Schlesinger, Senior Advisor to Lehman Brothers and Chairman of the MITRE Corporation. Previous positions and affiliations: Secretary of Defense; Secretary of Energy; Director, Central Intelligence Agency; Chairman, Atomic Energy Commission; Assistant Director, Bureau of the Budget (OMB); Director of Strategic Studies, RAND Corporation; Professor of Economics, University of Virginia.

Harry D. Train II, Manager, Hampton Roads Operations, Science Applications International Corporation. Previous positions and affiliations: Admiral, United States Navy (Retired); Commander-in-Chief, United States Atlantic Command NATO Supreme Allied Commander, Atlantic; Commander-in-Chief, United States Atlantic Fleet; Commander, United States Sixth Fleet; Director of Joint Staff; Senior Fellow, Joint & Combined Warfighting School, Joint Forces Staff College; Member of Defense Science Board Task Force on Information Warfare Defense; Mentor, Defense Science Studies Group.

Andrew Young, Chairman of GoodWorks International and President-Elect of the National Council of Churches. Previous positions and affiliations: U.S. Ambassador to the United Nations; Chairman, Southern Africa Enterprise Development Fund; United States House of Representatives, Fifth District, Georgia; Mayor of Atlanta; Co-Chairman, Centennial Olympic Games; Executive President, Southern Christian Leadership Conference.

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National Security Study Group Staff Listing

Executive Director Research Staff Charles G. Boyd Erin C. Conaton, Research Staff Director Chris Dishman Deputy Executive Director Garrick Groves Arnold Punaro Christopher Hall Mark Kohut Chief-of-Staff Kelly Lieberman Hank Scharpenberg William Lippert Kathleen Robertson Study Group Coordinator Rachel Schiller Pat Allen Pentland Betsy Schmid

Senior Study Group Advisor Support Staff Lynn E. Davis James Freeman, Administrative Officer Annette Atoigue Study Group Members Carmen Augustosky Patti Benner Antsen Marilyn Bridgette Lyntis Beard Jamie Finley Jeff Bergner John Gardner Coit Blacker Marvin Goodwin Chris Bowie Michele Hutchins Ivo Daalder Diane Long Rhett Dawson Jonathan Nemceff Keith A. Dunn Gerald Posey Charles Freeman Tom Prudhomme Adam Garfinkle Paula Siler Richard Haass Cynthia Waters Keith Hahn Frank Hoffman Charles Johnson Robert Killebrew Richard Kohn Bill Lewis Jim Locher Charles Moskos Williamson Murray Barry Posen Peter Rodman Barbara Samuels Kori Schake James Thomason Ruth Wedgwood

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National Security Study Group Advisors, Contractors, and Consultants

Senior Military Advisors General (ret) Michael P.C. Carns General (ret) William Hartzog Vice Admiral (ret) Richard D. Herr Admiral (ret) Joseph Lopez General (ret) Richard I. Neal

Contractors Barry Blechman, Darcy Noricks, Mary Locke, and the DFI International team Fred Frostic, George Raach, Maria Alongi, David Dye, Kristin Craft, and the Booz-Allen & Hamilton team William M. Wise

Consultants Charles Barry Daniel Byman Lieutenant General (ret) Patrick M. Hughes Major General (ret) William E. Jones James Lindsay Paul Byron Pattak General (ret) Daniel Schroeder Jeremy Shapiro Charles D. Vollmer Lee Zeichner

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