Oil, Interdependence, and the Likelihood of War

There are two very good new posts on the Monkey Cage today.

Petro-aggression: How Russia’s oil makes war more likely by Jeff Colgan: Colgan notes that much of the current discussion about the role of energy trade in the Crimean Crisis focuses on the effect of the trade on Ukraine or Europe. He argues that the more important effect is on Russia.

Russia’s energy revenues (from both oil and gas) have ensconced Vladimir Putin as an autocrat and given him a free hand in foreign policy.  Russia is so heavily dependent on its energy revenues that it is a classic petrostate, making it more susceptible to corruption, autocracy and violent conflict.

 Russia’s incursion into Crimea can be seen as a close cousin of petro-aggression.  A state is more likely to instigate international conflict when it has a combination of (a) oil income and (b) a leader with aggressive preferences.  A lot more likely: 250 percent more military conflict than a typical non-petrostate, on average.  Oil income means more military spending, increasing the state’s scope for potential conflicts.  Even more importantly, it distorts the domestic politics of the state, reducing the leader’s domestic political risk from military adventurism and aggressive foreign policy.

What World War I can tell us about international commerce and war today by Erik Gartzke and Yonatan Lupu: The authors note that WWI is often viewed as a counter example to the argument that economic interdependence will force nations to show restraint in the use of force. Gatzke and Lupu argue that WWI is not as strong a counter example as it appears to be. In their words:

The growth of international economic exchange in Europe before the war was uneven.  Much of Western Europe belonged to a highly interdependent subsystem of states in which crises arose but were resolved peacefully.  By contrast, economic interdependence was much shallower in most of Eastern Europe and parts of Central Europe.  The Ottoman Empire, Serbia, Austria-Hungary, and several other newly independent Balkan states traded relatively little with each other. Unlike in the interdependent West, crises in this region tended to escalate to war.

It is no coincidence that World War I was sparked among the non-interdependent states in Eastern Europe.  Economic ties played an important role in averting escalation to major warfare in the crises that led up to the Great War, especially in the first and second Balkan wars.  These crises, however, produced the need for the more economically integrated countries, most importantly Germany and Russia, to demonstrate an increasing resolve to support their weaker, less interdependent, allies, Austria-Hungary and Serbia.  Alliances tightened after Germany and Russia took turns backing down under the pressure of war in previous crises.  Tighter alliances increased the leverage of Balkan allies, but only by in effect handing the foreign policies of the interdependent powers over to countries that were less well integrated into the world economy, and thus had fewer reasons not to engage in war.

 As for what lessons we can draw about today's world, Gartzke and Lupu argue:

The size and organization of existing trade networks suggest that Asia, like western European powers in the decades before World War I, is more likely to manage secondary crises without bloodshed.  If interdependence works as theorized, disputes such as those over the Senkaku/Diaoyu Islands are more likely to be occasions of considerable posturing and no actual force.   While no one likes to be the loser, excessive brinksmanship is not a practical strategy in the world that Japan, China and other developed nations inhabit today.  Discretion is likely to rule these relationships, even if there is occasional grumbling from those on the short end of the stick.  There is much to gain from tough talk, but more to lose by failing to pull back from the brink.

The larger risk to international stability today comes from nations cast in the role of the Eastern European powers a century ago.  Lacking economic inhibitions and with no other methods to advance themselves, sovereigns in some countries will find it useful to heighten international tensions.  North Korea is a prime example.  Russia is on the cusp.  Reliance on energy exports rather than a more diversified trading base has allowed President Putin to bluster more often and occasionally to engage in naked aggression, if only against minor powers so far.  Fortunately, fewer of these countries exist today and most are on the periphery of the international system, not near its center.

Blaming and Hating the US

A lot people react very negatively when you point out the negative consequences of US actions in the world. One is likely to be accused of (if not vilified for) blaming the US. But what's the alternative to recognizing that US actions have had negative effects on other nations and people? It seems ridiculous to argue that there have been none or that all the negative consequences that occurred fell only nations and people who had it coming.

In short, you can't make an omelette without breaking some eggs and the US has been cooking in the world kitchen for centuries. The Global Policy Forum has a list of US Interventions in other nations since 1798 that I think most folks would find surprising. Of course, some of these listings are debatable, such as the supposed role of the US in the 2004 coup in Haiti, but there are enough other ones on the list to convince you that the US has broken more eggs than most Americans are aware of.

I became aware of my own lack of awareness when attending a small group discussion with the Assistant Secretary of Defense for Latin America in the 1980s. A student in the audience got up and challenged him over the US intervention in the Dominican Republic. He claimed that his family's home had been bombed and asked what they possibly could have done to deserve it. The ASD hemmed and hawed, but I just sat there thinking, "When the hell did we invade the Dominican Republic?" Turns out that we sent over 20 thousand troops there in 1965 to prevent what Lyndon Johnson called a "communist dictatorship" though it is hardly clear that any such thing was likely to occur.

Then there is Iran. I was in High School during the Iranian Hostage Crisis, the memory of which has been refreshed by the movie "Argo", and so my peronal awareness of US-Iran relations starts there. Like many people I  had a sense of outrage at the taking of the hostages, and tended to sneer at Iranian allegations of CIA misdeeds in Iran. Then I find out that , no, the CIA actually did support a coup and overthrow the democratically elected leader of Iran,  Prime Minister Mohammed Mossadegh, in 1953. Apparently, Mossadegh moved to nationalize the oil industry in Iran, which threatened British oil interests and raised the specter of communism. In his place, the US supported the Shah of Iran, Mohammad Reza Shah Pahlavi. Whatever you think about Iran's current regime, the Shah definitely did not have a good human rights record.

What really bothered me when I pieced all this together was how much the story resembled the typical claims of conspiracy theorists, which I tend to reject out of hand. A CIA coup over oil that installs a dictator is almost a cliche. Of course, nothing is cliche the first time it happens and the preceding description oversimplifies the situation. Still, I can't pretend it didn't happen.

What do we do with all this? In my view, it is a question of choosing between having a naive, cynical or sophisticated view of the world. The naive view takes events as they are portrayed by the leaders involved or as popularly believed in the society. The cynical view disregards all public statements about actions and intentions as pretext or propaganda and assumes that actions are motivated by ulterior motives. The sophisticated view takes both views into account and assumes that multiple motivations are in play and that all public statement contain part of the truth but that there is probably more involved.

When it comes to "blaming the US" or not, I think you have to acknowledge the bad with the good. Admittedly, this not very profound but it can be difficult to do in practice. It is easy to slip either in the direction of vilifying or lionizing the US.

It is worth pointing out that, whatever the US has or hasn't done, most people around the world have a favorable view of the US. In 2013, PEW Research found that a majority of respondents had a favorable view of the US in 28 out of 38 nations they polled. Six of the ten countries with less than a majority with a favorable view were  in the Middle East (Egypt, Jordan, Lebanon, Palestinian Territories, Tunisia and Turkey, or every one they polled in the region except Israel).  The remaining four countries were Argentina, Greece, Pakistan, and China. Interestingly, the US was most popular in Africa and more popular in Asia and Latin America than in Europe. Small majorities also had a favorable view of the US in Russia and Venezuela.

Of course, PEW didn't conduct polls in Iran, Iraq, Afghanistan or North Korea (because they can't). But, we should keep in mind that "the world" doesn't hate the US.

Some Links for the Weekend

Here are a couple o'sorta interesting links.

True size of Africa: For most of our lives, we have been subjected to Mercator maps that flatten the world out in a way that makes things nearer to the poles look larger than things nearer to the equator. This gives us an inflated sense of the size of North America, Europe and Asia vis-a-vis South America and Africa. This map shows just how big Africa really is. Just worth looking at.

Matt Ridley on Technology and Jobs: Matt Ridley has labeled himself the Rational Optimist and, whenever you think things are going bad, it can be good to visit his blog.  In this post, he talks about why economists don't think that technology is going to put everyone out of a job.

Socialist Critiques of Trade

In my IPE book, I spend a lot of time going over the Liberal economic models of trade, which generally see trade as mutually beneficial to the nations trading in it. However, from a Socialist  perspective, trade is potentially exploitative.

In Marxian economics, the value of  a good is an objective thing. Goods are worth the value of the labor used to produce them. Therefore, when two goods are exchanged between parties, the only fair price or rate of exchange is one that reflects the value of the labor in each. If it takes an hour of labor to produce a yard of cloth and 2 hours labor to produce a bottle of wine, the only fair rate of exchange is two yards of cloth for 1 bottle of wine or a price price of cloth/yard that is 1/2 the price of wine/bottle. This is because, only at the 1/2 ratio of exchange or prices will equal amounts of labor be exchanged for one another.

If, however, cloth and wine are traded at a different rate or relative price, say 1 yard of cloth for 1 bottle of wine, then the exchange is unequal because one hour of labor from the cloth maker is being exchanged for 2 hours of labor from the winemaker. Such an unequal exchange is not only unfair, but it also exploits the winemaker by taking one hour of his/her labor and giving it to the cloth maker without compensation. In Marxian terms, the exchange will alienate the value of one hour of labor from the winemaker.

From this point of view, much of international trade is based on unequal exchange. When workers in one nation are paid lower wages than workers in another, the low wage country ends up trading goods that required more labor to produce than was used to produce the goods the country receives in exchange. Such trade exploits the low wage workers to benefit the high wage workers. Of course, if you throw capital into the mix, the exchange of labor intensive for capital intensive goods means that lots of labor (in the form of labor intensive goods) is being exchanged for less labor (in the form of the capital intensive goods). This exploits the workers in the labor abundant country to benefit owners of capital (better known as capitalists) in the capital abundant country.

The concept of unequal exchange is simple and appeals to an intuitive sense of, and desire for, fairness that is at the heart of socialism. However, it is misguided from the point of view of neoclassical economic theory which conceives of voluntary exchange as mutually beneficial and value producing. From this point of view, the object of exchange is not to trade equal value for value, but for both parties to trade something of lessor value for something of higher value.

Of course, this is only possible if we allow for individuals to have differing values for goods (i.e., a subjective concept of value), or to face different trade offs between producing one good or another (i.e., differing opportunity costs). An example of the first case would be two kids trading an apple for a banana based on the fact that the kid with the apple likes bananas more than apples, and the kid with the banana like apples more than bananas. By trading one for the other, they both give up something they like less for something they like more. Through this arbitrage, both parties are better off as a result of the trade precisely because they have differing subjective values for the two goods and this difference creates the opportunity for mutually beneficial trade.

David Ricardo's hypothetical scenario of trade in wine and cloth between  England and Portugal is an example of the second case. In this scenario, England and Portugal can both produce wine and cloth, but they require differing amounts of labor to produce a unit of either good. The table below lists the hypothetical amount of labor needed to make cloth and wine in England and Portugal.

	Labor Required to Produce Cloth	Labor Required to Produce Wine
England	100	120
Portugal	90	80

According to the Theory of Comparative Advantage, both nations would be better off if they specialize in the production of the good for which they have the lower opportunity cost.  In England, the opportunity cost of producing one unit of cloth is the amount of wine it could have produced if it used the labor of the 100 workers needed to make the cloth to make wine instead. Given that it takes 120 workers to make a unit of wine, England's opportunity costs for producing one unit of cloth is 100/120 or 0.83 units of wine. Applying the same logic to Portugal, we see that its opportunity cost for making wine is 90/80 or 1.13 units of wine. If we further apply this logic to the production of wine, we see that England's opportunity cost for making one unit of wine is 120/100 or 1.2 units of cloth, and Portugal's opportunity cost of producing one unit of wine is 80/90 or 0.88 units of cloth. So England should specialize in producing cloth, Portugal in producing wine, and they should trade the goods between them.

However, according to the Marxian concept of equal exchange, this exchange will only be fair or non-exploitative if the rate of exchange of cloth for wine is set so that equal labor is traded for equal labor. Since it takes 100 workers to make one unit of cloth in England and 80 workers to make one unit of wine in Portugal, the Marxian equal exchange rate of England cloth for Portuguese wine would be 100/80 or 1.25 wine for 1 cloth. 

But does it make any sense for the two countries to trade cloth and wine at this rate (or the relative price it implies)? England would be getting 1.25 units of wine in exchange for 1 cloth, which requires the labor of 100 workers to produce. Since those 100 worker only produce 0.83 wine, England clearly benefits from getting 1.25 wine in exchange for 1 cloth. But,  it is a different story for Portugal. It must give 1.25 wine, which requires the labor of 100 workers, in exchange for 1 cloth, which would only require 90 workers to produce for itself. Therefore, Portugal would be exchanging the work of 100 workers for something that it could have produced with 90. Thus, trade based on the Marxian concept of equal exchange would make Portugal worse off than if it didn't trade at all. 

In broader terms, the Marxian analysis (and the concept of  fairness in general) focuses on what one party gets out of the exchange versus what the other party gets. Neoclassical economics focuses on what each party can get by trading as opposed to what what each one could do for themselves if they didn't trade . That is to say, the question of whether England is getting more or less out trade than Portugal is irrelevant. What matters is whether England and Portugal are both getting more out of trading with each other than they would by not doing so. This focuses the analysis on the choices each party makes over the alternatives that are actually available to them rather than comparing their situation to some ideal scenario.

Of course, many people will make fairness arguments without consciously taking a socialist stance or knowing the first thing about Marxian micro-economics. For instance, in the mid 1990s their was a big controversy over Nike's operations in Vietnam as epitomized by the NYT article. A common meme in the exploding debate involved comparisons of Nike's profit and Michael Jordan's endorsement fees with the wages being paid to Vietnamese workers. The staggering disproportion seemed to speak for itself but did it speak to the most important issue?

From the perspective of neoclassical economics the most important issue is not whether an NBA superstar gets paid more than a Vietnamese factory worker, but whether the Vietnamese factory worker is better off working in the Nike plant than not doing so. When researchers looked at this issue, they found that workers in plants run by multi-nationals were paid wages that run an average of 10%  above the local wage rate and that US affiliated multinationals  paid a premium of 40% in high income countries and up to 100% in low-income countries above the local market wage. Also, in 2000, Vietnamese workers in foreign owned plants were found to be in the top 20% of the population in terms of household expenditures. So, from this point of view, the Vietnamese workers were better off working for Nike than working in the other jobs available to them.

Liberal Interpretations of the Crimean Crisis

Whenever you try to apply Liberal theories to a case in which one nation uses force on another, the Liberal perspective appears to be at a disadvantage vis-a-vis Realism since force has in fact already been used. For instance, Mearsheimer's analysis of Russian actions and the underlying assumption that only power can deter power seems quite plausible at the moment.

However, one must remember that, in 1990, Mearsheimer predicted that the end of the Cold War could lead to a multi-polar  and more war prone international system in Europe.  He has more recently argued that Europe has remained peaceful because the United States has acted as the pacifier of Europe by maintaining large forces in the region since the end of the Cold War. In this view, the fact that European nations are all democracies, that they have become more economically interdependent, or that they have established a fairy strong  international institution in the EU are of minor importance.

But now that we have something that looks like an old fashioned territory grab that is the bread and butter of Realism, what do Liberal theories have to say about this? Unfortunately, Liberalism is a term that covers a wide array of different theories and perspectives, or what I call flavors of Liberalism. Furthermore, none of these theories, or at least none of the Neo-Liberal theories commonly used in academia, entirely discount the importance of security and power, or replace Realism's model of the world with entirely different one. In general, they argue that Realism is missing some important aspects of the international system and state behavior by focusing entirely on power, security, and the international system.

Republican Liberalism: The general point of view here is that a nation's domestic politics has an impact on its international behavior. Democratic Peace Theory is perhaps the most important part of this perspective and it predicts that democratic nations will not fight wars with other democratic nations. Therefore, one might suppose that, since the fall of the Communist system, Russia would be less likely to get into a war with democratic nations.

However, this presumes that Russia is currently a democracy. After all, Putin is a democratically elected president. But it takes more than an election to make a democracy (note that even North Korea stages elections). The folks at Freedom House provide an an index of democracy that rates the political systems of the world according to their level of civil and political rights. On a scale of 1 (best) to 7 (worst), Russia gets a 5.5, which Freedom categorizes as Not Free. In contrast, Ukraine gets a 3.5, or Partly Free, rating and most Western European nations get a 1, or Free rating. (Freedom House also has a world map that shows the category of all nations in the world).

So, Russia's actions can be seen as the result of a lack of democracy in the nation. Indeed, Freedom House is doing an "I-told-you-so" on the subject:

Since 2003, Freedom House has documented the country’s move to authoritarian rule and warned of Russian efforts to restore hegemony over Ukraine (see attached and below a selection of quotes from past Freedom House analysis on Russia).  We explained how this increasingly authoritarian system posed a threat to democracy not just inside Russia itself but through Vladimir Putin’s support for dictators and pressure on democratic governments among Russia’s neighbors.  Blocking democratic development and integration with the West along Russia’s periphery is integral to Putin’s repressive rule.  The nature of the Russian regime—kleptocratic authoritarianism—lies at the core of the current crisis between Russia and Ukraine.

Beyond Democratic Peace, Republican Liberalism can be thought to encompass more specific analyses of domestic political influences on foreign policy. One example of this would be Boris Barkanov's argument that Putin is playing to nationalist and religious audiences in Russia. In general, Barkanov sees Putin as "a strategic actor motivated by domestic concerns." He argues that portraying Putin as a dictator misrepresents that nature of Russian domestic politics which he describes as follows:

Russia is a hybrid system that combines elements of authoritarianism and pluralism.  State-sponsored repression, though now growing, has been selective and relatively limited.  Intense elite competition, elections, and public opinion are managed, but they matter more than the conventional wisdom holds.  This means a successful solution [to the crisis] has to accommodate an attentive public, as well as domestic elites’ various security, economic, and ideological interests.

Barkanov describes Putin himself as follows:

Some have suggested that Putin may be a new Hitler. A better historical analogy is to think of him as a 21st century Russian Bismarck.  My research supports former Secretary Henry Kissinger’s view that Putin is an intelligent, rational, strategic actor who views politics through a realist lens that is informed by his view of Russia’s history.  He began as a neo-liberal statist who has gradually drifted to the right for political reasons.
From this point of view, Putin's moves in Crimea have been more of a tactical response to unexpected developments in Ukraine than part of a grand strategy. However, because of the national and religious importance conservative Russian attach to the Ukraine (not to mention the economic interests that elites have in current ties to Ukraine), Barkanov does not expect Putin to back down easily.

Another concept that loosely fits in this category is the diversionary war hypothesis, This posits that leaders may use small scale wars as a means of diverting public attention from domestic difficulties. This idea was popularized in the film "Wag the Dog" which takes its name from the idea of the tail wagging the dog.  In a post on the Monkey Cage, Kimberly Marten discusses the role that Putin's intervention might play in diverting public attention away from the corruption and waste in the Sochi Olympics. Though Marten does not argue that this provided the primary motivation for Putin's moves, she notes that the Crimean Crisis was well timed since critics of the Sochi Olympics had been holding off until after the games were over. While domestic political diversion has seemed at play in wars like the Falklands War, the wag the dog meme too often threatens to become conspiracy theory.

Economic or Commercial Liberalism: From this point of view, economic ties between nations are supposed to make them less likely to go to war with one another. More specifically, when nations become economically interdependent on one another, the costs of going to war are thought to be so high that the nations will seek other means of resolving their differences.

Russia and the EU are arguably in a situation of interdependence. According to the BBC, the EU is Russia's largest trading partner by a wide margin with 267 billion Euros in trade with Russia. Russia's next largest trading partner is China with only 64 billion Euros in trade. Europe also buys 84% of Russian oil exports and 76% of its natural gas exports (most of which flow through Ukraine). Of course, Europe needs these imports of fuel to keep itself going, thus both sides are dependent on one another to a good extent.

As for Ukraine and Russia, the relationship is a little more lopsided. Trade between the two countries amounts to about 24 billion Euros per year, only 1/10th as much as Russian trade with Europe. Much of that trade was natural gas, which Russia was selling to Ukraine at a greatly reduced price to encourage stronger ties (and discourage a move towards the EU). As a result of Ukraine's change on government, Russia is now demanding a higher price for gas and a refund of the gas discount (to the tune of $12 billion). So, in some ways, Russia's economic position vis-a-vis Ukraine is improving as a result of the crisis, especially if Russia expected that a Ukrainian move towards the EU was going to diminish the economic benefits of friendly relations with Ukraine anyway.

Of course,  many of Russia pipelines run through Ukraine,and the Ukrainians could threaten to shut them down. However, that would cause a great deal of harm to the Ukrainian and European economies and could provide a pretext for a Russian invasion. Alternatively, a large Russian invasion of Ukraine might either force the Ukrainians's hands or simply disrupt the pipelines as collateral damage. This creates a rather precarious situation.

In metaphorical terms, I would describe the situation this way. Imagine there is a big puddle of gasoline. Russia and the EU each have one foot stuck in the edge of it and Ukraine is standing in the middle. All three have lighters which they can use to ignite the gas and burn all three of them.

In such a situation, no one will want to make any sudden big moves that might cause one of the others to light the gasoline on fire. However, because anyone who lights the fire will also get burned, they will be reluctant to do so. As a result, each party can probably get away with a lot of subtle little moves without triggering someone else to spark a conflagration. That is to say, having a lighter doesn't give anyone control over anyone else, but no one will be able to ignore the fact that the other two have lighters. Therefore, everyone will be constrained in what they do and "go small, or go home" will be the order of the day.

In terms of the Crimea, Russian actions have been relatively constrained (at least up to this point). Since they started out with a major military base there, Russia did not invade the peninsula so much as come out of the barracks to occupy it. Even then, they weren't willing to own up to the fact that it was their own forces taking over the territory. While labeling their forces "Crimean self-defense units" was a transparent fiction, it bespoke a certain level of sensitivity and a perceived need to be circumspect. Also, the fact that the Crimean parliament actually kicked off event by declaring independence from Kiev probably presented Putin with an opportunity to secure the peninsula in a way that would not provoke a massive response from Ukraine and the EU.

In this sense, Russia is "going small" and their economic interdependence with the EU and, to lesser extent, with Ukraine may keep their actions small (compared to what they might otherwise be) even if it doesn't make them go home.

Institutional or Regulatory Liberalism: This is the view that having international rules and institutions can mitigate the raw effects of anarchy and allow more cooperation between nations. Realists may scoff at this notion and quip that institutions and rules didn't stop Hitler, but I think that such arguments make a straw man out of institutional liberalism by overstating the expectations of what institutions can accomplish. To my mind, the First Gulf War in 1990-1991 is a good case to examine. Saddam Hussein blatantly violated the rules of the UN Charter when he invaded Kuwait. While the rules didn't stop him from doing so, they greatly facilitated a UN based response and a broad coalition to oust him from Kuwait. Also, prior to the invasion,  the US did not have a formal treaty with Kuwait that committed the US to defend Kuwait (something that famously came up in his interview with the US ambassador to Iraq a couple days before he invaded). One is left to wonder what effect a defense pact with Kuwait would have had on Saddam's calculations of the US response to his planned invasion.

As far as Crimea is concerned, I have already blogged on varying views on the role of international law and institutions and will let that post finish this one off.

Quick Points: Russian Strength and the US in a Long War

I am very contrary before my first cup of coffee, and two headlines in the news got me thinking (to the point of blogging).,

Russia: First there is this one from The Wire, "Obama: No, Romney Was Wrong. Russia Is Weak, Not Strong." First of all, I thought (and still think) that Romney was way off when he said that Russia was the United States' number one geopolitical foe. If you measure a foe by its intentions, North Korea and Iran seem to be more of a problem. If you measure a foe by its capabilities, China, India, heck the EU are all more likely candidates for the top slot. Russia just doesn't make the cut.

But does that mean that Obama is right when he says Russia is weak. It think is is pretty clear that Russia is not weak in the Crimea or Ukraine. While Obama is quite right to call Russia a regional power, Ukraine is in Russia's region where Russia has much more power than the US. Of course, this imbalance exists largely by default since the US has never really had any vital interests in the Black Sea (the term "backwater seems appropriate here). In contrast, Russia does.

I would also point out that the Europeans have much more at stake with Russia and Ukraine. Not only are they much closer, but they are more economically intertwined with both nations. US trade with Russia amounts to about $20 billion/year, EU trade amounts to about $240 billion/year. The EU gets 33% of it natural gas from Russia, mainly through pipelines running through Ukraine, and this amount of natural gas cannot be acquired from other sources. Since pipeline have two ends, Russia also cannot sell that much natural gas to other customers and its economy is very dependent on energy exports. So, Europe is probably as ''strong" as the US in this situation.

US in a Long War: Then there is this headline from Reuters: Deep budget cuts may erode U.S. Army ability to fight long war: general. IN the article, Gen. Ray Odierno expresses doubts that the proposed $496 billion 2015 defense budget would allow the US to  "execute one prolonged, multi-phase operation that is extended over a period of time." While I understand his concerns about the defense cuts, I have to wonder who he thinks the US would be fighting a long war against. Even with the proposed cuts, the US would be spending 4 times as much on defense as the next largest defense spender, China.

Also, what kind of war are we talking about here? Odierno has a lot of experience in Iraq and Afghanistan, but the long portion of those wars was a counter-insurgency not an interstate force-on-force conflict. Indeed, the force-on-force portions of those wars were stunningly brief and required far less forces than conventional military thinking at the time imagined. We look back at Bush's "Mission Accomplished" banner as a sad joke, but we should remember that it did signal the end of the conventional phase of the war in Iraq. The counterinsurgency didn't get going until the US had obliterated the Iraqi government and military and found itself in the role of occupier.

The lesson one might draw here is that modern wars against other militaries don't last long but wars with segments of a nation's population do. Therefore, if you envision the US getting into a long war, you are probably talking about a case in which the US has defeated another government and is occupying some (or all) of its territory, or one in which the US has committed forces to support a government in a protracted counter-insurgency. In the first scenario, the immediate external threat from the other nation, which threat presumably sparked the conflict, has been eliminated and the US is dealing with a messy aftermath. In the second scenario, the US is intervening to help a government whose resources have to be factored into the equation and, if those resources are not substantial, one has to question whether the US should or would be involved in the first place.

If you buy that reasoning, then the question for the US is whether being less able to deal with those scenarios poses an acceptable or unacceptable risk to US national security.

T-TIP: Transatlantic Trade and Investment Partnership agreement

President Obama's trip to Europe this week, and the news reporting on it, will undoubtedly be dominated by the Crimean Crisis and security issues. Also, there will be a nuclear summit ad meetings with Asia and Middle Eastern leaders.

One issue that is likely to get back-burned is the ongoing negotiations over the  Transatlantic Trade and Investment Partnership (T-TIP) agreement. This agreement seeks to not only reduce tariffs between the US and EU, but also to reduce regulatory barriers to trade between the US and EU.

From the European point of view, "What the European Union wants to do with TTIP is to find common-sense ways to make regulations set by the EU and the United States more compatible, while keeping
people protected." The EC thinks this can be done in the following ways:

Existing regulation can be tackled in different ways:

• One idea would be to formally recognise that some regulations have broadly the same effect. This would mean that companies, under certain conditions, could simply comply with  one set of rules in order to sell in both markets. 
• Another idea would be for both sides to move their regulation closer to internationally agreed ways of solving the problem at hand. 
• A third way to work, where EU and US regulations are very different, would be for regulators to cooperate more on how they put the regulation into practice.

From the US point of view (with regard to regulations), "We seek to eliminate or reduce non-tariff barriers that decrease opportunities for U.S. exports, provide a competitive advantage to products of the EU, or otherwise distort trade, such as unwarranted sanitary and phytosanitary (SPS) restrictions that are not based on science, unjustified technical barriers to trade (TBT), and other “behind-the-border” barriers, including the restrictive administration of tariff-rate quotas and permit and licensing barriers, which impose unnecessary costs and limit competitive opportunities for U.S. exports."

In general, the EU view leans towards regulations as a means of protecting the safety of its citizens while the US leans towards seeing regulations as a means of protecting domestic industries. It will be interesting to see how (or if) the EU and US reconcile their contrasting views.

It is also interesting to note what the EC thinks is in it for Europeans:

The aim is to increase trade and investment between the EU and the US by unleashing the untapped potential of a truly transatlantic market place. The agreement is expected to create jobs and growth by delivering better access to the US market, achieving greater regulatory compatibility between the EU and the US, and paving the way for setting global standards. If such an ambitious agreement were achieved, it is expected that every year an average European household would gain an extra €545 and our economy would be boosted by 0.5% to up to 1% of GDP, or €119 billion annually, once fully implemented.

Note that the result of an "ambitious agreement" is expected to be a 1/2-1% increase in GDP. Nothing to sneeze at, but not a huge increase in well-being.