THE WORLD / DIPLOMACY : When Too Much Agreement Is a Danger to World Stability

Charles Wolf Jr. is dean of the RAND Graduate School of Policy Studies

Despite fractious disagreement on nearly all current issues--from Bosnia to China, from welfare to Medicare--liberals and conservatives, Democrats and Republicans, academics and journalists, labor and management, internationalists and neo-isolationists all agree on one thing: In the post-Cold War world, economics matters more than military affairs.

This consensus, however, is profoundly misleading, if not demonstrably wrong.

The world, to be sure, has changed drastically. The overarching threat posed by the Soviet Union's nuclear forces is gone. The Warsaw Pact's imposing conventional dominance is also history. But this diminished military challenge does not correspondingly increase the relative importance of economics, nor does it suggest that public policy should be more concerned with economic issues than with military ones.

Such a conclusion is unwarranted, for two reasons.

First, the range and gravity of the military problems that burden the post-Cold War world are more numerous and more serious than usually recognized. Second, while economic disputes are also substantial, many of them can, and will be, ameliorated by market forces; there is no similar self-correcting mechanism to mitigate military challenges.

Even an abbreviated inventory of the military issues, risks and potential conflicts that characterize the post-Cold War era suggests how numerous and formidable they are. Consider:

* Possession by 24 nations of ballistic-missile capabilities, with ranges in varying stages of development, that could reach the United States and its closest allies.

* Proliferation of advanced conventional weapons--including sea- and air-delivered missiles, submarines and air-defense systems--through foreign weapons sales by major suppliers (including American suppliers), as well as sales of dual-use technologies that expand the number of potential producers of such weapons.

* Proliferation of weapons of mass destruction--nuclear, biological and chemical--coupled with longer-range missile-delivery technology.

* China's assertion of sovereignty over the Spratly Islands and throughout the South China Sea, combined with expansion and modernization of its military capabilities, especially naval. China's recent missile-testing exercises in the Taiwan Straits provided an unsubtle testimonial to these developments.

* Perennial conflict in the Balkan, which may abate or spread.

* North Korea's still threatening convential-military posture toward the South, as well as uncertainties connected with its agreement to halt and roll back its nuclear-weapons development.

* Russia's reduced, yet still large, military capabilities, and its continued development of new and improved naval and air weapons.

One thing that's clear about this list of military challenges is that there is no benign mechanism that operates to mitigate them. Economic issues, and the disputes they often entail--between, say, the United States and Japan, or the United States and the European Union--can frequently be eased or circumvented by the self-interested actions of business firms, entrepreneurial zeal and international corporate alliances operating in response to market incentives.

When the Sumitomo Bank asks the Ford Motor Co. to help reorganize Mazda, and thereby protect their joint holdings in the Japanese company, the Ford-Sumitomo partnership contributes to the easing of the sometimes antagonistic economic relationship between their respective governments, while also advancing the partners' interests.

When Toyota and Nissan agree to buy more auto parts from the United States and to shift some production of passenger vehicles to America, they are impelled as much by the overvalued yen as the overcharged negotiating rhetoric of the U.S. and Japanese governments.

When IBM, Toshiba and Siemens collaborate in designing, producing and marketing the next-generation 64-megabyte memory chip and its prospective 256-megabyte successor, they are advancing their separate and joint interests, while indirectly forging linkages among the U.S., Japanese, and European economies.

And as the Disney-Capital Cities/ABC merger finds new ways to expand in the Japanese entertainment and recreational market, beyond the successful record of Disney's Orayasu theme park, these mutually profitable endeavors will provide an emollient for the inevitable trade frictions that will recur between Washington and Tokyo.

The large and growing network of such international, inter-company alliances doesn't signal the "End of the Nation-State," as Kenichi Ohmae's recent book of that title suggests. But it does sharply differentiate economic disputes from military ones. Negotiations, sometimes acrimonious, and agreements, sometimes ambiguous, among the respective governments are not always necessary, and sometimes not even fruitful, to alleviate economic frictions among the parties.

Conventional wisdom can be, as in this instance, misleading: Despite the prevailing consensus to the contrary, there is no convincing basis for asserting that public policy and discussion should accord military issues any less importance or lower priority than that accorded economic issues.*

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