Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, Stratfor cannot guarantee their complete accuracy.
Colin Chapman: There's just over a week to go until the American presidential election, and while foreign policy may not be uppermost in people's minds in the swing states, it was the focus of the final television debate. And some interesting issues emerged. As George Friedman says, in a Stratfor essay this week, it's impossible to state a coherent policy on a complex matter in 90 seconds. So in the next few minutes we'll try and give you an idea of that complexity on three or four core issues the next president will face.
Welcome to Agenda. I'm Colin Chapman, and with me is Stratfor's director of analysis, Reva Bhalla. Reva, in the debate there seemed shades of difference but not a great gulf some media people forecast.
Reva Bhalla: Well of course, Colin, there are a number of political calculations that go into setting the tone for a debate. But if you put aside the campaign managers for Romney, one of the things that Stratfor has long maintained is that it's not the personalities that matter most when it comes to shaping a foreign policy — it's the events that they're dealt with once they come into that presidency. And so even if there are politics playing into the debate, I think it was actually a preview of what's to come, because we didn't see much difference between the two candidates' positions. And really that's because I think there's overall a great many constraints on either one, whoever is sitting in the White House, and that's when you really get into the issues, you start to see that come to light.
Colin: Right. Well let's go through some of these issues. Syria — Romney says no military intervention at all. We know where Obama stands, but what post-election could be U.S. strategy?
Reva: I think Syria is actually a very good example of an emerging foreign policy doctrine — one in which the United States doesn't just throw itself at every problem in the world but actually conserves its strength and relies on regional allies — in this case Turkey — to shoulder more of the burden. The U.S. is very content right now in seeing Syria destabilize and specifically having that undermine Iran's regional position, but the U.S. is not willing to entangle itself in yet another military engagement in the Islamic world. Now this is going to be messy process, because as the al Assad clan continues to devolve in power and we start to see these very messy negotiations take place over a transition for a post-al Assad Syria, there's no guarantee team that the U.S. is going to get its wish of removing them al Assad name but still maintaining much of the state machinery to avoid a lot of the mistakes that we saw in Iraq with the debaathification campaign. So this is going to be a long and complicated process. But I think were also seen a lot of disciplined restraint by the United States to not militarily involve itself (and that's something that both Obama and Romney agreed on) and allow regional players like Turkey to take the helm and look to diplomacy as a key option in trying to maneuver among all these various regional interests.
Colin: Okay. Israel and Iran. Both candidates stressed more than once their support for Israel but both resiled from a pre-emptive strike by Netanyahu. But both say they want to allow Iran to have nuclear weapons. So what's going to happen there?
Reva: Well, either one as president would be facing the same constraints in dealing with Iran. When it comes to the military question of whether to strike Iran are not. You know there's a lot of uncertainty over the economic cost to such as strike especially if Iran follows through with the threat to close the Strait of Hormuz. There are intelligence gaps; there's no guarantee that the strike would be successful and significantly set back Iran's program. And again, the United States doesn't want to involve itself in yet another war in this region and so we can see the U.S. does have the appetite for that war. Israel lacks a military capability to unilaterally strike Iran. But if we take a closer look at this strategic intent behind several of the measures that the U.S. has been taking lately with the economic pressure rising on Iran through sanctions, through covert action, through military posturing, that's all designed to coerce Iran into a negotiation — one that preferably would be on Washington's terms. Now that's a big challenge. There's no guarantee that would happen, but we are seeing hints of the dialogue take place. Now after the election that's going to be a very critical question to watch, but I wouldn't rule out a dialogue with Iran for either Romney or Obama.
Colin: Romney made a point about even tougher sanctions. Is that in the cards?
Reva: Well, the Treasury Department always has plans to tighten sanctions and, yes, there is more damage that can be done. The U.S. can also get back to applying more pressure on many of the countries, particularly in Asia, who were already resuming imports from Iran, albeit at lower levels. So yes, there is more sanctions pressure to bear.
Colin: Now, in the section about Afghanistan where both men want out, Romney turned the talk very quickly to Pakistan. But it seemed like hand wringing — talking about doing something. But doing what?
Reva: Well there really isn't much to do about the situation in Afghanistan. The U.S. is withdrawing from Afghanistan — that's been very clear. Now the problem with that is when everybody knows that you're withdrawing it makes negotiations for a post-U.S. Afghanistan all the more trying. Either way, Pakistan is going to be shouldering and very big burden. It's also going to be trying to reconsolidate a lot of its influence in Afghanistan and limit India's influence there. So Pakistan has a full plate. We will continue to see strained relations between the U.S. and Pakistan, but this is just not a strategic issue for the United States to expend a whole lot of political capital on.
Colin: Let's turn to China, an immediate issue were Romney to win the election. Because on day one, he says he will label Chinese as currency cheats. Yet he said, if they stop cheating, he wants a warm and friendly relationship. Obama pledges to bring jobs back to the United States but it's hard to see companies like Apple bringing back manufacturing to California.
Reva: To start, you would need U.S. congressional mandate to label China a currency manipulator and even if you do label China a currency manipulator, it doesn't result in immediate punitive action. But the atmosphere becomes a lot more complicated because in those trade tensions you're going to have a lot of companies in between that are not going to want to be and that could results in a negative economic impact for both the United States and China. So it's a complicated tool. In many ways, the United States has more leverage holding that threats rather than exercising it. But either way China couldn't allow its currency to appreciate even if it wanted to. The number-one priority for China is to maintain employment no matter what, and at this point we're seeing China undergoing a very deep economic crisis. A lot of the structural inefficiencies are catching up with it also at a very sensitive political transition And when we see Chinese factories, seeing their profit margins evaporate, that becomes very troubling for the Chinese government authorities and they can try to incentivize exports through other means by trying to subsidize a lot of businesses. But that just adds to the entire inefficiency problem, so this is made a bad cycle that China is caught up in. But China is not going to compromise on its key imperative to maintain employment because of U.S. rhetoric on labeling China as a currency manipulator. This is just not something that it can really compromise on. And that is undercutting the economic problems that China is dealing with, is undercutting a lot of its competitiveness. And so we're already seen a number of businesses starting to shift — some of them going to Latin America where wages may be more competitive; also southeast Asia. So these problems are growing for China and as those problems grow, it's going to be less able to compromise on this ongoing dispute over this currency manipulation.
Colin: Finally Russia — Putin's action since his return this president make many people nervous. Romney said he wouldn't view Russia through rose-colored spectacles. Obama suggested his opponent was frozen in a Cold War mentality.
Reva: Romney is certainly has been a lot more hawkish toward Russia, and certainly Putin has taken note of that. But Russia is going to be looking for and hoping for any distractions for the United States, because it still has a lot left on its to do list in trying to strengthen its influence in the former Soviet periphery. And it really benefited from the past decade in having the U.S. distracted in the Islamic world. Now Russia has a lot on its plate when it comes to its upcoming economic challenges, political challenges at home, long term demographic challenges. But there is an additional challenge that is coming its way that's become a top national security issue for Moscow. And that's related to something that both candidates discussed in the debate — that of U.S. energy independence. Now that's referring to the shale gas revolution in the United States, where the United States has been able to produce a large amount of natural gas thanks to technological breakthroughs, hydraulic fracturing and horizontal drilling. But the term "energy independence" is a bit misleading. There would need to be huge technological breakthroughs in things like gas-to-liquids technology and infrastructure overhauls to allow natural gas to become a major transport fuel to replace crude. We're nowhere no near that yet. But still, when Russia is looking at the United States' natural gas production, it's looking at a surplus of the U.S. natural gas; it's looking at construction of LNG export facilities all along the Gulf Coast. And it can see very clearly that it could face competition in the European market for natural gas. So when we talk about this idea of U.S. energy independence, that is something that Russia has taken very close look at when it's looking at the U.S. natural gas production, and that could have very serious geopolitical implications for it in the long run, and no wonder the Kremlin is debating that heavily already.
Colin: Reva Bhalla, my guest on this week's Agenda. Thanks for being with us at Stratfor. See you next time.