Economic warfare: An under-used tool of statecraft

by J. Michael Waller
Insight magazine, 29 October 2002.

Al-Qaeda recently announced economic warfare against the United States and other Western countries. U.S. intelligence expects years of attacks on the economic infrastructure of the civilized world. For its part, the United States has an arsenal of economic weapons for this war, but critics fear it may have forgotten how to use them strategically — an important point, because proponents believe that strategic economic warfare thoughtfully applied by the United States could save innocent lives and avoid military conflict while achieving the same objectives as an all-out bombing or invasion.

Lessons of successful economic-warfare operations that hastened the collapse of the Soviet Union, veteran practitioners tell Insight, are valuable guideposts to help the Bush administration develop an integrated economic-warfare strategy.

Many weapons in the economic arsenal already are in play in the war on terrorism. The United States and other governments are going after bank accounts and electronic money transfers of terrorists and their sponsors, seizing assets and running a spectrum of policy options from covert "black operations" against terrorist financiers to full-scale embargoes against terrorist regimes. U.S. dominance of information technology and space for orbital satellite communications gives Washington immense superiority over any other world power.

The Department of Defense (DoD) defines economic warfare as the "aggressive use of economic means to achieve national objectives." Economic warfare can range from blockades and sanctions to physical attacks on an enemy's agricultural or industrial production, workforce and distribution systems to disruption of financial transactions and information networks. The concept dates to antiquity, from the plagues that destroyed the Egyptian pharaoh's crops, as reported in the Book of Exodus, to the enemy who sowed weeds on top of his neighbor's wheat in the New Testament.

For the United States, economic warfare is a tool of statecraft almost as old as the republic itself. Legislated actions include bans on certain international transactions, begun as early as 1807 with the Embargo Act and the 1809 Non-intercourse Act. Though neither law was successful as a foreign-policy tool, successive U.S. governments resorted to sanctions and embargoes to attempt to impose their will abroad.

Economic sanctions are a brand of economic warfare favored for their precise, though usually fleeting, political benefits to the politicians imposing them. They tend to have high and protracted human costs in the targeted countries and little if any appreciable impact in removing the targeted regime from power.

The 20th-century's mechanized warfare saw extensive targeting of enemy economies. British Prime Minister Winston Churchill saw this as such a vital part of the effort against Adolf Hitler that he created a wartime Ministry of Economic Warfare, telling its first minister, Hugh Dalton, to run it as "a new instrument of war" whose purpose "was to coordinate all action by way of subversion against the enemy overseas."

The goal was to weaken "the enemy's will to make war and the strengthening of the will and power of his opponents," Dalton said. This also meant overt and clandestine radio broadcasts and other forms of propaganda to support allies and demoralize the enemy, running agents of influence in friendly countries to support the war effort and conducting other black operations to disrupt the enemy's economic capabilities and supply lines.

Throughout the Cold War, however, the Western democracies did not develop a coherent, strategic, economic-warfare policy toward the Soviet Union until the early 1980s. Early in his first term, President Ronald Reagan approved a coordinated, strategic plan that integrated economic warfare into a well-defined U.S. national-security strategy with the goal of rolling back Soviet communism and forcing the Soviet system to reform within or collapse into itself. Reagan's national-security adviser, William P. Clark, presided over development of the plan that integrated economic warfare into U.S. diplomatic and defense goals, beginning with National Security Decision Directive (NSDD) No. 66 of November 1982.

To coordinate federal agencies, an earlier directive, NSDD-48, created a Senior Interagency Group for International Economic Policy (SIGIEP) that reported to the president through his national-security adviser, with separate interagency groups tasked with working some particular economic-warfare issue. In January 1983, shortly after the issuance of NSDD-66, Reagan signed NSDD-75, which laid out a three-part strategy to take down the Soviet Communist Party without risking war. The strategic document combined diplomacy, military power, propaganda, subversion and economics in a multifront offensive against the Soviet Union.

The strategy aimed at reversing Soviet expansionism, promoting internal change within the U.S.S.R. and conducting negotiations where there was strict reciprocity and mutual interest. One of the keys was to starve the Soviet economy of desperately needed technology and loans.

"This kind of integrated policy/strategy set is extremely rare in American history," says Norman A. Bailey, a former senior Reagan National Security Council (NSC) official who played a major role in developing the economic-warfare strategy and who served as the first executive secretary of the SIGIEP. In a Potomac Foundation study, Bailey notes, "By and large Americans have lacked a sense of history and strategy, and have depended repeatedly on geographic isolation and the ability to deploy overwhelming economic and military resources for last-minute tactical responses to imminent threats."

But a senior independent economic-warfare strategist tells Insight, "There's nothing like SIGIEP now for the war against terrorism."

Bailey recalls, "President Reagan's strategy to accelerate the demise of the Soviet Union consisted of five pillars: economic, political, military, ideological and moral." The NSC configured what he calls "a security-minded economic strategy that would constrict financial and other forms of Western life support" against the Soviet enemy.

NSDD-75 declared, "U.S. policy on economic relations with the U.S.S.R. must serve strategic and foreign-policy goals as well as economic interests." U.S. objectives were to shut off Western subsidies to the Soviet military buildup, keep squeezing the Soviet economy to force pressure for radical structural reforms and minimize the Soviets' ability to use "reverse leverage" on the West by manipulating trade, energy and financial levers.

It's this kind of Reaganesque strategy that the Bush administration must develop, proponents say. Bailey and other Reagan defense and security-policy veterans tell Insight that the economic-warfare plan came under intense opposition from the departments of Agriculture, Commerce, State and Treasury, as well as from such administration officials as James A. Baker, whose persona and acolytes later dominated the Reagan successor administration in ways that former president George H.W. Bush now is said to regret.

Reagan, with the help of his loyal vice president, forced the strategy through "with astonishing rapidity [and] against powerful opposition, not only from the Soviets but also from the administration itself and from U.S. allies," according to Bailey. A Cabinet-level group, SIGIEP, operated between 1982 and April 1985, working itself out of existence as the Soviet economic collapse propelled Mikhail Gorbachev to power.

What made SIGIEP successful in pushing through the president's strategy? At the White House the NSC, the CIA and the DoD were statutory members of a senior, Cabinet-level, interdepartmental group, ensuring proper integration of security considerations and policy deliberations. National Security Adviser Clark, CIA Director William Casey and Defense Secretary Caspar Weinberger were united with a common mission and vision. So too, SIGIEP veterans tell Insight, was Treasury Secretary Donald Regan, who chaired the group.

"The chairman reported through the national-security adviser to the president, and the National Security Decision Directive that created SIGIEP made clear that this body reported to the National Security Council and was a function of the NSC," according to a former member of the group who asked not to be identified. "That way, the group could never go off the reservation."

Says a former Reagan NSC official, "It's important today to seek to replicate this group in the war on terrorism."

The key to a successful economic-warfare strategy, as evidenced in the case of the Soviet takedown, is concentrating on a potential adversary's hard-currency cash flow and sources of financing. The George W. Bush administration is waging a financial war on terrorism, understanding that drying up traditional avenues of financing is fundamental to reducing and eliminating the terrorist threat. Similarly, various "follow-the-money" techniques have proved effective to identify terrorist groups and those who aid and abet them.

"President Reagan was persuaded even then that it was impractical to divorce international economic and financial policy-making from traditional national-security concerns. This is even more evident today in the war on terrorism and the urgent need to get a handle on proliferation of weapons of mass destruction and ballistic-missile delivery systems," says a retired senior official. "Even our domestic capital markets are now being penetrated successfully by global 'bad actors' that are able to raise billions of dollars annually from unwitting U.S. institutional and individual investors."

Among these bad actors are publicly traded companies that partner closely with terrorist-sponsoring regimes and provide them with "dual-use" technology and equipment with both civilian and military applications, and which facilitate large-scale revenue flows that terrorist governments can use in any manner they choose. Few, if any, public-pension systems or mutual funds screen for such global security risks.

Any attempt to revive a senior interagency body such as the Reagan-era SIGIEP would have to take private business and investments into account. Structurally, as far as denying American investment funds to "bad actors," the Securities and Exchange Commission (SEC) represents the first line of defense. As the first to know which foreign entities are seeking to raise funds and list equities in the huge U.S. market, the SEC could screen foreign companies with an index of firms with histories of proliferation-related concerns or material business in terrorist-sponsoring states. The SEC could refer those names to an interagency group that could work parallel to the normal SEC registration process, meaning no bureaucratic delays in the listing efforts of foreign companies and no interference in the market process.

Insight's interviews with national-security veterans of economic warfare indicate that the agencies most appropriate to serve on such a quietly configured interagency group would be the NSC, the CIA and the departments of Defense, Treasury and Homeland Security. "This kind of selective approach to protecting U.S. investors from unwittingly underwriting the wrong sorts of foreign enterprises would not only advance U.S. security interests, but represent an important new safeguard for the markets themselves," says one proponent who, because of his sensitive government position, asked not to be named. "It also represents sound corporate governance via the occasional use of American intelligence sources and methods to vet companies that otherwise would be unwilling to disclose their security-related transgressions and thereby expose investors to onerous material risks down the road."

This high-level insider continues, "In select cases like those of known proliferators, they should properly be denied access to the U.S. stock and bond markets. And there should be no apologies for such a step." He then suggests something that individual citizens can do to help defund terrorism: "Every citizen should be asking their financial advisers and fund managers whether they have invested money in companies doing significant business in terrorist-sponsoring states that likewise possess weapons of mass destruction. Firefighters and police officers should be particularly sensitive to the likelihood that their retirement dollars are, unbeknownst to them, being invested in companies with terrorist ties. It's likely that 21st-century economic warfare and prudent security policy will play out on these types of rarified battlefields."


Is the U.S. Vulnerable to Economic Warfare?

The Bush homeland-security team already has entire units devoted to defense against foreign economic warfare, and the potential threats can be surprising.

The $800 billion U.S. agricultural sector, some military theoreticians argue, is a prime target for enemy attacks to cripple the economy. "Harmful bacteria, viruses, rickettsia or toxins that incapacitate or kill humans, animals or plants have an unsettling value in waging economic warfare," notes Air Force Lt. Col. Robert P. Kadlee in a paper on future warfare published by Maxwell Air Force Base. He offers a scenario where China, as the world's second-largest corn exporter, attacks the U.S. corn industry by spreading a corn-seed blight over the Midwest, decimating the corn crop. The damage would force the United States to import corn for the first time ever, sharply increasing demand and prices while also damaging the corn-fed hog and cattle industries.

According to this scenario, "Food prices rise sharply and cause higher-than-expected food prices and inflation. China gains [a] significant corn-market share and tens of billions of dollars of additional profits from their crop."Another scenario envisions European winemakers seeking to capture the California wine market by spreading grape lice across the Napa and Sonoma vineyards of Northern California. "In the post-Cold War era and as we enter the 21st century, the economy determines superpower status," says Kadlee. "The threat posed by biological weapons deserves prudent attention."

Economic Warfare Versus Saddam Hussein

Critics point to more than a decade of international sanctions against Iraq and the massive suffering of much of the Iraqi population as proof of the ineffectiveness and inhumanity of economic warfare. Even though the sanctions now allow Iraq to sell oil to purchase food and medicine, the regime has manipulated the distribution system to support its own power and punish its enemies while allowing Saddam to blame the United States for his people's hardship.

But those sanctions are only a half-measure, and a harmful one at that, others argue. "Sanctions are almost never seriously applied and thus end up leaking massively and actually enriching the target country's elite while impoverishing and embittering the general populace," notes Norman A. Bailey, former special assistant to the president for national-security affairs.

Skillful deployment of strategic economic warfare, proponents say, actually can avoid all-out war and save both the national infrastructure and innocent lives. Bailey argues that if the United States decides to remove Saddam Hussein it can wage economic warfare successfully and in a way that will spare the Iraqi population from prolonged suffering.

In an unpublished memorandum, he and George Mason University School of Law professor Barbara P. Billauer state: "Genuine and leakproof sanctions are feasible and would work in a very short time. They would involve: (1) a total blockade, enforced by sea and by air, with no exceptions or exemptions; (2) a total cutoff of all transportation in and out of the country, ruthlessly enforced; (3) a total cutoff of all communications links to and from the country, also ruthlessly enforced; and (4) a complete financial isolation of the country. Enforcement of such measures would bring the regime to its knees within days. To cause a complete power shutdown the oil refineries might also be put out of action and concurrent psychological measures might also be considered. …

"Overthrow Saddam? If we really want to do it, let's do it, and let's do it with minimum damage and loss of life, and let's have the Iraqi people do it."

U.S. Intelligence Warns of Attacks on Economic Interests

A Department of Transportation Office of Intelligence and Security advisory to operators of U.S.-flagged and controlled vessels has been obtained by Insight. It warns of al-Qaeda threats "against U.S. economic interests" and cites al-Jazeera broadcasts in October referring to "al-Qaeda targeting key sectors of the U.S. economy" and other provocations.

Independent interpretations by al-Qaeda detainees at the U.S. Naval Base at Guantanamo Bay, Cuba, agree that the release of the taped statements may signal an upcoming attack. "This information strengthens previous assessments that al-Qaeda continues to plan major attacks against U.S. interests. The focus upon economic targets is consistent with al-Qaeda's stated ideological goals and long-standing strategy to undermine what they see as the backbone of U.S. power: the economy. Striking a prominent U.S. target for economic and symbolic reasons would have immediate worldwide impact.

"The focus on economic targets is consistent with al-Qaeda's stated ideological goals and long-standing strategy. The Sept. 11 attacks and commentary on these attacks by [Osama] bin Laden and others indicate how central economic targets are to this strategy. The group's leaders have said that they aim to undermine what they see as the backbone of U.S. power: the economy. Our adversary is trying to portray American influence as based on economic might and therefore seeks to strike an economic target prominent enough for economic and symbolic reasons that would have immediate resonance around the world."

On Oct. 21, a concerted electronic attack was made on all 13 root servers of the Internet. U.S. forces defeated the attack.

— JMW

This article, posted 29 October 2002, appeared in the printed issue of Insight magazine dated 12-15 November 2002.

Hyde urges Bush to oust Venezuela's Chavez

by J. Michael Waller
Insight magazine, October 29, 2002

Warning of the formation of a potential "Axis of Evil" in the Americas, an influential lawmaker has called on President George W. Bush to support the ouster of left-wing Venezuelan strongman Hugo Chavez.

Just days before Brazilians elected radical populist Lula da Silva as their president on Oct. 27, House International Relations Committee Chairman Henry Hyde (R-Ill.) sent President Bush a powerfully phrased letter warning that a triumvirate of political extremists leading economic powerhouse Brazil, oil giant Venezuela and the terrorist-sponsoring regime of Cuba constitute an emerging "Axis of Evil" that the United States must stop.Insight obtained a copy of the two-page letter, dated Oct. 24.

Hyde is concerned that da Silva's professed desire to renew Brazil's nuclear-weapons program and his hints at building the country's economy and global stature through proliferation of advanced weapons, is particularly alarming — especially in light of the Brazilian leader's open support for hemispheric terrorist organizations. Combined with the State Department's continued listing of Cuba as a sponsor of international terrorism and the Venezuelan paratrooper-turned-president's open embrace of Havana and fellow terrorist regimes in Iran and Iraq, Hyde has become alarmed at the administration's apparent inaction.

Hyde recounts the Chavez regime's record, which, according to the letter, includes "fundamental" violation of the Venezuelan constitution and usurpation of powers of the legislative and judicial branches; "public alliances with state sponsors of terrorism including Cuba, Iraq and Iran" and subsidizing the Fidel Castro regime with oil; and support for "terrorist organizations attacking nearby fragile democracies including the FARC [Revolutionary Armed Forces of Colombia] in Colombia and radical antidemocratic groups seeking to destabilize Bolivia and Ecuador."

"The Clinton administration remained unconscionably silent about the antidemocratic actions of President Chavez," according to Hyde, who urged Bush to stop continuing the Clinton policies and to start telling the truth about Venezuela. "This is the time for the Bush administration to set the factual and historical record straight: The current regime of President Chavez is illegitimate because it is based upon the systematic violation of the Venezuelan constitution in force in 1999," Hyde wrote. "The Bush administration should also declare itself in sympathy with the pro-democratic civil-military coalition in Venezuela which seeks to restore democracy and should do so at once."

According to Hyde, "all the pro-democracy elements of the society, including the genuinely democratic political parties, the labor unions, business associations and religious institutions, have been gathered for two days in coalition with a group of active duty military officers of flag rank demanding that President Hugo Chavez resign and that new, free and open elections be held."

Such action might moderate the incoming da Silva government in Brazil. Hyde is especially concerned that da Silva would make good on his statements to build and proliferate nuclear weapons.

Other lawmakers share Hyde's concern. The International Relations Committee chairman told Bush, "Recently, many of my colleagues in the Congress wrote you a letter in which they expressed their concerns about the ten-year-long association of Mr. Lula da Silva with Latin American, European and Middle Eastern terrorist organizations in a forum which he convened and organized in silent partnership with Castro. "

They also expressed their concern about Mr. Lula da Silva's recent statements indicating an interest in reviving Brazil's nuclear-weapons program, which from 1965-1994 not only wasted enormous resources that could have helped the poor, but also succeeded in designing a 30 kiloton nuclear bomb which could be quickly tested if the program were revived. "There is a real prospect that Castro, Chavez and Lula da Silva could constitute an axis of evil in the Americas which might soon have nuclear weapons and ballistic missiles. ... This is the time to support the pro-democratic coalition in Venezuela and to help the people of Brazil understand the truth about Chavez so that they do not make a similar mistake and elect another pro-Castro radical who will neither help the poor, nor help their economy, nor live at peace with democratic neighbors."

The Bush Doctrine: New national security strategy abandons moral relativism

by J. Michael Waller
Insight magazine, October 15-18, 2002

Here at last is a new White House document that doesn't mince words: friends and enemies; good and evil; right and wrong. It's all in The National Security Strategy of the United States of America — the essence of what is becoming the Bush Doctrine — and it's turning the establishment diplomatic and international-security communities on their heads.

In his first formal strategic paper on how he intends to secure the country's security, President George W. Bush declares, like a modern Abraham Lincoln or an Old Testament prophet, that it is this nation's responsibility to "rid the world of evil."

The evils he wants to destroy are terrorism, governments that sponsor terrorism and rogue regimes that threaten the civilized world with weapons of mass destruction. To do so, according to the strategy, the United States must: completely rethink its entire military, foreign-policy and national-security machinery; dramatically redesign its armed forces from the ground up; slash bureaucracies; streamline intelligence collection and analysis; speed the systems needed for decisionmaking; employ new technologies; and make it possible for the United States to identify and destroy threats before they can strike the country and its interests.

The White House reasons, "America is now threatened less by conquering states than we are by failing ones. We are menaced less by fleets and armies than by catastrophic technologies in the hands of the embittered few. We must defeat these threats to our nation, allies and friends."

At the same time, the president believes the United States cannot simply destroy the evildoers without helping lift up and rebuild areas of decay and strife. He sees the country shouldering an enormous international responsibility to encourage political, religious and economic freedom around the world. The theme builds on former president Ronald Reagan's crusade to defeat and dismantle the evil empire of the Soviet Union by confronting aggression and promoting freedom. The strategy is rich in Reaganesque simplicity and sincerity in both its words and its reasoning: "In pursuit of our goals, our first imperative is to clarify what we stand for: The United States must defend liberty and justice because these principles are right and true for all people everywhere."

Gone is the values-free, relativist realpolitik of the 1960s that justified coexistence and even collaboration with despots and tyrants while ushering in Strangeloveian concepts such as "balance of terror" and "mutually assured destruction." The new strategy is to "promote a balance of power that favors freedom." Little if anything in the decidedly free-trade document smacks of establishment cynicism: "Embodying lessons from our past and using the opportunity we have today, the national-security strategy of the United States must start from these core beliefs and look outward for possibilities to expand liberty."

It's an idealistic document, to be sure, but an idealism laced with hard-nosed realism about both the limits of U.S. power and the limits of working with the consent of the rest of the world. Bush has dumped the discredited notion, embraced by establishment policy wonks for generations, that the United States must wait until its people are slaughtered before striking an enemy. The Bush strategy is to defend the United States, the American people and our interests at home and abroad by identifying and destroying the threat before it reaches our borders.

"While the United States will constantly strive to enlist the support of the international community, we will not hesitate to act alone, if necessary, to exercise our right of self-defense by acting pre-emptively against such terrorists, to prevent them from doing harm against our people and our country." The United States will deny further foreign sponsorship, support or sanctuary to terrorists "by convincing or compelling states to accept their sovereign responsibilities." In the president's own words, repeated in the document, "We cannot let our enemies strike first."

National Security Strategy is a document which Congress requires annually under a law designed to force the Clinton administration to think strategically. It is especially important because it represents not just a view of the State Department or Pentagon or an administration faction, but accurately reflects the thinking of the president, senior administration officials who worked on the strategy tell Insight.

"It is very definitely a White House document," says a senior presidential aide. Drafts of the strategy underwent rigorous interagency review before being signed by the president.

That consensus and the personal presidential approval, administration sources say, are what make the National Security Strategy so strong. President Bush has scrapped 50 years of values-neutral, relativist national-security doctrine and replaced it with a moral crusade to free the world not only from terrorist regimes and weapons of mass destruction, but of all forms of tyranny. The document picks up where Ronald Reagan left off.

"The U.S. national-security strategy will be based on a distinctly American internationalism that reflects the union of our values and our national interests," the president writes in the introduction. National Security Adviser Condoleezza Rice is credited with coining the term "distinctly American internationalism" in 1999 early in the Bush presidential campaign. The strategy reflects this distinction, as well as her own personal cachet, backing an assertive global approach promoted by Defense Secretary Donald Rumsfeld and his team.

Quite to the contrary of the administration's foreign and domestic critics, who accuse Bush of cowboy-like unilateralism, National Security Strategy notes that U.S. resources are finite and calls for active participation by the rest of the world. The strategy seeks to strengthen, not retreat from, the successful system of alliances that has included NATO, the Organization of American States and the Australia-New Zealand-U.S. (ANZUS) pact.

"There is little of lasting consequence that the United States can accomplish in the world without the sustained cooperation of its allies and friends in Canada and Europe," according to the strategy, which also encourages regional allies such as Australia, Japan, South Korea, Thailand, the Philippines and Singapore to lead in their respective regions and areas of concern. It hails partnerships with countries such as Indonesia and Colombia with the will, but without sufficient resources, to defend their embattled democracies against terrorists.

It also expands cooperation to heretofore out-of-bounds countries. "U.S. interests require a strong relationship with India," it says, adding, "Today we start with a view of India as a growing world power with which we have common strategic interests."

The idea of a strong India horrifies the sino-apologists at the State Department and elsewhere in the administration who favor the realpolitik tilt toward the People's Republic of China and the Islamic Republic of Pakistan. But the Bush strategy further calls on the United States to continue working with "coalitions of the willing" — unofficial, often-shifting coalitions of nations focused on a relatively narrow problem area.

The strategy underscores a "new strategic relationship" with Russia, based on the administration's view that "the United States and Russia are no longer strategic adversaries." Some Bush loyalists may take issue here, noting Moscow's continued development and deployment of next-generation strategic nuclear missiles and its ongoing illegal biological- and chemical-weapons programs.

And so the White House cautions, "We are realistic about the differences that still divide us from Russia and about the time and effort it will take to build an enduring and lasting partnership. Lingering distrust of our motives and policies by key Russian elites slows improvement in our relations. Russia's uneven commitment to the basic values of free-market democracy and dubious record in combating the proliferation of weapons of mass destruction remain matters of great concern. Russia's very weakness limits the opportunities for cooperation."

Ideas will remain important weapons in the U.S. arsenal, even though insiders acknowledge that the administration has conducted its strategic-information campaigns poorly and squandered valuable time. "We will also wage a war of ideas to win the battle against international terrorism," the strategy paper says, though there appears to be no effective coordination coming from the National Security Council as occurred in the Reagan administration.

U.S. strategy now is to anathematize all forms of terrorism and terrorist sponsorship "so that terrorism will be viewed in the same light as slavery, piracy or genocide: behavior that no respectable government can condone or support and all must oppose." The United States will support "moderate and modern government, especially in the Muslim world," to dry up conditions that fertilize terrorism, while enlisting the international community to focus its efforts and resources on areas most at risk. It also will deploy "effective public diplomacy to promote the free flow of information and ideas to kindle the hopes and aspirations of freedom of those societies ruled by the sponsors of global terrorism."

Taken to its logical conclusion, the Bush Doctrine envisions regime change not only in states ruled by terrorists and tyrants, but wherever freedom is repressed. This raises the touchy, but pressing problems of what to do about places such as totalitarian Saudi Arabia and communist China, whose political-influence operations in Washington had until now impeded U.S. public diplomacy to promote freedom as American policy.

National Security Strategy says nothing of the Saudis, but states flatly that Sino-U.S. relations are crucial to promote peace and prosperity in the Asia-Pacific region. The United States welcomes "the emergence of a strong, peaceful and prosperous China."

Having said that, the White House adds a catch: "The democratic development of China is crucial to that future. Yet, a quarter-century after beginning the process of shedding the worst features of the communist legacy, China's leaders have not yet made the next series of fundamental choices about the character of their state. In pursuing advanced military capabilities that can threaten its neighbors in the Asia-Pacific region, China is following an outdated path that, in the end, will hamper its own pursuit of national greatness. In time, China will find that social and political freedom is the only source of that greatness."

Diplomatically speaking, that language is significant. It clearly states that communist China's military modernization poses a future threat, that it is a repressive regime, directly implying that both the threatening and repressive natures of the Chinese government system — the Communist Party and its People's Liberation Army — must be dislodged before China can play its part in the civilized world.

The document adds that although Beijing permits more personal freedoms and allows some village-level elections, the regime "remains strongly committed to national one-party rule by the Communist Party." Much work remains to be done to grant the Chinese people real freedom and, the strategy implies, to remove the regime as an international threat. Significantly, the Bush strategy reiterates "our commitment to the self-defense of Taiwan under the Taiwan Relations Act."

But, curiously, National Security Strategy all but papers over the U.S.-Israel relationship, which receives but a passing mention, while the document portrays a "democratic Palestine" as essential to Israeli security. Administration sources close to Israel say they are not troubled by the omission, given the diplomatic need at present to cultivate Arab and Islamic forces for larger U.S. security needs.

Economic and social reconstruction in much of the world, deployment of missile-defense systems, development of a new homeland-security structure, aggressive strategies to prevent and counter proliferation of weapons of mass destruction and the total restructuring and transformation of the nation's defense, intelligence, security and law-enforcement communities also are laid out in the president's new strategic vision. "The major institutions of American national security were designed in a different era to meet different requirements," the document says. "All of them must be transformed."

National Security Strategy envisions the continued development of newer and ever more-dangerous threats to the United States and is designed to support pre-emptive options: "As time passes, individuals may gain access to means of destruction that until now could be wielded only by armies, fleets and squadrons. This is a new condition of life. We will adjust to it and thrive — in spite of it." It warns, "Freedom and fear are at war, and there will be no quick or easy end to this conflict."