Economic Growth Is a National Security Issue

Hovver logoby Michèle Flournoy And Richard Fontaine

Policies on trade and energy that foster prosperity also strengthen America’s military and political power.

Asia-ECNA-Trade-Line-Star-Performer-in-2014From the polls, one might think that a stark partisan divide has developed about which issue is of greatest importance to the nation. Take The Wall Street Journal/NBC News survey released earlier this month, which asked likely primary voters to name their top two priorities for the federal government from seven options.

The top choice among Republicans was “national security and terrorism,” picked by 54%. That option placed only fourth with Democrats, who instead chose “job creation and economic growth”—which placed third with Republicans.

The truth is that national security and economic strength are inextricably linked, and Washington needs to pursue both. In siloed government agencies, though, they are too often considered in isolation. America’s economy is the foundation of its military and political power, and boosting growth helps relieve the downward pressure on defense and foreign-affairs budgets that reduces Washington’s ability to shape international events. With the world aflame from Syria to Ukraine, and tensions with China rising, the demand for U.S. power is higher than it has been in decades. The challenge today is supplying it.

Perceptions of American retrenchment in recent years stem partly from Obama administration policies and congressional dysfunction—the sequester cuts, remember, were supposed to be so onerous that lawmakers would never let them take effect. But equally important is that in the wake of the financial crisis, the country turned inward to focus on creating jobs and reducing income inequality at home rather than sending aid and personnel abroad.

Until the rise of Islamic State in the Middle East and aggression from Russia in Ukraine, the percentage of Americans saying that the country should mind its own business internationally was 52%. This figure, from a December 2013 poll, was the highest ever recorded. The sentiment was driven by pervasive war-weariness and the middle class’s increased focus on its pocketbook. Indeed, throughout U.S. history, periods of economic strife have coincided with America’s trimming its national sails overseas. An internationally engaged U.S. must be an economically prosperous and confident one.

A bright economic outlook is a powerful counter to the narrative of American decline. It boosts perceptions of U.S. leadership and thus Washington’s ability to shape and enforce the international rules of the road, in domains as diverse as trade, maritime security and cyberspace.

Hence the need for a bold and bipartisan international economic agenda, one that will enhance national security in a world of growing turmoil. Such an agenda should include several elements:

• Trade and investment. The bipartisan bill, now making its way through Congress, to grant the president trade-promotion authority is critical to unlocking new and important trade deals. Lawmakers should pass the bill and, upon its completion, the Trans-Pacific Partnership free-trade agreement, which would produce unambiguous economic and strategic gains for the U.S. Success would also pave the way toward an eventual Transatlantic Trade and Investment Partnership trade agreement with the European Union.

More modest but still important, Washington should pursue a bilateral investment treaty with India. It should further reform export-control regulations, which block overseas sales of sensitive technology, to streamline the process for American manufacturers and ensure that remaining controls keep pace with technological advances. Congress should also reauthorize the African Growth and Opportunity Act, which expires in September and provides for duty-free importation of goods from sub-Saharan African countries that are making progress toward free trade, free market economies and the rule of law. The Generalized System of Preferences, which eliminates duties on thousands of goods from the world’s poorest countries, should be reauthorized as well.

• Energy. The ban on exports of crude oil dates back to the energy crises of the 1970s and is both outdated and counterproductive. Congress should lift the ban, and as a result boost employment and strengthen international trading relationships. Similarly, the Obama administration should speed the issuance of permits for the export of liquefied natural gas to American allies in Asia and to European countries seeking to move away from Russian supplies.

International institutions. The Obama administration’s failure to dissuade even the closest U.S. allies from joining the China-led Asian Infrastructure Investment Bank has showed how not to respond to the rise of new economic institutions, even ones that rightly give U.S. policy makers pause. Washington should more aggressively try to shape the rules and membership of future institutions like the AIIB. Trying to improve their governance and lending standards is more productive than futile opposition to their existence.

Similarly, Congress should stop holding up reapportionment of voting power at the International Monetary Fund. Giving developing countries more say could increase their buy-in to the IMF and reduce the attractiveness of alternative financing mechanisms that lack the IMF’s lending standards and transparency.

Over the past 70 years, the U.S. has pursued a free and open economic system that enhanced American prosperity and helped generate the power necessary to preserve it. The circle has been exceedingly virtuous. Now is the time to set an ambitious international economic agenda for the future. America’s future prosperity and security demand it.

Ms. Flournoy is chief executive of the Center for a New American Security and former undersecretary of defense for policy in the Obama administration. Mr. Fontaine is president of the center and former foreign-policy adviser to Sen. John McCain (R., Ariz.).

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