Still a dangerous world
Monday, December 6, 1999
EDITOR'S NOTE: Blanchard and Company is pleased to publish the following
guest article by Frank Gaffney of the Center for Security Policy, one of the
most influential think-tanks in America today. Mr. Gaffney points out that
despite the popular myth that the world is now a safe place with no threats
to U.S. security and interests, several problems are festering around the
globe that could disrupt international commerce and distort economic
conditions. Few investors realize that these problems therefore pose a
threat to the financial markets. Gold is the best form of financial
insurance to protect your portfolio against the ravaging effects of
international tensions. The timing of this article is especially appropriate
in that, 20 years ago, two events pushed the price of gold up 128 percent in just 2
months: the Iranian hostage crisis and the Soviet invasion of Afghanistan.
Those of you who thought that such episodes are impossible today may change
your mind after reading Mr. Gaffney's article.
There is sometimes irresistible temptation in this post-Cold War world to
believe that we have seen the last of international crises that can disrupt
international commerce, distort economic conditions, or threaten other vital
U.S. interests. After all, it is repeatedly said, the United States is the
world's only remaining superpower. How could its security or equities
possibly be jeopardized?
Unfortunately, the answer is: In lots of ways. In fact, there are myriad
problems now festering around the world, any one of which could erupt with
little warning. Should that happen, the effects could be dramatic and
direct. Alternatively, they could be more subtle and indirect. But no one
should be under any illusion: The probable inability of the United
States-for all of its military might-to prevent, and possibly do much to
contain, these effects could have far reaching strategic and economic
consequences.
Consider an illustrative sampler of such incipient crises:
Such behavior could have dire repercussions for the United States, which the
Chinese consistently describe in propaganda designed for internal
consumption as "the main enemy." In 1996, a top Chinese officer issued a
thinly veiled threat to attack Los Angeles if the United States interfered
with its efforts to bring Taiwan to heel. This year, a Communist Party
newspaper warned that U.S. aircraft carriers could be attacked with nuclear
weapons if they got in the way. The situation is ripe for miscalculation and
possibly uncontrollable armed escalation.
North Korea is similarly benefiting from technical and financial assistance
from China. Thanks in part to such assistance, Pyongyang is reportedly close
to deploying a missile of sufficient range to be able to deliver a small
nuclear weapon against U.S. territory. Since the United States currently has
no deployed defense against even one such missile, this capability poses a
danger of blackmail-or worse, attack-by one of the world's lunatic regimes.
Indeed, mad as it may seem, the possibility that such a regime may decide to
take hundreds of thousands of this country's or its allies' citizens down
with it as North Korea collapses under the weight of its cratering economy
and starving population cannot be precluded.
The danger that U.S. pension funds, mutual funds, life insurance companies,
corporate portfolios and private investors could, unwittingly, be providing
critical financial wherewithal to such operations-many of which are directly
inimical to American security and interests-has prompted two blue-ribbon
commissions in the past few months to raise an alarm about this activity.
Legislation has been introduced in Congress that is intended to ensure
greater disclosure and due diligence with respect to such fundraising
initiatives. Should such non-intrusive measures fail to be implemented or to
prevent abuse of the U.S. capital markets, public outrage over this
dangerous practice could create an irresistible popular demand for more
restrictive responses.
For example, in speeches delivered in Arabic, Yasser Arafat continues to
encourage his people to believe that the long-standing goal of liberating
all of "Palestine" remains unchanged. He talks of "jihad" (holy war), to
ensure the "flag of Palestine will fly over the mosques and churches of
Jerusalem." Such comments suggest no genuine conversion on his part to the
path of peaceful coexistence. Further territorial concessions by Israel may,
therefore, simply give rise to a threatening Palestinian state able to
interfere with Israel's water supply, use of its airspace, and the security
of its borders, territory, and population.
Given Syrian dictator Hafez Assad's past history of duplicity and violated
agreements, moreover, hopes for a "breakthrough" on that front seem at least
as likely to prove misplaced. If Israel discovers this reality only after it
has surrendered the strategic Golan Heights, it could find itself facing a
renewed, possibly mortal peril from Syria-this time able to utilize not only
its vast conventional arsenal and weapons of mass destruction to inflict
huge damage on the Jewish state but military cooperation with an organized
and armed Palestinian force in Israel's rear.
The prospects for peace in the volatile Middle East are made worse still by
the steps being taken by Iran and Iraq-two avowed enemies of Israel that
have also gone to war with each other and with fellow Islamic states in the
region-to arm themselves with chemical, biological, and even nuclear arms
and the means to deliver them over ever longer distances. Should such
weapons be loosed, there is no telling what the impact could be. But it is a
safe bet that it will entail at least temporary disruptions in the flow of
oil and commerce through the Persian Gulf.
With considerable luck, none of these or various other potential flashpoints
will metastasize in the next few years. Betting on luck, however, is neither
a sound approach to national security policy-making nor to investment
strategies.
Frank Gaffney is the founder and director of the Center for Security Policy
in Washington, D.C., a not-for-profit, non-partisan educational corporation.
The Center has been internationally recognized as a resource for timely,
informed and penetrating analysis of foreign and defense policy matters. Mr.
Gaffney is a columnist for the Washington Times and a monthly contributor to
Defense News. In addition, his op.ed. articles also appear periodically in
The Wall Street Journal, USA Today, The Washington Post and other leading
publications including, The New York Times, The Christian Science Monitor,
The Los Angeles Times, The New Republic and Newsday. From August 1983 until
November 1987, Mr. Gaffney was the Deputy Assistant Secretary of Defense for
Nuclear Forces and Arms Control Policy. In April 1987, Mr. Gaffney was
nominated by President Reagan to become the Assistant Secretary of Defense
for International Security Policy, the senior position in the Defense
Department with responsibility for policies involving nuclear forces, arms
control and U.S.-European defense relations. Mr. Gaffney holds a Master of
Arts degree in International Studies from the Johns Hopkins University
School of Advanced International Studies and a Bachelor of Science in
Foreign Service from the Georgetown University School of Foreign Service.
For more information on the Center for Security Policy, visit their web site
at www.security-policy.org or call them at (202) 835-9077. For more
information on the Center via mail, write:
Center for Security Policy
1920 L Street NW, Suite 210
Washington, D.C., 20036.
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