Ukraine and the Trans-Pacific Partnership
Image Credit: Wikimedia Commons

Ukraine and the Trans-Pacific Partnership


On Friday the Pacific Realist had the opportunity to participate in a panel discussion on applying American power that was hosted by the Atlantic Council’s Brent Scowcroft Center on International Security. The other panelists were Brent Scowcroft Center Director Barry Pavel; Jones Group International Senior Associate Jeff Lightfoot; RAND Political Scientist Stacie Pettyjohn; and John Hudson, a staff writer for Foreign Policy and one of The Cable guys, who moderated the conversation. A video and summary of the event is available on the Atlantic Council’s website, and I’m embedding the video below.

It was a far reaching discussion and I’ll probably return to some of the topics on this blog in the coming days. One of the topics, in particular, seemed particularly noteworthy in the light of President Obama’s current trip to Asia, as well as the ongoing crisis in the Ukraine.

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Specifically, during the Q&A portion of the panel, one of the audience members asked about the interaction between foreign and domestic policy. I didn’t have a chance to address the question at the panel, but it is a topic that I feel doesn’t get enough attention in American foreign policy circles.

Other countries are very good at harnessing foreign policy challenges for domestic ends and vice-versa. For example, many believe that the Chinese leadership is using territorial issues in the South and East China Seas to distract from the economic slowdown at home (and this is not a new theme in Beijing). I personally believe that Japanese Prime Minister Shinzo Abe is using the threat posed by a rising China to rally conservatives within his coalition to embrace the third arrow of Abenomics in the form of the Trans-Pacific Partnership (TPP).

Although American analysts often make note of foreign leaders exploiting crises abroad for political ends, they rarely propose that U.S. leaders should do the same. This is a mistake, in my opinion, especially given to the paralysis in the American political system.

There are constantly opportunities to do this, however. A nice and timely example would be the Obama administration using the crisis in the Ukraine to bolster its prospects of getting free trade deals in the Pacific and Atlantic theaters.

Russia’s annexation of Crimea and ongoing flirtation with invading eastern Ukraine has prompted many in Congress to argue that the U.S. must agree to export natural gas to Europe. In my view, this argument seems to derive from a fundamental misunderstanding of the way global energy markets operate. Specifically, whereas oil is easy to transport and thus sold on an open, global market, natural gas is extremely costly to transport by sea and as such prices vary considerably across regions.

Europe, being so close to Russia and other natural gas hubs in the Persian Gulf, pays a lot less for its natural gas than does the Asia-Pacific. As such, the U.S. is intending to export its excess LNG to Asia where it could hope to turn a profit while bolstering its geopolitical influence. By contrast, even if it built the required infrastructure on both sides of the Atlantic, the U.S. could never hope to compete with Russian gas in Europe given the differences in transportation costs. Since it won’t be economical, the U.S. and Europe would have to agree to build up infrastructure solely to use in times of crises with Russia. Even during these crises, undercutting Russian gas exports to Europe for political purposes would only be viable if the European countries were willing to incur substantial rises in the price of natural gas.

Thus, the natural gas argument doesn’t appear to me to be viable. On the other hand, the Obama administration should seize on the Ukraine crisis to argue to members of Congress that containing Russian influence over the long run requires that the U.S. to deepen its economic relationship with the European Union. And the best way to integrate the U.S. economy with the EU is to conclude the Transatlantic Trade and Investment Partnership (TTIP). The White House could then argue that Congress could facilitate this agreement by empowering the president with Trade Promotion Authority (TPA), which many in Congress are resisting.

TPA, of course, allows the president to submit free trade pacts to Congress for an up-and-down vote without the legislatures adding a bunch of reservations (pushed on them by interest groups) that target other parties to the treaty and threaten to unravel the entire pact. Thus, having TPA will make other parties to free trade talks more confident that President Obama can get the final product ratified by Congress. It is therefore seen as essential to concluding both the TTIP and the TPP.

The best part about TPA, however, is that it is granted to the president for all free trade pacts for a set number of time (say, 5 years). Thus, if President Obama could use the Ukraine crisis to get TPA in order to conclude the TTIP, that same grant of TPA could be put to work to conclude the TPP in Asia. Thus, a crisis in Europe could be used at home to expand President Obama’s power in Asia.

In an age of political paralysis in Washington, making those kind of far-reaching connections will be increasingly necessary to maintain an effective presence abroad.

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