Wednesday, March 01, 2006

Shop and Awe

Note: This post was originally supposed to run in the Washington Monthly, but the piece got killed. It has been kicked around for a while to other publications with no takers so I decided to blog it instead. It was growing stale, and I wanted somebody to actually read it. Another random act of journalism committed by yours truly. Enjoy.

Shop and Awe

During 2003, I was an intelligence officer assigned to CENTCOM in support of Operations Enduring and Iraqi Freedom. I worked hard to win, but the military machine of which I was a tiny part can only secure a partial victory. If U.S. trade policy were better adapted to the post 9/11 world, we might ultimately win by dropping more currency than cruise missiles. Call it “shop and awe”.

I spent the initial phases of Iraqi Freedom in Qatar. Right after, we had declared “mission accomplished”, CENTCOM lowered the force protection level enough for a few of us go exploring the in the souk, or market, in Doha, Qatar. Two of us wandered into a shop selling beautiful Persian silk rugs.

“You are American soldiers?” the proprietor asked in accented English. Damn, the haircut gives us away every time.

“Yes sir,” I replied. “Where are you from in the world?”

“Iran,” he stated glaring defiantly from under his turban--a challenge probably borne from watching too much “reality” TV on Al Jazzera.

“Really?” I replied. “It’s too bad our two countries don’t get along better. My grandfather spent some time in Iran, and he loved it.” (After thirty years in the Air Force, his military adventures are so much better than mine.)

It wasn’t the reply he was expecting, and the glare turned into a quizzical stare. I started looking around. My family has several nice rugs from my grandfather’s travels so I know a little about them. I showed my buddy how the weave in the silk makes them appear to change colors based on the angle you look at them.

I told the proprietor that we didn’t make anything like this in America, and that I was impressed. He smiled, and hate gave way to him offering me a special price. I almost bought one, but even with the discount they were still a couple grand. I told him that I couldn’t buy one without asking my wife first. He laughed. Some truths are universal.

For a brief moment, I was an ambassador of American consumer culture. And who knows, maybe the money from the sale would have gone to the “right” Iranians. I could have helped fund some nascent democracy movement.

But, that’s the problem isn’t it? How do we put money into the hands of the right people spurring growth and development in countries whose main export commodity is suicide bombers? The answer to the terrorism problem is a multi-faceted one, but so far, we’ve mostly sought military solutions.

Our country has not pursued a strategy that capitalizes on all our assets. We have the most powerful military in the world and have not been hesitant to use it. We also have the world’s most powerful economy but haven’t leveraged it into the fight. We should be pursuing policies that capitalize on the success of several private sector companies and jump start the economy’s of strategically important regions helping to create a bigger middle class in the Middle East. But, myopic US and European trade policy is standing in the way of total economic commitment.

Last year, Bob Dukelow, a now-retired senior civilian pentagon intelligence analyst with on the ground experience in Afghanistan, began looking into new strategies to win the GWOT. He heard about an area on called “worldstock” where they sell goods from developing countries like Afghanistan. Bob concluded that Overstock, and companies like it, had a role to play in our counter-terrorism strategy.

“Venues like this create better opportunities for local craftsmen in remote areas to get their products to markets they normally would not reach,” Bob says. “We can pull these craftsmen and their families into the functional core of the world's economy lessening the chance they will fall prey to the rhetoric of fundamentalist terrorist recruiters.”

Overstock CEO Patrick Byrne agrees that he and his company have a role to play. Overstock’s niche is normally selling large volumes of discounted goods over the internet. They are the web equivalent of an outlet mall. But, with worldstock, Bryne seems to be committed to using a large part of his business for purely altruistic goals. Plus, he actually travels to the locations where worldstock gets its products.

“I was in Afghanistan 15 months ago. One day through a misunderstanding I found myself stranded in a Hazara village west of Kabul, and after a little bit in the open I was getting way too much attention paid to me. Just about then a convoy of tanks and military vehicles came driving up. I never thought I’d be so happy to see a tank in my life.”

Not something that you’d find on the curriculum of the average MBA program, but then again, neither are Byrne’s goals. He wants to use his company to do the same thing for third-world craftsmen that he is doing for discount electronics and apparel.

“We don't make a big deal about it, but our Worldstock is not about making profit,” Byrne says. “The goal is the artisans.”

Byrne believes that by giving a venue to craftsmen he has helped create 15,000 jobs worldwide —1,500 in Afghanistan alone. Byrne believes that the private sector is uniquely suited for roles like this. He says that he has not coordinated his activities with any government organizations, but would like to see the government “help raise awareness of the successes/achievements of organizations such as Worldstock.”

And Overstock in not the only business doing this. A small chain of stores called Ten Thousand Villages does the same thing but with a lower profile. Run on Christian principles by the Mennonite Central Committee, these stores sell craft-goods from the developing world. It’s the same stuff that you’d find at a Pier1 or Cost Plus with one difference. These stores operate under the ideal of fair trade and are “designed to benefit artisans, not to maximize profits”. Cruelty-free consuming.

Company marketing director Doug Dirks has worked at Ten Thousand Villages for twenty years. “Our goal,” Dirks says. “Is to give people work and steady incomes to create stable communities. We are not donation driven or subsidized. We operate like a business, and try to help connect people to larger businesses.”

When asked if his company has a role to play in combating terrorism Dirks says “that’s not a specific goal, but we have noticed an increase after 9/11. People come to us saying that they came here because we’re trying to work with other cultures and bridge the divide.” Dirks also sees his company assisting the economic enfranchisement of people in the countries where Ten Thousand Villages operates. “We can’t do massive programs, but we can help connect people who are left on the economic fringes. We help connect them into the economy and plug them into the influential circles in their own countries.”

And Ten Thousand Villages operates on the fringes like those it is trying to help. “We aren’t plugged into other systems,” Dirks says. “We haven’t worked with USAID because there are too many strings attached. People know what they need to do with their money, and they don’t need extra assistance deciding what is best for them. Just like in our society. We actually end up cutting ourselves off from our supplier base because most people spend money on education so their children move beyond being craftsmen.”

Of course, crafts goods don’t drive powerful economies, but if the trends that Doug Dirks is seeing hold true, then the economic enfranchisement of artisans may help to create a middle class in developing nations. This middle class could form the nucleus of an investor class that may spur industrialization and further economic development. And this is the point where the developing world runs afoul of our trade policy. We haven’t pursued policies that capitalize on ideas like worldstock.

Brink Lindsey, an economist with the Cato Institute believes our policies ought to change. He says that agriculture and textiles manufacturing are the bottom rung of industrialization, but that US and European trade practices are hindering countries that are strategically important in the war on terror from getting on to that bottom rung. “US trade barriers are bad on September 10, 2001,” Lindsey says. “But they are brain dead and ridiculous today.”

Lindsey points to the success of a US/Jordan trade policy known as “Qualified Industrial Zones”. Started under the Clinton administration, this policy gave duty-free access to certain Jordanian goods. From 1999-2002 benefits from this trade policy represented 4% of the Jordanian GDP. But, this policy is not part of any greater plan or policy implemented since 9/11.

“Inadvertent consequences of US trade policy have impacted Muslim countries,” Lindsey says. “The Bush administration has signed free-trade agreements with smaller countries like Bahrain, Jordan, and Morocco. And, Bush has announced that he would be willing to sign more free trade agreements with countries like Egypt as long as they open up to US products and implement reforms.” But, Lindsey says that will take too long and is too dependent on actions from other countries that may not move at the pace we need them too. He advocates unilateral duty free agreements with countries in the greater Middle East.

Economist Edward Gresser of the Progressive Policy Institute agrees. “In trying to pick winners with our trade and tariff policy, we’ve created losers,” Gresser says. “In 1980 Muslim countries accounted for 13% of the World’s exports. Now it’s about 4%.”

Gresser believes that our protectionist trade policy is hurting us strategically. “What’s galling about the policy is that we’re protecting industries without jobs,” Gresser says. According to Gresser, there were about 2.4 million US workers in the garment and textiles industries in 1970. Today, globalization has forced these jobs offshore, and there are only a few hundred thousand US workers in these industries—less that .5% of the total work force—and the numbers decrease every year.

Compare this to Pakistan where 4 million workers are in these industries. Currently Pakistani garments and textiles are subject to 10-20% tariffs giving a trade advantage to countries like China. Gresser says that Europe is more lax on textile and garment tariffs but notoriously protectionist on agriculture goods—an economic one, two punch for developing nations.

In 2003, U.S. Senators Max Baucus (D-Mont.) and John McCain (R-Ariz.) introduced legislation that would have created a trade preference program for countries of the Middle East. The legislation didn’t go anywhere. Edward Gresser thought it was a great idea. “McCain-Baucus didn’t depend on any other country for action, and it would have made a difference in strategically important countries,” Gresser says.

Tom Friedman may be right. The world is getting flatter, but there are still some steep hills between the developing world and the standard of living and personal freedoms that we enjoy in our country. People stuck down in the valleys get angry and that makes violence just as much a commodity of globalization as Indian call centers. But some guy like my Iranian friend who believes that he is getting a fair shake out of the New World Order is less likely to end up needing a JDAM parked on his head by some guy like me.

For instance, we are spending millions trying to eliminate opium in Afghanistan without providing enough of an alternative. Pistachios used to be one of Afghanistan’s main crops, so why doesn’t the president have a bowl of “freedom nuts” on his desk to promote Afghani agriculture? Hell, it worked for jellybeans.

So, four years after 9/11, why did our government spend so much political energy promoting CAFTA while ignoring trade with the Greater Middle East? Is the economic development of Guatemala more important than Pakistan? And why aren’t we demanding that the Europeans open up to agriculture imports? Currently the Iraqi and Afghani economies are clawing their way back into life. When they re-enter the global economic stage, will they run aground on Western trade policy?

The countries where we are trying to spread democracy need concrete evidence of our commitment to their long-term well-being. Last summer, the Bush administration fumbled around with the idea that we are no longer in the Global War on Terror, or the GWOT. The new term was GSAVE, the Global Struggle Against Violent Extremism. It’s all empty semantics without real changes in our policy. Parts of the private sector are getting it right. Why can’t our government?

After 9/11, we were told to keep spending and traveling so the terrorists wouldn’t win. With some adjustments to our trade policies, we might have been on to something. So go buy a rug, and strike a blow for freedom. I know a guy in Doha who will give you a deal.


At March 02, 2006, Anonymous JG said...

The same thing should have been done after the collapse of the Soviet Union. We should have, if we didn't, encourage Capitalism via trade in the Soviet satellite states. An attempt was made in Russia but the Politburo - more of a Mafia family than a legislative body even before the collapse - became the Russian Mafia.

People seem to forget that democracy, individual rights and Capitalism, are all fingers of the same hand.

At March 21, 2006, Blogger Dee said...

Thank you! It's so nice to read an article on this by someone with a brain! ;-)

And thank you for being a Good Example in a foreign land. If more Americans acted like that... *sigh*

At June 14, 2006, Blogger chiflada-a-go-go said...

Amen, brother!

At August 08, 2006, Blogger Andrea Lawrence-Stuart said...

People could take a lesson from you in diplomacy. I am glad you decided to blog your article. It's an example of a good world citizen. Another not-so-average Alexander--Jane, the actor--a fellow of the International Leadership Forum where I work, posted a worthy commentary on our blog, the ILF Post, and it's titled "Cultural Diplomacy, US-Islam" in which she notes that cultural diplomacy is flagging. The art of simply being candid and courteous, making something positive out of each encounter, could be the key to peace. If you get the time, have a look and add a comment.

At August 08, 2006, Blogger Andrea Lawrence-Stuart said...

People could take a lesson from you in diplomacy. I am glad you decided to blog your article. It's an example of a good world citizen. Another not-so-average Alexander--Jane, the actor--a fellow of the International Leadership Forum where I work, posted a worthy commentary on our blog, the ILF Post, and it's titled "Cultural Diplomacy, US-Islam" in which she notes that cultural diplomacy is flagging. The art of simply being candid and courteous, making something positive out of each encounter, could be the key to peace. If you get the time, have a look and add a comment.

At May 25, 2007, Anonymous daan van ophuijsen said...

dvo said:
So, another tear of wisdom that bush will never read. And, mr jg, perhaps a friend, do you think that Gazprom is not capitalism? That the Chinese 'Getting rich is glorious' is not capitalism? That Mafia, or Emron, or Elf, or Parmalat, or Worldcom, is not capitalism? Did you know that many prominent (ex)communists had special relations with some western tycoons and ministers, and some of the same were the first to become 'exemplary' capitalists after the perestroika? What do we know about the old party assets, in the mean time? Fingers of the same hand, you say? Yes, if the hand cratches the right back at the right time, all fingers point in the same direction: from Swiss Bank to Wall Street. And if you like democracy, surely you are a member of the Democratic Party? Get real. Stop changing the subject. Do something!


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