High-Powered Diplomacy at the UN:
Advice for the "Willing"

Washington - Friday, March 14, 2003 - by: Dean Baker and Mark Weisbrot



offers they
can't refuse

The six undecided countries on the United Nations Security Council are in a tough bind. If it were put to the vote of their people, these nations would undoubtedly be against the Iraq war, just like the rest of the world. But in the spirit of the Godfather, President Bush is making offers that they cannot refuse, so it's a tough situation for these governments.




The leaders of these countries will have to weigh their choices carefully, but there is some advice that we can give them about dealing with President Bush: get the money up front. As New York Times columnist Paul Krugman recently pointed out, President Bush is not a man who lets past commitments interfere with his freedom of action. In other words, his promises don't mean very much.




In the 2000 election, education was one of his main themes as he promised to "leave no child behind." In 2001 he got Congress to approve a large increase in education funding as part of this commitment. Now he is proposing substantial cutbacks in education spending, so that there will be enough money to pay for more tax breaks for the wealthy. He also refuses to assist state and local governments that are being forced to close schools and libraries in order to balance their budgets.



no money

After the September 11th attacks he promised a large aid package to help New York rebuild. The people of New York are still waiting for most of that money. He also promised increased funding of homeland security to protect ports, bridges, and other vulnerable targets against terrorist attacks. Here too he has not delivered, as the appropriations he requested are far too small to meet the need.




President Bush's list of broken promises is impressive for a man who has held office for just over two years. The willing should keep this in mind when he asks for their support at the United Nations Security Council.



and trade

Even if he were sincere, it is not clear that President Bush would be able to meet his commitments to the new coalition. Our rapidly expanding budget deficit is only one of the obstacles to paying for Security Council votes. The other big problem is the trade deficit. Some of the willing may be selling their vote in exchange for greater access to the U.S. market. This might make sense if the U.S. presented a growing market for imports. Unfortunately this is not the case.



U.S. bad

The United States has a current account deficit that was running at close to a $550 billion annual rate at the end of 2002. A deficit of this size cannot be sustained for long. Until now, foreign investors have been willing to support this deficit by purchasing U.S. financial assets, such as stocks, bonds, and short-term notes. But they have been suffering huge losses on these investments in the last couple of years. Investing in euro-denominated bonds and notes would have provided far greater returns than dollar-denominated bonds or notes.




At some point foreign investors will stop throwing away money by buying U.S. financial assets, and the dollar will fall. When this happens the U.S. market will shrink -- imports are likely to decline by $200 to $300 billion annually. Having greater access to a shrinking market is not worth very much. In this case, the willing will have sold their votes for nothing.



war to cost 2% world

In short, the undecided countries will get what they see up front. But they could well end up with a net loss: the war will have a serious negative impact on the world economy. The International Monitary Fund has estimated that a war that goes badly could knock two percentage points, or more than $800 billion, off of world economic growth. This is an enormous loss, but even a much smaller negative impact of the war could easily wipe out any gains that the willing accrue from the bribes that are actually paid up front.




Unfortunately for the willing there is no court to enforce bribery agreements at the United Nations. And even if there were, the Bush administration would ignore it. So the governments that trade away their votes on the Security Council will get what they see up front, minus their losses from the war. They should make sure that this is a high enough price for selling their souls.

Dean Baker

Mark Weisbrot



Center for Economic and Policy Research
1621 Connecticut Ave NW, Suite 500
Washington, DC


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