Power, Prosperity and the Sea

September 29, 2020
 • 
Episode: 
18

Power, Prosperity and the Sea

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Admiral James Stavridis

Most global trade in goods moves by sea—but what makes that possible? U.S. Navy Admiral (Ret.) James Stavridis walks through the global network of naval forces that supports international trade and discusses the linkages between this system and national security, power and prosperity. He also discusses his experience building an anti-piracy maritime coalition that included Russia, China, and Iran when he served as NATO Supreme Allied Commander—and what lessons that may offer today as Russia and China build up their naval forces at a time of increased trade tensions.

Opinions expressed on Trade Matters are solely those of the guest or host and not the Yeutter Institute or the University of Nebraska-Lincoln.

Show Notes

What Admiral Stavridis has been reading:
Pedaling Protectionism: Smoot-Hawley and the Great Depression by Douglas Irwin

Transcript

Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the audio before quoting in print and write yeutterinstitute@unl.edu to report any errors. Transcripts will be posted within one week of the show.

Jill O'Donnell: Welcome to Trade Matters, a podcast by the Yeutter Institute at the University of Nebraska-Lincoln. I'm Jill O'Donnell. Our guest today is Admiral James Stavridis, a retired four-star officer in the United States Navy. He previously served as the 12th Dean of the Fletcher School of Law and Diplomacy at Tufts University. Currently, he is an operating executive of the Carlyle Group. Admiral James Stavridis, thanks so much for being on Trade Matters today.

James Stavridis: It's great to be with you, Jill.

Jill O'Donnell: So sir, I'd like to dive in and talk with you about a book you wrote about three years ago called Sea Power. And I think if I could summarize that book in one sentence, it would be that national security, national power and national prosperity are all closely linked with sea power as projected by the US Navy at the center of that. And in the book, you talk about things like 95% of global trade moving by sea. And you mentioned that at any moment in time, about 50,000 vessels are underway in the oceans and you wrote, "the open flow of free goods on the oceans is crucial to a geopolitical power like the United States." So I'd like to start with a big counterfactual for you. Imagine for a moment that there is no US Navy or Coast Guard, what would that mean for international trade and for the competitive position of the United States in the world?

James Stavridis: Jill, we don't really have to imagine that as a counterfactual since we have a millennia of history going back say 2500 years when the seas were an ungoverned space, when it was an outlaw sea. And we know what that world looks like and we don't want to go back there. It's a world of piracy. Then of course, we still have modest amounts of piracy occurring today in the world. Even though we have all of these navies and all of these Coast Guards, but we don't have to imagine a world of two or 300 years ago where piracy was simply built into the business costs of moving goods around the world. In fact, much of the global renaissance, if you will, in the 20th century economically was a result of regulating the oceans. So without any question, if you take away the ability to police the oceans, unfortunately I think we can predict more piracy, more illegal, unregulated fishing, more dumping of plastics into the ocean. All of these are currently significant problems, but if you take away not only the US Navy, but really the global network of navies and Coast Guards, we are looking at truly destroying the oceans. It would be a huge mistake.

Jill O'Donnell: So you mentioned piracy there. I'd like to pick up on that for a moment in a couple of different ways. First in your book, Sea Power, you talked about overfishing and you talked about how government subsidies can contribute to overfishing, which in turn can deprive people of legitimate way of earning a living, especially in certain parts of the world where there's not a lot of other options. Making them open to recruitment into piracy. And right now, as we speak, we have negotiations underway at the World Trade Organization to eliminate subsidies for illegal unreported, unregulated fishing, all of which contribute to overfishing.

So my question for you is first in your capacity as a US Navy Admiral, did you ever interact with the World Trade Organization or other elements of the international trading system regarding their role in addressing the underlying factors that can lead to piracy?

James Stavridis: Indeed I did. And particularly through the offices of the International Maritime Organization, which is headquartered in London and is another body in the United Nations family. So absolutely we need international cooperation if we're going to deal with all manner of illegal fishing, which is in my view, rising above piracy in terms of costs to the international economy, long-term damage to the oceans, potentially incalculable, as well as sparking a great deal of geopolitical tension. Think about how close China and Japan have come to exchanging missiles over fishing, not in the South China Sea, but in the East China Sea. So absolutely I touched the World Trade Organization most typically through the International Maritime Organization. All of these international organizations are not perfect. They all could use a tune-up they've been around since the 1950s, 60, 70s, but they are still essential to creating some level of order on the still very chaotic oceans. And I'll close on this Jill by saying an important element of this is the United Nations Convention on the Law of the Sea. UNCLOS, often simply called the Law of the Sea. The United States still in my mind regretfully has not signed that treaty. One of the last of a handful of nations, not to have signed it. All of that fits together. And if we're going to continue to have free trade on the oceans, avoid the kind of disputes over fishing you've addressed, take on the challenges of piracy, we need a strong United Nations Law of the Sea treaty. We need an active World Trade Organization working with the International Maritime Organization in the oceans specifically.

Jill O'Donnell: Following up from a moment on that, can you talk just a little bit more about what your interactions with the International Maritime Organization were like? Was it a case where that organization is relying on you for some kind of real-time sort of on the ocean perspective on what you're seeing as a Navy Admiral or a senior Naval officer? What are they seeing out there on the oceans that helps inform what that UN body can do? Was that the nature of the dialogue or tell us just a little bit more about what that was like?

James Stavridis: I can and you categorized it very well in terms of what information flowed from operational forces, in this case, Supreme Allied Commander of NATO in command of the counter-piracy missions off the coast of East Africa. Information would then flow from us because we had our warships of NATO and our allies partners and friends operating in North Arabian Sea, Indian Ocean, Red Sea. We would send intelligence and information to the IMO in London. Conversely in London, the IMO would then convene stakeholders bringing in, for example, the big shipping lines, Mariinsk, Onassis, Niarchos, many of the big shipping container and tanker lines. They would bring together environmental groups. They would bring security professionals such as ourselves and then they would convene in London. All of us would exchange information and create real policy. A practical example in counter-piracy was the creation of the series of protocols that the merchant fleets could follow to minimize the risks they faced of piracy. Very practical nuts and bolts kind of stuff. Intelligence flowing from us, policy flowing back from them. Very good meeting between the two interlocutors.

Jill O'Donnell: Okay. So as you mentioned, you previously served as NATO Supreme Allied Commander. And when you served in that role and you discussed this in your book, Sea Power that you assembled a global maritime coalition to address Somali piracy, because it was having a major impact on European companies, especially in increasing the cost of moving goods, especially through East African and North Arabian Sea waters. So what I found striking about that coalition that you assembled was it included Russia, China, Iran, countries that we don't typically think of as working closely with NATO. And so I wondered if, especially at a time right now when we see Russia and China developing their Naval forces at a time of increased trade tensions, are there any lessons from that experience of building that maritime coalition that resonate with you today?

James Stavridis: There are. And principally, I would say it is important to confront our opponents where we must, where we have significant profound disagreements with them. We are profoundly in disagreement with Russia about its invasion of Ukraine and annexation of Crimea. We are profoundly in disagreement with China about its claims of territoriality in the South China Sea. We have to confront them there, but we should confront where we must, but cooperate wherever we can. Try and find zones of cooperation, try and reduce tension, try and build confidence. A couple of examples include the one you just mentioned, counter-piracy. Every nation has an interest in reducing piracy on the high seas. It's one of the few things upon which there is universal sovereign agreement. So in a case of counter-piracy, we were able to say to Russia and China and Iran, "Be part of this effort." Doesn't mean you have to place your ships under my command as the Supreme Allied Commander of NATO and commander of the task force, but work alongside us. Take a sector that you will patrol. Share intelligence information with us. Let's find ways to cooperate. And as an example, working with our Russian counterparts, we were able to put specialized communication here on our warships in the task force and on Russian and Chinese warships. So we could simply communicate with each other because our communications and radio systems weren't naturally connected. So these are important geopolitical possibilities to explore because they broadly reduce tension in the international system, but there are very powerful tactical reasons for doing this. It helped us catch many pirates by working together.

Jill O'Donnell: Okay. Sir, you mentioned the South China Sea already a couple of times and China, of course. And I'd like to get your thoughts on some issues related to the South China Sea. You have a chapter on this in your book and the subtitle is A Likely Zone of Conflict. And as you know very well, but just to remind our listeners, there's a lot happening in the South China Sea, such as overlapping sovereignty claims between China and many of its smaller neighbors, which is largely driven by competition over resources like hydrocarbons and fish. China's constructing artificial islands in your book, which you published about three years ago. At that point, you said that China had reclaimed already about 3,000 acres of land out of the sea. And that these really constitute, in essence, unsinkable aircraft carriers. And China continues to ignore international court rulings against its sovereignty claims in this area. All of this in a place where as you know $5 trillion of the world's trade passes through every year. So three years after writing this book and this chapter about the South China Sea, especially now as we are in the midst of a trade war with China, has your assessment of the possibility for US-China cooperation changed in any way?

James Stavridis: Yeah, it's obviously diminished. We're all familiar these days because of COVID with the term pre-existing conditions. So think about the US-China relationship before COVID. It already had some pretty bad pre-existing conditions. We had a fundamental territorial disagreement about the South China Sea. We saw constant Chinese intrusion into our social networks and into our commercial networks often with the intent of stealing intellectual property. You've mentioned the imbalance in trade and tariffs. We had a pretty hot competition about who would drive the 5G networks. And finally, back to the South China Sea, the construction of these artificial islands is really unlike anything we've seen in terms of attempting to build a claim on the high seas by constructing islands, which then allows you to use the Law of the Sea process to claim a territorial sea. So bad pre-existing conditions that's when I wrote the book, today it's worse.

We have still all of those pre-existing conditions. We've made almost zero progress on trade imbalance and tariffs. We have a mini trade deal that's on life support. The Trump administration is using China and beating it like a pinata in the run-up to the election. The Biden administration potentially probably will be on the same track. So our election is inflaming those pre-existing conditions. And then of course, this virus originated in China. And so there's a great deal of animosity and anger in the United States directed at China because of those pre-existing conditions, because of our election coming up and because of COVID. So, unfortunately, Jill, I have to say that the potential for further conflict with China is not insignificant. At this point, we ought to be focused on avoiding a full blown military confrontation. We need a real strategy to deal with China. We need it to have military diplomatic, political, cultural communications, commercial elements to it. And it needs to be an overarching and successful strategy if we're going to avoid stumbling into at best another Cold War and at worst, a hot war with China.

Jill O'Donnell: So pretty overarching comprehensive strategy there that you just mentioned calling for when it comes to managing this really complex bilateral relationship. And I want to pick up on the commercial element of that strategy that you just mentioned. As you know, the US pulled out of the Trans-Pacific Partnership trade deal right after President Trump was elected, he did that. That was a 12 nation trade deal, including the US and other nations along the Pacific Rim. It would have been the largest trade deal to date in the world of its kind if it had gone through with US involved. So how do you think that economic cooperation bolsters security cooperation in your view? And for example, I bring in the TPP because I wonder what you think the impact of the TPP would have on US security and the arrangements in the region if the US had not pulled out of that deal?

James Stavridis: Yeah. I think the TPP Trans-Pacific Partnership made enormous sense both trade wise to create this vast free trade zone. We don't have time to unpackage all the reasons that makes a lot of sense, but I for one believe in free trade, I think it's lifted billions of people out of poverty over the last hundred years. So it had economic benefits, but Jill, it had enormous geopolitical benefits. Why? Because China was not part of it. China was outside the TPP. And therefore in my view over time as we built that TPP into a very significant trade zone, it would become something we could incentivize Chinese behaviors by offering them eventually an opportunity to come into it. It was perfect for doing that unfortunately. And by the way, you can't blame this strictly on the Trump administration. Candidate Hillary Clinton also indicated she would not support it. And I'm not sure the Congress would have supported it. Nonetheless, looking at it as an analyst, as a political independent as I am, it makes economic sense for trade. It makes military and strategic sense in terms of creating a bargaining chip, a significant one with China to influence Chinese behavior. I am hopeful that at some point we will return to the idea of a TPP. And by the way, on the Atlantic side, there is also nascent movement toward an Atlantic if you will, a transatlantic free trade zone, which could be very powerful as well. Ultimately I'm convinced larger, more important free trade zones make a great deal of sense particularly geopolitically. They reduce tension over time, but we are in a moment in which many forces are creating headwinds against that, forces of nationalism in individual countries, including China and the United States. So as those of us who advocate for free trade, we need to continue to make the case going forward and it's not just an economic case. It's economic, it's strategic, it's military as well in my view.

Jill O'Donnell: So recognizing all of those elements of a trade deal like the TPP economic, commercial, security, geopolitical. Do you think that economic decision-making and national security decision-making should be more closely aligned through formal arrangements in the US government?

James Stavridis: I do. And there has been progress in this. If I look back 30 years ago when I had a significant assignment for the first time in the Pentagon, and I've had six significant Pentagon assignments over the course of my military career, going way back to the 80s, early 90s, there was almost no cooperation. There was very little connectivity between what was happening in the Department of Defense, what was happening in Treasury, frankly, what was happening at the State Department. The interagency was really not structured to come together and work coherently together. We have made a great deal of progress in that regard, particularly on the defense side of things. 9/11 was a huge wake up call, for example, in the intelligence community, which had 17 different entities that really weren't talking together very effectively. We have improved in interagency cooperation. I think administration by administration, we need more of that. And frankly, where this should best occur is on the National Security Council staff in the White House where the NSC staff ought to be working closely with the staff of the Council of Economic Advisers with the trade representative of the United States. This is really the job of the national security advisor to bring that interagency together, present options in the situation room to the president. And you hope for a president who can see the need for a whole of government kinds of approaches. So yes, we're better, but yes, we need to improve even more the nexus of where that improvement could occur is in the White House and in the National Security Council staff in my view.

Jill O'Donnell: Okay. And I'd like to bring another element in there and that is engaging with the American public. So we've talked about the Trans-Pacific Partnership and you noted that it probably would not have had the support of Congress, which is in part a reflection of voter sentiment about trade agreements and their perceived positive or negative benefits. How do you think foreign policy decision-makers, whether in the security or economic realm should engage the American public throughout the policymaking process and not just after a big decision is announced or is made and announced?

James Stavridis: Yes, this is really leadership 101. It's taking a big idea that has been thoroughly researched and vetted, and a leader becomes convinced it's the right course of action, but there isn't popular support for it. So what do you do? You have to communicate with the public. And in today's world, there are multiple communication paths and they range from at the presidential level, a presidential speech on the merits of free trade or of a free trade arrangement with a particular country or a particular region. It can be part of a State of the Union Address by the president. It can be part of what the secretary of state and the secretary of defense and the secretary of the treasury are building into their remarks and communications. It can be part of social network campaigns that are used by each of the departments of government, as they build up followings on Facebook and Twitter and LinkedIn, and even TikTok could be a place where you demonstrate the power of free trade. We need more creativity and imagination in how we move those kinds of messages. And then secondly, you have to be fact-based. It's a trope these days to say, "Oh, China took our jobs." That's actually not correct. China certainly received some level of new jobs. Most of the jobs that have disappeared in the American economy have resulted because of advances in automation. Facts matter. The truth matters. So we need a communication strategy to communicate these ideas. We need them to be fact-based and we have to be willing to sit down with our opponents, hammer out our disagreements. And sometimes we do have to compromise. I'll close on this is just our fundamental problem in American society today that hurts us in trade and international engagement is the internal gridlock that we have found ourselves in such a polarized place in the country that we seem less and less able to achieve sensible compromise. So we need all of those elements. That's what good leaders do.

Jill O'Donnell: So that leads perfectly into another question I have for you about a more recent book that you published called Sailing, True North about leadership and character. And in that book, you talk about how character is the hinge really on which leadership swings. And you've just outlined a lot of things that we need to do better that you've mentioned in country and our internal gridlock communication at many levels and through many pathways that could be improved. So what can you reflections on character and leadership and perhaps your experiences over your long and distinguished career? What can those reflections offer us in the midst of all these challenges that we face right now?

James Stavridis: I would encourage everybody who wants to think about leadership and character to take a look at Franklin Delano Roosevelt, somebody who faced immense challenges probably more than President Trump, President Bush and President Obama combined. He faced a global depression, a world war, really a remarkable basket of challenges. So what were his qualities and characteristics? What was his character? What were his leadership skills? He was a team builder. He was thoughtful, kind, had a great sense of humor. He was a superb communicator. Someone who used the most primitive means of communication, the radio, it captivated and inspired an entire country. He was a master of detail. Franklin Delano Roosevelt could tell you the name of every county in the United States. There are 3,000 counties and tell you who was part of the governance structure in each of those counties. He was a master of details. And lastly, he was an innovator, someone who was willing to embrace the new from the ideas of spending in a great depression to restart the economy, the various projects that countered the depression to the advent of nuclear weapons. He was someone who was unafraid of the new. So at the end of the day, I think history is a pretty good guide for us. Look for some of those inspirational leaders of the past and think about what they brought in character and leadership to the table.

Jill O'Donnell: And thank you, Admiral. I have one last question for you, which I ask every guest on this show and that is what is something you've read recently, whether it's a book or an article or reports about trade or global commerce that's been particularly striking to you? And in your case as the author of nine books, I should probably also ask you what you're writing these days too if you'd like to answer that one as well.

James Stavridis: Sure. A book I often recommend to people on trade and I've referred a couple of times to the Hawley-Smoot tariffs is a book called Peddling Protectionism, and it's by Douglas Irwin. And it's a very good look at how we hurt ourselves with those kinds of trade barriers, how they contributed to the downfall in the global economy. Certainly weren't the only things that caused it, but it's a cautionary tale for us in today's world.

In terms of what I'm writing now, you're very kind to ask about that. I am working on a book about decision-making, how we make decisions. It's called Nine Hard Choices. And it looks at nine individuals in very distinct different moments in their lives when they had to take a responsibility to make a very hard decision and then tries to draw from that. What are the attributes of decision-making that are common amongst us?

Jill O'Donnell: That sounds very interesting. Do you have an estimated timeframe when we can expect to find that on the bookshelves?

James Stavridis: That book will be out in well over a year, but I do have a kind of an entertainment that will arrive in March of 2021. Although I suppose the topic is not exactly entertaining. It's a novel Jill, about what a war with China would look like it's called 2034 as in the year 2034. And it looks at the human cost of a war. It's meant to literally frighten people and to create a sense that at all costs, we have to avoid a war with China. So that's the next book out in March, 2034.

Jill O'Donnell: That's really interesting that you're writing fiction right now as well. So we'll look forward to that too. Well, Admiral Stavridis, thank you again very much for being on Trade Matters today. It's been a really a pleasure to talk with you and we appreciate it very much.

James Stavridis: It's my pleasure as well. And please say hi to your leader at the University of Nebraska, Navy fighter pilot and an old friend of mine.

Jill O'Donnell: Will do. We'll certainly tell President Ted Carter that you said hello. Thank you, sir.

That's it for this episode of Trade Matters. Thanks for listening and a big thank you to Alex Voichoskie and Rebel Sjeklocha and Jacy Thoman for helping produce this podcast. Please subscribe to Trade Matters on iTunes, Spotify, Stitcher, or wherever you get your podcasts. If you have ideas or topics you would like to hear about on Trade Matters, we'd love to hear from you. Send us an email at yeutterinstitute@unl.edu or follow us on Twitter @YeutterUNL.

Opinions expressed on Trade Matters are solely those of the guests or hosts and not the Yeutter Institute or the University of Nebraska-Lincoln.