A front-page article in the Sept. 25 issue of Defense News reported that China has tried to blind U.S. satellites with high-powered lasers. With sufficient power, lasers can blind electro-optical satellites or even interfere with radar satellites.
Satellites have become critical to American military communications, surveillance and targeting, and are at the heart of the strategy to transform the U.S. military through net-centric warfare systems.
That China would seek to disrupt American capabilities should not be surprising, given the number of hot spots in Asia and the Middle East where U.S. and Chinese policies are at odds. There have been reports for many years that Beijing is working on a variety of advanced weapons under the heading “assassin’s mace.” The goal is to find ways to knock out Washington’s ability to act in a crisis.
What is disturbing is the lack of response from the Bush administration. According to the Defense News report, “Pentagon officials, however, have kept quiet about China’s efforts as part of a Bush administration policy to not anger Beijing, which is a leading U.S. trading partner and seen as key to dealing with North Korea and Iran. Even the Pentagon’s recent China report failed to mention Beijing’s tests. Rather, after a contentious debate, the White House directed the Pentagon to limit its concern to one line.”
The desire of the White House not to “anger” Beijing is an attitude apparently not reciprocated in China, where there seems to be no fear of angering America by testing weapons against U.S. targets. Who instills fear, and who shows fear, is a measure of the real balance of power in a relationship.
Let’s call this the “Goldman Sachs Effect” after the international banking firm that seems to have taken over White House China policy, even as it continues to raise capital for Chinese industry and the regime. Shortly after Goldman Sachs CEO Henry Paulson became secretary of the treasury, Robert Zoellick, deputy secretary of state and former U.S. trade representative, took a high post at Goldman Sachs. President Bush’s chief of staff, Josh Bolten, worked for Goldman Sachs in London. Goldman Sachs senior partner Stephen Friedman briefly headed the National Economic Council before returning to the firm.
This is not an entirely new situation. Robert Rubin, who was treasury secretary in the Clinton administration, had been a vice chairman of Goldman Sachs.
The trade-off between commerce and security works against the United States on both ends. It is well-known that Beijing manipulates the value of its currency by as much as 40 percent to gain a competitive advantage against American firms. Chinese officials claim that basing their currency on market values would cause economic turmoil, harming China’s “fragile” banks and financial sector. Paulson has embraced this explanation, and on his recent trip to Beijing said the U.S. would be “patient.” He prevailed on Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., to pull their bill levying sanctions on China for its currency policy, so as to buy Beijing more time.
Yet, last May — while Paulson was still its CEO — Goldman Sachs invested $2.6 billion in Industrial & Commercial Bank of China, the country’s largest state-owned bank. According to a Sept. 28 report in the Wall Street Journal, “when ICBC, as the bank is known, lists its shares on the Hong Kong and Shanghai stock markets next month, the value of Goldman’s stake could double based on current demand for the offering.” Goldman Sachs was also a major underwriter for the Bank of China’s June stock offering, which raised $11.2 billion. So much for “fragile” Chinese banks!
Beijing has integrated itseconomic and security strategies within what it calls “comprehensive national power.” There is no such unity in the United States, because major banks and corporations are conducting their own private foreign policies. They are willing to sacrifice the long-term security of the United States for the chance to make a few extra bucks here and now. Thus they lobby for the appeasement of Beijing in the hopes of avoiding any confrontations that might interfere with trade or elevate security issues to the top of the policy agenda.
Chinese leaders are well aware of the “Goldman Sachs Effect” and are exploiting it to the fullest. Beijing needs time to develop its military capabilities, and continued American passivity is a critical factor in their strategic plans.
William Hawkins is senior fellow at the U.S. Business and Industry Council in Washington, DC.
