The thanks of a grateful world go with Steve Bannon

By David P. Goldman, ASIA TIMES

My friend Steve Bannon did the world an inestimable favor in his final dictum from the West Wing of the White House by telling The American Prospect that there is no military solution to North Korea’s nuclear provocations. In an Aug. 17 interview, Bannon stated:

“There’s no military solution [to North Korea’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.”

Bannon is right, of course; despite public remonstrations to the contrary, the whole of the Defense Department agrees with Bannon.

During late July and early August I met with Bannon twice in the West Wing office at his invitation, to discuss means of reversing America’s strategic decline. Although I do not agree with Bannon on every detail, he has a brilliant grasp of grand strategy and a deep sense of urgency about its implementation. Because I was advising Bannon rather than interviewing him, I cannot report his remarks.

But I can state unequivocally that he has a better understanding of America’s vulnerabilities than any senior official I have met in a generation, and some excellent ideas about how to get out of the mess. There was no mention of any antagonism or rivalry in the Administration in these meetings, which were focused strictly on policy matters.

His departure is a loss for the Trump Administration, but not necessarily for the country. As he told associates over the weekend, he had influence at the White House, but as executive chairman of Breitbart News, he has power.

A hostile press portrays Bannon as a bomb-thrower. His Parthian shot last week, on the contrary, qualifies him as the most level-headed realist in the Administration, and the only one with the guts to stand up to the president.

According to Newsmax and other media, President Trump was “furious” about the American Prospect interview, which deflated the president’s “fire and fury” threats against North Korea. Defense Secretary James Mattis the next day warned of a military response if North Korea “initiates hostilities” by attacking America or its allies.

Press accounts portrayed this as a rebuttal to Bannon, who said something quite different: the departed White House strategist warned that there was no military means to prevent North Korea from acquiring a nuclear arsenal. I don’t know whether his remarks on Korea or some other issue prompted Bannon’s departure, but it was well that he made them.

Trump’s bellicosity apparently reflects the kind of negotiating technique that he elucidated in “The Art of the Deal,” and used to some effect in his real estate business: start with a tantrum and outlandish demands in order to move the goal posts of the negotiation. That’s well and good for bankruptcy lawyers, but irresponsible in the extreme for a president dealing with a rogue regime led by the volatile Kim Jong Un. The military option is imaginary.

As I wrote Aug. 14, “If the United States conducted a limited conventional strike on North Korea, North Korea would fire an artillery barrage at the South Korean capital of Seoul, just 35 miles from the border. A nuclear strike on North Korea could destroy the regime and silence its artillery, to be sure, but the fallout would kill a lot of South Koreans as well.” One could hear the sigh of relief across the Pacific after Bannon pointed out that the president has no clothes in the matter.

Korea is a sideshow, Bannon added in the American Prospect interview:

“We’re at economic war with China,” he added. “It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path. On Korea, they’re just tapping us along. It’s just a sideshow.”

The economic war is not a matter of dumping steel or aluminum, or even pirating American technology: China is establishing a dominant position in high-tech manufacturing, including a new US$50 billion plan to build a domestic semiconductor industry. The nub of what I presented at our West Wing meetings in late July is now available in the just-published Fall 2017 issue of the Journal of American Affairs. I wrote:

China and, to a lesser extent, other Asian competitors employ the full resources of state finances to fund capital-intensive manufacturing investment in the way that the West subsidizes basic infrastructure. In addition, China will commit $1 trillion to building infrastructure overseas to support its foreign trade, including exports as well as raw material supplies. The problem is not merely the dumping of artificially cheap goods into American markets, but a state-supported capital investment program that erodes returns for American investors. As a result, investment in the United States seeks capital-light venues such as software and avoids capital-intensive sectors such as chip production. We are being shut out of the global market for high-tech exports.

America still produces about a quarter of the world’s integrated circuits, the industry that China now has in its sights. Other high tech products invented in America – light-emitting diodes, flat panel displays, solar panels, solid state sensors, and flash memory – no longer are produced in the US. That portends not only economic decline, but critical strategic vulnerabilities. In a world of high-tech war, losing our production capacity in these industries is like losing our steel production in the age of cannon.

To fetch production capacity back to the United States after so many years of deterioration will take drastic measures. I proposed that “the United States should use a range of measures to force parts of the high-tech supply chain back to the United States. A first step would be to require 100% American content for semiconductors, flat panels, sensors, and other key components of defense equipment.”

More broadly, the United States should support innovation in critical defense technology on the scale of the Kennedy Moonshot or the Reagan Strategic Defense Initiative.

Without attempting to characterize Steve Bannon’s views, I can report that we had a freewheeling, detailed and action-oriented discussion on these and related themes. A former Navy officer who served as an aide to the Chief of Naval Operations during the Reagan Administration, Bannon has extensive background in the subject matter and a sharp grasp of the problems.

One problem is that the economic ascent of China has been the biggest and most profitable trade for multinational corporations during the past few years. Most American companies are happy to trade know-how for access to the Chinese market, an exchange that boosts their bottom line within the tenure of the average CEO, but weakens the United States in the medium-term. Any attempt to restrict technology transfers to China will be met with the “fire and fury” of industry lobbyists, and most of all from the tech companies.

Another problem is that the list of major defense contractors has shrunk to a handful – Lockheed Martin, Boeing, Raytheon, General Dynamics – and they are used to operating as a comfortable oligopoly. A concerted effort to restore America’s edge in military technology would draw funds away from profitable current products, and, even worse, favor prospective competitors. The defense industry won’t like it.

To restore America’s strategic position would require a visionary president and a powerful Secretary of Defense with a single-minded determination to undo a generation of damage. Steve Bannon has that kind of vision, but his services in the West Wing no longer are required. He did the world a favor by defusing the North Korea problem – but that, as he said, is a “sideshow.”

America is still unprepared for the main event.