End Game (8 page)

‘And don’t tell me that point there, right there, doesn’t rile the Chinese all the way to the Great Wall and back again.’

Marion smiled knowingly. ‘Come on, Joel, let’s not muddy the waters. I said “aren’t able”, not “aren’t willing”. That would be a whole different doctrine. The Chinese know we’re talking about a restricted, contained operation where the Ugandan government itself has invited us in. That makes all the difference. Now, I agree with you, completely confidentially between you and me and Dave, I’m not a great fan of the way the president’s chosen to do it. And if you ask me does that make it harder for the Chinese, I would say, yes, it does. But that doesn’t change the main thrust of what we’re doing. There is absolutely no agenda underlying Jungle Peace that’s about establishing some kind of strategic advantage for the United States in Central Africa. That’s not what this is about and the Chinese have been reassured on that numerous times.We’ve made it very clear to them at every level, at every contact, at every opportunity. Me included. I’ve said it any number of times to Liu at the UN.’

‘And what have they said?’

Marion shrugged. She had seen the content of the note that had been delivered to Steve Haskell, along with his report of the meeting with the Chinese vice-foreign minister, but she wasn’t at liberty to reveal it.

Joel watched her.

‘Like I said, I’m not saying China doesn’t have reason to feel a little aggrieved at the way we’ve done it, I’m not saying that going in with a coalition wouldn’t have been better.’

‘Or that at least you could have been told you wouldn’t have time to build one,’ said Joel, who was aware, like everybody else in the international relations community, that the State Department had been hung out to dry while the Pentagon was going full steam ahead.

Marion didn’t take the bait. She had no intention of revealing to Joel the full extent of her irritation with the manner in which the president had acted. ‘Look, does China perceive this as a challenge? The loss of face, I accept, is an issue, and I don’t mean to minimize it. But is that the question, do they see this as a bigger challenge? Joel, I can’t say for certain, but my guess is that they don’t. As long as we do it like we’ve said we will, and as long as we’re not there so long that it looks like we’re trying to establish some kind of permanent presence, I think they understand what we’re saying.’

‘Well, that’s good,’ said Joel, ‘because we’re going to need their help to get out of there.’

‘Meaning what?’

‘Meaning when something goes wrong, they’re going to get dragged in.’

‘You’re assuming something’s going to go wrong.’

‘Show me a military operation where it hasn’t. Say we end up chasing some LRA into Sudan. You’ve got the seeds of a confrontation right there and it can go a thousand different ways. The only one who’s got any influence with Sudan is China.’

‘No one can guarantee everything’s going to go right,’ said Marion. ‘That’s a risk.’

‘And I’m saying we’ll end up with China having to rescue us. You know, it’s possible the Chinese have lured us into this whole thing.’

‘Joel, that is so ridiculous …’ Marion couldn’t help laughing. Now she knew he was being contrarian just for the hell of it.

‘I’m serious! Why do you think it’s impossible?’ Joel turned to Dave with a look of injured innocence, as if appealing for justice. Then he looked at Marion again, his face changing back instantly. ‘You know, if you were Mao in 1960, you would have wanted to support the Vietcong just to draw us into Vietnam. Getting us into Vietnam is what led eventually to getting Nixon to China. We withheld recognition of them for twenty-four years but Vietnam changed that. So if you were Mao in 1960, you might have said, let’s get the Vietcong insurgency going and let’s suck the Americans in until they realize they can’t pretend we don’t exist any more.’

‘I don’t think Mao said that in 1960,’ said Marion.

‘Neither do I. But if he was smarter he would have. Maybe President Zhang’s saying it now.’

‘Joel, we already recognize China.’

‘There are other things they want from us.’

‘I don’t think Uganda’s going to be a Vietnam.’

‘I agree. And I sure hope not. But the situation doesn’t need to be identical for the same principles to apply. Suck us in and get us into a situation where we have no alternative but to acknowledge they’re a player.’

‘We already acknowledge they’re a player.’ Marion couldn’t help smiling. ‘Joel, I’ve got no idea whether you’re serious or not.’

‘I’m serious. I’m deadly serious. You know, I’m glad Knowles has done this. I mean, I don’t think he’s got the first idea what he’s doing, but I think there’s a good chance we’ll end up in a situation where we’re going to need China to help us out.’

‘I really hope that’s not going to happen.’

‘No, I do. That would be a good thing. We have to share leadership with them and we should be actively looking for ways to do it. We have to switch to doing that. In fact, someone’s just written an excellent book about precisely that point.’ Joel paused theatrically. ‘Oh! Me. We have to switch from a stance where we sit here figuring out what we can do to bolster our position and what crumbs we have to let the Chinese have in order to keep them quiet, to one where we actively seek to create a joint leadership approach.’

Marion didn’t disagree with that. She just thought it was going to take a long, long time until the US and China were anywhere near able to behave in that fashion.

‘Unless we change our approach, we’re going to see conflict over global issues. I’m serious, I’m talking about real conflict. The problems won’t solve themselves. You know how it works, Marion. When the tensions are there, anything can act as a trigger.’

‘And what’s the time scale for this conflict of yours?’ asked Marion half-jokingly.

‘Listen,’ said Joel. He sat forward, an intense expression on his face. ‘Marion, I know you and I think differently. I know you think I’m the kind of historical thinker who’s completely impractical when it comes to the reality of the day-to-day relationships between states.’

Marion smiled. ‘I wouldn’t say exactly that.’

‘Not in front of me. It’s okay, I know you would. And you, you’re very practical. You take that knowledge you have and distil it into learning to manage real diplomacy. Practical, meaningful stuff that makes a difference from one day to the next. I’m in awe of that, really, I am. But you know, Marion, there are times when the two converge. The big historical stuff and the day-to-day. This is one of those times. Let me give you an example. South Africa. We both know the Chinese government is cosying up to the ANC dictatorship. We’re seeing a world power helping a country move
away
from democracy to an alternative form of government. Think about that. We haven’t seen anything like it since the height of the Cold War.’

‘Joel, we’re working very hard to stop it. That’s high on our agenda, very high.’

‘And I hope you succeed. But to me, it’s the phenomenon that’s important, what it means about what’s happening in our world. The way power is shifting and being used.’

‘You’re right, Joel. We’re completely different. It’s not the phenomenon that’s important to me. It’s the reality of it. It’s what it does to the people of South Africa. It’s what we do about it.’

‘I agree with that,’ said Joel. ‘I’m not being theoretical here. I apologize. That was badly expressed. What I mean is we have to start sharing leadership with them – over things like South Africa, for example – or we just won’t solve the problems we have to solve and we’re going to end up either with a very bad outcome or a fight. And it’s not easy, because they’re pissed. And they have a right to be. They didn’t get any of the influence we promised them after the financial crisis.’

‘What about their talk about rebalancing their economy?’ said Dave.

‘Exactly. They’re pissed. We’re pissed. So what, right? Countries have been pissed all through history. No, this is different. The nature of the problems we face doesn’t allow that. We can’t just stay pissed at each other and not want to cooperate. We have to cooperate, and fast. We cooperate –
seriously
cooperate – or we fight.’

‘That’s an extreme way of putting it,’ said Marion.

Joel shrugged. ‘That’s what I think.’

‘I don’t agree with you. You’re way too black and white.’

‘Not as black and white as Tom Knowles.’

Marion didn’t reply to that. She didn’t think Knowles’ thinking was generally black and white, but it seemed to have been this time. She didn’t agree with Joel that China was necessarily going to have to bail the US out of there – and she was even less in agreement with his contrarian view that that would be a good thing – but she did agree that launching the intervention unilaterally in Uganda would make a bunch of things on which they needed Chinese cooperation a lot harder to achieve.

‘My fear,’ said Joel, ‘is that Tom Knowles, even if he recognizes the need to make a switch of this magnitude, isn’t big enough to do anything about it.’

‘He’s a competent president,’ said Marion.

‘We need more than a competent president. We need someone much bigger than that.’

‘So we’re doomed to conflict in your opinion?’ Marion said it with a smile.

‘I fear we are,’ said Joel seriously, ‘unless Tom Knowles undergoes some kind of personality change. Or the next president. We might get lucky. I don’t know the time scale, but when the stresses build up like this the trigger can be anything.’

8

IN HIS OFFICE
on the thirty-fourth floor, Ed Grey turned up the volume on CNBC. Tony Evangelou and Boris Malevsky were with him.

The screen showed a Senate committee room. Ron Strickland, chairman of the Federal Reserve, had already taken his seat at the table in front of the bar. A former professor of economics at Stanford, Strickland was a craggy-faced man with a head of silver hair, heavy brows, and a large wart on the left side of his chin. He was arranging his papers in front of him. A moment later the chairman of the Senate Banking Committee, Louisiana Republican Bill Givens, welcomed him, and Strickland commenced the presentation of his quarterly monetary policy report.

He started with a survey of the state of the domestic economy and global trends. He then progressed to his projections for economic activity. Overall the outlook was benign, with risks weighted to the upside. Then came his inflation projections.

Strickland was a slow-talking, methodical man. You didn’t listen to his speeches for entertainment. Yet Grey, Evangelou and Malevsky were hanging on his every word.

‘I now come to my view of the sustainability of market activity,’ said Strickland on the screen.

Ed Grey leaned forward in his seat. This was the so-called bubble statement, an element in the chairman’s report in which he gave a view of sustainability of activity in critical investment markets – stocks, bonds, commodities, housing. Veiled references to irrational exuberance were no longer thought to be enough and the statement had been introduced as one of the responses to the failure of the Greenspan–Bernanke period of chairmanship to deal with bubbles inflating across asset markets. It remained a controversial element, much hated by Wall Street.

Strickland continued in his customary monotone.

‘While we see no evidence of bubble-type activity, we remain alert to the possibility that the upside view over the short- to medium-term horizon will encourage an increasing level of activity in a number of asset classes. Pricing and volume data indicate an increasing risk appetite among certain investor segments backed by rising levels of leverage. In particular, we continue to see a notable increase in the market uptake of certain collateralized derivatives, and although these are a legitimate means of diversifying portfolio risk they also carry a systemic risk through secondary and tertiary markets and, as I have reported before, we believe could exacerbate overheating should this begin to develop. We remain particularly watchful of a number of segments of the equities derivatives markets and remain vigilant to the exposure of the banking sector, which would be a key concern should overexposure develop.’ Strickland paused portentously. ‘We will use monetary policy if overheating appears to be taking place. We will use it rapidly, decisively, and are prepared to do so.’

Grey glanced at Malevsky. He was frowning as he gazed at the screen. Evangelou caught Grey’s eye and shrugged.

When Strickland had finished his prepared remarks, the questions from the senators began. After a few questions one of the Democratic senators brought him back to the bubble statement.

‘Mr Chairman, you talked about rising risk appetite and leverage. Can you be more specific about the levels of these rises?’

‘If I had to characterize them, Senator, I would describe them as moderate to medium. My office can supply the data.’

‘That would be helpful. But I take it you’re saying you do have significant concerns at the moment.’

‘It depends, Senator, what you mean by significant.’

The senator sighed impatiently. ‘I think most people would understand what I mean, Mr Chairman. It sounds as if you have significant concerns that you will need to intervene.’

‘Senator, let me try to be clearer. We monitor these parameters. Will the day come when we need to intervene? Logically the answer to that must be yes, because every single cycle that we have ever seen in this country has culminated in a bubble and then gone on to a bust, and part of my mandate is to ensure that we don’t get to that point again. And if without intervention we would get to that point, it stands to reason that intervention at some point will be required.’

‘Mr Chairman, that’s a wonderful theoretical answer.’

‘Thank you, sir.’

There was a ripple of laughter from the audience.

Strickland’s craggy face remained serious. He had little in the way of a sense of humor and hadn’t seen the irony in the senator’s compliment. Since taking the post as head of the Fed his technical and ponderous communication style had been the target of much criticism.

‘Mr Chairman,’ said the senator in a show of exasperation, ‘what point is there if you have concerns and don’t make the extent of these concerns known? Surely the point of these concerns is to warn unsuspecting investors in good time to help them make informed decisions. Quarter after quarter, you come before this committee and tell us you have concerns and yet you do not tell us how strong they are. If I heard you correctly, I think you’re telling us your concerns are strong. Is that correct?’