The Way Forward – Part 2: Russia, Iran and China

Last week we discussed how our extraordinary victories in the Civil War and in World Wars I and II created a collective confidence about our role in the world. But then, failures in Vietnam during the 1960s and in Iraq during the 2000s caused this sense of infallibility to unravel. This week we’ll cover three topics. First, we’ll briefly review some of the key lessons learned from this period. In Part II, we’ll discuss a basic framework, or model, for foreign relations; and in Part III we’ll discuss current negotiations with Russia, Iran and China.

PART I: LESSONS LEARNED

Let’s briefly consider three key takeaways from our post-World War II engagements.

LESSON 1: The best defense is a good offense.

History has shown that capitalism has an unmatched potential to create upward mobility and the resources needed to help the less fortunate. The Cold War showed that capitalism is also far and away the most powerful system for securing peace through economic strength. Resolving our current debt and deficit problems and unleashing our economy’s potential are all critical to maintaining peace and security.

LESSON 2: The best offense is to isolate hostile regimes.

Authoritarian command and control systems are inherently dysfunctional. The Soviet economy, isolated behind the Iron Curtain throughout the Cold War, eventually collapsed as a result of its inability to produce upward mobility for its citizens and to match our arms buildup during the 1980s. The Chinese Communist Party (CCP) also drove their country into famine and extreme poverty. Their rise over the past few decades has been built primarily on the backs of the cheap labor their own policies created and on access to our market based system. If we had continued to isolate the CCP, they almost certainly would have gone the way of the Soviet Union or, at worst, the economic resources available to fund their current aggressions would be but a fraction of ours.

LESSON 3: Beware of globetrotting, nation building, and pre-emptive strikes.

Winning the Cold War by exploiting our economic advantages shortly after withdrawing from Vietnam demonstrated we did not need to put boots on the ground in far off regions of the world to prevent the spread of communism. Later, in the Iraq War, our failure to find weapons of mass destruction showed how pre-emptive strikes can unnecessarily lead us into long foreign engagements with little to show for it.

Our experience in Iraq and the reversion of both Russia and China after the Cold War demonstrate how difficult it is to push democracy and our values into other countries.

PART II: ALLIES AND ENEMIES - A Simple framework for foreign relations

I believe we should return to a relatively simple and straightforward system of dividing countries into allies and enemies based not so much on their stated good intentions, or their form of government, or the extent to which they have adopted our value systems. Rather, we should focus primarily on their demonstrated history of either peace or aggression and whether they engage in commercial relations under the rules of law and standards of commerce that have enabled market based economies to lift millions up out of poverty and depravation.

While this is nothing revolutionary, it does involve a departure from both historical and recent practices. For example, for far too long, and under far too many administrations, we’ve allowed the leaders of hostile regimes to convince us of their good intentions during negotiations only to then resume military and economic aggression thereafter. As the old saying goes, fool me once, shame on you; fool me twice, shame on me.

So, with this in mind, lets’ set out some simple standards for classifying our enemies and allies.

ENEMIES: This should be an easy club to get into, and a hard one to get out of.

There should be no uncertainty: attacking peaceful countries, building nuclear weapons, consistently supporting other hostile regimes, and engaging in espionage and commercial theft will put you on the enemy’s list. Once on the list, little short of a regime change will get you out.

ALLIES: This should be a hard club to get into, but one that offers incomparable opportunities through trade and defense relationships with the U.S. and our network of allies.

With by far the largest economy in the world, the simple fact of the matter is: we have far more to offer others than they have to offer us. Nevertheless, our goal should be to create a vast and sustainable network of free and balanced trade and defense relationships that promotes our combined upward mobility and security and that creates incentives for others to join the club.

While a long line of administrations have bemoaned the failure of our NATO partners to live up to their commitments, the Trump administration has at least challenged NATO in a way that seems to be producing change. Nevertheless, messaging is important, and our tone here has often been too confrontational.

Our goal should be to create mutually beneficial defense alliances with peaceful countries in each of the major areas of the world, including the Americas, Europe, the Middle East, and Asia. Further, we should encourage the dominant countries in each area to assume leadership responsibility for their region and we should establish clear guidelines that set forth what we expect of them and what they can expect from us in return.

Our allies should understand we will evaluate providing military assistance based on a number of factors, including:

A. Whether a threat is primarily regional in nature, or directly endangers the international community,

B. Whether a hostile regime, taking into consideration their economic resources (GDP), military assets, and other relevant factors, has the potential and intention of spreading aggression more broadly,

C. The direct threat posed to the U.S.

In cases that are primarily regional in nature, we should make it clear that we expect regional leaders to provide the first line of defense and assistance to an attacked country within their territory, much as Europe’s leaders did during World War I and II. Further, such regional leaders must understand that our ability to engage will also be affected by threats we face in other areas of the world and by our own financial circumstances. In addition, we need to spend less time negotiating allied agreements that are then often ignored in practice and instead establish working relationships based on demonstrated actions.

With respect to NATO, for example, we have spent too much time arguing over how much countries are going to commit to defense spending, only for them to then ignore their commitments with no consequences for doing so. In addition, when financial support has been needed, as with Ukraine, it is too often arranged on an ad hoc basis - with each nation, including the U.S, making isolated and independent decisions. This system has the potential to obscure leadership responsibility, create unrealistic expectations, and lead to an unfair sharing of risks.

We should transition to a “putting your money where your mouth is” arrangement that leaves routine decisions about annual defense spending to each country but conditions our support for specific conflicts on actual financial contributions made to counter aggression. One way to formalize this approach would be to form a special purpose entity (SPE) to coordinate support for a country under attack.

In the case of Ukraine, for example, leaders could contribute to and raise money from other European countries and pool it in an SPE to provide financial and military support. Based on the various factors outlined earlier, the United States could then consider making a contribution that represents a percentage of the funds already raised by Europe. Oversight of the SPE could be based on relative financial contributions made by each country. Ideally, a basic format and agreement for such vehicles would be worked out between the U.S. and regional leaders in advance of any conflict.

This would establish a cooperative, partnership-like approach to dealing with regional aggressions, put the responsibility for leadership with countries most directly threatened, establish reasonable expectations for U.S. involvement, and create relationships where all contributing countries are treated openly and fairly relative to one another. All of which would create a significant incentive to make the system work.

Now, let’s turn to current negotiations.

PART III: CURRENT ISSUES – Russia, Iran and China

Based on recent developments, its fair to say that our negotiations with Russia over its war with Ukraine, with Iran over its nuclear weapons programs, and with China over trade, have all proven more difficult than the Trump administration anticipated. Let’s start with Russia.

RUSSIA: In seeking to end the Ukraine war, we seem to have failed to understand the predicament Russian President Vladimir Putin has created for himself.

Russia’s power is but a fraction of that wielded by the old Soviet Union, as evidenced by both the diminished size of their economic resources (today, Russia’s GDP is a bit smaller than Canada’s) and by their struggle to achieve victory over Ukraine. Indeed, the desire to expand their resources obviously played a major part in Putin’s decision to go to war in the first place. Having exhausted enormous human and capital, Russia’s already dysfunctional economy is now also heavily dependent on unsustainable wartime spending. In other words, from a political perspective, Putin can ill afford to withdraw without securing assets that help pay for and justify the extraordinary cost of the war, which is why he continues to express a verbal interest in peace talks even as his actions belie his real intentions.

In short, I see no reason to expect that Russia will do anything other than continue to fight until they have fully exhausted available resources and public support, or have achieved concessions that will never be acceptable or in the best interests of either Ukraine or Europe. Based on Putin’s long history of aggression and his recent actions, we should disavow both the idea that Russia is a potential ally whose behavior could be transformed by welcoming them into our trading network and the recently floated idea that they might somehow be helpful in our negotiations with Iran. Instead, we should move forward with the Senate’s plan to impose maximum economic pressure on Russia.

With respect to providing direct financial assistance to Ukraine, we should encourage Europe to move forward with the creation of an SPE like the one discussed above. We could then consider a contribution tied to a percentage of Europe’s funding that also reflects the primarily regional risks posed by this conflict.

IRAN: Unlike the situation in Europe, we are fortunate to have an ally in the Middle East that has accepted responsibility for its own defense and demonstrated the ability to confront and repel hostile enemies and terrorist regimes. Furthermore, Trump’s efforts during his first term to help overturn the old “Israel against the Arab world” paradigm and to establish a new model based on the Abraham Accords was brilliant.

This is also my reading of Trump’s highly successful recent trip to the region, where he simultaneously: created enhanced economic incentives for Arab countries to engage with the United States, showed Iran just how isolated they are, and had the opportunity to assess Arab support for a strike on Iran’s nuclear facilities should the related negotiations break down. Many commentators criticized the administration for not meeting with and including Israel in the process. This misses the point that to have done so would have made it much more difficult for countries like Saudi Arabia to further align their interests with the U.S. (and Israel) at this important time.

If Iran refuses to dismantle its nuclear facilities, it seems highly likely that Israel will militarily do the job for them. Assuming we have built the necessary support in the region, that such action only occurs after Iran has rejected all attempts for a peaceful resolution, and that the U.S. is not forced into an Iraq-like conflict, this would be the next best thing to a peaceful resolution. Admittedly, an Israeli strike is a dangerous option that creates risks similar to what we experienced in the Iraq War. But allowing Iran to develop nuclear weapons creates an existential threat.

As they say, history doesn’t repeat, but it often rhymes. Success here balances delicately on the scales of sound judgment, which, with respect to the nuclear weapons, both the U.S. and Israel have exhibited so far.

CHINA: For all of China’s posturing, the Trump 1.0 tariffs and Covid deeply weakened their system. In spite of some notable achievements and much blustering, their economy is mired in debt, unemployment and massive levels of excess housing and manufacturing capacity. Like Russia, the actions of the CCP over the past few decades reveal that they have little interest in becoming a trusted trading partner and global ally and are instead driven by a laser-like focus to expanding and project the power of the CCP around the globe.

It is imperative that we continue to decouple from China. Ideally, this will happen in a way that allows us to rebuild strategically important industries and that gives American companies and workers time to adjust. But, under any circumstances, we must curtail the access to our markets that, along with the exploitation of their own impoverished workforce, has enabled the CCP to rise from the ashes of its own failure and become the most important threat to the world’s safety and security.

The administrations underlying objectives with respect to trade negotiations aren’t entirely clear, which may be by design, but what has transpired so far is consistent with these objectives.

SUMMARY

The Trump administration is correct that it is time for a global reset in our trading and defense relationships. In addition to resolving our own financial problems and unleashing our economy, we should isolate our enemies while also working constructively and cooperatively to create balanced, sustainable and mutually beneficial trading and defense relationships with our allies.

Today we face important challenges, but none that are greater than those we have overcome time and again throughout our storied history. Here’s hoping your day is as bright as America’s future.

- Todd June, 8, 2025

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