As the buck has slumped this year, the euro has become a favorite alternative to foreign exchange traders and central banks.  The holdings of euros among central banks rose to a record in the second quarter of this year, with the euro accounting for 27.5% of global currency reserves.  While not yet a serious rival to the dollar, the euro’s global stature has increased over the past year.  That is the good news.

The bad news—the euro’s strength comes at an unpropitious time for Europe since export growth lies at the heart of continent’s nascent economic recovery.  The stronger the euro, the greater the pain for European exporters and many export-depend nations across the continent.  To this point, in the final quarter of 2008, net trade subtracted more than a percentage point of the eurozone’s total output. 

It was the collapse in global demand that decimated Europe’s leading exporters last year.  Additional pain has come this year courtesy of a stronger euro, with the euro roughly 20 percent more expensive in dollar terms since the start of 2009.  The effect is evident around the continent—Finland’s GDP shrank an annual rate of 9.4% in the second quarter of this year; Germany’s export-dependent economy is likely to decline by 5% this year, twice as much as the U.S.; and lacking any impetus from export growth, Spain’s unemployment rate could top 20% in early 2010. For the entire eurozone, the unemployment rate is expected to breach 10% in the near term, a prospect that has alarmed European policy makers.

All too mindful of the fragility of the eurozone’s recovery, Jean-Cluade Trichet, president of the European Central Bank (ECB), has become increasingly vocal about the dollar’s slide.  In mid-October, for instance, Mr. Trichet said the US commitment to a strong dollar policy was “extremely important.”   That’s true—but more for Europe than the United States.

The fact of the matter is that the U.S. needs a weak dollar to generate export-led growth and to re-orient its economy away from rampant personal consumption.  With the U.S. consumer saving more and spending less, dollar weakness has never come at a better time to America, boosting exports and the foreign earnings of U.S. multinationals.  Washington policy makers know this and are not about to fiddle with success. 

Hence, the “strong dollar” mantra of the Obama administration does not carry much weight.  It has become a phrase with little currency. 

And besides, Mr. Trichet should direct more of his comments towards Asia, where various monetary authorities have intervened in the markets in recent weeks to bolster the dollar’s strength against their own currencies.  Asian policymakers want to slow the pace of the dollar’s decline in order to protect their export-dependent economies.  In doing so, however, Asia is shifting the burden of the dollar’s decline and the brunt of global rebalancing on to Europe.  In other words, most of Asia is comfortable with a weaker dollar as long as the decline does not come at their expense.  If the dollar is going to slide, let Europe bear the pain.

As The Economist recently noted, most of Asia’s currencies have fallen since 2008 and are among the most undervalued in the world right now.  With the yuan basically repegged to the U.S dollar, the slide in the dollar has coincided with a decline in the trade weighted value of the yuan, making Chinese exports cheaper and imports more expense.  The upshot—rising Chinese exports to Europe, which has triggered European antidumping investigations.

In the end, Europe’s effort to talk up the U.S. dollar is likely to fail.  Washington is relatively comfortable with a weak currency at this juncture, while Asia is not about to abandon its export-led growth model.  That suggests a stronger euro over the near-term and more pressure on corporate Europe’s ability to compete globally.

Looking ahead, Europe has a great deal riding on the greenback.  Further dollar weakness could ultimately force Europe policy makers to cut interest rates and opt for more fiscal measures.  Both options are anathema to the ECB and many European governments already deep in debt.  They may, however, have no other choice since the U.S. dollar is our currency, but Europe’s problem.

A Story of Germany’s Unification

Robert B. Zoellick

November 5, 2009

Twenty years ago, the Berlin Wall opened, and events moved so quickly that they seemed inevitable. But were they?

German unification is a story about how leaders and diplomats moved quickly to transform a political earthquake into a new political and security order for Europe. But it is also the story of how this statecraft responded to and relied on the actions of the German people. U.S. diplomacy was guided by the need to trust the German public as partners in achieving unification.

Secretary of State James Baker and I believed that East Germans would be a driving force for unity. We suspected that the average East German wanted what his or her cousins had in West Germany – and which most East Germans could see on Western TV. Interestingly, this was not the view of the U.S. mission in East Germany. The U.S. diplomats there were in touch with the courageous dissidents who had challenged the communist regime; these intellectuals wanted to find a “third way” between communism and capitalism. But the public did not.

I recall a visit with Baker to a Lutheran church in Potsdam in December 1989, just weeks after the breaching of the Berlin Wall. I listened carefully as the ministers and lay leaders recounted sadly that their congregation wanted the prosperity of the West, not a new experiment in the East.

This insight affirmed two important beliefs. First, the Federal Republic of Germany was the legitimate German state in the eyes of all Germans. Second, events would create a momentum for unity that the Federal Republic and the United States could use to their advantage. But this momentum also posed risks: a stalled diplomatic process could trigger mass migration from the East; an unguided process could provoke dangerous resistance from the Soviets or Europeans who feared one Germany, and their opposition, in turn, could spark uncontrollable protests against weakening local authority and occupying powers.

To offer reassurance amidst the tumult of 1989, the U.S. strategic concept was for free people to enjoy governments based on their consent, leading to a unified Germany within a more integrated Europe. This Europe whole and free would be linked to America through NATO and deeper trans-Atlantic ties with what became the EU. We also needed to build new cooperative frameworks with the then-Soviet Union.

We were alert to the critical need to communicate with the public – especially in Germany and Europe. We wanted to show the German people that America stood by Germany at this defining moment. The Two-plus-Four negotiations – with the very name recognizing the leading role of the two Germanies, combined with Britain, France, the Soviet Union and the United States – were launched in February 1990 to help steer the external dimensions of German unification.

There was always a risk that while the Soviets would accept unification, they could delay Germany’s international settlement or impose limits as a price of unity. Therefore, Baker always emphasized our support for Germany’s unification in freedom and of not singling out Germany for discriminatory treatment, including limits on its choices of alliances. This posture avoided later generations of Germans from feeling unfairly treated, while aligning our interests with those of a sovereign, democratic Germany.

U.S. officials were fortunate that the American people expressed strong support for unification – something I was proud to see. This public trust in Germany enabled U.S. diplomacy to be more agile. In early 1990, when Chancellor Helmut Kohl deferred making a firm commitment on the Polish border, President George Bush could discretely reassure Poland, avoiding a crisis for Kohl.

Strong personal relationships between leaders made a big difference. Most importantly, Kohl and Bush trusted and relied on one another. Baker’s relationship with Foreign Minister Hans-Dietrich Genscher and their trust of Soviet Foreign Minister Eduard Shevardnadze likewise enabled unusual diplomacy. In advance of the NATO summit of July 1990, Baker gave Shevardnadze a description of initiatives the United States hoped NATO would adopt. The early notice positioned Shevardnadze to issue a public endorsement of the overtures when they were announced, pre-empting Soviet opponents. We were at the point where the American and Soviet foreign ministers could plan secretly how to use tentative NATO language to persuade the Soviet Union to accept a unified Germany. Time after time, the confidence Americans had with German officials like Frank Elbe or Horst Teltschik enabled us to act on fast-moving events so the two countries were consistently ahead of others that were trying to resist the momentum.

Over the last twenty years, Germans have accomplished important things. They have helped integrate the countries of Central and Eastern Europe into the European Union and into the trans-Atlantic security of NATO. They have helped build an historic European Union in peace. The global economic crisis was the first big test of this New Europe. European states, for all their internal debates, have recognized their interdependence. Under stress, Europe did not splinter.

In 1989, the author was the chief U.S. negotiator in the “Two-plus-Four” negotiations. Today, he is President of the World Bank Group.

Most importantly, the Lisbon Treaty aims to reinforce leadership at the top of the EU by creating a new President of the European Council, and by strengthening the position of the High Representative for the Common Foreign and Security Policy. As there is also a new Commission to be filled (the mandate of its predecessor ran out on October 31, together with that of the preceding High Representative, Javier Solana of Spain), the EU top jobs carousel has suddenly spun into overdrive.

European leaders had originally hoped to agree on a new President and a new High Representative at a summit meeting in Brussels last week; the Czech delays scotched that plan. Nonetheless, while the meeting’s formal agenda was governed by the upcoming climate change negotiations in Copenhagen, immigration policy, the establishment of a new EU financial watchdog as well as concessions to the Czechs in return for ratifying the Lisbon Treaty, an unofficial parallel summit was busy discussing a single issue: who should fill the new key positions?

In fact, the European leaders managed to considerably narrow down the list of candidates for the EU’s President by way of elimination. Britain’s former premier Tony Blair was swiftly excluded as unpalatable to too many countries (mostly because of his support of the Iraq war, and because Britain is not in the Eurozone). Another key step was taken when the Germans and the French agreed that the new post should be held by a Christian Democrat from a small country – thereby recognizing that most of Europe is currently governed by center-right coalitions, and excluding another Brit or candidates from their own countries (e.g., the former Foreign Ministers Hubert Védrine or Joschka Fischer).

As a result, the unofficial candidate list was ruthlessly downsized to three: Luxembourg’s Prime Minister Jean-Claude Juncker, Dutch Prime Minister Jan Peter Balkenende, and Belgian Prime Minister Herman van Rompuy. Junker is one of the EU’s most experienced negotiators, but thought to be too federalist by the British and several other countries. Balkenende fell afoul of many Central and East European countries because of his government’s strict views on EU budget discipline; and in the context of a highly secular European culture, others feel alienated by the fact that the Dutch Conservative is very religious. Van Rompuy, finally, is uncontroversial, because he is generally held to be a good administrator with a sense of humor; but he is hardly a charismatic communicator, and he has yet to make clear where he stands on the future of Europe.

The selection process for the High Representative, the top foreign policy job at the European Commission, is similar to that for the President in that he (or she) must represent the entire Union and its citizens. The logic of political balance therefore dictates that the “High Rep” will be chosen from the center-left.  The names mentioned here are the foreign ministers of Great Britain and Italy, David Miliband and Massimo D’Alema, respectively.

The European Parliament has already elected its new President (the Pole Jerzy Buzek), the third player in the EU’s new top tier; it is ready to hold hearings on the members of the new Commission — it has a right of approval for each member, as well as the “High Rep” — by next week. Selections have been made for 19 posts; the remaining seven are tied up in the negotiations for the top jobs. The Swedish EU Presidency is already preparing to convene an extraordinary meeting of the European Council in mid-December in order to take the legal steps and political decisions required to implement the new Treaty.  They have their work cut out for them. The Lisbon Treaty provides for the creation of a new European External Action Service (EEAS) — effectively, a diplomatic corps for Europe — but its legal status, functional scope, and budgetary foundation are all grey areas that must now be addressed urgently.  The relationship between the new President of the European Council (elected for 2 ½ years) and the EU member state holding the rotating EU Presidency for six months also needs to be worked out. Spain, Belgium, and Hungary — the three countries next in line — have just announced that they don’t want to see their roles and functions undermined under the new system. 

In sum: None of the candidates on offer for the new, improved Europe’s top jobs is ideal. The potential for frictions, turf battles, and dysfunctional solutions for the trio at the EU helm is very high. Then again, in 1985 – at the apex of eurosclerosis – a certain Jacques Delors, then a little-know former French finance minister, was made president of the Commission under very similar circumstances, and went on to a triumphant 10-year tenure in which he managed to give the European Union a reinvigorated sense of direction and dynamism.

Corinna Hörst is the deputy director of the Brussels office of the German Marshall Fund.

I have engaged in many discussions with organizations and individuals on transatlantic disability law and policy — both during the fellowship and since — and brought up the Convention, which scholars have called the first human rights treaty of the 21st century.

In December, an annual celebration of the Convention is held at the United Nations during the International Day of Persons with Disabilities.  With this celebration approaching once again, providing a description of the Convention and elucidating its importance for organizations working in the transatlantic space to be leaders in this segment of the transatlantic relationship is a valuable use of the pen.

Article 4 of the Convention elucidates the general obligations of state parties, or those nations that have ratified the Convention.  State parties agree that they will ensure the equality of “rights and fundamental freedoms of persons with disabilities without discrimination of any kind.”  As such, the Convention not only provides lofty, hortatory language, but also states, in Article 4, that the principles of the Convention are to be implemented by state parties through: (a.) legislation and regulatory enactment and promulgation; (b.) policy formulation; and (c.) research and development.  Additionally, state parties, in furtherance of the Convention, are to furnish proactively reasonable accommodations to persons with disabilities.  Similar to the body of legal issues in the United States known as “affirmative action,” Article 5 of the Convention provides that state parties are to undertake measures to accelerate “de facto equality of persons with disabilities.”  In addition to these obligations for state parties, there are many other substantive Articles of the Convention that impose affirmative obligations on governments.

Article 25 in particular may be noteworthy in light of the pending reform of the American healthcare system.  This Article mandates that state parties ensure equal, accessible, and affordable healthcare services, reimbursement systems, and insurance to persons with disabilities.  Notably, the Convention provides that people with disabilities are to enjoy enhanced access to rehabilitation services, equal rights to reproductive health services, and increased access to affordable technologies that aide in daily functioning.  Furthermore, the Optional Protocol to the Convention provides “teeth” to the underlying covenant in so far as it establishes a review body — the Committee on the Rights of Persons with Disabilities — at the United Nations to receive communications and complaints relating to implementation by state parties.

Since the Convention was brought into force in spring 2008, there have been 71 ratifications of the Convention and 45 ratifications of the Optional Protocol.  For instance, European Union aspirants Serbia and Turkey as well as established EU states like Germany and Belgium have ratified the Convention.  Consequently, scholars in disability law and policy, including Michael Ashley Stein and Janet E. Lord, have heralded the Convention as a new paradigm for disability rights and as a positive force for social integration and inclusion of persons with disabilities.

Despite the positive nature of this Convention as a discussion vehicle, if nothing else, the United States did not warmly receive the Convention, at least not until recent months.

The administration of President Bush was regularly castigated by disability advocates for not undertaking a leadership role on the Convention.  This lack of leadership was regrettable, as the Convention is imbued by concepts and principles encompassed in the Rehabilitation Act of 1973, as amended, and the Americans with Disabilities Act of 1990, as amended.  However, in summer 2009, arguably reclaiming our leadership on global disability policy, President Obama had the new ambassador to the United Nations ensure that the federal government is a signatory to the Convention.

In sum, the disabled and able-bodied can mutually benefit from opportunities to enhance their perspective on foreign law and public policy.  The important influence of organizations like the German Marshall Fund of the United States and others in fostering transatlantic cooperation, here at home, and abroad, is irrefutable.  I suggest to these organizations that the next item on the transatlantic agenda should be international disability policy, which has been overlooked too long.

In the Cold War’s early days of space exploration, the Soviet-American competition was labeled the “space race.”  Races generally result in prizes for the winner, and the prize in this case was the historic prestige of being the first nation to send its explorers beyond the home planet.  Nations still pursue space exploration for national prestige.  In explaining the EU’s decision to increase investment in space exploration, European Commission Vice President Guenter Verheugen said, “Exploration is to open the minds of European citizens without having to answer the question: How useful will it be?”  But, he added, “Space exploration has never been driven by human curiosity alone.  It is a symbol of global power and prestige.  Other countries are rising to the challenge.  Europe should not remain sidelined in this process.”

Centuries ago, European explorers were driven by curiosity as well as the prospect of money and fame.  Recalling the 18th-century British effort to find a method for ships’ captains to determine accurately their longitude, NASA has used prizes recently to encourage technology innovations such as the 2009 Regolith Excavation Challenge.  The competitors’ goal was to build a robot that can “dig up and deposit at least 150 kilograms of material from a simulated lunar surface and deposit it in a collection bin.”  The $500,000 prize was won by a team led by a college student.

The current reviews of space policy in Europe and America offer an opportunity to advance human exploration as well as unmanned science missions.  But to do so, President Obama and his European colleagues must chart a new route.  Europe and the United States should together view space exploration not as the exclusive domain of scientists and government agencies, but of our entire societies.  To engage the best of our societies in space exploration, we should return to that tested method of encouraging exploration, the prize.

Most of NASA’s human exploration budget, and as much as Europe can contribute, should be pulled from government-run programs and put into a fund for major space exploration prizes.  Money would be available within a few years for the United States and Europe to offer jointly prizes of, for example, 20 billion euros/$30 billion for a successful manned lunar mission and 50 billion euros/$75 billion for a successful Mars mission.

NASA and the European Space Agency (ESA) would work on the common infrastructure that all prize-contenders would need, such as launch facilities and communications.  But the energy, creativity, and risk-taking mindset that must all come together to advance exploration would come from American and European societies in partnership.  Meanwhile, ESA and NASA would focus on the kind of high-risk, high-reward science that has succeeded in recent years, such as the Hubble and Spitzer space telescopes and the Mars landers.

Five years ago this month, a team led by Burt Rutan and financed by Microsoft co-founder Paul Allen took aim at the Ansari X-Prize of $10 million.   The prize called for launching a reusable manned vehicle on a sub-orbital spaceflight twice within two weeks.  During the Rutan team’s first flight, the vehicle reached space but unexpectedly tumbled at the top of its trajectory.  The team’s engineers analyzed the data carefully.  Then, rather than announcing a multi-year delay for expensive modifications, they told the public that they believed they understood the problem, that the risk was acceptable, and that they would launch again as planned.  On the 47th anniversary of the Sputnik launch that began the space race, they took home their prize.  Their successors can lead a bright future of space exploration.

Joseph R. Wood is a senior resident fellow with the German Marshall Fund.

Various Iranian officials have indicated various caveats for an acceptance of the United Nations-sponsored proposal to ship its low-enriched uranium (LEU) abroad. This plan was negotiated over the last weeks in the Geneva and Vienna talks of the so-called P5+1 (the five permanent members of the U.N. Security Council plus Germany) with Iran. The plan calls for Iran to transfer around 75% of its known 1.5 tons of LEU to Russia for further enrichment by the end of this year, then on to France for conversion into fuel plates. These would be returned to Tehran to power a research reactor that produces radio isotopes for cancer treatment. This deal, if it becomes reality, would be a win-win for both sides. For the West, because Iran would not have enough nuclear material to build a weapon and there would be more time to prepare an international agreement on Iran’s nuclear ambitions. For Iran, this deal would set a precedent by permitting Iran to continue a fuel production that the Security Council previously had ordered it to stop. The official response from Iran has been promised for Friday, and it will be a litmus test for Iran’s stated intent to use LEU only for peaceful ends.

The recent revelation by U.S. President Barack Obama, French President Nicolas Sarkozy, and British Prime Minister Gordon Brown at the Pittsburgh G20 summit of a new enrichment facility at Qum, 160km south of Tehran, and their call for tougher sanctions if Iran still fails to abide by its obligations under the Non-Proliferation Treaty (NPT), sent a clear signal to Iran. The new U.S. engagement policy with Iran is not unconditional, but a mix of carrots and sticks. Faced with the revelation, Iran hurriedly informed the International Atomic Energy Agency (IAEA) and accepted inspection by an IAEA team that arrived last Sunday to investigate the enrichment facility that Iran had hidden since 2007.

Moscow, meanwhile, is still continuing its seesaw policy toward Tehran. As a co-architect of the NPT, it certainly prefers a non-nuclear Iran, but on the other hand it likes the status quo of an isolated Iran that keeps the West in a state of deep unease. Russia benefits economically from the nuclear power plant it is building in Bushehr, and it also benefits under the new UN proposal by taking over an early phase of enrichment of Iranian LEU. Russian President Dmitry Medvedev praised the P5+1 talks in Vienna and Geneva during the visit of U.S. Secretary of State Hillary Clinton to Moscow last week, but he ruled out Russian support for sanctions against Iran “at this time.”

U.S.-led international political pressure on Iran adds to the domestic pressure the regime feels from its internal opposition. With the U.S. administration extending its hand and offering a conditioned engagement policy, it has become more difficult for the repressive Iranian regime to justify its domestic repressions with the pretence of a U.S. threat. Obama’s pragmatism in refraining from public condemnation of the regime’s handling of its June elections and the subsequent brutal repression of the protests of millions of Iranian citizens actually put further pressure on the Iranian government. U.S. Defense Secretary Robert Gates has helped by saying, regularly and clearly, that military force could not solve the problems the West has with Iran. Globally, people feared the United States more than they feared Iran getting away with its nuclear violations; now, people want Iran to be more accommodating.

Iran has not negotiated in a spirit of genuine give-and-take for years. The renaissance of the United States’ global credibility might press Iran to take a few steps for the first time since 2004 as a beginning to the beginning of a real negotiation process.  After all, the first round of renewed international negotiations has made unexpected progress. The Iranian government now feels obliged to modify its behaviour in order to build international confidence that all of its nuclear activities are peaceful, and that none of them have military dimensions.

In the long run, the United States and its P5+1 partners will have to maintain the necessary political pressure and frame a mutually acceptable outcome with Iran that allows it to save face. As the NPT never defined when nuclear fuel usage is weaponization and when it is not, the negotiated outcome could be an enforceable agreement that clearly classifies which nuclear activities are peaceful and which are not; that classification should be applicable to all countries under the NPT. It will be a long way to go with many maneuvers still to come. But if Iran can keep face in the process, it may be able to drop its veils. Iran’s answer to the UN’s enrichment proposal will indicate its readiness to move in this direction.

Jörg Himmelreich is a senior non-resident fellow with the German Marshall Fund.

In light of the highly-publicized murder of a pregnant Egyptian woman in Germany, GMF Program Associate Delancy Gustin discusses Muslim integration in France, Germany and the United Kingdom with Daljit Dhaliwal.

GMF’s Jim Kolbe discusses the economy, the TEC, and international economic recovery with Tranatlantic Business Dialogue Co-chair, Jim Quigley, in this three-part video series.

The potential benefits are clear. China is one of the very few nations with the capacity and risk-tolerance to make multi-billion dollar investments in both Afghanistan and Pakistan. Projects such as the Aynak copper mine and the expansion of the Karakorum Highway are only the most visible. From telecommunications in Afghanistan to power-generation in Pakistan, China‘s involvement in major economic sectors is already substantial. Ever more importantly, China’s close, longstanding relationship with Pakistan, including in sensitive areas of Pakistan’s nuclear weapons and military programs, give it a unique level of influence, insight, and trust. On the rare occasions when Beijing exercises its leverage, Islamabad acts.

But China is torn between competing imperatives. While being uncomfortable with the U.S. and NATO presence so close to its borders, Beijing is at the same time fearful of a precipitous Western withdrawal and quietly happy to see the United States bogged down militarily. Notionally supportive of international efforts to combat extremists, China is still wary of provoking them and is single-mindedly focused on Uighur groups such as ETIM rather than the broader transnational terrorist threat. China is also an inveterate hedger. In the absence of a winning U.S. strategy, Beijing sees no reason to make an enemy of the Afghan Taliban, however unpleasant it finds them. The lack of clarity about future U.S. policy in Afghanistan makes a wait-and-see approach the easy default option. And every upsurge in violence in its restive northwestern region, Xinjiang, only heightens Beijing’s sense of caution about the reactions of its own Muslim population.

China’s broader dealings with Pakistan are equally tricky to navigate. This is a relationship in which the Chinese military plays an unusually important and not especially progressive role. While Beijing is eager to emphasize the unchanging nature of its friendship, in practice its relations with the Pakistan People’s Party, and President Zardari in particular, have been cool. It doesn’t take much to prompt Chinese officials to express their longing for Musharraf and military rule. China’s willingness to provide economic support to the current civilian government is correspondingly diminished. Moreover, despite Chinese anxieties about the risks of Indo-Pakistani conflict — and willingness to deal constructively with crises such as the Mumbai terror attacks — Beijing still benefits from tensions on the subcontinent that keep the Indian military diverted to its western borders and pinned down in Kashmir.

The combination of these considerations with China’s innate foreign policy conservatism would seem to be a recipe for inaction. But China’s growing concerns about stability on its periphery are changing the way it perceives its interests.

Chinese investment projects in the region are now important not simply in scale but in their strategic nature. The Gwadar port and the linked prospect of an energy corridor to China’s northwest, for example, are valuable well beyond their economic worth. Yet all of these projects — including the much-touted Aynak mine — are go-slow until Chinese confidence about stability has returned. The Pakistani military is no longer able to ensure that Chinese interests are given a privileged and protected status. Whether it comes to attacks on Chinese assets or the kidnappings and killings of Chinese workers, the threats have been growing as the situation in Pakistan has deteriorated. China has become a target for groups well beyond ETIM and Baluchi nationalists ever since its involvement in the Red Mosque incident. Political tensions with the Pakistani government over these issues have grown markedly in the past year.

Even more worryingly, since the riots in Urumqi, China has faced warning signs that it is becoming a first-order target for transnational terror groups. While Beijing could be dismissive of the AQIM statement in July threatening Chinese overseas personnel, this month’s video from a senior Pakistani-based Al Qaeda figure, Abu Yahya al-Libi, urging a holy war in Xinjiang, is harder to ignore. The threat to China’s domestic security is starting to expand well beyond a tiny group of Uighur extremists. China is also profoundly worried about Pakistan’s long-term security situation. It has become one of the only countries where Beijing has undertaken crisis contingency planning for scenarios ranging from state collapse to loose nukes. And all of their planning makes one thing clear: China needs to coordinate effectively with other major powers if its interests are to be protected. It is no longer clear that pursuit of a narrow set of bilateral objectives is the best Chinese strategy.

Beijing has responded positively to the new U.S. administration’s regional outreach initiative. Nevertheless, eliciting meaningful Chinese cooperation will be a slow process. China is still testing U.S. openness to involving it seriously in the future of the region rather than just episodic crisis management – and trying to gauge what level of pressure it will come under if it holds back. European efforts have so far been much weaker. While individual member states such as the U.K. and France have launched their own initiatives with China, Afghanistan and Pakistan have occupied a lowly role in EU-China discussions, and NATO contact with China is highly underdeveloped.

The existing efforts are also overly focused on Afghanistan. The value China can add and its sense of responsibility and anxiety about the situation in Pakistan are many times greater. While the results may not be swift, there is genuine scope over time to find ways of coordinating the targeting of economic and military support, political messages, strategies for dealing with extremist threats, and even some limited discussion of contingency planning. Beijing is reluctant to address Pakistan in multilateral forums or to risk creating perceptions of condominiums with the United States and the Europeans that may damage its close relationship. But the West will in any case benefit more from Chinese efforts that are seen to be bilateral, such as the recent political and practical support given by Beijing to the Pakistani military’s campaign in Swat.

If it can be secured, the omens for cooperation are good. The last time China and the West were aligned against a common threat in Southwest Asia, Chinese arms and Chinese mules played their part in a famous victory. Can Deng Xiaoping’s successors deliver again?

The American people, Congress, the allies, the Afghan people, and enemies in Afghanistan and around the world are waiting for the President to show how serious his commitment is toward the Afghanistan mission. Absent President Obama’s strong leadership and commitment, Europe probably will not add more firepower to the fight in Afghanistan, and one could reasonably expect its collective ability to remain on the ground beyond the next 12-24 months to be quite tenuous. In fact, 12 months from now, a perfect storm of midterm U.S. congressional election campaigns, the debate over ISAF mission renewal mandates in the Netherlands and Canada, debates over the FY2010 U.S. defense authorization and appropriation bills, and the one-year anniversary of the release of ISAF Commander General McChrystal’s report will serve as not only as points of reflection on the mission but as opportunities to possibly cut off funding for the U.S. effort in Afghanistan.

What has frustrated many in recent years is the inability of the United States and its allies to exercise the leverage it holds over the Afghan government in demanding greater performance and accountability from it. The reality is that nearly 90 percent of all funds in Afghanistan originate from the international community, the majority of all security operations are conducted by the ISAF, and President Karzai derives (or at least derived during the past five years) his legitimacy as leader of Afghanistan from the fact that the international community recognized him as such. That said, we know that the Afghan government has repeatedly failed to tackle corruption throughout the country, the government at all levels, and quite likely within the presidential cabinet itself. Given the tolerance of such bad behavior, it is no surprise that some argue that the international community’s efforts are futile.

So what is needed now is a convincing declaration by President Obama that he intends to do what is necessary in Afghanistan. Such a declaration should include the following points: that, along with healthcare reform, Afghanistan is the top priority for his Administration and that he understands the consequences of withdrawal; that significant increases in levels of U.S. troops as well as of civilian experts on the ground are needed and will be dispatched in the coming months; that Europe and the international community have joint equities in Afghanistan and that there should be a collective matching of the total increase in U.S. personnel Washington will make; and that a functioning and stable Afghan state cannot be achieved without the help of a capable partner on the ground, in the form of the Afghan government. President Obama must convey this message so that whoever wins the November 7 runoff presidential election knows how serious the U.S. is in demanding better performance during the next five-year Afghan presidential term.

The President should also announce a list of what is realistically achievable in the next 12 months to demonstrate that tangible progress on the ground has been made. Such indicators should not be purely or largely security-focused, such as stating a certain percentage of territory will be held by the Afghan National Security Forces or that a certain number of Afghan troops and policemen will be trained and fielded. These are important indicators. But they are not the most critical in convincing allied publics and parliamentarians and, more importantly, the Afghan people themselves, that progress is being made in the country. Instead, the criteria for progress President Obama should announce must focus on improving the daily lives of the Afghan people throughout the country. No one indicator would be more telling than if whoever wins the currently-debated Afghan presidential election allows for the arrest, prosecution, and conviction of senior members of the Afghan government who are known to be involved in corrupt practices. This would send a signal to the world and to the Afghan people that its government is committed to the creation of a functioning, rule-of-law state that serves the people, rather than preying upon them.

As many have noted, the consequences for the international community’s premature withdrawal and failure are real and staggering. However, the United States and the world cannot bring about a stable Afghanistan if the Afghan leadership does not play a constructive role, which has been the Achilles heel of our collective efforts thus far. The President should not hesitate in stating that the U.S. and the international community cannot want a functioning and law-abiding Afghanistan more than the Afghan leadership wants it and, therefore, all international efforts can only succeed if the Afghan government dramatically changes the way it operates and prioritizes what is important for the Afghan people. Some may argue this could be the President’s exit strategy: that if the Afghan government does not prove to be a capable and willing partner on the ground then the international community’s efforts are doomed to fail. Looking at it another way, demanding accountability from the Afghan government and exerting the leverage we collectively have on the government is the only prudent course of action.

President Obama has an opportunity to refocus not only America’s efforts in Afghanistan but also the Afghan leadership’s commitment toward this grand project. This will require a convincing announcement by the President that Afghanistan is a priority for him and his administration. Such a decision must come soon.