An Economic Retreat from East Asia

An Economic Retreat from East Asia, by Doug Bandow
Cato, April 27, 2009.

The People's Republic of China (PRC) is ever more confident, challenging U.S. naval ships in the South China Sea and the U.S. dollar in international forums. China has displaced America as the number one trading partner with leading East Asian states. And Beijing is creating a military capable of deterring if not defeating the U.S. armed forces.

How do the Obama administration and Democratic Congress respond? By retreating economically from the region. Sen. Barack Obama termed the U.S.-South Korean free trade agreement (FTA) "badly flawed" and urged the Bush administration not to even submit it for ratification. At his confirmation hearing U.S. Trade Representative Ron Kirk called the agreement "unacceptable." Although increased trade with the Republic of Korea (ROK) is "one of the biggest opportunities we have," he affirmed that the administration "will step away from that if we don't get it right." This policy is remarkable for both its economic and geostrategic folly.

Washington instead should be expanding American investment and trade opportunities in East Asia. The starting point should be to ratify the FTA with the ROK.

South Korea possesses one of the world's largest economies and is among the top dozen trading nations. Total U.S.-ROK trade ran more than $80 billion in 2008. The seventh largest merchandise trading partner of the U.S., Seoul is a major importer of aircraft, cereals, chemicals, machinery, and plastics. Even a small expansion of U.S.-ROK trade would offer a significant benefit for America's economy.

The FTA offers unusual potential because South Korea has been a notoriously closed market. Dependent on exports for its stunning economic success, the ROK is far less hospitable to other nation's exports, including from the U.S. The Korea Economic Institute reported: "Korea remains a very difficult place in which to do business."

The FTA responds by helping to open the Korean market. Jeffrey Schott of the Peterson Institute for International Economics reported: "The U.S.-Korea pact covers more trade than any other U.S. trade agreement except the North American Free Trade Agreement" and "opens up substantial new opportunities for bilateral trade and investment in goods and services."

More specifically, reports the U.S. Trade Representative:

In addition to eliminating South Korea's seven percent average tariff on industrial goods, the KORUS FTA effectively addresses a wide range of discriminatory non-tariff barriers to U.S. goods and services. It will improve regulatory procedures and due process in South Korea through the most advanced transparency obligations in any U.S. FTA to date. In addition, the Agreement contains an unprecedented package of automotive related provisions, including a unique dispute settlement mechanism that will level the playing field for U.S. automakers in this important market.

Obviously, the FTA does not eliminate all economic barriers in the ROK. Sen. Obama was one of many critics to point to continued Korean restrictions on the sale of U.S. autos and agricultural products. But the pact makes important progress. Explained Schott: "The FTA outcome on autos makes both sides better off than they would be in the absence of the bilateral deal" and "the FTA liberalization of farm trade predominantly benefits U.S. agricultural exporters."

Moreover, Seoul is in no mood to make concessions to the Obama administration. ROK President Roh Moo-hyun negotiated the treaty at some political cost. His successor, Lee Myung-bak, already has been attacked for easing restrictions on American beef imports. Trade Minister Kim Jong-hoon declared simply: "There are [to be] no renegotiations or additional negotiations."

The U.S., whose share of total Korean imports has been falling, would obviously benefit from the pact. The likely increase in exports, perhaps $20 billion annually, would be particularly helpful in the midst of today's deep recession. Demand for American audiovisual, financial, and telecommunications services also likely would increase substantially. Overall, the U.S. International Trade Commission figures that American exports to South Korea would rise nearly twice as much as imports from the ROK. Since the South's per capita GDP today is well below that of the U.S., South Korean demand is likely to increase even more over the longer-term. Even more so if the two Koreas eventually reunite.

Economics is not the sum total of the issue, however. The Korean FTA is part of East Asia's great geopolitical game. A rising China is bumping up against a less dominant America; strengthening trade ties is one way for Washington to ensure continued American influence in the region.
The U.S. remains the globe's sole superpower, with the ability to project power into every region. But the PRC is engaged in a measured military build-up directed at creating armed forces capable of deterring American intervention in East Asia. Washington will find it increasingly difficult to achieve its objectives with military force.

Despite the Wall Street crash last fall, the U.S. retains the world's largest and most productive economy. And China has not escaped unscathed from the global downturn. However, Washington's economic dominance in East Asia is waning. By some measures the PRC has surpassed Japan as possessing the second largest economy.

Moreover, China's rapid economic growth has naturally led to expanded investment and trade throughout East Asia. American companies have been pushed into second and even third place in South Korea and Japan.

China's expansion is changing East Asia economic patterns. Noted Schott: "The region is the hotbed of regional trading arrangements, with a variety of pacts differing in scope and coverage." Driving this process is China's growing economic role. The impact on the ROK has been particularly significant. Observed Robert Kapp, a long-time president of the United States-China Business Council: "The growth of Korean-Chinese economic action has been even more impressive than China's expanding ties with other trade and investment partners."

Beijing is not content to rely on osmosis. The U.S.-China Economic and Security Review Commission warned: "China has linked its growing economic power with strong diplomatic initiatives throughout Asia. China's softer approach to the region has been dubbed a smile campaign or charm offensive, but it is more than just that -- China has injected new energy into bilateral partnerships and multilateral trade and security arrangements."

In fact, Beijing has been negotiating or discussing free trade agreements with Australia, Japan, South Korea, and Taiwan, among other countries. The economic and political barriers to such arrangements are obvious, but the fact that the PRC is pursuing this strategy -- and that America's three leading military allies in the region as well as another one-time ally and long-term friend, which enjoys an implicit security guarantee from Washington, view FTAs with China as a serious option -- symbolizes the challenge now facing Washington.

South Korea is not waiting for the U.S. The ROK has negotiated FTAs with the ASEAN (Southeast Asian) states and several European countries. Moreover, reports the Korea Economic Institute: "In March, Korea and the EU announced the tentative conclusion of FTA negotiations, while Korea also announced that it will commence FTA negotiations with Australia, New Zealand, and Peru. The EU deal, when completed, will be the world's largest bilateral trade agreement, eclipsing the still unapproved U.S.-Korea FTA."
Yet the U.S.-ROK FTA sits unratified in Washington. Washington's influence in East Asia is slowly ebbing. Rather than retreating quietly, the U.S. should strengthen its economic role by expanding trade and investment ties throughout the region. Washington should pursue FTAs with Japan and Taiwan. But first Congress should ratify the already-negotiated accord with South Korea.

The primary benefit of the agreement is economic. But expanding trade ties offer geopolitical advantages as well. The Bush administration may have overstated the benefits, but only slightly, when it argued: "By boosting economic ties and broadening and modernizing our longstanding alliance, it promises to become the pillar of our alliance for the next 50 years, as the Mutual Defense Treaty has been for the last 50 years." Seoul has a similar objective. Wrote Kozo Kiyota and Robert Stern of the University of Michigan: "Korean officials hope that there will be positive spillover effects from an FTA on the broader bilateral relationship."

Moving forward will require genuine statesmanship backed by political courage from the Obama administration. Failing to ratify the South Korean FTA is likely to result in permanent economic and geopolitical damage. Warned Jeffrey Schott: "The stakes -- in terms of both U.S. economic and security interests in East Asia -- are too great, and the costs too high, to reject the pact or defer a decision."

This would be a high price to pay at any time, but especially when China is rapidly expanding its influence throughout East Asia.

Geithner: The Fox Guarding the Henhouse?

Geithner: The Fox Guarding the Henhouse? By Larry Kudlow
The Corner, Monday, April 27, 2009

What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.

Meanwhile, top Obama adviser Valerie Jarrett opened the door wide on CNN yesterday to bank nationalization and CEO firings. Unfortunately, my take that the economic stress tests are a political stalking horse for more government ownership, more government control of the banks, and more government disruption of shareholder rights and normal corporate governance looks to be coming true.

Then there’s today’s huge New York Times story about Tim Geithner. It starts on the front page and goes on and on for thousands of words. Yes, he missed early signs of the crisis. But he was altogether too cozy with the New York banks, especially Citibank — and Robert Rubin along with Sandy Weill. In fact, at one point Weill asked Geithner to be Citi’s new CEO. And Geithner joined the board of a Weill-run non-profit to help inner-city high-school students. There were numerous lunches and dinners with Rubin and Weill and other Wall Street luminaries.

With Geithner running the Treasury and the potentially criminal enterprise called TARP, is his incestuous relationship with Wall Street bigwigs a perfect example of the fox guarding the henhouse? Was he too cozy to keep a critical eye on the very institutions that blew up later?

By the way, Geithner sometimes worried about derivatives. But he also worked hard for a plan that would reduce the amount of capital banks were required to keep on hand.

You just have to wonder about this cozy relationship with a trillion dollars of TARP money at stake — essentially a second government budget for Bailout Nation run by a young guy who is in bed and under the covers with the leading bankers he’s supposed to regulate, all while the TARP inspector general is launching 20 criminal probes into how all this taxpayer money is going to be spent.

I don’t usually agree with Nobel economist Joe Stiglitz, but he talks about how mindsets can be shaped by people you associate with and that “you come to think that what’s good for Wall Street is good for America.” I know Stiglitz, Krugman, and the other lefties want to nationalize the banks, and allegedly Geithner does not. But frankly, backdoor nationalization is coming and Mr. Geithner’s independence is suspect.

No, the Times article doesn’t mention Geithner’s failure to pay back taxes until just before he was nominated for Treasury secretary. But it seems that at this point in history we need a strong, credible, and independent TARP and bank regulator.The New York Times really makes me wonder all over again about Mr. Geithner.

“Never Again,” Obama Style

“Never Again,” Obama Style. By Michael Ledeen
Pajamas Media, April 27th, 2009 8:32 pm

No president in modern times has managed to conceal so much of his biography as this one. The journalists assigned to the Obama beat seem to have lost their traditional avidity for digging out the missing details. We do not have a medical report, or a college transcript from Columbia, or a notion of how well he did in Harvard Law School.

These things are not automatically significant, but they can be. Nobody thinks the president has some basic medical problem. He shows every sign of being in excellent physical condition. But so did John F. Kennedy, who turned out to have had Addison’s Disease, and was taking steroids and pain killers, which had an effect on his performance. We didn’t know it at the time. We should have.

What did Obama study? With whom? How well did he do? Obama occasionally says things that are uncharacteristic of cultured persons, as when he flubs the number of states in the U.S., or when he seems to believe that they speak “Austrian” in Vienna. Are these just occasional slips of the tongue? Or did his college and law school years show a pattern of ignorance? We’re entitled to know these things, but there is a disappointing, albeit quite predictable, lack of curiosity by the usual suspects in the media hunter/killer packs.

A great quantity of newsprint was filled with criticism of the Bushitlercheney insistence on secrecy, and rightly so. Critics, and even would-be friends of the Bush Administration, were encouraged to believe all kinds of nonsense, much of which was fueled by the administration’s famous inability to explain what it was doing, and why. In like manner, the stonewalling of basic information about Obama fuels dark suspicion about the very legitimacy of his presidency, as in the ongoing demand that he prove his constitutional qualification for the office.

Lacking the basic information, we must use the old tools. We must infer, deduce, and guess. We have to parse his words and compare them with his actions. He himself insists on this. In March, when the North Koreans launched a rocket in the teeth of multiple international warnings, Obama [1] insisted that “words must mean something. The world must stand together to prevent the spread of these weapons. Now is the time for a strong international response.” He rightly insisted that mere talk wasn’t good enough, because if warnings were ignored and no price was subsequently paid, warnings would become meaningless. Without action, words mean nothing.

A joint U.S.-Europe declaration reiterated this theme, noting that North Korea was developing “the ability to threaten countries near and far with weapons of mass destruction. This action demands a response from the international community, including from the U.N. Security Council to demonstrate that its resolutions cannot be defied with impunity.”

Which brings me to his little-analyzed [2] recent speech in the Capitol on the Holocaust Day of Remembrance, a theme inevitably close to the heart and soul of our first black president. Some of it is Obama at his best, elegant, spare, right to the point. He made a point near to my heart, which is often forgotten in the history of fascism:

It is the grimmest of ironies that one of the most savage, barbaric acts of evil in history began in one of the most modernized societies of its time, where so many markers of human progress became tools of human depravity: science that can heal, used to kill; education that can enlighten, used to rationalize away basic moral impulses…

Yes, fascism and Nazism came from two of the most advanced and most cultured Western societies, Italy and Germany. And the institutions of those societies were enlisted in the service of the Holocaust, with precious little protest from the most cultured and advanced individuals in those societies.

the bureaucracy that sustains modern life, used as the machinery of mass death, a ruthless, chillingly efficient system where many were responsible for the killing, but few got actual blood on their hands…

Those words about bureaucracy, “that sustains modern life,” are a useful window into the way Obama views government. He loves government, especially his own. But he’s got the Nazi story wrong. The bureaucracy that conducted the mass murders was largely military, and the most important component was not part of the bureaucracy, or even the traditional army, but rather the SS, which was tied directly to the Fuhrer, not to the old German state.

Obama’s description of the killing process, in which the victims were processed on a mass assembly line of death, was accurate and important, but he didn’t recognize that Hitler created a new kind of state. Nazism seized power in Germany, but the Nazi state was very different from the “state of laws” that preceded it.

He then gave his version of “never again,” and it’s a very odd version indeed. First, he draws hope from the survivors of the Holocaust. Those who came to America had a higher birthrate than the Jews who were already living here, and those members of “a chosen people” who created Israel. These, he says, chose life and asserted it despite the horrors they had endured.

And then he goes on:

We find cause for hope as well in Protestant and Catholic children attending school together in Northern Ireland; in Hutus and Tutsis living side-by-side, forgiving neighbors who have done the unforgivable; in a movement to save Darfur that has thousands of high school and college chapters in 25 countries and brought 70,000 people to the Washington Mall, people of every age and faith and background and race united in common cause with suffering brothers and sisters halfway around the world.

Those numbers can be our future, our fellow citizens of the world showing us how to make the journey from oppression to survival, from witness to resistance and ultimately to reconciliation. That is what we mean when we say “never again.”

So “never again” means that we learn from others how to forgive and forget, and ultimately live happily with one another. But that is not what “never again” means, at least for the generation of the Holocaust and for most of those who followed. For them, “never again” means that we will destroy the next would-be Fuhrer. In his entire speech, Obama never once mentions that the United States led a coalition of free peoples against Germany, Italy and Japan, nor does he ever discuss the obligation of sacrifice to prevent a recurrence. Indeed, his examples suggest that he doesn’t grasp the full dimensions of the struggle against evil. Northern Ireland is a totally inappropriate example (nothing remotely approaching a Holocaust took place there), the relations between Hutus and Tutsis in Rwanda and Burundi are hardly characterized by forgiveness, even though the president of Burundi is striving mightily to achieve a peaceful modus vivendi, and as for Darfur, well, despite the tens of thousands who demonstrated on the Mall, nobody has done much of anything to stop the Khartoum regime from slaughtering the peoples of the south.

In the history of modern times, the United States has done more than anyone else, perhaps more than the rest of the world combined, to defeat evil, and we are still doing it. Yet Obama says that we must “learn from others” how to move on, forgive and forget, and live happily ever after. But these are just words, they are not policies, or even actions. And the meanings he gives to his words show that he has no real intention of doing anything to thwart evil, any more than he had any concrete actions to propose to punish North Korea.

Significantly, Barack Obama is a lot tougher on his domestic American opponents than on tyrants who threaten our values and America itself. He tells the Republicans that they’d better stop listening to Rush Limbaugh, but he doesn’t criticize Palestinians who raise their children to hate the Jews. He bows to the Saudi monarch, but humiliates the prime minister of Great Britain. He expresses astonishment that anyone can worry about a national security threat from Hugo Chavez’ Venezuela, even as Chavez solidifies an alliance with Iran that brings plane loads of terror masters, weapons and explosives into our hemisphere from Tehran via Damascus, fuels terrorists and narcotics traffic, and offers military facilities to Russian warships and aircraft. He is seemingly unconcerned by radical Islam and a resurgent Communism in Latin America, even as his Department of Homeland Security fires a warning shot at veterans–the best of America–returning from the Middle East. He seeks warm relations with Iran and Syria–who are up to their necks in American blood–while warning Israel of dire consequences if she should attempt to preempt a threatened Iranian nuclear attack.

Thus far, at least, the one clear message from President Obama is that he is not prepared to fight…our international enemies. He sounds more like a psychotherapist than a national leader in these words from his Holocaust Day speech:

…we have the opportunity to make a habit of empathy, to recognize ourselves in each other, to commit ourselves to resisting injustice and intolerance and indifference, in whatever forms they may take, whether confronting those who tell lies about history, or doing everything we can to prevent and end atrocities like those that took place in Rwanda, those taking place in Darfur…

These words are calculated to internalize conflicts that are raging in the real world, and they are precisely the sort of words that will encourage our enemies to redouble their efforts to bring us down. For if the president of the United States will not act, who can stop them?

Putin vs. the Truth

Putin vs. the Truth. By Orlando Figes
The New York Review of Books, Volume 56, Number 7 · April 30, 2009


Review of:
Inside the Stalin Archives: Discovering the New Russia. By Jonathan Brent
Atlas & Co., 335 pp., $26.00

Vietnam is buying six Russian Kilo class submarines

A Six Pack For Vietnam
Strategy Page, April 29, 2009

Vietnam is buying six Russian Kilo class submarines, for $300 million each. The Kilos weigh 2,300 tons (surface displacement), have six torpedo tubes and a crew of 57. They are quiet, and can travel about 700 kilometers under water at a quiet speed of about five kilometers an hour. Kilos carry 18 torpedoes or SS-N-27 anti-ship missiles (with a range of 300 kilometers and launched underwater from the torpedo tubes.) The combination of quietness and cruise missiles makes Kilo very dangerous to surface ships. North Korea, China and Iran have also bought Kilos. Considering the low price, it appears that the Vietnamese boats do not have AIP (Air Independent Propulsion), which allows non-nuclear boats to stay underwater for weeks at a time.

Pak's Ambassador: The pacification model that worked in Iraq can work in the Swat Valley

How Pakistan Is Countering the Taliban. By HUSAIN HAQQANI
The pacification model that worked in Iraq can work in the Swat Valley.
WSJ, Apr 29, 2009

The specter of extremist Taliban taking over a nuclear-armed Pakistan is not only a gross exaggeration, it could also lead to misguided policy prescriptions from Pakistan's allies, including our friends in Washington.

Pakistan and the international community do face serious challenges in confronting terrorists and the ideologies that sustain them. But panicked reactions of the type witnessed in the U.S. media over the last few weeks -- after the Taliban drove into Buner, a town 60 miles north of the capital Islamabad -- are not conducive to strengthening Pakistani democracy or to developing an effective counterterrorism policy for Pakistan.

Now that the Taliban have been driven out of Buner, and Pakistani forces have militarily engaged them just outside their Swat Valley stronghold, it should be clear to all that Pakistan can and will defeat the Taliban.

In the free elections that returned Pakistan to democracy in February 2008, Pakistanis overwhelmingly rejected Taliban sympathizers and advocates of extremist Islamist ideologies. But the legacy of dictatorship, including a tolerance for some militant groups, has proven tough to erase. Anti-American rhetoric and Pakistan's traditional security concerns about its neighbors have also dampened popular enthusiasm for strong military action against violent extremists, even though President Asif Zardari has repeatedly declared the war against them a war for Pakistan's soul.

Meanwhile, the change of administration in the U.S. has slowed the flow of assistance to Pakistan. Unfortunately, ordinary Pakistanis have begun to wonder if our alliance with the West is bringing any benefits at all.

Under the Musharraf dictatorship, Pakistan probably was not as quick as it needed to be to comprehend the enormity of the Taliban threat. And after last year's election of democratic leaders, our new government had an array of domestic issues to address. Mobilizing all elements of national power, particularly public opinion, against the Taliban threat took time because many Pakistanis thought the Taliban were amenable to negotiations and would keep their word.
Recent developments offer us an opportunity amid crisis. More Pakistanis are now convinced of the need to confront the extremists.

The recent spike of international concern about the threat in Pakistan seems to stem from the recent dialogue between the government of the Pashtunkhwa Northwest Frontier Province of Pakistan and a local movement that supported Islamic law but did not join the Taliban's violent campaign. The goal for this dialogue was twofold -- first, to restore order and stability to the Swat Valley; and second, to wedge rational elements of the religiously conservative population away from terrorists and fanatics.

The model here was the successful pacification of Fallujah in Iraq, where agreements with more moderate elements broke them away from al Qaeda nihilists. The model worked so well in Fallujah that it is now being resurrected by the American and NATO troops in Afghanistan. The goal in Pakistan's Swat Valley was the same.

The dialogue in Swat resulted in an agreement that would allow for elements of Shariah to be applied to the judicial system of the Valley, as it has at other times in our nation's history. This agreement demanded that the native Taliban put down their weapons, pledge nonviolence, and accept the writ of the state. It was a local solution for what some in Pakistan viewed as a local problem.

Let me be perfectly clear here: Pakistan's civil and military leadership understands that al Qaeda and its allies are not potential negotiating partners. But, as the U.S. did in Iraq, Pakistan sought to distinguish between reconcilable and irreconcilable elements within an expanding insurgency.

The premise of the dialogue was peace. Without peace there is no agreement, and without an agreement the Pakistani government will use all power at its disposal to restore order in the Valley. We'd rather negotiate than fight. But if we have to fight we will -- and we will fight to win.
What does Pakistan need to contain this threat? In the short term we need the U.S. to share modern technology in antiterrorist engagement. Pakistan needs night-vision equipment, jammers that can knock out FM radio transmissions by the terrorists, and a larger, modernized fleet of helicopter gunships for ground support in the massive sweeps that are necessary to contain, repel and destroy the enemy.

Yet Washington has been reluctant to share this modern equipment, and to train our military in antiterrorism techniques, because of concerns that these systems could be used against India. Such concerns are misplaced. Pakistanis understand that the primary threat to our homeland today is not from our neighbor to the east but from the Federally Administered Tribal Areas (FATA) on our border with Afghanistan. To meet this threat, we must be provided the means to fight the terrorists while we work on resuming our composite dialogue with India.

In the long term, Pakistan's security will be predicated on Pakistan's economic viability. That is the central thrust of the Kerry-Lugar legislation currently before Congress, which would establish a 10-year, multibillion dollar commitment to Pakistan's economic and social system. It is also manifest in the Regional Opportunity Zone legislation currently before Congress that would open U.S. markets to products manufactured in Afghanistan and Pakistan's FATA region. An economically prosperous Pakistan will be less susceptible to the ideology of international terrorism -- and it will become a model to a billion Muslims across the world that Islam and modernity under democracy are not only compatible, but can thrive together.

Mr. Haqqani is Pakistan's ambassador to the United States.

North Korea is once again provoking an American president

No More Bribes. WaPo Editorial
North Korea is once again provoking an American president.
WaPo, Wednesday, April 29, 2009

NORTH KOREA'S campaign to win attention and favors from the Obama administration continues to escalate. Over the weekend the regime announced that it had resumed the reprocessing of plutonium for nuclear weapons at its Yongbyon nuclear facility, having previously ejected U.N. inspectors. Quite possibly the claim was false: Experts estimate that it would take months at least to restart the reprocessing facility, and up to a year to turn on the main reactor. In any case, North Korea's capacity to add to its current arsenal of half a dozen bombs is limited -- perhaps one warhead a year.

Probably that's why the regime further upped the ante by declaring that two American journalists it is holding would be put on trial. The two women, Laura Ling and Euna Lee, were arrested March 17 along North Korea's border with China, most likely on the Chinese side. Working for San Francisco-based Current TV, they were investigating the issue of North Korean refugees in China -- including the underreported scandal of the trafficking of North Korean women. No doubt Pyongyang realizes that live hostages are better than a crumbling nuclear facility; it surely took note when Iran, which has received loads of attention from the new American president, put American journalist Roxana Saberi on trial this month.

While experts endlessly debate Iran's intentions, those of dictator Kim Jong Il aren't hard to figure. He would like the Obama administration to engage his regime in bilateral talks -- excluding South Korea, Japan and other U.S. partners -- and then offer it economic and political bribes in exchange for North Korea releasing the U.S. hostages and shutting down Yongbyon again. Mr. Kim has already succeeded in selling a Yongbyon closure to two U.S. presidents, Bill Clinton and George W. Bush; why not, he must reason, try for a three-peat? Unfortunately, the Obama administration's part-time envoy for North Korea, Stephen W. Bosworth, has already signaled that Pyongyang's crude strategy might work by publicly offering bilateral talks along with "incentives" and by suggesting that the six-party negotiations including U.S. allies will be downgraded.

The Case for Compensating Live Organ Donors

The Case for Compensating Live Organ Donors. By Jennifer Monti
CEI, April 23, 2009

Conflicting opinions on the ethics of organ donation have existed as long as organ transplantation has been medically feasible. Eligibility requirements, reason for transplant, and international organ tourism continuously resurface as difficult medical policy and ethics issues. One issue about which there is little dispute is demand for organs far exceeding the supply of donors. Demand for kidneys exceeds the current supply of deceased donor organs and altruistic donors. Approximately 73,000 people sit on the waiting list for a kidney — 18 of them will die by tomorrow and 6,000 more patients join the list every year. By 2010, over 100,000 Americans will wait for a kidney donation. A kidney transplant in the United States generally requires a five-year wait.

The development of a transparent, regulated market for live organ donation is currently prohibited by the National Organ Transplant Act of 1984 (NOTA), which imposes criminal penalties of up to $50,000 and five years in prison for any person who “knowingly acquire[s], receive[s], or otherwise transfer[s] any human organ for valuable consideration for use in human transplantation.”

The establishment of a transparent, public market to permit the sale of organs from live donors will transform organ procurement from a lengthy, stressful, medically damaging waiting game into a safer, more efficient, routine, life-saving process. Such a market would have both economic and moral merit; it would deliver more and better organs at less cost than alternative options, and will result in more lives saved.

A model of direct payment for organs is available in the experience of Iran, which has allowed compensation since the late 1980s. Singapore plans to introduce direct compensation in 2009. What can be learned from a study of this process and its potential role in the modern American medical landscape? The deliberate choice to rely on altruism has been unsuccessful and fails to reflect the advances that have been made in transplant techniques. Technology and success rates have improved; why has policy remained largely unchanged? The tide, however, is beginning to turn. Individual states are experimenting with indirect payment systems to increase the number of live donors.

Moral outrage ought to be directed not at the tension between markets and altruism, but at the needless loss of life as transplant waiting lists continue to grow. In that spirit, this paper offers two policy proposals to support the development of payment systems — both direct and indirect — for procurement of organs. The most expedient route to a transparent regulated market requires a repeal of section 301 of the National Organ Transplant Act of 1984.

[Full study available in the link above.]