Foreign policy

Over the last decade, Wall Street has become an important foreign policy actor in its own right, almost as important as the lobbyists on K-Street and the White House on Pensylvania Avenue. The ebb and flow of capital has been a decisive international force in determining the fate of nations - most recently illustrated in the cases of Greece and Ireland. As an aide to President Clinton once said: in a second life he would like to come back as the bond market. But Wall Street has influenced foreign policy in a deeper way too: by changing the way that successive US administrations see the world. Not by focusing on the bottom-line. International relations cannot be reduced to cost/benefit analyses.

Reading the British press - or even listening to some ministers - you would be forgiven for thinking that the only obstacle preventing Middle East peace is Israeli obstinacy and Benjamin Netanyahu's unwillingness to force his political allies - like Shas - to the negotiating table. But, as always, things are a bit more complicated than the newspaper headlines would suggest. From Israel's position, the region is looking increasingly hostile. Talk of a war in Lebanon with Hezbollah persists. In Syria, President Assad looks less interested in a rapprochement than he has done for years.

Admiral Lord West’s intervention was most striking in its language. He promised that a ‘national humiliation on the scale of the loss of Singapore’ would ensue unless his advice was heeded. Writing in the Times (£), Sir Menzies Campbell notes West’s seething tone and concludes that his frustration was the product of a review of defence resources, not strategy. At no point, Campbell says, did the government ask ‘what sort of country do we want to be’ and plan accordingly. Campbell continues: ‘Is Britain ready now or likely to be ready to go to the aid, alone or with allies, of a nation that becomes the target of aggression, as we did in Sierra Leone and Kosovo?

The world is undergoing a permanent shift of power from West to East, with China being the biggest beneficiary and middling states (like Britain) likely to be the biggest losers. The government may, in the words of William Hague, reject any kind of strategic shrinkage. But if China's economy continues to grow at even half the rate it has developed until now, Britain will end up looking small no matter what policy it pursues. What is the best way to deal with a country like China, which on current projections, will have a larger economy than the United States by 2050? How best to position Britain if the US and China abandon peaceful co-existence, and, as the FT's globe-trotter Gideon Rahman predicts in his new book Zero-Sum World, begin to fight?

Yesterday saw an outbreak of Yeminitis, with Westminster focused on Osama Bin Laden’s ancestral home after the foiled bomb plot. To CoffeeHouse readers, this will come as no surprise. Last year, the Spectator prophesised that Yemen would be the “sleeper issue” of 2010. And so it has proved. But what have successive British governments been doing since the threat began to grow? UK policy towards Yemen is an exemplary case of cross-government cooperation. Rarely do the FCO, DFID and the MoD collaborate as closely as they do over Yemen. Alan Duncan, now a Minister for International Development, has taken a personal interest in the country, flying to Sana'a earlier in the year and drawing on his network in the Gulf to engage Yemen’s leadership.

Russia and Nato are now allies, or birds of a feather at least. The Independent reports that the twentieth century’s opposed spheres will work together for stability in Afghanistan. The attendant irony is blissful. Two years ago, machismo raged between Nato and Russia over Georgia. Why the sudden accord? There are two schools of thought, both relating to the East’s inexorable rise. Russia can no longer determine Central Asia of its own accord: China co-opted the Shanghai Cooperation Organization, a long-time pillar of Russian power in Asia, to condemn Russia’s recognition of South Ossetia and Abkhazia - a sign, to Russian eyes at least, of China's creeping influence in Central Asian politics.

Wikileaks is the story of the day. The Guardian has extensive coverage of unsubstantiated allegations made by unnamed Iraqis. That is not to prejudge the revelations, just to provide balance against the sensational headlines before proper investigations called for by the UN. In addition to the alleged atrocities and cover-ups, Wikileaks’ disclosures support what Blair and Bush said and maintain: Iran incited dissidence to exploit instability. In fact, it is still doing so, despite the Obama administration’s protests to the contrary. The New York Times has eviscerated Biden and Obama this morning.