big bets and black swans a presidential briefing book

7/29/2019 big bets and black swans a presidential briefing book

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Policy Recommendations for President Obamas Second Term

by the Foreign Policy Scholars at Brookings

January 2013

&BIG BETSBLACK SWANSA PRESIDENTIAL BRIEFING BOOK


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Policy Recommendations for President Obamas Second Term

by the Foreign Policy Scholars at Brookings

Edited by Martin Indyk, Tanvi Madan, and Thomas Wright

Project Design by Gail Chale

January 2013

&BIG BETSBLACK SWANSA PRESIDENTIAL BRIEFING BOOK


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I N T R O D U C T I O N

President Obama begins his second term at a critical moment in world aairs. Administration o-

cials have already generated internal policy recommendations or dealing with the many challenges

that an unstable world, much o it in turmoil, will present the president in the next our years. In the

Foreign Policy Program at Brookings, we decided to mirror this process rom an outside perspective,

taking advantage o the diversity and depth o our scholars expertise to generate innovative policy

recommendations or the President.

What ollows is a series o memos designed to present President Obama with a suggested to do

list or the major issues o our time. We divided these memos into Big Bets and Black Swans. The

Big Bets are places where the Foreign Policy scholars believe the President should consider invest-

ing his power, time and prestige in major eorts that can have a transormational impact on America

and the world, as well as on his legacy. The Black Swans are those low probability but high impact

events that can trip the President up and divert him rom his higher purposes; events so dramatically

negative that he will need to take steps in advance to avoid them.

The Foreign Policy Program is very grateul to Brookings Trustees David Rubenstein and Ben Ja-

cobs or their generous support o this project. Brookings scholars maintain the highest standards

o quality and independence in their research, analysis and prescriptions. This publication is solely a

refection o their individual views.


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The Presidential Brieng Book

BIG BETS

A Plastic Momentby Martin Indyk and Robert Kagan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Bringing Beijing Back Inby Kenneth Lieberthal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The India Investmentby Tanvi Madan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Turning Tehran by Suzanne Maloney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

The Road Beyond Damascus by Michael Doran and Salman Shaikh . . . . . . . . . . . . . . . . . . . . . . 19

Opening to Havana by Ted Piccone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Energy and Climate: From Black to Gold to Greenby Charles Ebinger and Kevin Massy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Free Trade Game Changerby Mireya Solis and Justin Vaisse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Calming the Eastern Seas by Richard Bush, Bruce Jones and Jonathan Pollack . . . . . . . . . . . .37

New Rules of War by Peter W. Singer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Right-Sizing Defense Cuts by Michael OHanlon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Another New START by Steven Pier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

BLACK SWANS

China in Revolution and War by Cheng Li . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Eurozoned Out by Justin Vaisse and Thomas Wright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Confrontation over Korea by Jonathan Pollack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Chaos in Kabul by Vanda Felbab-Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Revolution in Riyadh by Bruce Riedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Camp David Collapse by Shadi Hamid and Tamara Wittes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Ramallah Unravels by Khaled Elgindy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

The Big Thaw by Elizabeth Ferris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

THE AUTHORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92


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A PLASTIC MOMENT


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As you ente you second tem, the state of the wold is emakably

unsettled. The leading powes ae beset with economic cises o ae in

vaious states of political tansition o gidlock. The Middle East is in a

state of political upheaval. Tensions ae ising in East Asia. The wolds

institutions, whethe the United Nations, the G-20, o the Euopean Union,

ae weakened and dysfunctional, and seem to be pulling apat in the absence

of conceted leadeship. The libeal wold ode established afte the

Second Wold Wa chaacteized by a fee, open intenational economy, the

spead of libeal democacy, and the deepening of libeal, peaceful noms

of intenational behavio is faying at the edges.

It is a time of uncetainty and instability fo the wold, and fo the

United States; but it is also a moment of oppotunity. Almost a centuy

ago, when the United States enteed the Fist Wold Wa, the philosophe

John Dewey obseved that the wold was at a plastic junctue. He and many

other progressives believed that the unsettled world of their day oered

the United States and the othe democatic powes a chance to emold the

intenational system into something bette. Ameicans walked away fom that

challenge and would embace it only afte a second catastophic beakdown

of wold ode. Today, we ae at anothe plastic junctue. Will Ameica

tun inwad and away fom an inceasingly messy wold? O will we launch

a new eort to strengthen and extend, both geographically and temporally,

the libeal wold ode fom which Ameicans and so many othes aound the

world have beneted?

The answer depends very much on how you choose to make use of your next

four years in oice. Unfortunately, there is not a lot to show for yourrst four years. In many respects, this is understandable. The economic

cisis that you inheited made steady concentation on foeign policy moe

challenging. The two was you inheited in the Geate Middle East had

been bungled by you pedecesso and cost the United States dealy, both

mateially and in tems of eputation. You began to estoe that eputation

through your own global appeal and the eorts of your Secretary of State.

TO: Pesident Obama

FrOM: Matin Indyk and robet Kagan

DATE: Januay 17, 2013

BIG BET: A Plastic Moment to Mold a Libeal Global Ode

M E M O R A N D U M

BIG B ETS AND BLACK SWANS A President ia l Br ie ing Book

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2

You have done especially well in raising Americas prole and deepening our

engagement in East Asia. Howeve, so fa it is had to list many duable

accomplishments. Most of the majo challenges ae much as you found them

when you took oice, or worse: from the stalled Middle East peace process

and tumoil in the Aab wold to Ians continuing mach towad a nuclea

weapons capability to Chinas inceasing assetiveness in East Asia. Youundestandable peoccupation with eelection has left much of the wold

wondeing: Whee is the United States?

Fo all the talk of Ameican decline fom cetain quates, the United

States is actually well-positioned fo a new ea of global leadeship. If

you can strike the diicult but necessary compromise with Congress that

begins to address Americas scal crisis, the United States could well

emege as among the wolds most successful and dynamic economies. Ameica

enjoys unique advantages in the intenational economic system: a natual

gas revolution that promises soon to make it a net-exporter of energy, asupeio univesity education system and an open and innovative economy

that continues to attact the wolds best and most ceative young minds.

On the intenational stage, the United States emains the only wold powe

with global each, uniquely capable of oganizing conceted intenational

action and seving as a souce of secuity and stability to nations and

peoples facing theatening neighbos.

Recommendations:

How then to take advantage of this plastic moment to mold the changing

global ode to best seve the United States and humankind? We believe

that in the next four years you will have a unique opportunity to shape a

multilateral global order that will continue to reect American liberal

values and pogessive ideals. This will equie you sustained attention,

pesonal engagement, and diection of the national secuity agencies of the

U.S. govenment. The ewad could be a tansfomational and lasting impact

on the international system, which will redound to the benet of future

geneations.

In the secuity ealm, you pimay big bet must be to pevent Ian fom

obtaining a nuclea weapons capability. It is had to imagine a bigge

blow to the intenational secuity ode than the collapse of the non-

polifeation egime that would follow Ians successful acquisition of

nuclea weapons. Convesely, if you can succeed in achieving meaningful

cubs on Ians nuclea weapons aspiations and einfoce this by

negotiating anothe nuclea ams eduction ageement with Moscow, you


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3

will do much to stengthen non-polifeation and nuclea disamament as a

fundamental pilla of the new libeal global ode.

In East Asia, you pimay big bet should be on pomoting a egional ode

that encouages China to develop in a peaceful and poductive diection.

You have aleady fomulated a cedible stategy; now you will need toencouage Chinas new leadeship away fom geate eliance on militay

powe in favo of continued economic and political development at home

and inceasing economic and political integation aboad. This will mean

continuing to deepen Ameicas Asian alliances, especially with the new

leadeships in Tokyo and Seoul; building new patneships with the nations

of the egion; and playing a majo ole in suppoting egional coopeation.

You should ensure that the rebalancing eort in East Asia goes beyond the

militay to include all aspects of Ameican powe. With India, the wolds

lagest democacy and the othe majo ising powe in Asia, you have laid

a strong foundation but the next four years will be critical in buildinga patneship that can seve as anothe pilla of the emeging libeal

geopolitical ode.

Stengthening the libeal economic ode needs to be a highe pioity

in you second tem. Concluding fee tade ageements with the Asia-

Pacic region and Europe would boost U.S. exports and global economic

ecovey while pomoting a boade consensus on the necessay standads

to pomote fee tade and investment in the global economy. Building the

infrastructure and putting in place the policies necessary to export

Ameican natual gas to key allies and patnes, especially in Euope and

Asia, will help educe thei dependence on russia and Ian. Leveaging

Americas hydrocarbon bonanza to encourage more eective eorts to counter

climate change can help pomote a geene global ode.

Strengthening the liberal political order will require increased eorts to

enlist the suppot of emeging democacies. Nations like Bazil, Indonesia,

Mexico, South Africa and Turkey have become increasingly inuential

economically. But they are struggling to nd their identity as democratic

powes on the intenational stage and, in some cases, ae punching below

thei weight. Some ae difting towad a woldview that actually undemines

the libeal natue of the global ode. At the same time, poweful

autocacies like russia have staked out positions at the United Nations and

elsewhee that ae antithetical to libeal values on the issue of Syia,

fo instance. These autocatic powes need to undestand that if they

continue thei obstuctionism, the democatic intenational community will

inceasingly move on without them and they will be isolated.


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4

In your rst term, you were reluctant to make democracy a centerpiece

of you foeign policy. Howeve, with evolutions in the Aab wold and

political changes in Buma that you have suppoted, it is time to place the

United States once again at the vanguad of the global democacy movement.

This is not only because democacy is consonant with Ameican values. In

the Middle East, in russia and pats of Easten Euope, just as in Bumaand the est of Asia, the United States has stategic, political and

economic inteests in the spead of stable, libeal democacies. Although

democacies can be factious, and in times of tansition unstable, in the

end they ae moe eliable suppotes of the libeal wold ode which

Ameicans seek. The United States needs to do moe in suppot of the

diicult struggle for democracy in the Arab world too, including holding

the Egyptian Muslim Bothehood govenment to democatic standads, and

more actively leading the eort to shape a positive democratic outcome in

Syia and peventing it fom descending into chaos o becoming a haven fo

jihadists and Iranian proxies. Americas relationship with Russia needsto be shaped by stategic ams ageements as well as by espect fo the

desies and aspiations of the russian people. You should wok to stee

russia in a positive diection, stengthening whee you can those foces in

russian society that favo economic and political modenization.

Finally, the United States needs a global stategy. It cannot focus on one

citical egion to the detiment of othes. While you wee absolutely ight

to increase American attention to the vital region of the Asia-Pacic, the

United States cannot and should not educe its involvement in the Middle

East o in Euope. Since the end of the Second Wold Wa, the United States

has played the key secuity ole in all thee egions at once; thee is

no safe altenative to that. This is paticulaly tue in the Middle

East, whee many nations look to the United States fo both potection

and assistance. But even Euope deseves continued Ameican attention and

involvement. Eveything the United States wants to accomplish in the wold

can be bette accomplished with the help and coopeation of its Euopean

allies.

Conclusion:

At the end of Wold Wa II, the United States led the way in shaping an

intenational political, economic, and secuity ode which, fo all its

aws, served the American people, and much of the world, remarkably well.

Much is changing in todays wold, but the basic equiements of Ameican

foeign policy have not. You geat challenge is to seize this plastic

moment and apply your leadership to the preservation and extension of the

libeal global ode fo futue geneations.


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BRINGING BEIJING BACK IN


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TO: Pesident Obama

FrOM: Kenneth Liebethal


BIG BET: Binging Beijing Back In

You ebalancing stategy towad Asia has poduced desiable esults,

including convincing China that the United States is seious, capable

and detemined to be a leade in the egion fo the long tem. But this

stategy is also geneating dynamics that inceasingly theaten to

undemine its pimay goals. It is theefoe time to ebalance judiciously

the ebalancing stategy, and Chinas leadeship change povides you with

an oppotunity to do so.

Your objective should remain an Asia that, ve-to-10 years from now, will

contibute substantially to global and U.S. economic gowth and will

mitigate secuity dilemmas that dain Ameican teasue and educe the

egions economic dynamism.

Unfotunately, at this point you cuent stategy is in dange of actually

enhancing athe than educing bad secuity outcomes. Most notably,

teitoial disputes have become shape, and Beijing is lagely opeating

under the false assumption that the are-up of these disputes reects an

undelying U.S. stategy to encouage Japan, Vietnam, and the Philippines

to push the envelope in the hope that Chinese esponses will lead those

counties and ASEAN to become moe united and dependent on the United

States.

Welcome mats fo ou inceased secuity engagement ae now being laid out

aound the egion. This is satisfying in the shot tem but caies longe-

tem isks. U.S. fiends and allies ae encouaging the United States to

enhance its secuity commitments, but they ae also tying thei economic

futues to Chinas gowth. The United States is thus in dange of havingAsia become an ever greater prot center for China (via economic and

trade ties) and a major cost center for the United States (via security

commitments), especially if the Trans-Pacic Partnership (TPP) does not

develop as hoped.

M E M O R A N D U M


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Recommendation:

To shift this tajectoy, you should take the initiative this sping to

solidify and stengthen the coe bilateal elationship with China while

continuing to povide eassuances to allies and patnes of U.S. staying

powe in the egion. Nobody in Asia wants to have to take sides between theUnited States and China, and none any longe fea a G-2. All seek wise

management of U.S.-China elations. An initiative that impoves U.S.-China

elations and contibutes to egional stability can, theefoe, potentially

enhance U.S. position thoughout Asia.

Background:

Chinas leadeship change pesents an oppotunity. Xi Jinping feas

seious challenges to the Chinese system if he cannot impove elations

with a population that has become inceasingly vocal, citical andnationalistic. Xi knows he must signicantly alter a development model that

is exacerbating social and political tensions, even as the rate of growth

slows.

Ealy indications ae that Xi is moe open and politically agile than was

Hu Jintao, but his specic priorities and capacity to eect change are

not yet known. He may take a stong stance on egional issues to signal

Chinas detemination o he may welcome a chance to tamp down intenational

tensions to focus moe on domestic tansfomation. You should give him a

clea option to pusue the latte appoach.

Specically, you should oer Xi a game-changing opportunity to put U.S.-

China elations on a moe pedictable long-tem footing that potects

citical Chinese equities but also equies that China engage moe

positively on key bilateal, egional and global issues. Any U.S. policy

that moves the needle on Chinas behavio will be welcome thoughout Asia.

Beijing is bueaucatically incapable of taking the initiative to suggest

the ideas ecommended below. Xi will want the United States to put cads on

the table to which he can then espond and then the eal negotiation will

begin. That lets you shape the opening agenda.

The strategy is to oer Xi full good-faith eorts to deal with key

iitants,provided China works with your administration on the areas of

major U.S. concern indicated below. You can do impotant things to change

Beijings calculus of American intentions while also advancing specic U.S.

inteests.


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I ecommend that you engage with Xi Jinping ealy on in ode to establish

a stong pesonal elationship with him. Use this to popose woking out

a fou-yea famewok fo U.S.-China elations that establishes a solid

foundation of trust for the next one-to-two decades and provides substance

to Chinas manta of a new type of majo powe elationship. Suggest that

at least fou times pe yea you and he hold half-day summits not one-hou bilateals on the magins of multilateal events. Substantively, you

might aise the following fo consideation:

The current Strategic & Economic Dialog (S&ED) is structurally

vey awkwad fo China and has neve poduced a sustained dialogue

acoss the economic and foeign policy sphees. Popose that it be

repackaged into a political and military (pol/mil) dialogue that

is sustained (rather than a brief annual meeting) and a separate

economic dialogue that closely paallels the Stategic Economic

Dialogue that fome Teasuy Secetay Paulson led.

For the pol/mil dialogue, suggest an enhanced Strategic Security

Dialogue (SSD) that convenes four day-long meetings a year, with each

side establishing a woking goup fo ongoing liaison. The Stategic

Security Dialogue, which met briey twice under the S&ED, is the only

fomal U.S.-China dialogue that bings togethe militay and foeign

policy leades in the same oom. At least two of the enhanced SSD

meetings should exclusively address overall U.S. and Chinese security

postues in Asia a decade hence basic thinking, petinent doctine,

core concerns/interests, and areas where mutual restraint may benet

both sides. The United States has neve held such discussions with

China, and they may be citical fo building stategic tust.

U.S.-China military-to-military (mil-mil) relations lag far behind those

of thei civilian countepats. Suggest seveal initiatives to elieve

some of the stain in that sphee. The PLA sees estictions on inviting

them to military exercises as indicative of hostile U.S. expectations

of the elationship. You can indicate the possibility you will use you

waive authoity to pemit PLA paticipation in vaious futue U.S.-

organized military exercises (Defense Secretary Panetta has already done

this for RIMPAC 2013). You might also oer serious discussions on militarycooperation to assure better the ongoing ow of reasonably-priced oil from

the Pesian Gulf.

relatedly, maitime teitoial disputes ae feeding Chinas wainess about

U.S. strategy in the region. You can oer to clarify authoritatively our

principles to reduce Chinese suspicions. Such clarication would make clear

that: The United States will take no position on soveeignty in teitoial


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disputes to which it is not a paty; the United States suppots an ASEAN

collective negotiation with China on a Code of Conduct in ode to educe

the potential fo teitoial disputes to escalate, but does not seek

Chinese negotiation with all of ASEAN on esolving teitoial disputes;

and the United States will adhee to its coe pinciples of peaceful

management of disputes, freedom of navigation (including in ExclusiveEconomic Zones), and normal commercial access for American and other rms

to maitime esouces.

You can suggest vaious initiatives to enhance economic coopeation.

These might include, for example, intensifying negotiations for a U.S.-

China Bilateal Investment Teaty; inviting China to engage on the

TPP when Beijing feels it is able to do so; completing the yeas-long

technology export policy review, which can help U.S. business while also

emoving seious iitants in U.S.-China economic elations; diecting

the Depatment of Commece and the U.S. Tade repesentative to establisha consultative arm to help Chinese rms understand the pertinent U.S.

investment laws and egulations; and indicating U.S. inteest in woking

with China at the Clean Enegy Ministeial to develop coopeative ways fo

majo emittes to impove thei capacity to deal with climate change.

The above highlights the scope and some of the content of what you might

indicate to Xi that you ae pepaed to move fowad on as a package, if Xi

will put together a comparable level of eorts on the following issues:

Mitigation of tensions ove maitime teitoial disputes

More extensive U.S.-China mil-mil engagement and discussion of long-

tem stategic postues in Asia

Noth Koeas nuclea and missile pogams

Opening additional areas of the Chinese economy (especially in the

sevice secto) to Ameican investment

Stengthening enfocement of intellectual popety potections and

engaging on cybe-secuity theats

Joint initiatives on climate change

Conclusion:

Xi may be unable or unwilling to respond signicantly to your oer. But

taking this wide-anging initiative ealy on costs little o nothing, since

you would be seeking to begin a ecipocal negotiation, not to commit the

United States to unilateral actions. The payo is potentially very large in

eshaping Chinese and Ameican behavio in ways that will make ou oveall

ebalancing stategy a long-tem egion-wide success.


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THE INDIA INVESTMENT


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TO: Pesident Obama

FrOM: Tanvi Madan


BIG BET: The India Investment

You administation has made the coect judgment that the ise of India

and its increasing role and inuence in the international system benet

U.S. inteests. This assessment has been aticulated epeatedly and enjoys

bipatisan suppot. While Indian policymakes have not been as vocal,

thei actions have indicated that they too ecognize the impotance of

the bilateal elationship. U.S. elations with India ae boade and

deepe today than they have eve been. The dange to the elationship is

that it will suer from inattention on the Indian side, because of the

lack of bueaucatic and political capacity, and policymakes domestic

peoccupations; on the U.S. side, because of the lack of a cisis o

a single high-prole initiative focusing bureaucratic and political

attention, and othe moe-pessing domestic and intenational concens.

Futhemoe, the etun on the U.S. investment in India will likely only

manifest itself in a majo way in the medium to long tem. That, combined

with political and economic cicumstances in India, might lead to India

fatigue in the United States.

Recommendation:

You have aleady made a bet on India. In you second tem, as you ty to

shape the emeging global ode in a libeal diection, Indias ole will

become eve moe impotant because of its size, geostategic location,

economic potential and democatic institutions. Accodingly, you need to

ensue that you administation stays invested in that bet and pehaps even

ups the ante. In many instances, it is India that needs to put moe chips

on the table. Howeve, thee ae steps that the United States can take to

help increase the momentum, as well as shape the context in which Indiandecisions ae made. These include woking with Indian countepats to

implement existing agreements, conclude current negotiations, and explore

new aeas of collaboation, in paticula in the enegy and education

sectos. You administation should also signal sustained commitment to

the elationship though continued consultations, high-level visits and

timely personnel appointments. Active eorts are also needed to encourage

M E M O R A N D U M


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movement on the Indian side, incease public outeach and facilitate the

consolidation and ceation of constituencies fo the elationship beyond

govenment.

Background:

The elationship with India has been one of the little-healded foeign

policy successes of your rst term. The momentum, however, will not sustain

itself. Along with the dange of dift, thee is likelihood that bilateal

dierences rather than achievements will take center stage. Past irritants

ae likely to e-emege. You administation and the Indian govenment

successfully navigated the ticky Ian sanctions-Indian oil impots issue

last year. However, if the situation with Iran worsens and conict breaks

out, Delhi and Washington might nd themselves on opposite sides. The

U.S. relationship with Pakistan, in the context of the withdrawal from

Afghanistan, might create another area of potential dierence. The UnitedStates has ecently encouaged Indian involvement in Afghanistan and a

U.S.-India-Afghanistan tilateal is in place. Thee ae aleady concens

in India, howeve, that the U.S. desie to assuage Pakistan to facilitate

the Afghanistan withdawal might lead to a evesal of that position. Thee

ae also concens that the United States will be less likely to pessue

Pakistan on counte-teoism issues elated to India. Any enewed dive

for the Comprehensive Test Ban Treaty (CTBT) might spark bilateral strain

as well. U.S.-India elations have changed since the debate ove the CTBT

in the 1990s. But the CTBT issue could once again lead to contention

between the two counties, which will not be esticted to the pivate

sphee. Finally, as you caefully calibate the elationship with the new

leadeship in Beijing, domant Indian concens about a G-2 o Sino-U.S.

condominium will also likely aise again.

Avoiding drift and the dominance of dierences will necessitate getting

more deliverables from the numerous U.S.-Indian oicial dialogues. This

means implementing ageements that have aleady been eached. In some

cases, the majo obstacles to implementation lie on the Indian side the

civil nuclear agreement is one such example but there are others where

the United States needs to act, including in the defense and technology

areas. The expeditious completion of negotiations on other agreements

would also help, including those elated to bilateal investment, as well

as defense technology and tade. These ageements have the potential

to ceate oppotunities fo the U.S. pivate secto to invest in India

and geneate jobs hee at home. It can also ceate new constituencies

fo the elationship, including at the state level, in both counties

and demonstate that the United States is inteested in stengthening


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Indias economy and secuity, as well as those of the United States. New

assessments will be needed of othe aeas in which thee can be substantive

cooperation: space, maritime, and cyber-security oer opportunities. The

United States and India should ty to move fom consultation in these

aeas to joint initiatives. An updated feasibility study on a fee tade

ageement with India could also claify the desiability of moving on thatfont.

While diplomatic, defense and economic engagement get the most attention,

coopeation elsewhee could bea fuit, paticulaly in the enegy and

education sectors. Your administrations eorts should include urging

Indian efom of its highe education secto to allow the paticipation

of Ameican univesities. Meanwhile, eseach collaboation, academic

exchanges, and university linkages should be facilitated, and you should

encouage India to eview visa pocedues to facilitate moe Ameican

citizens studying and woking thee. U.S. immigation efom that includesaddessing the question of the mobility of high-skilled wokes could

stengthen the U.S. hand in encouaging these changes. On the enegy font,

the administration should work to allow the export of natural gas to India,

while explaining that this is not the major solution that many in India

seem to think it is. Futhemoe, thee should be additional pogess on

coopeative clean enegy initiatives and the opening up of the enegy

infastuctue secto in India to geate U.S. investment.

Progress in these areas will require diicult domestic decisions for the

Indian govenment. Yet ecent statements and actions fom Delhi have

shown that it ecognizes the magnitude of the poblems and the need fo

foeign investment and coopeation. Pogess on these issues would also

encouage engagement fom state govenments, copoations, civil society

and individuals on both sides. Finally, while oering opportunities for the

Ameican people and copoations, these initiatives would also help build

physical and human capacity in India, and demonstate U.S. investment in

Indias futue.

The quality of bilateal inteaction will also need to impove futhe.

As pesonnel change on the U.S. end and, potentially, on the Indian

side, thee is a need to ensue that the level of tust and woking-

level coopeation that has been established is not lost. The elationship

equies White House attention and coodination, which would be facilitated

if an oicial responsible for India policy is appointed. Furthermore,

India-related positions across government need to be lled speedily and not

left vacant as they were in some high-prole instances in the rst term.

This is especially impotant since post-Afghanistan withdawal and with


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12

the possible consolidation of South Asia bueaucacies, thee is a dange

that India will evet to being seen in the govenment as just anothe

South Asian county. Indias involvement in the est of the wold is only

going to incease. If the United States does not continue to engage with

it on egional and functional issues outside South Asia, it will miss an

oppotunity to coopeate and incease the possibility that India willhinde U.S. inteests.

Thee is a continuing need fo attention and commitment at senio levels.

You could make evident you pesonal inteest by visiting India duing

your second term, making you the rst U.S. president to visit India

twice. A ecipocal visit fom the Indian pime ministe should also be

encouaged. Such visits would be especially impotant if thee is a change

in leadeship at the top in India.

An oveaching challenge is how to facilitate movement with Indiawithout stepping on Indian sensitivities and becoming an issue in Indian

domestic politics. Fist, you administation should continue to shae

with the Indian govenment you concen that India fatigue will make

futhe pogess on ou end hade. India will need to help cultivate

constituencies in the United States that suppot the elationship. In

cetain instances, pessue will be called fo; ideally, it should be

applied pivately. Second, though a moe vigoous and consistent public

outreach eort in India, your administration needs to explain the content

and objectives of its policies and ageements, as well as how India

benets. If the United States does not ll the vacuum, others will do so

with misinformation or disinformation. Such an eort should also engage

citics and, while keeping the sitting govenment infomed, opposition

leades.

Conclusion:

You will need to manage the dierences that the United States will continue

to have with India and not underestimate the diiculties Indias rise might

create for some U.S. interests, for example at the U.N. or in global trade

talks. Howeve, you judgment that the United States and India ae natual

partners and that the benets of Indias rise outweigh any costs remains

sound. But the elationship needs continued nutuing. It also equies

sustained buy-in fom legislatos, copoations and individuals who have

been key in diving the elationship; moe ecently thei suppot has been

agging. Importantly, India needs to do its part too. It is likely that

it will. India is concened about an economic slowdown and the secuity

situation in its neighbohood, especially involving China and Pakistan.


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13

It also continues to aspie to a geate ole on the wold stage. And

Indians ealize that the United States can play a citical ole in helping

India achieve its security and economic goals to an extent that perhaps no

othe county can.


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TURNING TEHRAN


22/119

TO: Pesident Obama

FrOM: Suzanne Maloney


BIG BET: Tuning Tehan

The pesistent and intactable challenge of Ian pesents you second tem

with an epic threat and a historic opportunity. Despite the signicant

achievements of U.S. policy towad Tehan in the past fou yeas, Ians

evolutionay egime emains the wolds most dangeous state. Ian

continues its eorts to extend its negative inuence, iname sectarian

tensions and undemine pospects fo peace in a egion aleady beset by

instability and upheaval; its suppot fo Basha al-Assad has enabled the

Syian dictato to butalize his own people; and its gowing stockpile of

low-eniched uanium and vast nuclea infastuctue alams the wold. An

initiative aimed at resolving the Iranian nuclear crisis oers the biggest

potential payo in a game-changing foreign policy agenda. A meaningful deal

with Ian would epesent a cowning achievement fo you pesidency since

non-polifeation and nuclea disamament ae cental pillas of the global

order you are attempting to shape. The spin-o eects of a resolution

to the nuclear crisis would signicantly advance broader U.S. national

secuity inteests in a paticulaly vital egion.

Recommendation:

The following ecommendations ae poposed as a stating point fo a new

diplomatic initiative:

Quickly pusue a stop-and-swap deal to end Ians 20 pecent

enichment;

With suppot fom U.S. allies, develop a compehensive poposal of

sequenced Ianian nuclea concessions and sanctions efom;

Press for an intensied schedule of negotiations with Iran, comprised

of an intelinked pocess of multilateal and bilateal dialogues.

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Background:

A binding agreement that rmly constrains Irans nuclear ambitions would

safeguad the wold fom the devastating implications of an Ianian nuclea

capability, as well as the catastophic costs of a militay stike against

the pogam. It would eassue Ameicas fiends and allies in the egion,and enable them to addess the pofound secuity challenges that confont

them close to home, such as the domestic pessues fo efom in the

Aab monachies and the fozen peace pocess. It would end the cyclical

poclivity fo binksmanship on all sides that inevitably spooks the oil

makets and theatens the global economic ecovey. And a cedible nuclea

bagain with Ian would bolste the tatteed non-polifeation egime by

binging a would-be ogue back fom the bink of weapons status.

Fo these easons, you should etun to whee you began on Ian with a majo

diplomatic initiative. The conditions ae ipe today than at any time sincethe 1979 evolution fo making meaningful headway against the most dangeous

dimension of Ians foeign policy. At a minimum, you appoach the challenge

of Ian with fou distinct advantages ove the situation fou yeas ago:

Thanks to the rigorous sanctions, Iran is experiencing the most

sevee economic pessue of its post-evolutionay histoy. Tehan

has aleady lost tens of billions of dollas, and the impact of the

estictions poduct shotages, ising unemployment, spialing

ination, and the collapse of the currency has been felt at every

level of Iranian society. The mounting nancial toll, as well as

the tangible eosion of Ians intenational statue, has pompted

the rst real debate in years among Iranian power brokers on the

paametes of Ians nuclea policy. It emains unclea whethe

Ians supeme leade can countenance a compehensive shift in the

nations nuclear course, but the historical record conrms that

intense economic pessue induces policy modeation in Ian, albeit

only gradually and tfully.

The sanctions have been facilitated by unpecedented intenational

coopeation on Ian, especially among the wolds majo powes,

so that a constructive and durable partnership on Iran now existswith obust consensus on the cuent appoach. Afte decades of

eluctance, Euope is moe than willing to get tough on Tehan, and

Moscow and Beijing have stepped up to the plate as well. The embace

of punitive measues by some of Ians taditional tading patnes

has helped to bing aound the est of the wold, including many

states that have histoically hedged, such as the Gulf sheikhdoms.


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16

Today, the longstanding, often butal Ianian powe stuggle is

eectively irrelevant to the prospects of a deal with Washington.

Thee is no longe any doubt that the ultimate authoity lies with

supeme leade Ayatollah Ali Khamenei. The intenal unest spaked

by the impobable 2009 landslide eelection of Mahmoud Ahmadinejad

has esulted in the futhe consolidation of contol by Ians had-lines unde Khameneis leadeship. This development is catastophic

fo the democatic aspiations of Ians citizeny, but leadeship

coheence pobably ceates a moe conducive envionment fo a policy

evesal within Ian.

Similaly, Ameican domestic politics pesent fewe constaints to a

bold initiative on Ian than fou yeas ago. The United States has

exited one costly war in Iraq and is beginning to wind down another

in Afghanistan, and thee is no appetite among the Ameican public

fo anothe militay ventue in the Middle East. The failue of the

Republican critique on Iran to gain any signicant public traction in

the 2012 pesidential campaign demonstated that Ameicans ae moe

inteested in economic ecovey than new intenational commitments.

As a esult, you can asset geate latitude in pusuing a viable

deal and pushing back on patisan pessues.

While the odds fo engaging Ian on the nuclea issue may be bette this

time around, the stakes are also exponentially higher. Irans nuclear

pogam continues to advance and many obseves ae convinced that 2013

will mark the point of no return for Irans eorts to achieve a nuclear

capability. This impats added ugency to any enewed diplomacy. In the

absence of a beakthough via negotiations, the cedibility of you Mach

2012 commitment to use foce if necessay to pevent an Ianian nuclea

weapon will be on the line.

As a esult, this time aound, thee is neithe time no utility fo a

charm oensive: public diplomacy only reinforces the ainity of ordinary

Iranians for American culture while exacerbating the paranoia of its

leadeship. And while Tehan has been signaling fo many months that it

may be open to a limited bagain addessing a naow scope of its nuclea

activities i.e. highe-level enichment intended only to fuel a eseacheacto that poduces isotopes fo medical teatments such incemental

condence building rightly prompts skepticism. Given that the regimes

legitimacy is gounded in its antagonism towad Washington, this appoach

has been thooughly discedited by thee decades of failed undetakings.


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17

Howeve, the eseach eacto is the ight place to stat, if only because

of the pesistence of its pesence in Ians own diplomatic gambits since

at least 2010 and the need to do something quickly about Ians stockpile

of 20 pecent eniched uanium. A successful stat can put moe time on

the clock fo negotiations and povide the gounds fo moe ambitious

undestandings. Thee is boad consensus among many in Washington andin Tehran surrounding the contours of a deal that satises both sides

minimum equiements. Such an ageement would pemit Ian to etain modest

enichment capabilities seveal thousand centifuges, opeating at

less than 5 percent. In exchange, Tehran would have to accept stringent

inspections and verication to provide for greater transparency about the

entire scope of the program and greater condence in the ability of the

intenational community to foesee an Ianian beakout. This should include

povisions to estict activities at Fodow, Ians undegound enichment

facility opened last yea nea the city of Qom, which the United States has

insisted must be mothballed.

To achieve this, you will have to put you cedibility on the line, and

elevate and intensify the diplomatic dialogue. You will also have to proer

sanctions elief in ode to obtain any meaningful concessions on the pat

of Tehan, despite the stategic and moal disinclination fo ewading

Ians nuclea tansgessions. The sole consistency in Ians nuclea

diplomacy ove the couse of the past 11 yeas has been its tansactional

appoach, and the egimes insistence on compensation fo any concessions

has only been stengthened by the escalation in the pice that it has paid

fo its avesion to compomise. Woking with ou patnes in Euope, russia

and China, an interagency eort should develop a persuasive package of

specic sanctions relief that is sequenced to clear actions and credible

commitments on the Ianian side. The incentives must be moe pesuasive

than the paltry oers the United States has made to date, and at least as

inventive as the sanctions themselves have poven, but any incentives must

also be povisional o apidly evesible to mitigate against Ianian ploys

and deter dissembling. In addition, you should seek to establish nancial

mechanisms to facilitate tansactions involving humanitaian activities,

food and medicine. All of this will equie ealy investments on the pat

of administration oicials in ensuring Congressional support.

Conclusion:

Thee ae, of couse, no guaantees. Ians Islamic republic is a

pesistently unpedictable state, and the animosity and distust towad

Washington uns deep among its elevant decision-makes. The sanctions

have weakened Ians economy, but consistent with 34 yeas of Ianian


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18

responses to economic pressure, they have stiened its leaderships spine,

at least fo the shot tem, and inceased its paanoia about Ameican

inteest in egime change. Moeove, the spialing civil wa in Syia

and the detemination of Ians had-lines to push back against a wide-

anging campaign of economic pessue and covet wafae may ovetake

any new diplomatic initiative, and may yet povoke a confontation thatneithe side desies. Still, the altenatives to a negotiated deal emain

pofoundly less attactive than the isks involved in pusuing one, and the

prospective payo a world released from the perennial nightmare of an

Iranian nuclear bomb is more than suicient to justify the investment of

you time and enegy on this issue. And if Tehan is unwilling to engage

in a seious fashion, you will have demonstated Ameican commitment to

diplomacy ahead of the othe options.


27/119

THE ROAD BEYOND DAMASCUS


28/119

TO: Pesident Obama

FrOM: Michael Doan and Salman Sheikh


BIG BET: The road Beyond Damascus

Syia is standing on a pecipice eminiscent of Iaq in ealy 2006. The

egime will likely fall, but the pospect now is one of a failed state that

produces a toxic culture of extremism and lawlessness. If the United States

does not take on a moe active leadeship ole, the tend towad walodism

and sectaianfragmentation will likely prove inexorable. Syria will become

a second Somalia, in the heatland of the Middle East and on the bodes of

Isael, Tukey and Jodan, the thee closest egional allies of the United

States. Convesely, though active intevention you can help ensue a moe

stable tansition to a post-Assad ode that will povide a bette futue

fo the Syian people and a stategic gain fo the United States and its

egional fiends.

In your rst term, when it came to the Syrian revolution, you wagered that

the isks of active intevention outweighed the isks of a moe cautious

appoach. Now, howeve, we believe the massive toll of civilian casualties,

the dismemberment of the country, and the intensication of the conict

along sectaian lines dictate a evisiting of you decision.

Recommendation:

To stave o disaster and play a leadership role in shaping Syrias

futue, the United States should povide lethal assistance to the Syian

opposition, foge a genuine national dialogue that includes Alawis and

Christians, and create an International Steering Group (ISG) to oversee

and lend suppot to the tansitional pocess, including the ceation of

an intenational stabilization foce to povide potection to Syian

civilians. You will need to engage diectly with Pesident Putin toovecome aleady weakening russian esistance to these essential endeavos.

Background:

A descent into chaos in Syia poses many isks to the United States. In

paticula, it ceates oppotunities fo Ian and Hezbollah to safeguad

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20

their interests. Perhaps the greatest potential benet to the United States

of the upising had been the damage that it did to the alliance system of

Ian, the stategic advesay of the United States in the Middle East.

Fo a time it seemed that Ians foothold in Syia would be washed away

naturally by the tide of events. But as the conict has deepened, Tehran

has spared no expense to make itself an indispensable partner to a numberof goups who seem destined to thive in the gowing chaos.

Secondly, the fagmentation of Syia means pepetual civil wa. Violence is

aleady developing along sectaian lines, between Sunnis and Alawis, Sunnis

and Chistians, and othe eligious communities; along inta-sectaian

lines, particularly between al-Qaeda ailiates and their Sunni nationalist

ivals; and along ethnic lines, as Aab-Kudish violence speads acoss

the countys noth. Futhemoe, this violence will incease the isk of

spillover to neighboring countries: increasing refugee ows, the growing

pesence of ival Iaqi factions inside Syia, and gowing tensions inLebanon. Othe, moe damatic foms of spillove ae looming: diect

intevention by Tukey, against the backgound of Kudish poblems, o by

Israel, in an eort to destroy Assads chemical weapons.

Finally, the chaos is enabling al-Qaeda to gain a signicant foothold.

Jabhat al-Nusra, the al-Qaeda ailiate in Syria, is now recognized as one

of the most potent ghting forces in the country.

Until now, the pimay U.S. answe to the fagmentation has been to

support the newly established Syrian Opposition Coalition (SOC), the

umbella oganization that is tying to tie togethe many of the political

strands among the opposition. As a result, the SOC has gained signicant

intenational ecognition as the sole epesentative of the Syian

people. This suppot is timely and encouages geate opposition unity. But

in the absence of a moe obust Ameican leadeship, it will not stabilize

Syia, because the wit of the SOC is limited by its failue to each a

national consensus and by the gowing powe of the walods.

It is time to place a new bet on a moe active Ameican leadeship ole,

one that seeks to potect civilians, hastens the fall of Assad, and shapes

a new political ode moe amenable to the needs of the Syian people and

to Ameican inteests. A geate leadeship ole does not necessaily mean

diect militay intevention. Continuous U.S. aistikes and lage numbes

of Ameican boots on the gound should not be necessay. Howeve, emoving

the theat of intevention entiely only emboldens Assad and his chief

paton, Ian. If the scale of civilian bloodletting continues to escalate,

the United States must be pepaed to act decisively, in the spiit of the


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21

esponsibility to potect. In this egad, we encouage you to communicate

to Assad and his allies that the United States is willing to intevene to

establish a no-y zone with its European and regional allies to protect

civilians in Syia. We believe this would hasten Assads demise, heaten

the opposition, and signicantly enhance American credibility in the

egion.

In 1995, Pesident Clinton was foced to intevene militaily in Bosnia

and theaten the geate use of militay foce. He did so afte ove

100,000 Bosnian men, women and childen had been killed ove a fou-yea

peiod. Clealy, Syia is not Bosnia. But afte nealy two-yeas, 60,000

killed (the UN thinks this is a conservative estimate) and the UN-Arab

League Special Envoy waning that anothe 100,000 could be killed in 2013,

the United States must not allow Assads killing machine to continue the

slaughte with impunity.

Today, the United States simply does not possess an eective ground game in

Syria. It needs to help the Free Syrian Army (FSA) develop a country-wide

militay stategy and insist that it foge stonge links with the Syian

Opposition Coalition. Like it o not, the FSA is the nucleus of the post-

Assad military, which will be the most signicant institution of the Syrian

state. If the new Syia has any hope of being stable, moe plualistic, and

friendly to the United States, then the eort to shape its institutions

must begin now.

The centerpiece of that eort is the provision of lethal assistance by an

Ameican-led coalition. To be sue, the fagmentation of the ebels and

the presence among them of al-Qaeda ghters present daunting challenges.

There is no guarantee, for instance, that some weapons will not nd their

way to al-Qaeda. No will the intenal divisions within the FSA be ovecome

without intenecine bloodletting. Howeve, a continuance of the cuent,

hands-o policy will only make al-Qaeda stronger and the conicts within

the FSA moe pemanent. As daunting as the challenges in Syia ae today,

if the United States does nothing, it will face even moe viulent poblems

tomoow.

In addition, a continuation of the status quo will lead to a pemanent

diminishment of American inuence. A reluctance, thus far, to provide

lethal assistance has led to a gowing sense of betayal among Syians.

Many of them now ague that you falteing attitude paied with you

peceived esponsibility fo the inability to ovecome the diplomatic

impasse with Russia has played a decisive role in the intensication of

the Syrian conict.


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Afte establishing itself as the single most impotant playe shaping the

conict on the ground, your administration should provide assistance to

the Syian people to foge a genuine national dialogue on the natue of

the desied tansition. This equies the ceation of a national platfom

that bings togethe the divese ethnic and eligious communities of Syia

including Sunnis, Shia, Alawis, Chistians and Kuds, as well as tibaland religious guresto discuss the future of the country. Specically,

it should include Alawis who enjoy wide legitimacy within thei community

but who ae also willing to talk about a post-Assad egime in Syia. As an

exclusively Sunni club, the Syrian Opposition Coalition is not qualied to

win the necessay tust of unde-epesented minoities and communities.

At the same time, the United States should bing togethe key intenational

and egional powes to ceate an ISG fo Syia that would wok in close

collaboration with a legitimate and empowered transitional Syrian executive

authoity.

The ISG should include russia, China, Tukey, and key Aab and Euopean

states. It should agee on a numbe of basic goals fo the tansition and

set benchmarks for their eective implementation. The immediate focus:

potecting civilians, minoities and vulneable goups though the ceation

of an intenational stabilization foce; addessing humanitaian issues;

safeguading chemical and othe unauthoized weapons; and suppoting

transitional governance and transitional justice eorts.

This wok should be followed by a longe-tem commitment to assisting

Syians on secuity secto efom, the disamament, demobilization

and reintegration (DDR) of combatants and supporting a transitional

govenance oadmap, including pepaations fo multi-paty elections and a

constitution-drafting exercise; economic recovery, including planning and

coodination on infastuctue and econstuction; and assisting national

reconciliation eorts.

To succeed, this stategy will have to ovecome the pesistent russian

demand that Assad play a ole in the tansition. His absence fom the

process, however, is an equally rm demand of the rebels. In order to

overcome this gap, you will need to engage with President Putin in an eort

to pesuade him that russian inteests ae bette potected by patneing

with you in an eort to promote a stable post-Assad order than by resisting

it. In the pocess, you will need to insist that emoving Assad is a

fundamental equiement fo a successful tansition. With epots now

eaching Pesident Putin that detail the collapsing contol of the egime,

he may be coming around to accepting that Assad is nished and may be

willing to econside russias ole.


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23

The Syria challenge is diicult. The very intractability of the problems is

what made the oiginal bet of avoidance of active involvement an attactive

option. But developments since have made it an inceasingly dangeous

option fo Ameican inteests; its time fo a eassessment.


33/119

OPENING TO HAVANA


34/119

TO: Pesident Obama

FrOM: Ted Piccone


BIG BET: Opening to Havana

You second tem pesents a ae oppotunity to tun the page of histoy

fom an outdated Cold Wa appoach to Cuba to a new ea of constuctive

engagement that will encouage a pocess of efom aleady undeway on

the island. Cuba is changing, slowly but suely, as it stuggles to adapt

its outdated economic model to the 21st centuy while peseving one-paty

ule. refoms that empowe Cuban citizens to open thei own businesses,

buy and sell property, hire employees, own cell phones, and travel o the

island oer new opportunities for engagement.

Recommendation:

You can beak fee of the staitjacket of the embago by asseting you

executive authority to facilitate trade, travel and communications with

the Cuban people. This will help establish you legacy of ising above

histoical gievances, advance U.S. inteests in a stable, pospeous

and democatic Cuba, and pave the way fo geate U.S. leadeship in the

egion.

Background:

Early in your rst term, you made an important down payment on fostering

change in Cuba by expanding travel and remittances to the island. Since

then, hundeds of thousands of the 1.8 million Cuban-Ameicans in the

United States have taveled to Cuba and sent ove $2 billion to elatives

thee, poviding impotant fuel to the bugeoning small business secto

and helping individual citizens become less dependent on the state. You

decision to libealize tavel and assistance fo the Cuban diaspoa povedpopula in Floida and helped incease you shae of the Cuban-Ameican

vote by ten points in Miami-Dade county in the 2012 election.

As a esult of you actions and changing demogaphics, families ae moe

eadily euniting acoss the Floida staits, opening new channels of

commece and communication that ae encouaging econciliation among

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Cuban-Ameicans and a moe geneal efaming of how best to suppot the

Cuban people. Cubas recent decision to lift exit controls for most Cubans

on the island is likely to acceleate this pocess of econciliation

within the Cuban diaspoa, theeby softening suppot fo countepoductive

tactics like the embago. The new tavel ules also equie a e-think of

the outdated U.S. migation policy in ode to manage a potential spikein departures from the island to the United States. For example, the team

handling you immigation efom bill should be chaged with devising

proposals to reduce the special privileges aorded Cubans who make it to

U.S. soil.

Unde raul Casto, the Cuban govenment has continued to undetake a numbe

of impotant efoms to modenize its economy, lessen its dependence on

Hugo Chavezs Venezuela, and allow citizens to make thei own decisions

about thei economic futues. The pocess of efom, howeve, is gadual,

highly contolled and shot on yielding game-changing esults thatwould ignite the economy. Failure to tap new oshore oil and gas elds

and agicultual damage fom Huicane Sandy dealt futhe setbacks.

Independent civil society remains conned, repressed and harassed,

and strict media and internet controls severely restrict the ow of

information. The Castro generation is slowly handing power over to the next

geneation of paty and militay leades who will detemine the pace and

scope of the efom pocess.

These trends suggest that an inection point is approaching and that now

is the time to try a new paradigm for de-icing the frozen conict. The

embargo the most complex and strictest embargo against any country in the

world has handcued the United States and has prevented it from having

any positive inuence on the islands developments. It will serve American

inteests bette to lean how to wok with the emeging Cuban leades while

simultaneously amping up diect U.S. outeach to the Cuban people.

I ecommend that you administation, led by a special envoy appointed

by you and epoting to the secetay of state and the national secuity

adviso, open a disceet dialogue with Havana on a wide ange of issues,

without peconditions. The aim of the diect bilateal talks would be to

esolve outstanding issues aound migation, tavel, counteteoism

and countenacotics, the envionment, and tade and investment that ae

impotant to potecting U.S. national inteests. Outcomes of these talks

could include provisions that normalize migration ows, strengthen border

secuity, beak down the walls of communication that hinde U.S. ability to

undestand how Cuba is changing, and help U.S. businesses ceate new jobs.


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26

In the context of such talks your special envoy would be authorized to

signal you administations willingness to emove Cuba fom the list of

state sponsos of teoism, pointing to its assistance to the Colombian

peace talks as fesh evidence fo the decision. This would emove a majo

iitant in U.S.-Cuba elations, allow a geate shae of U.S.-souced

components and sevices in poducts that ente Cuban commece, and feeup esouces to tackle seious theats to the homeland fom othe souces

like Iran. We should also consider authorizing payments for exports to

Cuba through nancing issued by U.S. banks and granting a general license

to allow vessels that have enteed Cuban pots to ente U.S. pots without

having to wait six months. You can also facilitate technical assistance

on market-oriented reforms from international nancial institutions by

signaling you intent to dop outight opposition to such moves.

Unde this chapeau of diect talks, you administation can seek a

negotiated solution to the thony issue of U.S. and Cuban citizens sevinglong pison sentences, theeby catalyzing pogess towad emoving a majo

obstacle to impoving bilateal elations.

You should, in parallel, also take unilateral steps to expand direct

contacts with the Cuban people by:

authorizing nancial and technical assistance to the burgeoning class

of small businesses and coopeatives and pemitting Ameicans to

donate and trade in goods and services with those that are certied

as independent entepeneus, atists, fames, pofessionals and

caftspeople;

adding new categoies fo geneal licensed tavel to Cuba fo

Ameicans engaged in sevices to the independent economic secto,

e.g., law, real estate, insurance, accounting, nancial services;

ganting geneal licenses fo othe taveles cuently authoized

only under specic licenses, such as freelance journalists,

pofessional eseaches, athletes, and epesentatives of

humanitaian oganizations and pivate foundations;

inceasing o eliminating the cap on cash and gifts that non-

Cuban Ameicans can send to individuals, independent businesses and

families in Cuba;

eliminating the daily expenditure cap for U.S. citizens visiting Cuba

and emoving the pohibition on the use of U.S. cedit and bank cads

in Cuba;


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27

authoizing the eestablishment of fey sevices to Cuba;

expanding the list of exports licensed for sale to Cuba, including

items like school and at supplies, athletic equipment, wate

and food pepaation systems, etail business machines, and

telecommunications equipment (currently allowed only as donations).

The steps ecommended above would give you administation the tools to

have a constuctive dialogue with the Cuban govenment based on a set of

measues that 1) would engage Cuban leades in high-level, face-to-face

negotiations on mattes that diectly seve U.S. inteests in a secue,

stable, prosperous and free Cuba; and 2) allow you to assert executive

authoity to take unilateal steps that would incease U.S. suppot to the

Cuban people, as mandated by Congess.

To take this step, you will have to contend with negative eactions fom a

vocal, well-oganized minoity of membes of Congess who inceasingly ae

out of step with thei constituents on this issue. You initiative should

be pesented as a set of concete measues to assist the Cuban people,

which is well within cuent congessional mandates, and as a way to beak

the stalemate in resolving the case of U.S. citizen Alan Gross (his wife

is calling fo diect negotiations). Those ae winnable aguments. But you

will need to be pepaed fo some unhelpful citicism along the way.

Conclusion:

Cuent U.S. policy long ago outlived its usefulness and is

countepoductive to advancing the goal of helping the Cuban people.

Instead it gives Cuban oicials the ability to demonize the United States

in the eyes of Cubans, othe Latin Ameicans and the est of the wold,

which annually condemns the embago at the United Nations. At this ate,

given hadening attitudes in the egion against U.S. policy, the Cuba

problem may even torpedo your next presidential Summit of the Americas in

Panama in 2015. It is time fo a new appoach: an initiative to test the

willingness of the Cuban govenment to engage constuctively alongside an

eort to empower the Cuban people.


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ENERGY AND CLIMATE:

FROM BLACK TO GOLD TO GREEN


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TO: Pesident Obama

FrOM: Chales Ebinge and Kevin Massy

DATE: Thusday, Januay 17, 2013

BIG BET: Enegy and Climate: Black to Gold to Geen

Your second term oers a signicant opportunity for the United States to

stengthen its economic and geopolitical position by taking advantage

of nea-tem global demand fo oil, gas and coal, while bolsteing its

competitive position in the longe-tem global maket fo lowe-cabon

technology and taking a leadeship ole in the battle to addess climate

change.

Recommendation:

By adopting policies that encourage the development and export of U.S.

hydocabons including oil, coal and gas, the United States can take

advantage of the ising demand fo these fuels in developing and emeging

economies around the world. As a condition of greater exploration,

poduction and tade in these fuels, the Fedeal Govenment should impose a

modest but meaningful volumetric or carbon-based tax on their production,

with the resultant revenues allocated specically to the development of two

technologies that are essential to global eorts to ght climate change:

cabon captue and sequestation; and advanced batteies, both at the gid

and vehicle scale.

Background:

While the global political economy is likely to thow up many supises

over the next 20 years, three things appear certain:

U.S. global power and inuence will have to be shared with others, as

emeging powes such as China and India gain economic and geopoliticalinuence. As highlighted by the recent National Intelligence Council

repot, Global Trends 2030 (http://www.dni.gov/les/documents/

Inteactive%20Le%20Menu.pdf), the global political ode will change to

one in which powe will shift to netwoks and coalitions in a multi-pola

wold.

M E M O R A N D U M


28
http://www.dni.gov/files/documents/Interactive%20Le%20Menu.pdfhttp://www.dni.gov/files/documents/Interactive%20Le%20Menu.pdfhttp://www.dni.gov/files/documents/Interactive%20Le%20Menu.pdfhttp://www.dni.gov/files/documents/Interactive%20Le%20Menu.pdf


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29

Asia will continue to experience rapid growth in energy demand, most

of which will have to be met with fossil fuels unde any scenaio

(http://www.iea.org/publications/freepublications/publication/

English.pdf). Chinas enegy demand is set to gow by 60 pecent

between 2010 and 2030, while Indias demand is pojected to moe

than double. Despite the development of enewable and low-cabontechnologies such as wind, sola and nuclea, coal will continue

to play a leading role (http://www.iea.org/newsroomandevents/

pressreleases/2012/december/name,34441,en.html) in global enegy

supply, with consumption in Asias electic powe secto alone

pojected to incease by 63 pecent between 2011 and 2020. Asian

demand for energy will more than compensate for a broad leveling o

of enegy demand and a eduction in cabon emissions among the OECD

counties.

Consequently, global cabon emissions will continue ising at anunsustainable rate as eorts to get an internationally binding

ageement on emissions eductions stall and investments in low-cabon

technologies falte in the economic downtun. In its most ecent

annual assessment, the IEA concluded: Taking all new developments

and policies into account, the wold is still failing to put the

global enegy system onto a moe sustainable path.

These global tends ae coinciding with lage stuctual domestic changes

in the United States. Facing weak economic gowth pospects, a massive

debt burden, scal constraints and a dysfunctional political system, the

one bright spot for our country in recent years has been the unexpected

boom in oil and gas poduction. U.S. oil poduction ose at its highest

annual rate ever in 2012 to levels not seen in decades (http://www.eia.

gov/todayinenergy/detail.cfm?id=9030).Thanks to technical developments

in hydaulic factuing and lateal dilling, natual gas poduction

and inventories are at all-time highs (http://www.eia.gov/dnav/ng/hist/

n9070us2A.htm).While the natual gas bonanza and envionmental concens

are leading to a reduced role for coal in the U.S. power sector, exports of

the commodity of which the United States is the lagest esouce holde

are also at record levels (http://www.eia.gov/coal/production/quarterly/).

The oil and gas boom has had many commentatos beathlessly healding an

ea of U.S. enegy independence. This is unlikely to mateialize eithe

pactically o economically. Unde even the most optimistic scenaios fo

domestic hydocabon poduction, the United States will continue to impot

millions of baels of cude oil pe day fo the foeseeable futue, albeit

inceasingly fom ou own hemisphee athe than the Middle East. And as
http://www.iea.org/publications/freepublications/publication/English.pdfhttp://www.iea.org/publications/freepublications/publication/English.pdfhttp://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.htmlhttp://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.htmlhttp://www.eia.gov/todayinenergy/detail.cfm?id=9030http://www.eia.gov/todayinenergy/detail.cfm?id=9030http://www.eia.gov/dnav/ng/hist/n9070us2A.htmhttp://www.eia.gov/dnav/ng/hist/n9070us2A.htmhttp://www.eia.gov/coal/production/quarterly/http://www.eia.gov/coal/production/quarterly/http://www.eia.gov/dnav/ng/hist/n9070us2A.htmhttp://www.eia.gov/dnav/ng/hist/n9070us2A.htmhttp://www.eia.gov/todayinenergy/detail.cfm?id=9030http://www.eia.gov/todayinenergy/detail.cfm?id=9030http://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.htmlhttp://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.htmlhttp://www.iea.org/publications/freepublications/publication/English.pdfhttp://www.iea.org/publications/freepublications/publication/English.pdf


41/119


30

long as the United States is connected to the global tading system, it

will be subject to supply and demand shocks beyond its bodes, meaning

that pice disuptions anywhee in the wold will be passed on to U.S.

consumes.

Howeve, thee is a way in which the U.S. can use its oil and gas bonanzato aest both its elative economic and political decline to put itself

back at the foefont of global tade and to take a leadeship ole in

climate change mitigation.

Iespective of actions by OECD counties, China, India and othe emeging

nations will bun oil, gas and coal in eve geate quantities fo the

foreseeable future. The main beneciaries of this demand are likely to be

the OPEC nations, russia, Austalia and othe oil, gas and coal poduces.

Given its huge eseves of hydocabons, the United States could position

itself as perhaps the principal beneciary of this demand by adopting anear-term policy of full-scale, export-led oil, gas and coal development.

Such a policy would involve the expedited permitting of oil and gas

poduction and ancillay pipeline infastuctue pojects and the enabling

of crude oil and gas exports, which are currently subject to policy

restrictions or prohibitions. The resultant surge in production and exports

would strengthen both the countrys scal position through export revenues

and job ceation; and its political position though weakening the maket

powe and the evenue geneation of OPEC nations and russia. It would also

bring geopolitical benets through the deepening of partnerships with key

consumes such as China and India.

The obvious opposition to such a policy is on envionmental gounds.

With global waming an unavoidable and wosening eality, such a couse

of action is open to citicism of being iesponsibly self-inteested.

Howeve, a policy of full-scale hydocabon development can be consistent

with leadeship on climate change if, as a stict condition of the apid

development and export of our oil, gas, and coal resources, the production

of hydrocarbons is taxed, either on a volumetric or carbon-content basis.

You should then allocate the revenues to a modern Apollo Mission eort

toward the development of carbon capture and storage (CCS), and advanced

batteies and stoage technologies. CCS is a necessay technology fo any

meaningful eduction in climate change given the continued pominence of

coal in the global power generation mix. Advanced battery and alternative

fuel stoage technologies ae essential to make electic cas competitively

viable and to give sola and wind powe the eliability and scale they

need to compete with fossil fuels. The policy will also wok to move the


42/119


31

domestic economy towads lowe-cabon consumption in powe geneation and

tanspotation and to pove the new technologies at scale.

Having gained a competitive advantage in geen technologies, the United

States can then become the dominant global producer and exporter of

CCS technology, advanced batteies and othe lowe-cabon poducts andsevices, maintaining its competitive position in the global enegy

economy.

The implementation of this policy will not be easy. Thee is likely to be

opposition to exports of oil and gas on the grounds of U.S. energy security

and ideological opposition to new taxes. Such concerns should be addressed

by greater eorts at public education on the importance of global trade to

U.S. energy security and the domestic economic and geopolitical benets of

expanded production.

Conclusion:

In a business-as-usual scenaio, the wold will continue its hydocabon-

dependent tajectoy towads an unsustainable level of cabon emissions

with the principal economic benets accruing to other resource-rich

nations. By adopting this black-gold-geen policy, the United States

could simultaneously ealize the nea-tem economic and geopolitical

benets generated by the worlds near-term need for hydrocarbons while

taking a leadeship ole in the development and deployment of the

technologies that ae able to meaningfully addess climate change ove the

longe tem.


43/119


32

140

120

100

80

60

40

20

0

U.S. natual

gaspoduction

U.S. oil

poduction

Global demand

fo oil, gasand coal

Manmade

globalgeenhouse

Medium-tem enegy and envionment pojections

*Unde cuent policies

Souce: US Depatment of Enegy, OECD

United States

2010 2020 2030

CoalOil Gas

2010 2020 2030

CoalOil Gas

A Tale of Two Stories:

Energy Supply/Demand Balances: 2010, 2020, and 2030

Non-OECD Asia

Souce: US Depatment of Enegy, OECD


44/119

FREE TRADE GAME CHANGER


45/119

TO: Pesident Obama

FrOM: Mieya Solis and Justin Vasse


BIG BET: Fee Tade Game Change

Pursuing and signing free trade agreements (FTAs) with both the Asia-

Pacic region and Europe during your second administration will yield

considerable economic and political benets. World trade is expected to

have stalled at a mee 2.5 pecent gowth in 2012, down fom 13.8 pecent

in 2010. Potectionism is on the ise eveywhee, especially in the fom of

non-tari barriers. The Doha Round is essentially dead. At the same time,

the United States and Euope need to stimulate thei economies without

resorting to scal spending. Furthermore, the United States needs to

establish a boade and deepe economic pesence in Asia, the wolds most

dynamic economic region. Achieving both a Trans-Pacic Partnership (TPP)

and a Trans-Atlantic Free Trade Agreement (TAFTA) is the most realistic way

to eclaim U.S. economic leadeship and make pogess towads you pomised

goal of doubling U.S. exports. Moreover, signing both the TPP and TAFTA

would have deep strategic implications. Both deals would reairm liberal

noms and a leading U.S. ole in setting the global ules of the oad. The

TPP would help dene the standard for economic integration in Asia, without

necessaily antagonizing China. TAFTA would give Ameican and Euopean

businesses an edge in setting industial standads fo tomoows global

economy.

Recommendation:

Pusue both TPP and TAFTA simultaneously. Conclude negotiations in

close succession to gain momentum in intenational bagaining, eap

the benets of emulation (through setting rules and standards of

global applicability), and incease you leveage domestically;

Start the process to secure Trade Promotion Authority (TPA) early

in 2013 by eaching out to Congessional leades in unison with an

aggressive public awareness campaign on the benets of free trade,

led by the White House, which seeks to allay some of the concens

about opening U.S. makets.

M E M O R A N D U M


33


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34

Set October 2013, the time of the next APEC leaders meeting in Bali,

Indonesia, fo the conclusion of negotiations. This will povide a

focal point for leaders of TPP countries to bridge dierences at the

negotiating table;

Launch TAFTA talks as ealy as possible in 2013 afte the U.S.-EU

high-level woking goup makes it ecommendations, with the objective

of concluding negotiations before the next U.S. midterm elections in

2014.

Background:

Free trade was not a priority in your rst administration. It is, however,

an indispensable component of a long-tem gowth stategy to ebound fom

the 2008-2012 ecession. It is also a necessay pat of the esponse to the

signicant redistribution of power in the international system. The pivot

to Asia and to the emeging wold in geneal cannot be based on political

and militay initiatives alone. It needs to be backed by ejuvenated

Ameican leadeship in tade and investment.

While the time has come to launch new initiatives in these sphees, the

eosion of suppot fo FTAs in Congess and among the public is likely

to hamper this eort. Contrast, for example, the fact that Congress

continuously enewed fast-tack authoity between 1975 and 1994, but in the

post-NAFTA years it was only extended during the 2002-2007 period. Public

skepticism of the value of FTAs is also on the ise, accoding to polls. It

will fall on you, M. Pesident, to advocate focefully fo these

big bets and black swans a presidential briefing book

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