Business forum: Economic power can help calm conflicts

WASHINGTON - The federal government seems to be on hold these days as it waits for the new occupant of the White House. Regardless of who wins in November, it will be the American people, as always, who will bear the brunt of the decisions.

In the past eight years, the United States has experienced a series of traumas that began with the events of Sept. 11, 2001, and continued with the military response in Afghanistan and the preemptive war in Iraq. Both responses were an exercise in the use of power. How the country extricates itself from these situations also will depend on how it uses its power -- all forms of its power.

Historically, when we spoke of U.S. power it generally was understood to mean military power. But there are other types of power, as professor Joseph Nye of Harvard University explains:

• Hard power: Refers to a nation's military force -- its technical capability as well as the number of troops under arms that it can deploy at any one time to conflicts in foreign locations. Recently, the United States has used hard power, almost exclusively, at a huge cost -- financially and, most importantly, loss of life and serious injuries to our service members.

• Soft power: The term used to describe other forms of persuasion, such as diplomacy, trade, foreign aid and cultural influence. In the past, the United States has employed soft power to build a network of support from like-minded allies and other interests to support desired programs without resorting to military force.

• Smart power: A relatively new term being used by the Center for Strategic and International Studies to describe how a nation wisely can use hard and soft power. It assumes that, because the world is being affected dramatically by global interdependence, its problems cannot be solved by hard power or soft power independently. The two must be integrated to work effectively with those countries that have similar interests and values.

Yet challenges ranging from terrorism to economic competition from China and the rest of Asia cannot be solved by hard power alone -- nor even by the combination of effort represented by the introduction of smart power.

One of the most effective forms of power is economic power, specifically economic power in the form of economic development. It is this form of power that is capable of transforming a country from an outsider/troublemaker with nothing to lose into a country that becomes a part of the world community less intent on violent behavior.

Some are skeptical when it comes to believing that creating jobs and opportunities for people can lead to a reduction of violence. But the evidence shows otherwise.

In a recent interview in the Financial Times, private equity expert Ronald Cohen explained how his $1 billion housing project on the West Bank not only will accommodate 90,000 people but will also provide jobs in the construction and supply industries that could help almost 200,000 people and, by doing so, lift the Palestinians' gross domestic product by 1.5 percent a year for as long as five years.

He cites as part of his reason for doing the project the correlation between improving unemployment in Northern Ireland and a corresponding reduction in violence there.

Whoever wins the November election should remember that, if the United States wishes to continue to be considered the leader-of-choice by most of the rest of the world, it must revert to a strategy that uses all the elements of power -- including hard, soft, smart and, most assuredly, economic power.

A firm understanding of how much economic development can do to prevent the need to wield hard power in the future will go a long way toward restoring this country's credibility and reducing world violence.