Koch's Comments: No quid pro quo for scrapping European missile defense shield?

President Barack Obama lost a golden opportunity last week and exhibited surprising naiveté in foreign affairs when he unilaterally agreed to scrap plans for a missile defense shield in Eastern Europe.   

The president decided to undo the actions of former president George W. Bush, who had continued president Ronald Reagan's "Star Wars" concept by placing a radar station in the Czech Republic and an anti-ballistic missile site in Poland, all on the borders of Russia. 

The response of Prime Minister Vladimir Putin and President Dmitry Medvedev to Bush's strategic move was to threaten retaliation by having Russian ballistic missiles aimed at NATO countries. The US claimed that the two installations were defensive only, and were intended to shoot down nuclear missiles aimed at Western Europe, Israel and America by Iran, North Korea, or terrorists.

The Russians, of course, scoffed at Bush's explanation. Remember how the US under president John Kennedy reacted when the Soviet Union, then headed by Nikita Khrushchev, placed ballistic missiles in Cuba? We threatened war if they were not removed. We also imposed a blockade preventing Soviet ships from entering Cuban waters without first being searched for nuclear missiles. 

A third world war involving the US and the Soviet Union was avoided when the Soviet Union agreed to withdraw all of its nuclear ballistic missiles from Cuba and the US agreed to withdraw its ballistic missiles from NATO member Turkey.

President Obama should have secured a similar quid pro quo from Russia before he terminated the planned missile defense program in Eastern Europe. What do we need from Russia? We want Russia to use its influence with Iran to end Iran's research and development of nuclear weapons. If Iran declines to stop its nuclear weapons program, we want Russia's support for greater sanctions in a resolution to be voted on at the United Nations Security Council.  Russia has publicly stated it will oppose such a resolution. The leverage that Obama might have had with Russia was lost when he unilaterally gave Russia what it wanted.

All this is not to say that Obama was wrong in terminating the nuclear shield program. The Obama administration stated that the Bush plan was directed at intercontinental missiles Iran did not yet have, and was years away from developing. In my opinion, the president was right to come to that conclusion but wrong in the execution of his new plan.

It is generally accepted that Obama has restored the international standing of the US.  As The New York Times stated in a September 20 article, "Foreign counterparts flock to meet with him, and polls show that people in many countries feel much better about the United States. But eight months after his inauguration, all that good will so far has translated into limited tangible policy benefits for Mr. Obama."

Surely there must be some middle ground between the swagger of George W. Bush and Barack Obama's rush to please. My choice is the policy of former president Teddy Roosevelt: "Speak softly and carry a big stick."

As a result of naiveté or bad advice, Obama dropped one of America's biggest sticks without apparently obtaining any concessions that would protect us from those who want to see us destroyed. The president has lost a great opportunity. 

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Federal Reserve Chairman Ben Bernanke recently declared that the US recession, which nearly reached the depths of the 1930's depression, is technically over. Troublesome, however, is the comparison between the current economic conditions of the US and China. 

The Times reported on September 18, "The Chinese central bank said the country's economy surged at an annualized rate of 14.9 percent in the second quarter. The United States economy shrank at an annual rate of 1 percent in that period."

One of the reasons cited by the Times for China's success was "liberal bank lending." Our Federal Reserve declined to compel such a policy to creditworthy applicants. It was left to the banks to decide how to spend the TARP monies that the federal government poured into their coffers. Those monies have been used by some to buy other banks, and to pay huge bonuses to their employees. 

I wrote to Chairman Bernanke last year asking why he declined to compel such lending. He replied: 

Dear Mr. Koch.  I am responding to your letter of October 9, 2008, in which you recommend that the Treasury or bank regulators direct commercial banks to lend to creditworthy borrowers. You further suggested that banks that did not comply with such a directive would be ineligible to participate in the Treasury’s Troubled Asset Relief Program (TARP).

We at the Federal Reserve firmly agree that an unfreezing of financial markets and a resumption of lending activity is essential. Credit is the lifeblood of an economy, and continued economic growth will requite that substantial credit flows be restated.

But requiring directly that banks extend specified amounts of credit to creditworthy borrowers would entail many complications. For example, bank regulators would need to create an objective definition for determining which borrowers were creditworthy. Moreover, because the volume of banks' credit activities can fluctuate over time for a variety of reasons, including those over which they have no control (such as the rate of economic growth in their geographical regions), determining appropriate targets for individual banks' lending activities would be complex and potentially arbitrary. In addition, because of the very large number of banking institutions in the country - more than 8,000 -administering such a program would be extremely resource intensive."

I think Bernanke was mistaken. Because of our government's reluctance to compel banks to lend, our economic recovery has been much slower than it need have been.