William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.

Under Secretary for Arms Control and International Security John R. Bolton, speaking at a biological weapons conference in Geneva November 19, said the existence of a germ warfare program in Iraq is "beyond dispute" and added that the United States strongly suspects North Korea, Libya, Syria, Iran and Sudan of pursuing such weapons.

Bolton's comments are part of a stepped up U.S. anxiety about biological weapons and the willingness of America's foes to use them.  Many in the Bush administration favor making Iraq the next target in the war on terrorism.  One of the key hijackers in the September 11 attacks reportedly met with Iraqi intelligence agents and Saddam Hussein has the means and the motive to support terrorist attacks on the United States.  Iraq also has a chemical weapons capability, a ballistic missile program and a desire to build nuclear bombs.

Bolton said that North Korea "likely has the capability to produce sufficient quantities of biological agents for military purposes within weeks of a decision to do so." The United States believes Iran has probably produced and weaponized biological warfare agents, even though it has signed the biological weapons convention.  Libya's and Syria's biological weapons programs are thought to be in the research and development stage.  Sudan, Bolton added, had expressed "growing interest" in developing a biological weapons program and remains a "state of concern" despite its declared break with al-Qaeda.

What does all this mean for the U.S. economy in general and trade policy in particular?

First, it means that the United States needs to gear up for a long war against terrorists and the states that support them.  The defeat of al-Qaeda in Afghanistan was relatively easy compared to where America will have to take the war next.  Osama bin Laden chose a weak state, which did not possess weapons of mass destruction, missiles or a modern army.  He did so because he could control the Taliban.  However, the Taliban could not protect his network.  Terrorists will now seek the cover of states that can protect them, as is already the case with Syria, Iraq and Iran.  

The U.S. defense industrial base needs to be rebuilt, so it can both sustain current forces in combat operations and modernize for the future.  We do not know when the next crisis may occur, any more than we expected the September 11 attacks.  

Prior to September 11, it seemed that there would have to be cuts in current force levels in order to fund future programs.  To defeat enemies with WMD and new ways to block the projection of American power in their regions, we will need missile defenses, airmobile armored vehicles, new attack aircraft and improved precision-guided weapons, among other things.  This will cost billions and push American industry and technology to new frontiers.

Had the money saved from the military downsizing that took place at the end of the Cold War been devoted to modernization in the 1990s, such a trade off would have made sense, but not now.  The decade of peace following the Gulf War is over.  The widely circulated ideas of just a few months ago about cutting a couple of aircraft carrier battlegroups or Army divisions are no longer heard.  Too many other states used the last decade to improve their capabilities, looking for ways to offset the superiority American demonstrated in the liberation of Kuwait.  

Second, when the United States builds new military systems it must not make them dependent on foreign sources for key components or manufacturing capabilities.  

For the U.S. to depend on foreign sources for items critical to the production or support of its weapons systems is to create a new vulnerability that would be easier for an opponent to attack than it is to go after our armed forces directly in the field.  The risk factors of moving defense related industries outside American borders are many, starting with location.  The continental United States is still the most secure territory on the planet, and we are in the process of making it more so.  Factories placed anywhere else, along with any associated engineering and shipping facilities, would be easier to attack by either conventional or terrorist means.  

Besides physical security of manufacturing operations, the reliability of foreign defense industries depend on a variety of factors, including their trade and investment relations with countries that may be adversaries of the United States.  We have already seen how tepid political support for American actions in Afghanistan has been, even among some European allies.  Many of these states oppose U.S. economic sanctions on Iraq and Iran, and might be driven to withhold military components or systems in order to protect their business interests from retaliation in case of war.  As in the current war in Afghanistan, most of America's main trading partners are not engaged in the conflict.  They will assess their options with the view of protecting their interests, not ours.

The classical theory of "free" trade, leading to interdependence, was designed for a world at peace.  It has never been a sustainable system because the world has never remained at peace for very long.  The dawn of the 21st century doesn't appear to be any different, which means that the United States must look to it own productive resources first and foremost.

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