This week President Bush will seek to focus the nation's attention on border security and immigration reform. But the president's proposals won't protect Americans from our gravest cross-border threat: the possibility that a ship, truck or train will one day import a 40-foot cargo container in which terrorists have hidden a dirty bomb or nuclear weapon.

The Bush administration maintains that it has a smart strategy to reduce this risk. A new 24-Hour Rule requires that importers report the contents of their containers to customs inspectors one day before the boxes are loaded on ships bound for the United States. The Department of Homeland Security's National Targeting Center then reviews the data, checking against other intelligence to determine which boxes may pose a threat. Although the containers deemed high risk are inspected at cooperating foreign ports or when they enter the United States, the rest--more than 90 percent--land here without any perusal.

We have two concerns about this strategy. First, it presumes that the United States government has good enough intelligence about Al Qaeda to reliably discern which containers are suspicious and which are not. But our inability to thwart the attacks in Iraq demonstrates that we lack such specific tactical intelligence. And supporting customs inspectors, who must make the first assessment of risk, is not a priority for the intelligence agencies. Inspectors must rely on their experience in spotting anomalies--a company that claims to be exporting pineapples from Iceland, for example.

Second, determined terrorists can easily take advantage of the knowledge that customs inspectors routinely designate certain shipments as low risk. A container frequently makes 10 or more stops between its factory of origin and the vessel carrying it to American shores. Many of the way stations are in poorly policed parts of the world. Because name-brand companies like Wal-Mart and General Motors are widely known to be considered low-risk, terrorists need only to stake out their shipment routes and exploit the weakest points to introduce a weapon of mass destruction. A terrorist cell posing as a legal shipping company for more than two years, or a terrorist truck driver hauling goods from a well-known shipper, can also be confident of being perceived as low risk.

So what needs to be done? A pilot project under way in Hong Kong, the world's largest container port along with Singapore, offers one piece of a potential solution. At an estimated cost of $7 per container, new technology can photograph the box's exterior, screen for radioactive material, and collect a gamma-ray image of a box's contents while the truck on which it is carried moves at 10 miles per hour.

Terrorists can defeat radiation sensors by shielding a dirty bomb with dense materials like lead. But by combining those sensors with gamma ray images, the Hong Kong system allows inspectors to sound the alarm on suspiciously dense objects. Inspectors would need to analyze enough of the scans--perhaps 20 percent to 30 percent--to convince terrorists that there is a good chance that an indistinct image will lead a container's contents to be sent for more reliable X-ray or manual examinations. Images of container contents would then be reviewed remotely by inspectors inside the United States who are trained to spot possible nuclear weapons.

If terrorists were to succeed in shipping a dirty bomb, for example, the database of these images could serve as a kind of black box--an invaluable forensic tool in the effort to identify how and where security was breached. That information could help prevent politicians from reacting spasmodically and freezing the entire container system after an attack.

Such a program could significantly reduce the likelihood that terrorists will smuggle plutonium or a dirty bomb through American ports. But it still would not stop a terrorist from importing highly enriched uranium, which can be used to construct a nuclear weapon. Lengthening the time that a container is screened for radiation would help, and this could be done without increasing waiting times if additional monitors were added to the Hong Kong system near the gate where the trucks must already stop for driver identification checks. Better still would be for the Department of Homeland Security to make the development of new technology that can recognize the unique signature of highly enriched uranium an urgent priority.

Finally, we must find ways to ensure that terrorists do not breach containers before shipments arrive at loading ports. Sensors should be installed inside containers in order to track their movements, detect any infiltration and discern the presence of radioactive material. Where boxes are loaded, certified independent inspectors should verify that companies have followed adequate protocols to ensure that legitimate and authorized goods are being shipped.

Taken together, these recommendations will require new investments and an extraordinary degree of international cooperation. But increased container security will not only help the United States prevent terrorism, it will also help all countries reduce theft, stop the smuggling of drugs and humans, crack down on tariff evasion and improve export controls. What's more, such a program would require an investment of just one one-hundredth of the capital that could be lost if we shut down the global container shipping system after an attack.

Container security is a complex problem with enormous stakes. American officials insist that existing programs have matters well in hand. But we cannot afford to take these perky reassurances at face value while the same officials fail to embrace promising initiatives like the Hong Kong pilot project.

One of the less publicized but perhaps most important matters before President Bush on his recent trip to South Korea for the annual Asia-Pacific Economic Cooperation summit was that of relations between the United States and the host country. Although South Korea has long been a close ally of the United States, relations between the two have cooled in recent years, and the alliance has come under great strain. Bush's trip did not set a new direction for the alliance, which has been drifting for the past few years.

There is a way to reverse this cooling in relations, I believe -- to promote U.S. strategic interests in the region, including denuclearization of North Korea; to retain U.S. influence there; and to strengthen a long-standing alliance. What is needed is an effort to widen the "North Korea problem" from one of nuclear weapons to one of unification.

Controversy over the fraying U.S.-South Korea alliance focuses almost exclusively on cultural or emotional issues. In the United States there are some who feel that South Koreans are insufficiently grateful for the steadfast U.S. support to South Korea, particularly for the American lives lost in defense of the South during the Korean War of 1950-53 and for the extensive economic and military aid since. Others feel that rising anti-American sentiment in South Korea reveals the naivete of a younger generation of Koreans who are insufficiently worried about the North Korean threat.

But the problems in the alliance are not a result of emotion, naivete or ingratitude. Indeed, even if none of those emotional and cultural issues existed, the alliance would still be in dire need of revision. To find the best path forward for both the United States and South Korea, we need to focus on the real issues.

The main factor straining the alliance is the unresolved Korean War and the continued division of the peninsula. This has created differing long-term strategic concerns for the United States and South Korea.

For South Korea, the key issue is not North Korean nuclear weapons -- it never was. South Korea's overriding concern is how to resolve the issue of national unification and integrate North Korea back into the world's most dynamic region, whether or not there are nuclear weapons. All other South Korean foreign policy issues take second place.

In contrast to Korea's regional issues, U.S. concerns are global and military. For at least the next several years, the United States will be mainly concerned with countering potential terrorist threats. Distracted by the overwhelming focus on anti-terrorism, homeland security and other issues, the United States has viewed its Korea policy as a narrow extension of its anti-terrorism policy, focusing almost exclusively on denuclearizing the North. These different strategic priorities have led to severe strains between the two allies, despite the desire of both to maintain a close relationship.

The United States can improve its position in East Asia, as well as solidify its alliance with South Korea, by widening its focus beyond North Korean denuclearization and coming out strongly and enthusiastically in favor of Korean unification. Although the United States rhetorically supports unification, it has been noticeably passive in pursuing policy to that end.

Such a policy shift would achieve many U.S. goals and would strengthen our alliance with South Korea in the process.

First and foremost, denuclearization is far more likely to occur with a change in North Korea's regime and a resolution to the Korean War than it is without resolving that larger issue. Until now the United States has put denuclearization first, without making much progress. Folding the nuclear issue into the larger issue would provide far more leverage on both questions and potentially create new or broader areas for progress.

Second, such a policy would provide grounds for agreement between U.S. and South Korean policymakers from which they could cooperate and work together, rather than against each other. Exploring the best path toward unification will require both economic and military changes in the North -- changes that will provide the United States with more flexibility to rebalance its own forces in the region.

Finally, it would put the United States in a solid position to retain goodwill and influence in Korea after unification -- something that is far from ensured today, when many South Koreans are skeptical about U.S. attitudes and policies toward the region. If the United States is seen as a major source of help for unification, it is far more likely that the post-unification orientation of Korea will be favorable to Washington.

This would be a major policy change for the United States, but given the importance of the region and of the Korean Peninsula, it is the best path to follow.

Over the last several decades, there has been a strenuous debate about policies for economic development between the Washington Consensus promoted by the major international financial institutions and the revisionist political economists . Followers of the former view advocate free and unfettered markets buttressed by institutions to protect property rights. The revisionists argue that development involves social and political processes not adequately captured by the narrow prescriptive focus of the Washington Consensus.

In confronting globalization, there is also a new split among the revisionists themselves. Whereas the Washington Consensus welcomes globalization as a boon to developing countries through expanding the scope of market forces, the revisionists divide over the prospects for developing countries under globalization. The optimists, such as Ernst and Saxenian, see transnational networks as providing opportunities for developing countries to continue to learn the skills and competencies necessary to further their progress. The pessimists of the revisionist camp, such as Stiglitz and Strange, see globalization eroding the capabilities of the state or state-societal alliances necessary for development.

Using the case of technological upgrading (one aspect of economic development) in China's information technology (IT) industry, I demonstrate that opportunities for development exist under globalization. These paths to development are not simply the result of picking the right international networks to join nor are they due to the continued efficacy of state action. They also do not arise from well-developed market institutions within China. China's development success in spite of low levels of state industrial policymaking capacity and very incomplete market institutions tells us that other developing countries similarly unequipped can develop even in this globalized world.

In China's IT industry, two local institutional variables, firm operational strategies and state-firm relations, have interacted with the technology flows present in global networks to create opportunities for certain types of firms to upgrade. A firm's operational strategy (OS) determines its motivation to upgrade in China as opposed to doing so elsewhere. The relationship of firms to the state determines their sources of finance i.e. whether or not they can access functioning financial institutions.

The relationship of firms to the state determines their sources of finance and these sources of finance in turn impact their ability to upgrade. Sources of finance that provide credit with hard budget constraints give firms incentives to upgrade. Firms have hard budget constraints when they do not receive free help in covering their own financial obligations. With hard budget constraints forcing firms to meet their financial obligations, firms have to remain competitive to survive. For technology firms, a critical part of their competitiveness is their technology so they have every incentive to improve their technologies to keep pace with competitors. Finance that provides credit with soft budget constraints deprives firms of the incentives and even the capabilities to upgrade. Firms have soft budget constraints when they do not have to pay for some or all of their financial obligations themselves. These firms can rationally expect to survive even if not competitive because others are willing to bail them out. A third possibility is no source of finance. Firms without financing will not be able to invest in technological development.

There are four types of firms in China: the favored domestic firms, the neglected domestic firms, the hybrid foreign-invested enterprises (FIEs) and the regular FIEs. Financing and motivation have varied across firm categories. Due to different state-firm relations, FIEs rely on foreign finance and domestic firms do not. Hybrid FIEs differ from regular FIEs because the hybrids have a China-based operational strategy. This operational strategy (OS) is a mix of interests and ideational factors that causes these firms to perceive China either as the vital center of their operations (the China-based OS) or as just another location among many (the non-China-based OS). Thus, variation in firm-state relations (finance) and operational strategy (motivation) determine the variation in technological upgrading.

This thesis finds that the two types of FIEs are more likely to contribute to upgrading in China than the two types of domestic firms. Among the FIEs, the hybrid FIEs are more likely to contribute than the regular FIEs though the discrepancy is not as large as it is between the FIEs and domestic firms.

The hybrids are the most successful upgraders because they have both disciplined finance (i.e. credit with relatively hard budget constraints) from foreign financial institutions and the motivation to upgrade in China due to their China-based OS. The unsuccessful domestic upgraders lack finance (neglected domestic firms) or financial discipline (the favored domestic firms) due to their particular relationships to the state. The regular FIEs have the capabilities to upgrade due to their financial discipline and access to transnational technology networks, but undertake less upgrading in China than the hybrids because they lack the China-based operational strategy.

The 2005-06 Academic Year got off to an exciting start for the European Forum. Following the recent terror attacks in Madrid and London, the Forum plans to be organizing a variety of events on the manners in which European countries and institutions are facing the threat of terrorism. In the first weeks of the Fall Quarter the European Forum hosted several European politicians, academics and authors. On October 12 John Bruton, European Union Ambassador to the United States and former Prime Minister of Ireland (1994-97), presented his views on Europe and the United States as global partners in a fascinating lecture for a crowd of about 100 faculty and researchers.

Earlier during the Fall term the European Forum was honored to welcome Latvian Foreign Affairs Minister Artis Pabriks. On September 21 he gave a lecture on Latvia's current challenges in foreign policy and homeland security, and answered questions on Latvia's relations with the United States and its position within the European Union.

During a visit to Stanford on October 4 German sociologist Heinz Bude, from the University of Kassel, presented his views on the most recent German elections from a broad, societal and historical perspective, paying attention to the 1968 student uprisings and their long-term impact on German society. Later on in October Christian Deubner, from the CEPII research center in Paris, shared his opinions on current developments in French politics, with a focus on the French rejection of the EU Constitution earlier this year and its impact on France's position in the EU.

On October 26 German author Peter Schneider offered his reflections on the cultural differences between Europe and the United States. He compared the relationship between the two continents to a marriage that has its ups and downs, but endures. In a seminar on November 3 Josef Joffe, Editor of the German newspaper Die Zeit, pointed at cultural, demographic, political and economic reasons to argue that the European Union is not about to become a new superpower. Both events drew much attention and a large audience from the Stanford community.

Later on in November there will be talks on the effects of the Europeanization of the holocaust on the attitudes toward Jews (November 16), by Werner Bergmann from the Technische Universität Berlin; and on Poland's current economic dilemma's (November 17), by Wojciech Bienkowski, from the Warsaw School of Economics.