Monday, February 02, 2009

The US is no longer a global hegemon

Copyright (c) 2009 The Daily Star

Tuesday, February 03, 2009
The US is no longer a global hegemon

By Leon T. Hadar
Commentary by

Changes in the status and power of nations, just like changes in economic conditions, are not always immediately apparent. There is, in the jargon of economics, a recognition lag between the time when an economic shock, such as a sudden boom or bust, occurs and the time when it is recognized by economists, central bankers and the government.

Recognition lag explains why, for example, economists have only recently acknowledged the current economic recession - several months after it began. And recognition lag might well be why officials and pundits are now failing to recognize the detrimental impact of the combination of the Iraq war and the financial crisis on America's standing in the international system.

Some attribute Washington's current difficulties in dictating global developments to the Bush administration's mismanagement of US diplomacy and national security policy. The conventional wisdom is that a more visionary and competent Obama administration will be able to reassert America's global leadership role - especially in the Middle East.

According to that logic, a charismatic and cosmopolitan President Barack Obama, by re-energizing the United States' diplomatic influence and emphasizing Washington's commitment to play the role of an honest broker, will revive the dormant Israeli-Palestinian peace process, overcome the many obstacles to a political settlement, and help bring peace to the Holy Land. (Some pundits seem to assume a similar peacemaking model can be implemented in other troubled regions as well, such as South Asia and the Caucasus.) All that is lacking, supposedly, is enlightened leadership and American willpower.

Such assumptions about US omnipotence are woefully out of touch with reality. The mess the Bush administration made in the Middle East, where US military power was overstretched to the maximum, coupled with the dramatic loss of American financial resources, has produced a long-term transformation in the balance of power in the region and worldwide. The confluence of these negative factors has significantly eroded Washington's diplomatic and political clout. The increasing wariness of the American public regarding new US military interventions, as a consequence of the Iraq war, will reinforce this trend.

This is not the first time there has been a lag between when an international crisis, such as a military conflict or a loss of geostrategic standing, takes place and the time when officials, pundits and the public recognize its effect on the global balance of power. In the aftermath of World War II, which devastated the military and economic power of Britain and France, the two leading imperial powers, officials and journalists continued to refer to those two declining nation-states as Great Powers. It was not until the late 1950s that the diminished status of Great Britain and France was widely recognized and the adjective "great" was finally dropped when the two countries were mentioned.

That the US has already been losing some of its leverage has been demonstrated by Washington's failure to contain the rising power of Iran and Tehran's growing influence through surrogates in Iraq, Lebanon, and the Palestinian territories. Notwithstanding strong opposition from Washington, Israel decided to open negotiations with Syria, while Hizbullah was once again invited to join the government in Lebanon.

While the US does not now occupy the same kind of drastically weakened geopolitical position that Britain and France did after World War II, we must recognize that it is no longer a global hegemon, as it was during the first decade or so after the end of the Cold War. Even the most visionary and competent US president will be that much more constrained in his ability to "do something" when an international crisis takes place.

In 2000, the United States was at the apex of international power in a unipolar world, and the Israelis and the Palestinians were led by strong and more moderate leaderships than today. Even at that time, Washington could not significantly advance an Israeli-Palestinian peace process. There is little reason to expect that Obama will be an exception, and an effective Holy Land peacemaker, in 2009. With an overstretched military and an economy in recession, the incoming president, like others in Washington, will be forced to recognize that reality sooner or later.

Leon T. Hadar is a research fellow in foreign policy studies at the Cato Institute in Washington. He wrote this commentary for THE DAILY STAR.

100 days of stimulating and bailing-out

Business Times - 03 Feb 2009

100 days of stimulating and bailing-out

Obama's early months will be dominated by one agenda: giving the economy the right jolt


'ECONOMIC Signs Turn from Grim to Worse' screamed the top front-page headline of The Washington Post last Friday, reflecting the sour mood in Washington as well as on Wall Street and Main Street.

Sales of new homes are plummeting. Businesses, including corporate giants like Microsoft and Ford Motor, have announced massive layoffs as unemployment claims continue rising while stock prices keep on falling each day.

Later, the US Commerce Department reported that consumers and businesses cut spending during the last three months of 2008, causing the US economy to shrink by 3.8 per cent - the fastest economic contraction in 25 years. The toxic mix of a global credit crunch, a collapsing US real estate market and a decline in consumer spending are combining, as the prophets of gloom and doom predict, to create the conditions for a rerun of the 1930s great economic depression.

After about two weeks in office, public opinion polls indicate that most Americans continue to give President Barack Obama a sky-high approval rating and refrain from blaming him for the economic crisis that started on his predecessor's watch.

In fact, notwithstanding his personal popularity and the combined Democratic majority that controls Capitol Hill providing him with all the power he needs to promote his ambitious economic agenda, President Obama has gone out of his way to seek support from the Republican opposition for his proposed US$819 billion economic stimulus package.

Meeting with Republican lawmakers in the White House and on Capitol Hill and disowning any 'pride of authorship', Mr Obama asked both Democrats and Republicans to work together in Congress on the bill to stimulate the weakening economy. And as part of an effort to win Republican backing for the bill, he agreed to expand the tax-cutting component of the stimulus package.

But change comes very slowly to Washington, if at all, and while the bill passed by a comfortable margin in the House of Representatives last Wednesday, it did not win even one vote from the Republicans; so much for the new era of bipartisanship on Capitol Hill.

Now comes a vote on a similar stimulus package bill in the Senate (that is scheduled to take place today ), followed by negotiations between Democrats and Republicans that may - or may not - produce a compromise bill on which lawmakers in the two legislative bodies would vote in a week or so. It is hoped Mr Obama will be able to sign the final version of the stimulus legislation before the middle of this month.

Republican leaders are criticising the White House for trying, as one Republican put it, 'to stimulate more government and more debt'. They are demanding a major overhaul of the bill and are calling for greater focus on tax cuts. Their opposition to the stimulus package reflects both ideological considerations and, in particular, traditional conservative distrust of government's role as an agent of economic change.

On top of that, there are specific policy differences with the administration over certain provisions in the bill - for example, one that provides US$150 million to insure honey bee farmers. But the expectation in the White House and on Capitol Hill is that more revision in the proposed legislation would make it possible to broker a compromise and allow for more Republicans to vote for the final version of the stimulus package which is, as everyone seems to agree, the only game in town. In any case, there is little doubt that Mr Obama would succeed in gaining the backing of at least three Republicans in the Senate, where the Democrats' majority is slim (59).

There seems to be a wide consensus for pursuing this experiment in Keynesian economics that is supposed to produce growing consumer and business demand. But even the most enthusiastic supporters of the stimulus package admit that they cannot guarantee that pumping money into the economy through a mix of government spending and tax cuts (about a third of the package) would succeed in providing the needed jolt to the ailing economy; they also agree that even under the best-case scenario (economic recovery), the mounting government spending would raise the federal deficit to dangerous levels.

The debate among economists is over the 'multiplier effect' of the many elements in the stimulus - whether government spending on, say, construction of new roads would lead to a greater or lesser increase in the national income than spending on, say, social welfare programmes.

In any case, a Congressional Budget Office (CBO) analysis concluded that only 64 per cent of the bill's spending would be completed within 19 months. And in that context, much of the delay would actually affect programmes with higher multiplier effect.

If there are very few in Washington who are confident that this gigantic fiscal spending programme (with more and more spending expected to follow) will do the trick, there is really no one in this city who would vouch for a coherent plan to deal with the monetary side of the current economic crisis that would fix and bring back to life the broken financial system.

New Treasury Secretary Tim Geithner said that the administration was working on a comprehensive strategy to 'repair the financial system' but declined to provide details about the plan it was contemplating. Perhaps such a plan has yet to be devised or Mr Geithner and other top economic aides - like Lawrence Summers, head of the White House's National Economic Council - are worried that disclosing information about the course the administration was going to pursue would encourage investors to take steps that would undermine their plan's objectives.

Or, more likely, the Obama administration, like its predecessor, is improvising - using trial balloons to test the waters, without having any long-term strategy in mind (which makes sense since Mr Geithner was involved in drawing the outlines and implementing the earlier efforts to shore up the financial system during the last year of the Bush term).

The latest trial balloon released by the administration suggested that it was seriously considering the idea of creating a so-called 'bad bank' (which sounds like a lousy name for an institution that is supposed to help revive the financial system) that would flush out 'toxic assets' from the balance sheets of the many failing financial firms.

That some bank stoc`ks ended up soaring last week after the plan was leaked to the press may be an indication that bankers welcome the idea of a government- backed bad bank - as opposed to earlier suggestions that the American government would take steps to nationalise some leading financial institutions, in the same way it had already nationalised insurance giant American International Group (AIG) and mortgage banking institutions Fannie Mae and Freddie Mac.

'We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system,' Mr Geithner said in response to that speculation.

But buying the bad assets could cost the government up to US$4 trillion (yes, that's 'trillion'). At a time when lawmakers are still fuming over the chaotic fashion in which the US Treasury and the Federal Reserve handled the funds that Congress has already approved as part of the Troubled Asset Relief Program, or TARP, the notion that Congress would be asked to release more trillions of US dollars to assist the CEOs and shareholders of Citigroup and Merrill Lynch is mind-boggling. Indeed, officials are still discussing how to use the second US$350 billion slice of that bailout package.

So, lawmakers are bound to insist that President Obama take responsibility for selling the idea to the American people who are losing their wealth and drowning in debt.

And since the financial system would be doomed without a continuing infusion of money from Washington, Mr Obama will soon have to ask those who voted for him, as well as those who voted against him, to put their trust in him as he tries to lead the nation out of the economic mess - with even more debt.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

A new book review

Published in the new issue of The American Conservative.
F e b r u a r y 9 , 2 0 0 9 T h e A m e r i c a n C o n s e r v a t i v e 33

[ A m e r i c a n R a j : L i b e r a t i o n o r D o m i n a t i o n ? : R e s o l v i n g t h e C o n f l i c t B e t w e e n t h e W e s t a n d t h e M u s l i m W o r l d , E r i c M a r g o l i s , K e y P o r t e r ]

Averting the Clash
B y L e o n H a d a r

IT WAS BOUND TO HAPPEN. In the same way that the movement against U.S. military intervention in Vietnam split, amoeba-like, during the drawdown of the war in Southeast Asia, the opposition to the war in Iraq seems to be disintegrating now that the presidential candidate who promised to withdraw from Mesopotamia—a position that is currently supported by 70 percent of the American people—has occupied the White House.

In fact, opponents of President George W. Bush’s decision to oust Saddam Hussein and the ensuing American occupation of Iraq have never constituted a unified political force. The antiwar coalition instead consisted of several factions on the political Left and Right. They came together at the height of America’s unipolar moment in reaction to an effort by neoconservative ideologues to impose U.S. military hegemony in the broader Middle East and most of the Muslim world. In American Raj, Eric Margolis charts the evolution of an American imperial system whose foundations were laid in the Cold War and whose main rationale was the control of energy resources in the Middle East—a process that accelerated after the collapse of the Soviet Union, the only global player that could challenge American supremacy. His book is part political analysis and scholarship—unfortunately the author does not provide endnotes—part lively travelogue and personal memoir.

Margolis, like other critics of U.S. policy in the Middle East, was not surprised by 9/11. “The attacks of September 11, 2001, did not come out of the blue,” he writes. “They were a huge, overdue installment payment in the costs of empire.” Washington’s policy of propping up unpopular military regimes and monarchies in the Muslim world and its unyielding support for Israel’s repression of the Palestinian people, along with the humanitarian catastrophe resulting from the embargo against Iraq, produced a massive backlash against America in the Muslim world. President Bush and his neoconservative aides, says Margolis, seized the opportunity provided by 9/11 to pursue an overreaching strategy to secure America’s domination of the Middle East’s energy resources, a plan that required U.S. military control of Iraq and Afghanistan. This campaign was launched in the name of fighting terrorism, protecting the West from the Muslim menace, and democratizing the Middle East. But that crusade led to a head-on confrontation between the U.S. and the Muslim world, ignited even more anti-American terrorism, and ended up with a strategic debacle in Iraq and costly diplomatic and military setbacks in Afghanistan as well as in Lebanon and Israel/Palestine.

Most of the activists and pundits who helped energize antiwar sentiments in this country would probably support Margolis’s assessment. But not all the critics of the Iraq War agree in their opposition to the neoconservative agenda. Many realists faulted the mission in Iraq for not serving core U.S. interests but supported the invasion of Afghanistan. Foreign-policy internationalists insisted that the unilateral decision to attack Iraq violated the dictum that the U.S. should only go to war on behalf and with the full backing of the international community, as happened in Afghanistan. Noninterventionist followers of Ron Paul or Ralph Nader, meanwhile, warned against going abroad in search of monsters to destroy, while traditional conservatives and Jacksonian nationalists cautioned against both invading the world and inviting the world in the name of a self-defeating universalist doctrine. These differing ideological orientations overlapped on the issue of the Iraq War. Yet while common outrage against the neocons made for congenial political bed fellows, one recalls that there were quite a few realists, internationalists, libertarians, lefties, nationalists, and even paleo-conservatives who supported the invasion of Iraq and the campaign against Islamofascism.
And now that the U.S.-led crusade to remake the Middle East (aka the Freedom Agenda) has crashed so disastrously into political, economic, and military realities, it is not surprising that the anti-neocons are starting to discover that what united them may not be enough to keep them together. We can expect, for example, to hear charges of inconsistency directed against political allies from noninterventionists who cannot comprehend why their antiwar internationalist buddies are now advocating humanitarian intervention in Darfur. Or Ron Paul libertarians might be appalled to discover that realists insist the U.S. should remain engaged in the Middle East to maintain access to energy resources.

This is why some readers who wholeheartedly approved of Margolis’s many published articles blasting the Bush administration’s foreign policy and the neoconservative agenda may not entirely agree with the arguments put forward in American Raj. Realists who rebuked President Bill Clinton’s use of military force in Bosnia and Kosovo—even though neither situation threatened the well being of American citizens—would probably see a certain cognitive dissonance between Margolis’s denunciation of the military intervention in Mesopotamia and his applause for the one in the Balkans, which he describes as a “rescue of the Balkans’ oppressed Muslims” and a “gallant humanitarian action.”

And Margolis is very critical of the Bush administration’s refusal to
denounce and take action against Moscow’s brutal suppression of the Muslim insurgency in Chechnya, a view not shared by realists, who place priority on securing the U.S. relationship with great powers like Russia, and noninterventionists, who oppose military aggression everywhere. Libertarians and traditional conservatives, moreover, may not feel comfortable with Margolis’s notion that the U.S. has an obligation to bring democratic values and practices to the Muslim world or his argument that the Orange and Rose Revolutions in Ukraine and Georgia serve as a model for the role that America and the European Union can play in forcing dictators out of power.

But Margolis is neither a traditional conservative nor a libertarian nor a leftwing interventionist. As the son of an American-Albanian mother and an American-Jewish father, he is one of those foreign correspondents with strong cosmopolitan sensitivities— someone who can reasonably boast that the world is his home. He is essentially an internationalist with realist and idealist tendencies in the tradition of presidents Dwight Eisenhower, whom he praises for pressuring Britain, France, and Israel to withdraw from Egypt after the 1956 Suez campaign, and John F. Kennedy, who fiercely criticized France’s colonial war in Algeria. He also shares many of the foreign-policy views of contemporary public figures such as former national security adviser Zbigniew Brzezinski and former Republican senator Chuck Hagel. Both have been harsh critics of neoconservative-driven policies in the Middle East, but they also support the exertion of U.S. influence in the region through diplomatic, economic, and political means.

In American Raj, Margolis stresses his concern that 9/11 and the Iraq War have helped turn the late Samuel Huntington’s clash of civilizations paradigm from a theoretical concept into an explosive global reality. Extremists on all sides—Osama bin Laden and al- Qaeda, Bush and the neoconservatives; Milosevic and Serb nationalists, Putin and Russia’s imperialists, Israeli Likud leaders and the Jewish settlers—have succeeded in transforming national, strategic, and economic disputes into conflicts between religions and cultures. Margolis believes that, notwithstanding the history of bloody conflict, the Abrahamic monotheistic faiths have much in common and that a reconciliation between the West and the Muslim world would serve the long-term interests of Americans and Middle Easterners alike. His case is convincing. The clash of civilizations is not inevitable. The current conflicts in the broader Middle East—Israel/Palestine, Kashmir, Chechnya, Lebanon, Iraq—are struggles in which political, tribal, national, as well as religious factors all play a role. (In fact, I challenged Huntington’s clash of civilizations thesis 15 years ago in an article for Foreign Affairs. I argued that members of the U.S. foreign-policy establishment, suffering from “Enemy Deprivation Syndrome” in the aftermath of the Cold War, were settling on radical Islam—or the “Green Peril” as I called it—as a potential new bogeyman.)

The hawkish ideologues who hijacked President Bush’s foreign-policy apparatus duly embraced Huntington’s concept as a way to justify their attempts to expand American military power and establish U.S. hegemony in the Middle East. But even if, as Margolis advises, America withdraws its troops from Iraq, Afghanistan, and the rest of the broader Middle East and revises its open-ended commitment to Israel, there are no guarantees that the Middle East would take the road towards liberalization, following in the footsteps of the former Communist-controlled states of Eastern Europe. It is quite conceivable that other global powers might fill the vacuum created in the aftermath of the American empire, working with old and new regional autocrats and local warlords in ways that sabotage political and economic reform.

Yet Margolis, despite his own rejection of Huntington’s thesis, keeps referring in American Raj to the “Muslim world,” as though all its peoples share similar values and aspirations. The Muslim world is in fact a mosaic of nation-states, ethnic groups, religious sects, and tribal groups; a mishmash of political ideologies and economic systems as well as national identities— Arab, Persian, Turk, Kurd, Israeli, Berber—and even large non-Muslim communities—Maronites, Copts, Armenians, Jews, and, if India is added to the picture, Hindus. The Muslim world includes the secular Arab nationalist movements of Ba’athism and Nasserism; Saudi Arabia’s dominant and strict Wahhabism; the revolutionary, millennialist dogma of the ruling Shi’ites n Iran and their Middle Eastern satellites; the Kemalist secular, republican, and statist tradition of Turkey; the tolerant and multicultural societies and capitalist economies of Indonesia and Malaysia; the radical Islamists of South and Central Asia; Westernized, multiethnic, multi-religious Lebanon; and Muammar Qaddafi’s strict and somewhat bizarre Islamic revolutionary system in Libya.

It is true that Bush’s policies may have unified the majority of the world’s Muslims against America. Yet changes in American policy under the administration of President Barack Obama, especially in dealing with the Persian Gulf and the Levant, could reverse these attitudes. Washington might then embrace a foreign-policy realpolitik that treats the Broader Middle East not as an American Raj or a monolithic civilization, but as a hodgepodge of many identities, interests, and policies.

Leon Hadar is a Cato Institute research fellow in foreign-policy studies and
author, most recently, of Sandstorm: Policy Failure in the Middle East.