September 11th, Globalization and the End of the High-Trust Era[1]
by
In the late 1990s, America seemed triumphant on all
fronts. The Cold War had largely been
closed in 1991 with the dissolution of the Soviet Union. America had enjoyed nearly a decade of
robust economic growth characterized by a low inflation, low unemployment
formula that stupefied even the most seasoned economists. America was championing among nations a
supposed “new economy model” comprised of stunning individual and corporate
wealth creation, technological innovation and entrepreneurship, market
expansion, and minimalist social safety-net liberal democracy that it felt all
nations had to converge towards, or themselves remain uncompetitive in the face
of the American juggernaut.
America believed that it was moving its political
economy a notch closer to the theoretical constructs of frictionless capital
flows and investment, efficiently directed by high levels of quality
information, good institutional governance and feedback loops. This was a time of little humility when the
high priests of modern capitalism sought to remake economic theorems and when
America saw the creation of a new class of super wealthy entrepreneurs and the
broad enrichment of the middle class.
And had always been true, at least since the mid-17th
century, powerful states organized themselves at the highest end of wealth
creation and utilized lesser states as producers and suppliers of items to
satisfy their consumption. In the
modern world, Asia broadly and Southeast Asia in particular have been the
producers of preference to satisfy the formidable consumption appetites of the
United States and Western Europe.
Whether the contemporary phenomena of highly connected
economic and cultural convergence around the world is titled globalization,
Americanization, or homogenization, the globalization process thrives in
high-trust, low-fear environments. The
terrorist tragedies of September 11th, however, have seriously
disturbed the culture of globalization and reduced trust both within and among
developed and developing states.
Although the current vector of international affairs need not continue
towards highly cynical, security-obsessed, low trust ends, the chance of
quickly re-establishing the 1990s environment of robust flows of risk-ready
investment and finance are very low.
However, beyond the systemic distractions of September
11th, other factors also influence the course of American economic
and security engagement in the Asia Pacific region. First, the end of the Cold War has not yet been fully reconciled
with the parts of American foreign and international economic policy still
moving by inertia and very much rooted in the old realities of superpower
rivalry. There still exist significant
vested interests born in the past – Pentagon preservationists and defense
contractors as examples – which thrive in low-trust environments and wither
when the international environment is more stable. Secondly, the crisis of confidence triggered by the burst of
America’s internet bubble combined with the evident fraud and political
cronyism in the collapse of Enron and other well-placed, blue-chip American
firms, minimizes the moral and political leverage that America and its
international agents, such as the International Monetary Fund, have in helping
to direct the course of other economies to fit American preferences. Third, the current political dynamic in the
transition from the Clinton White House to the Bush White House is one that
favors more classical approaches to security-focused American foreign policy
rather than developing an international economic vision to help buttress and
support international stability. In
other words, there is no Robert Rubin look-alike among George Bush’s team, and
little evidence of anything more than ad hoc economic policy in the new
administration.
American economic and security engagement in Asia and
elsewhere in the world has significantly suffered because of the events of
September 11th, which have in turn empowered actors in the political
economy that are much at odds with the forces that drive high rates of regional
economic growth. Rather than achieving
greater stability through global economic integration, enmeshing and taming
potentially troublesome economies such as China in the stabilizing fabric of
global economic co-dependence, the world will be pulled apart some, at least in
the mid term. For the time being, smart soldiers will somewhat displace smart
investment bankers. The benefits of
America’s fiscal conservatism which prompted lower interest rates and greater
consumption are being undermined by the largest increases in military spending
in more than two decades and the return to high debt politics. Economic rates of growth will slow on average
and recovery will be stifled by diminished consumption among rich nations and
poor economic decisions by developing nation leaders who are addicted to export
led growth rather than cultivating more stable but less dynamic domestic
consumption. In a prescient speech in
1997, Lawrence Meyer, who recently stepped down as Deputy Governor of the
Federal Reserve Board, defined America’s phenomenal economic strength over the
last decade as the result of “an era of positive shocks,”[2]
which were coming to an end and which would make the miracle economy seem much
less miraculous. September 11th
just helped this foresight come true faster and more furiously, with
unemployment surging by 50% in just a few months.
During the Cold War, the Asia Pacific region thrived
in part because America was willing to foster economic dependency by trading
market access for political loyalty.
Behind the veneer of free market economic development was a set of
political, non-market decisions designed to keep much of the Asia Pacific in
American rather than Soviet orbit. When
financial flows and investment erupted by orders of magnitude after the Cold
War’s end and helped drive spectacular growth rates in what Jeffrey Garten
called the BEMs (Big Emerging Markets)[3],
two things happened – first, the proliferation of reckless financial
speculation throughout most of Asia where highly regulated, often corrupt
financial markets gave way to highly unregulated, more corrupt realities. Second, the disappearance of the Soviet
Union meant that America needed the political loyalties of these states less
than was earlier the case and thus would be less willing to buffer these
economies from shocks and failure. The
combination of huge inbound investment, lousy governance, and ignorance that America
would fail to bail out failed policies and governments made an economically
lethal combination. America’s
callousness towards the newly emerging Asia middle class manifested itself in
the 1997-1998 East Asia economic shocks where those who had placed bets on the
market economy were mostly shoved into poverty. Such a situation could never have been imaginable during the Cold
War.
Today, after September 11th, international
trust has been tested beyond the economic.
President Bush has built a global coalition to stand against and root out
terrorists – and in so doing has done much what feudal warlords have done in
the past in compelling their vassals, or lesser states in the contemporary
setting, to swear absolute loyalty oaths to the greatest power. Failure to stand by the U.S. means international
isolation and potential military confrontation. With American advisors now operating in the Philippines, North
Korea highlighted as one of the premier members of the “Axis of Evil,”[4]
and terrorist cells being tracked and identified in Indonesia, Singapore,
Thailand, and Malaysia, the risk factor for new investment in the region has
skyrocketed. Globalization may not be
dead, but it is certainly more in doubt today than on September 10th.
While the baby boomers saw the assassination
of John F. Kennedy, the Civil Rights struggle, and the Vietnam War as defining
experiences of their generation, those in the current “me” generation watched
the Cold War become a historical afterthought.
They celebrated self-indulgence, made Madonna rich, and built their
communities in internet chat rooms. The specter of AIDS was the closest this
generation came to a shared touch point, until the 11th of September. In the collective minds of young and old,
9-11 now replaces December 7th as the most infamous date on the calendar, and
America's future course will no doubt be driven by debates about the
implications of this terrorist tragedy.
In the weeks following the attacks, most public policy
intellectuals forfeited introspection and analysis for flag-waving and calls
for revenge. To ask the question of
“why?” and to ponder whether American foreign policy had gone awry was to risk
accusation of being un-American and of legitimating terrorism. Former Washington Post Tokyo Bureau
Chief T.R. Reid, now stationed in Europe, commented on CNN that his editors had
refused articles from him that asked “why so many people in Islamic nations,
and in developing countries around the world, hate the United States.” He stated that the Washington Post management felt that “the time would come later for
articles about something other than who did this and how we're going to make
them pay.”[5] Being patriotic, however, requires more than
reflex, and the task of sorting out the policy requirements of the future is
the only way to win back global stability.
America is tied in knots as it struggles with the
drama of airplanes flying into skyscrapers, of anthrax in the mail, and of the
anxiety of not knowing what next un-thought of horror waits to be told on the
news. Despite the widespread belief that foreign assaults on American soil
change everything, there is an emerging debate between those who want to
confront terrorism and its root causes with old institutions, like the U.S.
marines and the World Bank, and those who feel that September 11th
is a hinge in history between two eras and that Cold War-crafted institutions
have little relevance to the demands of 21st century global conditions.
The former camp views September 11 as a tragic episode
but does not feel that it portends anything new or fundamentally different for
American institutions. They feel that
globalization will continue on course; that American foreign policy will reward
nations that respect markets and democratic choice and will penalize rogue
nations that disrupt order. They
believe that America's role as the greatest military and economic power in
world history stands unrivaled. To
change course, in their eyes, would not only be wrong-headed in terms of policy
but also provide a victory for terrorist mastermind Osama bin Laden. As Defense Department guru Andrew Marshall
has argued, great powers rise and fall through interaction with their peers, not
through the actions of stateless terrorists who can harm and irritate but who
cannot change the calculus of power in global affairs.[6]
Others see September 11 as a pivot point between the
Cold War's slow end and a new era. When
the Berlin Wall was torn down in 1989 and the Soviet Union subsequently
dissolved in 1991, the world saw the superstructure of the Soviet empire give
way to new realities. Although Russia's
internal struggle with Chechnya and the ongoing crisis in the former Yugoslavia
are part of the hangover from this historical transition, the implosion of
power in the Kremlin resulted in former Soviet states, ethnic groups, and even
organized crime bosses competing to fill the power vacuum left when the USSR
died. But the other spouse in the long
Cold War relationship – the United States – failed to dismantle the
institutions and massive economic and security superstructure with which it
confronted the Soviets. American
leaders believed that since NATO succeeded in deterring aggression, expanding
NATO could only be a good thing. Since
the International Monetary Fund, World Bank, and World Trade Organization had
held the so-called free world largely together and on the track towards
market-based economic order, then broadening their mandates in the post-Soviet
world could only be positive. Since the
U.S. had emerged from the Cold War with a booming stock market, a surging
economy, low unemployment, low inflation, and a strong national currency and
was at the same time parenting new information, genetics, and nanotechnology
revolutions as well as connecting the world via the world wide web, then
compelling the rest of the world to do the same was honorable. Although the Cold War had clearly ended,
America never accepted the need to rewire its institutions to deal with a new
and different world. Instead,
triumphalism combined with inertia and incrementalism has defined America's
post-Cold War foreign policy.[7]
What the world witnessed on September 11 was a seismic
occurrence in global affairs, the last aftershock of the Cold War's end. The 1985 Plaza Accord Agreement in which
America compelled Japan to increase the value of its yen to more than double
its preceding level to help reverse America's growing trade deficit was the
first sign that the Cold War's costs were getting too high for the U.S.
superpower. In that same year, Japan
succeeded the United States as the world's leading creditor nation while
America became leading debtor. But many
other events in the last fifteen years – some great such as the 1997-1998 East
Asia economic crisis and some small but significant such as the September 1995
rape of a 12 year-old school girl by three U.S. military personnel in Okinawa –
were tell-tale signals that the dynamics of America's engagement in
international security and economic structures were out of sync with what was
really happening in the world.
While American media and strategists have argued incessantly about whether the U.S. has vital interests at stake in the Bosnian situation and has quarreled about the deployment of approximately 3,000 U.S. troops in Bosnia, and now a smaller number in Macedonia – there had been total silence in Washington policy circles on the question of U.S. troops in Saudi Arabia – until Saudi officials in February 2002 leaked their desire for the U.S. troops to leave.[9] After having for some time observed the radicalizing effects on the local population of a five and a half decade deployment of nearly forty U.S. military installations on Okinawa, Japan, I have been asking American defense intellectuals for the last several years to describe the differences between pre-revolutionary Iran and Saudi Arabia today. Should not America worry about a military presence that erodes the legitimacy of Saudi rulers in the eyes of their domestic population and radicalizes fundamentalist Islamic adherents against the U.S.? This subject has either been pushed aside because of the conventional notion that U.S. troops stabilize the region against Iraqi misbehavior or because it was a taboo topic and that essentially America has a very difficult time withdrawing from its international outposts, once dug in.
In
a meeting discussing his Foreign Policy essay on the rising number of
self-determination movements in former Soviet controlled territories, former
Deputy Secretary of State Strobe Talbott commented that the subordination of
culture and identity of the peoples of the Soviet empire resulted in amazing
radicalization of parts of the population.[10] I asked him whether we should worry about
the same thing in the American case, asking whether our long term troop
presence on Okinawa which has linguistic, cultural, and historical roots
distinct from Japan could be radicalized in the same way. I asked the same regarding the Saudis. Talbott responded that he didn’t realize
that the Okinawans were any different than the Japanese, that this notion had
not occurred to him, and that troops are stationed abroad to be “anchors of
stability in unstable regions.”[11]
Despite his status as an international parasite
now, Osama bin Laden’s words on this are important to read. Whether one
considers bin Laden’s voice totally illegitimate now, the fact is that many
well-established elites in Saudi Arabia, UAE, Oman and Kuwait – all of which
America is now supposedly protecting --- share bin Laden’s views. In his forthcoming book Holy War Inc:
Inside the World of Osama bin Laden, Peter Bergen reports bin Laden’s words
from an exclusive interview:
The Collapse of the Soviet Union made the U.S. more haughty, and it has started to look at itself as a master of this world and established what it calls the new world order. . . .The U.S. today has set a double standard, calling whoever goes against its injustice a terrorist. It wants to occupy our countries, steal our resources, impose on us agents to rule us. . . .and wants us to agree to all these.[12]
Bin Laden is a terrorist, but his words ring eerily
close to the comments of leaders of many nations in the developing and
developed world; as well as to the protestors against globalization that
unleashed their fury in the “battle in Seattle” protesting a new round of WTO
negotiations, in Davos at the World Economic Forum meetings, and at the
Washington meetings of the IMF and World Bank.
After his 1992 victory over George Bush, Bill
Clinton tried to modify the calculus of national security by raising the
priority of economic interests to a level on par with classical security
considerations. Clinton perceived a
military establishment intoxicated with its own self-importance after its Gulf
War victory but essentially out of step with the mores of centrist
Americans. At his November 1992 Little
Rock Economic Summit, Clinton made clear that his foreign policy would be
driven by economic concerns – and the need to draw nations together in trade
and the mutually beneficial bonds of economic enmeshment. He marginalized the nation’s military elite
and made them appear irrelevant to the future.
He also threatened the institutionalized homophobia of the armed
services by ordering that gays and lesbians be allowed to serve in the
military. Few could make the world’s
most powerful military force feel insecure, but Bill Clinton excelled at
it. Eventually, a resilient Pentagon
prevailed over Clinton who was distracted by person scandals. Had Clinton put foreign policy on a new
course, the world’s resentment over America’s often unilateral and
unconstrained economic and military behavior would have been lessened.[13]
George
W. Bush began receiving regular intelligence briefings earlier than other
presidential contender in history. His
defense and foreign policy team, including Condoleeza Rice, Colin Powell,
Donald Rumsfeld, Richard Armitage, and Paul Wolfowitz, were in place remarkably
fast. Rather than appointing trusted,
hand-picked loyal retainers, Bush kept Louis Freeh at the FBI and George Tenet
at the CIA. Freeh had a key role in
pursuing the perpetrators of the terrorist assault on the USS Cole in Yemen
while Tenet had emerged as a key player tracking the groups, formal and
informal, which threatened to disrupt the Middle East peace talks. Fears among some informed observers were
that Iraq, possibly Iran, and possibly Libya were attempting to light a match
in the Palestinian-Israeli negotiations, and that weapons of mass destruction,
particularly from Hussein, could become part of the morass.
Bush’s
one known meeting with a foreign policy intellectual was with Robert Kaplan,
author of “The Coming Anarchy.” Bush,
Condoleeza Rice, and Andrew Card met Kaplan alone for more than an hour on the
same day that Bush had a summit meeting with Japan Prime Minister Mori. Bush takes foreign policy seriously, and
reportedly told Kaplan to “relax. . .we are all realists here.”[14] George Bush, who won the presidency in a
contested election, could not get more than half of the American public to
support him on any domestic policy achievements – not even a massive tax
cut. He has been prepared for conflict
since he entered office, and international conflict is the one route that this
presidency had to get Bush’s popularity levels to rise. It is interesting that Bush’s economic team,
in contrast to Clinton’s, appears second rate, utterly uncoordinated, and has
little regular access to him.[15] Bush is consumed by foreign policy and wants
to remove the notion that the Bush family was bested by Saddam Hussein. In contrast to Nixon and Kissinger who were
realists during a time of perceived American decline, Bush sees himself as a
realist leader in a time of unparalleled American ascension and power.
In order for America to take a constructive step
forward, it must introspectively sort out what were the conditions that led to
these horrendous attacks against symbols of American values. The misfit between America's lofty self
impressions and those held by other nations have hampered a constructive
response to the current tragedy. Rather
than adjusting to the future, America may be rushing back to its past.
Despite having in the few months following September
11 the luxury of three important international meetings - the Shanghai APEC
Leaders Summit, the Marrakesh meeting on Global Climate Change, and the Doha
WTO Ministerial Meeting -- to help launch and outline the beginnings of a new
global grand bargain built on collaboration and inclusion of both the powerful
and the impoverished nations of the world, George Bush chose not to
innovate. Instead, he made the
Shanghai APEC meeting a punctuation point in the global coalition against
terror and a venue where more nations swore what are essentially loyalty oaths
to the United States.[16] Not that a coalition against terror isn't a
significant accomplishment - but to build global capacity to oppose terrorists
while not responding to the growing disparity between rich nations and poor
ones, or to fail to understand that what is needed today is both “compassionate
globalization” and a 21st century global Marshall plan to help win back the
affections of the silent majorities of nations in the developing world, runs
the risk of being completely ineffective and ensuring future global trauma.
Many nations have been irritated by the high-handed
unilateralism of George W. Bush's rejection of the Kyoto Protocol and have been
anxiously waiting for an unveiling of the promised Bush plan to deal on its own
with the problem of greenhouse gas emissions.
Perhaps no other gesture would make a more instantaneously positive
impression on the world – and replace the security underpinnings of the new
global collaboration against terror with some widely shared positive vision -
than U.S. steps to respond seriously to the problem of global climate
change. Yet the United States proposed
nothing new at the October 29 Marrakesh meeting. Furthermore, the November 9 WTO Ministerial Meeting which
skittishly assembled in the heart of the Middle East in Doha, Qatar launched a
new round defined by the pre-September 11 neo-liberal objectives of the United
States to get agreement to negotiate new terms of trade in agriculture and
services, with few new twists to better tie together the fundamental fortunes
of the developed and developing worlds.
The leaders of the developing world - particularly India, Pakistan and
Malaysia - who had argued most strongly for a new round that was less
ideologically and politically suited to U.S. needs went mostly silent the weeks
following the terror attacks and then rather cynically settled for minor
this-for-that sectoral relief for textiles – certainly nothing that could be
considered cosmic or a new 21st century deal to achieve dignity and
a seat at the table for those at the lower levels of global per capita
income. Thus, America won a new trade
round but failed to make adjustments to policy that could have helped the
nations who are all too well of the constraints on their actions to feel like they
had future opportunities – while at the same time reinforcing George Bush’s new
global security alliance with the glue of enthusiastic economic and political
collaboration. While American
leadership in global affairs should not be forfeited, the tendency towards
calloused, knee-jerk unilateralism undermines American interests and global
trust.
While many shallowly argue that the East Asia
financial shocks were caused by ‘crony capitalism,’ poor bank governance, and
short term capital flight, the real driving cause of the economic collapse in
Asia was that America, without a superpower rival, was unwilling to further
tolerate the conditions in these countries that had always existed, frequently
by American design or with American protection. A mixture of political
and economic triumphalism led America to strong-arm Japan, South Korea,
Thailand, Indonesia and other nations in the Asia Pacific to forego heavy
regulation of their economies. The
U.S. encouraged broad structural deregulation, particularly in the financial
sector. Now that the Cold War ended,
the demands of Goldman Sachs and J.P. Morgan regarding the ‘rights of capital
investors,’ increased, and most Asian economies complied. However, American investors and pundits made
the same mirror-imaging errors in this emerging financial arena that American
strategists used to make when trying to guess Soviet strategic intent. They completely overestimated the legal and
regulatory competencies of these nations.
The lack of strong institutional oversight and governance mechanisms through much of the lesser developed, fast growing economies in the Asia Pacific combined with huge injections of new investment capital seeking quick returns produced a classic speculative bubble of a boom in asset values, overextension of short term credit, and subsequent collapse. When capital realized that Asia had been seriously overbought, a whiplash in capital flows occurred, with investors cashing out and loans being called.[17] In addition, nations attempting to fight the deflationary pressures of economic reform and adjustment – such as Japan – started devaluing their currencies so as to boost exports, which resulted in a disastrous round of competitive devaluations. At the time of this writing, Japan’s currency in the year 2002 has fallen in value by roughly 10%, drawing threats from China’s central bankers, and warning from other regional leaders such as Malaysia’s Prime Minister Mahathir, that they will not allow their currencies to move to uncompetitive levels against the yen.[18] In many ways, the conditions that preceded the collapse of the Thai economy and the viral spread of economic malady to other parts of Asia and Latin America starting in 1997 bear similarity to the conditions in February 2002 – the only exception being that a spark in a potential set of developing nation economic shocks probably will not be the instantaneous flight of short term capital. Instead, a combination of choked off general investment as well as a major decline in consumption from the West, combined with the third leg of competitive currency devaluations could spread economic hardship through the region.
When evaluating the behavioral norms of any system, it is best to observe the system under stress. The three most significant economic challenges during the tenure of the still young Bush administration have occurred in the financial crises of Turkey and Argentina, and in the ‘potential’ for a globally significant major economic incident in Japan. Most analysts believe that Turkey’s capital crisis was mostly resolved by the International Monetary Fund – despite not having much public (or private) support for credit extensions from the United States. Argentina, in contrast, has been permitted to sink with America offering “tough love” advice to the profligate spenders of Argentina’s government. In the years ahead, Argentina – in many ways one of the premier democracies of Latin America – will either thank the U.S. for refusing to bail out the undisciplined and corrupt leadership in its government or will harbor major resentment against the U.S., prompting a political course in that nation that could be very much at odds with American interests.
What became clear, however, in the matter of responding to international economic crises is that the Bush administration has developed none of the competency or clarity in its economic team that it has in its foreign policy and defense ranks. Although all of the major economic voices of the administration have flip-flopped in their views on the efficacy and morality of international bail outs, it was clear that two key voices – Paul O’Neill at Treasury and Lawrence Lindsey at the National Economic Council – were at odds with each other in this key debate. O’Neill favored bail out actions and applauded Robert Rubin’s quick action and success during the Mexico peso crisis. Lindsey had articulated near frenzied opposition to such bail outs, arguing that they only distort markets and reward inefficient and often corrupt sectors in the respective economy. The two barely co-exist within the administration.
John Judis, in writing about the Bush administration’s approach to both Argentina and the economic morass in Japan, has written that O’Neill and Lindsey – despite their intellectual and policy rivalry – have largely followed the same script each time a new crisis has emerged. He writes, “first, they deny that it is all that serious; then they deny that the United States – or international lending institutions – can do anything about it; then they put forth solutions that make things worse.”[19] In the case of Japan, O’Neill’s key deputy, Kenneth Dam, called on Japan to do something “swiftly and efficiently” about its bad debt problems. At the same time, Lindsay was arguing that Japan’s compounding non-performing loan problems were more a manifestation of over-regulation in the Japanese economy, and the failure to implement structural reforms, rather than a cause of the problem. In another instance of cross purposes between Lindsey and O’Neill, Lindsey prompted Japan to jumpstart growth by devaluing its currency through the purchase of foreign (particularly American) bonds. In late December 2001 and then again in a speech at the Nihon Press Club on 23 January 2002, O’Neill strongly punctuated his opposition against Japan pursuing economic revival through currency manipulation.[20]
In the Bush White House, there is no semblance of order in the economic team – no clear leader. Lindsay and O’Neill are at each other’s throats. Pronouncements are ad hoc as witnessed in a series of strikingly negative statements by U.S. Trade Representative Robert Zoellick, Treasury Secretary Paul O’Neill, and Deputy Treasury Secretary Kenneth Dam about Japan’s economic policies at various times – each statement quickly snuffed out and closed down by a White House much more concerned with the realities of this new anti-terror war and the need to tread lightly on key allies.
Regarding the rest of Asia, America is sending clear signals that it is subordinating the prize of economic cooperation to military collaboration, as witnessed in the exchange of a huge aid package to the Philippines for President Gloria Macapagal Arroyo’s commitment to work hand in hand with American military advisors in moving against various Philippines rebel and terrorist organizations.[21] America is mindful of the stress on the rest of Asia, to a degree. It is taking Japan’s cue and beginning to consider bilateral and even regional free trade agreements, as it has done with Singapore. Washington has taken note that China has proposed an ASEAN-China FTA – which has somewhat startled both Japan and the U.S.
However, given the high state of fear and conflict in the international system today as well as predictable distractions in just determining what was agreed to and what not in the Doha WTO Ministerial Agreement, the chances for any real progress in meaningful trade liberalization – bilateral, regional, or even more broad – are minimal. Compounding this pessimistic view is the reality that APEC is viewed suspiciously now in the United States because of its failure to secure substantial market liberalization commitments among member nations, when times were good. Many American analysts believe that APEC has become a once a year leader’s photo opportunity with little substance.
In this environment, America’s economic policy with Asia will hardly be anything more than erratic, ad hoc, and reactive. When one considers the rise in security tensions, one would normally argue that the United States would step forward to better secure the economic dimensions of regional stability – but there is no evidence, as of yet, of such common sense vision.
Rather than waking American leadership up about the
realities that need tending in the 21st century, September 11 seems to have
hardened perspectives that were in play before the assaults on the World Trade
Center and Pentagon. Nearly all serious
treatments of future threats to American national interest produced in the last
fifteen years have raised the likelihood of increased state-sponsored and
non-state terrorism.[22] Saddam Hussein's interest in biological,
chemical, and nuclear weapons have led many to predict that the day was not far
out when American soil would be the target of some massive terrorist
attack. In its 1999 report, “New World
Coming - American Security in the 21st Century,” the Hart-Rudman
Commission argued that “It will no
longer require a major investment in scientific and industrial infrastructure
for small states and even reasonably well-heeled groups and individuals,
whether they be criminal syndicates or terrorists, to get their hands on very
dangerous technologies.”[23] The Commission further stated that “states
will acquire weapons of mass destruction and mass disruption, and some will use
them. Americans will likely die on American soil, possibly in large numbers.” The report was criticized in the media as being
sensationally alarmist, but most agreed that terrorism had to be a high
priority of the next administration. In
a famous Wired Magazine article
titled “Why the Future Doesn't Need Us,” Sun Microsystems co-founder Bill Joy
argued that the rapid innovations in genetics, robotics, and nanotechnology
were generating pools of low-cost, easily accessed expertise where the
activities of a few bad people - or even good people who caused scientific
accidents - could create deadly or very harmful outcomes for very large numbers
of other people.[24]
Unwilling or unable to organize to confront these
anticipated and emerging asymmetric threats, the Pentagon and national security
apparatus including the CIA, FBI, and National Security Agency have moved
forward on inertia, determining what they would do tomorrow by what they did
yesterday. In contrast, Timothy McVeigh
and Osama bin Laden leveraged the information revolution and realized that the
small could generate huge outcomes and that the big were blind to the competencies
of the small.
Infected by notions of Cold War power, the U.S.
Defense and State Departments developed rhetoric regarding 'rogue states' and
argued that the best protection against next century terrorism was a protective
shield of ballistic missile defenses.
Why would terrorists spend the resources to somehow mount a ballistic
missile attack when commercial airplanes are so much more effective, and more
simply commandeered? However, the commitment of the Pentagon and U.S. national
security apparatus to missile defense has been broadened and hardened. Despite huge resources that were pouring
into America's intelligence services, new legal authorities are being provided
to the CIA and FBI in addition to billions more dollars. Few have pondered the question of whether
America's intelligence problem is actually one of too much information and not
enough synthesis - or even a problem of good intelligence and poor political
decision-making. Nonetheless, America
is going to spend more, get more quantities of intelligence, and be told –
quite wrongly – that the problem has been solved.[25]
After the terrorist attacks on the Pentagon and World
Trade Center several months ago, many Americans expected and demanded quick
revenge. President Bush promised
“justice would be done,” and stated that Osama bin Laden was “wanted dead or
alive.” 40 well-known conservative and
liberal intellectuals, led by neoconservative wunderkind and Weekly
Standard editor William Kristol sent a letter to Bush commending his
“commitment to lead the world to victory” and endorsed his call for “a broad
and sustained campaign against the terrorist organizations and those who harbor
and support them.” In this letter,
America's neoconservatives and leftish pro-Israel intellectuals encouraged Bush
to invade Iraq, crush the Hezbollah in Iran and Syria, and financially cut off
the Palestinian Authority if it fails to completely neutralize those forces in
its territories that are threatening Israel.[26]
Given this bleat from the political left and right for
results and revenge, President Bush's restraint has been remarkable. While bombs are falling on Afghanistan, the
scope of attack has been well-defined and modest, even though any action taken
by the U.S. in the region could threaten the political stability of several
Middle East nations. Bush's preference
for diplomacy tied to ruthlessly precise assaults on enemies all of the world
can hate has inspired hope that the American president may be more thoughtful,
less reflexive, and more strategic than many had thought.
Applauding Bush’s restraint, however, may be
premature. The President and Defense
Secretary Rumsfeld have promised a long war, which may run for several or more
years. American support for the
President’s actions will rise and fall depending on whether America is
accomplishing anything in its assault on terrorism; and may grow frustrated
with the new constraints on freedom of action on American citizens themselves. Furthermore, if Saudi Arabia, Pakistan or
other nations fracture in civil war – a very real possibility – the complexity
of global conflict becomes orders of magnitude greater. While many worry about a post-conflict
Afghanistan state, the real worry of the United States is Pakistan. Afghanistan was sacrificed long ago in a
Cold War proxy war between American and Soviet interests, and there is no quick
solution to its governance. Controlling
Pakistan, however, is fundamental to American interests and may be part of the
key of stabilizing Afghanistan.
India’s hypersensitivity about Pakistan’s political-security situation
may prompt India to cause mischief in the region, resulting in escalating
tension between two nuclear powers.
Some scenarios suggest that the United States may eventually try to
suggest a U.S.-United Nations presence in Pakistan to stabilize the
region. The U.S. may get India’s
agreement to this if the U.S. agrees to be a “cork in the bottle” containing
Pakistani aggression against India – but on a more covert level, a U.S.
presence in Pakistan would provide yet another point of U.S. influence on
China’s border to help constrain the growth of future Chinese influence. Such a scenario, however, may trigger a profound
systemic reaction from both Middle Eastern and South Asian nations against the
ever greater sprawl of American global presence.
The challenge for President Bush now is coupling the
cynical, military course he must take with a more positive, internationally
sensitive strategy that gives other nations hope that America will leave the
world situation more stable in the future than it was before September 11th.
Bush has injected potentially destabilizing dynamics in the domestic political
arenas of many nations by pressuring all countries to put aside their other
agendas and to work with the U.S. and Bush in going “after terrorism wherever
we find it in the world...getting it by its branch and root.”[27] Russia, China, Tunisia, and even North
Korea, in addition to nearly every other nation signed on to the President's
campaign and are remaking their own moral profiles and the world's geopolitical
landscape in the process. Regrettably,
promises to work against terror did not keep North Korea from joining both Iran
and Iraq as the leading triumvirate in an “axis of evil,” as articulated by
President Bush in his 2002 State of the Union Address.[28] Some in the White House know that this
collaboration is unsustainable without an American commitment to replace the
anger with which it has created this new order with other incentives.
While many Americans erupt in rage when anyone
implicitly ties the need to change U.S. behavior to the circumstances that led
to this unthinkable terrorist assault, most non-Americans believe that future stability
depends on the U.S. and G7 nations winning the affections of the silent
majorities in developing nations, particularly Islamic countries. New York Mayor Rudolph Giuliani refused a
$10 million donation from Saudi billionaire Prince Alwaleed Bin Talal when he
suggested that America needed to resolve the standoff in the Middle East and
help secure the establishment of a Palestinian state to stave off many of the
violent tensions emanating from this region.[29] Bin Laden deserves no legitimacy – but the
point that Alwaleed makes was vital for America to have comprehended and to
have taken action on before this terrorist tragedy.
However, the greatest challenge that some parts of the
Bush team are beginning to mull over is how to capture the world's imagination
about a better, fairer, stronger system of international governance that is
inclusive and respectful of developing nations. Some in the administration don't want to recast American
environmental or trade strategies in any new ways. Others in the administration, particularly today in the State
Department, feel compelled to reinforce the fragile threads of current
cooperation with gestures on international environmental, labor, and general
trade policy and want the perception of America's heavy-handed presence in
world affairs to be replaced by collaboration.
The problems with the sensitive route are many. First, the administration is populated more
by unilateralists and neo-conservatives, who sneer at institutional
encumbrances like the United Nations, than by diplomatic consensus builders
like Colin Powell.
Furthermore, when it comes to designing alternative
schemes of world order, much of the developed world has little trust in
unconstrained U.S. leadership. In this
regard, other potential lead nations are in short supply. Japan is economically stagnant and still
appears internationally immature. The
United Kingdom has forfeited its potential role as the nouveau John Maynard
Keynes redrawing important global institutions of the 21st century. Instead, Britain has resurrected the spirit
of Churchill in the form of Tony Blair who has become leading spear-carrier for
the American empire. Germany seems tied
in knots about the subject of military deployments and is neglecting the
questions of what sort of software operating system the world needs to run on
now. Strangely, France – with
experience in empire and a well-known independence of the U.S. – may be the
very nation that America needs to strike the call for a new, more compassionate
global order. Given the French
elections next May, either President Chirac or Prime Minister Jospin have a lot
to gain by constructing the platform on which the world's greatest political
and economic thinkers could replace or adjust the Bretton Woods institutions. Their goal could be a new grand bargain
between developing and developed nations that mixes regulation and markets to
achieve a more humane strain of globalization.
While America cannot overtly lead this charge, it could enthusiastically
cooperate and collaborate in such a court of the world's best government and
non-government intellectuals.
Americans will never forego the belief in leadership
and of the calculus that sometimes calls for independent action when no others
will act. But in trade, in environmental matters, in making the World Bank and
IMF work for today's world rather than for a world fifty years ago – America
and its key partners have the opportunity to reacquaint themselves with the
citizenries of nations that have been alienated and left behind as the
developed world has raced ahead.
The End of
America's “Just in Time” Era
Although the American economy had slowed considerably
before the terrorist tragedies, America's resolve to accept the costs of a
long-term, expensive, new form of war have nonetheless shaken the confidence of
consumers, wreaked havoc on American industry, and have sparked the likelihood
of global recession. The hemorrhaging
of government cash to keep airlines flying and the U.S. economic system from
collapsing has enhanced rather than lessened the fears of U.S. consumers and
investors about the future.
Historically, when governments demonstrate fiscal
frugality, their consumers spend – and when governments spend well beyond their
means, citizens worry about the future, cut their debt and save. During most of 1999 and the first half of
2000 when government accounts were in surplus, Americans were spending 103% of
income - and their high level of consumption was the most important driver of
global growth. Feeling confident about
the future, American consumers believed in “just in time money” with cash
coming in as soon as it was needed as well as “just in time jobs” in case there
was a need to replace one job with another, or even to a second job to one's
work load. Compare the confidence of a
just in time economy that America grew to expect over the last decade with
Japan's stagnant economic conditions.
While Japan's historically high savings rate had fallen considerably in
the late 1980s and early 1990s, once Japan's economy burst and government and
private sector institutions - weakened by poor performance and scandals –
appeared untrustworthy, Japanese savings rates surged.
Confidence in institutions, trust between nations, the
interconnectedness of futures that globalization is supposed to be about comes
from hard won effort. Once trust is
violated - if only for a short time - it takes considerably longer to
re-establish that trust. This is the real impact that the terrorists have
made. They have shaken the confidence
of American citizens as well as people around the world in their institutions -
both economic and military.
All that well-intended global leaders can do now is to
work to restore confidence. To do this,
they must not only follow the logic of military action but must offer a vision
of a better global order that the nations and people of the world can aspire to
create. To pursue a new global economic
order without dealing with the reality of current security realities would be
just as damaging as pursuing a final military solution to terrorism without the
promise of better circumstances for developing countries.
When Zbigniew Brzezinski was asked in 1998 if he felt
guilty about funding Afghan freedom fighters six months before the December
1979 Soviet invasion into Afghanistan - thus helping to spark a proxy war
between superpowers that destroyed Afghan society the consequences of which are
being revisited on America and the world today – Brzezinski replied, “What is
more important to the history of the world?
The Taliban or the collapse of the Soviet empire? Some stirred-up Moslems or the liberation of
Central Europe and the end of the Cold War?”[30]
If consumers are going to churn the wheels of the
world's economy, they have to believe that the future will be better than the
past. And for that to be achieved,
America and the world need to learn from past mistakes – such as Brzezinski's –
and understand that outcomes we reach a decade from now will be determined by
the course of action governments and people choose to take today. America and the world need to consider what
steps ahead, even if necessary and painful, will eventually restore confidence
and trust to the international system.
Only thinking through the military side of that equation – and not
considering the economic dimensions of stability – will result in a low-trust,
high-fear world – a rather pessimistic and unfortunate outcome.
Steven C. Clemons is executive vice president of the
New America Foundation, a centrist public policy institution in Washington,
D.C.
[1] Paper prepared for conference, “American Policy in Asia After September 11,” March 7-9, 2002, organized by Sun Yat-sen America Center, National Sun Yat-sen University.
[2] Lawrence Meyer, “The Economic Outlook and Challenges Facing Monetary Policy,” Economic Strategy Institute, speech, 8 January 1998.
[3] Jeffrey Garten, The Big Ten: The Big Emerging Markets and How They Will Change our Lives (New York: Basic Books, 1997).
[4] See George W. Bush, State of the Union Address 2002; also see Murray Hiebert, “Fight Evil or Win Friends,” Far Eastern Economic Review, 21 February 2002.
[5] T.R. Reid, interview with Christiane Amanpour, CNN International, 5 October 2001.
[6] See Robert Kaplan, Warrior Politics: Why Leadership Requires a Pagan Ethos (New York: Random House, 2001); and Lawrence F. Kaplan, “No Choice: Foreign Policy after September 11, New Republic, 1 October 2001.
[7] See Chalmers Johnson, Blowback: The Costs and Consequences of American Empire (New York: Metropolitan Books, 2000); and Steven C. Clemons, “All Powerful but Powerless: The Foreign Policy Implications of September 11,” Le Monde Diplomatique, October 2001, cover article.
[8] Official website, Third U.S. Army, United States Army Central Command – Saudi Arabia (ARCENT-SA) Report, URL: http://www-sa.arcent.army.mil/mission/index.html.
[9] David B. Ottaway and Robert G. Kaiser, “Saudis May Seek U.S. Exit: Military Seen as Political Liability in Arab World,” Washington Post, 18 January 2002.
[10] Strobe Talbott, “Self-Determination in an Interdependent World,” Foreign Policy, Volume 118, Spring 2000.
[11] Strobe Talbott, public meeting, from notes, Carnegie Endowment for International Peace, 8 June 2000. It is interesting to note that Talbott made these comments shortly before his and President Clinton’s trip to Okinawa, Japan for the G8 Economic Summit in July 2000.
[12] Peter Bergen, from interview notes with Osama bin Laden for Holy War, Inc. (New York: Free Press, 2001).
[13] See Steven C. Clemons, “The Armitage Report: Reading Between the Lines,” JPRI Occasional Paper No. 20 (Cardiff, CA: Japan Policy Research Institute, February 2001), www.jpri.org.
[14] From notes of meeting with Robert Kaplan, Washington, D.C., 19 March 2001; also see Steven C. Clemons, “All Powerful but Powerless: Foreign Policy Implications of September 11,” Le Monde Diplomatique,” October 2001, cover story; and also see Steven Mufson, “The Way Bush Sees the World,” Washington Post, 17 February 2002.
[15] See John B. Judis, “Bush-League Economics: Our Bum Steers for Argentina and Japan,” American Prospect, 28 January 2002.
[16] For an interesting review of the foreign policy stakes involved in the 2001 APEC Leaders Summit in Shanghai, see John J. Tkacik, Dana R. Dillon, Balbina Hwang, and Sara J. Fitzgerald, “Preparing for the APEC Summit: Mobilizing Asian Allies for War,” Heritage Foundation Backgrounder, 4 October 2001.
[17] For an important and insightful view in the East Asian economic crisis, see Paul Blustein, The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF (New York: Public Affairs Books, 2001).
[18] See “Koizumi’s Depreciation Tour,” The Economist, 17 January 2002.
[19] John B. Judis, “Bush-League Economics: Our Bum Steers for Argentina and Japan,” American Prospect, 28 January 2002.
[20] See Olivier Garnier, “Weaker Yen, Stronger Euro: The Global Economy Would Benefit if the Bank of Japan Bought Euro-Denominated Bonds,” Financial Times, 9 January 2002; James Brooke, “The Yen’s Relentless Downhill Slide,” New York Times, 28 December 2001; Edward Alden and David Pilling, “O'Neill Turns on Japan in Clash over Weaker Yen,” Financial Times, 23 January 2002; and Paul O’Neill, Speech at the Nippon Press Club, 23 January 2002.
[21] Rajiv Chandrasekaran, “Attack Altering Politics Across Southeast Asia,” Washington Post, 11 October 2001.
[22] For example, see Graham T. Allison and Robert Blackwill, principal authors, America’s National Interests (Washington, D.C.: The Commission on America’s National Interests, July 2000).
[23] U.S. Commission on National Security (Hart-Rudman Commission), New World Coming - American Security in the 21st Century, Washington, D.C. 15 September 1999, URL: http://www.nssg.gov/Reports/New_World_Coming/new_world_coming.htm.
[24] Bill Joy, “Why the Future Doesn’t Need Us,” Wired, April 2000
[25] For useful insights into the problem of low cost terrorism using domestic infrastructure against developed political economies, see Thomas Homer-Dixon, “The Rise of Complex Terrorism,” Foreign Policy, January/February 2002.
[26] See William Kristol (and 40 other signatories), letter to President Bush on the War on Terrorism, 20 September 2001, Project for a New America Century, URL: http://www.newamericancentury.org/Bushletter.htm.
[27] George W. Bush, Address to a Joint Session of Congress and the American People, 20 September 2001.
[28] George W. Bush, State of the Union Address, 2002.
[29] Jennifer Steinhauer, “Nation Challenged: The Donations -- Citing Comments on Attack, Giuliani Rejects Saudi's Gift,” New York Times, 12 October 2001.
[30] “How Jimmy Carter and I Started the Mujahideen,” Interview with Zbigniew Brzezinski, Le Nouvel Observateur (France), January 15-21, 1998, p. 76.