Tuesday, September 21, 2010

Globalization and Foreign Policy Choices

Following the collapse of the Soviet Union, Francis Fukuyama famously erred when he declared the end of history and subsequently admitted he was wrong. Many – if not most – people wished he was right because economic globalization coupled with the perceived triumph of democratic regimes over totalitarian would herald in a new age of peace and prosperity. How’s that working out?

The military and economic hegemony – characterized best, I think, by The Economist cover of the US soldier in Roman garb standing guard on the walls, lasted a whole ten years. Now we are well into the era of renewed nationalism and economic competition that leans toward protectionism. The hubris accompanying the US and UK invasion of Iraq for no legitimate reason slammed the door on two trends. One was of less conflict and the other of economic liberalization.

By bankrupting the US economy, alienating just about everyone and fulfilling the dreams of transnational jihadists, the Iraq adventure significantly changed how the major economic and military powers viewed their positions and actions for the future. US foreign policy has barely adjusted to the multi-polar world that has emerged, much to its diminishment except for its military.

Europe, despite numerous opportunities to develop a unified foreign and economic policy, has fallen back to a barely concealed competition among EU member states with France and Germany leading the way while losing control over some of its poorly managed members.

China, not a poster child for a model democracy, is now the second most economic power on the planet and surging. And make no mistake – military power follows economic power. Its neighbour, India, is also growing rapidly and, fortunately does not harbour the same command economy and totalitarian regime.

Economic competition for energy resources has increased dramatically, putting the old war zones of Central Asia, the Caucuses and the Gulf back into play.

The new world order is beginning to look a lot like the old world order. It’s going to last a good bit longer than a decade.

Foreign policy in the US has focused on terrorism and the threat of Islamic extremism and in particular, the transnational jihadist threat. It is a threat of course, but to place it first on the list of concerns requiring action is a mistake. Globalization has been remarkably successful, of course, in shifting economic power to non-Western countries. US foreign policy, which now appears to be driven by fear, has yet to come to terms with this phenomenon which could be looked at as simply a return to normal.

During the 19th century, China accounted for around 30 percent of the world economy. During the same period India could claim 15 percent while Europe was over 20 percent. It should surprise no one that even toward the end of that century the US held its own at 2 percent. In the mid-twentieth century the situation was reversed for China and India while the US and Europe controlled over 25% percent each. At present, although the US still remains at the top at over 25%, China and India have rapidly regained their old seats. Pay-back can be painful.

This economic shift informs foreign policy in general. The strong growth we are witnessing in China and India needs to be fed and Europe and the US, not to mention Japan and Brazil, are all in competition to secure energy resources. The problem is that energy sources are largely located in regions not known for stability, creating flashpoints. US policy after 9/11 was dictated by energy – a point that did not go unobserved by critics of the Iraq invasion. That has not worked out as planned and the use-force-first policy of the Bush administration has, at least in the Middle East where it was exercised with a vengeance, resulted in elevating the power status of Iran. Not exactly the desired result.

US foreign policy is changing under the new administration from one of obnoxious unilateralism to its traditional multilateralism. It recognizes the need for cooperation with Europe; compromise with other powers and to engage. US foreign policy has also begun to revert to a working relationship with China based on mutual dependence. A partnership with China will be essential to maintain peace and economic growth. If the relationship goes south and the status quo is changed then conflict is likely sometime in the future.

A new US policy of engagement in the Middle East is also critical. Except for the war in Iraq, the previous US administration studiously ignored the rest and refused to challenge Israeli policies or engage with other players, such as Syria. There are clear signs of improvement, but all this can and will unravel with a return to the policies of the Bush administration which seems likely due to the rise of the religious right in the US; so progress needs to be made and solidified before that happens.

Europe has a huge challenge. A visitor from the planet Zog who analysed the potential of Europe as a whole, would likely be astonished at its low economic and military standing on the planet relative to the US, China and Japan. It simply does not make sense.

Germany and France need to first help put the EU house in order by leading and not dominating. This may be a difficult process given Germany’s recent proclivity toward bullying Eastern European and other economically challenged members. Nevertheless, there have been signs of an easing of German attempts to shape the EU to its purposes at the expense of everyone else. Simultaneously, Europe needs to begin to engage the world as a unit. This will be a much harder, but necessary task but commonalities with other countries exist in Africa and the sub-continent.

Finally, for now, the Western world needs to actually complete the Doha round which has been languishing for a decade in an unfinished state. Clearly, the process of Doha is not working. It is time to come up with another.

Engagement for the West with the rising powers must take priority but without illusions. China is not a democracy and not a free market so dealing with non-democratic countries will take time and CNN, BBC and Sky News will need to do without their requisite sound bites.

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