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Radnor Geopolitical Report

London, February 2007



Strategic geopolitical intelligence for decision-makers





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Post Pax Americana

by Ken Feltman

The pursuit of peace and progress cannot end in a few years in either victory or defeat. The pursuit of peace and progress, with its trials and its errors, its successes and its setbacks, can never be relaxed and never abandoned.

- Dag Hammarskjold

Sometimes the good news is hidden in the bad news. Sometimes it?s the other way around. The good news for the United States coming out of the January World Economic Forum in Davos, Switzerland, may be an example of bad news hidden inside good news. What do I mean?

I had breakfast with an old friend the day after he returned from Davos. He was brimming with the good news that the anti-American tone prevalent in recent years was absent this year. But is that good news? You decide.

Consider the theme of the meeting: Shaping the Global Agenda: The Shifting Power Equation. The presentations at Davos make clear that this conference was all about the expected (even hoped for) shift of power and importance from the United States to Europe and Asia, especially to the European Union and China. That was the message from Davos. So the lack of anti-Americanism this year was because the U.S. was largely ignored, with no featured, high-level speaker. The world, it seems, may have moved on. Most Europeans think that is a good idea. Are they right?

Almost uninterrupted economic growth

Since World War II, the United States has been the world?s economic and military leader and has tried to use that dual superiority to promote peace and prosperity. These years have seen Europe experience almost uninterrupted economic growth and sustained political peace. As Europe recovered and America prospered, economic advancement rippled across the world. Asian nations, led by Japan, became engines of productivity and increased personal freedom.

The world has never experienced such prosperity. In the five decades beginning in 1950, the global economy expanded by a factor of six. Trade expanded 20 times and growth rates were well beyond historical experience almost everywhere. Living standards exploded. Average incomes have multiplied about 16 times in South Korea, nearly 12 times in Japan, six times in Spain. Germany?s living standards increased by a factor of five and France?s by four.

Under the umbrella of Pax Americana, democracy flourished in Western Europe and Japan. It spread to South Korea, Eastern Europe and elsewhere. Thirty years ago, there were 89 autocratic regimes in the world and 35 democracies, according to the Center for International Development and Conflict Management at the University of Maryland. Two years ago, there were only 29 autocratic regimes and 88 democracies.

Some, especially European politicians and academics, now tell us that all this would have occurred spontaneously. Economists tell us that such thinking is unrealistic. The Marshall Plan, advanced by President Harry Truman after World War II, was a stabilizing influence. Europe rebuilt and became strong. Together, North American and Europe began to provide the world with global currencies, lower tariffs and the worldwide flow of investment capital. Technology and management skills spread around the world. This led to more and more open markets. The U.S. financed much of the expansion. In fact, to this day, the U.S. supports economic growth in faraway countries by tolerating huge trade deficits without imposing debilitating import restrictions.

Over 60 million people died in World War II. Only four subsequent conflicts have had more than one million deaths?the Civil War in the Congo took three million lives; Vietnam took nearly two million lives; the Korean War took over one and a quarter million lives and China?s civil war took nearly that many.

To Americans, the lesson of World War II was that to prevent a repetition, the United States had to promote global stability. This meant the acceptance of short-term costs and burdens to stave off larger long-term costs. The policy seemed to work. Then, the Soviet Union collapsed and some said that event marked 'the end of history' - democracy and free markets would spread, unabated, forever. The United States was the only super power.

Military strength is not power

Of course, the flaw in all this theorizing was to mistake strength for power. Statistically, the United States remains the world?s strongest nation, with the world?s richest economy, triple the size of the economy of Japan. Its all-volunteer military is the best trained and most technologically advanced in the world. No other nation is building nuclear powered aircraft carriers, stealth fighters and unmanned aerial vehicles at the same time. But strength is not power, no matter how impressive that strength may be. Power is the ability to get others to do what you want. Here America is weak. Iraq reminds us that religious and ethnic loyalties dim the appeal of democracy, freedom and commercialism.

Asymmetrical threats routinely neutralize conventional advantages. Once again, Iraq has confirmed what Americans should have learned long ago.

The U.S. military edge declines each time a renegade power acquires nuclear arms - or appears to be on the verge of acquiring those arms. Any actions against such a country could result in a nuclear exchange. The existence of one new nuclear power might convince that power?s neighbors to develop their own nuclear capacity. Terrorists may acquire the bomb.

So it appears that the end of the Cold War reduced, not increased, American power. With the Soviet threat gone, Japan and especially Europe felt less reason to follow U.S. leadership.

Anti-Americanism is wearing down Americans. The United States is regarded as arrogant and a source of instability. Americans are blamed for global warming, Islamic militancy, globalization and a host of other things. Americans are tired of it all. Increasingly, Americans view Europeans as critics with no solutions. European nations have made great strides in economic unity - but they bicker and draw differences with each other on issues involving world leadership.

China for China?

Certainly, China will have to change markedly before it can assume America?s role. Unlike the policies that guided the United States for half a century, China?s policies are for China, not for a stable world order. China is altering the world. Its economic policies are mercantilist; it subsidizes its exports with an artificially low exchange rate. It is attempting to tie up world energy supplies.

No empire lasts forever and the United States may lack the will or ability to play world peacekeeper in an ever more complex world. The United States may be ready to withdraw from the responsibilities of leadership. Social welfare spending, already twice defense spending, will only grow. Younger Americans - by a margin of three to one - do not believe that the United States should take the lead in solving international problems. Remember, today?s college freshmen were infants when the Berlin Wall fell.

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Who will lead? We may be headed into one of those periods of instability out of which emerges a ruthless empire, such as Nazi Germany out of the lack of effective political leadership after the First World War. Seldom, out of those periods, has a well intentioned but bumbling leader arisen. Now that well intentioned but bumbling empire is receding.

Perhaps, people who now celebrate America?s decline will realize too late that America?s failures were not as significant as America?s successes. Perhaps they will wish that the United States - or a benevolent country like the United States - will rise again. It is doubtful, however, that any nation will have a people so willing to give so much to so many beyond their borders.

Interested in attending a Radnor political or legislative briefing? Please call Sarah Scotch at +1 202 659-4300 for more information.

Our next briefing, by Louis-Lyonel Voiron, will concentrate on the coming French presidential election.

Meantime, also in January, McDonald's reported the best results in decades, led by huge sales abroad. Chinese customers are wolfing down more and more Big Macs and France is the No. 2 profit center for McDonald's after the United States.

Last year, the French manager of McDonald's said, 'We are an icon of the United States. When you enter a McDonald's restaurant, you enter America.'

Unfortunately, the U.S. government is not so nimble as American business.

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