The Pandemic Depression
The Global Economy Will Never Be the Same
So far, the year 2014 has been a tumultuous one, as geopolitical rivalries have stormed back to center stage. Whether it is Russian forces seizing Crimea, China making aggressive claims in its coastal waters, Japan responding with an increasingly assertive strategy of its own, or Iran trying to use its alliances with Syria and Hezbollah to dominate the Middle East, old-fashioned power plays are back in international relations.
The United States and the EU, at least, find such trends disturbing. Both would rather move past geopolitical questions of territory and military power and focus instead on ones of world order and global governance: trade liberalization, nuclear nonproliferation, human rights, the rule of law, climate change, and so on. Indeed, since the end of the Cold War, the most important objective of U.S. and EU foreign policy has been to shift international relations away from zero-sum issues toward win-win ones. To be dragged back into old-school contests such as that in Ukraine doesn’t just divert time and energy away from those important questions; it also changes the character of international politics. As the atmosphere turns dark, the task of promoting and maintaining world order grows more daunting.
But Westerners should never have expected old-fashioned geopolitics to go away. They did so only because they fundamentally misread what the collapse of the Soviet Union meant: the ideological triumph of liberal capitalist democracy over communism, not the obsolescence of hard power. China, Iran, and Russia never bought into the geopolitical settlement that followed the Cold War, and they are making increasingly forceful attempts to overturn it. That process will not be peaceful, and whether or not the revisionists succeed, their efforts have already shaken the balance of power and changed the dynamics of international politics.
A FALSE SENSE OF SECURITY
When the Cold War ended, many Americans and Europeans seemed to think that the most vexing geopolitical questions had largely been settled. With the exception of a handful of relatively minor problems, such as the woes of the former Yugoslavia and the Israeli-Palestinian dispute, the biggest issues in world politics, they assumed, would no longer concern boundaries, military bases, national self-determination, or spheres of influence.
One can’t blame people for hoping. The West’s approach to the realities of the post–Cold War world has made a great deal of sense, and it is hard to see how world peace can ever be achieved without replacing geopolitical competition with the construction of a liberal world order. Still, Westerners often forget that this project rests on the particular geopolitical foundations laid in the early 1990s.
In Europe, the post–Cold War settlement involved the unification of Germany, the dismemberment of the Soviet Union, and the integration of the former Warsaw Pact states and the Baltic republics into NATO and the EU. In the Middle East, it entailed the dominance of Sunni powers that were allied with the United States (Saudi Arabia, its Gulf allies, Egypt, and Turkey) and the double containment of Iran and Iraq. In Asia, it meant the uncontested dominance of the United States, embedded in a series of security relationships with Japan, South Korea, Australia, Indonesia, and other allies.
This settlement reflected the power realities of the day, and it was only as stable as the relationships that held it up. Unfortunately, many observers conflated the temporary geopolitical conditions of the post–Cold War world with the presumably more final outcome of the ideological struggle between liberal democracy and Soviet communism. The political scientist Francis Fukuyama’s famous formulation that the end of the Cold War meant “the end of history” was a statement about ideology. But for many people, the collapse of the Soviet Union didn’t just mean that humanity’s ideological struggle was over for good; they thought geopolitics itself had also come to a permanent end.
At first glance, this conclusion looks like an extrapolation of Fukuyama’s argument rather than a distortion of it. After all, the idea of the end of history has rested on the geopolitical consequences of ideological struggles ever since the German philosopher Georg Wilhelm Friedrich Hegel first expressed it at the beginning of the nineteenth century. For Hegel, it was the Battle of Jena, in 1806, that rang the curtain down on the war of ideas. In Hegel’s eyes, Napoleon Bonaparte’s utter destruction of the Prussian army in that brief campaign represented the triumph of the French Revolution over the best army that prerevolutionary Europe could produce. This spelled an end to history, Hegel argued, because in the future, only states that adopted the principles and techniques of revolutionary France would be able to compete and survive.
Adapted to the post–Cold War world, this argument was taken to mean that in the future, states would have to adopt the principles of liberal capitalism to keep up. Closed, communist societies, such as the Soviet Union, had shown themselves to be too uncreative and unproductive to compete economically and militarily with liberal states. Their political regimes were also shaky, since no social form other than liberal democracy provided enough freedom and dignity for a contemporary society to remain stable.
To fight the West successfully, you would have to become like the West, and if that happened, you would become the kind of wishy-washy, pacifistic milquetoast society that didn’t want to fight about anything at all. The only remaining dangers to world peace would come from rogue states such as North Korea, and although such countries might have the will to challenge the West, they would be too crippled by their obsolete political and social structures to rise above the nuisance level (unless they developed nuclear weapons, of course). And thus former communist states, such as Russia, faced a choice. They could jump on the modernization bandwagon and become liberal, open, and pacifistic, or they could cling bitterly to their guns and their culture as the world passed them by.
At first, it all seemed to work. With history over, the focus shifted from geopolitics to development economics and nonproliferation, and the bulk of foreign policy came to center on questions such as climate change and trade. The conflation of the end of geopolitics and the end of history offered an especially enticing prospect to the United States: the idea that the country could start putting less into the international system and taking out more. It could shrink its defense spending, cut the State Department’s appropriations, lower its profile in foreign hotspots -- and the world would just go on becoming more prosperous and more free.
This vision appealed to both liberals and conservatives in the United States. The administration of President Bill Clinton, for example, cut both the Defense Department’s and the State Department’s budgets and was barely able to persuade Congress to keep paying U.S. dues to the UN. At the same time, policymakers assumed that the international system would become stronger and wider-reaching while continuing to be conducive to U.S. interests. Republican neo-isolationists, such as former Representative Ron Paul of Texas, argued that given the absence of serious geopolitical challenges, the United States could dramatically cut both military spending and foreign aid while continuing to benefit from the global economic system.
After 9/11, President George W. Bush based his foreign policy on the belief that Middle Eastern terrorists constituted a uniquely dangerous opponent, and he launched what he said would be a long war against them. In some respects, it appeared that the world was back in the realm of history. But the Bush administration’s belief that democracy could be implanted quickly in the Arab Middle East, starting with Iraq, testified to a deep conviction that the overall tide of events was running in America’s favor.
President Barack Obama built his foreign policy on the conviction that the “war on terror” was overblown, that history really was over, and that, as in the Clinton years, the United States’ most important priorities involved promoting the liberal world order, not playing classical geopolitics. The administration articulated an extremely ambitious agenda in support of that order: blocking Iran’s drive for nuclear weapons, solving the Israeli-Palestinian conflict, negotiating a global climate change treaty, striking Pacific and Atlantic trade deals, signing arms control treaties with Russia, repairing U.S. relations with the Muslim world, promoting gay rights, restoring trust with European allies, and ending the war in Afghanistan. At the same time, however, Obama planned to cut defense spending dramatically and reduced U.S. engagement in key world theaters, such as Europe and the Middle East.
AN AXIS OF WEEVILS?
All these happy convictions are about to be tested. Twenty-five years after the fall of the Berlin Wall, whether one focuses on the rivalry between the EU and Russia over Ukraine, which led Moscow to seize Crimea; the intensifying competition between China and Japan in East Asia; or the subsuming of sectarian conflict into international rivalries and civil wars in the Middle East, the world is looking less post-historical by the day. In very different ways, with very different objectives, China, Iran, and Russia are all pushing back against the political settlement of the Cold War.
The relationships among those three revisionist powers are complex. In the long run, Russia fears the rise of China. Tehran’s worldview has little in common with that of either Beijing or Moscow. Iran and Russia are oil-exporting countries and like the price of oil to be high; China is a net consumer and wants prices low. Political instability in the Middle East can work to Iran’s and Russia’s advantage but poses large risks for China. One should not speak of a strategic alliance among them, and over time, particularly if they succeed in undermining U.S. influence in Eurasia, the tensions among them are more likely to grow than shrink.
What binds these powers together, however, is their agreement that the status quo must be revised. Russia wants to reassemble as much of the Soviet Union as it can. China has no intention of contenting itself with a secondary role in global affairs, nor will it accept the current degree of U.S. influence in Asia and the territorial status quo there. Iran wishes to replace the current order in the Middle East -- led by Saudi Arabia and dominated by Sunni Arab states -- with one centered on Tehran.
Leaders in all three countries also agree that U.S. power is the chief obstacle to achieving their revisionist goals. Their hostility toward Washington and its order is both offensive and defensive: not only do they hope that the decline of U.S. power will make it easier to reorder their regions, but they also worry that Washington might try to overthrow them should discord within their countries grow. Yet the revisionists want to avoid direct confrontations with the United States, except in rare circumstances when the odds are strongly in their favor (as in Russia’s 2008 invasion of Georgia and its occupation and annexation of Crimea this year). Rather than challenge the status quo head on, they seek to chip away at the norms and relationships that sustain it.
Since Obama has been president, each of these powers has pursued a distinct strategy in light of its own strengths and weaknesses. China, which has the greatest capabilities of the three, has paradoxically been the most frustrated. Its efforts to assert itself in its region have only tightened the links between the United States and its Asian allies and intensified nationalism in Japan. As Beijing’s capabilities grow, so will its sense of frustration. China’s surge in power will be matched by a surge in Japan’s resolve, and tensions in Asia will be more likely to spill over into global economics and politics.
Iran, by many measures the weakest of the three states, has had the most successful record. The combination of the United States’ invasion of Iraq and then its premature withdrawal has enabled Tehran to cement deep and enduring ties with significant power centers across the Iraqi border, a development that has changed both the sectarian and the political balance of power in the region. In Syria, Iran, with the help of its longtime ally Hezbollah, has been able to reverse the military tide and prop up the government of Bashar al-Assad in the face of strong opposition from the U.S. government. This triumph of realpolitik has added considerably to Iran’s power and prestige. Across the region, the Arab Spring has weakened Sunni regimes, further tilting the balance in Iran’s favor. So has the growing split among Sunni governments over what to do about the Muslim Brotherhood and its offshoots and adherents.
Russia, meanwhile, has emerged as the middling revisionist: more powerful than Iran but weaker than China, more successful than China at geopolitics but less successful than Iran. Russia has been moderately effective at driving wedges between Germany and the United States, but Russian President Vladimir Putin’s preoccupation with rebuilding the Soviet Union has been hobbled by the sharp limits of his country’s economic power. To build a real Eurasian bloc, as Putin dreams of doing, Russia would have to underwrite the bills of the former Soviet republics -- something it cannot afford to do.
Nevertheless, Putin, despite his weak hand, has been remarkably successful at frustrating Western projects on former Soviet territory. He has stopped NATO expansion dead in its tracks. He has dismembered Georgia, brought Armenia into his orbit, tightened his hold on Crimea, and, with his Ukrainian adventure, dealt the West an unpleasant and humiliating surprise. From the Western point of view, Putin appears to be condemning his country to an ever-darker future of poverty and marginalization. But Putin doesn’t believe that history has ended, and from his perspective, he has solidified his power at home and reminded hostile foreign powers that the Russian bear still has sharp claws.
THE POWERS THAT BE
The revisionist powers have such varied agendas and capabilities that none can provide the kind of systematic and global opposition that the Soviet Union did. As a result, Americans have been slow to realize that these states have undermined the Eurasian geopolitical order in ways that complicate U.S. and European efforts to construct a post-historical, win-win world.
Still, one can see the effects of this revisionist activity in many places. In East Asia, China’s increasingly assertive stance has yet to yield much concrete geopolitical progress, but it has fundamentally altered the political dynamic in the region with the fastest-growing economies on earth. Asian politics today revolve around national rivalries, conflicting territorial claims, naval buildups, and similar historical issues. The nationalist revival in Japan, a direct response to China’s agenda, has set up a process in which rising nationalism in one country feeds off the same in the other. China and Japan are escalating their rhetoric, increasing their military budgets, starting bilateral crises with greater frequency, and fixating more and more on zero-sum competition.
Although the EU remains in a post-historical moment, the non-EU republics of the former Soviet Union are living in a very different age. In the last few years, hopes of transforming the former Soviet Union into a post-historical region have faded. The Russian occupation of Ukraine is only the latest in a series of steps that have turned eastern Europe into a zone of sharp geopolitical conflict and made stable and effective democratic governance impossible outside the Baltic states and Poland.
In the Middle East, the situation is even more acute. Dreams that the Arab world was approaching a democratic tipping point -- dreams that informed U.S. policy under both the Bush and the Obama administrations -- have faded. Rather than building a liberal order in the region, U.S. policymakers are grappling with the unraveling of the state system that dates back to the 1916 Sykes-Picot agreement, which divided up the Middle Eastern provinces of the Ottoman Empire, as governance erodes in Iraq, Lebanon, and Syria. Obama has done his best to separate the geopolitical issue of Iran’s surging power across the region from the question of its compliance with the Nuclear Nonproliferation Treaty, but Israeli and Saudi fears about Iran’s regional ambitions are making that harder to do. Another obstacle to striking agreements with Iran is Russia, which has used its seat on the UN Security Council and support for Assad to set back U.S. goals in Syria.
Russia sees its influence in the Middle East as an important asset in its competition with the United States. This does not mean that Moscow will reflexively oppose U.S. goals on every occasion, but it does mean that the win-win outcomes that Americans so eagerly seek will sometimes be held hostage to Russian geopolitical interests. In deciding how hard to press Russia over Ukraine, for example, the White House cannot avoid calculating the impact on Russia’s stance on the Syrian war or Iran’s nuclear program. Russia cannot make itself a richer country or a much larger one, but it has made itself a more important factor in U.S. strategic thinking, and it can use that leverage to extract concessions that matter to it.
If these revisionist powers have gained ground, the status quo powers have been undermined. The deterioration is sharpest in Europe, where the unmitigated disaster of the common currency has divided public opinion and turned the EU’s attention in on itself. The EU may have avoided the worst possible consequences of the euro crisis, but both its will and its capacity for effective action beyond its frontiers have been significantly impaired.
The United States has not suffered anything like the economic pain much of Europe has gone through, but with the country facing the foreign policy hangover induced by the Bush-era wars, an increasingly intrusive surveillance state, a slow economic recovery, and an unpopular health-care law, the public mood has soured. On both the left and the right, Americans are questioning the benefits of the current world order and the competence of its architects. Additionally, the public shares the elite consensus that in a post–Cold War world, the United States ought to be able to pay less into the system and get more out. When that doesn’t happen, people blame their leaders. In any case, there is little public appetite for large new initiatives at home or abroad, and a cynical public is turning away from a polarized Washington with a mix of boredom and disdain.
Obama came into office planning to cut military spending and reduce the importance of foreign policy in American politics while strengthening the liberal world order. A little more than halfway through his presidency, he finds himself increasingly bogged down in exactly the kinds of geopolitical rivalries he had hoped to transcend. Chinese, Iranian, and Russian revanchism haven’t overturned the post–Cold War settlement in Eurasia yet, and may never do so, but they have converted an uncontested status quo into a contested one. U.S. presidents no longer have a free hand as they seek to deepen the liberal system; they are increasingly concerned with shoring up its geopolitical foundations.
THE TWILIGHT OF HISTORY
It was 22 years ago that Fukuyama published The End of History and the Last Man, and it is tempting to see the return of geopolitics as a definitive refutation of his thesis. The reality is more complicated. The end of history, as Fukuyama reminded readers, was Hegel’s idea, and even though the revolutionary state had triumphed over the old type of regimes for good, Hegel argued, competition and conflict would continue. He predicted that there would be disturbances in the provinces, even as the heartlands of European civilization moved into a post-historical time. Given that Hegel’s provinces included China, India, Japan, and Russia, it should hardly be surprising that more than two centuries later, the disturbances haven’t ceased. We are living in the twilight of history rather than at its actual end.
A Hegelian view of the historical process today would hold that substantively little has changed since the beginning of the nineteenth century. To be powerful, states must develop the ideas and institutions that allow them to harness the titanic forces of industrial and informational capitalism. There is no alternative; societies unable or unwilling to embrace this route will end up the subjects of history rather than the makers of it.
But the road to postmodernity remains rocky. In order to increase its power, China, for example, will clearly have to go through a process of economic and political development that will require the country to master the problems that modern Western societies have confronted. There is no assurance, however, that China’s path to stable liberal modernity will be any less tumultuous than, say, the one that Germany trod. The twilight of history is not a quiet time.
The second part of Fukuyama’s book has received less attention, perhaps because it is less flattering to the West. As Fukuyama investigated what a post-historical society would look like, he made a disturbing discovery. In a world where the great questions have been solved and geopolitics has been subordinated to economics, humanity will look a lot like the nihilistic “last man” described by the philosopher Friedrich Nietzsche: a narcissistic consumer with no greater aspirations beyond the next trip to the mall.
In other words, these people would closely resemble today’s European bureaucrats and Washington lobbyists. They are competent enough at managing their affairs among post-historical people, but understanding the motives and countering the strategies of old-fashioned power politicians is hard for them. Unlike their less productive and less stable rivals, post-historical people are unwilling to make sacrifices, focused on the short term, easily distracted, and lacking in courage.
The realities of personal and political life in post-historical societies are very different from those in such countries as China, Iran, and Russia, where the sun of history still shines. It is not just that those different societies bring different personalities and values to the fore; it is also that their institutions work differently and their publics are shaped by different ideas.
Societies filled with Nietzsche’s last men (and women) characteristically misunderstand and underestimate their supposedly primitive opponents in supposedly backward societies -- a blind spot that could, at least temporarily, offset their countries’ other advantages. The tide of history may be flowing inexorably in the direction of liberal capitalist democracy, and the sun of history may indeed be sinking behind the hills. But even as the shadows lengthen and the first of the stars appears, such figures as Putin still stride the world stage. They will not go gentle into that good night, and they will rage, rage against the dying of the light.