Optical Illusion

[Please welcome Ian back, and check out his regular digs over at the Agonist.   That's my bookmark recommendation for the day!  -- Pach] 

On Saturday I talked about walking a mile in your enemies shoes.  Today I want to extend that a bit by looking at the world as various of America's allies and friends do. But before I can discuss that properly, the scene needs to be set with a little bit of history.

The History of the Pax – Pax Britannia and Pax Americana

The Empire has lasted now, for almost 200 years. For the first 150 it was ruled from London – the glorious Pax Britannia, which stained the world's map red. By 1880, while Britain appeared to be going from strength to strength, the signs of rot were clear, British industrial dominance fading and falling to Germany and America. More and more of Britain's money went into maintaining a military lead, leaving other countries an opening to steal the true basis of modern power – a powerful and technologically advanced industrial economy.

The early twentieth century can be told in large part as the story of the fall of Britain, as the long war with Germany left Britain unable to sustain its empire or colonies. While the world was, in principle, largely decolonialized after WWII, in fact the empire largely fell into American hands. And if the United States, with over 50% of the world's production, ruled with a lighter hand, with fewer garrisons and more monetary incentives, still no one should mistake most of the non communist world in those years as anything but client states. Any who thought otherwise learned during the Suez crisis that even the mightiest could be brought to heel by the US.

The United States, from the end of WWII, to the fall of the USSR, built itself a large permanent military, the first in its history, and a massive military, industrial and intelligence infrastructure around it. The military itself was designed to fight a war in generally open ground against other conventional forces – it was designed, in fact, to fight for Europe against the Warsaw Pact. The US military can be seen as the armored spearhead of NATO – it is probably the best open field battle force in the world. This military is fantastically expensive – at this point it costs almost as much as the rest of the world's militaries combined. Even US intelligence services (notably incompetent) cost only about 20% less than the entire Chinese military.

The US military was not designed to fight in isolation from other NATO members. It is only one part of a combined military which is much greater than its parts – the spearhead. Without other NATO members to take up jobs such as garrison duty, anti-insurgency warfare, to fill out the infantry bulk, and so on, the US military is not particularly functional, except as a decapitation military. (If the US had gone into Baghdad, overthrown the government and left, everyone would still be quaking in fear.)

Meanwhile the US balance of trade and general economic position has been deteriorating. In large part one might blame this on US triumphalism after WWII – Keynes's proposal for Bretton Woods would have made imbalances in trade – including having too much of a trade surplus, something the system worked against. The US, not ever imagining itself as having a trade deficit, didn't like that idea and it wasn't enshrined in Bretton Woods or the Bretton Woods institutions (the IMF and World Bank being two that have outlived Bretton Woods itself) – having a trade deficit was to be a problem for the debtor nation only.

US economic weakness in it's particularly chronic nature, however, can be traced back to the mid 70's and early 80's, after the end of Bretton Woods. With the rise of the conservative movement, and the enshrinement of globalization as the technocratic consensus, marginal tax rates were put through the floor; capital controls were largely done away with; and the institutions and laws created to ensure the Great Depression could never happen again were removed in wave after wave of “reform” and “liberalization” till only a few great spars, such as Social Security, and Medicare, remain.

These economic policies lead to what I've called the long suck – a good thirty year period where middle and working class wages, in real terms, stagnated, while the rich became fantastically rich, corporations gobbled each other up, household debt skyrocketed and families made ends meet by moving to having two wage earners. Financialization of economies generally leads to fundamental weaknesses in the actual economy (since real reinvestment drops when you can make better returns playing paper games) and this is what happened to the US. As Kevin Phillips noted in “Wealth and Democracy” this is the general end-game pattern for hegemonic powers – followed by Spain, the Netherlands, Britain – and now, odds are, by the US.

When the USSR fell, however, US decline, while there for those who were willing to see it, was still far from clear. What happened then was US triumphalism – a certainty in US political circles that the US model, because it had “defeated” communism, was the best model possible and was working wonderfully. What the world needed was more laissez-faire capitalism, more free trade deals (better understood not as free trade deals but as agreements to allow capital to move freely) and so on.

The Russian Bear

The model was tried, in full, in a surprising place – Russia. The “shock therapy” of privatizing as much as possible, as fast as possible, lead to violence, corruption and a massive drop in Russia's standard of living and indeed, life expectancy. State enterprises were sold of for cents on the dollar, largely to connected insiders, and in those cases where ownership was more widely spread, it was quickly concentrated in a few hands by making shareholders “offers they couldn't refuse”. Not unless they wanted their legs in casts.

Meanwhile NATO crept further and further towards the Russian border, while America bought as much influence as it could in the various post-Soviet Republics. The game was about oil – in many of the new Republics were believed to be some of the largest remaining unexploited reserves, and in others – the rights-of-ways necessary for oil pipelines.

Russia experienced this as a crushing humiliation and to this day many of them believe that the advice given them was deliberately bad – that Americans knew that “shock therapy” would be a disaster, and that's why they did their best to make Russia swallow the pill.

What happened was predictable. The hard men took over again. The question was always when and who, rather than if – personally I had thought the military would start lining people up, but it turned out to be the intelligence services who took over. They put the most important parts of the economy (those that generate foreign currency, most notably fossil fuel extraction) back under state control, and either destroyed or brought under control the oligarchs and the press, and while they maintained the forms of democracy, the state became far more authoritarian.

It should be understood by Westerners that this wasn't unpopular – not even close. Putin is extremely popular in Russia and so are his policies. People were tired of declining standards of living, of rampant crime, of corruption and of massive rises in inequality. They were looking for someone to do something. And while Putin hasn't solved everything, or even close, Russians are better off under his reign than they were under the liberalized western regime that preceded him.

In the early 2000's the color revolutions swept through ex-Soviet states, putting in place anti-Moscow governments. The color movements were funded by large amounts of American and European money and were seen by Moscow as puppets for Western interests. Moscow was infuriated, and step by step, they have worked to bring places like Georgia back under control – primarily through the use of oil as a weapon. If you want your houses heated and your cars to run, you will make nice with Russia.

What Russia has learned is that when your enemies are making a mistake you help them along and that the lesson of Afghanistan can so easily be turned on the US. So Russia has used the rhetoric of terrorism and Putin has egged Bush on. In the 2004 elections Putin did what he could to help Bush get reelected, then went and armed Syria and Venezuela; turned the spigot off on Georgia and Europe and generally made clear that if NATO wants to run right up to Russia's border there will be a price to be paid. Russia fell in large part by being bled white by Afghanistan – their goal now is help the US bleed itself white however it can, so that it can no longer afford its ambitions in what Russia regards as its sphere of influence.

China

China has modernized and industrialized the old fashioned way – behind barriers intended to keep its products cheap and to keep foreign goods largely uncompetitive in its internal markets, while trading with already industrialized nations – most notably the United States. There is little of “globalization” about the Chinese economic miracle, and they would tell you so themselves – instead they have pursued mercantalist policies used by every industrializing nation larger than a city state since the 19th century. Their military is weaker than the US's, their economy is still weaker than the US's, but they burn with the vitality of a nation on the rise and they are playing a very bad hand very well. Throughout the world they are locking down all the energy reserves they can, aided by a resolute policy of non-interference. How you run your country is your business as far as China is concerned, and they are happy to do business with countries like Ethiopia, Darfur and Iran and raise no concerns about how much blood is mixed in with the oil.

At one time if you wanted modern goods your choice was to do business with the West, on their terms, or do without. Today, most of what a third world nation wants can be provided by China, cash on the barrelhead, and no interference with your internal affairs. This has lead to a huge loss of clout for the US, especially in Africa, where China is gobbling up oil reserves, at a premium, as fast as it can.

China is in a position to destroy the US dollar hegemony at any time it chooses, but is unwilling to do so as long as Americans are willing to ship jobs and basic industry to China in exchange for a couple of points off the CPI and excellent profits for offshoring companies. In an ideal world it would be in China's interest to arrange a soft landing for the US, but in the world as it is, the Chinese decision is about when losing their massive investment in US dollars and assets will be offset by the cost of continuing to prop up the US economy when US citizens have a negative savings rate, and when the cost savings for buying energy in a properly valued Yuan will exceed the value of exporting to the US.

China's problems are not small – most of the country is still 3rd world, there is widespread corruption and violence and job riots are very common. But because China is riding the ragged edge; because the Communist Party is well aware that it could lose power; there is a huge drive to make the economy work for as many people as possible.

If that economy does not work for enough people; if economic growth stalls out, then the ruling class is at great risk. In such a case one should expect that their response will be to find external enemies – and the three most likely enemies are Taiwan, Japan and the United States. A failure of the Chinese miracle would not endanger just China, but all nations around it, and could very easily end in a war which involves the US.

Japan

Probably the US's most loyal ally, Japan is firmly tied into the US military and trade spheres. Japan's trade is still very dependent on the US, their security is underwritten by the US, and a Pacific dominated by China is very frightening when for many Chinese the Rape of Nanking happened yesterday.

Japan's response to US weakness has been a continued attempt to prop them up through monetary policy and a nervous sidestep towards further expansion of their own military, which is already much larger than the Constitution should supposedly allow. Politicians continue to lay the groundwork for rewriting the constitution, and trade with other nations is quietly expanded to reduce the risk of US exposure.

Iran

Persia sees itself as a great nation and believes it should be a great power in its own region. The post 9/11 world has been good for Iran – the hated secular government of Iraq was overthrown and its allies are largely in charge of the Iraqi government; the Sunni government of Afghanistan was destroyed as well, and the western provinces have fallen under Iranian influence. The rise in the price of oil has likewise lead to a huge influx of hard money which can be used to support Iranian proxies such as Hezbollah, and to buy influence.

However the continued enmity of the United States and its unwillingness to accept peace with Iran, no matter what Iran offers (and Iran had offered to end its nuclear program and support the US in Iraq and Afghanistan) has put Iran on edge. In the face of the declared intention of the United States not just for Iran to end its nuclear program, but for regime change, and in the face of repeated provocations such as the kidnapping of Iranian diplomats, Iran's hardliners and Mullahs have been greatly strengthened and so long as the US is in Iraq the Iranians have many Americans effectively hostage. The late crisis over the seized British marines, which caused a spike in the price of oil and thus a spike in Iranian oil revenues, was a reminder to the West of who is on the sticky end of the oil wicket.

Iran now maneuvers against the US's main allies in the region – Saudi Arabia and Israel, in a game to determine who has the most influence in the Middle East. With an ally in Hezbollah; with a strategic alliance with Syria, with near control of the Iraqi government, and with their status as a benefactors of the Palestinians, Iranian prestige is on the rise even as the power and influence of America's allies in the region is falling

Britain

Once the most loyal of America's allies, America's empire is, in many respects, a continuation of the British Pax. Since WWII Britain has mostly been willing to do whatever it took to maintain the “special relationship”. But the Iraq war, opposed by the majority of Brits even when Blair took Britain in, combined with Bush's complete unwillingness to give Blair anything at all for his extreme loyalty, has left Britain looking upon the special relationship with a jaundiced eye. It's one thing to be someone's lackey, it's another thing to get nothing at all for it.

As the center of financial gravity shifts away from New York (caused by a number of factors, including the US's unfriendliness to foreign visitors, the spread of technology and especially by the US's negative savings rate) it also becomes less necessary for Britain to be a key part of the American Pax. London's role as a financial center no longer requires America's ok, and the nations with great reserves to spend are in the Middle and Far East.

With even the Conservative party leader murmuring about an end to the special relationship it seems likely that its day is at an end. The extent to which this is a disaster for the US is impossible to overstate and is perhaps the most important long term damage the Bush administration has done to America's relations. Whether Britain, traditionally torn between the US and Europe, will fall more into the European sphere, or if they will chart an independent course as a financial center, remains to be seen.

 Al-Qaeda

What bin Laden wanted when he brought down the Towers was to sting the sleeping giant into invading Afghanistan. In Afghanistan the Russian bear had been bled white, and crawled home to die, and bin Laden hoped for a repeat.

He didn't quite get he wanted – the US invasion of Afghanistan was both successful and very light. The result of using proxies to do most of the fighting was that bin Laden survived – and the US wasn't drawn into a debilitating war of attrition in Afghanistan.

One suspects that bin Laden may have had some dark nights then, but Allah moves in mysterious ways, and the US, with over 70% of Americans convinced through big lie propaganda that Iraq was behind 9/11, went on and did what al-Qaeda wanted – got itself bogged down in a nasty guerrilla war. Win/win for bin Laden, since the secular regime of Saddam wasn't one he had much time for.

Bin Laden's basic thesis is this – the reason that Islamic insurgencies have lost in places like Egypt is because the US has been propping up such states with money, military and intelligence aid. A standard rule in Islam is that you fight the local bad ruler first – you shouldn't be running off attacking far enemies. But bin Laden argued that the local enemy couldn't be defeated, the new Islamic states couldn't be created, so long as the US was propping up states like Saudi Arabia, Egypt and Israel.

However, as long as the US stayed the “far enemy” it couldn't really be defeated. US troops needed to be drawn into a nasty ground war where they could be bled white. More than that, they needed to be drawn in so that Muslims as a whole could learn the lesson that they could be defeated. When Arabs went to Afghanistan in the eighties, they tended to go expecting to die. The Afghanis, on the other hand, had care for their own lives, because they expected, over time, to win.

Taught by two centuries of having their butts kicked repeatedly by the west that they couldn't win, Muslims needed to learn that Americans, westerners, bleed and die. A new generation of Jihadis needed to be forged in the crucible of war, and the Muslim world as a whole needed to see that you could fight the US and win.

Al-Qaeda got that, at the cost of taking a huge beating. They spent the last six years reconstituting themselves, and reports are now that they are operational again. As such the next state remains creating bases of operations in which they can safely train and operate. A good chunk of Iraq is pretty much under their control, the Pashtun region of Pakistan is safe to operate in, and Somalia is looking like a promising place.

But the longer term game is to turn two key pieces – Pakistan, with its nukes, and Saudi Arabia, holy of holies – with its huge oil reserves. Get nukes and you can have a safe staging ground; get that much oil, and the world is forced to deal with you.

Bin Laden still has a very weak hand. But so far the fates have favored him and worked to his advantage. The US is losing in Iraq; it is losing in Afghanistan, it has turned Somalia into a nesting ground. Pakistan is weak and tottering on the edge of civic collapse, with the US friendly government very much at risk, and the possibility that a sympathetic government could come to power.

 Truly, bin Laden must think that Allah does provide, for truly, the world appears to work towards bin Laden's end.

The View From There…

There are, of course, many other important players we could and probably should discuss. Nonetheless the key point is that the US finds itself weakening, and perversely be more and more isolated yet dependent on other players. The relationship with China is, at best, co-dependent. Britain, a true ally, is likely to cease being a very reliable ally soon. Russia is hostile, and Japan is dependent. Al-Qaeda has been having a number of very good years. Iran was willing to give the US everything it wanted except for its rulers to step down, and a refusal to accept that surrender led Iran to conclude, quite logically, that nothing they could do would appease the US and that they must act as if war is inevitable.

In most of these cases, simply understanding the motivations and world view of the other players could have avoided these problems. England deserved to receive something for its loyalty. Invading Iraq was playing into al-Qaeda's hands. Interfering in Russia's close sphere of influence was the equivalent of bear baiting (imagine China spending money and men and getting a Chinese friendly/US hostile government installed in Canada or Mexico).

Understanding how other nations thought, what their interests were, would not have just helped keep allies like England happier, it could have helped defeat enemies like al-Qaeda, gotten the majority of what the US wanted from Iran; and avoided turning Russia into an angry rival.

Turns out seeing the world through they eyes of others has hard practical applications and that not doing it can really hurt you. Because, much as we all might like to think so, we don't create our own reality all by ourselves. Others have input, and if we want it to work out well for us, we'd best understand what they want, and why.

Related posts:

  1. Benchmarked Crudely: Oil Soon to be Priced in Non-Dollars
  2. The Failure of Phantom Victory in Afghanistan
  3. Cornyn: India, China – Same Diff
  4. Superfusion: How China and America Became One Economy
  5. Karl Rove May Not Care About Muslims’ Opinion of the US, But We Should