Globalist Perspective

Welcome to a Fractured World

Will political disagreement over Iraq lead to economic problems?

Will political disagreement over Iraq lead to economic problems?

Takeaways


In the 21st century, as in the 19th century, great and near-great powers — the United States, Continental Europe, Britain, Russia, China, India and Japan — will deal between themselves as wary adversaries.

These powers will disagree, sometimes sharply, on their relations with minor powers. The challenge is to keep security disagreements from distorting the economic agenda.

Continental Europe and Russia see an arrogant United States as their principal challenge. China shares this concern — but foremost seeks the widest possible field for its ambitions in Asia.

Japan and India fear a rising China. The United States and Britain, aligned in bringing about regime change in Iraq, find few supporters among the other powers.

The reason is clear: no single group of terrorists threatens all powers. When other powers think about terrorism, they often worry about internal threats.

Continental Europe has its disaffected Muslims, but still feels blissfully unaffected by global terrorism — but how much longer? Russia already has to cope with Chechnya, while China has the Uigurs, India has Kashmir — and Japan has religious sects.

So far, only the United States and Britain have a serious al-Qaeda problem. Even in neighboring Canada, only 12% of the population thinks al-Qaeda poses a Canadian threat.

After Iraq, where does this leave President Bush's doctrine of preemptive action? Much depends on reading history right. Optimists may find, in Afghanistan and Iraq, echoes of Vietnam.

In that era, U.S. leaders believed in dominos — first Vietnam, then Thailand, Malaysia and Indonesia. The dominos did not fall and, in historical perspective, Vietnam looks like an isolated nationalist war rather than a communist spearhead.

In the mid-1970s as the Vietnam war burned out, the Western Alliance regained its coherence, thanks to then-U.S. Secretary of State Henry Kissinger's masterful diplomacy.

But another historical analogy could prove more apt than Vietnam. Afghanistan and Iraq could be harbingers of a long war against terrorism and WMD — just as Greece's fight against Communist insurgents (1947-49) and the Berlin Airlift (1948-49) were harbingers of the Cold War. The outlines of a new and potentially lengthy war are already emerging.

In the 21st century, as in the 19th century, great and near-great powers will deal between themselves as wary adversaries. Just beyond Iraq lie Iran and North Korea as sponsors of WMD. And just beyond Afghanistan lie Yemen and Syria as homes for terrorist cells.

Where the Cold War was "fought" with massive armies and nuclear arsenals, the terrorist/WMD war will be fought with Special Forces, the CIA — and comparatively modest armies.

On this reading, Bush's doctrine of preemptive strikes will be applied more than once in the decades ahead. As in Iraq, the United States will have to assemble "Coalitions of the Willing" — or to use the more direct label coined by Richard Haass in The Reluctant Sheriff, "Posses".

In return, the United States will have to tolerate the other powers when they apply their own versions of the preemption doctrine.

What long-burning fuel could provoke the powers to engage in preemptive strikes beyond — or sometimes within — their borders, time and again in the decades ahead?

The underlying provocation is not, I submit, the Israel/Palestine dispute, nor even a "Clash of Civilizations" — but rather failed states rooted in poor economic performance and persistent political turmoil.

A great many countries seem almost permanent members of the failed states club. In the bottom of what are politely labeled "developing countries" tier are outright economic losers: nearly all of Africa, the poorest states of South Asia, much of Indochina — and a few countries in Central and Latin America.

Some 1.7 billion people and 56 non-developing countries are lost in this sea of economic losers — and many qualify as failed states. In 1981, those countries on average earned 10% of U.S. per capita GDP. This figure fell steadily, until in 2001 it reached 5%.

Only a few of the economic losers have half-decent governments. Many are ruled by toll collectors or armed bandits. And the current world powers have no agreement on how to rescue these miserable countries.

Sustained and intrusive UN trusteeships, coupled with ample external assistance, might help. But no appetite exists, within the United States — or other powers — for that degree of involvement.

What avenues are left? Some aid, some trade and episodic military or paramilitary intervention when state failure erupts in terrorism, WMD — or genocide.

Seldom will the powers agree that intervention is necessary in individual cases. No matter how many officials are assassinated in Kashmir, no other power will come to India's aid. If FARC guerrillas carry the long-running Colombian war to Miami, no other power will rush to assist the United States.

The challenge facing the powers is to cooperate in managing the world economy, especially when they disagree stridently on managing world security. This task will prove extremely difficult.

The history of the Cold War was the history of building economic alliances — respectively centered on the United States and the Soviet Union — in furtherance of security alliances.

The most natural thing is to subordinate economics to security. American legislators are already threatening to boycott French firms. Signatures on the Chile-U.S. free trade agreement (FTA) — which were planned for April 2003 — may be delayed a month or more because of Chile's stance in the UN.

On the other hand, negotiations on the Australia-U.S. FTA may be accelerated due to Australia's willingness to commit troops in Iraq.

Without a security alliance as its rudder, can the world economic order be kept on course? No one should expect the WTO, the IMF or the World Bank to collapse in the wake of Iraq.

But it's one thing not to collapse — and another to move forward. The Doha negotiations on a new round of multilateral trade liberalization were already stalled and Iraq will not help them get started.

An early test for the great powers' ability to keep the economic agenda on track will be the upcoming G-8 Summit, scheduled for Evian, France, in early June. Will Evian be the "Recrimination Summit" or the "Reconciliation Summit?"

Unless reconciliation is the byword, management of world trade and finance will drift. Drift does not necessarily mean that the world economy will hit the rocks of trade protection and financial crisis — but it means slow going on global trade and investment liberalization.

If multilateral cooperation stalls, positive energy will instead be channeled into regional and bilateral agreements — enlargement of the European Union, the U.S. agenda of FTAs and the Free Trade Area of the Americas (FTAA).

And perhaps there will be a Chinese initiative on “AFTA plus three” — which includes Southeast Asian countries plus China, Korea and Japan. Regional and bilateral economic agreements could, of course, reinforce security alliances.

The powers no longer agree on critical security issues. Their post-Iraq challenge is to separate the economic agenda from the security agenda — and to coherently manage the world economy even as they sharply disagree about some of the issues in the war on terrorism and WMD.

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