The Fourteenth Annual Seminar:
June 22- 25, 2006
HUDSON INSTITUTE FELLOW
WILLIAM E. ODOM
SATURDAY, JUNE 24, 2006
America’s global hegemony is generally accepted as fact. Only it’s duration is in question. But this answer will not be given by a new rising threat from China or terrorism. The quality of American leaders will provide it. How they use it will determine whether we lose it. How well they understand this unique source of power that we have will determine whether they can use our hegemony effectively.
America has acquired an empire inadvertently, not a traditional one of the kind that Professor Kennedy very compellingly speaks about, but a sui generis regime-type, heretofore unknown. I define it as having four characteristics. First, it is ideological, not territorial. It’s ideology is classical liberalism or republican, as opposed to democratic. Our founding fathers did not use the word democracy in the Constitution. They sought to limit the state and guarantee individual rights. That’s a different task than expanding the electoral franchise. Once rights were secured, voting would inexorably follow, not the other way around. This empire, therefore, consists of sovereign Constitutional states, not dictatorships and illiberal democracies.
Second, the American empire has been a money-making, not a money-losing machine. It has been staggering successful. Throughout the Cold War when the defense budget averaged around 7% of the Gross Domestic Product, the United States sustained unprecedented growth. So too did Western Europe and northeast Asia. They both had the longest periods of peace and prosperity in their history. Contrary to popular belief, Japan and Europe did not get rich at our expense. Throughout this period, we have maintained between 20-30% of the world’s gross product, no matter how fast Europe and Japan grow. I think that you should remember that’s why they’re important in this regard and why ours is a money-making, not a money-losing empire.
Third, countries have fought to get into the American empire, not leave it. Since the invasion of Iraq, however, that may be changing. Our empire has no formal boundaries or membership. Any country with a constitutional order, stable property rights, effective dispute adjudication and autonomous courts, may consider itself a member. Switzerland and Austria, for example, could be included. Some other countries with constitutional orders, which are not yet mature liberal regimes also could be included because they are within our military alliances, for example the new NATO members. Of the roughly 40 countries that have a claim to membership in our “empire,” only about two dozen have what I and my political science colleagues would define as stable, mature constitutional orders systems that have lasted at least a generation without a relapse.
The fourth characteristic is our military alliances in northeast Asia and in Europe, which have supplied supra-national political and military governance over our allies, many of whom are old enemies. These U.S. military umbrellas afford them mutual trust that lowers business transaction costs, thus permitting them to capture much greater gains in trade. This role is still needed in both regions, even without an external military threat. If you know anything about how European countries still basically feel about each other and how the Koreans feel about the Japanese, you’ll understand this.
Additionally, the United States has created a growing network of economic and judicial institutions that are different from traditional imperial institutions. The WTO, the IMF, the World Bank, the United Nations, international courts and others have also facilitated economic growth through rule-based decisionmaking, rather than by imperial dictates. That practice lowers the cost to the United States for managing these international organizations, as well as their military alliances. And it is U.S. military, political and economic hegemony that keeps these voting institutions from going the way the League of Nations went. There is one big hegemonic member that can keep things from collapsing. When American leaders belittle and condemn these organizations, they endanger the very foundations of this remarkable system. The cost is not just damage to our ideas. It also involves billions of dollars in unnecessary expenses.
Now how and why is this true? The Nobel Prize-winning economist Douglas North has demonstrated that governance by rule-based, third-party enforcement, actually lowers transaction costs for business and makes long-term economic growth possible. I’ll come back to that because it’s very important. No countries have sustained growth over a century without liberal systems and constitutional orders. This has real implications for what we can do in countries that don’t have these systems, by giving them money.
Now this is why the United Nations, NATO, the WTO and others reduced the price to America of managing their unique regime, and why we are not imperially overstretched within the alliance we created during the Cold War. Liberal institutions are the key source of American power at home and abroad, not our native endowments, not our natural resources, not our territorial space, but our liberal institutions. Democracy is not that institution, although, it’s an ostensible component of constitutional regimes The states within the [American] system today to give you an idea of just how powerful it is in terms of resources produce 70% of the world’s Gross Product with only 17% of the world’s population. The British empire had well below 20% of the world’s GDP in the 19th Century at its height, and I think it was under 20%, a trivial percentage compared to this. This is so staggering, it just blows the mind away when you get into the details of it.
The figure alone gives us a sense of how much more productive power liberal institutions can generate than any other kind. It also shows that the main obstacles to peace and prosperity in countries outside the American empire is not money it is a shortage of constitutional government. They can’t make money until they get constitutional government. No amount of economic aid will compensate for or produce this kind of government. In fact, most economic aid makes it less likely that poor countries will achieve effective government. That’s the record today.
Unfortunately, no one knows precisely how to create these liberal institutions abroad. Their emergence is highly problematic and rare. Moreover, most of them have arisen after periods of violence, not repetitive voting. Violence leads to compromise among the elites and to a deal among them on abiding by rules. At the same time, violence has even more often thrown countries off the course to a compromise, so they never get there.
The record to date suggests that ethnic, racial, and sectarian fragmentation in a country makes a constitutional breakthrough virtually impossible. It also suggests that most political cultures, outside the traditional western world, are highly resistant to the idea of a contract state, as opposed to a predatory state, which most of them are. Japan, Turkey, South Korea, Taiwan and Singapore stand out as huge exceptions not fully constitutional in all cases, but certainly remarkably close to it, given where they started.
Few additional countries will soon become constitutional and able to sustain long-term growth. Neither China, nor India, nor Russia is a good prospect. All three may prosper for a while, but not in the long-run, unless they can create domestic liberal institutions. This is why rising challenges cannot destroy the American empire. Only it’s leaders can do that by throwing away our primacy.
For most of the Cold War, our leaders used American hegemony with remarkable effectiveness. The Marshall Plan is merely one of many examples. Stabilizing northeast Asia during and after the Korean War is another. Less well remembered is bringing West Germany into NATO against strong French resistance. For two years, Washington danced around French hostility toward German rearmourment, working to establish the European defense community to meet this French objection. Although Paris refused to dissolve its own army eventually into the EEC, it finally accepted German sovereignty and it’s membership in 1955. These are examples of how to use hegemony.
Had the United States insisted on that outcome in 1953 when it started, it might well have destroyed the alliance. This pattern of nudging, encouraging, demanding and often adjusting to European concerns, and getting help in convincing those countries that resist has long produced constructive outcomes.
But none of these examples can rival the reunification of Germany in 1990. This was the largest strategic realignment, without a major war, in the history of modern Europe a feat so spectacular that it’s unlikely to be rivaled at any time in the history of diplomacy. Today, we take it as foreordained. It was not. Had the Europeans had their way to a straight up or down vote, only two countries, the United States and West Germany would have voted for it. Germany would have reunited anyway, outside of NATO, and a rough Warsaw Pact would have survived. Europe would be without the European Union and the continent would be in a political and military mess.
U.S. hegemony or “empire,” if you want to use that word makes a big difference. Yet, through skillful diplomacy, backed by U.S. military power and economic power, George H.W. Bush backed German Chancellor Helmut Kohl in cutting a deal with Moscow, split Prime Minister Thatcher, the most adamant opponent of German unification from a somewhat less adamant opponent, French President Mitterand and pushed through NATO approval. Finally, Bush cornered Thatcher while Kohl appeased Mitterand by agreeing to the Maastricht Treaty in advance. Thus, Germany was reunified within NATO and the European Union was soon born out of the Maastricht Treaty. The Europeans think they invented the E.U., but without our pushing, there wouldn’t be any E.U. today. Soon afterward, the Warsaw Pact and the Soviet Union both soon collapsed. Even the hardest of American hard-liners against Soviet power would have never believed that this outcome was possible. Future historians will judge this achievement as one of the greatest diplomatic feats ever witnessed. It took skill, but it was also because of hegemonic American power.
As a final example, let us recall the first Gulf War in 1990-91 when George H.W. Bush won the Security Council backing, assembled a large military coalition and had serious armies there not only the British, but also French forces to expel the Iraqi forces in Kuwait. After the war, he persuaded Japan, Germany and about a dozen other countries to contribute sufficient funds to more than defray all our costs of the war. That’s how to use American hegemony.
Over the last dozen years, however, especially since 2002, we have seen examples of how to lose American hegemony. During the 1990s, we saw the Clinton Administration cut U.S. ground and tactical air forces by almost half. Maritime forces were reduced very little. That force structure left the U.S. firmly in charge of the porpoises and the whales, while leaving the land to the tyrants in the Balkans. Timidity, diffidence, and dilly-dallying during the disintegration of Yugoslavia marked Washington’s reaction to spreading instability in southeastern Europe. That’s within our imperial debate. That’s not in the Middle East, it’s not in Africa or in some other part. It was in an area that’s really critical to us. By bombing Serbia and Kosovo for 73 days, President Clinton damaged America’s image in much of Europe and elsewhere and delayed a decisive toppling of these corrupt regimes in both Kosovo and Serbia, an outcome still not achieved, even today. Though you may not be aware of it, take a close look under the lid in Kosovo and Serbia and it is not pretty. Had Clinton launched a ground invasion of a couple of armoured brigades out of the new NATO member’s territory of Hungary and enveloped Belgrade instead, he could have destroyed Milosevic’s regime within a week or 10 days with few casualties. A direct occupation, predominately with U.S. forces but also joining with NATO countries, could have administered and governed directly, re-establishing property rights and effective courts, and raised a new generation of political elites genuinely committed to liberal values.
In spite of Clinton’s feckless use of this military power in the Balkans, he did eventually turn around on NATO enlargement and accepted three new members, a move that preempted ethnic conflict in several other Warsaw Pact countries, so we didn’t have a repetition of the Kosovo event in places like Transylvania, Romania, or southern Slovakia.
By holding out hope that other eastern European countries could also join NATO, President George W. Bush followed this effective policy, but his unbridled unilateralism, beginning with the rejection of the Kyoto Treaty and his tariffs on steel imports proved more destructive of American power than Clinton’s foreign policy diffidence and bumbling use of military power.
Still, the events of 9/11 restored unprecedented global support for America and its fight against al Qaeda. We tend to forget what the situation was in the fall of 2001. The U.S. has never had the world support that we did in the fall of 2001. But once the President announced the “axis of evil” in his State of the Union address in January of 2002, that support began to decline. NATO had actually invoked Article 5 of the treaty for the first time in the history of the alliance, declaring that al Qaeda’s attack on the United States was also an attack on all of them. They signed up to fight al Qaeda. They were shocked to learn that the President was declaring war on Iraq, Iran and North Korea without even consulting them. His so-called “global war on terrorism” was being stretched to justify the invasion of countries anywhere, something that most of them, quite understandably, refused to support.
Failure to gain Security Council approval for the invasion of Iraq ensured that the financial costs of the war, not to mention the loss of life and decline in our moral standing would be huge and that the quality of coalition members would be poor. For example, the coalition in 1990 had French troops. In contrast, in 2003, it had Ukrainian, Polish, Honduran, and even a few Mongolian troops. The cost of the war rises every day, well above $300 billion, probably close to half a trillion, and we can be sure that other countries will not share these costs with the U.S. taxpayer.
The President may have delighted American voters by asserting U.S. sovereignty against the will of our allies on the Security Council, behavior we would normally expect of the French government, rather than the government that built the post-World War II international order. But they will not be delighted by the impact of these policies on their pocketbooks for years to come.
As a spectacular example of how to squander American hegemony, fiscally, morally, militarily and politically, the war in Iraq will probably turn out to be the greatest strategic mistake in our history.
Can we still save the American empire or is it too late? We can, but we must act soon. The first step must be withdrawal from Iraq. Invasion was never in American interests. Rather, it was in the interest of Iran because it avenged Iran’s feelings about Saddam’s invasion of their own country, and promised to greatly increase Iranian support in any post-war Iraq. It also advanced al Qaeda’s interests by making that country safe for the first time for al Qaeda cadres, where they are now killing Americans and Iraqis in great numbers, bringing their cadres home, training them, and sending them to countries in other parts of the world.
All of the debate today over the tactical mistakes how to fight the war that we’re fighting in Iraq are really beside the point. All of these unhappy consequences were destined to occur once the invasion started. They were going to happen; there wasn’t any right way to do it. More worrisome, the war has paralyzed the U.S. strategically. The precondition for regaining diplomatic and military mobility in the world for U.S. policy is to withdraw no matter what kind of mess is left. The U.S. bears the blame for it, but it cannot avoid the consequences by staying the course.
This is where Congress is hung-up these days. I’ve been queried by two or three senators on this very issue: “How do we avoid the mess?” My point is you cannot. It’s a sunk cost. It’s like Hitler pursuing the Battle in Stalingrad. You’ve cost yourself this; there’s no way of getting out of it. Every day longer only increases it and makes the eventual defeat larger. Only after we withdraw can we possibly rally sufficient international support to prevent the spread of damage beyond the region. I think we might even reduce it within the region if we were swift enough and agile enough in restoring some coalition activities to deal with the situation we’ve created.
The U.S. cannot do these things, however, unless it alters or abandons at least five of its present policies that are so perverse that they are generating the very things they were meant to prevent. The first is our non-proliferation policy. It was meant to maintain regional stability, as well as to prevent the spread of nuclear weapons. Our pursuit of it has accelerated proliferation and created instability. The lesson that Iran and others must draw is that if they acquire nuclear weapons, Washington will embrace them, as it has India and Pakistan. Earlier, the United States let Israel proliferate and that added to the incentives for all Arab states to proliferate as well. Our non-proliferation policy in northeast Asia has not only worsened our relationship with South Korea, but it’s pushing South Korea right into the Chinese security order and greatly increasing the prestige and the role of China in managing this region. At the same time, it’s allowed North Korea to make a joke of U.S. diplomacy and, as I said, to increase the Chinese influence. That opens the path to a unified Korea one day without U.S. troops and with nuclear weapons a sure formula for prompting Japanese acquisition of nuclear weapons. And then, the big issue: Japanese/Chinese strategic competition, which we’re already beginning to see the first phases of.
The second perverse policy is the so-called global war on terrorism. As many critics have pointed out, terrorism is not an enemy, it’s a tactic. The United States has a long record of supporting terrorists and using terrorist tactics. The slogans in the war on terrorism today merely make the United States look hypocritical to the rest of the world. A prudent U.S. president would end this present policy of sustained hysteria, order the removal of most of the safety barriers in Washington and everywhere else, treat terrorism as a serious but not as a strategic problem, encourage Americans to regain their confidence, and refuse to let al Qaeda keep us in a state of constant fright.
The third policy spreading democracy is a very bad practice. It should now be clear why I say so. We should try to spread constitutional order, not democracy, which, if it’s implemented before a constitution is fully accepted, will almost certainly be illiberal, allowing varying degrees of tyranny over minorities. It makes sense to support individual rights and liberties everywhere, but it is wrong-headed to assume that democratic voting procedures, easy to implement, will assure such liberties.
The fourth misguided policy is the Defense Department’s military deployment plan. We are hollowing out NATO long before the new eastern European members have achieved constitutional breakthroughs and transformed their militaries, something that requires big U.S. troop deployments there to exercise with them and keep them on that particular path. Europe may eventually create its own unified military, but it is nowhere near that goal today and it won’t be there 20 years from now. NATO, therefore, remains critical for Europe’s internal and external security. NATO’s influence and political capacity is directly proportional to the size of U.S. forces deployed in Europe. When you hear people say “Let’s make it less military and more political,” that’s a contradiction in terms. It’s only as political as the number of U.S. troops there, and that is why we were able to reunify Germany within NATO without it collapsing on us. If it had been demilitarized then, we would have never prevailed over Thatcher and Mitterand.
Finally, the energy policy of no energy policy ensures more shocks ahead while funneling trillions of dollars into the hands of those in the Middle East and southwest Asia and Russia who may not wish us well. A serious energy policy would include putting several dollars of tax on every gallon of motor fuel, the resulting revenue would be put into a Manhattan-like crash program to find other kinds of energy for motor transport.
These are not ordinary times. Minor modifications in our national strategy and our economic policies merely perpetuate the present of American hegemony. In our present predicament, we desperately need leadership that can fundamentally redirect U.S. strategy, not fine-tune it.