06 02 2011

Will the decline of the US empire be graceful?

As the US is overstretching its military power and the centre of gravity of the world economy is shifting towards Asia and Latin America, the formerly so mighty US empire is in decline. With no single new superpower emerging, we are inexorably moving towards a multipolar world. Decline is always difficult to manage and with the unprecedented US military power the process is extremely dangerous. Will the US be able to manage this gracefully?

In history, empires come and go. Sometimes they end in a spectacular collapse, as Czar Russia, the Austrian-Hungarian empire and the Soviet Union, and sometimes it has been a long drawn-out gradual process, as was the case for the English and the (much smaller) French colonial empire.

The present US empire has been based on two pillars: an enormous economic power, and an unprecedented military power.

The US emerged from the second world war as the world's leading economy, but since the sixties growth elsewhere started to challenge this economic hegemony. This process has escalated during the last decades, particularly with the rising economic power of China. If the European Union is not counted as one economy, the US continues to be the biggest economy in the world. It accounts for around 4.5% of the world's population and around 20% of the total output, but in terms of e.g. exports it is now only number three (after China and Germany). In other words, still big and heavy, but fading.

The military side, however, is another story. After the fall of the Soviet Union in 1990, the US is the world's unmatched military superpower. According to SIPRI, the US military spending was in 2009 661 billion dollars, corresponding to 43% of total military spending in the world. China, which according to SIPRI's estimates spent around 100 billion, is a distant number 2. Russia spends less than 10% of the US budget. The US has 44 of the 100 biggest military companies and is by far the world's biggest arms exporter, counting for more than half of the total exports. It has together with Russia the biggest nuclear forces in the world with a capacity to destroy any country in the world in question of hours with the push of a button.

The US has furthermore an impressive system of bases all over the world. In 2007 they had around half million troops deployed in 151 countries, in 761 “active sites” as the Department of Defence (DoD) calls it (including the US forces in Iraq and Afghanistan). In money terms, it is still relatively affordable, as costs according to the governmental Bureau of Economic Analysis only amount to 5.6 % of GDP in 2010 (a number questioned by many as underestimating the real cost). That is much lower than e.g. Israel (7.3%) or Saudi Arabia (10%), but much higher than Japan (0.8%), Germany (1.5%) or the UK (2.4%).

Even so, with the huge US budget deficit and the mounting Government debt, the sustainability of these costs is being questioned. It is true that the public debt is still affordable due to the extremely low interest rates paid on US government bonds, but at some moment the government will have to start paying positive real interest rates on it, and that will hurt. This means that the US military machine starts looking increasingly unsustainable. And of course even more so if the US plans to start more wars – say with Iran or Syria – or to intervene militarily to prop op friends and allies – say in Egypt or Saudi Arabia.

When looking at the debate over the theme in the US, however, the main worry does not seem to be the overstretching of the US military or the costs to the economy. The main worry is China. It is a rising economic power, and even if China – unlike the US - has no deployment of troops outside its own borders, its military capacity is also increasing.

In a recent issue of “The Economist” there is an analysis of “The dangers of a rising China”. It is claimed that “History shows that superpowers can coexist peacefully when the rising power believes it can rise unhindered and the incumbent power believes that the way it runs the world is not fundamentally threatened”. If that sort of thinking predominates in the US, then there are lots of reasons to be pessimistic. Inevitably, a change in international power relations will change the way US presently “runs the world”. If it doesn't accept that as a premise, then it is heading for trouble. It is when an empire understands that it has to change the way it “runs the world” and search for new solutions, that you can have peaceful change. As when De Gaulle realised there was no way to keep Algeria French or the English realised they had to give up India. Unfortunately, sometimes military defeats are needed before this understanding creeps in. And that is when things get dangerous.

For the moment China has been accommodating. It has deliberately avoided challenging the US militarily, but is silently building up increasing economic and military power. It has not seriously challenged the US over the invasion of Iraq, where it is now investing in the oil fields under US military protection. Neither has it seriously challenged the US over Iran, a main supplier of oil to China. But if the Chinese economy continues to grow strongly, this docility will not continue for ever.

It is true that China's neighbours are nervous and with good reason. A superpower's smaller neighbours are always nervous, and rightly so. That is why Germany's neighbours continue to be suspicious. That is why the Latin Americans are unhappy about the US – “So far from God, and so close to the US”, as a Mexican President once expressed it. Smaller countries close to the leading superpower prefer a multi-polar world. This permits them to counterbalance the overwhelming power of their bigger neighbour. No surprise that many South American countries are happy to establish friendly relations with China and buy their weapons in Russia or France.

So the US will be forced to change the way “they run the world”, one way or another. But before they realise that, nasty things may happen.

It is becoming increasingly clear that the expenses involved in occupying yet another unfriendly country is next to prohibitive, as the deployment of large contingencies of US troop is too costly. That leaves the other alternative: to destroy the enemy from the air with conventional weapons. This was the strategy used against Yugoslavia and it turned out to be effective, as the country actually capitulated after some weeks of devastating bombings destroying the infrastructure and the economy (and killing scores of people). This is also likely to be the strategy used against Iran, not because it can't be invaded and taken over as Iraq, but because of the cost of keeping it occupied. The only reason this hasn't happened yet is probably that it will almost certainly disrupt oil supply from the Persian Gulf for a prolonged period and that could send oil prices above 200 dollar per barrel.

It would be still cheaper to use a nuclear strike. That would really be “shock and ave” and frighten many enemies. When this is shrugged off as impossible, because the US is a civilized and democratic country, just remember that the US actually is the only country in the world that has ever used nuclear bombs, killing around 200,000 civilians in Hiroshima and 60,000 in Nagasaki. Whatever the arguments, this was against international law, which does not justify the deliberate killing of civilians as a means to win a war more quickly. Even so, the US has never expressed regret, and more alarmingly, nor has it been willing to promise to restrict the use of nuclear weapons in the future to a response to a nuclear attack. During the Korean war (1950-53) President Truman publicly threatened to use the atomic bomb against North Korea and China (but finally desisted, instead firing General MacArthur, who was strongly advocating the use of the bomb).

During the Vietnam War, “Che” Guevara made famous the phrase “One, two, many Vietnams”, to state what was required to break the power of the US empire. Presently the US has two “Vietnams” going on, one in Iraq and another in Afghanistan. Let us hope it ends there, and that the US chooses a more graceful way of finding its new role as one among many powers in a rule-based multi-polar world. But unfortunately it may still choose the route predicted by “Che”.

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Thorbjorn Waagstein

Thorbjørn Waagstein, Economist, PhD, since 1999 working as international Development Consultant in Latin America, Africa and Asia.

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