international analysis and commentary

America and the age of austerity


I attended a Council on Foreign Relations event in Washington wherein a current Assistant Secretary of State I have known (and liked) for years talked about the administration’s foreign policy. The more I listened, the more I was appalled. He spoke as if the world was still unipolar, as though American hegemony was still the defining characteristic of the age. Not once did he mention economics: the rise and rise of China and the Indian Ocean Rim, the Great Crash and the inability of European and American decision makers to get ahead of the tidal wave of debt that threatens to engulf them. I felt I had to put an end to the dangerous Alice-in-Wonderland tone of the gathering.

To paraphrase, I presented him with just three numbers. First, as of today one-third of working age Americans have no private savings of any kind. Second, one-quarter of American mortgages are underwater, with homeowners owing more on their houses than they are worth. Third, one-fifth of all American wealth has been wiped out in the Great Recession. Did he think that any of this ought to slightly change the course of America’s promiscuous foreign policy, where the answer to any question of intervention is always yes? 

Without warmth or mirth, the Assistant Secretary smiled back at me, mentioning how much I’d been missed. But then he did do me the courtesy of actually attempting to answer my question. He said that all I had said was true, that economic conditions had changed and were changing before our eyes. But, he critically pointed out, bureaucracies have a way of carrying on as before until facts on the ground make the obvious apparent (even to them).

But if the reactive and nostalgic present course of US foreign policy continues, America is doomed to a rather precipitous fall, as forward-looking analysis plays no role in what we are doing, with only calamities proving able to wake the foreign policy elite up to the fact that we now live in a multipolar age.

Increasingly, I think about this illuminating meeting as the Libyan crisis lumbers along. I continue to have little doubt that Colonel Gheddafi will eventually go, one way or another, just as I continue to believe that the intervention continues to make no sense in American national interest terms. It is just the next case – following on from Iraq and Afghanistan – of America taking second order problems and making them first order foreign policy priorities. That is the hallmark of what countries in decline do.

But there is a silver lining here. For as the Assistant Secretary dryly hinted, the laws of economic reality will eventually change this ruinous way of doing business. Libya is the time when the West’s economic problems are becoming so obvious, even to the most obtuse foreign policy analyst, that a course correction is at last coming.

Since this frank meeting, American economic conditions have demonstrably worsened, even as the intervention in Libya has inconclusively gone along. By playing a game of chicken – with the administration irresponsibly refusing to put a detailed plan for real entitlement cuts on the table while Republicans irrationally refuse to talk about tax increases of any sort – the US government has finally awoken the credit rating agencies and the whole world to the preceding decades of American profligacy. The unemployment rate stubbornly remains above 9% with the true number (including the underemployed and those so discouraged they have given up looking for work) being somewhere above 16%. The long-term US trend growth rate of 3% appears to be a thing of the past.

Whistling by the economic graveyard will simply no longer work; this has momentous repercussions for the vast majority of foreign policy practitioners. Both expansive neocons and Wilsonians now have a far more fearsome foe than the realist remnant (of which I am a proud member) that has long questioned their grasp of national interest priorities. Simply put, given the avalanche of bad economic numbers bolstering the case that American nation building at home must be the first domestic and foreign policy priority, those in both parties favoring a do everything foreign policy will now have to justify the cost of every move they make, something they have not really had to do for six decades. This, more than any number of clever realist arguments, will change everything.

Three immediate practical conclusions can be drawn from what will amount to the forced change in American thinking about foreign policy. First, nation building will be out, as it costs far too much, takes far too long, and rarely shows tangible results, without which no foreign intervention will be tolerated by the newly cost-conscious American public.

President Obama is already moving in this direction, as Afghanistan increasingly becomes a counter-terror matter (killing the bad guys with policing and intelligence), rather than a far more costly counter-insurgency strategy, which involves nation building and winning over local hearts and minds over time. Likewise in Libya, the President has been true to his word, transitioning the primary military role to the British and the French, an unheard-of posture for an American Chief Executive.

Second, there will be an increasing number of transatlantic schisms, such as the current row over Libya where the shocked British and French simply cannot believe the President meant what he said and will not come riding to the rescue with extra American military wherewithal now that the going is getting tough. But those days are over. Increasingly, Europeans will resent an America that truly begins to do less, even as it still occupies the primary leadership position in NATO.

At the same time, after decades of false warnings, America has finally and truly had it with a Europe that has been free riding the American superpower since the Cold War. In other words, the Western alliance as it has been constituted for the past six decades has come to an end. Either another grand bargain – one suited to the new multipolar era – will be arrived at or the West as we know it is over.

Finally, only realism – with its characteristic reliance on prioritizing interests – can get America out of its current intellectual rut, allowing it to continue to operate an internationalist foreign policy, curry vital public support through explaining why doing certain things is in American interests, and separate what is essential in the new era, from what is peripheral. As such, there will be far fewer Libyas in America’s future.