A softer power?

American
empire foreclosed? (Final)

A
softer power?

By Mark
Engler                                                                      Read Spanish Version

The
United States, whatever its troubles, is not going to disappear.
Predictions of collapse from the left and right alike usually imagine
imperial decline as a more fixed and predetermined process than it
is. Economic weakness in the United States, even the displacement of
the dollar on the world scene, will not mean that America will fade
into irrelevance in one swift, dramatic gesture. The United States
remains by far the world’s largest economy, and its military might
will dwarf that of up-and-coming rivals for the foreseeable future.
Even in a multipolar environment, the United States could hold a
status as “first among equals” for decades to come.

More
pressing, then, than determining whether
the United States is an empire is the question of how Washington will
manage the transition to a situation where its relative dominance has
diminished. Because the contours of this decline are highly variable,
the foreign policy decisions of the Obama administration remain very
relevant.

One
current danger is that President Obama, while rejecting the brash
unilateralism of the Bush administration and pulling back the fist of
U.S. hard power, will return to a softer form of imperial power.
Under Bill Clinton, the United States used multilateral institutions
such as the IMF, the World Bank, and the World Trade Organization 
(WTO) as primary instruments of foreign policy. While staffed with
economists in business suits rather than grunts in fatigues, these
bodies exerted considerable control over foreign peoples. 

The
international financial institutions forced developing countries to
comply with the prescriptions of the “Washington Consensus” in
order to receive economic support. These market fundamentalist
policies benefited a corporate elite while deepening inequalities and
producing very limited growth in the countries where they were
implemented. Corporate globalization’s deregulated markets also
proved crisis-prone, producing systemic shocks ranging from the Asian
financial crisis of 1998 and 1999 to Argentina’s economic collapse
in 2001 to the crisis that began with the collapse of America’s
subprime housing sector. 

During
the Bush years, the power of the IMF and the World Bank dramatically
waned, in part because of the discrediting effects of the earlier
crises and in part because of the Bush administration’s disinterest
in investing in multilateral structures. The Bush White House, with
its penchant for unilateralist hard power, did not appreciate the
advantages of Clinton’s preferred imperial instruments, and was
sometimes downright dismissive of them. British journalist and
Guardian
columnist
George Monbiot perceptively described this as “the unacknowledged
paradox in neocon thinking.” He wrote
in an April 2005 column that the Bush foreign policy operatives

want
to drag down the old, multilateral order and replace it with a new,
U.S. one. What they fail to understand is that the "multilateral"
system is in fact a projection of U.S. unilateralism, cleverly
packaged to grant other nations just enough slack to prevent them
from fighting it. Like their opponents, the neocons fail to
understand how well Roosevelt and Truman stitched up the
international order. They are seeking to replace a hegemonic system
that is enduring and effective with one that is untested and (because
other nations must fight it) unstable. Anyone who believes in global
justice should wish them luck. 

For
critics of the IMF and World Bank, seeing these bodies diminish was a
sign of progress. But it now looks like the job of dismantling the
past hegemonic order was far from complete. The Bretton Woods system
may be more enduring and effective than even Monbiot would have
guessed. 

Usual
suspects

Today,
the global economic downturn is giving new life to some of the
institutions that did the most to create the crisis in the first
place. Critics fear that the Obama administration might use these
institutions to reassert U.S. hegemony, albeit in a subtler form. In
doing so, Obama would no doubt look progressive in comparison to
Bush. But liberal praise would be misplaced if the multilateral
institutions he reanimates hold true to past practices.

At
the G20 summit, the assembled leaders vowed
to channel $750 billion or more through the IMF to support developing
countries, tripling the institution’s resources. As the London
Independent
describes it, “If everyone honors their pledges, institutions that
seemed on the verge of redundancy only a few years ago will soon find
themselves awash with new cash and new responsibilities…. The
Bush-era contempt for the UN and other multilateral forums is a thing
of the past. At least for now.”

A
positive interpretation of these events would hold that people and
institutions change along with political conditions. “The Larry
Summers of 2009 is not the Larry Summers of 1999,” the argument
goes–positing that the former Treasury secretary, a leading
corporate globalist in the Clinton years, will help to advance a far
more progressive economic agenda within the altered circumstances
that have allowed him to become Obama’s director of the National
Economic Council. The IMF might optimistically be expected to undergo
a similar rebirth. Although the Fund in the past worsened the Asian
financial crisis by making countries cut spending and eliminate
economic regulations, it will now be compelled to remake itself as an
institution able to stimulate spending and distribute Keynesian
largesse to those in need.

This
view may not be entirely naïve. In advance of the G20 summit,
British Prime Minister Gordon Brown explicitly delineated a break
with former practices. “Too often,” he acknowledged,
“our responses to past crises have been inadequate or misdirected,
promoting economic orthodoxies that we ourselves have not followed
and that have condemned the world’s poorest to a deepening crisis
of poverty.” Brown went further at the G20 summit itself, flatly
declaring, “the Washington consensus is over.”

The
New York Times reported
corresponding shifts within the IMF:

There
have already been signs of change. Late last month, the IMF announced
a revamp of its lending criteria so that less emphasis is placed on
evaluating a borrower’s ability to meet “structural performance
criteria,” the fund’s jargon for such measures as spending cuts
and tax increases. Supporters of the IMF say that the fund has
learned lessons from its experience working with Asian countries
after the region’s financial crisis in 1998 and is now in a
position to offer credit without harsh conditions.

There
are, however, many reasons to be suspicious. The IMF’s habit of
imposing harmful conditionality is hardly ancient history. Bailout
deals brokered over the past year with countries such as Hungary,
Latvia, Romania, and Pakistan have called on recipient countries to
drive up interest rates, reduce the wages and benefits of civil
servants, or otherwise prevent their central governments from
injecting money into their economies—the exact opposite of what any
real “stimulus” plan would demand.

The
G20’s embrace of the WTO was similarly problematic. Despite this
institution’s history in promoting neoliberal deregulation, the G20
leaders committed to forging ahead with currently stalled
negotiations there.

Commenting
on the summit’s final declaration, trade lawyer Lori Wallach,
director of Public Citizen’s Global Trade Watch, argues
that "One page of the communiqué identifies ‘major failures
… in financial regulation and supervision’ as ‘fundamental causes
of the crisis’ … while the next page reaffirms the leaders’
commitment to concluding the WTO Doha Round negotiations that require
further deregulation of finance."

The
international financial institutions’ continued failures relate to
their woefully undemocratic structures. At the IMF, reforms of recent
years have made token overtures toward increasing the voting power of
developing countries. However, the United States, with more than four
times the voting shares of China and with sole veto power, is still
firmly at the helm. There is little evidence to suggest that either
the U.S. Treasury Department or the international financial
institutions are capable of nurturing a truly democratic
globalization.

First
do no harm

A
key step in moving toward a post-imperial foreign policy would be to
abandon the idea that the United States is at its best when it
intervenes, militarily or economically. The Obama White House is
right to reject Bush administration militarism. But in crafting
something different it should be conscientious to “first do no
harm.” Reviving a version of corporate globalization under the
guise of a return to multilateralism would violate this dictum.

As
it considers alternatives, the Obama administration should recognize
that some of the most dynamic democratic processes in the world have
been taking place in Latin America, which has recently experienced a
form of benign neglect. While this is a region traditionally regarded
as the U.S. imperial backyard, it was often overlooked in the Bush
years, when Washington focused on its engagements in the Middle East.
The outcomes have been promising.

In
the past decade, Latin American voters have consistently beaten Prime
Minister Brown to his insight about the dysfunction of the Washington
Consensus. In country after country they have elected new leaders
with mandates to break with the international financial institutions
and to pursue new economic policies. As a result, even before the
current crisis, countries such as Bolivia, which has one of the
poorest populations in the hemisphere, have been devising more
equitable ways of distributing natural resource wealth–and more
democratic ways of involving historically marginalized indigenous
populations in the political process. Countries like Argentina, which
suffered tremendously under Washington-backed neoliberalism, have
worked to develop alternative, regional financial structures to allow
for greater independence. 

To
the extent that it allows such experiments to progress, an inward
focus by the Obama administration on dealing with the domestic
implications of the economic crisis would be welcome. In that case,
whether the still-unrivaled U.S. economy, its cultural reach, and its
worldwide network of military bases will continue to qualify it as an
imperial power—or whether other language more accurately describes
its sway within an emerging multipolar system—will remain open to
debate. But we will have moved closer to the day when “enlightened”
and “self-confident” foreign administrators, whether in pith
helmets or cuff links, are permanently retired.

Mark
Engler, a writer based in New York City, is a senior analyst with
Foreign Policy In Focus and the author of How
to Rule the World: The Coming Battle Over the Global Economy (Nation
Books, 2008). He
can be reached via the Web site http://www.DemocracyUprising.com.