In a recent Foreign Affairs cover story, Fareed Zakaria attempts to answer the question: “what happened to the American Century?” This sober and prescient piece of writing begins with: “Sometime in the last two years, American hegemony died.”
With the rise of China, the election of Donald Trump, and the boldness of leaders (both European allies and third-world stooges) to question American leadership, this fact has become undeniable. While Zakaria feels the need to get unnecessarily specific regarding the American Century’s time of death, his overarching narrative is largely correct. In reaction to September 11th, the United States began “thrashing around like a wounded lion,” invading Afghanistan with no long-term plan and finally sacrificing the last vestiges of its “respectable world-power” status on the mantle of Iraq.
Zakaria pays special attention to the critical decades between the fall of the Berlin Wall and the invasion of Iraq. America’s diplomatic presence was ballooning, and its global power was unquestioned. Some academics began talking of the “end of history,” the silly idea that American democratic liberalism was the final stage of societal development, never again to be questioned by an aggressive other. Surely, American strategic planners must have felt that they were staring down into a gaping well of formerly untapped opportunity.
Zakaria discusses the American relationship with a post-Soviet Russia to argue that this untapped opportunity was woefully mishandled. Washington “never truly took Russia’s security concerns seriously. It enlarged NATO fast and furiously, a process that might have been necessary for countries such as Poland, historically insecure and threatened by Russia, but one that has continued on unthinkingly, with little concern for Russian sensitivities, and now even extends to Macedonia.” This is exactly right, and the issues with this policy go beyond a disregard for Russia’s comfort.
In a famous 1990 meeting between Secretary of State James Baker and Gorbachev, Baker promised the Russian delegation that NATO would expand “not one inch eastward.” In the words of Wilson Center Senior Fellow Svetlana Sacranskaya, this was part of “a cascade of assurances about Soviet security given by Western leaders to Gorbachev.” Three weeks after that explicit assurance, Poland became the newest member of NATO, a military alliance which has crept eastward ever since.
However, Zakaria confuses this dishonesty for ambivalence, rather than the Cold War victor taking what it believes it’s due. He continues: “Both the White House and Congress during the George H. W. Bush administration had no appetite for an ambitious effort to transform Russia, no interest in rolling out a new version of the Marshall Plan or becoming deeply engaged in the country.”
The United States had an intense interest in Russia during the 1990’s, as evidenced by two critical examples. Firstly, the United States and the international institutions which it controlled (the IMF and World Bank) held enormous sway over how Russia transitioned from Communism into an international, free-market economy.
Nobel Prize winning economist Joseph Stiglitz, who served as a World Bank economist during the transition, writes that Russia “was doing much of what the IMF had stressed.” Western advisers, “especially from the United States and the IMF,” pressured Russia to immediately liberalize its price mechanisms and privatize all state-owned enterprises, regardless of the consequences which would come with such volatility. Inflation rates soared, exceeding 10% per month. Russian’s savings were zapped away in the blink of an eye, and many found themselves unemployed in a country which had privatized state-owned institutions before establishing a social safety net.
Stiglitz reports that life expectancy dropped by six years; between 1989 and 1998, the percentage of Russians living on less than $2 a day soared from 2% to over 23%. In the end, Russia saw a greater drop in GDP than was experienced during World War II.
Because of western advisers’ insistence on immediate privatization, Communist party officials began handing government companies over to their personal friends and family members, establishing a system of oligarchy and rampant corruption which persists in Russia today.
Stiglitz writes in Globalization and Its Discontents that the World Bank was under “enormous political pressure from the Clinton administration to lend more money to Russia” to mitigate their tanking economy. Unfortunately, due to the cozy relationship between Russian oligarchs and their government, loan money which was supposed to prop up the Russian private sector was whisked away to private bank accounts in Cyprus and Switzerland, leaving a mountain of government debt in its wake.
Which brings us to our second example. This aid package came at a moment which, as the New York Times reported at the time, was “expected to be helpful to President Boris N Yeltsin in the presidential election.”
Yeltsin openly and brazenly relied on American political advisers to help him run his campaign. As with the IMF loan, this was apparently “urged on by President Bill Clinton,” who is quoted as saying “I want this guy to win so bad, it hurts.” Yeltsin, who presided over the aforementioned economic disaster, sat at an approval rating of 6% during the beginning of his campaign (which was, at the time, lower than Russian’s approval of Joseph Stalin.)
Thomas Graham, the Chief Political analyst at the US embassy in Moscow during the election, later recalled that corruption was “clearly visible during the election campaign itself.” Election observers with the Organization for Security and Cooperation in Europe noted that Yeltsin would “dispense patronage and promises including payment of back wages, vacations, reconstruction of churches, tax relief, and whatever else the campaign managers identified as likely to induce support.”
Regarding the question of whether the vote was fairly counted, the Organization deemed it inconclusive, noting that “There is no question that there were serious thefts of votes in some areas.” After Yeltsin’s victory, Time magazine ran a cover story titled “Yanks to the Rescue: The Secret Story of How American Advisers Helped Yeltsin Win.”
Make of this what you will, but it doesn’t paint a picture of an America that wasn’t “deeply involved in Russia.”
In the case of the Russia fiasco, Zakaria mistakes US economic clout as disengagement. Elsewhere in the essay, he mistakes it for altruism. According to his memory, back in the golden age of unipolarity, the United States was the only entity capable of maintaining a stable global economy.
As an example, he cites the East Asian financial crisis: “Toward the end of the 1990’s, when a series of economic panics sent East Asian economies into tailspins, only the United States could stabilize the global financial system. It organized a $120 billion international bailout for the worst-hit countries, resolving the crisis.” This rosy and overly simplistic view of the crisis is a serious mischaracterizing of America’s role in East Asia.
In what Stiglitz calls the “single most important factor leading to the crisis,” East Asian economies were pressured by the west to liberalize their capital markets in the 1980’s and 1990’s despite their high savings rates (i.e. the lack of a need for more capital) in order to allow for Asian companies to borrow from Western financiers. When their currencies began collapsing, many East Asian finance ministers blamed these liberalization policies, but were skittish about reversing them for fear of international capital fleeing the country and making the problem worse.
In exchange for the aid package that Zakaria writes so warmly of, the IMF preconditioned that economies raise their interest rates to attract more foreign investors and stabilize their economies. In many cases, these interest rates exceeded 25%, precipitating a wave of bankruptcies among indebted companies that rippled across the East Asian region. The aid money was spent paying back debts to western financiers rather than attempting to stimulate domestic demand. Coincidentally, this didn’t attract foreign investors.
Japan, outlining an alternative vision of recovery, offered $100 billion to finance the creation of an Asian Monetary Fund. China, as well as many of the economies suffering through the crisis, were on board. Stiglitz writes that the United States “did everything it could to squelch the idea…As the only shareholder of the IMF with veto power, the United States had considerable say in IMF policies. It was widely known that Japan disagreed strongly with the IMF’s actions.”
Japan’s attempt at regional leadership is an important point. While the United States’ attempts at squashing regionalism were successful in this instance, that won’t be the case as American power dwindles. Recently, China established the Asian Infrastructure Investment Bank, a project supported by not only Asian economies, but European ones as well, despite the grumbling of the US Treasury Department.
Zakaria references a 1990 essay by Charles Krauthammer, which observes that “Germany is emerging as a regional superpower of Europe, as is Japan in Asia.” While acknowledging that, at the time, America was reigning supreme, Krauthammer concluded that “the unipolar moment will be brief.”
In the end, he may be correct, as is demonstrated by the politics surrounding the Asian Infrastructure Investment Bank. As America’s global power weakens, pushback can come from larger economies in regions where the US once forcefully and unquestionably exerted itself. In 2017, historian Alfred McCoy’s book In the Shadows of the American Century outlined a vision similar to Krauthammer’s:
…a new global oligopoly might emerge between 2020 and 2030, with rising powers China, Russia, India, and Brazil collaborating with receding powers like Britain, Germany, Japan, and the United States to enforce an ad hoc global dominion, akin to the loose alliance of European empires that ruled half of humanity circa 1900.
The overall thesis of Fareed Zakaria’s essay is correct: The United States isn’t the world’s leader anymore, largely because of its own mistakes. However, on the critical “unipolar moment” between the fall of the Soviet Union and the invasion of Iraq, he misunderstands how the US operated. It didn’t fail because it receded, it failed because it abused its power and demonstrated that unipolarity isn’t something necessarily desirable.
If the East Asian economies were left to recover on their own, if Russia were allowed to gradually develop to a market-based system (as South Korea and China did), perhaps there wouldn’t have been such a pushback against US power. Perhaps Vladimir Putin wouldn’t have been elected. Perhaps there wouldn’t be an Asian Infrastructure Investment Bank, an alternative to the IMF which is apparently quite popular in East Asia.
Alfred McCoy and Charles Krauthammer offer a vision of regional spheres all dominated by their respective powerhouses. These powers would communicate, coordinate, and clash, driving the machinations of the world economy in a fluid and potentially unpredictable way. No one nation would have unmatched power to dispense economic assistance for troubled economies. No one country could dictate how another country privatizes or nationalizes industry if it’s doing so on the other side of the globe.
Or perhaps something completely different will happen.