The Four Horsemen of Foreign Policy

America has lost its hegemonic status. If Barack Obama wants to navigate through four more years of foreign policy, he must correct America’s view of the world.

Barack Obama has been reelected by concentrating on domestic issues. A look beyond US borders would have been unbearable to American voters anyway. That isn’t Obama’s fault: foreign policy problems usually come with a long history, and we certainly can’t blame the president for not forecasting global turmoil.

Yet we can admit that the global panorama resembles a painting of apocalyptic proportions. The four horsemen: Iranian nuclear frenzy, Islamic revolts, Eurozone breakdown, and Chinese slowdown. There’s also a fifth horseman of US domestic origin: the federal deficit. “The Economist” believes that this might indeed be the most powerful threat – an opinion that is shared by the “New York Times” (which published an article right after the presidential election titled Back to Work, Obama Is Greeted by Looming Fiscal Crisis).

The claim is that the US cannot pursue small-state taxation levels and big-state spending at the same time. And there’s the additional worry that the US would feel the consequences of international turmoil as soon as any of the four global horsemen rears its head.

US presidents are seldom reelected on foreign affairs – but elections can surely be lost on them. Remember George H.W. Bush, who triumphed during “Operation Desert Storm” in 1991 and then had to bear Clinton’s and Gore’s criticism of having devoted to much passion and attention to the pursuit of Saddam, and not enough to the domestic economy? Obama leveraged a similar tactic this year, albeit in reverse: he demonstrated some remarkable achievements of his first presidential term (the killing of Osama bin Laden tops the list) and later refocused the discussion on big domestic themes: the bailout of the American auto industry, declining unemployment, and his signature healthcare law. A few words were spent on the troubled relationship of Netanyahu’s Israel on the side.

As he returns to the White House, Obama must nevertheless broker a deal on the federal budget by January to avoid the “fiscal cliff” that would re-shuffle 600 billion dollars through expenditure cuts and tax increases.
He will succeed. A third term isn’t an option, so Obama can afford unpopular choices. But domestic crisis management doesn’t do away with foreign policy problems: they remain acute and might threaten the US economy. The four horsemen represent the most difficult challenges ever faced by an American president since World War II. The US isn’t the same hegemonic power it used to be. While American GDP is still the world’s largest, the country is dependent on foreign funds – and on Chinese money in particular – to sustain its deficit. On average, every US citizens owes some 17,500 dollars to foreign creditors. Total debt per capita (foreign and domestic combined) is 52,000 dollars per head. If one considers only taxpayers, that number skyrockets to 140,000.

Military supremacy has been jeopardized by the decision to finance military interventions in Iraq (2003) and Afghanistan through “emergency spending": large military operations were decided without a proper assessment of the impact of war on the budget. Economists Joseph Stiglitz and Linda Bilmes once calculated that the total cost of the two wars may exceed three trillion dollars. As 42 percent of US foreign debt is in the hands of China and Japan, one could trace a connection between the sustainability of the military system and of the federal budget and the continued availability of foreign credit.

In absolute terms, Chinese-held debt accounts for only eight percent of US debt. Yet solving the budgetary crisis is pivotal if the US wants to keep spending as much as 600 billion dollars per year on military and defense (a sum that doesn’t even include homeland security). Unless the US embarks on a path of financial sustainability, it will be poorly positioned to face the four horsemen of foreign policy.

Some pundits (and, recently, Russia’s president Putin) have claimed that Obama is America’s equivalent to Mikhail Gorbachev, "a man forced to preside over the demise of a political system he desperately wants to save.” Without doubt the US finds itself in a period of relative decline as other powers emerge. But a comparison to the Soviet Union is misleading, since the US has never been a strong “territorial empire” in the Soviet sense. The closest similarity (and by similarity I do not mean the strongest term of “identification”) is with the British Empire. In his excellent analysis of the rise and fall of great powers, Fernand Baudel highlights several factors that indicate an empire in decline: an excessive availability of money that cannot find investment possibilities, clear signs of income polarization, “market colonies” that have learned from the hegemony and are now applying the tools and strategies themselves. China is now infusing its single-party system with elements of the free market. In some Middle Eastern countries, “democracy” has become the buzzword with which religious parties have cemented their claim to power.

Obama’s second mandate isn’t enough to avert the decline. Nonetheless, the experience of the British Empire in its last years may serve well as a guide as we try to understand how the US might face its international challenges. The basic rule is that the foreign policy of a country must necessarily serve domestic needs: idealism is a luxury that only empires at their zenith can afford.

Samuel Adamson has argued that British decline was characterized by “the deliberate preservation of sterling’s prestige on the international stage, fueled by a lingering nostalgia for the halcyon days of international British supremacy, [that represented a] punishing and painful damage inflicted upon the domestic British economy in an effort to achieve successive governments’ international agenda.” In a post-imperial period, the global system reverts to a “neo-Medieval” phase in which regional powers tend to emerge (Iran, Egypt, Israel and China). The US isn’t a central power anymore, but a relatively strong actor in an interconnected network. The era of D-Day is over, and a new geo-strategy is required.

Take the UK: after World War II and without the leadership of imperially-minded politicians like Winston Churchill, the country twice had to rely on the US to solve international crises: during the Iranian crises of 1946 and 1951-53, and again when the UK tried to single-handedly resolve the Suez crisis in 1956. The US had become powerful enough to set the tone for pacification.

Today, resorting to local powers to achieve international goals is not a first for America: in periods of downturn, Washington often had no problem with leveraging the interests of other countries. The CIA backed rebels in Afghanistan and Pakistan to repel the Soviet invasion, and Nixon’s administration reproached China to limit the influence of the USSR in the 1970s.

Indeed, China is important as a leveraging force even today. It might help America in fighting the four horsemen of foreign policy apocalypse. Look at Iran, for example: sanctions against the regime in Tehran started working only when Beijing agreed to limit commercial relations (and oil trade) with Iran. China may well be an American ally when it comes to the containment of extremist regimes (or regimes-to-be) in the Middle East, and from Pakistan to Morocco. Iran might rethink its nuclear strategy if economic sanctions remain harsh and Beijing refuses to do business with Tehran. India might play a similar role in the future, and the containment model would also serve to limit Russian influence in the region.

A new “Chinese détente” may also reduce the risk of an Asian downturn, and it would safeguard the flow of Chinese money to the US federal reserve at least until the American budget has been restructured.

The new strategy would necessarily involve the rebalancing of power in the Pacific region (from America’s west coat to the eastern coach of China), but this would be the lesser of many evils. The alternative is the continued pursuit of hegemonic dominion – a dream marked primarily by its distance from geopolitical realities especially in times of a 16 trillion dollar mountain of debt.

Read more in this column Stefano Casertano: Steady as she goes

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