Help Wanted: Leader of the Free World

Barack Obama’s victory speech in Chicago on the night of November 4th left a lump in the throats of many observers of U.S. politics: the touching account of the country’s past, as seen through the eyes of Ann Nixon Cooper, a 106-year-old African American. The clarion call to make the promise of change a reality.

While Americans now consider what Obama’s election means for them, the rest of us wait for the first glimpses of what it means for the world. As Canadians, we do this from two perspectives: as neighbours who co-manage a long and undefended border and a common economic space, and as co-participants in a larger international system that desperately needs enhanced cooperation to tackle the planet’s toughest environmental, security and economic challenges. What temperament should we bring to the Obama era?

Hope is a powerful and too-often underestimated force in politics. Moreover, we should not be afraid of embracing optimism when warranted. After all, the United States has proven time and again to be highly adaptable and dynamic, with a constitution more resilient than most other political experiments of the same kind. But Canadian policy makers, who deal with the U.S. both bilaterally and multilaterally, cannot afford to be swept away by hope. They are duty bound to advance Canada’s interests and to fulfil Canada’s global responsibilities—tasks that call for a hard-headed assessment of the current (and most likely) shape of global politics.

The Obama Promise

There is little doubt that the U.S.—a country that held for almost two decades the title of the world’s only superpower—is a giant who has stumbled. Today it faces not only questions about its capacity to achieve its desired outcomes on the global stage, but also skepticism about the attractiveness of its economic, social and political model. More troubling still, its reputation globally has suffered a series of blows—some of them self-inflicted as a consequence of prosecuting the war in Iraq. Even among those non-Americans who have long respected and defended the United States, there is profound dismay at the way the country has been gripped in a culture of fear and has walked away from the principles it preaches.

President-Elect Obama sees the restoration of America’s global standing as one of the key priorities of his new administration. On the campaign trail, he was fond of saying that during George Bush’s occupancy of the White House, the position of Leader of the Free World remained vacant. It is clear that Obama intends to fill it.

Lying behind this vision is a conviction, shared by many high-profile Democrats, that America’s problem over the past eight years has primarily been tactical. The Bush administration caused the U.S.’s stock to plummet by pursuing a unilateralist and bullying foreign policy that spurred enemies into retaliation and alienated traditional allies. For these Democrats, the mantra of the future is to recapture the spirit of the 1940s and the kind of multilateralism that underpinned the creation of institutions such as the United Nations, the World Bank and the International Monetary Fund. It is assumed that this strategy—following in the footsteps of Roosevelt and Truman—would allow the U.S. to assume its “rightful place” in the world.

This hopeful view, however, is based on two misconceptions. First, the world we confront is not the world of 1945. The two strong glues that held states together around the United States at the close of World War Two—weakness and fear—do not have the same adhesive force today. And second, the new actors that have joined the multilateral game are unlikely to allow the U.S. to reform institutions in ways that suit its own interests and values. The task of rebuilding (and, in some cases, creating) the structures that will manage global affairs is a monumental one, requiring a willingness on the part of Americans to establish new partnerships and bury the hegemonic mindset that has driven their policy making since the end of the Cold War.

Back To The Future?

Obama’s election victory is a dramatic symbol of the best that America can be, and has created a reservoir of goodwill in many foreign capitals. This will count for a lot in the short term, and could produce some tangible results—possibly even regarding the thorny issue of climate change. But underpinning this constructive atmosphere are fundamental structural factors that distinguish our world from the one that existed just over 60 years ago.

It was not just deft leadership that allowed the U.S. to work so effectively with European states after 1945, but also the cold necessity of overcoming economic collapse and defending against a common enemy. Today, the European Union boasts the largest market in the world, and European technologies are increasingly becoming the global standard. Those who judge Europe’s strength or weakness according to whether it possesses a common army are applying a conventional yardstick to an unconventional political entity. EU members currently provide the highest levels of development assistance, have contributed in targeted ways to peacekeeping and humanitarian missions overseas, and are using their accession criteria to expand the union’s perimeter. In addition, much as Europeans sympathized with the United States after 9/11—and have experienced terrorist atrocities themselves—they have never perceived the enemy of global terrorism in quite the same way as those in the United States. In fact, for most Europeans, the question is not how radical Islam can be countered abroad, but rather how Muslims can be integrated into domestic society.

Beyond the confines of the transatlantic space, there is an even more significant structural change afoot, whereby states and regions (primarily China, Brazil, India and the Persian Gulf) are starting to exert significant influence in global affairs. These rising powers are not merely markets to tap into, but are important players in a changing dynamic of multilateral cooperation. Consider, for example, how states in the Middle East have been called upon to provide much-needed financial backing for the cash-strapped IMF, or how Asian states are becoming larger contributors to United Nations peacekeeping missions.

In the midst of this systemic transformation, the strategic and tactical blunders of George W. Bush have revealed the limits of American power that the new president must adjust to. Yes, the U.S. may still have the most sophisticated army, navy and air force in the world, but its capacity to use that arsenal to bring about political change is limited (as Iraq painfully shows). So too is its ability to finance the continued deployment of its armed forces and the renewal program needed to maintain America’s military status. Indeed, economic factors have the greatest potential to derail the U.S. project to resume global leadership.

It is worth remembering that no other country in the world could have financed the Iraq war in the way the United States has. The U.S. can continue to run large current account deficits because it hosts the world’s reserve currency. It can simply print more dollars, and other countries’ central banks (primarily in Asia) will hold their surplus reserves in those dollars. But what French statesman Valéry Giscard d’Estaing once complained of as the U.S.’s “exorbitant privilege” will not last forever. We have already seen modest diversification into other currencies and demands on the part of some global actors to be paid in euros. As economic historian Niall Ferguson bluntly stated in a recent interview in The Globe and Mail: “If international investors think the U.S. dollar might not be the currency to hold its value, then this really will be a perfect storm … We all have to hope that the Democrats won’t go loopy with their spending plans, and that the Chinese and other sovereign investors continue to be willing to absorb quite large amounts of debt.” Nor is the exorbitant privilege without costs. Perhaps the most onerous is the negative effect of a strong greenback on U.S. exports and employment. A less visible, but equally important, cost is the decreased room to manoeuvre that comes with reliance on Asian creditors. The dollar’s status as global reserve currency is no longer a symbol of unconstrained American leadership, as it was three or four decades ago, but rather of the high degree of dependence of the United States on the decisions of others.

Another feature of the contemporary power shift relates to America’s so-called soft power. Obama has certainly given this a boost, by drawing attention to the potential for true social mobility and inclusion of diverse peoples within the U.S. melting pot. But the financial crisis of 2008 combined with deep-seated weaknesses in federal support structures (symbolized by the appalling response to Hurricane Katrina) have led to open questioning about the viability of the U.S. brand of capitalism and liberal democracy. The optimists will retort that the United States still exerts enormous cultural power, as “everyone wants to be like it.” This might be true in the abstract, but what exactly do others seek to emulate? Political scientist Dominique Moïsi has pointed out to Americans that “today’s biggest challenge may be that 1.3 billion Chinese want to spend like you but not be governed like you.” ((Dominique Moïsi (2008), “The Land of Hope Again? An Old Dream for a New America,” Foreign Affairs volume 87, number 5 (September/October), page 141. ))

The burning question that arises is what the new global order will look like. Many defenders of the U.S. take heart in the fact that there is no obvious hegemon to take the place of the stumbling giant. Neither the EU nor Russia, for example, is likely to fulfil this role. Nonetheless, it is hard to deny that the centre of gravity is moving from west to east. The size and trajectory of China’s economy, along with the breadth of its strategic interests (which now encompass Africa and Latin America), means that, according to the U.S. National Intelligence Council, it is poised to have a greater impact on the international system than any other country in the next two decades. ((See the NIC’s report Global Trends 2025: A Transformed World, published in November 2008 and available at http://www.dni.gov/nic/NIC_2025_project.html. ))

These trends do not necessarily mean the next era will be one of Chinese hegemony. Much hinges on the country’s political stability, which in turn depends on the government’s capacity to continue to deliver economic growth. But we should not be thinking in terms of replacements for the U.S. anyway. We are likely to see something much messier. First, the decline of America from its great heights will be neither swift nor linear. There is also a limit to how far it will fall—given its continued cultural and scientific clout. And second, no one superpower will dominate the international system. Instead, different countries and coalitions will lead on different dimensions, and a host of powerful non-state actors (whether businesses, religious organizations or criminal networks) will play both constructive and destructive roles.

Bretton Woods II?

The second problem with the hopeful view of U.S. Democrats is its skewed understanding of the multilateral order created after 1945. U.S. efforts during this period were driven not primarily by altruism, but rather by a particular set of American interests that combined laissez-faire capitalism abroad with a domestic New Deal. These interests, which were firmly embedded in both the UN and the Bretton Woods institutions, were also broadly shared by America’s key allies, in what John Ruggie has famously called the “embedded liberal compromise.” ((John Ruggie (1998), “Embedded Liberalism and the Postwar Economic Regimes,” in Constructing the World Polity (New York: Routledge), pages 62–84. )) And when divergence did occur, these states could be coerced into accepting American preferences, given their reliance on U.S. assistance. Furthermore, the number of players that Washington had to cajole was limited: there were only 50-odd states in the international system in 1945 (compared with close to 200 six decades later).

Today the capacity of the United States to shape institutions in its own image is much more limited. As journalist and Obama advisor Parag Khanna recently asked, “why should China or other Asian countries become ‘responsible stakeholders’ … in an American-led international order when they had no seat at the table when the rules were drafted? Even as America stumbles back toward multilateralism, others are walking away from the American game and playing by their own rules.” ((Parag Khanna (2008), “Waving Goodbye to Hegemony,” New York Times Magazine, January 27 http://www.nytimes.com/2008/01/27/magazine/27world-t.html. )) We have had a sneak preview of what a widened multilateral chess board might look like during the recent G20 meeting in Washington on the global financial crisis. While heads of state pledged to strengthen supervision of banks and credit rating agencies, as well as to tighten controls on complex derivatives, the gathering revealed significant ideological differences over the origins of the crisis and how best to address it. If the meeting represented an attempt at a “Bretton Woods II,” then it is clear that the emerging global financial architecture will not be driven by the kind of “light touch regulation” favoured by the United States.

Even among its friends in NATO, the United States is confronting a set of differing priorities. Europeans took a diverging line on the question of Georgia’s membership in NATO, with many wondering why the U.S. insisted on advancing this file when the organization had bigger problems at hand with the war in Afghanistan. And speaking of Afghanistan, the president-elect’s idea of strengthening NATO is to rally alliance members to invest more in reconstruction and stabilization. Is this something that a Canadian government (or a Dutch or German one) wants to hear? Just when Canada plans to wind down its commitment, a new Obama administration is going to come asking for troops. Rightly or wrongly, how U.S. allies react will be taken as a sign in Washington of their commitment to a new era of multilateralism.

U.S. Democrats might respond with incredulity to the kind of analysis I have just offered. Wouldn’t the world, and particularly Canada, be better off if the U.S. reassumed its natural role as leader of the free world? It is too late to be asking this question. We all need to adjust our geopolitical imaginations to understand the more fragmented world we are living in—beginning with the United States itself.

This is something Americans will have a hard time doing. An entire generation of policy makers in Washington is still gripped by a hegemony complex that sees the U.S. at the top of a unipolar system. They have known no other way of thinking about their country. But every day spent stuck in old thinking prevents the U.S. from seeing clearly the reality to which it should be adapting. The historian David Calleo has warned that “when a nation as powerful as the United States defies, Canute-like, the onrushing historical tide, all the makings of a grand historical tragedy are in the making.” ((David Calleo (2008), “The Tyranny of False Vision: America’s Unipolar Fantasy,” Survival, volume 50, number 5 (October), page 63. ))

Is Canada prepared for change?

Writing in the pages of the LRC four years ago, I counselled Canadian policy makers to dare to take the long view and consider a world where the U.S. was no longer global hegemon. ((Jennifer M. Welsh (2004), “Taking the Long View,” Literary Review of Canada, volume 12, number 6 (July/August), pages 3–5. )) That position was pilloried during the first half of this decade by the advocates of a Canadian foreign policy focused on relations with Washington as somehow antithetical to the Canadian national interest. Those of us who dared to consider whether Canada should expand trade priorities or political partnerships to include important developing countries were branded as promoters of a Trudeau-era “third option” that was destined to fail. But investing in alternatives to the United States—whether as economic or diplomatic partners—is (and was) hardly delusional. In fact, it reflects a prudent calculation of Canada’s national interests and the need to plan for a world with multiple centres of power.

As our country enters 2009, we are woefully unprepared for the geopolitical and economic transformation. Two institutions central to Canada’s past international policy—the G8 and the UN—are facing existential challenges (the former due to the rise of the G20 and the latter due to a lack of consensus globally on how to address key threats to international peace and security). How will we promote our interests and exercise our responsibilities in a new global order? Canada’s relationship with China is in tatters, and its understanding of the priorities of other rising states, such as India and Brazil, is still limited. We have underinvested in partnerships with key European countries that share our approach to foreign policy issues. And we have not even begun to consider the implications of a likely change in focus of U.S. energy policy from the Middle East to the western hemisphere.

Above all, our approach to Washington is still dominated by a paradigm that tries to ring-fence the Canada-U.S. relationship and keep discussions within a bilateral framework. Those advising Prime Minister Stephen Harper believe he should entice President-Elect Obama with a pragmatic agenda that includes border management and regulatory cooperation. Is this the right strategy to be pursuing with the new president? There is no doubt that we need constructive talks on such issues among civil servants and officials at the state or provincial level. At the same time, the approach feels transactional and narrow, when we have a (small) window of opportunity to think bigger. Does Canada want to be seen as an ally that comes to Washington with its standard ask-list for North America, or as one that has ideas and proposals to help the United States (and the West more broadly) adjust to a changing global landscape?

Let me conclude on a note of caution. There are some in Canada who might be taking Schadenfreudian delight in America’s relative decline. At last the U.S. is getting its comeuppance. But this kind of attitude will not serve Canada or Canadians well. First, our own role and status are equally challenged, so there is no room for complacency. And second, whether we want to admit it or not, many of the values and interests that have driven U.S. foreign policy over the last several decades have also been informing Canada’s global role. Although we often use different means, our liberal agenda (which includes things such as the promotion of democracy and good governance, and free trade) is broadly similar. This suggests that Canadians might end up—lo and behold—missing U.S. leadership far more than we ever expected to in the post-Bush era.