The Frugal Superpower

by Michael Mandelbaum

  Just as the Clinton administration had ostensible reasons for expanding NATO to Russia’s doorstep, so the Bush administration had its reasons for believing that the occupation of Iraq would be easy and require no special preparation. Some Bush administration officials thought that the liberation of Eastern Europe from communism in 1989, when most of the formerly communist countries made relatively smooth transitions to free-market economies and democratic political systems, offered a useful precedent for the liberation of Iraq. Others based what turned out to be their excessive confidence on what in 2003 seemed the easy and inexpensive eviction of the terrorism-sponsoring Taliban regime from Afghanistan two years before and its replacement with a far friendlier and less brutal Afghan government.

  As it happened, Iraq had little in common with Poland, Hungary, and the Czech Republic, and the occupation of Afghanistan was to become much more difficult for the United States in subsequent years. More to the point, the Bush administration should have been aware of the difficulties and dilemmas the conquest of Iraq would present because many individuals and groups, in and out of government, spelled them out, and did so both publicly and privately before the war began. In particular, General Eric Shinseki, the chief of staff of the army, warned that several hundred thousand troops—far more than the number actually sent—would be needed to pacify Iraq once Saddam had been overthrown. Seized by the overconfidence of the seat-belt wearer, however, the administration General Shinseki served ignored him, to the detriment of its own domestic political fortunes and the strength and global standing of the United States.

  The immediate costs of Iraq, in lives and money, were higher and more palpable than the costs of NATO expansion. But someday Iraq will recede from a prominent place in the national life of the United States, just as has Vietnam, a country as important and controversial forty years earlier as Iraq was in 2009. Moreover, the American efforts in Iraq might someday come to be considered successful, if the country should evolve over the years into a stable, tolerant place with, ultimately, a democratic form of government.

  NATO expansion did less damage to the United States in the short term. Unlike the invasion of Iraq, however, it has no prospect of ever providing offsetting benefits. Moreover, whereas the Iraq war will be seen in retrospect as a clumsy, unduly expensive solution to a real problem—the threat that Saddam posed—NATO expansion actually created a problem where none had existed, and that problem—the alienation of Russia—will weigh heavily on American foreign policy and international relations as far into the future as the practiced eye can see.

  Whatever the balance of damage inflicted between the two episodes turns out to be, their common underlying cause—the huge disparity between the power of the United States and that of all other countries, and the carelessness to which that disparity gave rise—is becoming inoperative. The collapse of Lehman Brothers and the economic developments that have followed and will follow have, to mix a metaphor, removed the seat belts from the American ship of state. Prudence, born of straitened economic conditions, will replace the carelessness that has proven so costly in Eastern Europe and the Middle East.

  The new discipline will undoubtedly improve the quality of American foreign policy in some ways, but that does not mean that the more constraining conditions can be considered, on balance, advantageous. To the contrary: as the singer Sophie Tucker once put it, “I’ve been rich and I’ve been poor and rich is better.” The United States has become poorer and will cut back on the resources it devotes to its external affairs. How will that affect America’s global roles?

  THE END OF INTERVENTION

  Of the three quasi-governmental economic services the United States provides for the world—furnishing the currency most widely used as a reserve and for international transactions, acting as the largest supplier of consumer demand, and ensuring a secure framework for cross-border economic transactions—the first is almost certain to persist in some form at least for a while. This is not because other countries are entirely pleased with the privileged status of the dollar. To the contrary, that status has become the subject of criticism and resentment because it gives the United States the capacity to borrow in its own currency, making possible the large American deficits. In addition, the special role of the dollar helped attract funds to the United States that in turn helped inflate its domestic housing bubble, the bursting of which threatened the integrity of the global financial system and plunged the world into a steep economic downturn.

  If the American government should decide to cope with the huge debt it has accumulated by printing money to pay it, sending inflation soaring and destroying much of the value of the dollars other countries hold, the world might well cease to use the American currency as a store of value and a medium of exchange. Short of that, however, the dollar will likely retain its central role in international monetary affairs because the alternatives are even less satisfactory.

  For example, the world will not accept as its principal form of money a currency issued by an international organization, such as the International Monetary Fund. China’s currency may one day rival the dollar, but that day will not come until China’s capital markets are large enough, its property rights secure enough, and its interest rates free enough of government manipulation to make citizens of other countries comfortable in holding the currency in large amounts. It would also have to become freely convertible into other currencies.

  The euro, the currency used by sixteen of the twenty-seven members of the European Union, including Germany, France, and Italy, does rival the dollar: countries do hold euros as reserves and employ them in international transactions, although not on the same scale as the American currency. The euro is unlikely ever to supplant the dollar entirely, however, because of lingering worries that one or another country might someday withdraw from what is in fact a multinational currency union rather than the currency of a single country, and because the euro countries are skittish about too heavy a demand for their money, which would raise its international value and penalize the exports on which they, especially Germany, so heavily rely.

  If one of the major services the United States provides to the global economy, furnishing its most important currency, will continue into the second decade of the twenty-first century, another important American economic role will not. The United States will no longer act as the world’s chief consumer, furnishing an enormous and ever-expanding market for exports from East Asia and Western Europe. The American consumption binge that stoked the engines of the global economy depended on the accumulation of ever more household debt. In the wake of September 15, 2008, American consumers’ spending habits changed. Saving became the order of the day. The pattern is likely to continue well into the century’s second decade and perhaps beyond. Indeed, the prospects for global economic growth over the long term depend on whether, to what extent, and how rapidly other countries—especially those accustomed to running balance-of-payments surpluses such as China, Japan, and Germany—increase their own consumption to fill the gap created by post–September 15 American frugality.

  As for the third major American service to the global economy, keeping order through policies that promote reassurance, nuclear nonproliferation, and freedom of the seas, all of which engender the confidence necessary for international commerce, whether these policies continue and how effective they are will depend in part on how large and capable American military forces turn out to be in an era of scarcity. That, in turn, will depend heavily on how much Americans decide to spend on defense.

  One of the best-known criminals of the past century, Willie Sutton, when asked why he robbed banks, replied, “Because that’s where the money is.” For America’s roles beyond its borders, the money—the serious money—is to be found in the defense budget, and it is therefore from defense spending, in addition to other categories of expenditure, that the post–September 15 reductions will come. During the Cold War the defense budget served as an indicator of the American public’s g
eneral assessment of how dangerous a place the world was for the United States. When the danger seemed to increase, with heightened peril to American interests, defense spending rose. This occurred on several occasions: at the time of the Korean War in the early 1950s; when the Soviet Union launched the first Earth-orbiting satellite, Sputnik, in 1957; during the war in Vietnam in the 1960s; and in response to the Soviet invasion of Afghanistan in 1979. When the danger seemed to recede, defense spending—as a percentage of the federal budget and of the total national output—declined.

  Without the global, mortal threat of the Soviet Union to justify it, defense spending declined sharply as a proportion of national output in the wake of the Cold War. The attacks of September 11, 2001, triggered an increase in defense expenditures, but in the following decade it never exceeded 4 percent of the American GDP, below the average for the Cold War years. Still, 4 percent of a $14 trillion economy adds up to a lot of money. In fiscal year 2008 the defense budget was $647 billion, which was 25 percent larger in real terms than it had been in 1968, at the height of the Vietnam War—although in 2008 it was a smaller proportion of a much larger GDP. Even without a major adversary, the United States spent more on defense than most of the world’s other national military budgets combined.

  Downward pressure on this spending began at the outset of the Obama administration. Secretary of Defense Robert Gates, a holdover from the George W. Bush presidency, announced the termination or limitation of a number of major programs, with the promise of a more stringent approach to defense spending in the future. The partisans of such spending—the companies with contracts to produce weapon systems, the workers employed in their factories, and the members of Congress in whose districts those factories and workers were located—mobilized to resist the reductions, inaugurating what will be a protracted struggle over the size of the American defense budget.

  The forces of resistance to defense cutbacks are formidable. The high-performance F-22 fighter aircraft, for example, which Gates sought to cancel after 185 had been manufactured (none was ever used in either Iraq or Afghanistan) employed a total of 25,000 people in several different states. This made it possible to generate a great deal of political support for building more of them, but the administration succeeded in getting the Congress to cap production of the airplane. Still, the first Obama defense bill included expensive projects the administration did not want but upon which powerful members of Congress insisted. And the administration itself planned a modest expansion in the size of the nation’s army. Over time, however, the mounting obligations of the federal government, the strain that paying for them will impose on taxpayers, and the skepticism about federal programs other than entitlements, including defense, that rising tax bills will promote, will tilt the balance of power in this political struggle increasingly in favor of efforts to reduce the defense budget. In the future, the United States will have fewer—still, no doubt, a great many, but fewer—tanks, ships, and airplanes, and soldiers, sailors, and air crews to operate them, than it has deployed in the past.

  While America will continue to supply to the world, even with these reduced forces, the services of reassurance, nonproliferation, and a secure backdrop for global commerce, one mission—a prominent and controversial one, the one the United States undertook in Iraq and Afghanistan, among other places—will in all likelihood be discontinued during the course of the twenty-first century’s second decade.

  Between 1992 and 2003 American forces were dispatched to Somalia, Haiti, Bosnia, and Kosovo, as well as to Afghanistan and Iraq. The American operations in these countries differed from the Cold War interventions in Korea and Vietnam, where the United States waged bloody, protracted campaigns against formidable communist armies. In the post–Cold War interventions, by contrast, American armed forces quickly overcame the opposing armies, but the United States then found itself having to undertake an unexpected, unwanted, arduous, and frustrating task, that of creating working political institutions in the countries it had conquered.

  In none of these countries did the United States set out to build working states: with military success, however, came responsibility for governing the places in question. In these places such local institutions of governance as had once existed had collapsed and working institutions of some kind had to be put in place to secure the goals for which the United States had intervened in the first place. The alternative to state-building in Bosnia in the 1990s, for example, was (or seemed to be) a resumption of the local wars, with the large-scale murder of civilians, that the United States had used its air force to stop. Similarly, without a prolonged American presence and an effort at state-building in Iraq, that country might have fallen into anarchy, or become a base for terrorist attacks against the West, or seen Saddam or someone like him regain power.

  State-building proved difficult, frustrating, and costly everywhere it was attempted. The missing institutions, such as financial systems, judiciaries, and parliaments with political parties, could not be imported from abroad; they had to be homegrown. Such growth takes time. In the best of circumstances, working institutions require at least a generation to take root, and the places where the United States attempted state-building did not offer the best of circumstances. The skills, the values, and the historical experiences on which state institutions rest were in short supply, or nonexistent, almost everywhere that the United States intervened. This should not have been surprising. Had the conditions favorable to the growth and maintenance of banks, parliaments, and courts been present—had the state already been built—the political pathologies the United States intervened to stamp out probably would not have appeared in the first place. To make the task even more difficult and less politically palatable, these interventions cost American lives as well as money.

  Despite the frustrations and the costs involved, the foreign policy community—those most knowledgeable about America’s relations with other countries, including the people with direct responsibility for conducting them—came to consider such interventions to be a challenge that the United States should accept and master. They wanted to accept the challenge in part because the circumstances in which the post–Cold War interventions took place offered the opportunity to defend American values. In unstable, poorly governed (or entirely ungoverned), violent countries—“failed states,” as they came to be called—values important to Americans are routinely flouted. Those unfortunate enough to reside in such places have no assurance that their lives, let alone their liberties, will be protected. Perhaps most important, communities and countries in dire need of state-building, of the kind in which the United States used military force in the first two post–Cold War decades, although distant from North America, can incubate threats to the American homeland, just as swamps breed tiny but deadly malaria-carrying mosquitoes. Terrorist cells and training camps flourish in such places. The deadliest terrorist organization, al Qaeda, established itself first in Afghanistan and then, when evicted, in the lawless northwest region of Pakistan.

  From this predisposition to interventions that lead to state-building follows the idea of reconfiguring the institutions of American foreign policy to make them better suited to this task. President Bush’s second secretary of state, Condoleezza Rice, called for an emphasis on “transformational diplomacy,” which would use the tools of American foreign policy to transform societies in distress and in desperate need of working institutions, and the next administration took up this theme when Barack Obama entered office. At the same time, the army began to concentrate on mastering the techniques of counterinsurgency, which placed greater emphasis than the conventional arts of war on nurturing effectively civilian institutions and seemed to have made Iraq safer when applied in that country. Attending seriously to state-building, as the foreign policy community wishes, seems to require that the relevant departments of the federal government be reformed to make them competent to build institutions and train people to operate them. In this vision of foreign policy, State Depa
rtment diplomats would become economists, aid workers, and public health officials, while soldiers would perform the tasks of architects, civil engineers, and teachers. Such a transformation could be seen as a large-scale, twenty-first-century version of the biblical vision of turning swords into plowshares, although at least a few swords would have to remain on hand for the purpose of keeping order.

  The American public, however, does not share this vision. The public ultimately determines what the American government does and because the experience of intervention, especially in Iraq, has been, from the public’s point of view, an unsatisfactory one, as well as because resources for foreign policy will be more limited in the future than in the past, the overhaul of the administrative apparatus of American foreign policy to make it an effective mechanism for state-building will not take place. Nor will the United States intervene abroad as frequently in the next two decades as it did in the past two—if indeed it intervenes at all.

  The humanitarian interventions of the Clinton years were never popular with the American public as a whole. For the two military operations in the Balkans, for example, in Bosnia and Kosovo, the administration never sought, because it knew it would not receive, congressional approval. These operations were restricted to aerial bombardment so as to avoid American casualties, because the administration understood that the public would not tolerate any.