Thread: When soft power meets hard choices

As a fyi, P Kennedy is the only reason I visit Timeonline....



When soft power meets hard choices
Obama’s first days inspire great hope of social and economic renewal but can America afford the promise he embodies?
http://www.timesonline.co.uk/tol/new...cle5581068.ece

Paul Kennedy

Living as I do in an extended Rooseveltian-Democrat family, in the heavily Democratic state of Connecticut, in the overwhelmingly Democratic city of New Haven, and teaching at undoubtedly liberal Yale University, I had no surprise in witnessing the steadily expanding family excitement as the Obama campaign unfolded – from an epic primary victory, to a near-landslide election return, to the magic of what happened on the Mall last Tuesday.

There were also no surprises when, in our local soup kitchen the day after the election, the predominantly African-American clientele was exhilarated, walking around the room and slapping each other’s fists. “You know, prof,” one of them told me, “I made my three young sons watch television all evening long. It was history. I wanted them to talk about this night in 2050.” So they will.

But I was surprised when I sensed that this excitement had filtered across the aisles to my Republican friends. This was partly relief at seeing George Bush and Dick Cheney go and embarrassment at their policies, but it was clearly more than that. One friend, a lifelong Republican with two sons serving in the military, told me he had never been so excited in his life as he was at Obama entering the White House.

So there is something large, almost transcendent, going on here; something new in American and world politics – at least for the first time in 40 years. There is a massive manifestation of human hope that one man can somehow pull this country, and the world outside, out of our present, frightened, battered state. The hope is so manifest because the anxiety is so profound. I have not seen such febrile excitement, whether among my Yale undergraduates or the denizens of the soup kitchen, since I arrived here from Britain 25 years ago.
Background


This comes, of course, as something of a challenge to scholars of long-term global trends and rising and falling great powers. It hits the theorists of realpolitik straight in the eye. It suggests that charisma, broad public appeal and determined leadership are as significant elements in national strength – even if far less tangible and measurable – as are numbers of battleships or growth in GDP. It suggests that the human factor might sometimes possess massive leverage, enough to alter the harsh and usually unrelenting landscape of military and economic hard power. It suggests that “soft power” in political affairs is a real thing.

When Joseph Nye, a Harvard professor, coined the term “soft power” in the early 1990s, he meant it as a complement to our measures of ranking nations by their defence spending or industrial production. Soft power was the capacity to influence others through cultural appeal, ideological attractiveness and the incentives of friendship. Nye clearly felt that soft power enhanced America’s relative position in the world: who, after all, could prefer Leonid Brezhnev’s decrepit, wheezing Soviet Union to the land of Hollywood movies, Marlboro Man, blue jeans, youth culture, Disney World, the American business model? Obviously, no one. All roads led to Washington, New York or Los Angeles; few bothered to take the trip to Moscow.

The problem with “soft power” is that it evaporates faster than does a nation’s relative economic or military heft. For proof, just look at the disastrous decline in America’s reputation during the eight years of the Bush presidency. It will be a long time until we reach some balanced assessment of the consequences of the 2001-9 regime, but there is no doubt that much of the rest of the world, including America’s staunchest allies, felt that the republic had gone astray. What was up with this haste to invade, rather than just isolate Iraq; with this blatant disregard of the Geneva conventions in the treatment of captives; with the reckless defence spending that was never covered by taxes; with the open disdain shown for international treaties and protocols; in sum, with this feckless neoconservative unilateralism? By almost all the opinion polls the number one power had become the most unpopular great power in the world. That was quite a feat.

To a certain degree this explains the enthusiasm for the new presidency; the dislike of the Bush administration had become so widespread that if Hillary Clinton or John Mc-Cain were now in the White House instead of Obama, we would still see a shift in global opinion. Yet there is clearly more going on here. Obama’s obvious intelligence, commitment, sense of humour, political savvy and capacity to articulate are probably a bit unnerving to other world leaders.

We have a genuine new element here, which in turn leads to an obvious cheering thought: if damaging policies by one American administration can undermine American soft power, then enlightened and well received policies by a new government might quickly recover much of the ground lost.

Yet the biggest question of all glares at us: however favourable the winds blowing in support of Obama’s capacity to win friends and influence people, and thus to get things done, what will happen when they encounter the harsh military and economic reality in today’s badly mangled world? Will those winds dissipate; will the reform movement falter? Fine words, my grandmother used to say, butter no pars****; rhetoric and charisma are no substitute for effective, real improvements. What happens when soft power meets hard choices?

I confess I am much less worried about the military and strategic challenges facing the Obama administration over the next years, although we shall certainly hear a lot of noise from the American armed services, the defence industries and military intellectuals with an obsession about terrorism, Israel and Iran, the rising Chinese threat and all that. Indeed, it would be most unusual if they did not sing those familiar songs, particularly since all fear that the new president may be less convinced about the size of such threats and more focused on trimming both American obligations and certain bloated weapons systems.

Whatever the relative position of the United States in a generation or two’s time – and I do think the long-term global balances are gradually tilting away from the artificial post1991 “unipolar world” – the republic has probably gained an important breather, as it did after the collapse of the USSR.

Just consider the opposition (if that is the right word). Vladimir Putin’s Russia, despite its recent spat with Ukraine to remind Europeans of their dependency, is surely significantly weaker nowadays than it was a year ago. And that is not just due to that inherent Muscovite clumsiness in alarming almost all its neighbours. It is also to do with the spectacular collapse of the price of oil, in consequence of which its vaunted sovereign wealth funds are being heavily drained. The tumble in the value of the rouble is not just bruising; it is quite unnerving. Russia has embraced open-market capi-talism and can’t take it. Meanwhile, its population shrinks, its healthcare system needs to go on the operating table and male mortality rates (vodka-induced) are high.

Then there is China. Of course the US naval war planners will keep an eye on those new ultra-quiet diesel submarines, the sea-skimming missiles, the supersonic fighters, the enormous nuclear-missile submarines that dwarf the size of any Trident-class boat. But one wonders if Beijing will have many or any yuan to pay for the operating costs in the months to come.

Until a short while ago the data suggested that, while China’s economy was going to take some damage from the global recession, it would weather the storms better than most. In the past week alone the data have altered dramatically. The most remarkable titbits are the 35% fall in Japanese exports to China, and the even more dramatic slide in Chinese domestic electricity consumption, suggesting that entire swathes of manufacturing are closing up. Exports are tumbling so fast that it might be a waste of time for Congress to rush off to investigate Chinese currency manipulation.

Who else is around? India is growing, but also badly hit by the global slowdown, and will need to focus its gaze inwards; it also has a sensible, clever government. No worries there for the United States. The European allies are convulsed with currency, debt and unemployment matters. Africa is falling down; Latin America is hurt, some countries deeply; Hugo Chavez’s moment in the sun has come and gone, Cuba is tottering towards change. The Arab world is scared, the Gulf sheikhs upset; Iran is a nuisance factor, Israel’s overmuscular policies an embarrassment. Ukraine/Georgia, Syria, the future of Egypt, possible instabilities in the Philippines and Indonesia are all on the foreign policy agenda as problems that might flare up, but they are not first-order challenges.

The real “hard choices” lie in the social and economic realms. And the blunt fact here is that the Obama administration is threatened with being torn in different directions. In an ideal full Keynesian vision, social and economic policies would march hand in hand. A strong social fabric, with solid healthcare and education systems, would provide a powerful underpinning to a competitive economy; a flourishing economy would in turn support modern infrastruc-ture, profitable banks, a steady rise in living standards and a reduction in the national debt. The government would orchestrate the various parts, producing a harmonious result. All would be well.

But what if the plan to repair America’s damaged social fabric is contradicted by the urgent need to achieve fiscal stability and international creditworthiness? What if the massive deficit spending plans actually hurt the country’s economic wellbeing; or, conversely, what if the compelling need to become attractive to the world’s investors really crimps any further printing of low-interest government bonds?

This is a dilemma about which, so far as I can see, no single member of Congress is willing to ask hard questions. Just as the legislative body failed miserably to confront the flawed logic of going to war against Iraq in 2003, now it looks in danger of being a passive bystander to – worse, an active supporter of – some really dangerous surges in the money supply.

It is easy to see where vast sums of federal money might usefully be spent (always assuming these hundreds of billions of dollars are not doled out to bankers intent upon saving the cash rather than lending it to customers). America’s inner-city and rural schools need a large revamping. A light railway system for 20 of America’s cities might work wonders. The creation of state-wide small business banks, pledged not to indulge in mergers and acquisitions or out-of-state investments, but to act rather like the old Farmers and Mechanics banks, could circumvent the sclerotic (non) lending policies of the frightened Bank of America and Citibank. All of these look likely to put pay cheques into people’s hands, cheques that would then be deposited into one’s personal bank account and allow the account holders some freedom to spend or save.

What’s the catch? The catch is that all of this, plus the continuation of existing expenditures on the military, federal agencies, national security and the rest, requires the Treasury to print bills (a type of government bond). But the Treasury does not (contrary to the suspicions of some neighbours of mine) simply open the window and toss the bills into the street. No. It auctions those “I promise to pay the bearer” notes each month in the form of three-year, 10-year, 30-year bills. And it needs to find buyers. Hitherto, the Federal Reserve has had great success in persuading individuals, banks and sovereign wealth funds to buy this stuff. But that was before 2009. Right now there are two completely new elements in play, causing even the wisest of analysts to be very confused and worried.

The first is that it is not just Uncle Sam who is going to the market to raise monies; it is almost every other government in the world. Gordon Brown plans to raise tens of billions of pounds, Germany’s Angela Merkel tens of billions of euros; France’s Nico-las Sarkozy is throwing out (borrowed) cash in all directions; the Japanese government is pouring vast amounts of bonds towards the markets; and all this at a time when those countries with large sovereign wealth funds – the Gulf states, South Korea, China, Russia, Norway, even the Saudis – feel compelled to direct vast amounts of capital inwards, not outwards. By some private estimates, governments may be seeking to float some $3 trillion-worth. President Obama’s America, with a forecast federal deficit of $1.3 trillion (and rising) for 2009, is not alone.

The second worry has to be that, unlike during the Great Depression or the second world war (“Buy war bonds now!”), Americans no longer have the savings to soak up Roose-veltian deficit spending. For years, foreigners have been willing purchasers of US government bonds, so they can hardly complain if they have recently been badly burnt. Right now, they not only need their savings for themselves, but they are clearly asking about the risk of getting burnt a second time.

As that acute observer Peter Schiff, head of Euro Pacific Capital, recently pointed out, “Just because the [buying bonds] game has lasted thus far does not mean that they [other governments] will continue playing it indefinitely.”

It is precisely this point that is getting the smarter analysts truly scared. Who is going to buy American notes at next-to-nothing interest rates, when everyone else is also offering notes? How can one achieve big sales, month after month, without raising interest rates – and then hurting the chances of domestic economic recovery?

This is what we mean when we talk about soft power bumping into hard choices. Obama’s sheer appeal, eloquence and confidence are inspiring much hope, but his programme – at least in the present harsh circumstances – seems to call for miracles. Perhaps I am wrong here (I often pray that I am), but it looks as if we – America, much of the rest of the world and its peoples – are in for a rough ride as 2009 unfolds. Hold on to your hats.

Paul Kennedy, author of The Rise and Fall of the Great Powers, is professor of history and director of international security studies at Yale University