The end of Pax Americana?

Monday 6 October 2008 (06 Shawwal 1429)

The end of Pax Americana?
Anwar Kemal | anwarkemal@yahoo. com


Latin America, long regarded as America's backyard, has recently hoisted the flag of defiance to its northern neighbor. In recent weeks, America's ambassadors have been expelled by Venezuela and Bolivia, a move that Brazil has supported. Brazil has also objected to the presence of American warships in the region, warning that his nation would put its own warships on alert in response. Argentina's President Cristina Fernandez de Kirchener said recently with obvious satisfaction that the First World, which had been "painted as a place we should strive to reach, was popping like a bubble." "The times when one economy and one country dominated are gone for good," Russia's President Dmitry Medvedev declared recently at a joint Russian-German seminar in St. Petersburg. After the American banking debacle, he said, the world does not want America as a "megaregulator. " A few weeks earlier, Russia had taught America's protégé President Saakashvili of Georgia a painful lesson when he attempted to retake South Ossetia by force. The United States could do nothing to stop the robust assertion of the Russian version of the Monroe doctrine in the Caucasus.

It may be recalled that the British Empire folded up partly on account of the staggering financial expenditures that it incurred during two world wars. The US financial crisis has erupted with destructive force because for many years America has been living beyond its means. The stalemated wars in Iraq and Afghanistan have no doubt contributed to the US deficit. Instead of raising taxes and restraining expenditures, the Bush administration has been practicing trickle-down economics.

True, the United States is militarily stronger today than it ever was in its 230 years of existence. Its armed forces have overwhelming nuclear and conventional firepower and reach that is unmatched. At the click of a mouse individuals sitting in their offices in Washington, DC can and do destroy targets 10,000 miles away in Iraq, Afghanistan or the tribal areas of Pakistan.

Yet these weapons of war are just as useless in averting financial disaster as the Russian weapons were in preventing Russia's economic meltdown.

Are these warning signs that Pax Americana is coming to an end? Is the financial crisis the cause of the decline of American power, or is it imperial overreach? Joschka Fischer, a former German foreign minister, recently summed it up brilliantly in Die Zeit:

"Due to Guantanamo and torture, America has lost her moral credibility; Thanks to the Iraq War, Iran has achieved regional supremacy in the Middle East; American military power has become overstretched due to a wrong and unnecessary war; Bush inherited a balanced budget from Clinton and has since acquired a huge mountain of debt; China is now America's largest creditor; the dollar's role as the dominant global reserve currency is seriously endangered; the American financial system is threatened with collapse; and the only answer to this crisis, an existential threat to the entire global economy, is nationalization by Washington's Republican government!" To conclude, the ongoing financial crisis which has led to the loss of hundreds of billions of dollars in the values of shares and which threatens the life savings of many millions of Americans could inflict lasting damage on the American economy. It could also lead to devastation consequences for the global economy. Its causes are unmistakably clear: imperial overreach and financial indiscipline.

The US must somehow extricate the country from the unnecessary war in Iraq, and accord priority to promoting a just and lasting settlement in the Middle East. Bringing peace and stability to Afghanistan and supporting Pakistan in its efforts to combat terrorism are also extremely important. Lastly, the US has to balance its books by reverting to the old American values of financial discipline, investment in knowledge, and hard work instead of a get-rich quick approach that had become the norm on Wall Street in recent years. Failing that, the recently approved $700 billion plus bailout package will only provide a temporary respite and not a lasting solution to America's financial woes