NEW YORK – The 2008 financial crisis marked the end of the global order as we knew it. In advance of the upcoming G-8 summit, it is impossible to overlook the fact that, for the first time in seven decades, the United States cannot drive the international agenda or provide global leadership on all of today’s most pressing problems.
Indeed, the US has trimmed its presence abroad by refusing to contribute to a eurozone bailout, intervene in Syria, or use force to contain Iran’s nuclear breakout (despite strong Israeli support). President Barack Obama officially ended the war in Iraq, and is withdrawing US troops from Afghanistan at a pace constrained only by the need to save face. America is handing off the leadership baton – even if no other country or group of countries is willing or able to grasp it.
In short, US foreign policy may be as active as ever, but it is downsizing and becoming more exacting about its priorities. As a result, many global challenges – climate change, trade, resource scarcity, international security, cyber-warfare, and nuclear proliferation, to name a few – are bound to loom larger.
Welcome to the G-Zero world, a more turbulent, uncertain environment in which coordination on global policy issues falls by the wayside. Paradoxically, this new environment, though daunting, is less troublesome for the US; in fact, it provides fresh opportunities for the US to capitalize on its unique position. The G-Zero world is not all bad for the US – if it plays its cards right.
Many residual strengths take on greater importance in such a world, and America remains the world’s only true superpower and its largest economy – still more than twice the size of China’s. Its defense expenditures represent nearly half the world total, and exceed those of the next 17 countries combined. The dollar remains the world’s reserve currency, and investors’ scramble into US government debt at every peak in the crisis since 2008 has underscored America’s safe-haven status (even in crises that America caused).
Likewise, the US continues to lead in entrepreneurship, research and development, higher education, and technological innovation. Moreover, it is now the world’s largest natural-gas producer and calorie exporter, which has reduced its vulnerability to price shocks or food shortages.
No country rivals America’s promotion of the rule of law, liberal democracy, transparency, and free enterprise. While other countries certainly support these values, only the US has been willing, healthy, and big enough to ensure that they prevail. So, as America curtails its global leadership, it will find itself in more demand.
Consider Asia, for example. As China’s economic importance and regional influence grows, its neighbors are seeking to deepen ties with the US. Japan, Australia, Indonesia, and Taiwan have all recently closed trade and security-related deals with the US. Even Burma has gotten on board, resuming diplomatic engagement with the US while trying to work its way out of China’s shadow.
In other words, in a G-Zero world, an increasingly aggressive global environment makes the US all the more appealing to countries seeking to hedge their bets. As a result, the US has an opportunity to act more precisely in its own interests. Supplying less leadership allows the US to weigh opportunity costs before taking action, and to select the issues and circumstances that suit it the best. In this environment, military intervention in Libya does not necessitate the same in Syria.
The extent to which the US will capitalize on these opportunities remains to be seen. In fact, America’s short-term advantages pose the biggest obstacle to its long-term outlook. Call this the “safe-haven curse”: as long as the US remains the safest port in any storm, it faces no immediate pressure to address its weaknesses.
For example, for all of the hand-wringing about America’s national debt, investors will continue to loan the US money. Over the long term, however, US policymakers must make steady progress in restoring confidence in the nation’s fiscal health by cutting politically sacred programs like social security, Medicare, and defense. Officials will have to put aside short-term motives and party orthodoxy to bolster America’s aging infrastructure, reform its education and immigration systems, and pursue long-term fiscal consolidation.
America’s advantages in the G-Zero world afford it the chance to invest in the future. But, by cushioning against sufficiently calamitous risks, the same advantages allow the US to procrastinate. American politicians need to recognize the new G-Zero reality and rebuild America’s domestic sources of strength, even if only incrementally. If they do, the US will have the vigor and flexibility to shape the next world order.
America’s political system usually works well in crises. But, thanks to its residual advantages in a leaderless world, the US need not rely on a crisis to precipitate action. It need only seize the G-Zero moment.