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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

15 June 2005

The coming tripolarity?

The world is polarizing around three centers of gravity—America, Europe, and China—each with its own ambitions and interpretations of how the world should work.

What makes this emerging tripolarity prone to conflict is that all three have differing views on how societies should be organized and how the world should be ordered. Disputes between them will be for more than dollars, euros or yuan—their battles will be about the optimum form of political and international organization; and other countries may increasingly view their relationship with one of the superpowers as a way to define their political identities, just as it happened in the Cold War.

Domestically America is liberal with an individualistic culture that is skeptical of government; Europe is also liberal, but with a citizenry that expects government to offer economic security against the free market; China is capitalist with a culture which is weary of sudden change and which believes that patient governance is preferable to the speedy poll-based decision-making of the West.

Internationally, America is missionary in its desire to spread democracy yet realistic in its faith that force can solve international problems; Europe is more inward looking, yet believes that international institutions and law can be relied upon to foster cooperation and peace; China pursues a commercial realpolitik, with increasingly military tunes, whose driving force is the national interest.

The three ways to organize life are spreading. The European Union is a magnet for Eastern Europe, and the acquis communautaire has become the EU’s guide on how to run a country. American-trained professionals are bringing ideas to foreign lands, and the “Washington Consensus” is the expertly guide on economic management. And, the Chinese are being called in different places to advance their development model which combines economic growth without political liberalization.

Although the West believes that its liberal ways have won, the Chinese model has broad appeal. Indeed, the world increasingly looks like China: insecure emerging countries, guarding of their sovereignty, whose political elites want economic development without relinquishing power, domestically or internationally. The perennial Western predicament—that its economic advice is directed to political chieftains who cannot heed to it without losing some power—is being resolved by an alternative development process.

This tripolarity has yet to fully emerge because China is only now spreading its influence. As Robert Kaplan writes, “All over the globe, in such disparate places as the troubled Pacific-Island states of Oceania, the Panama Canal zone, and out-of-the-way African nations, the Chinese are becoming masters of indirect influence—by establishing business communities and diplomatic outposts, by negotiating construction and trade agreements” (The Atlantic, June 2005). There are countries, too, that approach the Chinese to get their expertise on establishing authoritarian capitalism. China’s influence will increase as its adds foreign aid and other types of economic pressure to its diplomatic arsenal, to coerce as well as attract others to its ideas and interests.

This new environment has profound implications. America has assumed that with the fall of the Soviet Union, the importance of remote locations has waned; and Europe is self-consumed to try to extend its influence abroad. But the rise of China makes clear that countries are no longer left out in the cold if Washington or Brussels refuses to let them in—they can knock on Beijing’s door. This complicates America’s effort to square the circle of national security and democracy promotion. Where America pressures allies to democratize, China awaits in the corner to court rebuffed allies—and to lure them with access to its market and other economic benefits.

Sooner or later, the spheres of influence of the three superpowers will meet. As Europe spreads eastward, its ideas will reach Central Asia, upon which China depends to satisfy its energy appetite. And the American presence in the Middle East, with the peripheral alliances that make it possible, America and China could clash in China’s East, as surely they are bound to in the Pacific rim.

There is reason to think that these clashes might be lethal, which is that conflict between the three could become about the best way to organize a society. The twentieth century was a struggle between capitalism, fascism and communism. The twenty-first could be free market capitalism versus social welfare capitalism versus authoritarian capitalism.

This conflict is particularly disruptive because it has no bounds and hence security is infinitely unattainable. The success of any model threatens the order in the other two superpowers. Chinese authoritarianism undermines America’s grand strategy which connects democracy to peace and prosperity. The spread of the European model could undermine world trade, as it thrives with populations that are fear globalization (though this has yet to happen in Eastern Europe). And the spread of American ideas could bring industrial upheaval in Europe or political revolution in China.

This means that the world could be up for another cold war—resembling the Cold War in the deepness of the disputes between the superpowers. It could also herald new alliances—particularly between Europe and America to counter China. It could also mean that what to date has been considered a futile political exercise—building armies to deter an American attack, a strategy many Americans find incomprehensible given what they think is their benign intent—will find a superpower sponsor. China might become more and more willing to offer those states security—security from America’s military, and security from America’s and Europe’s disruptive ideas of political liberty.

There is some comfort in knowing that this play has been staged before. However novel China’s aristocratic system of government, the bet between giving and denying freedom has been won by liberty. But there is less comfort in knowing that whatever the ultimate end of this struggle, which could mean another “end of history” for Western liberalism, the struggle could be long and brutal.

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13 June 2005

EU elites

The refrain after the French and Dutch rejections of the European Constitution was that the voters punished the European Union for being remote and undemocratic. But this might not be the message to take from the referenda: the European project has been stuck because it cannot strike a balance between elite decision making and democratic legitimacy—in other words, it can neither bring the benefits of elite politics nor accrue the legitimacy required for failed politics to survive.

From the start, the European project lived by the premise that its electorates could not be counted upon to support a project that was unmistakably good. This logic demanded that European statesmen should take the lead and show to the people the prudence of integration; but people should be convinced of the merits of integration in hindsight, lest they block the road to providence.

The politics required to foster European integration could justify this syllogism. Brining France and Germany into any kind of union was politically sensitive in France; and the idea that the European continent, fragmented since the fall of Rome, could come together in peace and prosperity was revolutionary. It does not take cynicism to believe that the European peoples, still living in the ashes of World War II, would hardly rush to experiment with this idea.

What happened along the way was that the European Union failed to find a proper political role. Either it could continue along the path of European integration with the elite as its driving force—this would require that the elite make often unpopular or controversial decisions that would be justified by their positive results; or the EU could solidify its democratic base by diffusing its decision-making processes and bringing more people to the table. In other words, the European Union reached a bifurcated road: it could become results-driven or process-based.

In the end, the European Union chose neither. On one hand, the European Union became sufficiently democratic that it allowed powerful interests, usually meaning labor unions, to block necessary economic reforms. Hence, the economic fruits that matured in the early stages of European integration were overripe by now. Industrial upheaval in France and Germany effectively curtailed the ability of both governments to make reforms. So much for elite decision making.

On the other, the European Union turned inward, cultivating a bureaucratic culture in Brussels that was cryptic and aloof. The European Parliament made laws but few Europeans thought of this legislative body as truly accountable. Nor did the complex decision-making tree of the EU help bring the government closer to the people. Then came a European Constitution that was incomprehensible for the average citizen.

And so the European Union ended up with the worst of both worlds—neither bold leadership to push forward with new ideas and policies, nor strong institutions that would make people tolerate boring or failed politics.

All the same, this was almost inevitable; a war-torn polity has little to lose—it might tolerate experiments and can show patience for long-term policy that promises to raise living standards. But this appetite for change wanes as incomes rise. People become more protective—they want more as much as they want to keep what they have. This means that the European problem is not solely political, but the product of a social evolution. As Europe grew richer, becoming even richer required harder political decisions and economic sacrifices that Europeans were decreasingly willing to make.

It hard to know how to escape this dead end. On one hand, emerging farsighted leaders could convince Europeans to embrace change and globalization, to become less protective and more aggressive to protect their way of life. On the other, a gradual devolution of power to Brussels could lead Europeans to be more tolerant of a Union that cannot bring the economic benefits it once did. Either way, Europe will have to make a choice, for it cannot stand still forever.

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09 June 2005

Laissez-faire freedom

The experience of the past two years suggests that America could do more for freedom by standing on the sidelines rather than center stage—by encouraging rather than implanting democracy.

This belief comes from four observations: first, bloodless revolutions are proliferating; second, forced democracy breeds opposition; third, overtly helping foreign opposition groups often backfires; and forth, America’s allies are the usual suspects in crushing freedom.

The transfers of power in Georgia, Ukraine, and Kyrgyzstan add to a long history of peaceful swifts to democracy. In the 1970s, Greece, Spain, and Portugal became democratic relatively bloodlessly, as did Eastern Europe in the late 1980s (not to forget the Soviet Union, whose fall could have triggered a major conflict). Even a strongman such as Slobodan Milosevic in Yugoslavia was forced to resign in the face of mass opposition.

To be sure, these events are not purely domestic—Syria withdrew from Lebanon under foreign pressure, America and Europe supported Ukraine’s Viktor Yushchenko in his “orange revolution,” and Milosevic resigned eighteenth months after NATO had bombed his country. Nor is freedom on the march everywhere—witness the recent crackdown in Uzbekistan’s Andijon province or Robert Mugabe’s persistent cling to power in Zimbabwe.

All the same, these revolutions underscore that the passion for democracy is well rooted in the human psyche and that the images of freedom can travel from place to place and inflame that spark of liberty that every person carries within. When that flame takes hold and multiplies, no leader, however ruthless, can sleep quietly at night.

What is more, the conditions that make revolutions possible are spreading too. Peaceful transitions require a critical mass—a requisite basis of social support. In this, the internet plays a vital role; activists acquire expertise online whilst also broadcasting an unfiltered message internationally and instantly. Foreign technical support helps too with independent election monitors being able to identify electoral fraud more easily.

In a way, countries live under a microscope, with foreigners being less inclined to gloss over state violence; rather they want accountability and a Western reaction that is proportional to the evil committed. This is evident in Uzbekistan where President Karimov suppressed a rebellion in Andijon province, killing about 745 people (official toll: 169); Westerners are pressing for an independent investigation into the killings, while many others are reexamining anew the merits of a military alliance with Uzbekistan.

While the peace seeds are spreading, the attempt to democratize Iraq and Afghanistan has been paid for in billions of dollars and thousands of lives, foreign, Iraqi, and Afghani. The initial enthusiasm has waned and the locals’ patience is running out, showing how difficult it is to reconstruct a country. What is more, the manpower required to stabilize Iraq has compromised the pacification of Afghanistan, and America’s commitment has constrained its ability to deal with threats elsewhere. This shows the limits of converting states by taking them over.

The midpoint between watching a revolution on CNN and leading an invasion force to bring it about it to aid domestic opposition groups. This is the American policy in Iran: to favor moderates and hope that they will gain power. But Tehran neutralizes the American support by painting its opposition as America’s stooges. The Lebanese opposition groups faced the same predicament, though a low-profile American reaction helped them evade similar accusations. Only in Ukraine, which featured a widespread rebellion, claims of foreign involvement were insufficient to discredit Yushchenko.

Part of this has to do with the success of domestic propaganda. But the American appetite for freedom has grown and the policies to promote it appear unpredictable to much of the world, especially in the Middle East. In other words, what America will do is beyond forecasting, which means that allying with America appears like a dangerous pact—help at an unknown cost.

There can be no doubt that liberation is noble and inspiring; many in Iraq and Afghanistan are grateful for what America did. But there is also no doubt that America’s activism has generated envy among people who wish that America would stop supporting their oppressors.

The message reverberating from Iraq is that Arabs can be democratic; but it is also that America’s geopolitical interests no longer dictate an unconditional preference for stability over democracy. If this message reaches the Middle East, Central and South Asia, and Russia, America would have done plenty to advance freedom.

This approach contradicts America’s growing impatience with containment and deterrence. The sense of urgency comes from the fear that terrorists will strike with weapons of mass destruction. In that sense, gradualism is a luxury that America cannot afford.

But this is hardly right. When Sudan was pressured, it expelled Osama bin Laden (or, depending on the story, offered to turn him over to America). Afghanistan was too neglected to claim that America tried deterrence there and failed. And Iraq’s lack of weapons of mass destruction proves that containment can work. After all, America’s presence in Iraq has bred as many terrorists as any failed state could have.

In the end, America should realize that it can do lots with a light touch, and that the patient management of international affairs can be more fruitful than the radical kind, especially since both require a long time before they bring results, and hence neither should be regarded as a quick fix.

Put otherwise, America should think of democracy as a plant; the shadow of realpolitik has often left it to die where it could have flourished; elsewhere, it has grown against all odds. But overall, the freedom plant needs to be watered, not flooded, in order to grow.

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04 June 2005

Wolfowitz @ World Bank

On June 1, Paul Wolfowitz assumed the helm at the World Bank. Although his nomination raised plenty of eyebrows internationally, his inauguration was greeted mainly with advice—with suggestions about the World Bank’s priorities and the needs of the developing world.

The current development landscape features two novelties. One is that the international profile of the development cause is prominent—Gordon Brown, the British Chancellor of the Exchequer, is only the latest of visible public figures to make development in Africa a top priority; the other is that the available knowledge and expertise on development has proliferated widely, helping policymakers make more educated decisions about what works and what doesn’t.

Against this background, Mr. Wolfowitz has to forgo his traditional preference for strategic thinking. Mr. Wolfowitz has a very clear strategic vision of the world—but in the World Bank, his tactical and managerial skills might be more needed. Although the well of development knowledge has not run dry, there is plenty there to run the Bank efficiently and make a big difference for the world’s poor. The one exception would be on the link between peace and development—this is an area where the politics of help have been left behind; one can hope that Mr. Wolfowitz’s interventionist instincts could be summoned to underwrite the peace and stability necessary for economic growth to take place.

At the same time, the firmness of Mr. Wolfowitz convictions should be an asset at the Bank. His outlook is essentially liberal, built on the Wilsonian tradition of peace, democracy and free markets. It would behoove Mr. Wolfowitz to be uncompromising in his attitude towards skeptical leaders who fear liberalism. His often undiplomatic tone could help too, if used prudently and in moderation. Development, like international politics, is not always a popularity contest; both often require tough choices to be made and people being told what they might not want to hear. Mr. Wolfowitz should be well placed as the herald of such messages.

In the end, Mr. Wolfowitz’s possible ten-year term would happen to coincide with the end-date for the Millennium Development Goals. This would make his presidency more straightforward to assess; but it is possible that regardless of what happens on that end date, Mr. Wolfowitz could have transformed the World Bank, particularly if he instilled the perspective of an international mastermind on the workings of the development world.

Constitutional post-mortem

With the death of the European Constitution comes a moment for pause and reflection—a time to recognize that many Europeans have been disenchanted with their leaders and are no longer willing to follow them blindfolded; a time to understand that as Europe becomes more integrated, further integration will become progressively harder to accomplish; and a time to acknowledge that Europe needs to explain its purpose and sell itself to its citizens.

Those who rejected the Constitution spoke with many voices but they echoed one melody: that the political elite in Brussels is growing more powerful and unaccountable, that the European demos should have been given the right to debate the future of Europe, and that the European Union is no longer an unqualified positive.

This popular backlash had been brewing for a while. In successive European elections, fewer and fewer people bothered to vote, diffusing ever more widely Brussels’ legitimacy; meanwhile politicians singing the anti-immigration and anti-openness tune were gaining prominently in Austria, the Netherlands, and France, and quietly in other corners of Europe.

For liberal Euroskeptics, the rejection of the treaty can be received with mild enthusiasm because the forces that were summoned to defeat it can prove worse than the treaty itself. It would be Europe’s loss if the anger at the flaws of the European project were guised in the name of nationalism and mercantilism: in the name of anti-Europe.

All the while, Europeanists may rejoice—the rejection of the treaty can be a blessing in disguise: better for popular anger to burst out on a treaty that matters so little than to have been expressed in a treaty that really transformed Europe. It serves the European cause that so much passion has been directed at so little effect. Given that the public hardly rebuffed the novelties in the Constitution, but rather an abstraction of Europe, it is possible to accept some of the treaty’s better provisions in the future in a more mild version or less historic occasion.

Even more, the muddled and confused debate in France over the Constitution shows how poorly written the document was. The Constitutional Convention could have tackled Europe’s complex problems and reconciled the contradictory expectations that people have of Europe. Instead, it produced a document that tried to compromise—a document that said everything and ended up saying nothing about Europe’s values, priorities, ambitions, and limits.

The popular reaction to the Constitution illuminates another truth about Europe: that as Europe becomes more integrated, it will become progressively harder to integrate further. After World War II, removing trade barriers brought enormous benefits; as Europe is more interconnected, the gains from further integration are found in unpopular and politically controversial areas—liberalization of agriculture, variation in labor standards, trade in commercial and other services.

For most of its history, the European Union survived because its logic of elite decision making brought benefits with few costs. This is no longer true. The euro, the enlargement to the East, and the Lisbon Agenda which calls for further liberalization all suggest that many people no longer equate all things European with a positive-sum attitude.

At the very least, now would be a time for a more honest national and pan-European debate about where Europe stands, about what needs to be done to drive integration further, and about whether national publics are willing to make the sacrifices necessary to reap further benefits from the common market and European integration.

It would be tempting to think that as the task of integration becomes more complicated, the solution lies in more aloof leadership, more technocracy and less public consultation. But the democratic expectation and culture of the European peoples cannot be suppressed. If Europe is to ever find itself on solid ground, it needs to be accepted on its merits, not because people were too busy or confused to understand what Europe was really all about.

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