The End of the New World Order
Last week marked the collision of the "New World Order" with reality.
Toward the end of the week, reality was winning.
Proclaimed by George Bush after the collapse of communism, the New World
Order was neither an empty phrase nor a hidden conspiracy. It represented
a radical vision of what the world had become, now that U.S.-Soviet
confrontation had ceased to define the international system, and it was a
vision widely shared by much of the world's elite. According to this
vision, fundamental political disagreements between nations had
disappeared. Rather than being ideologically divided, all major nations
now agreed on fundamental core principles. Reasonable people everywhere
accepted the proposition that economic growth and prosperity were interests
that transcended all others. That being the case, it was essential to
maintain international stability in order to facilitate that prosperity.
Because all major nations agreed on the desirability of prosperity and
international stability, fundamental international disputes, like those
that led to the two World Wars and the Cold War, were no longer a
significant problem. The only international problems faced by the United
States and its allies were the management of marginal outlaw states like
Iraq and North Korea, internal instability as in Yugoslavia and Somalia,
and outbreaks of international terrorism. Because all nations were now
reasonable, and any reasonable nation could see the need to prevent outlaw
nations, civil wars, or terrorism from spreading misery and upsetting
financial markets, it followed that all nations would be prepared to
cooperate in managing these marginal problems. These were, after all,
marginal issues. What really had to be managed was the international
economic system, especially the integration of former Communist nations
into that system.
In Bush's view, an effective mechanism existed which could achieve all
these goals, one that derived from the Cold War itself. During the Cold
War, the Western powers had created a complex of alliances designed to
contain the Soviet Union, from Norway's North Cape to Japan's Hokkaido.
One part of this alliance system was military, including institutions
ranging from NATO to the U.S.-Japan Mutual Security Treaty.
But another part of U.S. strategy was economic. The United States
understood that maintaining the prosperity of the Western alliance was a
fundamental part of containing the Soviet Union. Prosperity persuaded
allies to remain in the alliance, persuaded neutrals to work with the
alliance, and undermined the legitimacy of the Soviet-led alliance. The
maintenance of the West's prosperity was placed in the hands of a group of
multilateral organizations, including the International Monetary Fund to
manage financial relations, the GATT (now replaced by the World Trade
Organization) to manage trade, the World Bank to develop the Third World,
and so on. There were many other such organizations. All of them had the
same purpose. They did their jobs extremely well.
* The New World Order and Transnational Institutions
At the heart of Bush's New World Order concept was the idea that these
transnational institutions would not be abandoned now that the Cold War was
over, but would in fact have their role expanded to include the management
of international economic relations with the former Soviet empire. Indeed,
Bush went so far as to envision a world in which states that hadn't
abandoned Communism formally, such as China, could be included in this
global, multilateral system. After all, the Chinese, whatever they said
officially, wanted the same thing as Belgium or Canada: a stable business
environment in which to develop their own economy. Bush expanded this
multilateral vision to include the United Nations, which had previously
been paralyzed by U.S.-Soviet competition, but which could now fulfill its
original mandate as global policeman.
Obviously, the United States, as the world's leading nation, would play a
special and decisive role in defining the mission of these multilateral
organizations. However, since all nations now had the same basic
interests, it followed that no reasonable nation would object to U.S.
leadership. Indeed, the world would welcome it. And for a while it all
worked. There were no major international conflicts. The world accepted
U.S. leadership in dealing with outlaws like Iraq and Serbia. The
international financial system was well served by the IMF, by G-7 meetings,
and so on.
Then reality set in. Asia, which had postponed the inevitable as long as
it could, buckled under the weight of its own inefficiency, and no
multilateral organization could do anything to prevent it. However, it
was still possible to fantasize that the Asian crisis could be contained,
that it would have no lasting political repercussions, or that it was not
as bad as it looked. None of this was true, but it was possible to
fantasize.
* The Russian Collapse and the New World Order
Then last week, reality mugged the New World Order with some brutal
finality. As the Russian financial markets collapsed, Russia passed beyond
the help of the IMF, the World Bank, or anyone else. The financial
meltdown in Russia is irretrievable. There is nothing that the West
possibly can do to resurrect the Russian economy. It is not a matter of
money.
The problem is that in Russia, money does not turn into capital. All
investments are hopelessly squandered through a combination of inefficiency
and theft. For money to turn into capital, for investments to flourish,
institutions must exist which guarantee such things as the lawful,
predictable enforcement of contracts, reliable transportation of goods from
one point to another, government neutrality in economic competition, and so
on. None of those things exist in Russia. Contracts are unenforceable,
basic reliable infrastructure is non-existent, and the government is not
only unpredictable in its treatment of participants, but is at times
deliberately destructive.
Russia is a different place. But the ideology of the New World Order held
that there are no different places, that all reasonable people behave in
the same reasonable way and that, therefore, given advice by Harvard and
Goldman Sachs, Russia would evolve economically. It was also assumed that
Russia would evolve politically, because it was assumed in general that,
with a growing economy, all reasonable people would come to look like
everyone else. Thus, prosperity would yield liberal democracy, and liberal
democracy would make Russia an enthusiastic member of the international
community, just like people from Wisconsin but with more beets in the diet.
Instead of this happy scenario, last week saw the re-emergence of the
Communist Party as the decisive force in Russian politics. The political
issue last week was not what Yeltsin or Chernomyrdin would do, but what the
Communist Party, the largest party in the Duma, would permit them to do.
The fact is that Yeltsin can no longer govern without the support of the
Duma, and power in the Duma lies in the hands of the Communists and the
nationalist parties, including the strange fascist Zhirinovsky, as well as
other factions. On the surface, this would seem to create a split in the
Duma that the Yeltsin/Chernomyrdin faction should be able to exploit. In
fact, there is a much closer bond between the Communists and the
nationalists than one might think. Indeed, it is this commonality of
interest that brings us to the end of the New World Order.
The Communist Party speaks for the lost Russia. It was a Russia of
relative poverty, but not the utter misery that has gripped most of Russia
since the collapse of the Soviet Union. More importantly, Russia was a
land in which the misery was shared, on the whole. The fantastic gap that
has opened between a tiny oligarchy of wealthy men who have used the new
regime to enrich themselves, and the masses who can barely feed themselves,
powers the Communists' claim that, as bad as the past might have been, at
least it was better than the present.
Thus, it is the Communists who are pressing Yeltsin to reject the demands
of the IMF and the West that economic reforms be maintained and even
expanded. Arguing that Western help hurt Russia rather than helped, and
also that no further help is being offered anyway, the Communists are
demanding that reforms be rolled back. They want to re-nationalize the
economy, impose wage and price controls, re-institute central planning, and
end the convertibility of the ruble. In other words, they want to return
to the status quo ante.
Implicit in the Communist position is a rejection of the assumption that
Russia's salvation lies with the West. This technical anti-Westernism
among the Communists is reinforced by the visceral anti-Westernism of
Zhirinovsky's Liberal Democrats, the third largest party in the Duma. For
Zhirinovsky and other nationalists, the economic disaster is coupled with a
geopolitical disaster. Under communism, Russia was a superpower, with
equal standing to that of the United States. Today, Russia is seen as a
vassal of the United States, with any Deputy Assistant Under Secretary of
anything having the right to lecture and scold Russia's leaders as if they
were school children. Even more infuriating, the great Russian empire was
given away, in return for nothing. Not only Eastern Europe, but also the
Baltics, Ukraine, Central Asia, and the Caucasus were lost. Even parts
of Russia itself, like Chechnya, can barely be contained.
The economic anti-Westernism of the Communists combines with the
geopolitical anti-Westernism of the nationalists to create a powerful
ideology that used to be called Stalinism. Central planning together with
powerful internal controls and a deep sense of the geopolitical interests
of the Soviet Union was, after all, Stalin's greatest achievement.
Personalities aside, this Stalinism will now reemerge, as it is the only
logical outcome of the current situation. Because no meaningful Western
help is possible, and thus mild internal reforms cannot possibly contain
the situation, power will devolve to the Communists and nationalists.
The logical bridge between the two is, of course, Alexander Lebed. We wrote
in our forecast for 1997 that, "If the Westernizers surrounding Yeltsin
manage to squeeze Lebed out or into irrelevancy, they will have sown the
wind. The whirlwind will be a counter-revolution of epic and bloody
proportions. If Lebed is given room to maneuver, he may manage a
restoration that keeps the vestiges of democracy and capitalism alive. In
either event, liberal democratic capitalism in Russia will fail in 1997 --
and its replacement will be the traditional Russian alternative to
Westernizing businessmen and intellectuals: xenophobic, Slavophile
bureaucrats and policemen." We were premature on our date, but believe we
were correct on our core prediction. Lebed was forced out. The whirlwind
is at hand.
* Western Strategy Toward Russia After the Communist/Nationalist Revival
It is therefore time for the West in general, and the United States in
particular, to begin defining a post-reform policy toward Russia. Russia's
foreign policy will be eminently clear -- first, and above all else, the
reclamation of the Soviet Union to its old borders. The key to this, of
course, is Ukraine. Russia is already in a close confederation with
Belorussia, and the reintegration of Ukraine is therefore critical. Here,
of course, the Bush-Clinton obsession with Moscow's nuclear weapons will
cost us dearly. Rather than strengthening Ukraine to resist reemerging
Russian imperialism, the United States focused on strengthening ties with
Moscow, hoping to encourage reform. This leaves Ukraine vulnerable to
Russian pressure. We believe that it is too late. The Ukrainians will not
be able to resist.
It is the West's good fortune that recovering the Soviet empire will take
the Russians a generation. But that process leaves the West with critical
decisions to make. The United States has made massive investments in
Central Asia. To what extent will the U.S. resist Russia's return? Will
the U.S. extend NATO protection to the Baltics? If not, what policy does
the U.S. propose? Iran and Turkey will both oppose Russia's return to the
Caucasus. What will U.S. policy be there? If the Russians become more
assertive, should NATO be further expanded to include utterly strategic
Slovakia? If not, should we attempt to include Poland and Hungary in NATO,
or are they too exposed?
And then there is the return of the abysmal and eternal German question:
should the U.S. shoulder the burden of defending Europe again, or should
Germany be forced into that role, recreating the problem that has burdened
Europe ever since German unification in the nineteenth century?
Fortunately, Russia's strategic position is such that it will not readily
return to global eminence. Many Armenians, Lithuanians, and Uzbeks will
have to die before that moment comes. But even a regional imperialism by
Russia poses a critical question to which Madeleine Albright and Sandy
Berger appear not to have given any thought: what is U.S. policy on a
thousand issues if Yeltsin falls and, for example, Lebed takes power?
These and endless other questions are political and military in nature.
They are not economic. The New World Order assumed that political and
military questions were now marginal. Therefore, strategic planners in the
Clinton administration, which inherited and celebrated the strategic legacy
of the Bush administration, continue to ignore these questions in favor of
familiar issues like IMF bailouts and reforms. These questions are closed
as far as Russia is concerned. Clinton doesn't seem to realize it. These
critical questions are being ignored in favor of a fantasy: that the
Russian experiment in economic liberalism is not yet dead.
Therefore, Clinton's visit to Russia will be disastrous. First, he is
meeting with the wrong leader. Yeltsin leads nothing. Clinton is meeting
with a political corpse, and infuriating the leaders who have already
usurped power in every sense but the official. Second, Clinton will be
discussing economic issues that can no longer be managed, rather than
posing the difficult political and military questions which now frame
Russia's relations with the world.
The new Stalinism cannot be stopped. Communists and nationalists will form
a coalition to govern Russia, sooner rather than later. They have a very
different agenda than the old regime. Clinton's summit makes no sense,
save that he believes that the economics-centered New World Order can still
be saved. We expect Clinton to meet with Lebed and perhaps others. But
what is he going to say to them? What is America's strategy? Thus far, it
appears to be to avoid the obvious and to pretend that what is impossible
can happen if we close our eyes and wish real hard.
* Asia and the Return to Politics
It is not simply a matter of Russia. Asia's problems are no more amenable
to economic solutions than are Russia's. The core issue in Asia is
political. Asia is no longer economically viable. It cannot compete with
the United States except by exporting at or near a loss. Asia is being
forced to take political measures to protect its economic security. Asian
countries can solve their economic problems internally only through
political action. Externally, they can stabilize their economies only by
forming a regional trading bloc that protects their weakened economies and
by creating a new reserve currency to substitute for the dollar. This is
not only an economic decision, but also one with profound political and
even military consequences.
The current economic crisis is forcing the world back to politics. In the
very long run, the return of politics will resurrect war in the traditional
sense of Great Power conflict. In the immediate future, this crisis has
demonstrated the impotence of multilateral organizations to manage the
world. The United Nations can't deal with Iraq, the IMF can't do anything
with Russia or Indonesia, and the WTO can't stop the trade war that will be
the inevitable consequence of Asian export surges and protectionism. The
multilateralism of the New World Order has shown the hollowness of these
institutions by revealing that it really isn't a small world after all, but
a very complex, variegated and dangerous one.
Like the Congress of Vienna, the New World Order tried to freeze in place
institutions that had meaning only in the context of a great struggle.
Whether that struggle was against Napoleon or Brezhnev, the fact is that
when the war ends, the institutions that made the alliance function must go
away. This crisis shows the impotence of such institutions in the face of
reality. It also shows that the New World Order, rather than being a
brilliant vision or a dark conspiracy, was merely a failure of imagination.
Or more precisely, it was imagination run wild, believing that politics and
war would be replaced by economics and good feelings.
So, now the history of the post-Cold War period finally begins in earnest.
It is not, in our view, the Russian question that will be the most
important. That is merely the first question. The most important question
is the relationship of the United States to Asia. More precisely, the
question is the relationship of the United States to the genuine if
reluctant leader of Asia: Japan. First, a redefinition of Japanese
politics is going to occur, with a more political and nationalist view of
the world emerging. Then, just as economic reality is prying U.S. and
Japanese interests apart, political reality will divide their interests as
well. As American and Japanese interests are forced apart, a new global
politics, the politics of the 21st Century, will be defined.
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