Fading superpower, rising rivals
By Bernd Debusmann
Times" - -- At the Beijing Olympics, China
trounced the United States in the contest for gold medals. In
the Caucasus, Russia inflicted a humiliating military defeat on
Georgia, America's closest ally in the region. At home, the US
economy is in deep trouble. The misery index, a combination of
the rates of inflation and unemployment, stands at its highest
in 16 years (11.3 percent in July) and there are forecasts of
worse to come.
The Olympics marked China's status as a world power and the
first time since 1996 that Americans did not win most gold
medals. In the Caucasus, Russia showed that it can do as it sees
fit in its own backyard, no matter how loudly Washington
protests. That includes recognising as independent states the
two breakaway provinces, South Ossetia and Abkhazia, that
Georgia claims as its own.
In the Great Power game in the region, the score so far is
Russia 1, US nil. Does all this mean that the oft-predicted end
of America's role as the world's only superpower is near?
Depends on the definition of "near". Political power grows from
the barrel of a gun, as China's Mao Tse Tung observed, and the
United States spends more on its armed forces than the rest of
the world combined. There are more than 700 US military bases in
some 130 countries.
And despite its current troubles, the US economy is larger than
those of the next three countries put together. Still, the US is
no longer number one in all the fields where its dominance was
once taken for granted. The world's leading financial center,
for example, is no longer New York, it is London. The world's
largest investment fund is in Abu Dhabi. The world's tallest
building will soon be in Dubai.
Predictions of shrinking (or rising) American power have been
wrong in the past. In his book "the Rise and Fall of Great
Powers," the Harvard historian Paul Kennedy foresaw the imminent
decline of the United States. The book was published just before
the Soviet Union collapsed, a turn of history that left the US
as the world's only superpower. On the opposite end of wrong
forecasts was Francis Fukuyama's famous essay "The End of
History," written after the fall of the Berlin Wall in 1989. It
argued that m
ankind's "ideological evolution" had ended, to be replaced by
"the universalization of Western liberal democracy as the final
form of human government." Things didn't quite turn out that
In an essay for the Washington Post this month, Fukuyama, a
professor at Johns Hopkins University, conceded that "today, US
dominance of the world system is slipping; Russia and China
offer themselves as models, showing off a combination of
authoritarianism and modernization that offers a clear challenge
to liberal democracy. They seem to have plenty of imitators.
Both Russia and China are members of the world's biggest
emerging market economies, the so-called BRIC club - Brazil,
Russia, India and China. They account for 40 percent of the
world's population, sit on vast foreign exchange reserves, and
have geopolitical ambitions. BRIC foreign ministers had their
first formal meeting in May, in the Russian city of
Given the perils of crystal-gazing into the future shape of the
world, it is not easy to find an expert willing to hazard a
guess on how long American supremacy will last. But there is at
least one, Nouriel Roubini, an economics professor at New York
University who two years ago correctly forecast the bursting of
the US housing bubble and the dismal chain of events that
followed. At the time, many of his fellow economists snickered.
Roubini thinks that it will take a couple of decades for "US
policy mistakes in economic, financial and foreign policies (to)
... erode the power of the American empire." That would make it
relatively short-lived. Depending on how you count, the Roman
empire lasted more than 500 years, the British 460 or so, the
Spanish around 400. One of America's most serious problems,
Roubini writes on his website, is the fact that the US is the
world's biggest net borrower and net debtor. The countries
financing the Am
erican deficits are its rivals, China and Russia, and Middle
Eastern oil exporters.
History, he says, provides lessons on the importance of
financial prudence. "Empires ... tend to be net lenders, i.e.
run current account surpluses. The decline of the British Empire
started in World War II when the British fiscal deficits in the
war and the current account deficits turned the empire into a
net borrower and a net debtor." The British twin deficits were
being financed by a rising power that was a net lender and a net
creditor - the United States. Whether it will ever return to
that state depends, in part, on the competence, or lack of it,
of the next US administration. President George W Bush's team
did not set a good example.
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