Tuesday, January 25, 2005

How is the Negotiating Power of the US Doing?

Michael Lind notes that, not only is the US adopting unilateral policies toward the rest of the world, but the rest of the world is leaving the US out of the loop. Find it in today's FT opinions (subscription required).

Here is the clincher...

Ironically, the US, having won the cold war, is adopting the strategy that led the Soviet Union to lose it: hoping that raw military power will be sufficient to intimidate other great powers alienated by its belligerence. To compound the irony, these other great powers are drafting the blueprints for new international institutions and alliances. That is what the US did during and after the second world war.
The US wrote the rules of the post-war era, and so stacked the deck in its favor. At the end of WWII, the US was a creditor, and it forced the rest of the world to make significant concessions regarding exchange rate flexibility (the US advocated fixed rates back then) and the amount of financial support that the US was required to give to the other members of the IMF. (In the end, the actual US contribution was a small fraction of what Keynes and the Europeans wanted.)

Now the US is a net debtor, and it needs its political influence more than ever. If the US loses relevance in international institutions (major treaties, organizations, etc) I doubt that it will be able to continue writing the rules. The more the "soft power" of the US is eroded, the more difficult it will be to convince China and Japan (along with Russia, the Middle East, and many more) to keep financing the current account gap.


<< Home

This page is powered by Blogger. Isn't yours?