America’s Forthcoming Foreign Policy Crisis*

America’s Forthcoming Foreign Policy Crisis

We’ve got a health crisis and an economic crisis. The only thing missing is a foreign policy crisis.” – Robert Kagan, Washington Post, March 27, 2020.

Not so fast, Mr. Kagan. All the ingredients for a foreign policy crisis are in place. America is sitting on a foreign policy time bomb … and the sparks are flying every which way.

The Lonely Realist on March 11, 2019 first wrote about the parallels between “1937” and the present. Those parallels are disturbing …, and becoming more parallel so by the day. They are pointing towards a coalescing of cascading international conflicts frictions … and worse.

In his most recent publication, “The Changing World Order,” Ray Dalio echoed TLR’s alarm: “[T]he confluence of 1) high levels of indebtedness and extremely low interest rates, which limits central banks’ powers to stimulate the economy, 2) large wealth gaps and political divisions within countries, which leads to increased social and political conflicts, and 3) a rising world power (China) challenging the overextended existing world power (the US) [makes today] the most recent analogous time [to] the period from 1930 to 1945.” As a reminder, WWII began 2 years after the economic downturn of 1937 and 10 years after the Crash of 1929. History may not repeat itself, but it often rhymes. “More specifically, in 2008-09 like in 1929-32, there were serious debt and economic crises. In both cases, interest rates hit 0{29ea29b64b10057f61377b2c087cd5b7537a0cd24da4295a308b0bf589469f35} which limited central banks’ ability to use interest rate cuts to stimulate the economy, so, in both cases, central banks printed a lot of money to buy financial assets which, in both cases, caused financial asset prices to rise and widened the wealth gap. In both periods, wide wealth and income gaps led to a high level of political polarization that took the form of greater populism and battles between ardent socialist-led populists of the left and ardent capitalist-led populists of the right. These domestic conflicts stewed while emerging powers (Germany and Japan in the 1930s) increasingly challenged the existing world power.”

Today, the emerging world power is China.[1] It, like Germany in the 1930s, has a global cabal of allies. Those allies view America as a common enemy. The Chinese Axis includes North Korea, Russia, Iran, Syria, Venezuela, and Cuba …, and is growing. They soon may be joined by a coterie of disgruntled countries alienated by “America First” economic policies (an echo of the 1930s), America’s tariff and sanctions actions (another echo of the 1930s), and the tendency of its two most recent Presidents to cleave towards isolationism and a retreat from allies and alliances (including Kurds, Afghanis, Iraqis, Taiwanese, Turks and Europeans) (yet again, much like the 1930s).

In “Axis of the Sanctioned Redux” in the January 2nd TLR, The Lonely Realist discussed America’s decade-long withdrawal from international engagement and Pax Americana, and the fact that the Chinese Axis has been hard at work to defeat counter U.S. initiatives, undercut the US Dollar as the world’s Reserve Currency, and reduce the economic, military and diplomatic power and influence of the U.S. The citizens of China, Russia, North Korea and Iran most certainly realize that their countries are at war with the U.S. Most Americans do not see the world in the same way. They may be in for a harsh awakening.

For the past three years, as a continuation of the Obama Administration’s pacifist foreign policy, the Trump Administration has been withdrawing America from foreign military and diplomatic engagement. In part, it has done so by withdrawing America’s military forces from foreign entanglements and, in part, it has reduced engagement by cutting staff and diminishing the role of the State Department. In admitting military defeat in Afghanistan, the U.S. has pledged to unilaterally withdraw its soldiers by April 30, 2021. In admitting military defeat in Syria and Iraq, it has abandoned its Kurdish allies and is unilaterally withdrawing its soldiers and support teams, leaving the war effort against ISIS in the hands of its enemies Russia, Turkey and Syria. America has balked at upholding its NATO commitments, demanded massive increases in defense spending from South Korea, Japan, Germany and France, suggested that underpaying allies should be left to fight their own wars, required a quid pro quo before honoring financial commitments to allies like Ukraine, and pooh-poohed cyber-attacks against America’s electoral apparatus. China and Russia, notable among enemies-of-America, have been closely watching these actions, biding their time.

Their perspective undoubtedly is undergoing a change due to the sudden onset of Covid-19 and the unexpected escalation of the Oil Price War, each of which is having a disproportionately adverse impact on the U.S. The novel coronavirus has created an opportunity for America’s enemies because, for reasons presented in “Winter Has Come” in the March 22nd TLR, America did not act quickly enough in taking the steps necessary to address the medical and fiscal fallout from Covid-19. America consequently is suffering more cases of Covid-19 than any other country. The Oil Price War simultaneously is laying waste to one of America’s cornerstone industries. The two together therefore are poised to cause America to suffer potentially dire health and economic damage. The healthcare, economic, political and social impact of the two on the U.S. therefore could become a game-changer should members of the Chinese Axis choose to capitalize on America’s distractions and weaknesses …, noting that America’s adversaries are opportunists and recognize the weight of additional pressures that an election-year places on the Trump Administration.

The Lonely Realist has written more than once about “The Failure of American Foreign Policy” (see the September 30, 2019 TLR) and about China’s multi-faceted offensive to replace the U.S. as global hegemon – in technology, trade, finance, monetary policy, educational system, production, geopolitics, capital, and ideology (see “Red Storm Rising” in the April 12, 2019 TLR). The initial July 21, 2019 “Axis of the Sanctioned” was a follow-up to TLR’s earlier March 27, 2019 “Speak Softly and Carry a Big Stick” in raising concerns about President Trump’s foreign policy strategy of grandiose threats and little action. America’s withdrawal from the international arena and its pursuit of isolationism have created a vacuum for America’s enemies. The Obama-Trump Administrations demonstrated over and over again that America, although able, is unwilling to exercise global hegemony and, disturbingly, that withdrawal or appeasement is America’s preferred outcome. These policies have left the world especially vulnerable to foreign policy crises. Plagued by partisanship and disorganized decision-making and wedded to a goal of “peace for our time” (the same goal expressed by Prime Minister Neville Chamberlain in his 1938 speech lauding the Munich Agreement that handed Czechoslovakia to Nazi Germany), America’s inactions have led China, Iran, Russia, Turkey, North Korea, Venezuela, the Philippines and Syria to take increasingly more brazen actions with the confidence that doing so not only will have little or no military consequences, but instead will incentivize America to further retreat from the international scene.

They’ve been correct.

These policies and actions have set the stage in a distressingly similar way to the stage setting in 1937.

The early 20th Century saw extremists finding supporters in the exploited populations of the then-rapidly growing cities. Poverty was widespread. The early 21st Century saw a similar phenomenon with extremists finding their supporters on the fringes of society on social networks that, like the urban areas of the early 20th Century, had become hotbeds – and amplifiers – of discontent. For decades now, de-industrialization, job-outsourcing and automation bit-by-bit have deprived workers of security, making the have-nots and those on the fringes of society vulnerable to extremism. At the same time, self-destructive domestic policies in developing countries like Russia, India and Brazil have created a textbook case for demagoguery. Poverty as an issue, although alleviated over the past century, has been transformed into income inequality, and the stark contrast between the haves and the have-nots in America has been highlighted by readily-obtainable data on the internet, graphically showing the stark contrasts that permeate 21st Century society. Just as the economic shocks that began in the late 19th Century climaxed in the Great Depression and led to the rise of far-right leaders and trade wars, culminating in WWII, the economic shocks of the late 20th Century climaxed in the Great Recession of 2008, intensifying conflicts between the haves and have-nots (the 1{29ea29b64b10057f61377b2c087cd5b7537a0cd24da4295a308b0bf589469f35} and the 99{29ea29b64b10057f61377b2c087cd5b7537a0cd24da4295a308b0bf589469f35}), deepened competition among nations, and led to trade wars that may have intensified have culminated in the Crash of 2020 … which now is being exacerbated by the Covid-19 Pandemic and the Oil Price War and will lead to … who knows what?

All ingredients of the 1930s calamity are present …, and ominously on an unparalleled scale.

On March 18th, more than 80 former national security officials decried America’s foreign policy: “Our nation’s foreign affairs are in disarray; our alliances frayed, and our national prestige declining. Our approach to both friends and enemies abroad has been chaotic and unprincipled. Our credibility as a nation has been lessened. And, perhaps most importantly, our place in the world as a source of moral leadership has nearly been lost. As a country, we are increasingly less secure and less safe. [America’s foreign policies have] created an existential danger to the United States, its place in the world, and the values we share.” A goal of this crowd-statement was for a return to the pre-2009 political and ideological status quo. This seems utopian. The world has changed radically and irredeemably. Covid-19, devastating in itself even without the Oil Price War, may prove to be only the first of many devastating shocks that lie ahead.

Finally (from a good friend)

*┬® Copyright 2020 by William Natbony. All rights reserved.

[1] Readers of TLR will find that Destined for War, a book by Graham Allison, is a useful reference work and worthwhile read.

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