The crisis of US hegemony

Walden Belllow

The Bush II years will be remembered as the years when in order to achieve unparalleled global strategic superiority, the US ended up with the opposite outcome: erosion of its global hegemony.

The erosion of hegemony is clear in the Middle East, Latin America, and most recently in Georgia. It is less obvious in the Asia Pacific region. The US after all maintains over 300 military bases in the Western Pacific. It has established a permanent troop presence in the Philippines to make up for its loss of military bases. And, since 2004, the Pentagon has resumed its close relationship with the Indonesian military.

Nevertheless, Southeast Asia is probably more independent of the US than at any other time in the last 60 years. Economics is a large part of the answer. Over the last two decades, the US has contended with three negative developments on the economic front.

First, its drive - supported by Australia - to create a trans-Pacific free trade area in the form of the Asia-Pacific Economic Cooperation (APEC) failed.

Second, its effort to impose capital account liberalization on the Asia Pacific economies backfired. Instead, this effort resulted in the weakening of the International Monetary Fund (IMF), an important mechanism of US control not only regionally but internationally. It also provoked closer regional financial cooperation in the form of the the ASEAN Plus Three formation that many see as the precursor of an Asian Monetary Fund. Finally, it pushed the East Asian countries to build up massive dollar reserves in order to protect themselves from future foreign exchange crises. Recycled to the US in the form of credit, the US economy has become greatly dependent on these reserves to maintain its consumption-led growth.

"One can only hope that the third option is the one Washington will decide to follow, which is why the outcome of the US electoral contest between Barack Obama and John McCain has great implications for the future of the region."

Thirdly, ever since the Asian financial crisis, the region has become increasingly dependent on the dynamism of the Chinese economy for its growth. Even as Washington's economic influence falters, Beijing has been consolidating its position as the new East Asian economic center, at the expense of both the US and Japan, via a smart economic diplomacy that includes the creation of an ASEAN-China free trade area by 2010. There is a great deal of truth in the observation that the biggest beneficiary of Washington's imperial misadventures over the last decade has been China, which has kept itself from military entanglements and devoted itself single-mindedly to economic development.

The rise of China provides a challenge to Southeast Asia and the US.

To Southeast Asia, the challenge will be to avoid being reduced to an appendage of the Chinese economy. The economic integration of the region as an economic block is the most effective answer to this development, but it is doubtful that the governments of the region have the political will to translate ASEAN from a talk shop to a unified market and economic block.

To the US, the challenge will lie in how it adjusts to China's rise as the world's preeminent economic power. Following the eminent analyst Giovanni Arrighi, we can discern three possible paths. First, Washington may follow a strategy of military and political containment such as that which it followed for four decades against the Soviet Union. This would not only be disastrous for the region but also for the whole world. Second, it may follow Henry Kissinger's prescription of maintaining its hegemony playing off the Asian powers against one another, much like Britain did in Europe in the 19th century. This would have terrible consequences for the region. Third, it may peacefully and gracefully yield first place to China, much like Britain behaved towards the United States in the 20th century.

Though it is the least likely, one can only hope that the third option is the one Washington will decide to follow, which is why the outcome of the US electoral contest between Barack Obama and John McCain has great implications for the future of the region.

The peoples of the Asia Pacific, developing country governments, and global civil society must not be a bystander in this process. They must not only encourage the US to follow the third path. They must also act to influence China to desist from following the destructive imperial path followed by Europe and the United States in its rise to global prominence.

The next few decades are pregnant with both dangers and opportunities, and perhaps the most appropriate stance that progressives can take is that which the great Italian thinker Antonio Gramsci expressed thus: 'Pessimism of the intellect, optimism of the will.'

Walden Bello is professor of sociology at the University of the Philippines and senior analyst at the Bangkok-based research and analysis institute Focus on the Global South. He is the author of numerous books, including Dilemmas of Domination: the Unmaking of the American Empire (New York: Henry Holt, 2005). Professor Below recently presented the Inaugural Ted Wheelwright Memorial Lecture at the University of Sydney (Podcast at this site).