Obama and the new patterns of geopolitics

WORLD VIEW:WORLD POWER and wealth distributions are shifting geographically and politically towards new centres of influence under the impact of the economic crisis. The changes lie behind this week's G20 summit in London, and the weekend meetings of Nato in Strasbourg and the EU-US summit in Prague. It is revealing to see how US commentators come to terms with the new patterns of geopolitics and geo-economics under the Obama administration. Their reflections throw light on a changing world.

Geo derives from the Greek word for earth, and the term geopolitics is associated above all with how geography and power were brought together before 1914 to analyse conflicting claims of imperial control and influence. Between the two world wars it became indelibly associated with Nazi theorising about a new world order. The discipline was revived after the end of the cold war to examine how those events changed world affairs – and especially to understand better how the US used its unipolar moment from the 1990s for its own quasi-imperial status.

That this moment is passing now under the influence of geo-economics – a more recent neologism to describe the spatial distribution of economic power – reveals much about our own period. Ahead of the G20 summit, Barack Obama said the rest of the world could not ask a small number of states to spend themselves into bankruptcy in order to rescue the others. In this he recognised that the era of US consumption and debt-fuelled overstretch has come to an end and that it would take a new configuration of international power to find an alternative. Imperial overstretch is a central category in geopolitical analysis of great power decline. Very often it is driven precisely by such economic forces.

Writing in the International Herald Tribunenewspaper on Thursday, the historian Paul Kennedy, (author of the Rise and Fall of the Great Powersfirst published in 1988 when it concluded with a section entitled "The United States: The Problem of Number One in Relative Decline" and sold more than 100,000 copies), argued that behind the expected cosy declarations of the G20 communique there lay two more fundamental issues: the dollar's role as an international currency and the balance of power at the International Monetary Fund.

Kennedy was widely criticised for anticipating US decline and not that of the USSR, which actually happened in 1989-91. This is somewhat unfair, as the preceding section of his book analysed “The Soviet Union and Its Contradictions” and especially the impossibility of continuing the Brezhnev formula of guns, butter and growth indefinitely. Perhaps his analysis of the US in the 1980s was premature rather than altogether misjudged: that its economy was too weak, the cost of its weaponry too high and the number of its competitors too great to turn the clock back to 1945 and that it should accommodate to its relative decline as gracefully and intelligently as it could.

Kennedy invokes Karl Marx on the contradictions between the forces and relations of production to examine such factors as the role of the dollar and the IMF compared to the continuing leading political role of the US. It has 25 per cent of world GDP but the dollar provides 75 per cent of the world’s exchangeable currency reserves. And if Asian states are asked to contribute more to the IMF why should they accept the power distribution inherited from 1944-5 which gives them so little influence?

In fact the G20 summit broached such issues more than Kennedy and other commentators expected. Although the currency issue was not dealt with there, China did raise it explicitly in discussing a possible transition to a new system of special drawing rights in which its large investments in US bonds would not be so vulnerable to a declining dollar. Obama’s meeting with Hu Jintao was widely seen as the most important bilateral encounter of the summit, while his brokering of a deal between the Chinese and French on tax havens was one of its most interesting pieces of diplomacy.

The summit also agreed that the IMF rules will be renegotiated over the next two years, on the basis of which China pledged $40 billion to its new drawing rights. Such deals helped make this a more successful encounter than the evident tensions of interest and policy ahead of it seemed to predict.

One of its highlights was Obama’s graceful and intelligent press conference after it concluded – and again in Strasbourg yesterday. He said the US is no longer seeking to dictate terms, but is willing to listen, learn and lead . He emphasised the continuing power and wealth of the US, measured by its technology, media, military or exports, and his responsibility to represent it; but by locating it in the new setting of complex interdependence he indicated it needs to share power differently.

That will please Roger Cohen who argued in the same edition of the Herald Tribunethat the Pax Americana in place for 60 years is coming to an end. Its basis in free markets, military dominance and popular legitimacy has been eroded, so that it needs to forge a more balanced world order under this cosmopolitan president. On the same page, Thomas Friedman calls for the system that related Chinese manufacturing to US consumption for 20 years in a toxic combination of debt and environmental degradation to be transformed into a capitalism that prices these risks more realistically.

Marx, too, was wrong – or premature? – in his predictions about the end of capitalism. But Kennedy is right to caution that such contradictions between structure and form are not easily – or peaceably – reconciled.

pgillespie@irishtimes.com