Diplomacy and Empire (Part II)

The moral argument put forward by both left and right-wing proponents of aggressive American unilateralism is that, as a nation with these unexampled elements of power and uniquely admired virtues, the United States has the duty both to lead the world and to remake it in our image.

But our recent confusion of command and control with leadership — and conflation of autocratic dictation with consultation — have stimulated ever greater resistance internationally. Thus the aggressive unilateralism by which we have sought to consolidate our domination of world affairs has very effectively undermined both our dominion over them and our capacity to lead.

The most obvious example of this has been our inability, despite the absolute military superiority we enjoy, to impose our will on terrorists with global reach, on the several battlegrounds of the Middle East, or on Iran or North Korea. But in many respects, these illustrations of the impotence of military power are far from the most worrisome examples of policy backfire.

After all, despite all the lurid domestic rhetoric about it and the real pain it can inflict, terrorism poses no existential threat to our country — except, of course, to the extent we betray American values in the name of preserving them. The more worrisome examples are the mounting effects of unrelentingly coercive foreign policies on our political credibility, economic standing and competitiveness.

As distaste has succeeded esteem for us in the international community, we have become ever more isolated. Our ability to rally others behind our causes has withered. We have responded by abandoning the effort to lead.

We are now known internationally more for our recalcitrance than for our vision. We have sought to exempt ourselves from the jurisdiction of international law. We have suspended our efforts to lead the world to further liberalization of trade and investment through the Doha Round. We no longer participate in the UN body charged with the global promotion of human rights.

We decline to discuss global climate change, nuclear disarmament or the avoidance of arms races in outer space. If we have proposals for a world more congenial to the values we espouse, we no longer articulate them. The world is a much less promising place for our silence and absence.

Our recent record in the Middle East alone includes the six-year suspension of efforts to broker peace between Israelis and Palestinians — and a seeming shift from the pursuit of al-Qaeda to the suppression of Islamism in Afghanistan.

Although we seem belatedly to be improving, we have become notorious for delusory or self-serving assertions masquerading as intelligence assessments. Our disregard for treaties abroad and the rule of law at home is leading to the indictment of our operatives abroad by our closest allies.

Our scofflaw behavior thus undercuts transnational cooperation against terrorists. The bloody consequences of our occupation of Iraq for its inhabitants are too well-known to require mention.

We continue to provide military support and political cover for Israeli operations entailing intermittent massacres of civilian populations in Lebanon and Gaza. We sit on our hands while wringing them over parallel outrages in Darfur. We are indifferent to the views of our friends and refuse to speak with our enemies.

Taken together, these acts of omission and commission have devastated American standing and influence — not just in the Middle East, but more widely. There are examples of such policy backfires to be found in every region.

Our ability to do business with others in our own currency has been a unique aspect of our global economic power. But our budget, trade and balance of payments deficits have grown to levels at which some foreigners now have more dollars than they know what to do with.

The value of our currency has come to depend on central bankers continuing to play a reverse game of chicken, in which they nervously hang onto dollars while watching each other to make sure that no one can bail out without the others’ noticing and dumping the dollar too.

No central bank wants to be the first to devalue its own and everyone else’s dollar-denominated reserves. So every day, Arab, Chinese, Japanese, Korean and Russian officials as well as assorted gnomes in the “Old Europe” lend our Treasury the $2.5 billion it needs to keep employment here up, interest rates down — and the U.S. economy growing.

Unlike central bankers, however, businesses and private investors are notoriously bad at “coordination games.” They are not willing to wait for the dollar to approach collapse before getting out of it and into other currencies and places.

As a result, there are now many more euros in circulation than dollars. The euro has displaced the U.S. dollar as the preeminent currency in international bond markets. In a few years, the Chinese yuan will clearly join it in this role. Hong Kong and London have overtaken New York in IPOs.

Over the past decade, we have adopted unilateral sanctions against some 95 countries and territories. Most recently, we have worked hard to shut down banking in the occupied territories of Palestine, severely curtail it in Iran — and prevent the use of the dollar in Sudan’s oil trade. The nobility of our motives in each case is not the issue.

But if we assert the right to confiscate dollar-denominated wealth, and to do so without due process or legal recourse and remedy, it should not surprise us that people begin looking for ways to avoid the use of our currency.

There is now an active search on the part of a growing number of foreign financial institutions for ways to avoid the dollar, bank-clearance procedures that touch New York — or transactions with U.S.-based financial institutions. Adding oil traders to the list of the dollar-averse increases the incentives for them to find alternatives to our currency.

Our ill-considered abuse of our financial power may thus have put us on the path to losing it. The dollar accounts for much of our weight in global affairs. U.S. investors are now increasingly hedging the dollar and going heavily into non dollar-denominated foreign equities and debt.

You would think that growing disquiet about America's financial over-extension would impel our government to make a major effort to boost our exports to rapidly growing markets like China. Our exports are in fact growing.

But our government’s present policy focus, judging from its hiring patterns, is not export promotion — but an attempt to block exports of scientific knowledge and technology to China and other potential rivals.

Export controllers want to require export licenses for foreign graduate students and researchers in our universities and to compel U.S. companies to conduct detailed due diligence on prospective foreign purchasers of their goods and services.

These initiatives reflect the mood of national paranoia and the concomitant growth of a secrecy-obsessed garrison state that have made Osama Bin Laden the greatest creator of federal employment since FDR. They encourage would-be customers to buy un-American.

Along with unwelcoming U.S. visa and immigration policies, such export-suppressive measures are a small part of a much broader assault on the openness of our society.

The increasing restriction of American intercourse with foreigners encourages the outsourcing not just of jobs but of innovation in science and technology, research and development, engineering and design services and industrial production.

Xenophobic policies and practices have begun to erode the long-standing American scientific and technological superiority they were intended to protect. Like economic protectionism, intellectual protectionism, it turns out, weakens, not strengthens one — and makes one less rather than more competitive in the global marketplace.