Globalization Vs. Democratization: Doubly Unfinished U.S. Business?

Remember all the talk about the "Washington Consensus?" For much of the 1990s, the term encapsulated a set of policies that the U.S. Treasury, Wall Street and others preached to emerging market countries to speed their development.

The measures included many sound fiscal and monetary policies, but also offered plenty of economic pain for countries experiencing financial crises.

The subject matter was far too complex for a rush job. Yet, that is very much how the U.S. Treasury sought to advance this agenda.

“Making the world safe for U.S.-based hedge funds” was how a former junior Treasury official described those dizzying times — only half in jest.

The Washington Consensus required countries to raise interest rates at moments of economic weakness — or force a country's finance minister to slash public spending in the face of soaring social needs.

Given such harsh measures, no wonder these policies came into disrepute as entire continents faced economic hardship. As crises deepened, the whole concept of globalization was eventually ill reputed.

Big protests followed in Seattle and Genoa, among others. Clearly, globalization had entered a popular crisis. In the end, the debate over the Washington Consensus showed that there is no single, sweeping solution to right the world's economic wrongs.

Instead, much hard work is needed at the domestic and international levels to fix and reform countries on a case-by-case basis.

But these policy measures — seemingly dull and arcane — are hardly the stuff that gets people excited. So now, a new gospel has emerged about how some of the world's most intractable problems can be solved with a sweeping solution.

Call this a new Washington Consensus. Just what is it about? Spreading democracy in the Middle East, of course. The new grand idea calls for eradicating the interlinking problems of global terrorism, proliferation of weapons of mass destruction — and putting an end to Arab-Israeli conflict.

All of these are certainly important objectives. But the simple question is: Is it wise to pursue this topic at the exclusion of other important items on the global to-do list?

After all, the globalization agenda had barely been accepted by most people living outside the United States by the late 1990s.

Often, that acceptance had come grudgingly.

Still, in the course of their internal deliberations, many countries realized that they had to alter their ways in order to succeed. What has changed since then? One big difference is that growth in the global economy has slowed down. That makes the required shifts even harder than before.

Regardless of where the rest of the world stood, the biggest change came when Washington refocused its agenda — from the advancement of globalization to "fighting terror" on various fronts.

Most Americans would argue this is only too natural after the events that destroyed the World Trade Center. The real question, however, is: Can these two agendas remain separate?

One can debate ad nauseam about this topic. But the view from the rest of the world is clear: The two agendas are inextricably intertwined. For that reason, people abroad take a rather somber — and uncharitable — view of U.S. choices made under the current administration.

The sudden and near-exclusive U.S. focus on the Middle East is seen as a self-serving change.

Rather than staying the course — and tackling the tough task of advancing global integration — the United States has simply kept itself enthused by designating another big-ticket item: reshaping the Arab world.

Sober-minded outsiders thus arrive at an uncomfortable conclusion. Washington already has one gigantic piece of unfinished business on the global agenda — globalization. Now, with democratizing the Middle East, it has added another.

Given the intensity with which Washington preached the globalization mantra during the Clinton Administration, it is hard for others to comprehend why this issue now gets short shrift.

Many long-time supporters of the United States worry that this mode of agenda-changing — whenever the going gets tough — will become a habit.

This only perpetuates the impression that Washington has a short attention span. It loses interest as soon as its own promises of quick and simple fixes to complex issues don't work out.

The world will become a much poorer and unstable place — if the United States develops a habit of enthusiastically creating a trail of unfinished business.