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Sunday 20 Aug 2017 | 03:11 | SYDNEY
Sunday 20 Aug 2017 | 03:11 | SYDNEY

Things I have changed my mind about this year

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18 December 2009 10:40

I began 2009 thinking that this year would be one looked back on as marking the eclipse of American primacy. With Wall St in meltdown, Afghanistan in a mess, and China's ship-killer missiles dominating the headlines, it looked like the end of an era was looming.

At year's end, I’m not so sure. Power and primacy are about more than material strengths and vulnerabilities, and are different from a gravitational ability to shift the global terms of trade with one's own consumption patterns.

Ultimately, primacy is about a willingness to lead, and a credibility in exercising leadership.

America's willingness to lead should have been affected, as it has descended into one of its generational cycles of self-doubt and self-loathing. The global financial crisis has eroded confidence in the American economic model, and American over-consumption has been identified as one side of a huge financial imbalance that caused the crisis. In America and elsewhere, questions have been raised about America's competence in managing the global reserve currency.

But despite American despair and Chinese triumphalism, there is no credible alternative to American leadership. The greenback is easy to critique as the global reserve currency, but there's no obvious alternative. The Euro and the Yen certainly aren't, and the Yuan is a very long way from even being a contender. Beijing's suggestion that IMF Special Drawing Rights should be the new reserve currency is also unrealistic; as one recent interlocutor observed, SDRs as a global reserve currency is the Esperanto of the financial world.

The fact is, there is no willing and credible alternative to American leadership.

Beijing couldn't be less interested in exercising leadership, and remains determined simply not to be isolated on international issues. None of the existing or rising powers have any clear conception of what the world should look like, or how it should differ from the one we are currently living in. As Dominic Moisi recently observed, China and India are less interested in the shape of world order than in their position in it.

2009 has demonstrated that America remains the global decider – because it is still powerful, and because it is still willing to lead and credible as a leader. It remains the country that sets the agenda on Afghanistan, Iran, North Korea and Iraq. Its post-Copenhagen climate change policy will set the agenda for progress on that issue. Its decision to invest the G20 with the status of the premier global institution on financial matters was enough to make it so.

Yes, China and the other powers are gaining on America's material strength. Yes, America's moral authority has been bruised by Bush and the GFC. But what the world is left with is a choice between the leadership of a tarnished America, and a leaderless world. In 2009 the world has chosen. America's primacy is tattered, but intact.

Photo by Flickr user magrolino, used under a Creative Commons license.

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