While many observers are still consumed by the economic complexities of the financial crisis, historians have been busy making predictions about the ominous geopolitical implications of a destabilized global economy, rising unemployment, falling incomes, and swelling ethnic tensions. Much like its individual citizens, countries in the aggregate tend to retrench in the face of uncertainty about the future, and that could lead to some dangerously myopic decision-making in the months and years ahead…
The Axis of Upheaval
By Niall Ferguson in Foreign Policy, March/April 2009
Forget Iran, Iraq, and North Koreaâ€”Bushâ€™s â€œAxis of Evil.â€ As economic calamity meets political and social turmoil, the worldâ€™s worst problems may come from countries like Somalia, Russia, and Mexico. And theyâ€™re just the beginning.
Seven years ago, in his State of the Union address on Jan. 29, 2002, U.S. President George W. Bush warned of an â€œaxis of evilâ€ that was engaged in assisting terrorists, acquiring weapons of mass destruction, and â€œarming to threaten the peace of the world.â€ In Bushâ€™s telling, this exclusive new club had three members: Iran, Iraq, and North Korea. Bushâ€™s policy prescription for dealing with the axis of evil was preemption, and just over a year later he put this doctrine into action by invading Iraq.
The bad news for Bushâ€™s successor, Barack Obama, is that he now faces a much larger and potentially more troubling axisâ€”an axis of upheaval. This axis has at least nine members, and quite possibly more. What unites them is not so much their wicked intentions as their instability, which the global financial crisis only makes worse every day. Unfortunately, that same crisis is making it far from easy for the United States to respond to this new â€œgrave and growing danger.â€
When Bushâ€™s speechwriters coined the phrase â€œaxis of evilâ€ (originally â€œaxis of hatredâ€), they were drawing a parallel with the World War II alliance between Germany, Italy, and Japan, formalized in the Tripartite Pact of September 1940. The axis of upheaval, by contrast, is more reminiscent of the decade before the outbreak of World War II, when the Great Depression unleashed a wave of global political crises.
The Bush years have of course revealed the perils of drawing facile parallels between the challenges of the present day and the great catastrophes of the 20th century. Nevertheless, there is reason to fear that the biggest financial crisis since the Great Depression could have comparable consequences for the international system.
For more than a decade, I pondered the question of why the 20th century was characterized by so much brutal upheaval. I pored over primary and secondary literature. I wrote more than 800 pages on the subject. And ultimately I concluded, in The War of the World, that three factors made the location and timing of lethal organized violence more or less predictable in the last century. The first factor was ethnic disintegration: Violence was worst in areas of mounting ethnic tension. The second factor was economic volatility: The greater the magnitude of economic shocks, the more likely conflict was. And the third factor was empires in decline: When structures of imperial rule crumbled, battles for political power were most bloody.
In at least one of the worldâ€™s regionsâ€”the greater Middle Eastâ€”two of these three factors have been present for some time: Ethnic conflict has been rife there for decades, and following the difficulties and disappointments in Iraq and Afghanistan, the United States already seems likely to begin winding down its quasi-imperial presence in the region. It likely still will.
Now the third variable, economic volatility, has returned with a vengeance. U.S. Federal Reserve Chairman Ben Bernankeâ€™s â€œGreat Moderationâ€â€”the supposed decline of economic volatility that he hailed in a 2004 lectureâ€”has been obliterated by a financial chain reaction, beginning in the U.S. subprime mortgage market, spreading through the banking system, reaching into the â€œshadowâ€ system of credit based on securitization, and now triggering collapses in asset prices and economic activity around the world.
After nearly a decade of unprecedented growth, the global economy will almost certainly sputter along in 2009, though probably not as much as it did in the early 1930s, because governments worldwide are frantically trying to repress this new depression. But no matter how low interest rates go or how high deficits rise, there will be a substantial increase in unemployment in most economies this year and a painful decline in incomes. Such economic pain nearly always has geopolitical consequences. Indeed, we can already see the first symptoms of the coming upheaval.
In the essays that follow, Jeffrey Gettleman describes Somaliaâ€™s endless anarchy, Arkady Ostrovsky analyzes Russiaâ€™s new brand of aggression, and Sam Quinones explores Mexicoâ€™s drug-war-fueled misery. These, however, are just three case studies out of a possible nine or more.
In Gaza, Israel has engaged in a bloody effort to weaken Hamas. But whatever was achieved militarily must be set against the damage Israel did to its international image by killing innocent civilians that Hamas fighters use as human shields. Perhaps more importantly, social and economic conditions in Gaza, which were already bad enough, are now abysmal. This situation is hardly likely to strengthen the forces of moderation among Palestinians. Worst of all, events in Gaza have fanned the flames of Islamist radicalism throughout the regionâ€”not least in Egypt. From Cairo to Riyadh, governments will now think twice before committing themselves to any new Middle East peace initiative.
Iran, meanwhile, continues to support both Hamas and its Shiite counterpart in Lebanon, Hezbollah, and to pursue an alleged nuclear weapons program that Israelis legitimately see as a threat to their very existence. No one can say for sure what will happen next within Tehranâ€™s complex political system, but it is likely that the radical faction around President Mahmoud Ahmadinejad will be strengthened by the Israeli onslaught in Gaza. Economically, however, Iran is in a hole that will only deepen as oil prices fall further. Strategically, the country risks disaster by proceeding with its nuclear program, because even a purely Israeli air offensive would be hugely disruptive. All this risk ought to point in the direction of conciliation, even accommodation, with the United States. But with presidential elections in June, Ahmadinejad has little incentive to be moderate.
On Iranâ€™s eastern border, in Afghanistan, upheaval remains the disorder of the day. Fresh from the success of the â€œsurgeâ€ in Iraq, Gen. David Petraeus, the new head of U.S. Central Command, is now grappling with the much more difficult problem of pacifying Afghanistan. The task is made especially difficult by the anarchy that prevails in neighboring Pakistan. India, meanwhile, accuses some in Pakistan of having had a hand in the Mumbai terrorist attacks of last November, spurring yet another South Asian war scare. Remember: The sabers they are rattling have nuclear tips.
The democratic governments in Kabul and Islamabad are two of the weakest anywhere. Among the biggest risks the world faces this year is that one or both will break down amid escalating violence. Once again, the economic crisis is playing a crucial role. Pakistanâ€™s small but politically powerful middle class has been slammed by the collapse of the countryâ€™s stock market. Meanwhile, a rising proportion of the countryâ€™s huge population of young men are staring unemployment in the face. It is not a recipe for political stability.
This club is anything but exclusive. Candidate members include Indonesia, Thailand, and Turkey, where there are already signs that the economic crisis is exacerbating domestic political conflicts. And let us not forget the plague of piracy in Somalia, the renewed civil war in the Democratic Republic of the Congo, the continuing violence in Sudanâ€™s Darfur region, and the heart of darkness that is Zimbabwe under President Robert Mugabe. The axis of upheaval has many members. And itâ€™s a fairly safe bet that the roster will grow even longer this year.
The problem is that, as in the 1930s, most countries are looking inward, grappling with the domestic consequences of the economic crisis and paying little attention to the wider world crisis. This is true even of the United States, which is now so preoccupied with its own economic problems that countering global upheaval looks like an expensive luxury. With the U.S. rate of GDP growth set to contract between 2 and 3 percentage points this year, and with the official unemployment rate likely to approach 10 percent, all attention in Washington will remain focused on a nearly $1 trillion stimulus package. Caution has been thrown to the wind by both the Federal Reserve and the Treasury. The projected deficit for 2009 is already soaring above the trillion-dollar mark, more than 8 percent of GDP. Few commentators are asking what all this means for U.S. foreign policy.
The answer is obvious: The resources available for policing the world are certain to be reduced for the foreseeable future. That will be especially true if foreign investors start demanding higher yields on the bonds they buy from the United States or simply begin dumping dollars in exchange for other currencies.
Economic volatility, plus ethnic disintegration, plus an empire in decline: That combination is about the most lethal in geopolitics. We now have all three. The age of upheaval starts now.
Niall Ferguson is Laurence A. Tisch professor of history at Harvard University.