National Interest USA

NIALL FERGUSON – In the history of empires the end is abrupt, and those that rely on them need to be ready.

All empires, no matter how magnificent, are condemned to decline and fall. We tend to assume that in our own time, too, history will move cyclically – and slowly.

The environmental or demographic threats we all talk about seem remote. In an election year, who really cares about the average atmospheric temperature or the age structure of the population in 2050?

Yet it is possible that this whole cyclical framework is, in fact, flawed. What if history is arrhythmic – at times almost stationary, but also capable of accelerating suddenly, like a sports car? What if collapse comes suddenly, like a thief in the night?

Great powers and empires operate somewhere between order and disorder. They can appear to operate quite stably for some time; they seem to be in equilibrium but are, in fact, constantly adapting. But a small trigger can set off a ”phase transition” from a benign equilibrium to a crisis – a butterfly flaps its wings in the Amazon and brings about a hurricane in south-eastern England.

Regardless of whether it is a dictatorship or a democracy, any large-scale political unit is a complex system. Most great empires have a nominal central authority – either a hereditary emperor or an elected president – but in practice the power of any individual ruler is a function of the network of economic, social and political relations over which he or she presides.

As such, empires exhibit many of the characteristics of other complex adaptive systems – including the tendency to move from stability to instability quite suddenly. But this fact is rarely recognised because of our addiction to cyclical theories of history.

The Bourbon monarchy in France passed from triumph to terror with astonishing rapidity. French intervention on the side of the colonial rebels against British rule in North America in the 1770s seemed like a chance for revenge after Great Britain’s victory in the Seven Years War a decade earlier, but it served to tip France into a critical state.

In May 1789, the summoning of the Estates-General, France’s long-dormant representative assembly, unleashed a political chain reaction that led to a swift collapse of royal legitimacy in France. Only four years later, in January 1793, Louis XVI was decapitated by guillotine.

The sun set on the British Empire almost as suddenly. So, what are the implications for the United States today?

The most obvious point is that imperial falls are associated with fiscal crises – sharp imbalances between revenues and expenditures, and the mounting cost of servicing a mountain of public debt.

Think of Ottoman Turkey in the 19th century: debt service rose from 17 per cent of revenue in 1868 to 32 per cent in 1871 to 50 per cent in 1877, two years after the great default that ushered in the disintegration of the Ottoman Empire in the Balkans. Consider Britain in the 20th century. By the mid 1920s, debt charges were absorbing 44.5 per cent of total government expenditure, exceeding defence expenditure every year until 1937, when rearmament finally got under way in earnest.

But Britain’s real problems came after 1945, when a substantial proportion of its immense debt burden – equivalent to about a third of gross domestic product – was in foreign hands.

Alarm bells should therefore be ringing loudly in Washington, as the US contemplates a deficit for 2010 of more than $US1.47 trillion – about 10 per cent of gross domestic product, for the second year running.

Since 2001, in the space of just 10 years, the US federal debt in public hands has doubled as a share of GDP from 32 per cent to a projected 66 per cent next year. It is projected that debt could reach 344 per cent by 2050.

These sums may sound fantastic. But more terrifying is to consider what continuing deficit finance could mean for the burden of interest payments as a share of federal revenues – up to 85 per cent in 2050.

The fiscal position of the US is worse than that of Greece. But Greece is not a global power. In historical perspective, unless something radical is done soon, the US is heading into into Bourbon France territory. It is heading into Ottoman Turkey territory. It is heading into postwar Britain territory.

For now, the world still expects the US to muddle through, eventually confronting its problems when, as Winston Churchill famously said, all the alternatives have been exhausted. With the sovereign debt crisis in Europe combining with growing fears of a deflationary double-dip recession, bond yields are at historic lows. There is therefore a strong incentive for those in the US Congress to put off fiscal reform.

Remember, half the US federal debt in public hands is in the hands of foreign creditors. Of that, a fifth (22 per cent) is held by the monetary authorities of the People’s Republic of China, down from 27 per cent in July last year. China now has the second-largest economy in the world and is almost certain to be America’s principal strategic rival this century, particularly in the Asia-Pacific region.

Quietly, discreetly, the Chinese are reducing their exposure to US Treasury bonds. Perhaps they have noticed what the rest of the world’s investors pretend not to see – that the US is on an unsustainable fiscal course, with no apparent political means of self-correcting.

That has profound implications not only for the US, but also for all countries that have come to rely on it, directly or indirectly, for their security.

Niall Ferguson is a British historian and the author of The Ascent of Money. This is an edited version of his John Bonython Lecture for the Centre for Independent Studies delivered in Sydney last night.

Source: The Age

JASON KOUTSOUKIS HERALD CORRESPONDENT

Tel Aviv: The Israeli Prime Minister, Benjamin Netanyahu, returned to Israel last night after an apparently disastrous meeting with the US President, Barack Obama, in Washington.

According to leaked accounts reported in the Israeli media, Mr Obama humiliated Mr Netanyahu by leaving the meeting early.

”I’m going to the residential wing to have dinner with Michelle and the girls,” Mr Obama reportedly said, adding that Mr Netanyahu should consult his aides about goodwill gestures Israel was prepared to make towards the Palestinians before renewed peace talks. ”’I'm still around,” he said. ”Let me know if there is anything new.”

The talks were shrouded in an unusual news blackout, with no statement issued after the meeting and no official photographs released. US officials said the two met alone for about 90 minutes. Mr Netanyahu then huddled with staff separately for 90 minutes before requesting a second meeting with Mr Obama.

When the President returned, Mr Netanyahu is said to have made a counter-offer which Mr Obama did not accept.

In an Israeli TV interview before leaving for Israel, Mr Netanyahu said he had made progress in his meeting with Mr Obama. “I think we are finding the golden mean between the traditional policy of all the Israeli governments, and our desire to find a way to renew the peace process. I think we made progress today.”

Relations between Israel and the US were shaken this month when, during a visit by the US Vice-President, Joe Biden, Israel announced plans to build 1600 Jewish homes on Palestinian land in occupied East Jerusalem.

One congressman who met Mr Netanyahu after his White House meeting said: ”It was awful. Netanyahu looked excessively concerned and upset. He waved around those pages, eager to persuade us that because of the complicated approval process for issuing construction permits in Jerusalem, one could never know in advance when a decision would be published on the issue.”

Writing in the Israeli Maariv, columnist Ben Caspit said there was no humiliation exercise the Americans did not try on Mr Netanyahu. ”Bibi received in the White House the treatment reserved for the president of Equatorial Guinea,” Caspit wrote.

Yedioth Ahronoth said the White House ambushed Mr Netanyahu. ”Everything was scrupulously planned, most likely, and the Israeli Premier, perhaps the most sought-after personage in the Oval Office in the past two decades, was received like the last of the wazirs from Lower Senegal.”

The consensus among Israeli commentators is that the US will continue to exert more pressure on Israel to move swiftly towards the creation of a Palestinian state.

”The US is abandoning us and effectively turning into Europe,” Caspit wrote. ”From now on, we are completely alone. The entire world, from one end to another, talks about a Palestinian state inside territory similar to 1967.”

”Obama wants to know whether Netanyahu is there. In explicit words, in writing, not with hints, not with a ‘maybe,’ not with a ‘yes, but’. A simple question that requires a simple answer.”

US and Israeli officials are working on a document dubbed ”the blueprint,” which covers all issues, including Jerusalem, that need to be resolved to let talks go forward.

Mr Netanyahu will try to sell it to his cabinet while the US Middle East envoy, George Mitchell, will take it to Arab and Palestinian officials for approval.

by Henri J. Barkey

The Turkish military, unaccountable to any political authority and long accustomed to operating with impunity, has suddenly come under scrutiny with the revelation that several of its officers have plotted to overthrow the country’s constitutional order. The arrests last week of forty-nine high-ranking former Turkish military officers, including former service chiefs of the navy and air force, as well as a deputy chief of staff, heralds the latest and perhaps final stage in a confrontation between Turkey’s powerful military establishment and society. The roundup, carried out by the judiciary with an unclear degree of involvement by Prime Minister Recep Tayyip Erdogan, will humiliate the military.

Although the two service chiefs and the deputy chief of staff were released, the sight of so many high-ranking officers being hauled in front of judges is unprecedented. It is too early to tell whether these arrests will solidify the attitudes of hard-line officers who are itching to topple the government, or whether the era of coups and other forms of unconstitutional attempts at overthrowing the system is over. All signs do point to the latter; and, in any case, there is still a significant threshold to cross—the expected change in military command in August.

What is clear, however, is that unless Turkey manages to devise a new constitution to replace the one imposed by the military in 1982, it will face increasing instability and likely become prone to erratic foreign-policy behavior.

This crisis is the culmination of profound shifts in Turkish society. The emergence of a conservative and pious business elite, made possible by the economic reforms of the 1980s, lay the groundwork for Erdogan’s Islam-influenced Justice and Development Party (AKP), which rose to power in 2002. For secularist elites, who are wedded to a doctrinaire vision of the Turkish state that does not acknowledge society’s deep religious roots—or the existence of the Kurds, for that matter—AKP’s commanding majority has been viewed with alarm, if not panic.

On one side are the AKP and its allies: some liberal intellectual elites, the conservative business elites and the religious orders. On the other are the forces of the secular state apparatus, composed primarily of the army, the bureaucracy, an important segment of the press establishment, academics, old-line political parties, and of course the judiciary.

Caught between and running scared are the old Western-oriented business elites, represented by TUSIAD, the Turkish Industrialists and Businessmen Association, and some intellectual elites who are not aligned with the AKP. These intellectuals sympathize with the party’s broad goals, but not with its leadership or its Islamist origins.

The military and judiciary have taken it upon themselves to protect Turkish “democracy” by any means. Four times since 1960, the military has intervened to overthrow governments, and the judiciary routinely bans political parties and politicians of which it does not approve.

What is new, however, is the Turks’ increasing resistance to military and judiciary conceptions of politics. The resistance comes from a more diverse population, a strengthening civil society and other forces, the most important of which is Taraf, a small daily newspaper. Taraf’s willingness to publish damaging stories about the armed forces, something mainstream newspapers have always shied away from, has energized individuals in various state offices to leak damaging information.

This is hardly a struggle between angels and demons, but the primary culprit is the military establishment, which has missed the signs of change. Its actions have backfired and further damaged its reputation. The most egregious case of army interference in domestic politics occurred on April 27, 2007, when its chief of staff issued a clumsily written statement on the Turkish Armed Forces website warning against the selection of Abdullah Gül as president of the republic. The army’s opposition derived primarily if not exclusively from the fact that Gül’s wife wore a turban—an unacceptable wardrobe choice, since he would be occupying the position once held by Atatürk, the founder of the secular Turkish republic, in whose name the military acts.

This forced the AKP to call for elections, which it won with an overwhelming mandate, but after which it has not succeeded in enacting reforms. This is in part because the secular state establishment sought revenge by trying to ban the AKP altogether, an attempt that almost succeeded. The AKP has yet to grow into a classical liberal party that embraces openness, freedom of thought and the rule of law. Instead, it has replicated all the ills of Turkish parties past, including one-man domination, the use of government power to squelch the opposition, and the lack of a comprehensive vision that transcends the immediate concerns of its own pious core constituency.

As a result, a new Turkish constitution remains both a distant dream and an absolute necessity. Turkey needs to overhaul its archaic political institutions that have prevented the evolution of dynamic and responsive politics. The resulting paralysis has always been an invitation to greater military involvement.

For the United States, Turkey’s traditional ally, this is a most unappealing scenario. The White House does not want to see Turkey wallow in crises, nor will it countenance a coup by any means. The former might simply be written in the stars—but Washington can be crystal clear that it will not accept the latter.

Henri J. Barkey is a nonresident visiting scholar at the Carnegie Endowment for International Peace, and a professor of international relations at Lehigh University.

SIMON MANN

WASHINGTON: The US President, Barack Obama, has called for an end to the bitter debate over healthcare reform, committing Democrats to a last-ditch effort to pass laws that are expected to extend health insurance to an additional 30 million Americans.

To do so, Mr Obama confirmed the use of a parliamentary tactic known as reconciliation, but shrugged off Republican charges that its use would amount to an abuse of power.

“The American people want to know if it’s still possible for Washington to look out for their interests and their future,” Mr Obama said during a choreographed media announcement where he was flanked by medical workers wearing white lab coats.

“They are waiting for us to act. They are waiting for us to lead. And as long as I hold this office, I intend to provide that leadership.

“I do not know how this plays politically, but I know it’s right. And so I ask Congress to finish its work and I look forward to signing this reform into law.”

The palpable sense of urgency contained in the President’s announcement has been reflected increasingly in the words of Democratic strategists conscious that 13 months into the Obama presidency, the administration remains focused heavily on its healthcare reform and not on job creation.

With Mr Obama’s popularity sagging, data due for release today is expected to reveal accelerating job losses in February.

Unemployment sits a shade under 10 per cent, but the recession’s impact has hit black and Latino communities particularly hard, with jobless rates of 16.5 per cent and 12.6 per cent.

A further 20 million Americans say they still cannot get enough work.

Marc Morial, the president of the National Urban League, which works for economic self-reliance for African-Americans, said the US needed “a strong, targeted jobs bill … and we need it now”. He described the recent $US15 billion ($16.6 billion) jobs bill, with tax relief for small businesses that take on new workers, as “timid” and “weak”.

A victory on healthcare would finally free up Democrats to throw everything at job creation in the lead-up to November’s midterm elections.

But the course that the Democrats have chosen is complicated. The healthcare bill originally passed by the Senate on Christmas Eve will now be sent to the House of Representatives, where Democrats command a big majority. Once passed by the House, the details of the reform will be fine-tuned in a reconciliation bill that will take in some measures proposed by Republicans while extracting other highly contentious items that favour individual states.

While a reconciliation bill, like all legislation, requires a simple majority for it to be passed, debate on such a bill is limited to just 20 hours in each chamber, negating an attempted filibuster.

While reconciliation has been used more than 20 times since its introduction in 1974, Republicans argue that in this case it is inappropriate.

The Obama administration pointed out that the Bush administration used reconciliation to push through tax cuts for the wealthiest Americans in 2001 and 2003.

A Republican senator, John Thune, said using the tactic for a big revamp of one-sixth of the US economy without any bipartisan support was ”unprecedented”. “It’s not a done deal,” Senator Thune said. He hoped “reasonable Democrats” would join Republicans to kill off the legislation.

First family to fly in … President Obama and his family will visit later this month. Photo: Reuters/Jason Reed

Barack Obama’s trip to Australia this month is in jeopardy as the US President pushes to clinch historic healthcare reform in America, one of his key election pledges.

Mr Obama, with his family, is expected to arrive in Australia on March 22 for a three-day tour after visiting Guam and Indonesia. But some fellow Democrats have expressed concern that the President’s absence will come during the critical final act of his revamp of the healthcare system, which is expected to extend health insurance coverage to an extra 30 million Americans.

Mr Obama will address a joint sitting of both houses of Parliament on March 23, the government confirmed yesterday.

”The United States is our most important friend and ally,” the leader of the house, Anthony Albanese, said in Canberra. ”President Obama will be a very welcome guest in our country.” Mr Albanese also announced that the Indonesian President, Susilo Bambang Yudhoyono, would address a joint sitting next Wednesday.

Mr Obama said yesterday that Democrats would use a parliamentary tactic known as reconciliation to thwart Republican attempts to block the reforms.

”It’s his judgment call,” the Democrat congressman Elijah Cummings told the Bloomberg news agency. ”But it would be a good sign if perhaps the trip were postponed until we get healthcare done … Moments like this don’t come often. We’re at a crucial time.”

In Canberra, the US ambassador’s children are preparing to play host to the Obamas.

”My kids are practising their Wii skills so they can go one-on-one with Sasha and Malia,” Jeffrey Bleich said.

It was ”not accidental ”, Mr Bleich told the Herald in Sydney yesterday, that Mr Obama was visiting Australia earlier in his term than any other US president. ”The US has no better friend in the world than Australia and this is one way of demonstrating it in a very concrete fashion.”

He said the visit would reinforce a partnership already in great working order and there were no plans to ask Australia to provide more troops for Afghanistan at this time.

”All the big issues we are working on, we are working with Australia. I think the meetings between the President and Prime Minister will be about those big global issues – Afghanistan, counter-terrorism, counterinsurgency, climate change, nuclear non-proliferation, broader regional free trade, scientific and technological exchange.”

He expects China’s expanding role to be on the leaders’ agenda, but Mr Bleich played down the prospect of any role for the Mandarin-speaking Prime Minister Kevin Rudd as a conduit between the world’s two biggest economies. ”At the end of the day, it’s a bilateral relationship, and it has to be done bilaterally. That is how hard issues are addressed and how hard issues are resolved,” Mr Bleich said.

Some have portrayed China’s blocking actions at the Copenhagen climate change conference and refusal to back sanctions against Iran’s nuclear ambitions as signs of a more assertive foreign policy. Mr Bleich said he would not call China’s evolving interaction more assertive, but rather a reflection of a more mature relationship, and it was normal there was some friction.

with Ari Sharp