US Economic Collapse: The Real Tipping Point?

The American invasions of Afghanistan and Iraq have ignited hopes among Washington’s neoconservatives that the U.S., taking advantage of the post-Cold War unipolar moment and its dominant military power, will gradually transform into a global empire.

So the debate among neocons rages over such topics as: Will Iran and/or Syria and/or North Korea be the next target(s) for American-led “regime change”? Will America take steps to contain the rise of China as a potential challenger to its hegemonic power, which could lead to war between the two powers? Is the U.S. encouraging a split in Europe to prevent the emergence of a European Union that could contain U.S. economic and military power?

But the insurgency in “liberated” Iraq, two years after President George W. Bush declared that “major combat operations in Iraq have ended” before a banner proclaiming “Mission Accomplished,” has raised doubts about whether Washington can produce reruns of Iraq in Iran or other countries.

Winning the War of Images

So it’s not surprising that much neocon propaganda in recent months has aimed at countering the depressing reality in Mesopotamia by suggesting that a “tipping point” is about to be reached in Baghdad, one that would mark the defeat of the anti-American insurgency and the triumph of “freedom.”

These neocons have already celebrated several such tipping points – the toppling of Saddam Hussein’s statue in Baghdad, the capture of the dictator and the killing of his sons, the “handover of sovereignty” to a provisional Iraqi government, the invasions and destruction of Fallujah, and finally, the parliamentary election on Jan. 30 in that country.

As journalist Mark Danner noted, each of these events has been highly successful as an example of “the management of images – the toppling of Saddam’s statue, the intrusive examination of the unkempt former dictator’s mouth and beard, the handing of documents of sovereignty from coalition leader L. Paul Bremer to Iraqi leader Iyad Allawi, the voters happily waving their purple fingers – and each image has powerfully affirmed the broader story of what American leaders promised citizens the Iraq war would be.”

What they promised, Danner pointed out, was “a war of liberation to unseat a brutal dictator, rid him of his weapons of mass destruction, and free his imprisoned people, who would respond with gratitude and friendship, allowing American troops to return very quickly home.”

But as these images dissolved into thin air, it became difficult to fit the “pseudo-events” into the storyline promoted by the neocons that was supposed to bring about freedom and peace in that country.

The anti-American insurgency has resumed in full force. The election proved to be not a triumph of American-style liberty but the victory of Shi’ite identity and Kurdish nationalism over the Sunnis. America is being drawn into what is gradually evolving into a low-level civil war.

Apparently, we have to wait for another of those tipping points.

Meanwhile in the Real World, as opposed to the universe of “pseudo-events” and wishful thinking, there are some indications that economic and military pressures are making it a Mission Impossible to accomplish the imperial fantasies concocted in think tanks in Washington by American intellectuals who have never met a war they didn’t like (as long as they didn’t have to actually fight in it).

Both the New York Times and the Los Angeles Times reported last week that the chairman of the Joint Chiefs of Staff concluded in a classified analysis presented to Congress that the strains imposed by the wars in Iraq and Afghanistan have made it far more difficult for the U.S. military to beat back new acts of aggression and launch a preemptive strike or prevent conflict in another part of the world.

Indeed, in what the L.A. Times described as “a sober assessment of the Pentagon’s ability to deal with global threats,” General Richard B. Myers concluded that the American military is at “significant risk” of being unable to prevail against enemies abroad in the manner that Pentagon war plans mandate.

It seems that empire-building is a costly and risky business, and according to several polls, that is certainly the conclusion of the American people, some of whom actually have to get into real tanks and fight in real wars in the Middle East and elsewhere.

Recent polls have indicated that the majority of Americans don’t believe that the costs of the war in Iraq in terms of U.S. dollars and casualties were worth the results. That in turn should place major constraints on the willingness of the Bush administration and Congress to launch new preemptive wars and expand the empire.

But will it? In the short run, one should expect the imperial project masquerading as the neocon narrative of freedom to continue its advance as long as the costs are perceived by Americans to be bearable.

But the combination of an overstretched U.S. military – the U.S. Army, for example, fell short of its recruiting objective in April, the third straight monthly deficit – as well as rising budget deficits and a weakening U.S. dollar are bound to have some effect on the policies pursued by Washington.

Interestingly, the notion of the U.S. experiencing an “imperial overstretch” as a result of rising military budgets and of maintaining its hegemony was very popular in the late 1980s, when it was promoted by such strategic thinkers as Paul Kennedy.

It seemed to have lost its appeal at a time when the high-tech boom and stock market euphoria reduced budget deficits and there was a growing sense that Americans would be able to secure their military predominance without engaging in major wars.

But now things are starting to look different. Interest in Kennedy’s thinking seems to have reignited as the deficit explodes, reflecting growing defense spending.

In practical terms, the U.S. needs to attract around a billion dollars a day to prevent the dollar’s collapse and keep interest rates low.

Were foreigners to decide to shift a portion of their dollar reserves into euros, the U.S. could face an economic crisis. Now that could be a real “tipping point.”

Reprinted from the Singapore Business Times, reprinted with author’s permission. Copyright © 2005 Singapore Press Holdings Ltd.