Shifts in global hegemony occur over long periods of time. They are not marked by a single event, or a particular day. And, yet, February 21 seems to have some special significance.
On 21 February 1947 the British government sent a telegram to the State Department in Washington announcing that it would end its support to Greece after March 31, 1947, the day of Greek elections. Two years earlier, at the Yalta conference convened to draw the map of post-war Europe, Churchill and Stalin divided the continent on the basis of national interests while an ailing FDR looked on. Greece, it was decided, would fall in the British sphere of influence in accordance with an earlier agreement between Churchill and Stalin that assigned 90 percent of interests to the British. But as a communist insurgency gained momentum and subsidies to the Greek government rose, U.K. interest in Greece waned.
Given huge war debt burdens, demands for full-employment and better social conditions at home and far-flung interests and commitments abroad, the Labour Government of Clement Attlee recognized the inevitable and, in handing the mantle of global leadership to the U.S., began a long process of imperial retrenchment. I was reminded of the Foreign Office telegram, reading about the absence of the U.S. in discussions leading to today’s announcement on Greece.
It would be foolish in the extreme to conclude that the age of American hegemony is, like the twilight years of Pax Britannica, in irresistible retreat. After all, Greece is a European problem, requiring a European solution; involvement by others could weaken the incentives on the core members of the euro zone to find a solution and, importantly, put their money on the table. That was certainly the line used by senior U.S. officials in the days leading to the decision on Greece in dismissing calls to augment the resources available to the International Monetary Fund (IMF).
To students of the international financial diplomacy of the past 70 years, however, the fact that the U.S. was largely a spectator to the drama in Brussels is noteworthy. Over most of that period, Washington orchestrated crisis resolution efforts and led others in policy reforms. Doing so not only promoted global financial stability, but also advanced American interests around the globe. There were significant costs associated with leadership – as Charles Kindleberger might have said, the costs of hegemony. These costs were worth bearing, though, since the result was a growing world economy with new markets for American goods and services.
No one should wait in expectation of the equivalent of a Foreign Office telegram any time soon. That said, a number of G20 countries reportedly support increasing the resources available to the IMF. With political polarization over the high level of the public debt and U.S. fiscal policy now an established feature of the debate in Washington, the prospects for U.S. participation in any such initiative are remote – to say the least. All this raises interesting questions about the possible consequences for U.S. leadership if a refusal to participate is viewed by others as recalcitrance.
While it is premature to declare the end of Pax Americana, we are perhaps observing another sign of transition. In this respect, the prospect of a fiscally-constrained U.S. that is beset by political polarization leads to the fundamental question: who will provide the public good of international financial stability?