"... 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 world’s regions—the greater Middle East—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 Bernanke’s “Great Moderation”—the supposed decline of economic volatility that he hailed in a 2004 lecture—has been obliterated by a financial chain reaction, beginning in the U.S. subprime mortgage market, spreading through the banking system, reaching into the “shadow” 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 Somalia’s endless anarchy, Arkady Ostrovsky analyzes Russia’s new brand of aggression, and Sam Quinones explores Mexico’s drug-war-fueled misery. These, however, are just three case studies out of a possible nine or more...
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.