11. Power. (Think Again).

(US military power)

Foreign Policy; 1/1/2003; Ferguson, Niall

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The United States may boast a massive economy and whopping defense budget, but wielding true global
power takes more than just greenbacks and green berets. These days the tools for projecting power are
more varied and dispersed than ever. And as the clout of terrorist networks, diplomatic alliances, and
international financiers seems to expand, lasting global supremacy may hinge on the skillful deployment of
an increasingly elusive resource: moral authority.

"Military Dominance Makes the United States the World's Greatest Power"

Yes, but military dominance depends on other factors. The German thinker Max Weber once characterized
the modern state as claiming a monopoly on the legitimate use of violence. Although such a monopoly is
impossible in the global arena, international power sometimes seems to depend on monopolizing the most
sophisticated means of perpetrating violence. Today, the United States enjoys a technological edge enjoyed
(briefly) by a few West European powers in the 19th century, when their possession of ironclad steamboats
and Maxim machine guns put the world at their mercy.

Just consider the sheer size of the U.S. defense budget. Yale University historian Paul Kennedy used to
worry about U.S. overstretch. No longer: "The Pentagon's budget is equal to the combined military budgets
of the next 12 or 15 nations," he wrote last September in the Financial Times. "In other words, the US
accounts for 40-45 per cent of all the defence spending of the world's 189 states." The European Union's
(EU) member states collectively spend around $170 billion annually on defense, but the United States
spends more than $300 billion per year and could comfortably increase that figure by 60 percent without
exceeding 5 percent of gross domestic product (GDP)--once seen by Kennedy as the overstretch threshold.

Indeed, dollars alone understate the extent of the United States' military lead. The most compelling
evidence was revealed to the world's television viewers in 1999 in Kosovo and in 2001 in Afghanistan. In
both conflicts, the technical superiority of U.S. forces allowed them to annihilate enemy troops, weaponry,
and other military "assets" while sustaining minimal casualties.

Yet there are two caveats. The first is that one can easily underestimate the speed with which such
technological gaps have closed in the past. The British launch of the Dreadnought in 1906 rendered all
other battleships obsolete. But within a few years, all the great powers had them. The United States'
monopoly on the atomic bomb was equally ephemeral. Today, a great deal of the accuracy of U.S. fighters
and bombers depends on the software that assists pilots in their split-second decision making--software that
could soon replace pilots altogether. Anyone familiar with the civilian software business will know that it is
extremely hard to monopolize a software breakthrough for long. And technologies are transferred
especially quickly when national survival is at stake.

Second, U.S. military superiority has been facilitated by the United States' extraordinary economic growth
of the 1990s, which made substantial defense expenditures suddenly seem insignificant in relative terms.
And in turn, that economic growth could only be harnessed because the United States' political institutions
have been remarkably successful, at least since World War I, in convincing voters to pay taxes or approve
government borrowing to maintain and improve national defense. So power is not just military power; or
rather, military power depends on economic growth and political institutions.

"Diplomacy Allows Weak Powers to Counter Strong Ones"

Correct. This argument has special appeal to Europeans. They know the EU is a military pygmy, even
though Europe's NATO members have, between them, more people under arms than the United States. But
by acting collectively and through the institutions of the postwar international order--such as the United
Nations, the World Trade Organization, and NATO--Europeans may be able to restrain Washington.
Harvard University political scientist Samuel P. Huntington once argued that European integration was the
"single most important move" as the rest of the world responded to U.s. power and that it would ultimately
lead to a "truly multipolar" 21st century. The energy and time the United States expended trying to
persuade European powers (France in particular) to approve of military action against Iraq suggests there is
at least some truth to this view.

Certainly, the ability to form alliances can more than compensate for a power's relative weakness. No one
wrote better about the way that system works than historian A.J.P. Taylor, whose 1954 work The Struggle
for Mastery in Europe remains the classic study of diplomatic power. For it was as much shrewd diplomacy
as military superiority that led Piedmont and Prussia to triumph over their superficially stronger continental
rivals, Austria and France.

There is a nice irony here. Devotees of balance-of-power diplomacy, such as Henry Kissinger, have tended
to dismiss institutions such as the United Nations and its predecessor the League of Nations, which were
established at the instigation of archidealists Franklin D. Roosevelt and Woodrow Wilson, respectively. But
now, European powers are using such supranational institutions--erected in the name of collective
security--in the most realpolitisch way imaginable.

"A Strong Economy Makes a Nation Powerful"

Not necessarily. It's tempting to assume that power is synonymous with a large economy--that big GDP
equals big power. Hence many analysts point to China's huge economy and rapid growth as evidence that
the country will soon gain superpower rank, if it hasn't already. Just project forward the average annual
growth rates of the past 30 years, and Chinese GDP will equal that of the United States and exceed that of
the EU within just two decades.

But GDP doesn't stand for great diplomatic power. If institutions aren't in place to translate economic
output into military hardware--and if the economy grows faster than public interest in foreign affairs--then
product is nothing more than potential power. The United States overtook Great Britain in terms of GDP in
the 1870s. But it was not until World War I that the United States finally overtook the British Empire as a
global power.

In any case, national growth rates in the next 20 years are unlikely to match those of the last three decades.
Depressed Japan's will almost certainly be lower, while growth in the United States might conceivably be
higher, if there is any truth to the claim that investments in information technology during the 1990s
permanently boosted U.S. productivity. And China will have trouble sustaining average annual growth
rates of more than 5 percent in the coming decades. Already the Asian behemoth is suffering serious social
growing pains as market forces rend asunder what was once a command economy. Before 1914, Russia had
the fastest growing economy in Europe. But the ensuing social polarization and war caused Russia's
collapse in 1917.

"Access to Oil is the Key to Power"

No. Sustained economic growth is only possible with access to plentiful, cheap oil. So if petroleum reserves
are the key, wouldn't true power lie with the oil-producing nations of the Arab world?

The realities here are stark. The Middle East accounts for 31 percent of world oil production but just 6
percent of consumption. North America accounts for about 18 percent of world oil production but
consumes 30 percent. Even more sobering, however, are the figures for world oil reserves: The United
States has just 6 percent of them; the Middle East 65 percent. Right now, the U.S. economy depends on the
Persian Gulf-mainly Saudi Arabia-for about 14 percent of its oil consumption, but that figure is bound to
rise. Some experts predict that starting in 2008 supplies of non-OPEC oil will fall steeply and that, barring
major technological breakthroughs, there will be an effective world shortage from 2010.
Nevertheless, oil doesn't necessarily make one powerful, though it certainly can make one rich. The
strategic importance of Middle Eastern oil makes it a safe bet that the United States will seek to increase
rather than diminish its influence in that region. Not only fraq but even Saudi Arabia itself-already an
unstable ally and a breeding ground of the al Qaeda terrorist network-may have to become de facto U.S.
protectorates in the foreseeable future, just as Germany and Japan did after World War II.

"True Power Resides With Global Financiers"

Not at all. Sub-Marxist teenage demonstrators from Seattle to Florence like to claim that power lies with
international financial institutions, particularly the World Bank and the International Monetary Fund (IMF).
This notion is as silly as it gets. The two agencies like to criticize one another, but they share one thing in
common--they are trying to help less developed or transitional economies. Their medicine may not always
be palatable or effective, but that's another matter. If anything, these institutions are not powerful enough.
Much of the time, all they can do is lend money to flaky governments and exhort them to be less flaky.
Some power. Their resources are also far more limited than the antiglobalization rent-a-mob seems to
realize. What the IMF calls its "total resources" amount to approximately $290 billion, but its net lending
capacity is just $69 billion. That's less than a sixth of the annual U.S. social security budget.

Of course, others argue that IMF & Co. are just public-sector fronts for the real powerhouses: multinational
corporations (MNCs). This line of argument is more serious. Between them, the three largest companies in
the world (according to Fortune magazine) have assets worth $550 billion and revenues of a similar order.
They employ more than 1.8 million people. Yet it would be a bold claim to say that Wal-Mart Stores--the
biggest of the three--has power. And even if it seems more plausible to attribute power to the next largest
corporation-Exxon-Mobil--the case shouldn't be overstated.

History has witnessed companies exercising power so directly and successfully that they themselves
became states. The East India Company is the most famous case. No MNC today comes close to wielding
the power that company did when it ruled most of the Indian subcontinent, paying for one of the largest
armies in the world (and one of the largest corporate debts) by relentlessly annexing new territories and
taxing their inhabitants.

But today's multinationals exercise power indirectly. Other than in regions of the world where state power
has crumbled away or become hopelessly contested, they prefer to coexist with governments rather than
replace them. And with good reason--from Russia in 1917 to Iran in 1979, the 20th century repeatedly
demonstrated that even powerful oil companies can be summarily expropriated in the wake of revolutions.
That is not to say that multinational companies have not been known to topple or buy governments. But, in
general, the large and immobile assets of most MNCs make them as vulnerable as their vast resources make
them strong. Nor should it be forgotten that MNCs are owned by multitudes of shareholders. Powerful
though CEOs may be, their power can swiftly be removed if they fail to deliver positive returns to
investors.

So is it the global investors who are powerful? New York Times columnist Thomas Friedman has argued
that real power in the age of globalization is vested in the "electronic herd" of international investors. When
they dumped the Thai baht, the whole Asian economy promptly faltered. It's certainly convenient for
finance ministers to blame their travails on such anonymous forces: the "gnomes of Zurich," as British
Prime Minister Harold Wilson called them after sterling had taken yet another postwar dive. But it's only in
fairy tales that gnomes have power. Saying that global investors rule the world is like saying plankton rule
the sea. There may be an awful lot of them, but without a unifying intelligence they can quite easily get
gobbled up by passing whales. It was international investors, after all, who poured money into countries
like Argentina, Brazil, Mexico, Turkey, and Russia in the decades before 1914. However, when those
countries decided to default on their foreign loans, it turned Out that investor s had no power at all.

"The United States Exerts Influence Through Soft Power"

Not really. Harvard political scientist Joseph S. Nye Jr. coined the concept of "soft power"--the notion that
nontraditional forces such as cultural and commercial goods can exert influence in world affairs. And since
so many of the world's largest multinationals are of U.S. origin, some argue that the products they sell make
American culture attractive and are the key to the real power the United States wields.

But the trouble with soft power is that it's, well, soft. All over the Islamic world kids enjoy (or would like to
enjoy) bottles of Coke, Big Macs, CDs by Britney Spears and DVDs starring Tom Cruise. Do any of these
things make them love the United States more? Strangely not.

Well, perhaps it is not so strange. In the 19th century, Great Britain pioneered the use of soft power though
it projected its culture through the sermons of missionaries and the commentaries in Anglophone
newspapers. Yet it was precisely from the most Anglicized parts of the indigenous populations of the
British Empire that nationalist movements sprang. The archetype was the Bengali babu--better able to
quote William Shakespeare than the average expatriate Brit--who worked for the British by day but plotted
their overthrow by night. Antiglobalization protesters smashing McDonald's windows while clad in Gap
khakis and Nike trainers are today's version of the same Janus-faced phenomenon.

"Consumers, Activists, and Terrorists Wield True Global Power"

No. U.S. consumers may be the motor of the world economy, but they have a qualified kind of power--the
power of the herd, capable of being either an immovable mass or, like those global investors, a stampeding
horde. Indeed, the numerical strength of consumer power tends to be in inverse proportion to the degree to
which it is organized and led.

It has become a cliche that nongovernmental organizations (NGOs) are now powerful international actors
in their own right, the pillars of a nascent global civil society. The figures are doubtless impressive:
Membership of the Worldwide Fund for Nature (WWF), for example, has increased 10-fold since the mid-
1980s to around 5 million, and Green-peace has 2.8 million supporters. These NGOs have considerably
more resources than most international governmental organizations: The World Trade Organization's
annual budget is roughly $100 million, less than a third of the WWF's budget. But the WWF's current
campaign to stop overfishing of the world's oceans is likely to be frustrated by the countless millions of--
you guessed it--individual consumers who just like eating fish more than they like thinking about the future
of the planet. The biggest check on the power of those who actively organize may be the indifference of
those who passively shop.

Others worry that, rather than consumers or activists, the individuals who wield the greatest power are now
lone lunatics with access to large-scale weapons. The historic cheapness, smallness, and destructiveness of
modern weaponry no doubt greatly enhance the power of terrorists. In the face of this kind of power, even
the biggest state and the richest economy seem impotent. That, for many commentators, was the lesson of
September 11: The suicide bomber will always get through.

But the question remains whether blowing oneself and others up is an effective way of deploying power to
achieve a political objective. Killing British civilians has not (yet) secured a united Ireland for the Irish
Republican Army. And somehow it is hard to imagine the United States meekly withdrawing its military
personnel from the Middle East in response to a sustained campaign of terror--if that is indeed what Osama
bin Laden wants to achieve.

"Moral Appeals Have Little Power in International Politics"

Wrong. Didn't Joseph Stalin once ask how many divisions the Pope had? None, it's true. But we should
never underestimate the power of ideology and religion--which certainly has proved more enduring than
the power of the Red Army. Indeed, some would say that, after Mikhail Gorbachev and Ronald Reagan, no
one did more to bring down communism in Eastern Europe than Pope John Paul II. Faith, then, is perhaps
as important a component of power as material resources.

Moreover, a final dimension of power cannot be left out: the psychological. Two things can greatly
magnify or diminish the ability of any entity to project power: first, its own legitimacy in the eyes of its
individual members and second, its credibility in the eyes of other powers.
These are the unquantifiable--but perhaps most important--elements of power. And the world would do
well to remember them. For in the war against global terrorism declared by President George W Bush in
September 2001, they may prove to be the deciding elements.

As things stand, the United States and the terrorist diaspora have both firmly established their credibility,
the latter by destroying the World Trade Center towers, the former by overthrowing the Taliban regime. At
the same time, both appear to have legitimacy in the eyes of their respective constituencies. Certainly, the
U.S. public mood was dramatically changed by September 11. And certainly, support for al Qaeda among
young Muslims seems to remain strong from Karachi to Riyadh. Some deem American patriotism a civil
religion as formidable in its way as Islamic fundamentalism. But is it?

Stamina--the ability of any human organization to sustain a collective effort--depends as much on moral as
on material factors; that is one of the oldest lessons of military history. The Russian army collapsed in 1917
under far less severe conditions than the Russian army endured in 1942, when Stalin's totalitarian
combination of propaganda and coercion preserved his regime's legitimacy.

In theory, democracies should prove equally resilient, even though they rely on consent through
representation more than on coercion. But no one knows for sure. No democracy has ever suffered
privations as colossal as those the Nazis inflicted on the Soviets; the United States in particular has got off
amazingly lightly in all the wars it has fought against external enemies.

Power, then, is partly about monopolizing as far as possible the means of projection (of power), which
mainly include material things: guns, butter, people, money, oil. Today, many of these elements are
becoming more evenly distributed because of differences in growth rates and the speed with which
knowledge--including knowledge with military applications--can be distributed. In that sense, power per se
is becoming dispersed. One nation with a nuclear missile is quite powerful. Twelve nations with nuclear
missiles are each much less powerful. The more proliferation, the less power.

But power is also about morale. In a world characterized by the diffusion of most of the material elements
of power, real power may therefore come to depend on having credibility and legitimacy. Faith cannot
move mountains. But it can move people.

Want to Know More?

For works on military power emphasizing technology and logistics, see The Pursuit of Power: Technology,
Armed Force and Society Since A.D. 1000 (Chicago: University of Chicago Press, 1982) by William H.
McNeill and Supplying War: Logistics From Wallenstein to Patton (New York: Cambridge University
Press, 1977) by Martin van Creveld. For insights into leveraging military assets through diplomacy, read
A.J.P. Taylor's The Struggle for Mastery in Europe, 1848-1918 (Oxford: Clarendon Press, 1954) and F. H.
Hinsley's Power and the Pursuit of Peace: Theory and Practice in the History of the Relations Between
States (Cambridge: Cambridge University Press, 1963).

The classic work on the relationship between economics and politics is Paul M. Kennedy's The Rise and
Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000 (New York: Random
House, 1987). On oil, consult Daniel Yergin's Pulitzer Prize--winning work The Prize: The Epic Quest for
Oil, Money, and Power (New York: Simon & Schuster, 1991). Niall Ferguson's The Cash Nexus: Money
and Power in the Modern World, 1700-2000 (New York: Basic Books, 2001) offers historical perspectives
on the limits and extent of financial power.

In his classic On War, Carl von Clausewitz saw moral factors as crucial on the battlefield. See in particular
the version edited and translated by Michael Howard and Peter Paret (Princeton: Princeton University
Press, 1984). See also Timothy Garton Ash's History of the Present: Essays, S ketches, and Dispatches
From Europe in the 1990s (New York: Vintage Books, 2001).
FOREIGN POLICY has examined international power over the years. See Joseph S. Nye Jr.'s "Soft Power"
(Fall 1990), Devesh Kapur's "Who Gets to Run the World?" (November/December 2000), Stephen D.
Krasner's "Think Again: Sovereignty" (January/February 2001), Robert Skidelsky's "Imbalance of Power"
(March/April 2002), Immanuel Wallerstein's "The Eagle Has Crash Landed" (July/August 2002), and John
Lewis Gaddis's "A Grand Strategy of Transformation" (November/December 2002).

For links to relevant Web sites, access to the EP Archive, and a comprehensive index of related FOREIGN
POLICY articles, go to www.foreignpolicy.com.

Niall Ferguson is Herzog professor of financial history at New York University's Stern School of Business.
His most recent book is The Cash Nexus: Money and Power in the Modern World, 1700-2000 (New York:
Basic Books, 2001).

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