Hegemonic Transition: Global Economic and Security Orders in the Age of Trump (Palgrave Studies in International Relations) 303074504X, 9783030745042

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PSIR · PALGRAVE STUDIES IN INTERNATIONAL RELATIONS

Hegemonic Transition Global Economic and Security Orders in the Age of Trump

Edited by Florian Böller · Welf Werner

Palgrave Studies in International Relations

Series Editors Mai’a K. Davis Cross, Northeastern University, Boston, MA, USA Benjamin de Carvalho, Norwegian Institute of International Affairs, Oslo, Norway Shahar Hameiri, University of Queensland, St. Lucia, QLD, Australia Knud Erik Jørgensen, University of Aarhus, Aarhus, Denmark Ole Jacob Sending, Norwegian Institute of International Affairs, Oslo, Norway Ay¸se Zarakol, University of Cambridge, Cambridge, UK

Palgrave Studies in International Relations (the EISA book series), published in association with European International Studies Association, provides scholars with the best theoretically-informed scholarship on the global issues of our time. The series includes cuttingedge monographs and edited collections which bridge schools of thought and cross the boundaries of conventional fields of study. EISA members can access a 50% discount to PSIR, the EISA book series, here http://www.eisa-net.org/sitecore/content/be-bruga/mci-registrat ions/eisa/login/landing.aspx. Mai’a K. Davis Cross is the Edward W. Brooke Professor of Political Science at Northeastern University, USA, and Senior Researcher at the ARENA Centre for European Studies, University of Oslo, Norway. Benjamin de Carvalho is a Senior Research Fellow at the Norwegian Institute of International Affairs (NUPI), Norway. Shahar Hameiri is Associate Professor of International Politics and Associate Director of the Graduate Centre in Governance and International Affairs, School of Political Science and International Studies, University of Queensland, Australia. Knud Erik Jørgensen is Professor of International Relations at Aarhus University, Denmark, and at Ya¸sar University, Izmir, Turkey. Ole Jacob Sending is the Research Director at the Norwegian Institute of International Affairs (NUPI), Norway. Ay¸se Zarakol is Reader in International Relations at the University of Cambridge and a fellow at Emmanuel College, UK.

More information about this series at http://www.palgrave.com/gp/series/14619

Florian Böller · Welf Werner Editors

Hegemonic Transition Global Economic and Security Orders in the Age of Trump

Editors Florian Böller Department of Political Science University of Kaiserslautern Kaiserslautern, Germany

Welf Werner Faculty of Economics and Social Sciences Heidelberg University Heidelberg, Germany

Palgrave Studies in International Relations ISBN 978-3-030-74504-2 ISBN 978-3-030-74505-9 (eBook) https://doi.org/10.1007/978-3-030-74505-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover image: © Tetra Images/Alamy Stock Photo This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

The election of Donald Trump in November 2016 not only represented a sea change for US domestic politics, but even more disruptively for the traditional hegemon’s global role. Four years later, at the time of this writing, there are numerous signs that the liberal hegemonic order, which structured world politics since the end of the Cold War, has begun to unravel. Neither are all elements of this tectonic shift caused by the 45th US president’s foreign policy, nor do most of them originate in Western politics and policies. In particular, the “rise of the rest”, China’s emergence as a global power, Russia’s renewed assertiveness, and the agency of middle powers, such as Brazil, have paved the way toward a severe contestation of the pillars of the liberal order. This insight also indicates that the disruptive forces tilted against liberal norms and the stability of established regimes in security and economic governance will not disappear after Donald Trump has left the White House on January 20, 2021. Rather, long-term structural changes, within the domestic settings of key states, and in view of regional and global interdependencies, will endure and continue to upend the status quo ante. The aim of this book is to provide a systematic analysis of the ongoing hegemonic transition of the international order—in the realm of economic policies and in terms of security regimes. With an updated concept of hegemonic politics, we offer an analytical framework to address whether, to which extent, and in which regional and policy specific setting the traditional hegemony enacted by the United States has begun to change. Our v

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analysis inspects three key developments: First, the consequences of the changing role of the traditional hegemon, the United States. Second, the reactions among allies of the United States adapting their foreign and security policies, and third, the question how other states beyond North America and Europe position themselves toward the ongoing hegemonic change and contribute to its manifestation. As we highlight longterm developments and the interdependence of domestic and international affairs, this volume is not an attempt to describe a potential “Trump effect” in global politics, but rather to make sense of the shifting patterns of hegemonic politics in various regions and policy fields that have been significantly accelerated since 2016. We began this project with a conference conducted at the Heidelberg Center for American Studies (HCA) at Heidelberg University, Germany, in October 2019. In the course of the development from an academic workshop to an edited volume, the COVID-19 pandemic infused uncertainty and economic turmoil in the middle of an extremely polarized US election year. Our authors were thus given an ambitious task to address timely developments without losing sight of long-term patterns. We are very grateful to all contributors of this volume for embarking with us on this endeavor, and for their dedication to this project. We would also like to extend our gratitude to Prof. Ay¸se Zarakol (Cambridge University) who provided insightful comments at the authors’ workshop and who encouraged us to realize this publication with Palgrave’s International Studies Series. Her groundbreaking work on international hierarchies was a true intellectual inspiration for our attempt to analyze current hegemonic affairs. Dr. Anca Pusca and Aishwarya Balachandar of Palgrave Macmillan provided professional guidance during the publication process, for which we are very thankful. We also thank the anonymous reviewers for their valuable suggestions, which helped improving our analytical framework. Also, we thank Dr. Styles Sass for his meticulous and experienced copy-editing for this volume. At Heidelberg University’s HCA, Nathalie Rauscher provided excellent research assistance and took part in the internal review process, for which we are very grateful. In addition, we wish to thank Ina Schiedermair (University of Kaiserslautern), who conducted a final review of the manuscript with attention to

PREFACE

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detail. Furthermore, we thank Dr. Anja Schüler, Emma Wolf, and Caroline Walter for their professional support during our initial workshop. Without the generous financial support of the HCA, and its pivotal function as a forum of academic exchange on US politics and international affairs, this project would not have been possible. Kaiserslautern, Germany Heidelberg, Germany

Florian Böller Welf Werner

Contents

1

Introduction: Global Order in the Age of Trump Florian Böller and Welf Werner

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Part I Declining Support: The Domestic Sources of US Hegemony 2

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From Internalization to Externalization: The Impact of State-Society Relationships on US Foreign Policy Christian Tuschhoff

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Broken Social Contract: The Domestic Roots of US Hegemonic Decline in the World Welf Werner and Christian Lammert

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Part II Abdication of Leadership: US Foreign Policy and the Politics of Hegemonic Ordering 4

A Crisis from Within: The Trump Administration and the Contestation of the Liberal International Order Tim Heinkelmann-Wild, Andreas Kruck, and Benjamin Daßler

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CONTENTS

Wasting Hegemony in the Global Trading System: Trump’s Trade Policy Andreas Falke Decay of US Economic Hegemony? Intellectual Property Rights, Dollar Centrality, and US Geo-Economic Power Herman Mark Schwartz

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Leading by Example or Extortion? US Leadership Role Transition and the Non-Proliferation Regime Gordon M. Friedrichs

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Whither the Liberal Security Order: The End of NATO as We Know It? Simon Koschut

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Part III 9

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Challenging Western Hegemony: Varying Patterns of Contestation

Rising Hegemon? China’s International Ambition and the Politics of Hegemonic Ordering in Asia During the COVID-19 Pandemic Sebastian Harnisch

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Spoiler State? Russia’s Status Seeking and Hegemonic Ambitions Suzanne Loftus

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Charting a Course Through Stormy Seas: Indian Foreign Policy and the Global Hegemonic Shift David L. Jacobs and Patrick B. Kessler

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Dual Hegemony: Brazil Between the United States and China Luis L. Schenoni and Diego Leiva

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Part IV

Conclusion & Perspectives: Hegemonic Transition and the Politics of International Order

CONTENTS

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Fast-Track Towards a Hegemonic Transition? COVID-19 and the Decline of US Hegemony Florian Böller Conclusion: A Hegemonic Transition? Florian Böller and Welf Werner

Index

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259 281

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List of Contributors

Florian Böller Department of Political Science, University of Kaiserslautern, Kaiserslautern, Germany Benjamin Daßler LMU Munich, Munich, Germany Andreas Falke University of Erlangen-Nürnberg, Nürnberg, Germany Gordon M. Friedrichs Heidelberg Center for American Studies (HCA), Heidelberg University, Heidelberg, Germany Sebastian Harnisch Heidelberg University, Heidelberg, Germany Tim Heinkelmann-Wild LMU Munich, Munich, Germany David L. Jacobs University of Cologne, Cologne, Germany Patrick B. Kessler University of Cologne, Cologne, Germany Simon Koschut Free University of Berlin, Berlin, Germany Andreas Kruck LMU Munich, Munich, Germany Christian Lammert John F. Kennedy Institute for North American Studies (JFKI), Freie Universität (FU) Berlin, Berlin, Germany Diego Leiva School of Government and International Relations, Griffith University, Brisbane, QLD, Australia

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LIST OF CONTRIBUTORS

Suzanne Loftus George C. Marshall European Center for Security Studies, Garmisch-Partenkirchen, Germany Luis L. Schenoni Department of Political Science and Public Administration, Konstanz University, Konstanz, Germany Herman Mark Schwartz Inland University College, Elverum, Norway Christian Tuschhoff Johann-Wolfgang-von-Goethe University, Frankfurt/Main, Germany Welf Werner Faculty of Economics and Social Sciences, Heidelberg Center for American Studies (HCA), Heidelberg University, Heidelberg, Germany

Abbreviations

ALP BASIC BIS BRI BRICS CELAC CIA COSBAN COVID-19 CPEC DARPA DSB E3 E3+3 EA19 EBITDA EC ECSC EU EU28 FDI FED FG2k FTA FTAA

Active Labor Market Policy Brazil, South Africa, India, China Bank of International Settlements Belt and Road Initiative Brazil, Russia, India, China, South Africa Community of Latin American and Caribbean States Central Intelligence Agency China-Brazil High-Level Coordination and Cooperation Committee Coronavirus Disease 2019 China-Pakistan Economic Corridor Defense Advanced Projects Research Agency Dispute Settlement Body Great Britain, France, and Germany Great Britain, France, Germany (E3) + USA, Russia, China Euro Area 19 (Eurozone) Earnings Before Interest, Taxes, Depreciation and Amortization European Communities European Coal and Steel Community European Union European Union (including United Kingdom) Foreign Direct Investments Federal Reserve Bank Forbes Global 2000 Free Trade Agreement Free Trade Area of the Americas xv

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ABBREVIATIONS

G7 GATT GDP HK HST IAEA IBRD IBSA IGO IMF INF INSTEX IOM IPR IR ITO JCPOA JPA LIO LMEs MENA Mercosur MFN NAFTA NATO NLD NPT OECD OPCAT PISA PLP PTA QSD R&D RCEP SAARC SOEs TAA TPP TTIP UAE

Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States) General Agreement on Tariffs and Trade Gross Domestic Product Hong Kong Hegemonic Stability Theory International Atomic Energy Agency International Bank for Reconstruction and Development India, Brazil, and South Africa Intergovernmental Organization International Monetary Fund Intermediate-Range Nuclear Forces Treaty Instrument in Support of Trade Exchanges International Organization for Migration Intellectual Property Right International Relations International Trade Organization Joint Comprehensive Plan of Action Joint Plan of Action Liberal International Order Liberal Market Economies Middle East and North Africa Southern Common Market Most Favored Nation North American Free Trade Agreement North Atlantic Treaty Organization The Netherlands Non-Proliferation of Nuclear Weapons Treaty Organization for Economic Co-operation and Development Optional Protocol to the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment Programme for International Student Assessment Passive Labor Market Policy Preferential Trade Agreement Quadrilateral Security Dialogue Research and Development Regional Comprehensive Economic Partnership South Asian Association for Regional Cooperation State-owned Enterprises Trade Adjustment Assistance Program Transpacific Partnership Agreement Transatlantic Trade and Investment Partnership United Arab Emirates

ABBREVIATIONS

UK UN UNASUR UNFPA UNGA UNHCR US USMCA USSR USTR VER WTO WWII

United Kingdom United Nations Union of South American Nations United Nations Population Fund UN General Assembly United Nations Refugee Agency United States United States Mexico Canada Agreement Union of Soviet Socialist Republics United States Trade Representative Voluntary Export Restraint World Trade Organization World War II

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List of Figures

Fig. 4.1 Fig. 12.1 Fig. 13.1 Fig. 13.2

Liberal hegemony and the move toward illiberalism and isolationism Implications of dual hegemony for subordinate state autonomy Stringency of governmental response between regime types Stringency of governmental policy measures over time (selected countries)

73 235 263 267

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List of Tables

Table 4.1 Table 6.1 Table 6.2

Table 6.3 Table 6.4

Table 7.1 Table 8.1 Table 13.1 Table 14.1

Empirical manifestations of illiberalism and isolationism Cumulative current account deficits and surpluses, 1992–2018, $ bil and % of total Top 10 IPR-based US firms: Share of global and sector cumulative profits for all Forbes Global 2000 firms, 2005–2019, plus global and national rank Profit share of Forbes Global 2000 firms by country, and country share of global GDP, 2005–2019 Country shares of cumulative sectoral profits and sector share of total global profits by Forbes Global 2000 firms, 2005–2018, % Different types of leadership roles and subsequent social settings State of the normative order of the transatlantic security community during the Trump years Key health and economic indicators of the COVID-19 pandemic 2020 Typology of foreign policy reactions to hegemonic transition

80 107

115 116

117 132 160 265 285

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CHAPTER 1

Introduction: Global Order in the Age of Trump Florian Böller and Welf Werner

Introduction The current international order is unraveling. Its traditional hegemon, the US, has ceased to unequivocally support the institutions it helped to foster. US President Donald Trump’s “America First” policy has exacerbated ongoing forces pushing international politics toward a hegemonic transition. China’s power surge, contestation by smaller states, and the West’s internal struggles with populism and economic discontent have undermined the liberal order from the outside, and from within. While a diagnosis of this crisis is hardly new (Acharya, 2018; Eilstrup-Sangiovanni

F. Böller (B) Department of Political Science, University of Kaiserlautern, Kaiserslautern, Germany e-mail: [email protected] W. Werner Faculty of Economics and Social Sciences, Heidelberg University, Heidelberg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_1

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& Hofmann, 2019; Friedrichs et al., 2019), its sources, scope, and underlying politics are still up for debate. This volume offers an assessment of the ongoing transformation of hegemonic order and its domestic and international politics. In doing so, it challenges the conventional wisdom in three ways. First, the role of the US under the Trump administration with regard to the liberal order is more complex than it may seem. It varies across regimes (e.g., trade and security), regions (e.g., Asia, Europe, the Global South), and is domestically contested by actors within Congress and society. After all, states are not unitary actors whose governments are free to decide the course of their countries, regardless of domestic institutions, voters’ interests, and partisan politics. The upending of traditional leadership paths by the Trump administration, in fact, was contested by traditionalists within the executive, and, more importantly, within the legislature.1 Thus, this argument demands a closer look at the connection between domestic politics and international relations, and the resulting patterns of hegemonic politics across policy fields and regions. Second, there is significant variance in the responses of state and nonstate actors toward this instability and disruptive transformation. Some actors forge new alliances, claim authority over policies or within institutions.2 Others, in particular allies of the US, such as Poland within NATO, or Israel, who significantly depend on the hegemon’s security provisions, reject leadership roles for themselves and try to entice the US to maintain its traditional role. Middle powers such as India and Brazil may find themselves wedged between the US and China, and their room for strategic maneuvering will be severely limited. It is thus a central aim of this volume to dissect contestation and support toward the current hegemonic order (and the traditional hegemon) among different actors. Third, while the topical focus of our endeavor is the age of Trump and the crisis of the international order, we recognize the longer-term trends that have paved the way toward the current hegemonic transition. Economic discontents within large swaths of the electorates in the 1 One example of this contestation is the bipartisan opposition in Congress against the Trump administration’s plan to cut funding for foreign aid programs (see Tama, 2019). 2 Examples include the European Union’s attempt to foster its integration in foreign and security policy (see Böller, 2020; Ringsmose & Webber, 2020), and China’s push for influence within global institutions, such as the World Health Organization in the wake of the Coronavirus pandemic (see Gauttam et al., 2020).

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US and in Europe have, for example, propelled populist and nationalist movements that, in turn, undermined support for maintaining policies and institutions within the liberal order (see Inglehart & Norris, 2016; Lammert and Werner in this volume). Furthermore, the traditional bipartisan foreign policy consensus, which provided the domestic backbone of the liberal order, has begun to erode since the end of the Cold War (see Schultz, 2017). In that regard, we hold that the Trump administration and its policies are a symptom rather than the cause of the unraveling of global order (see Nye, 2019, p. 76). Consequently, the crisis of the global order will not simply vanish with the leadership change in the White House on January 20, 2021. Against such a backdrop, this volume contributes to the burgeoning discussion within the international relations (IR) literature by offering theoretically informed case studies. Our reading of hegemony diverges from a static concept toward a focus on the dynamic politics of hegemonic order. This perspective includes domestic support and the demand for specific hegemonic goods, the contestation and support by other actors within distinct layers of hegemonic orders, and the underlying bargaining between the hegemon and subordinate actors.

Liberal Order in Crisis The current “liberal order” is structured along several interdependent layers. On the level of agency, the order is structured by asymmetrical relationships, in which some states bear more responsibility than others. The US has traditionally acted as a hegemon, which entails providing crucial public goods to stabilize that order (Ikenberry, 2011). Its allies have supported that arrangement, not only by contributing materially to sustain the order, but also by infusing legitimacy. The notion of legitimacy is crucial here in distinguishing hegemonic orders from other types of hierarchies that rest primarily on coercion (see Prys & Robel, 2011). With the support of US leadership, key norms and principles that helped to regulate international affairs were established. In that regard, Copelovitch et al. (2020) point to the principles of state sovereignty, economic liberalism, and rule-based multilateralism. Furthermore, the liberal order rests on institutional pillars that lock in these core ideas and thereby secure past agreements regarding the ideational underpinnings of the order. Examples of these institutions include international organizations in the economic

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realm, such as the WTO, IMF, and World Bank, or in the realm of security, the United Nations Security Council (see Alter et al., 2018; Peters & Karlsson Schaffer, 2013). Since the end of World War II, the liberal international order has undergone several periods of transformation, contestation, and crisis. The breakdown of the Bretton-Woods system in the early 1970s led to a transformation of economic governance. Through capital account liberalization, this opened up new frontiers for US hegemony in the realms of international capital markets, but also helped to pave the way for rapid economic development in the Global South, and the unraveling of the welfare state in liberal OECD countries such as the US and Great Britain (Werner, 2002). The core norm of national sovereignty was re-interpreted after the end of the Cold War when Western states promoted the idea of a “responsibility to protect,” that served to legitimize liberal wars to defend human rights (see Bellamy, 2009; Geis et al., 2006). It is equally important to note that states and non-state actors have chosen to support and contest the liberal order to varying degrees. For example, during the Cold War era, the regional and functional scope of the liberal order was clearly circumscribed and precluded from taking a more active role in global peacekeeping operations by Soviet hegemony over Eastern Europe, and its opposition within the UN Security Council (see Chesterman, 2002, p. 299). Furthermore, the Great Recession of 2008 and 2009 led to severe economic disruptions among Western democracies and was interpreted as a fundamental crisis of the liberal order (Guillén 2019, p. 87). While crisis, transformation, and contestation are thus the rule rather than the exception for the liberal order, the current situation differs from previous instances insofar as the attempt to undermine the order originates from the core, rather than the periphery. For the first time since the inception of the liberal order, the role of the hegemon has been fundamentally transformed. Under President Trump, the US has broken with core features of its traditional role as a guardian of the liberal world order (see Cooley & Nexon, 2020). There are at least two consequences of this shift. First, support for the liberal order by the current hegemon is diminishing and thus destabilizing the order from within. The Trump administration strives to overhaul the rules and principles of the international order that its predecessors helped to establish. The US increasingly externalizes the costs of leadership and deflects the negative effects of the liberal order—in

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particular, those resulting from economic liberalization (see Tuschhoff in this volume). Thus far, one of the distinct features of US hegemony has been the self-limitation of its material power by adhering to the universal norms, rules, and institutions within a liberal world order (Ikenberry, 2011, p. 150).3 Second, and related to the previous point, the demand for liberal hegemony is in decline as well. This insight addresses the notion that hegemony also implies relational aspects. Hegemonic orders establish power- and rules-based relations between a leader and followers, and the liberal variant in particular hinges on the continuous willingness of subordinate actors to support America’s course, such as within the transatlantic realm (Friedrichs et al., 2019). Today, however, there is considerable evidence that support for US leadership among key audiences, its allies and partners, as well as their societies and businesses is diminishing (see Alcaro, 2019; Börzel & Zürn, 2020; Jervis et al., 2018; Lehti et al., 2020).

Hegemony as an Analytical Framework This volume employs the concept of hegemony to provide an analytical framework to grasp the current shifts in international relations and the crisis of the liberal international order. Of course, other analytical perspectives would have been available as well, since scholars have long debated to what extent, in which context, and why the supposed anarchy between states is layered by rules, principles, institutions, and other manifestations of social relations (see Böller & Harnisch, 2021). Different concepts, such as hierarchies (Lake, 2007; Zarakol, 2017), unipolarity versus multipolarity (Ikenberry et al., 2009), empire (Nexon & Wright, 2007), or international society (Bull & Watson, 1984; Dunne & Reus-Smit, 2017), share an interest in material differentiation and social stratification of international orders, as well as the resulting manifestations and contestations within that order. We argue that the concept of hegemony is particularly suited to grasp ongoing symptoms of crisis, transformation, and contestation in the liberal order as it enables one to address different aspects of those empirical phenomena. In particular, it helps to account for the transformation of leadership by the US, and to explore how other states react to this shift. 3 Nota bene, unilateral strategies (e.g., the Iraq War in 2003) frequently contradicted hegemonic self-restraint.

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Furthermore, hegemony is a sufficiently broad concept that encompasses distinct elements both in terms of material power and immaterial norms and rules within global affairs. Since its scholarly inception, the concept of hegemony has undergone several periods of innovation. In a stylized, and much condensed account, we can broadly distinguish three perspectives (see Ikenberry & Nexon, 2019; Schenoni, 2019). The first generation of hegemony studies focused on systemic outcomes, such as system-wide wars versus stability, material capabilities, and great power relations. On the one hand, Hegemonic Stability Theory considered the role of a hegemonic power as crucial in providing public goods, both in the realm of trade and economic governance (Keohane & Nye, 1977; Kindleberger, 1973), and security (Gilpin, 1981). On the other hand, Power Transition Theories argued that hegemonic decline may lead to interstate conflict if the declining hegemon is threatened by emerging powers (Lemke & Werner, 1996; Organski & Kugler, 1980). Following this first generation of hegemonic studies, scholars began to disentangle the durability of the liberal international order and analyze the conditions for balancing behavior vis-à-vis the hegemon. Against the historical background of the end of the Cold War, these studies focused primarily on the shifting patterns of US primacy and contestation by lesser states (see Brooks & Wohlforth, 2005; Kelley, 2005). At the same time, the analytical scope became wider and not only included the material underpinning of power, but also addressed immaterial aspects such as authority, legitimacy, and status (Hurd, 2005; Larson & Shevchenko, 2010; Wolf, 2011). Finally, the most recent trend in the literature on hegemony—what Ikenberry and Nexon (2019) termed “hegemonic studies 3.0”—is particularly interested in the politics of hegemonic ordering. Here the questions are how leading states bargain with lesser actors and to what extent, with which tools hegemonic order is contested, and how to explain the resilience of the order vis-à-vis ongoing symptoms of crisis and transformation (Friedrichs et al., 2019; Norrlof, 2017; Norrlof et al., 2020; Williams et al., 2012). Rather than focusing on the broader material, institutional, and ideational tenets of international order, these studies focus on the making of hegemony through different agents (see Schenoni, 2019, p. 8). Building on this discussion, we understand hegemony as a type of hierarchical order that is characterized by:

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a. a specific distribution of material capabilities that enables the leading actor to provide necessary collective goods to the order, and/or to enforce its interests against lesser actors within the order; b. mutually agreed rules, norms, and institutions that stabilize the order, and that are significantly shaped by the leading actor; c. asymmetrical relationships between the leading actor and subordinate states, whereby the hegemon has the intention to provide leadership, and lesser actors choose to recognize the hegemon by supporting the leader, and/or by participating in core institutions, and obeying to key rules and norms of the order. This relationship is understood as a dynamic constellation in which hegemonic bargaining takes place between the leader and subaltern states. Hegemony thus includes not only material stratification and the predominance of one actor in terms of military resources and economic power. However, material capabilities are a necessary condition for the hegemon to maintain stability within the order. Beyond the material dimension, the concept also includes ideational aspects (see Bailly Mattern, 2005), since the concrete form of hegemony is characterized by specific rules and norms (as in the case of the “liberal” hegemonic order). It follows that the transformation or breakdown of a hegemonic order can be identified if one or more of the following processes take place: (1) the material configuration significantly shifts, so that the leading state is unable to fulfill its function as a hegemon; (2) core norms, rules, and institutions break down (either because they are replaced by new arrangements, or because they are contested by actors within the order); (3) social relations between leaders and followers change (either if the leading state is no longer willing to maintain its leadership role, or if subordinate states no longer recognize the authority of the hegemon).

Key Questions for the Individual Chapters The specific hegemonic setting varies over time, regions, policy areas, core principles, and norms, as well as material configuration. This means that a hegemonic order might produce distinct outcomes; for example, concerning security relations or a specific region. Indeed, one can see that the focus of US hegemonic ordering has shifted significantly from Europe, to the Middle East, and most recently, to Asia since the end of

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the Cold War. The strategies of hegemons will also include a varying mix of domination and persuasion. Lesser states will choose to support or challenge the leading state in various ways. Russia, for example, has shifted its deference toward the liberal order in the early post-Cold War era to a new assertiveness that includes interference in foreign elections and aggressive actions to destabilize the European security architecture. China, on the other hand, sought to cast itself as a leading actor, claiming new responsibilities to regulate international affairs, such as in the realm of trade with the Regional Comprehensive Economic Partnership (RCEP) signed in November 2020. This was in stark contrast to the Trump administration, which had withdrawn the US signature from the Trans-Pacific Partnership (TPP) in January 2017. Furthermore, the ability of hegemons to provide a leading role within the order might also wax and wane over time. For example, the inability of the Soviet Union to alleviate the economic situation within the Eastern hegemonic order contributed to the rise of opposition movements within these countries and ultimately resulted in a breakdown of the order. A deterioration of the US as a global hegemon is often associated with the relative decline in material superiority. However, leading states not only need the resources to maintain a leadership role, but also domestic support. This is often difficult to secure, as the retention of a leadership role is costly and democratic polities, in particular, provide guardrails that prevent the costs of imperial overstretch being externalized at the expense of powerful societal groups (see Regilme, 2019; Tuschhoff in this volume). The individual chapters therefore aim to provide answers to the following questions: 1. Acknowledging, as noted above, that hegemonic relationships are characterized by some degree of variation with regard to specific dimensions, the chapters will need to define how the current liberal order is characterized in the respective policy field and/or regional area under investigation. For example, liberal hegemony in South East Asia might entail a significantly different mix of norms and rules than hegemonic relations in global trade or in the field of non-proliferation. 2. How do the hegemon and other actors under investigation relate themselves to the current order? This entails, on the one hand,

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the politics of ordering by the hegemon, and on the other hand, the relationship of other actors toward the hegemonic leader. Both leading and lesser actors conduct themselves within a setting of rules, norms, and institutions. The positioning toward the leader, and toward institutional aspects of the order, might diverge in nontrivial ways. Can we identify support, contestation, or modification in the relationships and/or behavior of the various actors? 3. What are the key processes, mechanisms, and sources that drive the behavior of the actors and their relationship within the hegemonic order? This question pertains to the causes of change, or the factors that contribute to stability. This edited volume will provide different answers to this puzzle: Some authors will argue that domestic processes are key to understand the current situation (thus employing a liberal theoretical perspective), while others focus on structural explanations (neorealism), or the role of norms and values constituting actors’ interests (constructivism). In methodological terms, the chapters undertake structured and theory-based case studies, presenting careful empirical observation of the respective regional and policy-specific focus areas. 4. Based on consideration of questions 1–3, and in line with the concept of hegemony outlined above, authors are asked to provide an evaluation of whether we are witnessing a hegemonic transition in the respective policy area or regarding the behavior of the actors under investigation. 5. In conclusion, the chapters will offer a tentative outlook of whether the analyzed patterns indicate stability or instability of the current order.

Structure of the Book The edited volume is structured along three major themes: (A) domestic sources of US hegemonic politics; (B) its repercussions in terms of hegemonic ordering in the realm of security and economic policies; (C) the politics of hegemonic contestation among key competitors. Following the introduction, Part I of the volume addresses the domestic sources of US hegemonic politics by looking first at the impact of societal change and its implications for US foreign policy. Here, the argument is that domestic politics and societal preferences limit the ability of the US to enact a leadership role.

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Christian Tuschhoff contends that whether or not the US provides the leadership required to maintain a liberal international order depends, among other factors, on social relationships in American domestic politics. His chapter argues that domestic structures largely determine what kind of hegemony the US provides to international relations and whether or not it modifies its traditional role. A hegemonic power can either internalize and absorb costs of sensibility and vulnerability, or it can deflect these costs and thereby externalize them. Tuschhoff explains that the Trump administration pursues the externalization type of hegemony, which cuts out several of the key elements of international liberalism, thereby attempting to burden other states with the costs of public goods provision in international affairs. In doing so, it is both a response to changing social relationships in domestic politics and its driver. The second chapter of Part I focuses on socioeconomic conditions within the US. It argues that the traditional backbone of US hegemonic power projection has been broken due to the growing discontents of globalization and liberalization in the economic sphere. Christian Lammert and Welf Werner hold that the liberal world order after 1945 was grounded on successful domestic economic and social policies that provided Americans with unprecedented levels of economic growth and participation, as well as increasing social protection. While enjoying the blessings of technological leadership, successful countercyclical policies, and growing opportunities in the economic system, US citizens supported government actions to expose US labor markets to the cold winds of international competition through international trade liberalization. However, since the 1970s, the domestic social and economic premises of this socioeconomic contract started to crumble. Today, Lammert and Werner argue, the broken socioeconomic contract at home made Americans prone to messages of economic nationalism—and a retreat from US liberal hegemony. Part II of the book considers cases of the politics of hegemonic ordering by the US vis-à-vis subaltern actors. The first two chapters of Part II investigate economic relations, trade, and the geo-economic power of the US and the implications of these for the current international order. They highlight how the Trump administration abandoned the traditional leadership role of the US and thus document a shift in the politics of hegemonic ordering. Andreas Falke outlines US President Trump’s opposition to the rulebased trading system in the regional, as well as the multilateral context.

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Falke argues that Trump is undermining liberal hegemony in trade policy—understood as a leadership role of the US in advancing trade liberalization in a multilateral and regional context. As Falke explains, the reasons for the abandonment of the role are not only the rise of global competitors and technological challenges, but also the electoral incentives that an attack on the established trading order offers among large swaths of the American population. By refusing to play a constructive role in maintaining and developing the world trading system, the Trump administration is giving up any leadership claims in this area. This situation does not lead to a hegemonic transition per se, but rather to disruption and fragmentation of the current liberal order. Addressing yet another traditional pillar of US hegemonic power, Herman Mark Schwartz assesses economic politics under Trump. Schwartz argues that after the 1990s, intellectual property rights (IPRs) were a central condition for maintaining a hegemonic role. US military power rested on technological dominance generated through investment in basic R&D. In turn, US firms commercialized that R&D, and protected their profit streams with IPRs. Profitability created a huge pool of US assets that could be traded for real goods, making chronic US trade deficits acceptable to its trade partners. Moreover, the US projected its preferred and ideologically justified IPR regime into international law through various trade agreements. Assets whose value rested implicitly on profits generated by IPRs made it possible to run continual trade deficits without damage to the US dollar. But those deficits eroded the domestic social base for an open trading regime, contributing to the election of the more nationalist and de-globalizing Trump administration. That administration deinstitutionalized foreign policy, withdrew from agreements that would have expanded protection for IPRs of both US and foreign firms, and tried to defund the US science base, while scaring away immigrant researchers. Schwartz thus concludes that IPRs played a crucial role in creating and, through a process of endogenous decay, weakening US hegemony. The next two chapters focus on security relations, investigating the cases of the global non-proliferation regimes and transatlantic security. In both fields, the US role underwent a significant change, while allies face varying possibilities to retain the function of the regimes. Finally, a case study reviews how the Trump administration’s approach toward international institutions undermines the basic pillars of the liberal order.

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Gordon Friedrichs’ chapter addresses the question of US hegemonic transition under the Trump administration via an assessment of America’s international leadership role within the non-proliferation regime. Nuclear proliferation is a particularly interesting policy area because leadership changes do not correspond with changes to the material asymmetry of US hegemonic order. The chapter suggests that role transition is usually preceded by role conflict but is only consequential for interstate hegemonic orders when both leader and followers choose new roles for themselves in response. So far, however, Friedrichs cannot detect a hegemonic transition despite US leadership role transition and serious role conflicts, because other actors, such as the EU, have shied away from claiming new roles for themselves. Focusing on NATO, Simon Koschut examines frictions pertaining to a cornerstone of the traditional US-led liberal order in the realm of security. While on the one hand, President Trump did not miss any opportunity to weaken NATO, Koschut holds that, on the other hand, his administration strengthened the transatlantic alliance through material and strategic reinforcements. Applying Deutsch’s security community concept (Deutsch et al., 1957), the chapter aims to examine this puzzle on three levels: a value level, a behavioral level, and a communication level. It identifies considerable deficits at all three levels. At the same time, Koschut finds that even though the current threat to NATO is real, there is little evidence that the Trump administration is interested in disbanding NATO altogether. Koschut therefore contends that the Trump administration sees NATO primarily as a military defense alliance, rather than the value-based security community it has developed into since its foundation. This can be interpreted as a different kind of hegemonic order within the transatlantic realm. Tim Heinkelmann-Wild, Andreas Kruck, and Benjamin Daßler evaluate how the US has turned against some of the major multilateral institutions that underpin the current hegemonic order. Their chapter claims that liberal hegemony can be regressive in two ways: by illiberalism as well as isolationism. The authors illustrate both developments with examples of US contestation of international institutions. The combination of illiberalism and isolationism characterizes the turn away from liberal hegemony by the US, and drives the crisis of the liberal order. Although some of these recent developments could be reversed under a less nationalist administration, the analysis indicates that the days of liberal hegemony may be numbered.

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While Part II focuses on the shifting US role and its repercussions for Western allies and the central economic and security institutions of the liberal order, Part III investigates how competitors within the traditional order respond to hegemonic transition. Here, it becomes clear that states such as China, India, Russia, and Brazil retain agency over the politics of hegemonic order to varying degrees. Suzanne Loftus investigates Russia’s positioning toward the hegemonic order and vis-à-vis the US. In particular, Russia’s recent actions in Ukraine and its interference in democratic elections in Europe and the US have been characterized as aggressive attempts to destabilize the liberal order. The chapter takes a neorealist perspective to analyze these trends and contends that structural changes in the international system allow Russia to gain more influence and project its interests abroad. Instead of a fullon hegemonic transition, Loftus identifies a shift toward a multipolar world order. While the US is still considerably more powerful than Russia, Moscow has retained the ability to contest liberal ordering principles, such as human rights and democracy promotion. It has also used the retrenchment of US hegemonic grasp in the Middle East to expand its influence beyond the traditional Russian “near abroad.” India is regarded by many observers as a rising power in global and regional affairs. David Jakobs and Patrick Kessler analyze the question of how India is reacting to the ongoing global shift. India is here a highly relevant case due to its regional proximity to China, and its longstanding cooperation with the US in security policies. To approach this analysis, the authors first inspect the specific and preeminent rules, norms, and institutions of the regional order in South Asia, and, in a second step, zoom in on the underlying factors influencing Indian foreign policy. Jakobs and Kessler conclude that India’s foreign policy is neither fully challenging, nor completely supporting the US and the existing institutional arrangements in the region. Indian foreign policy initiatives are rather contingent on Indo-Pakistani relations and the development of an accelerating US-China competition. Luis Schenoni and Diego Leiva inspect the positioning of another middle power wedged between the US und China: Brazil. To understand recent shifts in Brazilian foreign policy, the authors develop the concept of “dual hegemony.” Schenoni and Leiva propose that states firmly under the umbrella of a hegemon and insufficiently powerful to challenge a hierarchical order may appear to successfully dispute it when true challengers, such as China, create an overlapping hierarchy. These dual hegemonies

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produce foreign policies that subaltern governments have incentives to portray as a manifestation of their own agency, when, in reality, the pull is largely beyond their control. This becomes manifest by the impossibility of middle powers to completely align with either hegemon or challenger even when they want to. Applied to the case of Brazil, the authors show that while the divergence from Washington during the Cardoso and Lula eras has usually been depicted as a successful quest for autonomy, it is impossible to disentangle this move from a parallel pull toward China that acted as a permissive condition. The periods during the Temer and Bolsonaro governments underscore that, even when Brazil wants to bandwagon with the US, dual hegemony continues to act as a constraint. Turning to the most significant challenger of US hegemonic leadership, Sebastian Harnisch reviews China’s foreign policy positioning. Focusing on the hegemonic rivalry between China and the US in the wake of the COVID-19 pandemic, Harnisch employs a role theoretical perspective to show that China’s ambitious international leadership claims have yielded limited results. While the Trump administration has failed as a public goods provider to its own people and the international community, Harnisch argues that this has not (automatically) enabled China to raise international acceptance for its self-ascribed role as a global public health provider. Moreover, the way the US neglected its leadership role by trying to shift blame onto China and engaging in populist-inspired vaccine nationalism incentivized the Chinese government to overreach its role (re-)making by promoting Chinese selective largesse as public goods production and by proclaiming the superiority of the Chinese response when most nations expected a more learned and humble demeanor. The volume concludes with two chapters. Analyzing the implications of the current COVID-19 pandemic for global order, Florian Böller argues that the crisis exacerbates the decline of the US in view of social and economic ramifications. Domestically, the US has been severely hit by staggering numbers of infections and deaths, laying bare the deficiencies of polarized domestic policies and specifically its healthcare system. In terms of welfare and social policies, the US lacks the political consensus to devote the necessary resources to mitigate the economic costs of the pandemic. At the same time, China’s swift economic recovery enables its leadership to realize international ambitions, portraying itself as the global economic powerhouse. The pandemic also entails implications for international institutions, in particular for the World Health Organization,

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as Böller argues. Here, the Trump administration withdrew its support, while China continues to expand its influence within the organization. The chapter thus suggests that the pandemic serves as a catalyst for a hegemonic transition as it accelerates the decline of the US relative to its peer competitor. The final chapter summarizes the findings across policy fields and regions, and compares the variant strategies of actors to cope with the ongoing transformation of global order. While the empirical findings vary among the chapters as they investigate specific constellations of actors and institutions constituting the politics of hegemonic order, the concluding chapter also highlights the scope of the ongoing transition. A new hegemonic order may not have fully materialized yet, but the previous order has been contested from within, and from the outside, rendering a return to the status-quo ante unlikely.

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Jervis, R., Gavin, F. J., Rovner, J., & Labrosse, D. N. (Eds.). (2018). Chaos in the liberal order: The trump presidency and international politics. Columbia University Press. Kelley, J. (2005). Strategic non-cooperation as soft balancing: Why Iraq was not just about Iraq. International Politics, 42(2), 153–173. Keohane, R. O., & Nye, J. S. (1977). Power and interdependence: World politics in transition. Little, Brown and Company. Kindleberger, C. (1973). The world in depression 1929–1939. University of California Press. Lake, D. A. (2007). Escape from the state of nature: Authority and hierarchy in world politics. International Security, 32(1), 47–79. Larson, D. W., & Shevchenko, A. (2010). Status seekers: Chinese and Russian responses to U.S. primacy. International Security, 34(4), 63–95. Lehti, M., Pennanen, H.-R., & Jouhki, J. (Eds.). (2020). Contestations of liberal order: The west in crisis. Palgrave Macmillan. Lemke, D., & Werner, S. (1996). Power parity, commitment to change, and war. International Studies Quarterly, 40(2), 235–260. Nexon, D., & Wright, T. (2007). What’s at stake in the American empire debate. American Political Science Review, 101(2), 253–271. Norrlof, C. (2017). Hegemony, hierarchy, and unipolarity: Theoretical and empirical foundations of hegemonic order studies. In W. R. Thompson (Ed.), Oxford research encyclopedia of politics. Oxford University Press. https://doi. org/10.1093/acrefore/9780190228637.013.552. Norrlof, C., Poast, P., Cohen, B. J., Croteau, S., Khanna, A., McDowell, D., Wang, H., & Winecoff, W. K. (2020). Global monetary order and the liberal order debate. International Studies Perspectives, 21(2), 109–153. Nye, J. (2019). The rise and fall of American hegemony from Wilson to Trump. International Affairs, 95(1), 63–80. Organski, A. F., & Kugler, J. (1980). The war ledger. University of Chicago Press. Peters, B., & Karlsson Schaffer, J. (2013). The turn to authority beyond states. Transnational Legal Theory, 4(3), 315–335. Prys, M., & Robel, S. (2011). Hegemony, not empire. Journal of International Relations and Development, 14(2), 247–279. Regilme, S. S. (2019). The decline of American power and Donald Trump: Reflections on human rights, neoliberalism, and the world order. Geoforum, 102(June), 157–166. Ringsmose, J., & Webber, M. (2020). Hedging their bets? The case for a European pillar in NATO. Defence Studies, 20(4), 295–317. Schenoni, L. L. (2019). Hegemony. In Oxford Research Encyclopedia of International Studies. https://doi.org/10.1093/acrefore/9780190846626. 013.509.

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PART I

Declining Support: The Domestic Sources of US Hegemony

CHAPTER 2

From Internalization to Externalization: The Impact of State-Society Relationships on US Foreign Policy Christian Tuschhoff

Introduction For several years, American foreign policy has been following a path whereby it is pulling back from supporting the liberal international order.1 The Trump administration has continued and even accelerated this ongoing trend. The United States retreated from some international organizations or refused to contribute its agreed share of funding. It paralyzed the workings of the dispute settlement mechanism of the WTO. It hit both allies and adversaries with so-called secondary sanctions, coercing them to follow US demands. It withdrew from key international and arms control agreements such as the Paris Climate Agreement, the JCPOA 1 For a most comprehensive description of this order and the policies required of the United States as its leader, see Ikenberry (2011).

C. Tuschhoff (B) Johann-Wolfgang-von-Goethe University, Frankfurt/Main, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_2

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with Iran, and the INF treaty with Russia. It signaled its allies that it might retreat from existing collective defense arrangements. And, finally, it imposed tariffs on a range of countries with the stated goal of either reducing their benefits from a liberal trade order or of seeking new international bargains that would further benefit the United States, such as the new United States-Mexico-Canada free trade agreement (USMCA). The primary approach of the Trump administration is unilateral confrontation and coercion rather than multilateral negotiation and compromise. President Trump demonstrated that he does not support a US leadership role that provides public goods to the liberal international order, but uses a “transactional approach” instead (Fehl & Thimm, 2019, p. 24; Hafner-Burton et al., 2019, p. 708). Donald Trump promised his constituents to discontinue the role of America as the world policeman and to withdraw its military from many hot spots around the world. He further insisted on a fairer distribution of collective defense burdens with allies and fought their tendency toward free riding on the United States. Essentially, he applied a much narrower definition of national security interests than his predecessors. In terms of commercial policy, Trump promised his supporters that he will end the practice of exploitation of the open American economy. He imposed tariffs on imports and prefers bilateral over multilateral trade agreements, which allows the United States to better exploit their strengths (Norrlof, 2018a). Still, it is not fully clear whether this lack of support for the liberal international order has already damaged it beyond repair, or just reconfigured it by better embedding its liberal components into domestic arrangements more conducive to current state-society relationships that previously served to support the liberal international order (Deudney & Ikenberry, 2018; Ikenberry, 2018, 2020; Ikenberry et al., 2018). Looking at longer historical trends, some scholars have argued that the United States and other capitalist states used the crisis of the economic stagflation in the 1970s to fundamentally restructure the world economy, and thereby the liberal international order, by dis-embedding its liberal components and exposing domestic politics to unmediated pressures from globalization. While these states achieved the goal of squeezing more economic growth from stronger international cooperation (Schwartz, 2009a, 2009b), they failed to compensate the domestic losers of such an enhanced economic openness (Acemoglu et al., 2016; Autor et al., 2013, 2016, 2017). In short, particularly the liberal market economies (LMEs)

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(Elkjær & Iversen, 2020; Hall & Soskice 2001a; Iversen & Soskice, 2019) payed a heavy, domestic political price for globalization because they ignored the guidelines of “embedded liberalism” (Ruggie, 1982, 1993). As a consequence, some experts propose a return to embedded liberalism (Colgan & Keohane, 2017; Norrlof, 2018a; Snyder, 2019) by either better compensating domestic losers (Lammert, 2018; Lammert & Vormann, 2016; Werner, 2019) through use of a social market economy arrangement (see Lammert and Werner in this volume), or addressing problems of domestic inequality and inequity more indirectly (Mukand & Rodrik, 2017; Rajan, 2019; Rodrik, 2011, 2014, 2017). Essentially, these proposals ask for a better redistribution of the economic gains derived from globalization among diverging domestic interest groups. While these proposals are well-intended, this chapter argues they require domestic conditions that do not exist in the United States and will be extremely hard to establish. Reforming the United States according to European models of coordinated market economies and parliamentary democracies based on electoral systems of proportional representation are not viable options unless the political, economic, and social systems of the United States are fundamentally transformed. Initiating such a transformation would be met with extremely high political resistance originating from a broad range of different social groups. It has virtually no chance of overcoming the constitutional thresholds set for fundamental reforms of the political system. Even the proposed major policy reforms are unlikely, as they typically require bipartisan majorities and agreements. Embedded liberalism has been a European idea that the United States only grudgingly accepted and never fully implemented domestically (Ikenberry, 2005, pp. 127–130). Instead, the causal path of American foreign policy is the opposite to Gourevitch’s “second image reversed” (Gourevitch, 1978; Solingen & Gourevitch, 2019). The United States do not respond to globalization by internal adjustment. Instead, they pursue a “second image” (Waltz, 1959) response by seeking to shape the international environment in order to maintain their relatively fixed domestic arrangements. It is this very inability of instituting domestic reforms to accommodate globalization that has fundamentally driven US hegemony for a long time. Presidents and their administrations can only determine the direction of these policies and thereby determine which social groups will particularly benefit. Uncompensated losers can use the electoral process to seek foreign policy changes more in line with their interests. The very essence of Trump’s “America First” and “Make

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America Great Again” projects has been to conduct a foreign policy that benefits Trump’s core supporters in the 2016 election and beyond.2

The Politics of American Hegemony: From Internalization to Externalization In a seminal journal article, Peter Katzenstein linked different types of foreign policy behavior to the specifics of domestic structures under conditions of high international interdependence, comparing the United States with France (Katzenstein, 1976). For the United States, Katzenstein found that the consistency of foreign policy is rather low. Following domestic politics, the United States frequently changes its external behavior, as shifting political interest coalitions prevail in some domestic conflicts, while losing in others. In addition, the goals of US foreign policy tilt heavily toward the economic side, since most domestic actors seek economic advantages for themselves. Political goals are put on the backburner because there is no independent domestic political force that pursues a political foreign policy agenda (Katzenstein, 1976, pp. 25–28, 31–35, 38–40). All private interests are potentially the public interest. In other words, “what was good for our country was good for General Motors and vice versa” (Charles E. Wilson cit in. U.S. Senate, 1953, p. 26).3 However, because the United States is big and powerful, the effects of international interdependence cannot penetrate it to the extent they penetrate small countries and their economies (Katzenstein, 1984, 1985, 2003). Benjamin Cohen showed that the United States commands exceptional powers to “delay” and “deflect” international adjustment pressures (Cohen, 2013, 2015). While small states and economies must absorb the pressures that result from international interdependence by undergoing extremely painful structural adjustments because they are highly sensitive (Keohane & Nye, 1989, pp. 12–13), the United States is the only country that has the luxury of delaying or even deflecting these pressures. Thus, when globalization hits, the United States is the only country 2 An important criticism of this argument is that the actual policies will in fact not help but hurt these core constituencies (Gilens & Page, 2014; Hacker & Pierson, 2014, 2016; Tuschhoff, 2019). However, the criticism cannot account for the fact that Trump’s core supporters nevertheless tend to stick with him. 3 For more conceptual details, see also Katzenstein (1978).

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that can resist and maintain its domestic institutions and policies. Rather than internalizing effects of international interdependence by undergoing painful structural adjustment reforms, it will externalize these effects and pressures to other states and their economies. Most importantly, the strength deriving from the dollar as the unrivaled international currency is the key to these powers to delay and deflect adjustment pressures (Cohen, 2013, 2015). Among other factors, it helps the United States to occupy the position of a hegemon in international relations (Norrlof, 2010, 2014, 2018b; Oatley, 2015). Yet, even the dollar as the US currency ultimately rests upon specific domestic institutions that make up and guarantee its strength both domestically and in international relations (Helleiner, 2008, 2009; Helleiner & Kirshner 2009a, 2009b). Externalization thus means the ability to delay or even deflect domestic adjustment to globalization pressures (Cohen, 2013, 2015). One important example is the ability of the United States to continuously run large budget deficits without facing pressures to either raise taxes or cut spending. Foreigners prove more than happy to lend to the United States, thus enabling it to fill the gap between revenue and budget expenses (Norrlof, 2008). This also allows the United States to build formidable armed forces by externalizing the funding for them (Oatley, 2015, pp. 85–86, 107–108). However, while this general pattern of externalization has existed for a longer period of time, the Trump Presidency added new elements to it. In the past, delaying and deflecting adjustment pressures applied only to the economy and society as a whole. Internalization still occurred, but it affected specific social groups only— the so-called globalization losers. Trump has added the requirement of deflecting international adjustment pressures from these specific groups, as well. Moreover, he added elements of coercion to the previous foreign policy toolkit—most importantly, “secondary sanctions.” This circumscribed some previous arrangements of the international liberal order, calling into question the legitimacy of US leadership as other states were now denied a voice in the American foreign policymaking process. While a complete assessment of the impact of Donald Trump’s version of externalization is beyond the scope of this chapter, there are indications that point toward discernible effects. Some NATO allies have indeed increased their defense spending in response to American pressure to otherwise reduce commitments to collective defense. Trump’s restriction of trade relations and sanctions regime produced significant costs for all other NATO member states. According to a recent study, these costs

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amounted to a total of $34 billion in losses to GDP. The US share was $2.6 billion, while the German share was $8.1 billion. If these trade-war costs would count against the commitment of spending 2% of GDP on NATO’s collective defense, Germany comes very close toward meeting that target (Chowdhry et al., 2020, pp. 9–11). Clearly, US allies had to pick up the American externalization bill. Moreover, the US withdrawal from the Paris Climate Change Prevention Agreement and their resulting lack of cooperation puts enormous pressure on all other states to compensate by increasing their share of climate protection costs. Moreover, the Trump administration’s limitations on immigration increased the pressure on other states to cope with increasing global flows of refugees and asylum seekers. Still, it is an open question whether externalization effectively protected those globalization losers that turned out to be Donald Trump’s staunchest and unwavering supporters. This chapter argues that the hegemony concept of the Trump administration, as outlined in the introduction, is a specific, more explicit version of the more general approach to adjustment externalization. This version is a direct reflection of the interests of the social groups that supported and elected Donald Trump as president.4

The Impact of Changing State-Society Relations Hegemony by adjustment externalization is the consequence of domestic structures in the United States. According to Katzenstein, these structures consist of three components: political forces that shape American society, the institutional design of the American state that makes it a weak political force in domestic politics, and the dominant social networks (or coalitions) that emerge as the winners in domestic conflicts (Katzenstein, 1976, pp. 13–19). These general structures, which expose a weak state vis-a-vis a society-centered political system with regard to foreign policy,

4 Interestingly, Trump mostly implemented the foreign policy part of his promises to

his constituents and reneged the domestic part most importantly the fight against crony capitalism (Cozzolino, 2018). Still, he successfully contained the influence of experts and the bureaucracy—the so-called deep state. Moreover, the appointment of conservative judges to federal courts and the supreme court can have a lasting impact of the Trump Presidency on domestic affairs.

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are still in place. However, the more specific version of adjustment externalization by the Trump administration as outlined in the introduction resulted from the particular current shape of these structures, to which the chapter turns next. Fragmentation and Polarization of the Society In most societies, economic class is or at least has been the dominant political cleavage that separated political groups (Alvaredo et al., 2017; Lenger, 2016; Piketty, 2014). However, the extensive literature on varieties of capitalism has demonstrated that class cleavage has waned because skilled labor especially has come to share important interests with the capital class. A sizable middle class has emerged that broadly supports the main electable political parties. This large number of middle-class voters is the predominant political group. They back democracy and limit the destructive power of a relentless class struggle (Hall & Soskice, 2001b; Iversen & Soskice, 2019). Some sociologists agree that labor, as a class, has at least been fractured into a new middle class, an old middle class, and a precariat (Reckwitz, 2019, pp. 85–107). This fragmentation of labor weakened it as a cohesive political force and undermined trade unions as its interest representatives. In the United States, other cleavages have always been at least as important as the class cleavage. Ideologically, American society is divided between liberals and conservatives. In terms of partisanship, the divide lies between Democrats and Republicans. These two cleavages have overlapped and deepened over time and the specific arrangements of the electoral system have driven the society toward greater polarization along these lines because it benefits candidates that express more extreme views than the median voter holds (Bartels, 2018; Kaufman & Haggard, 2019). Therefore, predominant cleavages and the electoral system weaken the potential for bipartisanship and compromise. Moreover, voters increasingly engage in “affective polarization” and “negative partisanship.” They no longer affiliate with a party but align against the one considered the adversary and thereby do not use cognitive arguments but emotional ones. A combination of alignment and affection broadens the distance between the opposing groups further and reduces the likelihood of compromise and cross-group coalition building (Abramowitz & Webster, 2016, 2018; Robison & Moskowitz, 2019, p. 1075). The increasing internal group harmony caused by simultaneous

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cross-group polarization reduces the chances of consensus formation and is therefore highly conducive to resisting structural adjustment. As the space for agreeable agendas and feasible compromises narrows, the obstacles for international cooperation grow exponentially (Evans et al., 1993; Milner, 1997; Putnam, 1988). The uncompromising stance of the Trump administration in foreign affairs is partly a reflection of this finding by the literature regarding the two-level-games impact on international cooperation. The two emerging partisan and ideological groups also hold very different visions of moral values for the American society: one is the rescue of the American nation based on nativist national and racial values. Paleoconservatives subscribe to and actively promote this vision (Gorski, 2017; Kolozi, 2017; Tuschhoff, 2018, pp. 4–9; Whitehead et al., 2018). On the other side of the spectrum, we find the idea of multiculturalism: the idea that all cultures, values, and beliefs should enjoy equal standing. “No longer was the basis of society the individual created in the image of God and possessed of inalienable rights. Rather it was the group, its identity and interests determined by considerations of race, class, ethnicity, gender, or sexual orientation” (Bacevich, 2005, p. 170). Multiculturalism has become the new mainstream, especially promoted by cultural elites5 However, it was never uncontested. This very conflict over identity and moral purpose of the society amounts to a new cultural cleavage that seriously inhibits the identification of purpose for strategic action. Whereas the Clinton administration sought to substitute the lack of consensus by proposing an ideology of economic prosperity and liberal openness, and thereby sided with multiculturalism, the Trump administration went the opposite way by siding with paleoconservatives and Christian nationalists. Yet, neither succeeded in establishing a new consensus upon which a bipartisan national strategy can be based. The emergence of the partisan and ideological cleavage significantly undermined the ability of the American society to pursue a consistent, long-term strategy in foreign affairs. This cleavage partly explains the cyclical nature of US foreign policy and its sharp turns of

5 Foreign policy elites often portray multiculturalism as the cultural foundation of the liberal hegemonic order that the United States established and maintained. However, as historical analysis shows, this view paints a very nice but self-deceptive picture of the history of US foreign policy under liberal hegemony, since promises were often not fulfilled and liberal values violated (Bacevich, 2018; Sperber, 2018).

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direction from one administration to the next. Moreover, it institutionalizes a preference for resistance to and rejection of absorption initiatives and results, therefore, in adjustment externalization. This problem of overcoming cultural, social, and economic conflicts within the society has been further compounded by an underlying trend in the United States and other democratic countries. Citizens who used to display relatively strong allegiance to political authorities have become more (self)assertive over time, as studies on civic culture and value change have demonstrated (Dalton & Welzel, 2014). New assertiveness intensifies the conflict among opposing social forces, undermines support for public authorities, and prohibits the building of consensus on a national purpose (Bacevich, 2005, p. 171). As new public assertiveness strengthens the society, it further limits the ability of governments to pursue a consistent foreign policy agenda, since the social purpose of such an agenda will be contested domestically. Societies characterized by cleavages and conflicts offer a fertile ground for political entrepreneurs—particularly when the marketplace of political ideas is highly polarized. Under these conditions, political leaders like Donald Trump can exploit the situation during election campaigns (McDonald et al., 2019, p. 758). These societal conditions are a perfect environment for atypical political candidates to thrive and win elections (Shafer & Wagner, 2019, pp. 346–353). Institutional Design of a Relatively Weak State In comparative analysis, the United States is commonly characterized as a society-centered model of foreign policy making. The state is considered relatively weak (Ikenberry et al., 1988, pp. 1–3; Katzenstein, 1976). This weakness partly results from the institutional arrangements of separation of powers, and partly from the competition between the “administrative state” and the “policy state.” Usually, Washington-based elites develop an “administrative state” that derives its power from the relative independence of foreign policy bureaucracies. These bureaucracies typically pursue stable, longer-term political agendas. Elected officials, such as the president and representatives in Congress, form the more partisan “policy state.” Both types of state conflict because they pursue different policy agendas (Drezner, 2019, p. 724). Presidents and Congress usually seek to attack or circumvent the resistance of entrenched bureaucracies by either balancing or even displacing them with new agencies clearly favoring their

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partisan ideas. Stephen Walt (2018) described how Donald Trump started to fight bureaucrats and foreign policy think tanks—the blob—in order to meet his promise to voters that he would reduce the power of the administrative state. Trump clearly followed through on his mission to disrupt the “deep state.” This further weakening of government bureaucracies reduced their ability to act as an autonomous political force; i.e., to act as a state. Political leaders can build new institutions and thereby alter the balance of power within the government (Drezner, 2019, p. 724; Ikenberry et al., 1988, pp. 12–13). The Trump administration seemed not to use this strategy, though. It did not develop new agencies or think tanks to support its goals. In fact, it had difficulties to swiftly fill the positions of political appointees within existing departments and agencies of the executive branch. In addition, it has had a very high turnover rate of political appointees and key officials in the White House. Taken together, such personnel politics weakens the administration’s ability to use the power of the administrative state to promote its policies. While the president clearly pursued a populist agenda of changing foreign policy and scored a number of policy successes, he largely failed to embed these policy shifts within new or existing bureaucracies or get Congress to write his foreign policy actions into law (Drezner, 2019, pp. 725–726). The first Secretary of State in the Trump administration, Rex Tillerson, largely succeeded in cutting both the budget and the staff of the State Department. He reassigned highly qualified career officers from the upper tiers of the department to marginal positions so they would not be able to exercise influence. Many professionals left the department and the morale of those left behind dropped significantly. As a consequence, the operational function of the department deteriorated (Drezner, 2019, pp. 727–728). However, the administration did not substitute anything for this loss of operational capacity in order to institutionalize its foreign policy agenda. It seems to be clear that the president and his supporters are highly suspicious of the administrative state because they perceive it as a powerful tool of the political establishment to pursue goals other than their own. Therefore, weakening agencies results from a desire to restrict the power of elites and indirectly strengthen the power of loyal Trump supporters (Ninkovich, 2018, p. 395). Stephen Walt (2018, p. 43) characterized this as an unavoidable dilemma situation: if Trump appointed experienced foreign policy officers to key positions of his administration he would strengthened the internal resistance against his desire to reshape

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foreign affairs. Alternatively, when new inexperienced people enter the administration, their likely mistakes undermine the conducting of sound foreign policy. If Trump chooses to appoint both liberal foreign policy experts, and new personnel committed to his foreign policy agenda, the combination will most likely lead to unconstrained in-fighting that could paralyze the foreign policymaking process. Some evidence points toward Trump seeking to clear departments and agency of bureaucrats considered disloyal to his foreign policy agenda (DeYoung, 2019; Lynch & Gramer, 2018; Office of the Inspector General, 2019). This is a sign that his administration favors political loyalty over proper bureaucratic functioning. Drezner offers another, more systematic, explanation for the destruction of bureaucracies without substituting for the loss of operational capability: Huge and strong bureaucracies are an anathema to populism to which the president and his administration subscribe. Supporters of populist leaders highly value strong individual leaders and therefore oppose state bureaucracies that might constrain individual leadership. Trump desires to act freely and instantaneously without prior consultations of experts. Government by institutionalization, however, represents the opposite model to such an individual leadership tactic (Drezner, 2019, p. 728; Hafner-Burton et al., 2019, p. 709). Therefore, the bureaucracies that opposed the Trump agenda had to be paralyzed but a more ideologically compatible replacement was also considered undesirable, if not even counterproductive. Apart from building new institutions in order to change the balance of power among them, a second strategy (Ikenberry et al., 1988, pp. 12– 13) is to use the head of the executive branch as the principal figure in foreign affairs. As such, the president is considered the legitimate actor for conducting international relations. But this position can also be exploited by redefining what were originally domestic policy issues as security-related matters, and thus within the purview of foreign relations. The Trump administration used this strategy frequently; particularly with trade and immigration issues, but also with environmental affairs. It issued reports designed to show that international openness represents various threats to US security or other national interests. This also moved these issues away from other branches of government and toward the executive branch. Subsequently, the administration exploited this concentration of power because these issues were no longer as extensively subject to separation of power arrangements as before.

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Finally, the president and the executive branch appealled to passive societal forces and mobilized them as a balance against powerful interest groups, Congress, or the media. This changed the balance of power within the society and neutralized White House opponents. The Trump administration made more frequent use of this strategy than his successors. The president himself was highly active in directly communicating with his supporters through Twitter or other channels. At a minimum, this prevented his opponents from effectively getting their messages through to the broader public. Elites, interest groups, and the mainstream media were essentially constrained to preaching to the converted. Trump supporters remained extremely loyal to the president and apparently could not be reached by his opponents communicatively (Mink, 2019). There seems to be little change in alignment between the Trump administration and its opponents. Another way to consolidate power—in which the president largely succeeded—was by breaking the opposition against him within the establishment of the Republican Party. He is now firmly in control of the party and has thereby consolidated his presidential power (Kaufman & Haggard, 2019, pp. 425–428). As this strengthening of the executive branch of government continues, there is growing concern about the ability to remove important checks and balances within the American constitution (Kaufman & Haggard, 2019; Levitsky & Ziblatt, 2018). This brief analysis shows that there are no conclusive trends that would fundamentally alter Katzenstein’s findings that the United States operates as a weak state. Attempts to concentrate powers in the White House are balanced by erratic personnel politics and bypassing the administrative state because it came under suspicion. This weak state lacks the capabilities necessary for making tough choices in case structural adjustments have to be internalized. Most importantly, a weak state cannot redistribute gains from international cooperation to compensate the losers of globalization. In that sense, externalizing structural adjustment is a reflection of the government’s weakness. Furthermore, to the extent foreign policy experts in the bureaucracies sought to sustain the international liberal order, this backing has been significantly diminished because these bureaucrats lost influence within the Trump administration. The international liberal order thus lost the US leg of a transnational epistemic community that had sustained it in the past.

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Changing Dominant Political Coalitions When the weak state is no match to a strong society, as in the United States, the analysis must turn to finding the prevailing political coalitions. These coalitions changed considerably under Trump. One reason is that Trump and his loyal supporters relentlessly attacked the political establishment. Thus, the political influence of elites has been minimized (Kaufman & Haggard, 2019). Along with them, the bipartisan support for the liberal international order waned (Busby & Monten, 2018, p. 5056; Pew Research Center, 2019; Shapiro, 2018, pp. 107–119). US foreign policy is no longer based on a bipartisan consensus or a bipartisan bargain that somewhat shielded it from the partisan fight. Instead, it became part of a continued battle among partisans; “winner takes all” patterns replaced bipartisan compromises. In such a domestic environment, externalizing structural adjustment is the best available policy option to pursue hegemony, because it allows avoiding partisan battles with uncertain outcomes. Moreover, the media landscape changed dramatically. More and more people use new social media as a source of political information rather than television or newspapers. The Trump administration has benefitted from three detectable trends: First, social media makes it easy for users to form opinions about issues without becoming informed. Second, traditional media faces fewer incentives to just forward views of elites. And, finally, their role as traditional gatekeepers of information collapsed (Baum & Potter, 2019, p. 754). Social media also contribute to further fragmentation of the way information is distributed (Kaufman & Haggard, 2019, p. 427). In such a media environment, broad-based interests, such as the consumers’ interest in free trade, are extremely hard to mobilize (Betz & Pond, 2019). Indeed, consumers’ political clout has always suffered from collective-action challenges (Olson, 1971). In recent years, it has diminished even further, and been replaced by more narrow-minded groups pursuing a protectionist agenda (Autor et al., 2017). The entire Republican Party changed its agenda from free trade to protectionism (Mansfield & Mutz, 2013). The Democratic Party—traditionally more protectionist than Republicans—has gone in the same direction: Representatives such as Hillary Clinton or Bernie Sanders have developed protectionist agendas, and, in the meantime, almost the entire party is

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convinced that China presents a serious challenge to the global trading system that will not be solved with multilateral trade policies. At least one political group has become more visible in recent years and plays a new role in coalition politics. Donald Trump’s support network rests upon a shared set of ideas. Anti-elitism states that powerful elites captured a disproportionate part of the state and society and diverted its resources away from public good production and channeled them into their own pockets. The concept of the virtuous people is the belief that the general public consists of a homogenous group of hard working, god-fearing folks that the ruling elites have robbed. In addition, these self-identified “virtuous people” believe that they are threatened by undeserving “others.” Those external groups deprive the virtuous of both material (e.g., property) and immaterial (e.g., status) resources. Therefore, the goal of (foreign) policy is to destroy the existing order of corruption and deprivation, and put the virtuous people firmly back in control, by enabling them to pursue both their values and interests (Boucher & Thies, 2019, p. 713). Given the strong bond between Trump, his administration, and loyal supporters, as members of the same social network, it is highly unlikely that opposition to the administration’s policies will emerge from these constituent—even when these policies violate their material interests (Hafner-Burton et al., 2019, p. 710). Donald Trump can rely on the loyalty of his constituents as they base their support not on the distributive gains (Ross, 2019) of his policies, but on the ideological bond of populism. Maintaining the liberal international order would require the ability to internalize the American share of the order-stabilization burden. Yet, such internalization of burden is incompatible with populist ideology and the support network President Trump based his power on, because it is perceived as favoring the “undeserving others,” such as foreign countries or immigrants. In short, the order of liberal hegemony is incompatible with the opposition to political elites at home and the othering of foreigners.

Conclusion The Trump administration pursued hegemony by externalizing structural adjustment. This version of hegemony deviates significantly from its predecessor—the pursuit of a liberal international order. The shift is

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the consequence of two interrelated factors. First, the United States is a society-centered political system in which a weak state is confronted with a strong society. Governments were thereby incapable of redistributing the gains of enhanced international cooperation among social groups; i.e., they were structurally inhibited from fairly compensating the losers of globalization as economists and liberals suggested. Thus, rising social inequality resulted from economic openness. Yet, successive governments failed to internalize these adjustment pressures through structural reforms. Instead, they externalized them by burdening other states, since the United States can do so by using its extraordinary powers to delay and deflect adjustment. Second, the Trump administration added its imprint on hegemony by externalization when it reduced the openness of the US economy, partially withdrew from multilateral institutions, engaged in protectionism, and sought to coerce other states into accommodating US interests. The Trump version of American hegemony by externalization has been further compounded by the establishment of new prevailing political coalitions. The old foreign policy establishment of bipartisan elites was replaced by new social forces of Trump’s loyal supporters. Because these supporters considered the established domestic and international networks as detrimental to their interests and views, they expected Trump, as their president, to destroy them. He delivered. His presidency will be remembered for its destructive action. Yet, when the COVID19 pandemic penetrated the United States, the Trump administration demonstrated both its incapability and unwillingness to govern effectively using an internalization response. The powers to delay and deflect proved to be ineffective in this penetrating case of international interdependence. The failure of the administration to address the sensitivity of the United States left it highly exposed to the pandemic and demonstrated the country’s vulnerability to those effects of international interdependence that cannot be changed merely through using the tools of hegemony by externalization. Acknowledgements I am grateful to Herman Schwartz, Jakob Schissler, Welf Werner, and Reinhard Wolf for their detailed comments on the version presented at the workshop in Heidelberg in 2019. Any remaining errors remain my own responsibility.

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CHAPTER 3

Broken Social Contract: The Domestic Roots of US Hegemonic Decline in the World Welf Werner and Christian Lammert

Introduction In the literature on US hegemonic decline, the focus is largely on manifestations of this decline in the realms of international relations (Nye, 2010; Schweller & Pu, 2011). In this chapter, attention is given to domestic constellations of US leadership, which are considered of utmost importance for explaining the decline of US liberal hegemony in the last decades and during the Trump presidency. Our hypothesis is that the US electorate is willing to carry the cost of hegemony only as long as it feels that the US can afford it and that the American people get something in exchange for their support. Such expectations manifest themselves, first of

W. Werner (B) Faculty of Economics and Social Sciences, Heidelberg University, Heidelberg, Germany e-mail: [email protected] C. Lammert John F. Kennedy Institute for North American Studies (JFKI), Freie Universität (FU) Berlin, Berlin, Germany © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_3

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all, in high and constantly rising living standards; second, in opportunities for upward social and economic mobility for large parts of the population; and third, in the expectation that individuals will be well-insulated from economic insecurity and hardship caused by the volatility of the business cycle. The chapter will first explain the broad support for US hegemonic power in the post-war decades. It then addresses the decline of this support, which the authors date back to the 1970s, when the first signs of serious socio-economic challenges emerged, and the welfare gap between Americans and the rest of the world started to widen. In each case, we show how changing socio-economic conditions at home were connected to shifts in US international trade policy. The postwar decades are characterized by spectacular economic expansion with improved social protection, economic participation, and the stabilization of the business cycle in the US. But they were also a period of strong bipartisan support for the unprecedented US-led initiatives to introduce free trade globally, which consequently exposed US workers to competition from the rest of the world and, increasingly so, from low-wage countries. In the post-war era, the US, operating as a benign hegemon, established multilateral rules in the realm of trade policies by allowing for significant exceptions of basic GATT (General Agreement on Tariffs and Trade) rules, actively encouraging Western Europe to engage in regional integration, accommodating the rise of the EC and Japan as competitors, and allowing for special privileges for developing countries in the form of “special and differential treatment” provisions within the GATT framework. With the first signs of severe economic challenges and relative economic decline emerging as a result of stagflation in the 1970s, public and political support for multilateral free trade started to decline. While the legislative basis for aggressive unilateral trade policy was already laid in the midst of the economic crisis of the 1970s in Section 301 of the US Trade Act of 1974, and the so-called Super 301 of the Omnibus Foreign Trade and Competitiveness Act of 1988, such provisions were applied for the first time to US trade policies by the Reagan administration in the 1980s (Bhagwati & Patrick, 1991; Falke, 2017; Meinderts, 2020). The 40th President had won the support of US voters with his message to strengthen America’s position in the world, specifically the international competitiveness of its companies and economy, and by aggressively fighting what had already back then been perceived as unfair trade practices of trade partners in Asia.

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While still actively pushing for multilateral negotiations in a new GATT round (Uruguay Round, 1986–1993), the US did not only engage in aggressive unilateralism in the 1980s, but also in actively negotiating preferential trade agreements (PTAs) for the first time since the end of the Second World War. The North American Free Trade Agreement (NAFTA) with Canada and Mexico was signed in 1994 and was followed by other regional trade agreements, specifically, but not exclusively, with Latin American countries. While the new PTA focus of US trade policy can be interpreted as a reaction to successful European integration, the main target of aggressive unilateral threats and measures, such as the “voluntary export restraint” (VER) programs, for example on automobiles, was not China, but Japan, with which the US had developed a significant bilateral trade deficit in the 1980s. After running a surplus in the entire US trade balance throughout most of the twentieth century, this balance had started to turn into a persistent and growing deficit in the 1970s, enforcing first widespread and well-published worries about US economic decline (Keohane, 1984). Regionalism and aggressive unilateralism became inevitably more dominant elements in US trade policies after the Doha Round (initiated in 2001) had stalled, and the liberalization process at the World Trade Organization was fizzling out in the following decades (Baldwin & Low, 2009; Falke, 2017). Aggressive unilateralism and attempts at establishing PTAs continued to be cornerstones of US trade policies in the twentyfirst century. However, while previous US administrations had already sidelined the WTO before 2017, the final blow came when President Trump ostentatiously abandoned the WTO as part of his “America first” strategy—expanding the scope and style of aggressive unilateral measures through widely dispersed duties on steel and aluminum and escalating tariffs on Chinese exports (Brewster, 2018; see Falke in this volume). This escalation received strong support from the President’s voter base, a large part of which had experienced income stagnation for quite a few decades in declining regions such as the “Frost Belt.” These regions in the North East and Mid-West of the US had suffered from a lack of socio-economic participation in a country, in which intergenerational economic and social mobility and impressive income growth have been deeply engraved in the culture for more than 200 years.

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Economic Expansion in the Bretton Woods Era: 1945–1970 There were a number of reasons for the unprecedented expansion in socio-economic participation in the post-war decades. First, the US found itself in a historically exceptional position within the global economy. This was mainly the result of the devastation caused by two World Wars and the Great Depression which had diminished European economies. Having already overtaken Great Britain as the leading economic power of the previous century, the US was now in a position of absolute and incontestable economic supremacy on a global scale (Block, 1977). Two World Wars had led the US to uncontested technological leadership in many key industries once its economy was converted back to civilian production. High labor productivity was the basis for high wages and high living standards. Among the many historical anomalies inherited from the Second World War was also a highly progressive tax system that placed a high financial burden on the rich to finance the war efforts. After the war, the progressive tax system was not abolished but was used to finance the expansion of state intervention in the economy and society (Goldin & Margo, 1991). While crucial gender and racial issues had by no means been resolved in those years, for the first time the war had brought many women and Afro-Americans into core industrial workplaces in the North, opening up—even if only temporarily for some—new opportunities for economic and social participation. In an era of rapid economic expansion and full employment, structural change—the destruction of old, less competitive industries and the emergence of new more competitive ones—did not mean a threat to workers, but was seen as an opportunity to climb up job ladders and improve incomes. Social mobility became a centerpiece of the American Dream. Economic historians described the period as “the great compression” referring to the reduction of income inequality in the period between 1945 and 1970 (Goldin & Margo, 1991), while President John F. Kennedy characterized the period as one in which “a rising tide lifts all boats” (Kennedy, 1963). While the first wave of welfare state expansion in the US had been introduced through the New Deal legislation of the 1930s, these programs were massively expanded in the post-war decades. Additionally, the Great Society legislation of the Johnson administration established new social programs in the 1970s, especially in the field of health care

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(Medicare and Medicaid). The national government became more important in delivering social services to citizens because the state governments, with their scarce financial resources, were limited in their ability to solve the deep-rooted social problems of an advanced capitalist economy (Grell & Lammert, 2013). Economic and labor market policies in the post-war period were based on John Maynard Keynes’ ideas of countercyclical management. Monetary and fiscal policies were primarily geared toward full employment (internal balance) and not toward exchange rate stability (external balance) which had dominated economic policies in the long nineteenth century and during the inter-war period. As discussions surrounding the Employment Act of 1946 have shown, preventing unemployment and personal hardship through smoothening the business cycle became the prime target of economic policies after the Great Depression (Santoni, 1986). However, full employment was not just a goal but also realized— at least until the US economy changed course in the 1970s. Overall, in the two decades following the Second World War, US capitalism had lost many of the ugly facets of the inter-war period. The economic success story of increased state intervention and market regulation as an instrument to tame the destructive forces of capitalism was also recognized among social scientists. Economic history textbooks, for example, tracking US economic development from colonial times to the present, characterize the post-war era routinely as an era of “big government,” while the MIT economist Peter Temin famously called this period “socialism in many countries” (1990). Bringing together the two main economic elements of the post-war era—domestic economic progress for workers and unprecedented trade liberalization—the political scientist John Ruggie (1982) used the term “embedded liberalism” to characterize this period. According to the terminology used in this chapter, the post-war decades were a time in which a “social contract” was formed. This social contract stood for an implicit and sometimes also explicit agreement between the US electorate and the national government that the opening of borders to unrestrained international trade and competition had to be balanced out by more economic protection at home.

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US Support for Multilateral Free Trade As terms like “embedded liberalism” and “social contract” imply, domestic socio-economic progress was closely intertwined with the introduction of a specific variant of the liberal world order in the 1950s and 1960s: the Bretton Woods system of fixed exchange rates. The main goal of this international monetary regime—agreed upon in 1944 by 44 nations—was not only to limit short-term capital flows, which had wreaked havoc with national economies in the inter-war period, but also to open national economies to international free trade (Bordo, 1993). After the devastating experience with nationalism and national chauvinism during two World Wars and the Great Depression, the US, in cooperation with Great Britain, led the initiative to establish international organizations such as the World Bank (originally IBRD), the IMF, and the GATT (initially ITO) in order to foster peaceful economic relations among member states. The establishment of free trade in the post-war era had two main goals and assumptions. First, economic engagement and trade further peaceful cooperation among nations: Countries that trade with each other do not wage war with each other. This was also the main rationale for the establishment of the European Coal and Steel Community (ECSC), which ultimately led to the creation of the EC and the EU, while the same argument was used prominently later in the twentieth century to bring China into the WTO. Second, free trade produces positive welfare effects. This idea goes back all the way to the writings of David Ricardo (1891), and there is a lot of empirical evidence that free trade has produced massive welfare effects in the US as well as on a global scale (Baldwin, 1952; Krugman & Obstfeld, 2015). As a result of eight rounds of tariff negotiations in the GATT and the WTO, average global tariffs came down from about 50% to below 5% (Krugman & Obstfeld, 2015). When the WTO was established in 1995, already 128 countries followed the idea and practice of free trade and trade liberalization. But this historical move toward multilateral free trade also had its downsides for the US and other countries. In an era in which more than 100 countries had already joined the WTO, few governments in the world seriously disputed the positive net effect of trade liberalization on national economies that Ricardo had proclaimed. But less people were thinking about the internal adjustment processes that economies have to undergo

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in order to reap the benefits of trade liberalization. Industries, companies, and jobs most vulnerable to international competition do not survive extended trade liberalization while other, more competitive industries benefit from extended access to global markets. The economic literature is aware of these partially painful effects of trade liberalization, but they received markedly less attention than Ricardo’s famous predictions. The income distribution effects of liberalization among different economic actors and groups within a domestic economy—the winners and losers of globalization—were already systematically described by Wolfgang Stolper and Paul Samuelson in the 1940s on the basis of the Heckscher-Ohlin trade theory. But only with the emerging public resistance to globalization and free trade in the late 1990s, for example the 1999 Seattle WTO protests, and new studies of globalization backlash in the long nineteenth century, did the real-world relevance of the Stolper-Samuelson Theorem receive more attention—also specifically for the US context of the early twenty-first century (Werner, 2004). In the 1960s, the conflicting effects of trade liberalization on the economy of a country as a whole and on individual groups within this country were discussed extensively when Congress ratified the results of the GATT rounds (Gartzke & Wrighton, 1998). Trade liberalization was criticized by parts of the Republican Party from an isolationist point of view, but the strongest criticism came from unions closely connected to the Democratic Party. In order to address these concerns, the Kennedy administration introduced the Trade Adjustment Assistance program (TAA), authorized under the Trade Expansion Act of 1962. This program is one of the most prominent examples of how broadbased economic expansion through trade liberalization can be balanced by protecting the “losers” of globalization. The program tried to reduce the damaging impact of import competition for American workers in sunset industries by extending unemployment benefits and providing access to programs that help them to acquire new qualifications in order to successfully re-enter the labor market. The program is a good example of the social contract described before: a combination of market expansion and competition on the global level, with more protection and help to deal with these pressures at home. In this way, TAA can also be interpreted as a first official admission of the US government that trade does not only generate positive effects for the country as a whole, but that it also has negative effects for certain industries and groups of workers within the country who need to be compensated.

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While the emergence of TAA as a part of the Kennedy Round is a good illustration of the social contract of the post-war decades, there is also the danger of overemphasizing this program in the context of the many groundbreaking changes that emerged in the expanding welfare state at the time. While TAA has been extended several times, the amount of money spent on this program has been relatively insignificant—compared to the expenditures for other parts of the welfare state. In order to understand the relevance of the social contract for mitigating the negative effects of import competition, one needs to take into account the many other programs of the modern welfare state that help individuals to realize their full potential independently of their personal resources. Unemployment benefits, for example, were being payed independently of the question of whether or not a job loss was due to import competition or to other causes, such as domestic technical innovations. The modern welfare state has presented workers with many opportunities to upscale their skills, not least through significantly expanded offerings of post-secondary education. Broad access to education and life-long learning opportunities is not just a question of fairness, but a key factor for economies to successfully undergo necessary structural change in an era of rapid globalization and technological progress at home. The broad-based welfare reforms introduced and significantly expanded in the US in the post-war era represent the domestic side of the promises of the social contract, even if they are not explicitly geared toward the needs that emerge from trade liberalization (Grell & Lammert, 2013; Werner, 2015). While the Bretton Woods consensus deliberately exposed the US economy to international competition, there were structural reasons why this exposure was not felt as intensely at the time by industries, companies, and individuals as in later decades, when resistance to free trade policies became more pronounced in the US. Trade liberalization and increasing trade flows do not always have the same results. The extent of disruption that such economic globalization causes in national economies depends on how similar or dissimilar the trading partners are that engage in liberalization. The Stolper-Samuelson Theorem, as well as numerous empirical studies, show that if the countries’ economic systems differ considerably, the potential for aggregate positive welfare effects is higher—but the same is true for disruptions through fundamental structural change (Krugman & Obstfeld, 2015). North–south trade between dissimilar countries has existed throughout the entire post-war era, but started to accelerate

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rapidly only with the arrival of emerging economies in the 1990s. In the 1950s and 1960s, large parts of US international trade took place between OECD countries, and a lot of this trade was even intra-industry trade— for example, Germany selling cars to the US and the US selling cars to Germany. The net effect of such trade on jobs in a given industry was therefore not very significant. A completely different picture emerged in the rapidly-expanding US trade relations with emerging and developing countries in later years, when large volumes of labor-intensive goods were imported, but not exported, after trade liberalization. The so-called “China Shock” after 2001, when China joined the WTO, is emblematic for these challenges. Rapidly rising imports from China resulted in massive deindustrialization in traditional industrial centers in the Rust Belt, rising unemployment rates and massive frustration among the people living there (Autor et al., 2016; Neumann, 2016). At the same time, the situation provided the US as a whole with very attractive new consumption and investment goods that raised living standards and made companies in the US more competitive. Before low-wage competition started to mount in the last decades, not only welfare policies of various kinds but, as these considerations show, also quite a few structural reasons had helped the US government in the post-war years to find support for their international endeavors in trade policies. On the basis of rapidly and widespread economic expansion at home, the US became the single most important driver of multilateral liberalization, actively initiating and supporting six rounds of GATT negotiations. Even with the first signs of relative decline and rising domestic socio-economic challenges emerging in the 1970s and 1980s, Washington continued its multilateral course with the Tokyo (1973–79) and the Uruguay (1986–1993) Trade Rounds.

Relative Decline and Domestic Policy Failure Since the 1970s The first signs of a crumbling social contract started to become visible with the onset of stagflation and mass unemployment in the 1970s. In its own right, this deep recession and its unfavorable consequences for industries, companies, and workers did not amount to a relative decline of the economic standing of the US in the world, because almost all industrialized and developing countries suffered from the very same global crisis. Nevertheless, the recession, for which no adequate economic policy

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response was found for a long time, exposed the negative aspects of structural change more bluntly. The rise of new industries and jobs as compensation for declining industries and job losses was not happening in the same way it had in the growing economy of the post-war decades. The problem became more obvious with the remarkable length and depth of the recession. Mass unemployment turned into long-term unemployment, which—as it turned out in all western countries—was especially hard to cure (Aaronson et al., 2010). Mass unemployment—together with the Vietnam War and the War on Poverty by the Johnson administration—also resulted in a massive increase of federal expenditures and escalating fiscal deficits. Those rising deficits did not, however, help to end the recession in the 1970s, as Keynesians would have expected. The combination of stagnation and inflation instead left economists and policymakers perplexed. A great majority of them—and even fiscal conservatives—had converted to Keynesianism before (Friedman, 1965). According to the Philips Curve— a central notion of this popular school of economic thought—the positive relation between inflation and stagnation that had emerged in the 1970s was not to be expected, because more spending, and thus more inflation, should automatically lead to economic expansion. The new insight that came during the long-lasting recession of the 1970s was that ever more spending was no longer the solution to the problem. Alongside a radical tightening of monetary policy under Fed Chairman Paul Volcker that curbed double-digit inflation, it was the shifting attention of economic policies from the demand to the supply side of the domestic economy that offered a way out of the economic malaise of the 1970s. The central idea of supply-side economics is that, as long as the production conditions are good for companies to compete in national and international markets, there will be enough demand for the goods they produce (Mendoza & Tesar, 1998). All these changes resulted in a neoliberal turn in economic policies in the 1980s—a result that was in many ways inevitable given the impasse that policymakers had faced in the 1970s. All OECD countries embraced one or the other key element of supply-side economics, such as attempts at deregulation, lowering corporate taxes, streamlining public expenditures, and boosting private investment; but with vastly different consequences (Harvey, 2007). In the US, the many aspects of the neoliberal turn, including a retrenchment of welfare and social

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policies and a fierce fight against labor unions during the Reagan administration, weakened domestic social protection of workers much more significantly compared to most Western European countries (Pierson, 1994). This, in turn, damaged the social contract in the US, as workers in the 1980s and beyond felt the massive pressure and insecurity from a second, more intense period of economic globalization that the world started to undergo in the late twentieth century. Another source of structural change that weakened the position of US workers in the era of hyper-globalization was the introduction of shortterm capital mobility that started with the demise of the Bretton Woods System of fixed exchange rates in the early 1970s—a movement joined by most OECD countries in the 1980s and later also by quite a few developing countries (Helleiner, 1994; Pauly, 1995; Pierenkemper & Werner, 2002). As a result, the position of unbound global investors was strengthened in relation to states and labor, both of which were still tied to their national boundaries (Strange, 2015). Finally, and maybe most importantly, unprecedented dynamics in the global economy started to challenge the position of labor and the social protection of workers in OECD countries (Esping-Andersen, 1996; Tanzi, 2002). For the first time since the Industrial Revolution, the number of the countries in the so-called convergence club—countries that successfully catch up with high-income countries—did not stagnate or shrink anymore, but started to grow significantly in the late twentieth century (Dervis, 2012). Emerging economies, whose appearance in the world economy was a sign of the transition into a second, more intense phase of globalization, led to rising imports of labor-intensive manufactures into the Global North—a development that accelerated the process of deindustrialization in the US and other OECD countries. The most important reason that former developing countries started to successfully export manufactures in great numbers instead of raw materials and agricultural goods was recognized by Thomas Friedman. He saw that a “flat world” had emerged, due to the digital technology and communication revolutions of the late twentieth century, in which cross-border flows of information and the possibilities of imitation of products and production methods had multiplied (Friedman, 2005). Accompanied by fast-growing global capital flows chasing global investment opportunities, expanded trade flows also encouraged “offshoring,” the relocation of production from the US to low-wage countries.

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The effects on the labor markets of advanced capitalist systems were striking. In this new global environment, mass unemployment and low levels of labor market participation lingered on long after the 1970s and led to fiscal pressures and crises in countries such as Sweden in the 1990s. As an answer to these pressures, the so-called activating welfare state emerged (Grell & Lammert, 2013; Werner, 2015). In this new welfare state model, the government was to play a more active role in supporting workers in successfully adapting to structural change in labor markets. Denmark, with its newly-introduced labor market regime “Flexicurity,” was soon to become the role model for a new balance between enhanced labor market flexibility on the one hand, and improved support for upscaling workers’ skills on the other, while leaving high levels of unemployment benefits untouched. In the EU, this transformation was supported and fine-tuned over a period of ten years by the Lisbon Agenda. Most Western European countries followed suit and developed their own versions of Flexicurity in the late 1990s and early 2000s (Aiginger & Guger, 2006; Bekker & Wilthagen, 2008; Heyes, 2013; Sapir, 2005). In the US, on the other hand, only half-hearted efforts for such changes were made following attempts in the 1980s to simply reduce welfare payments—without any accompanying measures to ease the mounting pressures on workers. President Clinton (1993–2001), largely following recommendations from a Republican Congress under House Speaker Newt Gingrich, proclaimed that his signature under the Personal Responsibility and Work Opportunity Act of 1996 would “end welfare as we know it” (Weaver, 2000). Harsh five-year lifetime limits on welfare payments, unknown in Europe until this day, were combined with activating measures such as retraining programs for the unemployed or improved childcare for single mothers. The problem was that the activating part of the US welfare reform that was supported by federal grants-in-aid and to be initiated and administered by the states turned out to be not much more than lip service in the medium and long run. The linchpin of the activating welfare state, the Active Labor Market Policy (ALP), or in other words retraining programs, is by Western standards insignificant in the US. In the 2000s, expenditures for such programs reached only 0.1% of GDP in the US, whereas most EU countries spent between 0.5 and 1.3% on such measures (Council of Economic Advisers, 2016). But, also the second important column of a labor market regime supportive of workers in times of increasing pressures, Passive

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Labor Market Policy (PLP), or, in other words, unemployment benefits, is, by Western standards, poorly developed in the US. Payments for such lifelines for the unemployed amount to only 0.4% of GDP in the US, compared to 1% to 2.5% in most EU countries (Council of Economic Advisers, 2016). Unemployment and fear of unemployment in economic crises such as the 2008 Great Recession, to which American workers were innocently exposed, are still of an existential nature in the US. This is not only because of an unforgiving labor market regime, but also because of a lack of healthcare coverage, which is, in many cases, bound to employment (Lammert & Leimbigler, 2020). US workers were left standing in the rain during a period in which it started to pour. Finally, also the educational system, the basis for intergenerational opportunity and social mobility, displays a bleak picture in the US compared to other Western countries in the last decades. The US has traditionally been perceived as a country of opportunity, focusing on educational policy in order to provide equal opportunities for all people (Dobbins & Bieber, 2020). Two-year colleges (community colleges), which play an important role in upscaling skills of blue color workers, are in a constant financial crisis because of chronic under-funding through the states. But even public primary education in the US has become problematic. The odds that a first grader from a working-class family will eventually be as successful in school as his/her peers from well-off families are remarkably low in the US for such a wealthy nation. According to the prominent PISA studies of the OECD, the US ranks 31st among 35 OECD countries regarding social mobility on the primary and secondary school levels (OECD, 2018). The many challenges of the post-Bretton Woods era presented to American workers due to structural change and significant policy failure are reflected in the development of income, which is an important, if not the only indicator of fading economic participation. Income inequality increased massively in the last forty years in the US and to a lesser degree also in other OECD countries. The French economist Thomas Piketty (2014) and his colleagues have shown that it is very few income segments, the top 1% of wage earners in particular, who have benefited most from the economic development since the 1970s. The bottom 50% of income earners in the US have hardly seen any growth in real wages in the last four decades. Their average annual income in 2014 was a mere 2.7% higher than their income in 1974. Over the same period, the income of the highest percentile of wage earners soared by 231%. At the same time,

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the government, via its tax and transfer system, did very little during this period to balance this unequal distribution. On the contrary, tax reforms beginning in the Reagan decade, and extending through George W. Bush or Donald Trump in 2000 and 2018, respectively, amplified the spread between rich and poor (Bartels, 2005; Lammert, 2020). Overall, the contrast between the Bretton Woods era, in which an orderly opening of the US economy to global competition was reconciled with policy measures that guaranteed a remarkable surge of social protection and economic participation, and the post-Bretton Woods era, in which economic globalization intensified and economic and social policies turned their backs to American workers, could not be stronger. Compared to post-war standards, large parts of the US population have found themselves in precarious socio-economic situations in the last decades. The low-wage labor market grew massively, and more and more people in the US are living from paycheck to paycheck (Collins & Mayer, 2010). While the many causes of the stunning income trends of the last forty years are not yet fully understood (OECD, 2011; Summers, 2012), increasing inequality and stagnation of real income have undoubtedly been connected to the changes discussed here: the introduction of supply-side policies, the freeing of short-term capital flows, the emergence of unprecedented competitive pressures in the world—and, not least, a broad-based policy failure to counteract these structural changes with the adequate labor market, welfare, education, and tax policies. The challenges for the US in opening up to this historical transformation have been twofold. The idea of American Exceptionalism has made it more difficult for US policymakers to learn from other countries (Junker, 2009). In comparison, the dynamic transformation of welfare and labor market regimes before, during, and after the Lisbon agenda in the EU shows that it is vital that best practices from other countries are discussed and considered, allowing for country-specific implementation of reforms. The other problems that led to public policy failure in the US are a deep distrust in public institutions, and, possibly, also higher levels of inefficiency in these institutions. Both of these have led to a revival of the derogative and ill-advised use of the term “Socialism” when it comes to social reform projects in the American public debate in recent decades. While deep-rooted societal values and judgments made it harder for Americans to address the roots of substantive policy failure at home (Fluck & Werner, 2003), a highly problematic way out of this dilemma was blaming foreign powers, foreigners, and, in some cases, even ethnic

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groups within the US for the self-made American malaise. Part of this blame game became an attack on the very multilateral institutions that the US had helped to establish as a benign hegemon after the devastating experience of two World Wars and the Great Depression. This refusal to adequately address challenges at home and to shift the blame elsewhere in the world has had inevitable consequences for the US leadership role in the world.

From Multilateralism to Aggressive Unilateralism: Not Just Since Trump As the domestic side of the social contract of the post-war decades has been shattered in the last decades, signs that Americans were less willing to support the international leadership role of the US became apparent. With downward trends in social protection and economic participation at home, and intensification of competition on the global level, we can see a change in US trade policy (Werner, 2004). In the last years, the trade policy of the Trump administration received quite a bit of attention and was often attributed to the peculiar personality traits of the 45th President (Stiglitz, 2018). Quite often, policies were also characterized as representing a radical change compared to those of preceding administrations. But this is only partially true. While quite a few elements of the current US trade policy are of a novel nature—especially the geographical scope of aggressive unilateral measures, their erratic, short-term, and transactional character, and the mixing of trade with security issues—the underlying currents are not. As already mentioned, US trade policy underwent three distinct phases in the last 70 years. In the first phase, the US was instrumental in formulating trade rules for the world that were finally accepted by some 159 countries. In an era in which Washington adhered to multilateral orthodoxy in its own trade policy, the benign hegemon made exceptions from multilateral rules and disciplines for Western Europe and developing countries. In a second phase, US international diplomacy opened up new policy tracks for the US in the form of aggressive unilateral measures and through actively negotiating PTAs. At the same time, Washington still fully supported the advancement of multilateral rule globally. This phase lasted from the authorization of aggressive trade policy measures in Congress in the 1970s, through the hesitant dedication of US diplomacy during the Doha Round in the early 2000s.

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In a third and final phase, the US abandoned the multilateral track of its trade policy and focused solely on PTAs and aggressive unilateral measures. While US administrations made no serious efforts to revive the WTO process in the last two decades but engaged occasionally in aggressive unilateral disputes (Falke, 2017, 2019), the Obama administration focused largely on the PTA route by pushing two mega-regionals, the Transatlantic Trade and Investment Partnership (TTIP) with the EU, and the Transpacific-Partnership Agreement (TPP). While formally focused on PTAs, these policies can still be interpreted as a detour to multilateralism because of their wide country coverage (see Andreas Falke in this volume). The Trump administration confirmed and escalated established trends by actively and ostentatiously dismantling the WTO—for example, by blocking the organization’s dispute settlement process. The 45th President clearly deviated from his predecessor by actively abandoning the PTA route, not ratifying TPP and not following up on TTIP, which was also blocked on the European side by countries such as France. Notably, another decisive deviation from former administrations is the underlying philosophy of trade policy: one that sharply contradicts the very principles on which US engagement in multilateral liberalization was based in the post-war years. Although the Trump administration sees international relations and especially international trade and trade policies as a zerosum game, trade liberalization of the post-war decades was firmly based on the assumption of positive-sum games, meaning that cooperation and reciprocity of liberalization commitments under the MFN (Most Favored Nation) clause lead to welfare gains for all countries involved. While the trade policies of the current administration have in many ways followed trends of the past by weakening multilateralism and strengthening alternative policy routes, its radical confirmation of aggressive and unpredictable unilateralism has regressed US trade policies in style and substance all the way back to the times of the Smoot-Hawley Tariff Act of 1930—the times before the US had introduced peaceful accommodation of national economic interests through bilateral and later multilateral negotiations. A closer look at the three phases of US trade policy shows how closely they are synchronized with the faltering of the social contract. Stagflation is the background against which the legal basis for aggressive unilateral policies was established with the US Trade Acts in the 1970s. Mass unemployment and the first unmistakable signs that foreign countries had made inroads to US leadership in high tech industries, particularly consumer

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electronics (McCulloch, 1988), led President Reagan to drift away from multilateral orthodoxy by using extensive unilateral trade policies in the 1980s. This movement continued and flared up occasionally as in the case of presidential candidate Ross Perot, who had a similar focus on US trade deficits and unfair trade practices in his 1992 campaign—as did Donald Trump in 2016. As a third-party candidate who, unlike the 45th President, did not take over one of the two parties, Perot was remarkably successful with his protectionist messages. An early indication that there was potential for a protectionist backlash in the US can be seen in the fact that support for unilateralism, mercantilism, and rejection of multilateralism has come from both Democrats and Republicans over the years. That support grew, as once before at the end of economic globalization before 1914, when losers of globalization became more numerous, visible, and vocal because of an intensification of the globalization process and policy failures at home (Werner, 2004). Interesting, but not surprising to economic historians, is the fact that competing trade policy strategies coexisted in the US for about 50 years, and that the shift from a multilateral to a unilateral focus was not a straight line. Until the completion of the Uruguay Round in 1993, the US was still, by far, the most vocal defender of the WTO process. At the time, Washington’s multilateral and regional activities were often interpreted as nothing but a threatening gesture mainly employed to bring new dynamics to the multilateral arena (Falke, 2017). One of the most remarkable moments in the long transition from multilateral orthodoxy to outright condemnation of the WTO is the relentless efforts of the Clinton administration to bring China into the WTO in the late 1990s, which seems contradictory when looking at US-China relations today. Because of the dissimilar characters and size of the American and the Chinese economies, it is not surprising from an international trade theory point of view that China’s WTO accession in 2000 led to the “China Shock.” Indeed, it is one of the clearest signs that liberalization of south-north trade does lead to demanding structural change and deindustrialization in the Global North—and specifically in the US. The maneuver to bring China into the WTO can only be understood against the background that it took politicians and academic elites inside and outside the US quite a while to understand the gravity of the transition into the second phase of globalization in the late twentieth century. This very dynamic phase of globalization put an end to the uncontested North

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Atlantic economic supremacy that had lasted since the Industrial Revolution. Once these insights had settled in, Washington’s stance toward China changed radically. In the meantime, not least through fierce trade policy measures introduced by the Trump administration, a new broad consensus has emerged in Washington that goes far beyond the followers of the 45th President; practices such as strategic infringements on intellectual property by China are no longer tolerated and trade imbalances, if they are consistent and of a high level, are addressed rigorously. The Trump administration’s modification of US trade policy is remarkable as it builds domestically on a new political coalition between Republicans and disenfranchised American workers. These modifications are detrimental because they come with an explicit denial of the significant domestic policy failure in the US during the last decades. Improvements in education, welfare, and especially of active and passive labor market policies were absent from the Trump administration’s economic policy agenda (Werner, 2019). In this sense, the Trump years have to be understood as a counter-thesis to the hegemonic trade policies of the US in the Bretton Woods era—while displaying disturbing parallels to dead-end policies in the North Atlantic region in the inter-war period.

Conclusion and Outlook Coming out of the Second World War, the US established a new social contract composed of vastly improved social protections at home, and an orderly opening of the US economy to global competition through free international trade. As a hegemon, the US was instrumental in setting multilateral rules and disciplines for the world trading system, while allowing for exceptions. The two sides of the social contract worked hand in hand. The TAA is one of the few explicit examples of this contract. More important in the post-war decades was the fact that the expanding welfare state improved opportunities for educational attainment and helped workers in many other ways to successfully cope with structural change induced by trade liberalization and other forces. The first signs that the social contract was crumbling came with the onset of the domestic economic malaise in the 1970s. The US held on to its hegemonic role as defender and driver of multilateral rule, but gave up its multilateral orthodoxy. In small steps, Washington started to compromise its own trade policy record by playing an active role in forming PTAs and engaging in aggressive unilateral measures. For many decades, the

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compromising of the absolute priority of US multilateralism ran parallel to the continuous decline of social protection and economic participation. With these changes came rising doubts in the population and among policymakers about the advantages of the multilateral rules the US had introduced to the world in the post-war decades. At the time of writing, it looks as if US trade policy has gone full circle—all the way back to the dark inter-war period of unpredictable aggressive unilateralism. However, this trend is not irrevocable. The incoming Biden administration may set new priorities—for both the domestic and the international sides of the social contract. European countries are a case in point: They have been confronted with similar structural challenges to their social contracts since the 1970s, but have not reacted with policy failures of a similar extent on the domestic side of the contract. Relatedly—with the remarkable exception of Great Britain— economic nationalism and isolationism have also not spread as much in the democracies of Western Europe, even though acceptance of regional economic integration has weakened here and there. Whether or not continuing on with a devastated social contract is a final point in US developments and what this would mean for US leadership in the international system is open for discussion. According to our analysis, the chances that the US will at least partially reclaim its leadership role in international trade policies and other multilateral forums is much more likely if the domestic side of the social contract can be restored—i.e. if economic and welfare policies help to re-introduce economic participation and social protection in the face of dynamic globalization. If, on the other hand, future US administrations will not achieve such domestic progress, the chances are slim that Washington will be able to play a more constructive role in the hegemonic transition process than it has during the Trump years. Democrats have repeatedly suggested policies that would strengthen the position of American workers, although to different degrees. The Obama administration’s main advance was the introduction of Obamacare (Lammert, 2017). Contenders in the 2020 Democratic Party presidential primaries, such as Bernie Sanders and Elizabeth Warren, wanted to go much further—in the direction of European Social Democracy. Interestingly, Sanders, and to some degree also Hillary Clinton, claimed, in addition to their proposals to revive the domestic side of the social contract, quite a few of the isolationist and protectionist trade policies of the Trump camp in 2016—and, in the case of Sanders, once again

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in 2020. The fact that not only Trump followers see a need for protectionist trade policies but that such policies have had a strong and growing footing in both, the Republican and the Democratic Party, for quite a few decades, points once more to the dramatic changes of the relative position of the US in the world economy. Changes such as accelerated globalization and competition from highly dynamic emerging economies are here to stay and will exert their pressures on the Global North in unprecedented ways in the years to come. They are already calling into question whether the US will be able to revive its exceptional socio-economic position of the post-war years—and the trade policies that were built on the basis of uncontested US hegemony.

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PART II

Abdication of Leadership: US Foreign Policy and the Politics of Hegemonic Ordering

CHAPTER 4

A Crisis from Within: The Trump Administration and the Contestation of the Liberal International Order Tim Heinkelmann-Wild, Andreas Kruck, and Benjamin Daßler

Introduction The Liberal International Order (LIO) is in crisis and the crisis stems from within: The United States has turned against some of the major multilateral institutions that it once constructed to underpin the LIO. Under President Donald Trump, criticism of international institutions has become a linchpin of US foreign policy rhetoric (Carnegie & Carson, 2019). Not only during his election campaign but also while in office, Trump and high-ranking members of his administration have regularly— and often fiercely—attacked international institutions at the heart of the LIO, including the United Nations, the NATO, the WTO, as well as the Bretton Woods Institutions; i.e., the IMF and the World Bank. While

T. Heinkelmann-Wild (B) · A. Kruck · B. Daßler LMU Munich, Munich, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_4

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the diagnosis of a current crisis of the LIO is almost consensual among political scientists, policymakers, and the broader public alike (see, e.g., Colgan & Keohane, 2017; Haass, 2018; Ikenberry, 2018), two strands of literature point to different causes of the US’s turn away from the LIO and thus different driving forces of the order’s crisis. Vanishing support for multilateral institutions from the Trump Administration seems hardly surprising from a power shift or, more precisely, a hegemonic decline perspective (Gilpin, 1981; Layne, 2018). Rooted in hegemonic stability (Kindleberger, 1976, 1986; Krasner, 1976) and power transition theories (Modelski, 1987; Organski, 1968; Organski & Kugler, 1991), this scholarship expects hegemons to turn away from multilateral institutions when their relative power is declining. As their power preponderance is shrinking, they get more concerned with relative gains for power-political rivals and relative losses for themselves from multilateral cooperation. Their tolerance for freeriding on the part of other states decreases while their own incentives to retrench their commitments and, if possible, freeride on other states’ contributions to multilateral institutions increase. Fading domestic support for costly multilateral commitments may further constrain declining hegemon’s backing of international institutions. Perhaps most importantly, their ability to achieve desired political outcomes in and through international institutions decreases, reducing the attractiveness of international institutions and breeding dissatisfaction with the institutional status quo. In short, (relative) decline in power leads to the hegemon’s abandoning of multilateral leadership. The populist nationalism literature emphasizes that anti-globalist social forces in the US and other Western societies shape their leaders’ stances toward international institutions (Bisbee et al., 2019; Copelovitch & Pevehouse, 2019; Hooghe et al., 2019; Musgrave, 2019; Norris & Inglehart, 2019). From this perspective, populist leaders present themselves as putting the interests of their nation first and attack liberal and globalist norms out of domestic politics calculus; i.e., to appeal to and stoke nationalist sentiments among their domestic constituencies. In this view, the Trump Administration seeks to destroy the current LIO in a populist move that caters to anti-globalist and anti-liberal sentiments in (significant) parts of US society. In this view, the crisis of the LIO is driven by an upsurge of illiberal nationalism in the US (and other countries making up the core of the LIO).

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While both the populist nationalism and the power shift perspective capture important aspects of the current crisis of the LIO, we argue that, in order to fully grasp the nature and extent of this current crisis, we should conceive of it as a crisis of liberal hegemony. The double problem of the LIO is that the US under President Trump has been undermining its liberal ideational underpinnings, as the populist nationalism strand foresees, and is increasingly withholding material contributions crucial to its functioning, as the power shift strand predicts. We develop our argument in several steps. The next section “The LIO and Liberal Hegemony” starts out from a definition of the LIO as liberal in substance and multilateral in its procedures. Liberal hegemony then designates a situation where the most powerful state in the international system backs the liberal values enshrined in international institutions and pursues its policies through multilateral cooperation and leadership. Based on this conception, we claim that liberal hegemony can be regressive in two ways: by hegemonic illiberalism, as well as isolationism. The combination of these two developments characterizes the Trump Administration’s turn away from liberal hegemony and drives the current crisis of the LIO. In the sections “Illiberalism” and “Isolationism”, we conceptualize illiberalism as well as isolationism as regressive dynamics undermining liberal hegemony, and illustrate their empirical prevalence by drawing on recent examples of US contestation of international institutions. The “Conclusion” discusses the implications of our diagnosis for a future (re-)consolidation of the LIO. We suggest that the current crisis of the LIO is less severe than the power shift strand often suggests but more protracted than the populist nationalism strand generally expects.

The LIO and Liberal Hegemony We understand the LIO as an open and inclusive order that is multilateral in its procedures and one that follows political and economic liberalism in its substance, such as human rights and open markets (Ikenberry, 2012, p. 2; Stephen & Zürn, 2019, pp. 10–11; Eilstrup-Sangiovanni & Hofmann, 2020, pp. 2–3; Cooley & Nexon, 2020, p. 16). While not being a cohesive entity formed at one moment in time, “[i]nternational order is manifest in the settled rules and arrangements between states that define and guide their interaction” (Ikenberry, 2012, p. 12). International institutions then are “building blocks of orders” and “prescribe acceptable kinds of behavior and proscribe unacceptable forms of behav-

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ior” (Mearsheimer, 2019, p. 9). International institutions are sets of rules meant to govern state behavior and can take the form of international agreements or organizations (Martin & Simmons, 2013, pp. 328–329). The LIO did not emerge by chance, but was purposively set in place by the US, who acted as a liberal hegemon both after the Second World War and since the end of the Cold War (Ikenberry, 2012; Ikenberry & Nexon, 2019; Mastanduno, 2019; Mearsheimer, 2019; Mousseau, 2019). We define liberal hegemony as a situation where the materially most powerful state in the international system ideationally fosters and supports liberal values enshrined in international institutions, and channels its policies through multilateral institutional fora. Thus, on the one hand, liberal hegemony draws on material capabilities to both provide international public goods and incentivize cooperation via multilateral institutions, and, on the other hand, to promote their ideational underpinnings (Nye, 2011; Young, 1991; Zürn, 2018; see also this volume). Prominent examples of liberal ordering by the US as a liberal hegemon include the creation of the UN system, NATO, the WTO, as well as the Bretton Woods Institutions; i.e., the IMF and the World Bank (Ikenberry, 2001; Ikenberry & Nexon, 2019). Liberal hegemony can be regressive with regard to both of these pillars. The ideational dimension of liberal hegemony can be regressive by a shift toward illiberalism, and the material power dimension can be regressive by the hegemon’s turn to isolationism; i.e., its inability or unwillingness to muster the resources for global leadership. While the US has periodically shifted in both of these two directions throughout its history (see, e.g., Fehl, 2012; Thimm, 2016), it is the combination of illiberalism and isolationism that drives the current crisis of the LIO (see Fig. 4.1).

Illiberalism Illiberalism in the hegemon’s approach to global order(ing) designates a situation where the government of the most powerful state in the international system publicly advocates ideas and pursues policies that contradict the principles of political and economic liberalism that form the LIO’s substantive core (see Hooghe et al., 2019; Copelovitch & Pevehouse, 2019; Panke & Petersohn, 2017). In other words, the formerly liberal hegemon stops supporting the ideational underpinnings of the existing order. Illiberalism might take the form of direct attacks—in words and deeds—against particular liberal economic or political norms enshrined

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Illiberalism

Crisis of LIO

Liberal Hegemony

Isolationism Fig. 4.1 Liberal hegemony and the move toward illiberalism and isolationism

in multilateral institutions (Heinkelmann-Wild & Jankauskas, 2020). It might also manifest itself more subtly via defenses of the sovereignty of the hegemon’s national community against liberal universal rights and strong international institutions (Wilde et al., 2019). In any case, international institutions that represent and promote liberal norms are contested by the hegemon’s government because they allegedly conflict with and infringe upon the interests and values of the hegemon’s national community, which is depicted as suffering from the institutional status quo. When the liberal hegemon shifts to illiberalism in its talk and action vis-à-vis international institutions, this has severe consequences for the LIO. Illiberal hegemonic contestation of international institutions directly undermines the legitimacy and viability of the order, as the—formerly sustaining—hegemon revokes its rhetorical and practical support for liberal international policies and/or actively advances alternative illiberal ideas and policies. Just as significantly, it has negative ripple-down effects, as other powers’ compliance with constitutive norms of the LIO

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also decreases. When the hegemon turns away from liberal norms and rules, other states may follow suit, as they may question the robustness of the contested institution and thus the utility of contested compliance and support (Carnegie & Carson, 2019). Moreover, illiberal states such as China and Russia then face opportunities to justify their own deviations from international liberal norms and rules based on the hegemon’s behavior (see Hurd, 2007; Schmidt & Sikkink, 2019). Under the Trump Administration, the US has clearly adopted an illiberal position toward many international institutions at the core of the LIO. It has dropped the publicly proclaimed values of political and economic liberalism, and turned to contest their presence in international institutions, by both words and deeds. In what follows, we empirically illustrate these two manifestations of illiberalism. First, the US under President Trump engaged in rhetorical contestation of liberal values enshrined in international institutions. Publicly attacking these institutions in terms of its narrow national self-interest and sovereignty, rather than out of concern for the global public good, as is typical for the rhetoric of liberal hegemons. In front of the UN General Assembly, President Trump emphasized a “doctrine of patriotism” that favored national sovereignty over international institutions, which he rejected as “unelected, unaccountable, global bureaucracy” (Donald Trump, cited by The White House, 2018). In this vein, Trump and members of his administration lashed out against international institutions frequently and fiercely. For instance, Trump called the WTO “a disaster for us” (2018a). He also depicted the UN Refugee Agency (UNHCR) as “an international body unaccountable to our own citizens” (2018b), and rejected its resettlement scheme, demanding to “place refugees as close to their homes as possible to ease their eventual return” (Donald Trump, cited by The White House, 2018). Similarly, Nikki Haley, his Permanent Representative to the UN at that time, insisted that immigration policies “must always be made by Americans and Americans alone” (Nikki Haley, cited by Rush, 2018) Moreover, then-US national security adviser John Bolton rejected the jurisdiction of the International Court of Justice over the US, which he criticized as “politicized and ineffective” (John Bolton, cited by Anderson, 2018). The most radical form of illiberal rhetorical contestation can be found in public statements that targeted international institutions’ liberal core from a nationalist point of view. These statements portrayed the national community of the hegemon as suffering directly from the practices and

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rules enshrined in the respective institutions. Take the example of the Trump Administration’s attacks against the WTO. Trump characterized the WTO as the “worst trade deal ever” and claimed that the organization “has actually been a disaster for us” (2018a). In an overt attack against the LIO’s principle of multilateralism, he opined that “[b]ilateral deals are far more efficient, profitable and better for OUR workers. Look how bad WTO is to U.S.” (2018c). The Trump Administration thus rejected the key liberal principle of a multilateral and rules-based trade order that constitutes the organization’s core. Other revisionist attacks targeted the very idea—rather than the specific procedures—of supranational dispute settlement and thus the liberal idea of an international rule of law. For example, US trade representative Robert Lighthizer criticized the WTO Appellate Body for “judicial activism,” denouncing binding multilateral adjudication as a “threat to sovereignty” (Robert Lighthizer, cited by Schlesinger, 2019). In its fundamental critique of the WTO, the Trump Administration refrained from using universalist language about the global public good that is typical of liberal hegemons. Rather, it focused on presenting the US as the victim of the WTO and openly put national interests first. For instance, Trump construed the WTO as an antagonist of and danger for “us,” i.e., the American people, when claiming that the organization is “unfair to us” (2018a) or “OUR workers” (2018c), and that “[t]he WTO was set up for the benefit [of] everybody but us. […] They have taken advantage of this country like you wouldn’t believe” (Donald Trump, cited by Donnan, 2017). Even in cases where the Trump Administration refrained from contesting international institutions’ social purpose, but focused on particular institutional practices, illiberal rhetorical contestation is evident. Much different from a liberal, benevolent hegemon that purports to act in the interest of global public goods, the Trump Administration unambiguously asserted its self-serving national interests when calling for reforms to international institutions such as NATO. In strong deviation from previous administrations, Trump’s criticism of other member states’ failure to live up to the 2014 objective of spending at least 2% of the GDP for defense by 2024 was characterized by a nationalist, transactional logic: “The United States is spending far more on NATO than any other Country. This is not fair, nor is it acceptable. […] Germany is at 1%, the U.S. is at 4%, and NATO benefits Europe far more than it does the U.S.” (Trump, 2018d). Trump (2018f) even claimed that

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fellow NATO members “are not only short of their current commitment of 2% (which is low), but are also delinquent for many years in payments that have not been made.” Importantly, this criticism is not framed in terms of increasing the global effectiveness of NATO in the interest of all member states, as a liberal hegemon would do. Rather, Trump focused on the national disadvantages for the US. He portrayed the US as a “sucker” (2019b) within NATO, and denounced institutional practices as being “[v]ery bad for [the] U.S.” (2017), “[n]ot fair to the U.S. taxpayer” (2018e), or “very unfair to the United States” (2019a). Trump (2018c) thereby stepped back from the (implicit) deal of liberal hegemony—carrying disproportionate burdens in return for disproportionate policy influence—when he claimed that other NATO members were taking advantage of US contributions, particularly since they would also “rip us off on Trade”: “Germany and other rich NATO Nations […] pay only a fraction of their cost. The U.S. pays tens of Billions of Dollars too much to subsidize Europe, and loses Big on Trade!” (Trump, 2018g) Second, the US also pursued illiberal policies at the international and domestic level that violate the liberal norms enshrined in many international institutions it helped to create. For instance, in clear deviation from universal human rights norms, Donald Trump campaigned on the promise to “bring back a hell of a lot worse than waterboarding” (Donald Trump, cited by Schmidt & Sikkink, 2019, p. 105) and, after taking office, prepared an executive order authorizing practices of torture (ibid.). Moreover, when the Trump Administration issued a policy that prescribed that migrant children should be forcibly separated from their parents at the border, this violated liberal norms enshrined in international institutions such as the UNHCR, the International Organization for Migration (IOM), and the United Nations Children’s Fund (Heinkelmann-Wild & Jankauskas, 2020). Child separation was not the only case where the Trump Administration’s asylum and migration policies violated universal human rights. In the first months after taking office, the Trump Administration issued an executive order—the so-called Muslim Ban—challenging humane migration and refugee protection enshrined in the mandates of the IOM and UNHCR. Moreover, the Trump Administration tightened rules on asylum seekers in late 2017, and reduced the numbers of refugees allowed into the US (Heinkelmann-Wild & Jankauskas, 2020). The Trump Administration not only acted against universal human rights norms, but also the principle of free trade. This was particularly evident in its aggressive trade policies that clearly contradicted the norms

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enshrined in the WTO’s liberal trade agenda. For instance, claiming to protect America from “[…] foreign adversaries […] who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services in the United States […]” (The White House, 2019), Trump issued an executive order to block the Chinese telecom giant Huawei and other foreign communications firms from doing business in the US. This was a clear example of the Trump Administration turning away from the liberal free trade principle enshrined in the WTO’s underlying treaties. Explicitly referring to national security interests, the Trump Administration further denied the WTO’s right to interfere within these unilateral measures against foreign companies by rejecting the WTO’s review of such national security determinations as not justiciable (Malawer, 2019, p. 424).

Isolationism Besides being confronted with hegemonic illiberalism, the LIO is, at the same time, threatened by a second dynamic—isolationism—that also undermines liberal hegemony. Isolationism refers to a situation where the most powerful state’s government shuns multilateral cooperation and global leadership in international institutions that form the LIO’s infrastructure (Daßler et al., 2019; Heinkelmann-Wild, 2020; MacDonald & Parent, 2018). In other words, the formerly liberal hegemon retrenches its global engagement and stops providing crucial material contributions, not only for deepening of the order, but even for its maintenance. Isolationism can take the form of refusing to partake in the creation and build-up of new international institutions to tackle emerging threats to the existing order. It can also mean to reduce commitments, such as financial or personnel contributions, to existing international institutions, or to outrightly terminate participation in such institutions by leaving international organizations or abrogating international treaties. When the liberal hegemon turns from multilateral leadership to isolationist retrenchment, this has severe consequences for the LIO. Depending on how vital the hegemon’s contributions are for the functioning of the institution, hegemonic disengagement can cripple the material and political resources of the institution to an extent that it can no longer operate effectively. At any rate, withholding or withdrawing hegemonic support has direct negative effects on the range of activities, authority, and effectiveness of the institution (see Tallberg & Zürn,

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2019). Moreover, the retrenchment of the hegemon will most likely have a contagious effect on other states as well. In the absence of the leading state, other countries were oftentimes found to be reluctant to join in multilateral cooperation or even continue cooperation in exiting international institutions (von Borzyskowski & Vabulas, 2019; Milewicz & Snidal, 2016). This may be because multilateral cooperation without the hegemon’s contributions is often less useful and costlier for the remaining members. This reluctance may also follow from direct attempts by the hegemon to draw other states out of the institution—these attempts being motivated by a desire to deliberately undermine the institution (Daßler et al., 2019). Under the Trump Administration, the US has turned to isolationism by abandoning multilateral cooperation and leadership in numerous international institutions. More specifically, we highlight two empirical manifestations of US isolationism. First, the US rejected to join the creation or deepening of international institutions to address emerging problems and threats to the LIO. For example, the Trump Administration refused to sign the “Optional Protocol to the convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment” (OPCAT), effectively renouncing a global leadership role in a crucial human rights regime. Moreover, the US, under Trump, repeatedly refused to sign the Group of Seven (G7) Summit Declarations and other G7 Joint Statements (e.g., BBC, 2018), most prominently in 2020 on the global fight against COVID-19 (Schult, 2020). During the global pandemic, the Trump Administration has also refused to agree upon an extension of the IMF’s Special Drawing Rights that were meant to enlarge the institution’s capacities to provide more conditional loans to those highly indebted low- and middle-income countries suffering unprecedented financial losses due to COVID-19 (Tooze, 2020). The Trump Administration thereby not only undermined the IMF’s crisis response, but also the institution’s effective functioning as a global “lender of last resort.” Another example is the Trump Administration’s opposition to signing the UN Global Compact on Migration. In this case, the contagious effects of hegemonic rejection of multilateral institutions is particularly evident: After the US proclaimed it would not sign the Global Compact for Migration, several other countries such as Brazil, the Czech Republic, the Dominican Republic, Israel, Poland,

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Slovakia, and Hungary followed suit, justifying their rejection with arguments and language strikingly similar to the US’s stance (Gatti, 2018; Paris, 2019). Second, the US has terminated their commitment to existing institutions by means of cutting their funding or leaving them—many of which had been co-created and sustained by previous US administrations. The Trump Administration withdrew significant amounts of funding from several international organizations, putting these organizations in severe financial crisis. For instance, the US, under Trump, cut funding for UN peacekeeping, the World Food Program, and the Green Climate Fund. In the case of the United Nations Population Fund (UNFPA), the Trump Administration announced it would eliminate the complete resource contributions to the organization. This amounted to a loss of $32.5 million for the fund and its projects that promote the reproductive health and rights of women and girls (Heinkelmann-Wild & Jankauskas, 2020). In other instances, the US even terminated their participation in international institutions. For instance, the US exited international organizations such as the UNHCR, the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), and the UN Educational, Scientific, and Cultural Organization (UNESCO), and withdrew from numerous international agreements, such as the Trans-Pacific Partnership (TPP), the Paris Agreement, the so-called Iran nuclear deal, and the Open Skies Treaty. The recent withdrawal from the World Health Organization (WHO) further underlines the Trump Administration’s effort to reduce its multilateral engagement, while increasingly isolating itself from established forms of international cooperation. In the midst of the global COVID-19 pandemic, Trump declared a withdrawal by the US—the member with the largest contributions by far—from the WHO. Instead of multilateral cooperation, the US would turn to unilateral assistance schemes (Adam, 2020).

Conclusion In this chapter, we have argued that the current crisis of the LIO is first and foremost a crisis of liberal hegemony. The regressive dynamics of illiberalism and isolationism undermine US support for liberal norms—and the international institutions that embody them—and lead the formerly liberal hegemon to retrench its multilateral leadership. This double assault

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Table 4.1 Empirical manifestations of illiberalism and isolationism

Illiberalism

Isolationism

• Rejecting liberal values • Pursuing illiberal policies

• Rejecting new multilateral efforts • Withdrawing from multilateral institutions

is visible in the Trump Administration’s contestation of international institutions through illiberal rhetorical criticism and illiberal policies, on the one hand, and its disengagement from multilateral cooperation, on the other. Table 4.1 summarizes the two developments along with their empirical manifestations. What does this analysis bode for the future of the LIO and, in particular, for the prospects of a reconsolidation or constructive renewal of this order? On the one hand, we are less pessimistic than proponents of a purely materialist power shift perspective who claim that the LIO is doomed due to vanishing US preponderance (Layne, 2018; Mearsheimer, 2019). In contrast to such a deterministic power shift account, we argue that more or less (il-)liberalism on the part of the (declining) hegemon matters and does entail meaningful variation in the design and vitality of the LIO. Recent and ongoing illiberal attacks from the US against the LIO harm the order directly and indirectly through ripple-down and contagion effects. Consequently, a more liberal US stance, which might be taken by a post-Trump Administration, could stop or at least mitigate the de-legitimation and erosion of the LIO in and by the core Western countries. On the other hand, we are less optimistic than some advocates of the populist nationalism thesis, who hold that if only a new US administration reasserts its commitment to liberal values and policies, the crisis of the LIO can be overcome, since the LIO, in and of itself, is alive, well, and attractive for most members of international society (see, e.g., Ikenberry, 2018). In contrast to such a reductionist view, we highlight that, even with a more liberal post-Trump US administration, the systemic global power shift will continue and further constrain multilateral engagement and leadership of the US. Even future US administrations committed to liberal values and policies at home and abroad are unlikely (to be able) to raise the level of US contributions to liberal global order(ing) back to preTrump levels, since the progression of the US’s relative decline in power

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will continue. Even if liberalism as a guiding principle of US attempts at global order(ing) can be restored, the days of US liberal hegemony may be numbered. To be sure, we cannot and do not want to rule out the possibility that alternative multilateral leaders might emerge in a reconfigured hierarchy of global powers that uphold or even revive the principles and practices of the LIO (Heinkelmann-Wild, 2020; MacDonald & Parent, 2018; Milewicz & Snidal, 2016). In the presence of such new liberal global leaders, we might indeed witness a “transition within the order,” as authors such as John Ikenberry (2012, 2018) do not tire of foreseeing and propagating. For instance, after the withdrawal of the US from the Paris Agreement on climate change, as well as the WHO, China and European powers signaled their willingness to take over leadership, and reaffirmed their commitment to these institutions (Coleman, 2020; Deese, 2017). However, potential alternative leaders in the Western camp can also undergo an illiberal backlash, while the liberal outlook of rising powers—first and foremost China—is anything but certain. As a result, even if they would step in at all, multilateral cooperation might nevertheless be hampered by increasing preference divergence or converted to illiberal purposes. For instance, while the EU filled earlier funding gaps in the UNFPA, after the US withdrawal under the Trump Administration, the liberal consensus was weakened due to Eastern European member states (Rankin & Elgot, 2017). And, after US withdrawal from the UN Human Rights Council, China was striving to fill the vacuum and redefining the core of universal human rights (Piccone, 2018). Thus, under less propitious conditions, a Gilpinesque “transition of the order” (Gilpin, 1981) away from liberal norms and multilateral procedures to a different, less liberal kind of international order is a real possibility.

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Schmidt, A., & Sikkink, K. (2019). Breaking the ban? The heterogeneous impact of US contestation of the torture norm. Journal of Global Security Studies, 4(1), 105–122. Schult, C. (2020, March 24). Streit über ‘Wuhan-Virus.’ Der Spiegel. https:// www.spiegel.de/politik/ausland/streit-um-wuhan-virus-a-6bb570bb-9f2b4cd1-a895-fdeabf53f6b4. Accessed 11 November 2020. Stephen, M. D., & Zürn, M. (2019). Contested world orders: Rising powers, Nongovernmental organizations, and the politics of authority beyond the nationstate. Oxford University Press. Tallberg, J., & Zürn, M. (2019). The legitimacy and legitimation of international organizations: Introduction and framework. The Review of International Organizations, 14(4), 581–606. Thimm, J. (2016). The United States and multilateral treaties: A policy puzzle. Lynne Rienner Publishers Inc. Tooze, J. A. (2020, April 17). A global pandemic bailout was coming—Until America stopped it. Foreign policy. https://foreignpolicy.com/2020/04/17/ global-pandemic-bailout-imf-world-bank-meetings-america-sdrs/. Accessed 11 November 2020. Trump, D. (2017, May 30). Twitter. https://twitter.com/realdonaldtrump/sta tus/869503804307275776. Accessed 11 November 2020. Trump, D. (2018a). Remarks by President Trump at signing of a presidential memorandum targeting China’s economic aggression. https://www.whi tehouse.gov/briefings-statements/remarks-president-trump-signing-presid ential-memorandum-targeting-chinas-economic-aggression/. Accessed 11 November 2020. Trump, D. (2018b, April 6). Twitter. https://twitter.com/realDonaldTrump/ status/982264844136017921. Accessed 11 November 2020. Trump, D. (2018c, June 10). Twitter. https://twitter.com/realdonaldtrump/sta tus/1005985339121504256. Accessed 11 November 2020. Trump, D. (2018d, July 9). Twitter. https://twitter.com/realdonaldtrump/sta tus/1016289620596789248. Accessed 11 November 2020. Trump, D. (2018e, July 10). Twitter. https://twitter.com/realdonaldtrump/sta tus/1016616792926703616. Accessed 11 November 2020. Trump, D. (2018f, July 10). Twitter. https://twitter.com/realdonaldtrump/sta tus/1016729137409486853. Accessed 11 November 2020. Trump, D. (2018g, July 12). Twitter. https://twitter.com/realdonaldtrump/sta tus/1017288317342224384. Accessed 11 November 2020. Trump, D. (2019a, August 21). Twitter. https://twitter.com/realDonaldTr ump/status/1164231651351617536?s=20. Accessed 11 November 2020. Trump, D. (2019b, October 7). Twitter. https://twitter.com/realDonaldTr ump/status/1181172462291243008?s=20. Accessed 11 November 2020.

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The White House. (2018). Remarks by President Trump to the 73rd Session of the United Nations General Assembly. The White House. https://www.whi tehouse.gov/briefings-statements/remarks-president-trump-73rd-session-uni ted-nations-general-assembly-new-york-ny/. Accessed 11 November 2020. The White House. (2019). Executive order on securing the information and communications technology and services supply chain. The White House. https://www.whitehouse.gov/presidential-actions/executive-order-securinginformation-communications-technology-services-supply-chain/. Accessed 11 November 2020. von Borzyskowski, I., & Vabulas, F. (2019). Hello, goodbye: When do states withdraw from international organizations? The Review of International Organizations, 14(2), 335–366. Young, O. R. (1991). Political leadership and regime formation: On the development of institutions in international society. International Organization, 45(3), 281–308. Zürn, M. (2018). A theory of global governance: Authority, legitimacy, and contestation. Oxford University Press.

CHAPTER 5

Wasting Hegemony in the Global Trading System: Trump’s Trade Policy Andreas Falke

Hegemony in the Global Trading System Since the beginning of the GATT/WTO system through the UruguayRound of the 1990s, the U.S. has been the main driver of a rules-based global trading system, at times even sacrificing its own interests to further the goals of the global system. The U.S. also managed to contain protectionist and unilateral impulses coming from domestic sources, particularly from the U.S. Congress, which, constitutionally, is the major agent in trade policy-making. Indeed, trade policy has been the domain of the executive, with institutions like the presidency and the USTR (United States Trade Representative) foiling protectionist impulses and pursuing market-opening strategies as their major goal. In this sense, the U.S. could be understood as a benign or benevolent hegemon that balanced its own needs with those of the stability requirements of the system. The U.S.

A. Falke (B) University of Erlangen-Nürnberg, Nürnberg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_5

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strategy even accommodated the rise of competitors such as Japan and the EU/EC since the 1960s. Yet, the stagnation of the Doha Round (since 2001) and the pursuit of a large number of FTAs (Free Trade Agreements), particularly in Latin America, give an indication that the WTO system is not the major focus of U.S. trade policy anymore. One of the reasons was the rise of new powers in the WTO system, namely, emerging economies such as India, China, and Brazil, which formed a “cartel” to block initiatives of the U.S. and OECD allies to push a new agenda. China’s rise as a manufacturing power in particular made the pursuit of further liberalization of the goods trade almost impossible, leading to the paralysis of the negotiating process in the WTO. The U.S. has also lost leverage with its very low tariffs on manufactured goods. The tariff-cutting formulas on the table in the Doha Round threatened the remaining peak tariffs designed to protect sensitive U.S. industries. The emerging economies, particularly Brazil, also demanded a drastic reduction of agricultural subsidies, a goal that ran counter to U.S. and EU interests. The WTO has been in a state of blockade and mutual obstruction ever since. The only way out would have been agreements on trade facilitation or the pursuit of critical mass agreements, where most suppliers would be included and the most-favored-nation rule would not have disadvantaged participants including the U.S. Alternatively, plurilateral agreements would have made it possible to trade concessions only among participants, excluding non-participants from the benefits. But this approach would have required the consent of all members. The WTO presented no opportunities for further market opening and rule-making in new areas such as digital commerce, where the U.S. had clear strengths. It was thus rational for the U.S. to pursue market-opening initiatives on the regional and bilateral level through comprehensive FTAs in terms of members and subject matter covered (Falke, 2017c, pp. 223–240). The Obama Administration pursued the FTA-route with proposals of two major mega-regionals: the Trans-Pacific Partnership Agreement (TPP), which included major trading nations in the Pacific such as Japan, South Korea, Australia, and Latin American countries such as Chile and Peru, as well as Canada. The Transatlantic Trade and Investment Partnership (TTIP) with the EU, which was to redefine transatlantic trade, was also pursued by the Obama Administration. The rules and disciplines proposed by both mega-regionals were directed at countering the rise

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of China’s neo-mercantilism—particular the role of state-owned enterprises and the violation of intellectual property rights of advanced nations. However, the relationship to the multilateral system was not lost. The idea was that both agreements would be so powerful and comprehensive in terms of membership and subject matter that they would eventually provide a basis for multilateralization. This way, the U.S. would restore and vindicate its role as benign hegemon of the global trading system, even though this approach side-lined the WTO (Falke, 2017a). This approach was loudly rejected by the Trump Administration.

Sources and Aims of Trump’s Trade Policy Donald Trump’s election campaign relied to an extraordinary extent on rejecting the integration of the U.S. into the world trading system, be it through regional or multilateral agreements. He argued that FTAs such as NAFTA, the Trans-Pacific Partnership (TPP), the planned Transatlantic Partnership Agreement (TTIP) with the EU, as well as the participation of the U.S. in the WTO had been disadvantageous for the country. An indicator of this disadvantage could be seen in the massive trade deficits that the U.S. runs with most of its trading partners, particularly in the manufacturing sector. These deficits, Trump alleged, are responsible for the massive job losses the U.S. has experienced across most industrial sectors. He vowed to counter this development by reorienting trade policy into a unilateral and protectionist direction. This push was a central plank in his election campaign strategy to win over the pool of uneducated voters, mostly whites without college degrees in industrial states, who felt left behind and displaced by globalization and trade liberalization (Trump, 2016). Trade agreements negotiated or planned by past administrations were identified as the major culprits behind the marginalization of traditional industrial centers. In the 2016 election campaign, this narrative gained traction, in part because major Democratic contenders like Bernie Sanders advocated a protectionist correction of U.S. trade policy as well (Falke, 2018, pp. 184–191). Trump’s strategy broke with a basic premise of U.S. foreign economic policy since the foundation of the Bretton Woods institutions, i.e., that the U.S. had to play a leading role in the maintenance of a rules-based world trading system, with the GATT/WTO system at its core. Trade policy is not the only area where this renunciation of global leadership can be observed. Indeed, the administration has distanced itself from the

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international system and its institutional structures overall: reducing and changing its role in the United Nations, in the system of U.S. alliances such as NATO, and when it comes to concerns like climate change or disarmament (Colgan & Keohane, 2017). This does not mean that the U.S. would not exploit these systems for singular convenience as long as they exist, but, as institutions, the Trump Administrations see them as dispensable and would prefer to replace them with bilateral relationships in which power is the main factor (Brands, 2018, pp. 79–100). Trade relations are to be evaluated purely by their mercantilist merits, while wider geo-political considerations such as bolstering alliances as the Obama Administration tried to do through TPP or TTIP, are not part of any calculus in the making of trade policy (Falke, 2017a, pp. 193–208). This very limited view of institutional trade relations and trade agreements is embedded in an understanding of trade as a zero-sum game: Trade deficits are one nation’s loss, while surpluses are another nation’s gains. Trump and his supporters focus on bilateral trade deficits with surplus countries and assume that the surplus can be used as a lever with which the U.S. can generate victories through a direct confrontation using protectionist threats (Falke, 2017b, pp. 321–342). Based on the Trump Administration’s premise of “an asymmetric balance of pain,” the surplus country always has more to lose, which will lead trading partners to oblige (Wolf, 2018). For the Trump Administration, the argument made by economists that bilateral and overall trade deficits do not matter for a country that holds the privilege of a world reserve currency such as the Dollar—and thus has no balance of payment problem—seems to be a purely academic argument with little traction (Blinder, 2018, pp. 184– 187). This thinking has brought forth the Trump Administration’s basic trade-policy initiatives such as non-participation in TTIP and TPP, the renegotiation of NAFTA and the Korea agreement, the use of the national security clause (Sec. 232) for sectoral protectionist measures, and the identification of China as the major competitor in the world trading order. It should be noted here that, for the Trump Administration, the WTO plays no role at all to help deal with American grievances.

Pressure Politics and the Risk of Trade Wars If trade policy consists in exerting maximum pressure to correct bilateral trade imbalances, the U.S. could be confronted with a situation in which it faces trade conflicts at multiple fronts—which, if unresolved, could lead

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to trade wars with almost all of its trading partners. The administration discounted the possibility that trading partners would retaliate and impose costs on American producers and consumers, as Trump advisors believed the U.S. would always have the option to increase “pain,” i.e., exhaust a much higher potential to raise tariffs and other trade barriers. In Trump’s own understanding “trade wars are easy to win” and “tariffs are the greatest” (Trump, 2016). At the center of the administration’s pressure tactics was the revival of Sec. 232 of the Trade Expansion Act of 1962 (Public Law 87–794), which represents a major delegation of trade authority by Congress to the executive branch. This provision, a relic of the Cold War era, allows the executive branch to introduce trade restrictions on products that are crucial for national security. The Trump Administration used this instrument to impose tariffs on steel and aluminum, arguing that, without a strong steel and aluminum industry, national security would be endangered (Bown, 2017). The interesting aspect of the decision was that not only China—arguably the country responsible for subsidized overcapacity—was hit, but also the closest allies of the U.S., such as the EU and Canada, thus calling into question the argument about national security concerns. Countries targeted by the tariffs retaliated by imposing their own tariffs on various American products, hitting, for example, the agricultural sector in states that were the bedrock of Trump’s electoral support. Undeterred by the sanctions’ fall-out, the administration threatened to apply the Sec. 232 instrument to the automotive sector (including car parts), where the U.S. has a massive trade deficit as well. The major target here was Germany, which accounts for the bulk of the EU’s automotive surplus. Faced with this threat, the EU has already developed a list of products for retaliatory measures. As of now, the pending threat of tariffs in the automotive sector has not come to pass. But the indiscriminate use of Sec. 232 shows the Trump Administration’s willingness to unleash an escalating spiral that will lead to a tit-for-tat trade war with several nations. Indeed, Sec. 232 could degenerate into an all-purpose weapon for ever-expanding trade restrictions. Interesting for the question of hegemony are the multilateral aspects of the U.S. Sec. 232 initiatives. The OECD had already recognized that there is a global overcapacity in the steel sector, mostly, but not exclusively, due to Chinese overcapacity. The OECD therefore suggested consultations in order to develop a concerted effort to reduce overcapacities. The Trump Administration rejected multilateral consultations on reducing steel overcapacity worldwide, claiming that the effects on trade

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flows were too small, and that the unilateral approach appeared much more effective. The administration felt vindicated by the fact that Art. XXI of the GATT does authorize countries to introduce trade restrictions for reasons of national security. The provisions of Art. XXI, however, are vague, and the rationales for introducing measures are, in the end, left to the “offending” party. Any judicial control through the WTO dispute settlement mechanism is, therefore, highly problematic: Formally, a dispute settlement panel could make a determination on national security claims, but the question remains whether contracting parties, particularly great powers, would accept a multilateral panel’s judgments on what constitutes legitimate security concerns. In addition, a panel would have to develop criteria and standards that legitimize protectionist instruments if the criteria are fulfilled. Such criteria have the inherent danger to define positive scenarios where national security measures could be invoked. The dispute settlement system of the WTO, since it has increasingly produced precedents, could provide strong rationales for national security-based protectionism. For these reasons, there had been a tacit understanding among contracting parties in the past not to take recourse to Art. XXI (Senti, 2017, pp. 321–324). While the tacit multilateral consensus had been to invoke Art. XXI in wartime situations only—using other mechanism such as the escape clause instead—the Trump Administration has broken with this tacit understanding. It might, of course, be argued that the threat of trade wars across the board is exaggerated. The Trump Administration did renegotiate NAFTA, now called USMCA (United States-Mexico-Canada Agreement), and it reached an agreement with South Korea and, most recently, (a partial) agreement with Japan. It should be noted that the Japan agreement only partly restores the market access guaranteed by the TPP and does not exclude the possibility of tariffs on the automotive sector under Sec. 232 (Schott, 2019). The same holds true for the EU-U.S. negotiations. The threat of tariffs on the automotive industry under Sec. 232 is not removed, but an agreement with the EU on industrial tariffs seems to be within the realm of possibilities (Landler & Swanson, 2018). An agreement might have been reached by making some concessions to President Trump so he could have claimed another (symbolic) victory before the 2020 elections. The problem may be, however, that the EU’s mandate excludes agricultural goods, which have to be included in an agreement if it is to have any chance of finding congressional approval. As the

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Trump Administration has entered negotiations with the EU and Japan, it appears to back away from trade war on all fronts. Yet, the lessons that can be drawn from the conflicts with Mexico, Canada, South Korea, Japan, and the EU indicate that the U.S. currently has little interest in developing forward-looking rules, in respecting precedent and conventions, and making efforts at collective action that would strengthen established alliances. The trade actions by the Trump Administration have made no significant contribution to strengthening the WTO system or to devising rules that would be amenable to multilateralization. The trade conflicts with Canada, Mexico, South Korea, the EU, and Japan seem only to have been a skirmish to prepare for a more comprehensive approach to challenge the U.S.’ most serious competitor and hegemonic rival: China. When it comes to addressing U.S.-China trade relations, its impact on the global trading system, and hegemonic transition in the system, we need to clarify what hegemonic transition means. Some preliminary concepts are: • hegemonic transition is a quantifiable change in global market shares, i.e., a change of the list of countries that account for the largest proportion of world trade, world exports, or manufacturing exports. • the successful attempt of another country, based on economic weight and diplomatic prowess, to shape the agenda and, eventually, the rules of the trading system. The paradigm and the yardstick here would be the role that the U.S. played during the formative period of the GATT to the conclusion of the Uruguay-Round. • hegemonic transition into uncertainty, or into chaos and disruption, where the old rules are being undermined and no new rules are on the horizon. This would describe a situation in which a hegemon would depart from or lose the ability to influence the system, be it out of lack of interest or that other powers block any progress in revising or up-dating the rules of the system. This is particularly relevant with regard to the U.S. relationship to the WTO. In the next section, this paper does not address these questions directly but focusses on the most crucial bilateral dynamic in the international system. It provides an overview of U.S.-China trade relations under the Trump Administration to seek clues as to what impact the U.S.-China trade conflict will have on the WTO/GATT system, and how this conflict may shape any possible hegemonic transition.

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The Trump Administration and U.S.-China Trade Relations: Dealing with a Systemic Challenger Ever since joining the WTO in 2002, China has become an economic powerhouse in the world trading system—increasing its share of global trade and exports, primarily by establishing a dominance in the global goods trade. It runs surpluses with most of its trading partners. The U.S. has amassed a cumulative goods trade deficit of 3.5 trillion dollars with China since its accession to the WTO, and about half of the U.S. overall trade deficit can be attributed to China (Atkinson et al., 2017, p. 3). Industrial jobs in the U.S. have been heavily impacted by the import of Chinese goods. Between 2000 and 2008, the loss of 2.4 million of 8 million industrial jobs lost overall can be attributed to Chinese imports, with early regional impacts on the industrial heartland and the South, and more recently also extending to regions producing technologically advanced goods. The impact is now felt nationwide, with the exclusion of agricultural regions that might have benefitted from trade with China. This process has been described as the “China Shock” (Autor et al., 2013), meaning that, during the first ten years since China’s WTO accession, the goods exported from China were primarily standardized mass products (textiles, toys, furniture, and basic electronic components). Yet, since 2010, China has been moving up the value chain and is now able to produce advanced technological products that compete on a worldwide scale. Increasingly, the competition between China and the U.S. is seen as a race between the two countries for the leadership position in the high-tech sector, and, in terms of economic systems, as a race between the Chinese model of state-directed capitalism and the Western model based on private competition and investment (Economy, 2018, pp. 91–151). The central challenge for the U.S. (and other advanced industrialized countries such as the EU member states, Canada, Australia, and Japan) is China’s neo-mercantilist industrial policy that relies on an intricate, multi-level, and opaque subsidy system. Measures include favorable credit terms, subsidized energy supply, and provision of free industrial real estate. Central to the Chinese strategy is a ten-year plan (Made in China) in which China identifies the advanced sectors where it aims to become a global market leader at the expense of market share of foreign corporations. Industrial robotics, aviation, e-mobility, renewable energy, advanced telecommunication, and biomedicine are among these sectors. The companies identified for government support are primarily

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state-owned enterprises (SOEs), over which governments, as well as the party, are able to exert control. These companies, which enjoy very favorable investment terms, are also protected from foreign competition by investment and custom barriers. Examples are high-speed trains, wind and solar power industries, and telecommunication equipment industries (Scissors, 2017; Financial Times, 2019). Because of its complicated institutional structure, the Chinese subsidy regime remains opaque to outside observers. Moreover, the lack of effective patent and trademark protection or intellectual property rights (IPR) has been a long-standing issue in the U.S.-Chinese economic contest, where the problem is now one of implementation rather than the lack of formal laws and regulations in China. The situation may also improve because of Chinese self-interest to establish an effective system of IPR protection, as Chinese tech companies now feel the need for protection of their own intellectual property. A greater challenge for American companies and policymakers appears to be the issue of forced technology transfer in the context of joint ventures with Chinese firms, where the partnership is conditional on the contractual transfer of technological know-how to the joint venture by the U.S. parent company. At the extreme end of appropriation of U.S. intellectual property is the outright theft of intellectual property by cyberattacks and industrial espionage (The National Bureau of Asian Research, 2013). China’s emerging market leadership role in mobile communication technology (5G), Artificial Intelligence (such as in self-driving cars), high-speed trains, and renewable energy were all abetted by statesupported industrial espionage using cyber instruments (Scissors, 2017). The Obama Administration already faced the issue of dealing with these challenges and tried to utilize institutionalized consultations with China to find solutions (e.g., Comprehensive Economic Dialogue), which had only limited success. A more confrontational approach to China was already on the horizon at the end of the Obama Administration. The attempts to engage China as a responsible stakeholder were seen to have failed (Economy, 2018, pp. 237, 246–247). Yet, the Trump Administration still instituted a rather abrupt change to past practices and introduced massive unilateral measures, for example, by using Sec. 301 of the Trade Act of 1974, which allows the U.S. to counter unfair trade practices, such as violation of intellectual property rights, forced technology transfer, and the impairment of the innovation capacity of U.S. industry through discriminatory measures. In addition,

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the U.S. used the escape clause (Sec. 201) for additional tariffs on products like washing machines and solar panels, and invoked the national security clause (Sec. 232) for steel products. By 2018, 50% of U.S. imports from China had become subject to higher tariffs, ranging from 10 to 25% (Bown & Zhang, 2019). Should Trump follow through with threats he issued before the “phase-negotiations” with China, the level of special protection would reach 96.7%. Average tariff rates on Chinese products would rise from 3.1% to 27.8%, a level not far from the infamous Smoot-Hawley tariffs of 1930 (Bown & Zhang, 2019). Although a changing attitude toward trade with China has been on the horizon for some time, the scale and scope of U.S. measures against China (and other trading partners) have changed profoundly under the Trump Administration and could continue to do so in the next few years. This could affect the entire world trading system, as not just bilateral trade is affected, but multi-country value chains as well. In this context, three aspects of the American strategy toward China are striking. First, the U.S. is trying to change deeply anchored structures of China’s state capitalism—such as entrenched regulatory and subsidy regimes—with short-term trade measures that seem incapable of leading to significant changes within China. Second, the U.S. is not making any attempt to find allies for a coordinated strategy against China. Rather, it rebuffs and alienates potential allies by imposing or threatening protectionist measures against them as well. Third, there is little consideration for the fact that the WTO, and therefore the established rules-based trade, could play a role in dealing with China’s state-centered mercantilism, even though this would require a more long-term perspective and more cooperation from the WTO members.

The Trump Administration, the WTO, and China’s State-Centered Mercantilism: The Marginalization of Multilateralism For the Trump Administration, multilateralism is not an instrument for the assertion of American interests. This position was clearly articulated by President Trump at the Asia Summit in Vietnam, in 2017, when he said, “Simply put, we have not been treated fairly by the World Trade Organization. We can no longer tolerate these chronic trade abuses, and we will not tolerate them” (quoted in Cassella, 2017). As he explains,

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U.S. Trade Representative Robert Lighthizer sees this attitude as a result of China’s rising role in the trading system: I believe that there is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China. The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented. Unfortunately, the World Trade Organization is not equipped to deal with this problem. The WTO and its predecessor, the General Agreement on Tariffs and Trade, were not designed to successfully manage mercantilism on this scale. We must find other ways to defend our companies, workers, farmers, and indeed our economic system. We must find new ways to ensure that a market-based economy prevails. (CSIS, 2017)

According to Lighthizer, the WTO and its current system of rules are unable to curb Chinese neo-mercantilism. Nor is a new set of rules available to stop Chinese practices, such as forced technology transfer or the dominance of the state-directed, subsidized sector of large national champions. The deeply embedded domestic subsidy and support systems seem to be immune to challenges by a multilateral organization in its current form (Wolff, 2017). And even if a reform package could be developed, China (and possibly other emerging markets) are likely to block such a move in the WTO. At the same time, the U.S., in the view of the Trump Administration, is forced into an unfair system of mismatched tariffs; i.e., the U.S. is caught in a system of very low-bound tariffs and limits on trade-remedy measures that restrict the leeway in crucial questions of systemic competition. Using the WTO as a forum to analyze and document problematic domestic practices are thus inconsequential. In the eyes of the Trump Administration, the WTO is a straight-jacket for the U.S., and an irrelevant playground at the same time—a position that comes close to an assessment that the WTO is disposable as an international organization (Financial Times, 2018). Thus, the strategy of the U.S. is to attack what it considers weak points of the organization’s procedures, such as the dispute settlement system— the core of the rules-based system. Beginning already under the Obama Administration, the U.S. has started to block the filling of open seats on the WTO appellate body, up to the point that it will cease to function.

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The Trump Administration is giving technical reasons for its obstruction, but the underlying reason may be the rather substantive opposition to decisions made by the appellate body regarding anti-dumping and countervailing duty cases that went against U.S. interests. Should no replacement panel members be appointed, the dispute settlement body (DSB) would fall into disrepair, which would eventually lead to a paralysis of the WTO system. The U.S. is unwilling to accept the DSB in its current form, as USTR Lighthizer clearly stated in a talk in 2017. There he pleaded for a return to the old GATT dispute-resolution system, where the adoption of rulings could be rejected and thus were not binding (CSIS, 2017). Thus, following the rules and decisions made by the appellate body would become a voluntary act. With the return to the old system, the U.S. would be free to assert its version of anti-dumping and countervailing duty strategies and thus gain more room to attack China and others. The U.S. would accept that other countries would also have the opportunity to act under less restraint. This is in line with Lighthizer’s claim that the DSB produces rulings that give states gains they would be unable to reach in bilateral negotiations. But could the WTO possibly play a more decisive role in the future by trying to address real grievances regarding trade relations with China? If one starts from the assumption that changing the Chinese practices of state-centered mercantilism is a long-term process, the WTO could provide a forum for analytically investigating and measuring the impact of Chinese restrictions and subsidy practices. The measurement of intricate and intransparent subsidies and the regulatory restriction of competition is complex and cannot be subsumed under traditional WTO definitions and rules. The WTO and its research function, however, can yield analytic documentation, pinpointing the impact of Chinese practices and create awareness of the challenge that China presents to the world trading system. A joint effort along these lines could also help to forge alliances with other affected member states. It would also create legitimacy for the process of challenging China. Only if such a strategy did not yield results, would bilateral pressure or collective pressure of like-minded states be called for. Unilateral measures should be the ultima ratio, including sectoral reciprocity in trade and investment in technological advanced sectors (Scissors, 2013, p. 6). However, the Trump Administration, with the President’s overwhelming desire for short-term results that appeal to his electoral base, has no patience and no acumen for long-term strategies

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and methodological approaches. It is unable to create foreign alliances, and even domestic alliances are relatively shallow. Domestically, industry as well as agriculture is opposed to uncontrolled protectionism. Even under the Trump Administration, there have been attempts by the U.S., the EU, and Japan to address the issue of systemic nonmarket policies by China within the WTO, including the massive use of trade distorting subsidies. But these attempts have been confined to the working level and never amounted to a high-level political initiative to challenge Chinese practices through a joint complaint (Gonzales & Véron, 2019, pp. 7–8). Nevertheless, they indicate in which direction measures by countries negatively affected by China’s state-centered neo-mercantilism could go.

Hegemonic Transition in the World Trading System: The Future of the WTO The current U.S. strategy toward the WTO is regressive. Although the trend toward this development started before the election of Donald Trump, his Administration has dramatically escalated this approach since 2016. This signifies a return to a system from the past, with limits on multilateral rules on trade. It also shows that the U.S. has retreated as an agenda-setter in the international system. The potential of the WTO as an investigative and research forum to develop strategies vis-a-vis China has been discounted in favor of unilateral actions. These have led to trade wars on multiple fronts that ended in a fragile truce through the phase-one agreement with China and the deferral of car tariffs against the EU. The WTO in its current shape may be unable to sanction Chinese behavior, but it has the capacity to document the consequences of the Chinese system and develop counter-strategies and rule-changes with allies. The current U.S. strategy under the Trump Administration is to undermine the WTO system. Since the creation of the GATT and all the way to the Doha Round, the U.S. has served as the driver of the system. While the Obama Administration concluded that the Doha Round was paralyzed, it pursued substitute strategies through mega-regionals that could have provided new rules for future multilateralization (Falke, 2017a, pp. 194– 195). Since the Trump Administration took office, the renunciation of rules-based trade seems to have become the norm, with the U.S. only willing to utilize institutions like the WTO if a decision is favorable to its interests. This is evident in the acceptance of the WTO’s authorization of

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retaliatory tariffs in the Airbus-Boeing dispute, which the U.S. considered favorable to its interests (Financial Times, 2019). The current approach of the U.S. to the WTO would lend weight to the argument that this is a hegemonic transition into uncertainty and disruption, possibly even chaos. There is a challenger to the U.S. in terms of share of world trade and export success, namely, China. But China is not only unable to set rules in the international system, but also mostly unwilling to do so. The exception is a regional role in the East Asian theater with the Regional Comprehensive Economic Partnership (RCEP), a Chinese proposal for lowering goods tariffs in East Asia. Currently, China profits from the status quo, where few of its practices are openly and formally challenge. However, given this situation, they will have to accept U.S. unilateral measures. Whether the EU could take on the role of a rule-maker in the multilateral trade system, possibly in an alliance with China, is highly questionable—even though the EU is establishing a cooperative approach with China through a joint EU-China working group and a planned agreement on investment (Gonzales & Véron, 2019, p. 15). The preference of the U.S. for a return to a former state of the system (the pre-Uruguay state of affairs) indicates a principled indifference to the WTO that may eventually turn into outright rejection. An abandonment of WTO-era, rules-based trade would open the door to unrestrained titfor-tat action in the form of massive anti-dumping and countervailing duty actions that would complement other unilateral approaches. It should also be noted that a return to the old system would make it much more difficult to challenge U.S. tariff measures. The question remains whether this development is due solely to the preferences and assumption of the Trump Administration. Would a Biden Administration reverse course and take a more constructive approach to the WTO, trying to deal with China’s challenge through a patient renewal and adaptation of the current trade system? Certainly, the tone and tactical approaches of a Biden Administration would differ from the Trump Administration. However, protectionist measures resonate with important segments of the Democratic electorate as well. Since Biden must regain states in the industrial heartland, such as Michigan and Pennsylvania, a complete reversal to status-quo ante or a reversal of all Trump’s tariff policies would prove difficult. This is reflected in the trade-policy positions of the Biden campaign that stress supply chain security and

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Buy-American attitudes. In addition, during a severe economic downturn induced by the COVID-19 pandemic, protectionism remains an option popular with large sections of the American public. It may be possible for a Biden Administration to take back the measures against the EU, but the pressure on China will continue, as criticism of Chinese trade practices is shared by both parties (Bryan & Chase, 2020, pp. 7– 8). While unilateral action will remain part of the American trade-policy portfolio, the question is, to what degree. Additionally, it remains to be seen whether unilateral measures can be combined with multilateral approaches. A Biden Administration offers an opportunity to revive multilateral leadership in trade policy and to formulate multilateral strategies against Chinese neo-mercantilism. This would require patient coalition building and coordination of policies. A Biden Administration could also undertake efforts with the EU to reform the appellate body within the dispute settlement system of the WTO. If (even partially) successful, such an approach would revive the role of the U.S. as an agenda-setter, and possibly stall, or at least delay, hegemonic transition into a chaotic state. Should President Trump be reelected, it is likely that his Administration would double down on its previous policies, with an increased emphasis on unilateral actions in bilateral contexts. This would include expansion of the “Phase One” agreement with China, geared to increase American exports, and to pressure the EU to reduce its export surplus in cars and car parts. The maintenance or strengthening of the WTO system would clearly not be part of the administration’s strategy. Rather, it is possible that the administration will actively work toward its demise. At best, the WTO would be marginalized. In this case, the hegemonic transition in which the U.S. is caught up would have to be equated with the WTO drifting into irrelevance.

References Atkinson, R., Cory, N., & Ezell, S. (2017). Stopping China’s mercantilism. Information Technology and Innovation Foundation. Autor, D. H., Dorn, D., & Hanson, G. (2013). The China syndrome: Local labor market effects of import competition in the United States. American Economic Review, 103(6), 2121–2168. Blinder, A. (2018). Advice and dissent. Why America suffers when economics and politics collide. Basic Books.

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Bown, C. P. (2017). Trump’s threat of steel tariffs heralds big changes in trade policy. Peterson Institute for International Economics. https://piie.com/com mentary/op-eds/trumps-threat-steel-tariffs-heralds-big-changes-trade-policy. Accessed 1 November 2018. Bown, C. P., & Zhang, E. (2019). Trump’s 2019 protection could push China back to Smoot-Hawley tariff levels. https://www.piie.com/blogs/trade-andinvestment-policy-watch/trumps-2019-protection-could-push-china-backsmoot-hawley.%2001.%20Oct.%202019. Accessed 5 October 2019. Brands, H. (2018). American grand strategy in the age of Trump. Brookings Press. Bryan, E., & Chase., P. (2020). The consequences of a Trump or Biden win for transatlantic Trade. German Marshall Fund. Cassella, M. (2017, December 9). Trump’s disdain casts unease over World Trade Organization summit. Politico. https://www.politico.eu/article/ donald-trump-trade-disdain-for-system-casts-unease-over-wto/?utm_sou rce=POLITICO.EU&utm_campaign=192797f685-EMAIL_CAMPAIGN_ 2017_12_11&utm_medium=email&utm_term=0_10959edeb5-192797f685189648249. Accessed 30 September 2018. Colgan, J., & Keohane, R. (2017). The liberal order is rigged. Foreign Affairs, 96(3), 36–44. CSIS. (2017, September 18). Transcript, Robert Lighthizer, U.S. Trade policy priorities. https://www.csis.org/analysis/us-trade-policy-priorities-rob ert-lighthizer-united-states-trade-representative. Accessed 14 October 2019. Economy, E. (2018). The third revolution: Yi Jinping and the New Chinese State. Oxford UP. Falke, A. (2017a). Auf dem Weg zur weiteren Handelsliberalisierung: Obama und die Ausweitung des Freihandels mit Europa, in Eine transformative Präsidentschaft. Die USA in der Ära Obama. Zeitschrift für Außen- und Sicherheitspolitik, 10(S2), 193–208. Falke, A. (2017b). Abkehr vom Freihandel: Die Trump-Administration und die transatlantischen Handelsbeziehungen. In F. Böller, S. Hagemann, A. Opitz, & J. Wilzewski (Eds.), Die Zukunft der transatlantischen Gemeinschaft (pp. 321–342). Nomos. Falke, A. (2017c). Handelspolitik. In T. Jäger (Ed.), Die Außenpolitik der USA (pp. 223–240). Springer. Falke, A. (2018). Neo-Merkantilismus und Wirtschaftsnationalismus. In W. Gellner & M. Oswald (Eds.), Die gespaltenen Staaten von Amerika (pp. 181– 198). Springer. Financial Times. (2018, November 2). America gives up writing the global trade rule book. https://www.ft.com/content/7b8284ec-dde1-11e8-8f50-cbae54 95d92b. Accessed 18 February 2018.

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Financial Times. (2019, October 2). WTO to let US impose nearly $7.5bn in tariffs in Airbus dispute. https://www.ft.com/content/9a2c5af6-e51c-11e99743-db5a370481bc?emailId=5d94b0db8960f3000407b3f9&segmentId= 3d08be62-315f-7330-5bbd-af33dc531acb. Accessed 20 October 2019. Gonzales, A., & Véron, N. (2019). EU trade policy amid the China-US clash: Caught in the Cross-Fire. https://www.piie.com/system/files/documents/ wp19-13.pdf. Accessed 1 October. 2019 Landler, M., & Swanson, A. (2018, July 25). U.S. and Europe outline deal to ease trade feud. New York Times. https://www.nytimes.com/2018/07/ 25/us/politics/trump-europe-trade.html?emc=edit_cn_20180728&nl=firstdraft&nlid=52496638_cn_20180728&rref=collection%2Fsectioncollection% 2Fpolitics&te=1. Accessed 1 August 2018. Schott, J. J. (2019). Reinventing the wheel: Phase one of the US-Japan trade pact. Peterson Institute for International Economics. https://www.piie.com/ blogs/trade-and-investment-policy-watch/reinventing-wheel-phase-one-usjapan-trade-pact?utm_source=update-newsletter&utm_medium=email&utm_ campaign=piie-insider&utm_term=2019-10-020. Accessed 1 November 2019. Scissors, D. (2013). The importance of Chinese subsidies. Testimony before the Senate Committee on banking, housing, and urban affairs subcommittee on economic policy. http://www.aei.org/publication/the-importance-of-chinesesubsidies. Accessed 12. September 2018. Scissors, D. (2017). How China cheats. National Review Online. http://www. nationalreview.com/article/453331/usa-must-make-china-reduce-protectio nism. Accessed 2 October 2019. Senti, R. (2017). WTO: System und Funktionsweise der Welthandelsordnung. Schulthess. The National Bureau of Asian Research. (2013). The IP Commission Report. The report of the commission on the theft of American intellectual property. http:// www.ipcommission.org/report/ip_commission_report_052213.pdf. Accessed 2 October 2019. Trump, D. (2016, June 28). Full transcript of Donald Trump’s jobs plan speech. Politico. www.politico.com/story/2016/06/full-transcript-trumpjob-plan-speech-224891. Accessed 2 October 2019. Wolf, M., (2018, October 2). Trump is wrong: China is not Mexico. Financial Times. https://www.ft.com/content/155f0ab0-c558-11e8-8670c5353379f7c2. Accessed 18. February. 2019. Wolff, A. (2017, December 15). The future of the WTO. Trade Vistas. https://tradevistas.csis.org/the-future-of-the-wto/?utm_source=CSIS+All& utm_campaign=18c19f2576-EMAIL_CAMPAIGN_2017_12_15&utm_med ium=email&utm_term=0_f326fc46b6-18c19f2576-201025765. Accessed 1 October 2018.

CHAPTER 6

Decay of US Economic Hegemony? Intellectual Property Rights, Dollar Centrality, and US Geo-Economic Power Herman Mark Schwartz

Dollar centrality in the global monetary system was a crucial pillar of US global power from 1945 until the Trump administration and the COVID-19 shock threatened to upend the global order. What was the structural basis for that centrality? Did it contain contradictions that drove endogenous decay? Hyman Minsky (1986, p. 79) posed a general question about money that applies here: “Every unit [in the economy] can ‘create’ money … the problem is to get it ‘accepted’.” Globally, this question becomes: Why do non-American actors continue to accept dollars, which, in practical terms, means holding dollar-denominated assets, and continue to use the dollar as the transaction currency for trade and foreign exchange hedging? Why do continuous US current account deficits and a steadily worsening US net international investment position—all of which

H. M. Schwartz (B) Inland University College, Elverum, Norway e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_6

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could signal a declining ability to service dollar-denominated claims—not induce other actors to flee the dollar for other, presumably more stable currencies? These questions are themselves embedded in the larger issues Susan Strange raised about US hegemony. For Strange (1989), hegemony rested on four pillars: dominance in or control over ideological power, military power, production power, and credit creation (financial power). This chapter concentrates mostly on the third aspect. It argues that intellectual property rights (IPRs—patent, copyright, brand, and trademark) were central to all four aspects of US power after 1991. Put simply, military power rested on technological dominance generated through investment in basic R&D. In turn, US firms commercialized that R&D and protected their profit streams with IPRs. This allowed them to organize global production chains from which they extracted the lion’s share of profits. Profitability created a huge pool of US assets that could be traded for real goods, making chronic US trade deficits acceptable to its trade partners. Finally, with varying degrees of success, the US state projected its preferred and ideologically justified IPR regime into international law through global, regional, and bilateral trade agreements, often with the support of IPR-oriented foreign firms. IPRs were one side of two inseparable structural factors assuring dollar acceptability in the pre-COVID-19 world. The other factor was historically rooted, politically engineered deficient aggregate demand in major export surplus economies. Demand-deficient economies needed significant export surpluses to attain politically acceptable minimum levels of GDP growth. But, by accounting definition, current account surpluses meant that exporters accumulated claims—assets—denominated in the importer’s currency, as surplus countries in effect loaned deficit countries the money used to buy exports. Practically speaking, the United States accounted for half of cumulative current account deficits between 1992 and 2018 (Table 6.1), meaning exporters accumulated US dollardenominated claims. But why would an exporter trust the value of dollar-denominated assets in the face of continual current account deficits and rising net external debt? The value of those dollar-denominated assets rested implicitly on profits generated by IPR-rich US firms and the GDP growth spillover from those firms. Here popular imagination and economic reality run in parallel: Apple alone accounted for about 1.5% of global stock market capitalization at the end of 2019. This made it rational to trade BMWs

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Table 6.1 Cumulative current account deficits and surpluses, 1992–2018, $ bila and % of total 12 largest deficit countries

$ bil

%

12 largest surplus countries

$ bil

%

USA UK Australia Spain Brazil Turkey India Canada Mexico Greece Poland Portugal Sum, these 12 Global deficits, total

−10,635.5 −1,780.5 −904.9 −813.7 −721.3 −593.6 −532.2 −457.2 −450.2 −354.9 −277.7 −260.8 −17,782

50.5 8.5 4.3 3.9 3.4 2.8 2.5 2.2 2.1 1.7 1.3 1.2 84.5

China/HK Japan Germany Gulf oil exportersb Russia Netherlands Switzerland Singapore Norway Taiwan Korea Sweden Sum, these 12

3,670.1 3,380.2 3,298.1 2,954.7 1,214.9 1,195.1 1,174.5 865.2 834.0 815.0 735.4 493.2 20,187

15.4 14.2 13.9 12.4 5.1 5.0 4.9 3.6 3.5 3.4 3.1 2.1 84.8

Global surpluses, total

23,793

−21,051

Notes Global deficits and surpluses do not equal because of errors, omissions, capital flight, and tax avoidance All surplus oil exporters = 24.8% of global surpluses a current dollars. Inflation adjusted data are essentially similar b Saudi Arabia, Kuwait, Qatar, UAE Source Author’s calculations from IMF, World Economic Outlook Database (IMF, 2019)

(0.04% of global stock market capitalization) for pieces of paper—US Treasuries and stock market equities. More generally, continual growth of the US asset base enabled continual trade deficits without damage to the US dollar. But those deficits also endogenously eroded the domestic social base for an open trading regime and a science-based economy. Electoral backlash by trade losers beginning in the early 1990s eventually helped put the more nationalist and de-globalizing Trump administration in power. That administration withdrew from agreements that would have expanded protection for IPRs of both US and foreign firms, tried to defund the US science base, scared away immigrant researchers, and deinstitutionalized foreign policy. This chapter thus argues that IPRs played a crucial role in sustaining and, through a process of endogenous decay, weakening US hegemony.

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Dollar Centrality The dollar’s durability in the face of persistent US current account deficits and a negative net international investment position suggests looking at those deficits as part of the structural basis for US power: a feature, not a bug. Network analytic research (Fichtner, 2016; Oatley et al., 2013) confirms the centrality of US and allied financial firms in global monetary flows, and of the United States as a source of and site for investment flows. Yet, the mechanisms generating persistent centrality remain relatively unexplored beyond invocation of network effects—essentially transaction costs—or generic reference to US hegemony in the global economy. The connections between dollar centrality in the international monetary system and other aspects of US global power in the production, knowledge, and military spheres—the other three pillars of US structural power in Susan Strange’s (1989) formulation—remain similarly opaque. Two related though not exhaustive mechanisms generate durability, centrality, and “feature-ness” for the dollar. These mechanisms connect all four of Strange’s pillars of global power, but this chapter concentrates on financial power. The first mechanism is that US current account deficits generate dollar centrality through self-reinforcing dynamics prior to the networks revealed by network analyses. Deep-seated domestic institutional arrangements in current account surplus economies produce chronic domestic aggregate demand shortfalls, which then produce US current account deficits. The more those export-led economies run surpluses with the United States, the more dollars they accumulate; the more dollars they accumulate, the more dollars flow through their financial and especially banking systems back into dollar assets and liabilities; the more dollar assets and liabilities those financial firms hold on their balance sheets, the more those firms rely on the Federal Reserve Bank (FED) both as a lender of last resort or a supplier of outside money during (the inevitable) crises; the more those financial firms lend or invest in dollars, the more counterparty debtor economies are drawn into use of the dollar. This mechanism originates from institutional responses to the problem of late development and not the emergent network of dollar claims and liabilities itself.1 That said, lower transaction costs and the huge US asset market also reinforce this emergent network.

1 Schwartz (2019) provides a more nuanced argument.

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Still, surely dollar acceptability must face limits set by persistent US current account deficits. Prudent actors might well balk at accepting more assets denominated in a currency at risk of sustained depreciation. In today’s world of flexible exchange rates, only above-average US economic growth and/or profits for the firms constituting the bulk of equity market capitalization validates confidence in dollar assets (Schwartz, 2009). Mechanism two is thus about profits, which corresponds to Strange’s productive power. US firms capture a disproportionate share of global profits, and, within this context, firms with robust IPRs capture a disproportionate share of US and global profits. Compliance with international trade treaties protecting IPRs is the focal point or center of gravity for this disproportionality. IPRs give some US firms monopoly or near monopoly power in the global (and domestic) commodity chains they construct. While many firms are not enmeshed in these chains, they tend to capture a relatively small volume of global profits. US firms accounted for 35.2% of cumulative profits for the 10,800 largest global ultimate owners, from 2010 to 2018.2 Profitability for US IPR-rich firms rests on compliance with trade treaties and enmeshment in global value chains orchestrated by US firms. The extension of US IPR law through various trade treaties (Drahos, 2010; Sell, 2003) allows US IPR-based firms to capture a disproportionate share of global profits via that monopoly power. US firms accounted for 34.4% of cumulative profits generated by any firm appearing on the Forbes Global 2000 list from 2006 to 2020; within that, firms in sectors characterized by robust IPRs account for 37.9% of US profits and 13% of global profits.3 Treaty compliance historically has not been purely voluntary (Gruber, 2000), but, rather, reflects a gradient in which mutually beneficial cooperation ranges into coercion as the proportion of local (non-US) firms benefiting from those treaties declines. US firms are not the only ones that possess marketable intellectual property. Non-US firms that also benefit from IPRs broaden the global political coalition supporting robust IPRs; those firms account for 45% of profits in the biotech and pharmaceutical sectors, for example. Yet, US firms tend to control the commodity chains in which many foreign firms participate.

2 Author’s calculation from Bureau van Dijk (2020) Orbis database. 3 All data from the Forbes Global 2000 are the author’s calculations from annual FG2k

lists (Forbes, 2020). DeCarlo (2012) explains Forbes’ selection methodology.

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These two mechanisms are connected: The first explains why non-US actors accumulate dollar-denominated assets, and the second explains why they retain those assets. The two mechanisms transform the exorbitant burden—current account deficits associated with use of the dollar as the international reserve currency—back into an exorbitant privilege. They represent a transfer of real resources back to the US economy in exchange for promises to pay back something in the future. Finally, though we will not explore this in the current chapter, these two mechanisms are also linked to the military side of US power, where a similar logic of dominance over potential peer rivals has driven science policy and technological innovation. Put bluntly, a military-innovation complex (Hozic, 1999; Hurt, 2010; Mazzucato, 2015; Smith, 2011; Weiss, 2014) is the research foundation for high-profit US IPR firms.

Dollar Centrality Meets Late Development Non-oil exporting countries with massive export surpluses are often lauded as high performing economies. There is some truth here, because, obviously, people do buy their exports. But there are two reasons to contain our enthusiasm. First, stellar export performers have lower GDP growth rates than the main deficit countries, China excepted. Second, most export over-performers are foreign investment underperformers, earning below average returns on the foreign assets they accumulate. Slower growth stems from domestic political economies that suppress domestic demand. Domestic demand suppression, in turn, forces a reliance on export surpluses for growth. The major surplus countries fall into two distinct groups that are demand deficient for structural and political reasons (Table 6.1). The first is oil exporters. We would expect oil exporters—if rational—to treat oil as an illiquid asset and seek to transform oil profits into more liquid assets, rather than expending oil revenue on current consumption (Schwartz, 2012). As oil is mostly priced in dollars, they will thus accumulate dollars and possibly dollar-denominated assets. Oil pricing in dollars, in turn, forces net-oil importing countries to earn or buy dollars in global export markets. In the aggregate, this implies that the world has to earn an export surplus versus the United States to buy oil or to borrow in dollars from successful exporters. Dollar pricing for oil was, and continues to be, a major foreign policy priority for the United States (Spiro, 1999).

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The other major surplus countries in Table 6.1 were or are all late developers. As Gerschenkron (1962; see also Streeck & Yamamura, 2001) argued, successful late developers generally mobilize capital for development by suppressing domestic demand. The capital thus mobilized is channeled into successively “heavier” industries, which, in varying proportions in different countries, tends to starve agriculture, light industry, small and medium-sized enterprises, and the service sector of investment capital. When this policy-driven mobilization of domestic resources creates viable, globally competitive firms at the technology frontier, it typically leaves behind permanently deficient domestic demand. Low household consumption in GDP enables and forces firms to look outward for markets, which they find in the Anglo-economies and some developing economies. Late developers also try to undervalue their currency to promote exports and growth (Prasad, 2015). Indeed, Höpner (2018) argues that even Germany, an advanced economy with a robust welfare state, has operated a pro-export undervaluation regime since 1950. As an outcome of late development, this is more a structural systemic factor than an expression of independent local choices. Successful late development creates durable constellations of political and economic power suppressing domestic demand. This institutional lock-in around reduced consumption also extends to financial systems. Late developing economies typically rely on patient bank lending rather than the more volatile securities or capital markets to finance investment. Although financial systems everywhere have been shifting away from traditional lend and hold banking models (Deeg & Hardie, 2016), bank lending, rather than a securities market, still dominates in late developers. In the most recent data from 2013, the ratio between securitized debt plus bond debt versus unsecuritized bank loans was roughly 2.2::1 for the US market, while the ratio for Japan was 1::1, and, for the Eurozone and EU, it was only 0.62::1 (IMF, 2015). This is a political outcome, given that roughly 80% of US securitized debt carries a government guarantee, and that securitization markets in much of the EU shrank because mortgage-backed securities became politically toxic after the 2010 crisis. Consequently, most foreign financial systems continue to be bank dominated, with banks providing 80 to 90% of corporate funding in Europe versus 30 to 40% in the United States (Standard and Poor’s, 2015). Successful late developers’ reliance on exports for growth and banks for financial intermediation generates dollar centrality. Their exports largely

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go to the Anglo-economies, and, more specifically, to the United States. The four anglo-economies in Table 6.1, plus New Zealand, accounted for 66% of cumulative global current account deficits between 1992 and 2019. US deficits alone averaged a non-trivial 0.8% of global GDP, or about $394 billion per year, contributing significantly to global demand (in comparison, the Obama stimulus 2009–2010 averaged $400 billion per year, see IMF, 2019). If export surplus countries returned those dollars to the United States by purchasing American goods, then their export surpluses would naturally shrink; if they exchanged dollars for their own currency, then that currency would appreciate, again shrinking export surpluses. And if they demanded payment in their own currencies, then importers would have to have some way of earning that currency, again shrinking surpluses. Rational exporters, of course, demand payment in hard currencies and then convert that into asset purchases. But this conversion is not immaculate. Rather, their dollars flow through their local banking system and then into the global financial system. Local banks thus have growing dollardenominated liabilities (i.e., deposits), which, in turn, compel those banks to relend dollars in global markets in order to have a corresponding asset. The dollar share of liabilities (deposits) and assets (loans) on bank balance sheets thus grows. US dollar-denominated liabilities have never accounted for less than 49% of all cross-border bank liabilities and accounted for 57% in 2017. By contrast, if intra-EU lending in euros is netted out, euro denominated lending has never exceeded 8% of cross border lending and has averaged 3.5%.4 Similarly, Taiwanese insurance firms seem to have accumulated huge dollar assets in order to prevent the Taiwan dollar from appreciating (Setser & Anonymous, 2019). Banks in export surplus economies thus accumulate large dollar liabilities (as export firms deposit their earnings) and dollar assets (as banks on-lend funds globally). The weighted average for dollar-denominated cross-border liabilities of banks in the eight European countries for which the Bank of International Settlements (BIS) has data was 36% between 2000 and 2017. Indeed, non-US banks generated 80–85% of offshore dollar lending, with virtually all of that funded from dollars supplied by non-US entities. US dollar lending by non-US banks rose from roughly

4 Calculated from Bank for International Settlements data (BIS, 2020).

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$4 trillion in 2000 to $14.1 trillion in 2017, of which roughly $10.5 trillion went to non-banks (Aldasoro et al., 2017; McCauley et al., 2015). But is this accumulation of dollar assets really a problem? After all, the export surplus economies are huge net creditors in world markets. Surely this must reflect some decay of US hegemony in Strange’s terms. While exporters are net creditors, the ones for which comprehensive data exist appear to earn sub-par returns on those investments. Export surplus Germany, Netherlands, Denmark, and Finland all ranked variously in spots 9 to 13 out of the 13 countries for which comprehensive data on returns on foreign assets from 1975 to 2017 exists (Hünnekes et al., 2019, pp. 3–5).5 These rankings do not reflect marginal differences. The gap between US and German returns on foreign assets averaged a nontrivial 5.7% points from 1975 to 2017. Worse, the return on German domestic assets was consistently higher than that for German-owned foreign assets. Germany—and by extension almost all the other non-oil exporting surplus countries—appears to be in the unenviable position of eking out modest GDP growth based on external demand, while translating its earnings into suboptimal investments. US hegemony is precisely visible in exporters’ sacrifice of real consumption today for the promise of some weak future return, based on hypothetical US exports. What are exporters counting on? Here, the outsized and IPR-based profitability of dominant US firms matters.

The Importance of Intellectual Property Rights Surplus economies necessarily accept some assets corresponding to their net sales. Their aggregate willingness to accept those assets rests on a belief in the future credibility of those assets, which in turn rests on differential growth in the overall US economy (supporting the credibility of public debt, mortgage-backed securities, and real estate) and on differential profitability (supporting the credibility of private bonds and equities) (Schwartz, 2009). Despite current account deficits, the US economy has enjoyed aggregate and per capita growth rates in real local currency terms and purchasing power parity terms exceeding all of the G7 from 1992 to 2019.6 The US firms that make up the bulk of equity

5 Unfortunately, data on Japan are not available. 6 Author’s calculation from the IMF World Economic Outlook database (IMF 2019).

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market capitalization enjoy relatively high profitability. By and large, those firms possess robust IPRs. These firms are crucial for differential growth (Nitzan, 1998), given that the expected value of other major tradable assets ultimately depends on growth in and revenues from the corporate sector. Where do those IPRs come from and why do they reflect US hegemony? Capitalism is ultimately about profits and the power created by the capitalization of expected (future) profit streams into share market value. The US government’s industrial and trade policies simultaneously support differential growth and profitability for US firms as well as geo-strategic superiority for the US military in the face of other countries’—often successful!—efforts to catch up. As Gilpin (1975) predicted, US firms’ ability to capture profits from simple manufactured goods had eroded by the end of the 1970s in the face of German and Japanese economic recovery. The US government used active industrial and trade policies to restructure the global economic playing field in favor of intellectual property and away from simple manufactured goods after 1970. Simple manufacturing became a low-profit segment in a rapidly expanding set of global commodity chains dominated by US firms with robust IPRs. This gave US firms a disproportionate share of global profits, though not necessarily to the benefit of average US incomes or, even more so, worker incomes. The annual Forbes Global 2000 (FG2k) lists the 2000 largest firms in the world each year based on an index combining sales, profits, market capitalization, and assets. US IPR-based firms loom large on this list with respect to cumulative profits (Table 6.2). The fear of peer military and economic rivals has motivated US state actors to continually engineer new disruptive technology and disperse it among commercially viable US firms (Smith, 2011; Weiss, 2014). Military and economic pre-eminence requires both abundant revenues and the ability to maintain a technological edge versus a broad range of potential enemies. Systematic and sustained defense-oriented support for technology development, which started in the 1940s, goes far beyond the justly famous DARPA (Defense Advanced Projects Research Agency). Various US government agencies aiming to create new, commercially viable firms rather than just new technologies now run dozens of venture capital funds, like the CIA’s venture capital firm In-Q-Tel (In-Q-Tel, 2020). Technologies funded by the US state extend well beyond the cell phone technologies that Mazzucato (2015) highlights. Funding goes into social network analytics, biomedical and biotechnologies, new materials,

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Table 6.2 Top 10 IPR-based US firms: Share of global and sector cumulative profits for all Forbes Global 2000 firms, 2005–2019, plus global and national rank Rank

Apple Microsoft Google Johnson & Johnson Pfizer IBM Intel Procter & Gamble Cisco Systems Oracle These 10, share of all global profit for FG2k

Share of global profit for indicated sector (will not sum to 100)

Global

USA only

Share of all global profit

1 6 20 22

1 3 10 12

1.2% 0.8% 0.5% 0.5%

Software Software Software Pharmaceuticals

34.4% 22.2% 14.3% 10.6%

24 27 29 30 40 42

13 14 15 16 20 21

0.5% 0.5% 0.4% 0.4% 0.3% 0.3% 5.5%

Pharmaceuticals Software Tech-hard Consumer Brands Tech-hard Software

10.2% 13.2% 6.1% 6.9% 4.3% 8.5%

Source Author’s calculations from Forbes Global 2000, various years (see Forbes, 2020)

alternative fuels, and batteries. Here, Strange’s military structural power overlaps with financial and productive structural power, because the firms engendered by this policy are disproportionately profitable. Big US firms’ profits are disproportionately large relative to the US share of the global economy, while other countries’ shares are smaller or disproportionately low. Table 6.3 shows the share of cumulative profits for all G7 and Chinese firms in the FG2k as a share of all profits by the 4042 firms ever appearing in the FG2k list between 2006 and 2020. The FG2k lists is slightly deceptive in that it contains only publicly listed firms (so, for example, neither Saudi Aramco until recently nor the German Mittelstand). But McKinsey (Manyika et al., 2018) examined 33,000 publicly and privately held firms with revenues over $200 million per year. Of these, 5750 firms with revenues exceeding $1 billion—measured as earnings before interest, tax, depreciation, and amortization (EBITDA)— accounted for two-thirds of total profits from 1994 to 2016. So, the 4042

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Table 6.3 Profit share of Forbes Global 2000 firms by country, and country share of global GDP, 2005–2019

USA China + HKb China ex-HK Japan UK France Germany Canada Italy

1 Profit share, %

2 GDP share in 2018a , %

Ratio of 1::2

34.4 13.7

24.2 16.3

1.42 0.84

11.6

16.2

0.72

6.9 5.0 3.7 3.5 2.6 1.1

5.9 3.3 3.3 4.7 2.0 2.4

1.17 1.52 1.12 0.74 1.30 0.46

a Most recent non-estimated data b Not all HK-domiciled firms are Chinese owned, so this row

overestimates the share in column 1 Source Author’s calculations from (1) Forbes (2020) and (2) IMF (2019)

FG2k firms are a reasonable proxy for the world just before and after the 2008 global financial crisis. That data show the salience of IPR-rich firms in the US economy, and the degree to which they account for the disproportionate US share of global profits. The top 10% of firms in the bio-pharmaceutical, computer and electronics, internet, and branded consumer goods sectors accounted for 38% of profits generated by McKinsey’s top 5,750 firms from 2014 to 2016 (Manyika et al., 2018). The top 1% of firms—58 entities—captured 36% of total profits, with 53% of that accruing to IPR-based firms (thus, 18% of total profits). Most of those firms were US-based. Table 6.4 shows the sectoral breakdown for the FG2k firms by country of incorporation. US dominance of the three big IPR-based tech, consumer brand, and pharmaceutical sectors stands out relative to the three other major global sectors. The profitability of US IPR-based firms does not flow automatically from new technologies or clever design. Rather, it reflects and sustains US hegemony. None of these new economy sectors would be profitable without domestic legislation and global treaties establishing robust IPRs. Information-rich goods are public goods: non-rival in consumption and non-excludable in ownership, and thus impossible to sell profitably

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Table 6.4 Country shares of cumulative sectoral profits and sector share of total global profits by Forbes Global 2000 firms, 2005–2018, % Tech hard- & software a USA Korea Taiwan Japan China India Germany Sector % of global Auto & truck assembly and parts Japan Germany Korea China France USA India Sector % of global

67.9 9.9 5.5 3.2 3.0 2.7 1.8 8.4

35.9 31.6 8.6 7.3 5.3 3.3 2.5 3.5

Pharmaceuticals & biotech USA Switzerland UK France Japan Denmark Germany Sector % of global Oil & gas operations USA Russia China NLD UK Canada India Sector % of global

Consumer brands 48.6 18.2 11.5 5.9 5.8 3.9 1.8 4.2

USA UK France Belgium Japan China Mexico Sector % of global Major banks

43.8 15.8 11.6 6.4 5.6 5.3 2.7 3.4

27.5 18.4 10.1 7.8 5.6 4.5 3.7 11.7

USA China Canada Japan UK Australia France Sector % of global

23.7 20.5 8.1 7.1 6.9 6.7 5.3 11.9

a Computer equipment, semiconductors, communications devices, software & software services

Source Author’s calculations from Forbes Global 2000, various years (Forbes, 2020)

without patents, copyrights, and other forms of protection that establish property rights. The US state conducted a concerted, 40-year campaign to expand US IPR law globally in order to secure revenue streams for US firms (Drahos, 2010; Hurt, 2010; Sell, 2003). US trade deals thus typically emphasize two sets of interests. The first is US financial firms’ access to other countries’ financial markets, which helps maintain dollar centrality, as well as access to value created in those economies. The second is legal protection for IPRs. As early as the Tokyo Round of GATT talks (1973–1979) the United States was trying to export its stronger IPR rules to the rest of the world (Hurt, 2010; Sell, 2003). Since then, the United States has systematically tried to export its internal IPR regime to the rest of the world, strengthening IPRs in each successive trade round. The failed Trans-Pacific and Transatlantic Trade and Investment Partnerships both had substantial IP protection.

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This legal infrastructure enables US firms to construct global commodity chains in which they operate the high-profit, human capitalintensive parts of the production chain, while delegating physical capitalintensive production to mostly non-US rich country firms (which in turn absorb considerable capital into that immobile, asset specific, and thus vulnerable physical base) and delegating labor-intensive assembly steps to developing economies. In turn, this elevates the market capitalization of IPR-rich US firms, giving them considerable power relative to other firms. The 30 largest IPR-based US firms by market capitalization in the FG2k at the end of 2018 accounted for 32.5% of US market capitalization, 14.7% of FG2k market capitalization, and 12.5% of global market capitalization. That said, both Japan in the 1960s and China after 1995 made market entry conditional on technology transfer. This structure is the material manifestation of Strange’s (1989) productive and financial power. Net direct investment income flows currently amount to roughly 1% of US GDP, constituting a transfer of resources to the United States. Second, this structure creates overseas domestic constituencies for continued cooperation with the United States. Foreign firms’ large fixed capital investments can only be validated through continued participation in those commodity chains and often by helping to maintain or extend IPR law. Indeed, many non-US firms, especially in pharmaceuticals and software, support robust IPRs. European luxury brands similarly rely on IPR protection. Yet, this global protection for IPRs differentially favors US firms.

Endogenous Decay? The dollar’s central position in the global monetary system reflects and produces US hegemony. But it also generates what Michael Pettis (2011; see also Germain & Schwartz, 2014) has called an exorbitant burden— chronic trade deficits. By definition, current account deficits subtract from economic growth, even though they transfer real resources—goods and services—to the deficit economy. Robert Gilpin (1975) already noticed in the mid-1970s that the expansion of US multinational firms was shrinking the economic gap between the United States and its European allies; he later elevated this re-working of Lenin’s combined and uneven development into a general principle of hegemonic decline. Continual current account deficits should imply either or both an erosion of the tradables sector or slower growth in the United States. Externally, this raises the

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problem flagged above: Why should export surplus countries continue to buy US assets whose value is exposed to significant currency depreciation or widespread IP theft? Internally, the job losses associated with the hollowing out of low-end manufacturing have weakened the domestic social base of support for US hegemony, as the Trump administration evidences. Externally, a flight from US assets would require either some substitute global currency or a reorientation of the domestic political economy of export surplus countries, or both. In principle, if a major export surplus economy were to open its financial and product markets, its currency might displace the dollar. The only economies big enough to handle this at a world scale are China and the European Union (or Eurozone). China’s financial liberalization remains a decade-long unfulfilled promise and its Made in China 2025 policy—now operating under a variety of different labels—aims at yet more import substitution. EU28 and EA19 unemployment at the end of 2019 was 7.2% and 7.9%, respectively. Even with a current account surplus of 2.7% of GDP in 2017–2018 (half of which was with the United States), the EA19 still had an output gap of 0.5% of GDP and GDP growth of only 1.9%, versus US GDP growth of 3%. Both the EU and China are short of sellable assets, though for different reasons. Finally, neither potential supplier of global money is likely to cease relying on exports to the United States as a source of growth, especially in a post-COVID-19 world where states are trying to unwind high levels of unemployment. Yet, hegemony based on and funded by control over IPRs is inherently fragile. Constructing elaborate global commodity chains and allowing non-US firms to handle more of the capital-intensive parts of production risks losing the ability to generate new, patentable technologies. In this respect, the rapid development of new electronics and biological technologies in China is a major threat, even though, or perhaps especially because, those firms have trouble enforcing IPRs and thus generating profits. The relative ease of technology transfer and rising educational capacity in potential peer rivals makes it easier for them to adopt and adapt the physical and organizational technologies that give US firms their advantage in generating new technology. Like the Red Queen, US firms and state cannot stand pat. Domestic discontent is more likely to undermine a strategy of economic growth and hegemonic dominance via IPRs. Perpetual trade deficits imply lost jobs, particularly in the low value-added parts of the

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manufacturing sector. Reliance on IPRs for profit thus tends to concentrate income into a small number of firms and employees, hollowing out the middle of the income distribution. Stagnant wages and diminished upward mobility have undermined the political consensus sustaining US current account deficits. Currently, only a minority of Americans believes that trade helps wages and employment grow (Stokes, 2018). This was especially true for the non-college educated voters that tipped the 2016 Presidential election toward Donald Trump and thus toward more protectionist policies and anti-science policies. The potential for continued and erratic Republican Party governance or opposition to Democratic Party technology initiatives both undermines US domestic growth and the credibility of US public and private promises to validate future claims on US tax revenue, mortgages, and profits. In particular, the Trump administration’s changes to visa policy and general anti-science orientation weakened the research base for technology development. These factors reinforce the deglobalization pressure stemming from the COVID-19 pandemic.

Conclusion Accurately assessing the durability of US geo-economic power requires accurately assessing the mechanisms that produce and maintain that power. Susan Strange (1989) identified four main structural sources of power but without much specificity as to their mechanisms. Here I have tried to show the centrality of IPRs for mechanisms sustaining dollar centrality and control over global commodity chains. Dollar centrality in the international monetary system allows the United States as an economy and, more specifically, US firms to escape constraints that balance of payments deficits impose on weaker countries (Cohen, 1998). In a world with free markets and minimal financial repression, US current account deficits would disappear through currency depreciation and capital flight. In our world, however, successful late developers have institutionally rooted domestic demand deficiency generating persistent current account surpluses. Their addiction to external demand means they accumulate excess export revenues that in turn require the creation or existence of counterpart assets. Only the United States can provide those assets in sufficient quantity and quality (Schwartz, 2009). US firms accounted for over half of global equity market capitalization in 2020, with one-third

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of this attributable to the top 30 IPR-based firms by market capitalization. Other assets, like Federal debt, mortgage-backed securities, and real estate, are all ultimately funded by the economic activity that large US firms generate. IPRs and the profits they generate are thus central to US global power, barring fundamental changes wrought by COVID-19, other external shocks, or US domestic political chaos stemming from the Trump administration. Of these, the first and the last are likely to combine to diminish US hegemonic power. The initially incompetent US response to COVID19 surely will shake faith in dollar-denominated assets, particularly if US growth falters relative to European or Chinese growth. More narrowly, government responses to COVID-19 will cause or force many supply chains back on-shore, particularly for health-related commodities. In this context, it is easy to see the erosion of pharmaceutical and other IPRs as states override patents to maximize production of critical drugs and equipment. This might culminate in a 1930s-style retreat into continental monetary and trade blocs, necessitating a painful adjustment of surplus economies’ domestic political arrangements. Avoiding this requires global reflation and recovery based on continued US current account deficits, and thus the export of “assets” backed by IPRs, which might sustain US hegemony. But this would in turn require expanding the US welfare state to compensate the losers from perpetual current account deficits, and this seems increasingly unlikely given the current balance of political power in the US political system. Acknowledgements The author thanks Randall Germain (especially via the influence of three joint papers), Florian Böller, and Welf Werner for helpful comment and criticism, and Natalie Rauscher for careful editing; this paper is also obviously indebted to the work of Susan Sell and Shelley Hurt. As usual all errors remain mine. Funding: The first draft was written while on leave funded by an Aarhus Institute for Advanced Studies CO-Fund II fellowship.

References Aldasoro, I., Ehlers, T., Eren, E., & McCauley, R. (2017, March). Highlights of global financial flows. BIS Quarterly Review, 15–23. https://www.bis.org/ publ/qtrpdf/r_qt1703b.pdf. Accessed 21 November 2020. BIS (Bank for International Settlements). (2020). Consolidated banking statistics. https://www.bis.org/statistics/consstats.htm. Accessed 21 November 2020.

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Bureau van Dijk. (2020). Orbis database. https://www.bvdinfo.com/de-de/uns ere-losungen/daten/international/orbis. Accessed 21 November 2020. Cohen, B. (1998). The geography of money. Cornell University Press. DeCarlo, S. (2012). Methodology: How we crunch the numbers. Forbes. https://www.forbes.com/sites/scottdecarlo/2012/04/18/methodologyhow-we-crunch-the-numbers/?sh=1e1320323d3f. Accessed 21 November 2020. Deeg, R., & Hardie, I. (2016). What is patient capital and who supplies it? Socio-Economic Review, 14(4), 627–645. Drahos, P. (2010). The global governance of knowledge: Patent offices and their clients. Cambridge University Press. Fichtner, J. (2016). Perpetual decline or persistent dominance? Uncovering Anglo-America’s true structural power in global finance. Review of International Studies, 43(1), 3–26. Forbes. (2020). Global 2000. The World’s Largest Public Companies. https:// www.forbes.com/global2000/#1c6fffc4335d. Accessed 21 November 2020. Germain, R., & Schwartz, H. (2014). The political economy of failure: The Euro as an international currency. Review of International Political Economy, 21(5), 1095–1122. Gerschenkron, A. (1962). Economic backwardness in historical perspective. Harvard University Press. Gilpin, R. (1975). US power and the multinational corporation: The political economy of Direct Foreign Investment. Basic Books. Gruber, L. (2000). Ruling the world: Power politics and the rise of supranational institutions. Princeton University Press. Hozic, A. (1999). Uncle Sam goes to Siliwood: Of landscapes, Spielberg and hegemony. Review of International Political Economy, 6(3), 289–312. Hurt, S. (2010). Science, power and the state: U.S. foreign policy, intellectual property law, and the origins of agricultural biotechnology, 1969–1994. New School for Social Research, Dissertation. Höpner, M. (2018). The German undervaluation regime under Bretton Woods, 1950–1973. Max Planck Institute. https://pure.mpg.de/rest/items/item_3 025067_2/component/file_3025546/content. Accessed 21 November 2020. Hünnekes, F., Schularick, M., & Trebesch, C. (2019). Exportweltmeister: The low returns on Germany’s capital exports. Kiel Working Paper No. 2133. https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Public ations/Christoph_Trebesch/KWP_2133.pdf. Accessed 21 November 2020. IMF. (2015). Global financial stability report. IMF. IMF. (2019). World economic outlook database. October 2019 Edition. https://www.imf.org/en/Publications/WEO/weo-database/2019/Oct ober. Accessed 21 November 2020. In-Q-Tel. (2020). https://www.iqt.org/. Accessed 10 November 2020.

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CHAPTER 7

Leading by Example or Extortion? US Leadership Role Transition and the Non-Proliferation Regime Gordon M. Friedrichs

Introduction The Trump presidency has reinvigorated a debate about the probability of an American decline (Daalder & Lindsay, 2018; Duncombe & Dunne, 2018; Ikenberry, 2018; Stokes, 2018 ). By rebuffing a leadership role that is based on a system of alliances and is embedded in multilateral organizations, the Trump administration has raised questions about America’s willingness and political ability to perform leadership tasks (Walt, 2018). Some argue that foreign policies enacted under the Trump presidency run counter to US national interests and provoke balancing of power by others and abandonment by allies (Jervis et al., 2018).

G. M. Friedrichs (B) Heidelberg Center for American Studies (HCA), Heidelberg University, Heidelberg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_7

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To some, the Trump administration is a domestic echo of the material and ideational costs US leadership has brought to the American public over the past decades (Colgan & Keohane, 2017; Norrlof, 2018; see Tuschhoff in this volume). Some even contend that the Trump administration’s ignorance toward democratic values and norms—both domestically and internationally—has incentivized an autocratic pushback by non-democratic rivals such as Russia and China, who thrive on a lack of US global leadership (Diamond, 2019). For other scholars, US hegemony under a Trump administration has severe negative implications for the liberal international order of the post-World War II era, paving the way for hegemonic rivalry and, eventually, transition (Acharya, 2018; Mearsheimer, 2019). In this chapter, I argue that the notion of a hegemonic transition is best-understood as a change in the asymmetrical relationship between the leading actor and subordinate states, whereby the hegemon has the intention to provide leadership and lesser actors choose to recognize the hegemon (see Böller and Werner in this volume). While the US remains materially the most powerful state in the international system, America’s international leadership role has instead undergone transition. International leadership roles are understood as bundles of social expectations about the functions and purpose of state groups (Harnisch, 2014). I thereby follow Böller and Werner’s conception of hegemonial transition (this volume) as a situation in which social relations between leaders and followers change (either if the leading state is no longer willing to maintain its leadership role, or if subordinate states no longer recognize the authority of the hegemon). I thus argue that leadership role transitions are marked by changes in the expectations of leadership functions and its representation of others. As leadership roles are reflections of social structures between states, they are the crucial link in the agent-structure relation of hegemonic systems and order (Friedrichs, 2021). The severity of leadership role transitions can foreground hegemonic order transition under two conditions: First, leadership role transition exposes a severe mismatch between the material status and the role enactment of the role beholder. Second, other states (i.e., followers) shift their behavior from “imitation” to “alter-casting” for the purpose of reducing their role dissonance originating from the hegemon’s ill-fated leadership role enactment (see de Sá Guimarães, 2020). This is mainly because followers have selected certain roles for themselves (i.e., achieved), or have become socialized by the US (i.e., ascribed) into certain roles in the past

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(Thies, 2013). Even as some of these states rise in material power terms, they might not hold expectations of the US to give up its leadership role, nor might they expect of themselves to fulfill this global responsibility any time soon.1 The outcome of US leadership role transition and counter-roles reflects the social structure that provides meaning for material power structures and re-confirms state’s identification with their roles, and with the potential to initiate hegemonic transition if role conflict leads to the making of new roles among the actors involved. The central claim is that, while we have seen evidence for US leadership role transition under the Trump administration, we do not see other members of the international system, particularly US allies, engaging in alter-casting for a purpose other than recasting the US into a role that matches its material status. In short, US hegemonic transition is what states make of it. Scholars have long ignored the conceptual difference between hegemony and leadership. In this chapter, I make use of role theory to develop a proper theorization of role transition and social structural change within hegemonic orders. The added value of this approach to the study of hegemonic transition is threefold: First, studying (leadership) roles allows one to identify changes in state behavior that do not correspond with material power shifts. As such, leadership roles consist of expectations about the functions and purpose of the hegemon’s material power. Investigating changes in leadership and follower roles can expose certain patterns of interaction that do not reflect the expected behavior promulgated by hegemonic transition theorists—whether it is uncertainty (Kindleberger, 1981), war (Gilpin, 1981), or institutional dissolution (Keohane, 1984). Second, investigating the relationship between hegemons and other states via leader and follower roles sheds light on the social structural basis of the prevailing hegemonic order. IR scholars largely agree that different hegemons have operated in different shades of international order over the course of history (Reich & Lebow, 2014). Whereas some orders have seen forms of dominance, others have witnessed instances of shared leadership among states, in both highly institutionalized and under-institutionalized systems of governance.

1 In fact, few studies have presented early evidence that the Trump administration’s vision of US global power and international relations has sparked revisionism in global affairs, but rather a high degree of uncertainty about future out-comes (Kagan, 2018).

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Third, studying role transitions offers insights into the mechanisms that drive hegemonic transition. A role theoretical investigation into the reactions of other states goes beyond mere increases in material power and the subsequent changes in the opportunity structures between hegemons and challengers (see Gilpin, 1981). Instead, depending on whether leadership transition produces role dissonance among non-hegemonic states, imitation and alter-casting are the key variables that facilitate hegemonic transition. I begin by reviewing the literature on hegemony in international politics and its assumptions about leadership. Although leadership is a reoccurring concept in theories of hegemony, it remains underdeveloped. I introduce role theory to this scholarship in order to distinguish between hegemony and leadership, and develop four ideal-type versions of international leadership roles and followers interactions that are representative of distinct social structures. I discuss some key mechanisms at work in role transition processes and the potential outcomes of this roleplay between leader and followers. It is argued that the key motivations of states to engage in alter-casting are to ensure ontological security and reduce cognitive dissonance—two inherent threats in any social setting for any participating actor. The theoretical assumptions are then tested in a plausibility probe of US leadership transition in the field of nuclear non-proliferation, particularly during the Iran nuclear crisis. The case is a good example for how roles can change and affect the social structures between states without alternations in the material power distribution or institutional setup between them. The chapter concludes by reflecting on the validity of the theoretical approach in light of the insights derived from the empirical cases. If the theory holds up, scholars must critically rethink the established view about hegemony in international politics. The chapter also contributes to a broader understanding of the actual implications of the Trump administration and the underlying currents influencing US relations in international politics.

Hegemony and Leadership in International Politics In the context of international relations, leadership is commonly understood as a set of expectations, particularly toward great powers, about

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special responsibilities in solving collective action problems and effectively pooling necessary resources (Ikenberry, 1996, p. 388). This can include a range of actions and issue areas, such as responding to international crises, maintaining global order, or innovating new norms (Underdal, 1994; Young, 1991). Kindleberger (1981) distinguishes between dominance and leadership as forms of hegemonic behavior. He argues that leadership brings hegemonic stability through public goods provision, whereas dominance rests on pure exploitation for private gains. The distinction between leadership as a form of public goods provision (coercive or benevolent) and hegemony as a material structure was further developed by Lake (1993) and is also embedded in Krasner’s (1976) structural account of material power concentration and the relative openness of the global economic order. Similarly, Gilpin sees hegemonic order resting on a leading state in terms of material capabilities. Modelski (1987) argues that all long cycles of hegemonic order contained versions of state leadership as “the accomplishment of essential services that give impetus and example to the global polity and, eventually, to the entire world system” (1987, p. 14). According to him, such services include agenda formation, mobilization, decision-making, administration, and innovation. Wallerstein’s (1984) world-systems theory sees the leading capitalist state in terms of unequal exchange, military dominance, and political hierarchy at the core of the global polity. Ikenberry (1996) presented the first systematic attempt to distinguish between different variants of leadership (structural, institutional, and situational) to conceptualize US behavior in the era of unipolarity after the end of the Cold War. To Ikenberry, leadership is a key element in a powerful state’s ability to not only “twist arms” through material power, but “the use of power to orchestrate the actions of a group toward a collective end” (1996, p. 388). This view was also sensitive to followership. Contemporary IR literature on US hegemonic power and transition has largely subscribed to Ikenberry’s approach. For proponents of the structural variant, material power preponderance is naturally accompanied by an inbuilt leadership based on primacy (Thornberry & Krepinevich, 2016). Here, leadership is a natural characteristic of the most powerful state to establish and defend its hegemonic position, ideally in a unipolar setting (Brooks & Wohlforth, 2008, 2016; Lieber, 2012). Others have added that US economic and financial power (i.e., the US dollar as lead

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currency) gives the US disproportionate commercial gains, large commercial power, as well as large US military power (Norrlof, 2010, 2014; see Schwartz in this volume). Accordingly, relative material power shifts are consequential for the capacity of great powers to enact leadership when they bring substantial changes to the structure of the international system, because it increases the resources that need to be invested in order to provide security to followers and deter threats from adversaries. In other words, states only lose the ability to perform leadership when their material power position declines, thereby causing disorder in world politics (Mandelbaum, 2016; Walt, 2018). Proponents of the institutional variant of leadership describe it as a powerful state’s ability to create and manifest international institutions designed to overcome uncertainty through rules and procedures, and to facilitate joint gains, expectation of behavior, and security about future outcomes (Keohane, 1984, pp. 34–35). US hegemony is deeply embedded in an open and rule-based international order in which the US voluntarily sacrifices policy autonomy and offers “voice opportunities” to junior partners in order to lock-in formal support for US leadership (Hurd, 2007; Ikenberry, 2011; Ikenberry & Kupchan, 1990). If the gains from hierarchy are small and/or induce high degrees of rent-seeking in subordinate states, legitimate hierarchy is less broadly distributed, eventually making US authority contingent on coercive rule within follower states, which, in return, can lead to regime change or political opposition (Lake, 2014). Structural and institutional variants of leadership come with analytical shortcomings for the study of US hegemonic stability and transition. The key impediment is that both variants situate leadership between forms of hierarchy and authority, and is thus conceptually indistinct from hegemony (see Schenoni, 2019; Reich & Lebow, 2014, p. 16; Maull, 2011, p. 168). As a result, shifts in leadership are overlooked if they do not correspond with structural shifts in the material power distribution or institutionalization of policy realms. Another shortcoming results from their monadic understanding of leadership. Structuralists derive leadership functions from material hierarchy, whereas institutionalists assume that rule-based leadership guarantees legitimacy. For a long time, the leadership scholarship has been

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emphasizing the importance of followership for the stability and constitution of leadership, i.e., transactional and transformative leadership (Grint, 2005; Masciulli et al., 2009). In short, we need a more complex yet analytically applicable conceptualization of leadership that takes these multifaceted empirical possibilities into account.

Role Theory and International Leadership Role theory defines international leadership roles as “social roles which emerge from group members’ expectations vis-à-vis one or several group members (the leader) and the leader’s own expectations about his/her leadership functions, by means of personal resources and soliciting followership, to the achievement of existing or development of future group goals” (Harnisch, 2014). Since roles are social positions constituted by ego and alter expectations, they are not “owned” by an actor based on certain characteristics or capabilities. Instead, they take an intermediate position between agency and structure (Breuning, 2011; Harnisch, 2018). This role theoretical reading of leadership entails two fruitful analytical characteristics: First, leadership is inter-subjective as it is based on shared expectations between leaders and followers about purpose, group cohesion, and longevity (Grint, 2005; Nabers, 2011). As Gupta and van der Grijp (2000, p. 67) put it: “a leader is not only a party that fulfils theoretical criteria; a leader is one that is perceived as a leader.” Second, leadership is interactionist because, in order to become stabilized, it requires commensurate behavior by followers, i.e., support or obedience. As a result, leadership roles are relationally, functionally, and temporally variant (Harnisch, 2014; Turner, 1990). Depending on the social context and interaction process, leadership roles can exist in both symmetric and asymmetric power constellations; both inside and outside of formal institutional networks; as well as in various group contexts (Hollander, 1992; Litzinger & Schäfer, 1982). In short, whenever a group of states defines a leadership purpose, group membership, and the timeframe for achieving a common goal, leadership emerges. The question of an American decline then constitutes a social phenomenon about the changing roles (and their interaction) attached to America’s material capabilities.

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Table 7.1 Different types of leadership roles and subsequent social settings

Functional (task allocation) Restrictive Relational Exclusive Bounded (followership) leadership role CLUB Inclusive Ascribed leadership role LEGITIMACY

Extensive Dominant leadership role DOMINANCE Shared leadership role HARMONY

Source Own depiction

It is possible that certain structures incorporate certain roles, which other structures do not. I do not infer that hegemonic structures entail unique roles (see Thies, 2013). Instead, I argue that, whereas hegemony might entail leadership, not every indication of leadership has to occur in hegemonic structures (see for a similar argument Lake, 1993, pp. 464– 466). As a result, different versions of hegemonic order can exist that operate with distinct logics and in different policy domains (see Nicholls, 2020).2 Four Types of International Leadership Roles Aggestam and Hyde-Price (2019) distinguish between four different types of leadership in international politics (structural, entrepreneurial, ideational, and directional). Here, I build on their underlying premises on what defines leadership and the social processes involved by adding that different constellations of leader–follower interactions are constitutive to both the type of leadership as well as the social structure that co-constitute them. Table 7.1 depicts the leadership ideal types of an interactionist, intersubjective reading. On the horizontal line, leadership comprises either extensive of rather restricted functions. The former might appear in cases where leaders and followers agree that certain tasks or goals require a wide variety of functions from the leader, including material resources (money,

2 This theoretical perspective is compatible with more recent approaches towards the study of hegemony, which sees “hegemonic orders as means, mediums, and objects of cooperation and contestation” (Ikenberry & Nexon, 2019).

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equipment, human lives) but also legitimacy or social trust (territorial access, delegation, judicial acceptance). In the latter case—leadership with rather restricted functions—leaders and followers share concerns about expansive functions and the costs attached. The horizontal line reflects the relative size of the followership (i.e., social group). It is here where the functional range of leadership becomes meaningful. On the one hand, leadership can take place within a large group of followers. Here, a restricted function of leadership might be the product of contestation within the group about task assignment or the right allocation of resources. This is mostly the case in instances where the group consists of states of relatively equal power ranking and the ascription of leadership has to undergo a process of legitimation, oftentimes by deliberation and temporal restriction. In such an instance, we would assume that leadership is based on legitimacy, where participation is open, but role allocation, i.e., leadership ascription, needs to be agreed upon by the group and then delegated. In contrast, an extensive leadership role within a large social group hints at a harmonious social structure between leaders and followers, in which the possibility for shared leadership roles among many members of the group is high. On the other hand, leadership might meet a relatively small group of followers. This can have two reasons: First, the overall purpose and goal only generates a small group of supporters. Second, the leader deliberately seeks a small group of followers in order to impose its vision relatively unconstrained. The consequences for the social relationship between a leader and followers can be twofold: A small group of followers in combination with restricted leadership functions reflects a bounded leadership role. Here, the leader is embedded in an exclusive social group, where followership resembles a club membership in which leadership rests on private goods with limited task allocation. On the contrary, a small group of followers with extensive leadership functions is a sign for a dominant, purely hierarchical relation between leader and followers. Theorizing Role Transition and Alter-Casting What drives a great power to push for a different functional and/or relational scope of its leadership role? Thies and Nieman (2017, p. 21) describe the attempt by states to create new roles for themselves as role transition. This process eventually constitutes structure because acceptance maintains conformity and continuity, whereas rejection induces

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crisis and structural transformation (Thies, 2013, p. 3). According to Allen and Van de Vliert (1984, pp. 9–16), as well as Thies and Nieman (2017, pp. 35–37), role transitions can occur when certain antecedent conditions are met. This entails chance events (i.e., unexpected developments that induce a foreign policy crisis), societal forces (i.e., changes in the prevailing ideas of the material power of the state in relation to the international distribution of capabilities), change in role senders (i.e., those in complementary positions that have stabilized the role relationship through counter-roles), and changes in the capability or motives of the focal person (i.e., the acquisition of power or shifts in the domestic-level beliefs). According to Thies (2013), states pursue roles while occupying one of four so-called master statuses that reflect their material power in the international system (great powers, major members, small members, novices). Usually, the creation of new roles puts existing role relationships under stress, especially if the new role does not correspond with the actor’s material power status (Thies, 2013). Under normal circumstances, existing members of the international system would seek to discipline the actor (back) into its appropriate role. Followers’ roles are decisive for the relational dimension of international leadership roles. Building on Thies (2013), followers of US leadership can invoke one of two responses (what he calls “socialization mechanisms”) to role transition: first, rational imitation, which is a mechanism pursued by emerging powers to find their role without triggering conflict with existing members of the international state system. It aims at reinforcing existing norms and roles within the system (Thies, 2013, p. 18). It encompasses a behavior through which followers adapt to the role transition by the leader and “learn” to become a follower via imitating the behavior of others, both in the past and presence. Second, followers can engage in alter-casting, which refers to situations in which the relevant followers cast another actor into a leadership role and provide cues to elicit the corresponding appropriate behavior (Thies, 2013; see Weinstein & Deutschberger, 1963; Stryker & Statham, 1985, p. 325). This is aimed at reducing role dissonance emerging from the leader’s role transition. Central to interactionist role theory is the notion of the “self” as a constitutive part of “ego,” that is partly constituted by self-identification and the experience with others, both in the past and presence. Actors seek to stabilize themselves through social interaction via the creation, reiteration, and modification of “self” and (sometimes

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imagined) others (e.g., a historic self) for the purpose of achieving ontological security. Followers attempt to alter-cast great powers in order to reduce dissonance, i.e., a situation of uncertainty about functions and task distribution with regard to group goals. Imitation and alter-casting are essentially considered constitutive of all four leadership ideal types portrayed in Table 7.1. However, if states make a new role for themselves instead of attempting to alter-cast the leader back into a proper role through the manipulation of their own existing role, role conflict emerges, foregrounding hegemonic transitions.

Role Transition and Alter-Casting of US Leadership During the Iran Nuclear Crisis The US leadership role in the field of nuclear non-proliferation consists of two central functions that are embedded in the Non-Proliferation of Nuclear Weapons Treaty (NPT): a commitment to nuclear disarmament via resilient nuclear arms control and the prevention of nuclear proliferation. By successfully negotiating the NPT, US leadership was crucial in legitimizing America’s political actions by invoking inclusive commensurate counter-roles, and thus made the US leadership role in this policy field (Friedrichs, 2021, pp. 64ff.). The Bush Administration and the Legitimate US Leadership Role (2003–2008) Under the Bush doctrine of 2002, following the events of September 11, US leadership was conceived as actively preventing states that were part of an “axis of evil” from acquiring nuclear weapons (Daalder & Lindsay, 2003). By justifying preventive warfare against rogue states, the Bush administration shifted the functional scope of US leadership from restricted deterrence to a more extensive leadership role. This also entailed that non-nuclear weapons states may only gain international assistance in developing civilian nuclear power under Article IV of the NPT when they renounce the pursuit of nuclear weapons. The Iran nuclear crisis initially began in 2003 when the International Atomic Energy Agency (IAEA) officially reported the existence of a clandestine nuclear facility in Natanz. Different US administrations have opposed uranium enrichment by Iran in the past, starting with President Clinton’s imposition of sanctions. The Bush administration rejected any

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nuclear role for Iran and cast Iran into the role of a rogue state (Malici & Walker, 2017). In response to the looming role conflict between Iran and the US, Great Britain, France, and Germany (known as the “E3”) initiated negotiations with Tehran that led to the so-called Tehran Declaration in 2003. Under the agreement, Iran committed to temporarily suspend parts of its nuclear program (Cronberg, 2017; Parsi, 2008), but asserted its right to develop nuclear technology for civilian purposes. While the US denied Iran any right for procurement, the E3 believed Iran should be allowed limited enrichment capacities under strong international monitoring. In a second attempt to moderate the emerging role conflict between Iran and the US, the E3 took the initiative in October 2004 by negotiating the Paris Agreement. By August 2005, however, Iran, under the presidency of Mahmoud Ahmadinejad, began producing uranium at its Isfahan facility, which ultimately led to a role strain between Tehran and the E3 and a subsequent halt to negotiations. In a follow-up response to Iran, the UN Security Council adopted various sanctions against Tehran. In addition to leading the effort of international multilateral sanctions, the Bush administration tried to change Iran’s role-taking efforts by imposing bilateral US sanctions. Sanctions were understood as a deterrence and punishment that would only be lifted after Iran made concessions, i.e., stopping the enrichment of uranium, destroying all centrifuges, and proving its willingness to forgo a military nuclear program. The growing role conflict between Iran and the US could not be eased by the E3 (Schmitt, 2017). The E3 efforts became further complicated by the Bush administration’s no contact policy, which hindered clear diplomatic procedures. As a result of the breakdown of the E3 negotiations and the imposing of multilateral sanctions on Iran, US leadership enjoyed rather inclusive followership, most notably by the EU, but also the other UN Security Council members. In short, the US leadership role was imitated by the E3 and thus established a community social structure that ascribed a leadership role to the US for the main purpose of stopping Iran’s nuclear program.

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The Obama Administration and Role Transition from Legitimate to Shared US Leadership (2008–2016) With the inauguration of Barack Obama in January 2009, US leadership vis-à-vis Iran and the international community shifted from an ascribed role to a shared leadership role. The new administration sought to shift US leadership from its previous focus on using preventive actions to stop nuclear proliferation, to a stronger commitment to arms control and disarmament. By invoking the goal of “global zero” or the complete abolition of nuclear weapons, the Obama administration sought to cast other nuclear weapons states into the role of followers in achieving this goal and thereby stabilizing US leadership (Friedrichs, 2021, pp. 74ff.) The goal was to continue to pressure Iran and bring it to the negotiating table while also offering to waive sanctions in exchange for a freeze in enrichment. This brought the US role closer to the role of the E3. However, under Ahmadinejad, Iran rejected this new US leadership role because it distrusted international regimes led by Western powers, particularly by the US. Despite its role conception of diplomatic leadership, the Obama administration was careful to simultaneously enact a commensurate role vis-à-vis the E3 + 3 (including China and Russia) and Congress, via the tightening of US and multilateral sanctions regimes. In October of 2009, the US proposed a so-called “fuel-swap” plan (later called the “Geneva Agreement”). This plan would have given Iran the opportunity to prove its benign nuclear intentions, but it was ultimately rejected by Tehran (Fitzpatrick, 2010). Under US initiative, the UN Security Council adopted Resolution 1929 in June 2010, significantly expanding sanctions against Iran (Hurst, 2016). Just one month later, the EU agreed to additional sanctions against Iran (Davenport, 2019). Yet, while the E3 held repeated nuclear talks with Iran throughout 2012 (what then also became known as the E3 + 3), Iran continued its proliferation behavior. Diplomatic gridlock between the E3 + 3 initiatives and Iran led the Obama administration to change the course of US leadership. Although the Obama administration initially continued much of the coercive diplomacy measures of its predecessor, such as backing Security Council Resolution 1929, the Obama administration believed that the US sanction regime rather promoted role conflict instead role commensurability. A crucial element of the change was that the Obama administration allowed for joint leadership by the US and the E3 + 3 vis-à-vis Iran.

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The Obama administration’s role transition included anticipated role expectations of US allies. As Wendy Sherman, Undersecretary of State for political affairs under the Obama administration put it: “Insisting on a total prohibition of enrichment only frustrated the United States’ European partners and gave Iran the opportunity to cast Washington as the recalcitrant party” (Sherman, 2018, p. 191). Indeed, the election of Rouhani, as Iranian president, fed the expectations within the Obama administration that moderate forces in Iran were on the rise and could be strengthened via diplomatic engagement. Under the lead of the E3, the parties signed the so-called Joint Plan of Action (JPA) in November 2013, which laid out specific steps for each side in a six-month, first-phase agreement. With the lead negotiations conducted by the E3, the Obama administration could avoid accepting Iran’s claim to the right to uranium enrichment. When it became clear that Iran was in compliance with the JPA, negotiations between the E3 + 3 led to the so-called Joint Comprehensive Plan of Action (JCPOA). The JCPOA had the goal to integrate Iran’s nuclear program into the NPT, while at the same time respecting certain Iranian “red lines” with regard to the country’s sovereignty and independence (Tabatabai, 2017). This functional shift sought to include both the E3’s and Iran’s role expectations to ultimately transition US leadership from being ascribed through legitimacy to being shared based on harmony. On the one hand, the administration sought to avoid enacting a singular leadership role that would have accepted Iran’s civil nuclear program by declaration and, on the other hand, casting Iran into a client role that would have been unacceptable for the Iranian leadership given historic animosities. The Trump Administration and Role Transition from Shared to Self-Centered US Leadership Following his critique of the JCPOA during the 2016 presidential campaign, Donald Trump announced on April 19, 2017, to review the JCPOA. Central to the Trump administration’s opposition to the JCPOA was the notion that the agreement would not guarantee a nonnuclear Iran but merely delays this process. On January 12, 2018, the Trump administration stated it would not waive another round of sanction pursuant to the JCPOA if European allies would not commit to re-negotiate the deal.

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The Trump administration pushed for a change in US leadership from an inclusive, shared leadership role, prevalent under the Obama administration after the JPA and JCPOA, to a much more exclusive leadership role. In contrast to its predecessor, the Trump administration sought to drastically extend the US leadership role outside of the areas to which followers, (i.e., the E3 + 3) had previously consented. These more extensive functions of US leadership included inspections at all sites; ensuring Iran could not produce enough fissile material for a nuclear weapon in less than one year; allowing the US for an indefinite period of time to “re-impose US nuclear sanctions if Iran does not comply with these new criteria; and that Iran’s long-range missile programs and nuclear weapons are inseparable and that Iran’s development and testing of missiles should be subject to severe sanctions” (Katzman, 2018, p. 23). A crucial element of these demands was the re-instatement of so-called secondary sanctions that targeted US allies and forced them to comply. In short, the Trump administration enacted a more dominant leadership role that was, at least initially, directed at US’ European allies to reverse their roles back to the pre-JCPOA period. However, after France, Germany, and the UK signaled resentment toward the administration’s much more functionally extensive leadership role, President Trump announced on May 8, 2018, that the US would no longer participate in the JCPOA and would re-impose the sanctions that had previously been unilaterally waived by the Obama administration. The ultimate goal was to exert maximum economic pressure on Iran. After the failed bilateral meetings of President Trump with Chancellor Merkel and President Macron, the E3 stated they would continue to comply with the JCPOA and protect their companies from US sanctions. The E3 parties asserted that the unilateral re-imposition of sanctions by the US violated the JCPOA. These were early signs of an alter-casting attempt to convince the Trump administration that leadership role transition from a shared or legitimate leadership role to a dominant role was inacceptable. As part of the leadership role transition, the Trump administration deliberately decided not to rely on provisions of the JCPOA itself. The administration has, so far, not pursued enacting a more inclusive leadership role vis-à-vis Iran, e.g., via attempts to re-impose UN Security Council sanctions that would include the other members. Instead, by re-imposing US secondary sanctions that had previously been lifted, the Trump administration decided to enforce US law vis-à-vis non-US

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parties for business involving Iran that occurs outside of the US territorial jurisdiction (Mulligan, 2018, p. 2). In response to the Trump administration’s international leadership role transition, the EU shifted its role. After the E3 established the “Instrument in Support of Trade Exchanges” (INSTEX) to facilitate transactions for non-sanctioned trade with Iran, the European Commission adopted an e18 million package for Iran (European Commission, 2018). The remaining P5 + 1 further agreed to establish a Special Purpose Vehicle “to facilitate payments related to Iran’s export (including oil) and imports, which will assist and reassure economic operators pursuing legitimate business with Iran” (Davenport, 2019). Nevertheless, the Trump administration imposed the second round of sanctions on November 5, 2019, forcing many global businesses to abandon trade and investment with Iran (Iranwatch, 2019). In December 2019, Secretary of State Pompeo announced that the US would seek cooperation with other UN Security Council members to re-impose ballistic missile restrictions on Iran outlined in UN Security Council Resolution 1929 (Department of State, 2018). However, the EU has instead alter-casted the other UN Security Council members into commensurable roles with the JCPOA. In February 2020, the E3, EU, Russia, China, and Iran reaffirmed their commitment to the JCPOA, support for INSTEX, and the backing of ongoing non-proliferation cooperation projects in Iran. Whether the US leadership role under the Trump administration will produce an international role conflict, with the other JCPOA parties making new roles for themselves instead of attempting to alter-casting the US back into its proper role, depends strongly on the US decision to end all sanctions waivers that allow for continued non-proliferation cooperation projects in Iran. In other words, E3 role-taking is also contingent on whether the Trump administration would re-impose secondary sanctions on all non-proliferation cooperation outside of the JCPOA. So far, the E3 have continued to enact its JCPOA-role vis-à-vis Iran instead of making a new role that would involve closer cooperation with Iran in defiance of US sanctions.

Conclusion In this chapter, I argued that there is analytical merit in distinguishing between hegemony and leadership. I developed four ideal-type versions of

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state leadership in international politics and its constitutive social relations with followers. In contrast to existing theories of hegemony, leader– follower interactions give meaning to existing material and institutional power structures that reflect hegemonic order. Leadership role transition and follower responses are also requirements for hegemonic transition. In short, roles are the crucial link between agency and structure in the hegemonic transition debate. I hypothesized that once followers of US leadership shift their behavior from imitation to alter-casting, signaling their discontent with the leadership role transition, role conflict can result, which, if not resolved, produces hostile social structures marked by enmity. If states respond with the making of new roles, they facilitate hegemonic transition. The empirical examination of US leadership transition and followers’ response during the Iran nuclear crisis exposed that, (1) US leadership role transitioned over time and presidencies from a legitimate ascribed leadership role, through a shared leadership role nested in harmony, to a dominant leadership role; (2) these transitions were both domestically and internationally triggered, yet they became manifested through, on the one hand, Iran’s ill-advised behavior to engage in alter-casting instead of imitation at critical junctures in the crises, and, on the other hand, failed attempts by US allies to alter-cast the US back into an appropriate leadership role; and finally (3) there is not yet any evidence that the prevailing role conflict between the US, followers, and others will result in new role-making of states involved. The Iran case showed that alter-casting is successful when the hegemon shows signs of identification with the followership, i.e., being able to take on the role of others. At the same time, imitation was a chosen strategy by US followers when it generated harmony among the parties involved, which explains why the EU followed US sanctions efforts both under the Bush (ascribed leadership) and Obama (shared leadership) administration. Furthermore, failed alter-casting by the EU during the Trump administration has so far not inclined the EU to make a new role but, rather, to continue to enact a previously stabilized role under the JCPOA. This is mainly because this role has stabilized the EU internally but also externally vis-à-vis Iran, Russia, and China. In short, while we have seen that US leadership role transition led to role conflict over time, and particularly under the Trump administration, the field of nuclear non-proliferation does not yet bear evidence of hegemonic power transition. Rather, the added conceptual value of

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a role-theory approach to the study of leadership points to changing social structures and the prevalence of dominance among former allies and partners as markers of a hegemonic order in the twenty-first century.

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CHAPTER 8

Whither the Liberal Security Order: The End of NATO as We Know It? Simon Koschut

Introduction1 In the early 1990s, Francis Fukuyama (1992) advocated his “end-ofhistory” thesis. Essentially, he argued that liberalism and democracy had prevailed as a model of global order over alternative models. Currently, however, we are not experiencing the end, but rather the return of history in international politics: The global liberal order is under pressure from inside and outside. Until recently, the West appeared divided: Under Trump, the US no longer seemed willing to assume the leadership role and the costs of defending the liberal order. In the policy field of security, 1 An earlier version of this chapter was published in German under the title „Das Ende der NATO wie wir sie kennen: Die transatlantischen Beziehungen unter Trump.“ In: F. Böller, C. M. Haas, S. Hagemann, D. Sirakov, S. Wagner (Eds.), Donald Trump und die politik in den USA, Eine Zwischenbilanz (pp. 307–320). Baden-Baden: Nomos. It is presented here in a much-revised form.

S. Koschut (B) Free University of Berlin, Berlin, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_8

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NATO is a crucial component of this liberal order and a manifestation of American hegemony. This raises the question as to what extent the US under Trump was ready to maintain the transatlantic liberal security order or whether NATO could have possibly faced its dissolution. The Trump Administration had been characterized by a contradictory approach to transatlantic security policy since the beginning of its term in office. On the one hand, the US President made it clear that US solidarity with its transatlantic allies would be conditional in the future, based on how much members pay for US protection. This triggered shock waves among many NATO member states and led to a significant loss of trust in Washington. In an interview, Trump described the European Union in the same breath with China and Russia as a “foe” (Die Zeit, 2018). The G-7 summit in Canada and the NATO summit in Brussels in 2018 further heightened Europeans’ fears about the future reliability of the US when Donald Trump humiliated his allies in front of television cameras. As Angela Merkel put it: “The times when we could completely rely on others are long gone. […] We Europeans really have to take our fate into our own hands” (Der Tagesspiegel, 2017). On the other hand, the US significantly increased its military presence in Central and Eastern Europe, and augmented its financial investments in the security infrastructure of other European NATO countries in order to improve future troop transfers within Europe and to ensure the protection of NATO’s eastern and southeastern external borders. In its 2018 budget, the Trump Administration increased the funds for the European Reassurance Initiative (ERI), launched under the Obama Administration, to 4.8 billion US dollars and headed one of the four battle groups along NATO’s eastern external borders in Orzysz, Poland (Department of Defense, 2017). With significant US funding, NATO was also building two new command centers; one in Norfolk, USA and one in Ulm, Germany. The new centers were the result of an increased threat perception toward Russia and are intended to be used for the transport of troops and materials, as well as to secure sensitive infrastructure such as internet and communication links across the Atlantic Ocean. In addition to fulfilling the wishes of many Eastern NATO members, this development was mainly due to pressure from the US (Süddeutsche Zeitung, 2018a). In short, while the Trump Administration weakened NATO on the one hand, it strengthened NATO on the other. How can this paradox be explained? In this chapter, I investigate this puzzle using the concept of a security community. I argue that

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security communities are normative communities. Hence, these communities should cease to exist when its norms are no longer followed and when collective meanings are no longer meaningful. This process involves normative change, understood here as the degeneration of established community norms (Koschut, 2016). I suggest that, even though the normative order of the transatlantic security community has been under pressure, there is little evidence that the Trump Administration was actually interested in dissolving NATO altogether. Instead, I argue that the Trump Administration viewed NATO primarily as a military defense alliance, while the normative foundation of NATO as a liberal security community based on mutual identification and trust took a back seat. This did not mean the end of NATO, but it meant the end of NATO as we know it: the degeneration from a security community based on shared values and mutual trust to a defense alliance based solely on shared interests and common threats. Such a development is deeply problematic, as it raises questions about NATO’s internal peace and the future possibility of war among European nations. This argument will be pursued in three steps. In line with the overall framework of this volume, I will first characterize the liberal security order in the North Atlantic Area as a normative order based on three core norms: norm of shared values, norm of multilateral behavior, and norm of meaningful communication. Based on this “mapping” of the transatlantic liberal security order, I will then evaluate whether the Trump administration, as the transatlantic hegemon, supported, contested, or attempted to modify the liberal security order. Finally, taking the current COVID-19 pandemic into account, I will formulate some conclusions pertaining to the stability/instability of the current liberal security order in the North Atlantic area.

The Normative Order of the Transatlantic Security Community According to constructivist theories in International Relations (IR), actors in international relations are subject to a variety of identities, norms, and belief systems. Unless one clearly conceptualizes the normative structure that is relevant to a particular group of actors, the empirical findings will ultimately remain indeterminate (Foot & Walter, 2013, p. 334). In other words, the normative structure within which normative change takes place needs to be specified first because some norms may be more legitimate

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and persuasive than others, while some norms may be less important or even irrelevant (Kowert & Legro, 1996, p. 486; Legro, 1997, p. 31; Müller, 2013, p. 14). I will refer to this structure as the normative order of the transatlantic security community. It is important to point out in this context that, even though security communities frequently develop organizational structures, the two need not be congruent. Thus, while NATO certainly forms the core organizational structure for the transatlantic security community, certain NATO members may not be recognized as members of the transatlantic security community. For example, there continue to be military stand-offs between Greece and Turkey over Cyprus, making their membership in the security community at least questionable. Even though the terms “transatlantic security community” and “NATO” are used almost interchangeably throughout this chapter, this important distinction should be kept in mind. A normative order may be defined as the “set of standards and values legitimizing the basic structure of a society (or the structure of inter-, supra-, or transnational relations), the exercise of political authority, and the distribution of basic goods” (Forst & Günther, 2011, p. 15, my own translation). This definition can also be applied to a (pluralistic) security community. In a security community, collective behavioral standards and norms are translated into shared meanings and interpretative frames that provide mutual knowledge about community membership and define the group as “we” (Adler & Barnett, 1998, p. 57). The normative order of a security community can thus be said to be legitimized by and embedded in narratives and counter-narratives, reproduced or contested through symbols, rituals, institutions, and memories that make the normative order “real” in the eyes of its members (Forst & Günther, 2011, p. 18; see also Wiener, 2008). From this perspective, a normative order serves as a “quasi-constitution” in the sense that it defines and constitutes the “way of life” of a particular security community (Adler & Barnett, 1998, p. 58). The remainder of this section specifies the substantive content of the liberal normative order of the transatlantic security community. Originally introduced by Richard Van Wagenen in the early 1950s, the concept of a security community found its theoretical and empirical elaboration in the seminal 1957 study Political Community and the North Atlantic Area, which was carried out by a research group under the leadership of Karl W. Deutsch at the Center for Research on World Political Institutions at Princeton University (Deutsch et al., 1957).

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In a pioneering volume, Emanuel Adler and Michael Barnett (1998) combined the concept of a security community with constructivist theoretical approaches and examined community-building in different regional contexts. A security community is defined as the integration of states and societies between which there is a real and credible assurance that the members of this community will not fight one another or engage in physical violence, but rather resolve their conflicts peacefully (Deutsch et al., 1957, p. 5). Security communities are transnational cognitive peace zones that develop mutual trust and reliability and, ultimately, a collective identity based on shared norms. This creates a so-called we-feeling (Deutsch et al., 1957, p. 36). The concept of collective defense or alliance, by contrast, is based entirely on utilitarian motives, such as cost–benefit calculations, mutual threats, or shared interests. It neither requires a shared set of norms, nor does it presuppose trust or collective identity, but merely serves one purpose: to ward off an external threat with the help of accumulated military might (Walt, 1987). The concept is based on realist theoretical approaches that see international relations as a struggle for survival between states trying to maximize their national interests. Individual actors come together to protect themselves from external threats. Alliances, however, remain fragile and can be undermined by the drive for power, the change of interests, or the disappearance of the external threat. Defense alliances have ambivalent consequences for peace: On the one hand, they can deter other actors, but on the other hand they can themselves be perceived as a threat and thus trigger armament and the formation of counter-alliances. For a hegemon, in particular, defense alliances can lead to entrapment in unwanted conflicts. Karl Deutsch et al. (1957, p. 68) sets up three basic requirements for the formation and maintenance of a pluralistic security community: (1) mutual compatibility of values, (2) reliable expectations of behavior, and (3) mutual responsiveness over considerable means and possibilities for communication, perception, consultation, and collective decision-making. On the basis of these criteria, the transatlantic security community can be understood as a normative order consisting of three core norms: the norm of shared values, the norm of multilateral practice, and the norm of meaningful communication. This raises the interesting question under investigation in this chapter: whether the American hegemon under the Trump administration supported, contested, or attempted to modify this liberal security order.

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This is not a trivial question. What many people perceive as the “natural order” of a security community is, as outlined above, a carefully constructed set of collective meanings tied to a particular set of institutionalized norms. If a significant portion of people living in a particular security community were to “unlearn” that stable peace is linked to the maintenance of these institutionalized norms, the normative order of peaceful change would cease to exist (McNamara, 2010, p. 165; see also Wendt, 1992). This is why it takes agency to meaningfully link these normative expectations of peaceful change to the existence of a pluralistic security community and defend it against competing meaning frames. As Karl Deutsch et al. (1957, p. 113) points out: “Proponents of union (security community) had to make the union issue paramount in politics. They had to link the remaining urgent local pressures and issues to it; and they had to present eventually the practical approach to union in terms of a single political plan. Eliminating rival plans was crucial.” Hence, awareness of what it means to be a member of a particular security community enables people to reproduce, but also to contest and change, the normative order of that community. The concept of the hegemon resonates nicely with Karl Deutsch’s et al. (1957, p. 70) assumption that security communities develop around “cores of strength” that push and pull for integration. In a security community, core states are “states that possess superior material power, international legitimacy, and have adopted norms and practices that are conducive to peaceful change” (Adler & Barnett, 1998, p. 44). Cores states exercise power by projecting shared meanings and normative understandings, thereby contributing to “a sense of purpose” that can have a magnetic effect on other members (Adler & Barnett, 1998, p. 424). Moreover, powerful core states play a pivotal role in promoting and defending the normative order of a security community as “superior” norm leaders (Deutsch et al., 1957, p. 72). The concept of power deserves further attention. In a security community, it is important to distinguish between “power” (material power) and “responsiveness” (non-material power) (Deutsch et al., 1957, p. 40). Emanuel Adler (1997, p. 335) makes a similar distinction between the material resources to accomplish certain goals (power) and the authority to define collective meanings and norms (knowledge). In a security community, the interplay of power and knowledge remains decisive, since all members continue to pursue their own interests. These interests, however, acquire constitutive meaning only within common normative structures and rules of behavior.

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Power thus becomes representational as security communities replace the threat of physical force with the threat to the individual identities of its members since “preserving the Self mean[s] sustaining the narrative” of the community (Bially Mattern, 2001, p. 20). In this sense, hegemonic core states possess what Deborah Avant, Martha Finnemore, and Susan Sell (2010, p. 13) term as “capacity-based authority.” Core states promote peaceful integration due to their capabilities and strength (ability to act) as well as due to their responsiveness and adaptability to the needs and interests of smaller members (ability to respond)—the latter being decisive for the community’s preservation (Deutsch et al., 1957, p. 138). Norm of Shared Values A pluralistic security community rests on a consensus about its main values. However, the localization2 of these normative values may vary significantly. It is thus necessary to distinguish between primary (or “major”) and secondary (or “minor”) values (Deutsch et al., 1957, p. 123). Primary values are “those that rank the highest within a particular perspective, whereas secondary values are those that rank lower within that same perspective” (Rosenfeld, 1998, p. 249). One important element in the category of primary values is, for example, a “basic political ideology” (Deutsch et al., 1957, p. 124).3 In addition to these primary values, there are secondary values that are contested and represent either different approaches to cope with individual and societal risks, and/or are historically and culturally constructed (Ruggie, 1983). To be sure, these secondary values are part of the overall normative framework shaping mutual trust and collective identity. A pluralistic security community does not imply absolute congruence of values. Deutsch and his associates (1957, p. 126) make this point very clear: “There is a 2 Localization means “the active construction (through discourse, framing, grafting, and cultural selection) of foreign ideas by local actors, which results in the former developing significant congruence with local beliefs and practices” (Acharya, 2004, p. 245). 3 Ideology may be understood as “a set of closely-related beliefs or ideas, or even attitudes, characteristic of a group or community” (Plamenatz, 1970, p. 15) or, in other words, “the whole outlook of a social group […] its total Weltanschauung (or mentalité) as conditioned sociologically by the group’s political orientation, and temporally by its location in the ongoing historical process” (Mannheim, 1936, pp. 57 and 125). For a detailed discussion of the concept, please refer to Mullins (1972), Howard (1989), and Gerring (1997).

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tendency in popular thinking to consider too many values as incompatible with each other. The public is apt to become upset about a seemingly incompatible value that may actually be irrelevant to the formation of a security-community.” A security community presupposes coherence of primary values and, at the same time, the depoliticization4 of secondary value differences (Deutsch et al., 1957, p. 125). The transatlantic security community is not a regional “melting pot,” but a heterogeneous community of states and people bracketed by a dynamic consensus on primary values (one could speak of a “value cluster”) that allows for certain domestic variations and adaptations (Koschut, 2016, p. 44). Secondary values, by contrast, are derivatives and must always reflect and meet the core meaning of primary values. Peaceful conflicts over secondary values are thus not a sign of a security community’s weakness or decay as long as its primary values remain uncontested. In fact, these conflicts can be said to be constitutive to the emergence of a security community since, without such conflict, the presence of institutional cooperation and value coordination would hardly be required (Keohane, 1989). The presence of contested secondary values grants importance to clearly defined primary values. Primary values are usually written down in foundational documents and treaties, constantly reiterated through symbols, rituals, and speech acts, and often contrasted against outside values (Deutsch et al., 1957, p. 123). The primary values of the transatlantic security community are the principles laid out in the UN Charter (collective security, national self-determination, human rights, and international law) along with the liberal values of democracy, individual freedom, the rule of law, and free market economies. Taken together, these primary values define the distinctive way of life of the transatlantic security community. In sum, the transatlantic security community is characterized by a multitude and diversity of secondary values at the domestic (member-state) level. At the regional (community) level, it requires a consensus over the primary values of the community. That said, the protectionist and unilateral policies of “America First” demonstrate that the transatlantic consensus on primary values was being contested by the Trump administration. At numerous summits such as the G-7 meetings, the G-20 meetings, or the NATO summits, member states were not able to agree on many of the fundamental liberal values of 4 According to Karl W. Deutsch, depoliticization means that an issue is made nonpolitical and taken off the political agenda.

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the transatlantic security community. After the G-7 meeting in Canada, for example, President Trump openly opposed the free trade policy of the European and Canadian allies. At the NATO summit in 2018, he accused Germany of being “completely controlled by Russia” and a “prisoner” of Moscow because of its energy policy (ARD, 2018). The United States left the UN Human Rights Council in 2018, while, at the same time, the US President displayed a certain affinity for dictators and autocrats such as Kim Jong Un in North Korea, Rodrigo Duterte in the Philippines, and the Saudi royal family (US News, 2018). Domestically, the US President undermined the principle of the rule of law with his actions against special investigator Robert Mueller and, with his unproven accusations of “electoral fraud‚” and his trivialization of right-wing violence in the US questioned the foundations of liberal democracy (Die Welt, 2018; Süddeutsche Zeitung, 2018b). He also undermined the freedom of the press in the US by calling individual media outlets “fake news” or “enemies of the people” (Frankfurter Allgemeine Zeitung, 2018a). Above all, he supported the rise of populists in Europe and other parts of the world who openly oppose the liberal order (New York Times, 2016a). US Secretary of State Mike Pompeo confirmed this: “Every nation—every nation—must honestly acknowledge its responsibilities to its citizens and ask if the current international order serves the good of its people as well as it could. And if not, we must ask how we can right it. This is what President Trump is doing” (Pompeo, 2018). The openness and vehemence with which these violations of liberal values were “celebrated” by President Trump can be said to have substantially undermined the transatlantic norm of shared values. The fact that all this was done by the US hegemon makes this even more detrimental. Since the US hegemon remains the single core state, it would seem to be much easier for American norm leaders to (re)define the norms and meanings of the transatlantic security community than for members with lower status.

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Norm of Multilateral Practice The ability of members to predict the behavior and performance of other members characterizes a pluralistic security community as a “community of practice”5 (Adler, 2005; Adler & Pouliot, 2011). In a security community, the peaceful resolution of conflicts of interest through diplomacy and negotiation becomes the norm, while war or physical coercion among its members becomes a taboo. This collective knowledge is rooted in a normative understanding of multilateralism that involves a strong or “thick” type of multilateralism. Thick multilateralism is more than the practice of coordinating national policies in groups of three or more states, but, rather, submits to certain normative principles (Ruggie, 1983). Thick multilateralism thus transcends the instrumental logic of egoistic and utility-maximizing behavior (which would be weak or “thin” multilateralism) and, instead, refers to the practice of self-restraint and peaceful conflict resolution (Adler & Greve, 2009, p. 71). The norm of multilateral practice also involves collective defense. The fact that the members of a pluralistic security community maintain peaceful relations among each other does not mean that its members will not fight wars against non-members. Security communities often develop a collective identity in order to distinguish themselves from a particular “other” (Diez, 2004; Owen, 2000; Risse-Kappen, 1996; Wendt, 1999). Defining a community in such a way enables members to distinguish between members and non-members. Disconnecting the normative “self” from a normative “other” can thus be understood as an act of identity building necessary for developing and maintaining a pluralistic security community. Any outside threat—defined in terms of a perceived risk or harm to the distinctive “way of life” of the security community— should thus trigger a collective response (Adler & Barnett, 1998, p. 56; Deutsch et al., 1957, p. 48; Wendt, 1999, p. 298). In sum, a pluralistic security community involves a normative (as opposed to an instrumental or strategic) understanding of security multilateralism based on peaceful conflict resolution and the practice of self-restraint on the inside. On the 5 This conception of a security community as a community of practice shares some significant theoretical and empirical overlaps with Adler’s concept of the same name (Adler, 2005; Adler & Pouliot, 2011). However, while I treat this concept as part of the general normative framework of a security community, Adler and other proponents of a practice approach to IR (especially Pouliot, 2008, p. 258) treat the logic of practice as ontologically prior to other forms of social action (logic of consequence, logic of appropriateness, logic of arguing) (See also Koschut, 2014).

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outside, it includes the use of force against outsiders based on collective defense. Under Trump, allied solidarity in NATO was not being questioned entirely, but it did become conditional. For example, the US President publicly doubted that the US would be willing to defend smaller member states like Montenegro: “Montenegro is a small country with very strong people. They are very aggressive people, they could become aggressive, and—congratulations—you are in World War III” (Frankfurter Allgemeine Zeitung, 2018b). During the election campaign, Trump also repeatedly suggested that US solidarity for its allies would depend on the payment mentality of individual allies (New York Times, 2016b). The fact that, initially, Trump strictly refused to commit to the traditional pledge to uphold Article 5, NATO’s mutual defense clause, only increased the collective uncertainty on the part of the allies (New York Times, 2017). Instead, at a campaign rally in Montana ahead of the 2018 NATO summit, he made it clear that he wanted to apply the quid pro quo principle of his “America First” policy to NATO: “You know Angela [Merkel], I can’t guarantee it, but we’re protecting you and it means a lot more to you than protecting us because I don’t know how much protection we get by protecting you” (The Guardian, 2018). The Trump Administration apparently thought that the transatlantic partnership works like an insurance company, which protects you only if you paid your “fees.” This has certainly undermined the trust of NATO member states in US alliance solidarity. It is a primary function of the hegemon to provide (military) reassurance to allies, which in turn strengthens the cohesion of the community. Again, due to highly asymmetrical security dependencies, the undermining of multilateral norms by the hegemon should be more consequential than by lesser allies (e.g., in the case of France’s withdrawal from NATO’s integrated military structure in the 1960s). Norm of Meaningful Communication Even though the norm of multilateral practice implies the primacy of self-restraint and collective action, unilateral actions and conflict of interests are still possible since members of a pluralistic security community maintain state sovereignty. This adds significance to the norms of communication and consultation among members of a pluralistic security community. In fact, Karl Deutsch (1966, p. 77) places communication at the center of any social community: “Communication is the cement

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that makes organizations. Communication alone enables a group to think together, to see together and to act together.” Hence, a pluralistic security community is also a “community of communication” (Müller, 2006; Risse, 2010). A community of communication establishes a “communicative space” in which issues of common concern are debated and conflict of interests are resolved within shared meaning structures and interpretative frames (Risse, 2010, p. 109). For the purpose of maintaining a security community, this involves, above all, shared conceptions about security threats, similar security perceptions and responses, and common security discourse involving shared conceptual vocabulary and symbols (Koschut, 2016, p. 46). This, in turn, requires that community members recognize each other as legitimate speakers and establish common reference frames for communication (Risse, 2010, p. 109). In the transatlantic security community, the norm of communication involves not simply informing other members about imminent actions or policies, but includes the permanent exchange of values, beliefs, interests, and perceptions (Kitchen, 2009). The purpose of such “thick” communication is to limit unilateral actions and resolve conflict of interests (Koschut, 2016, p. 46). This normative understanding of communication implies responsiveness. Responsiveness is the willingness to listen to and be persuaded by others (Deutsch et al., 1957, p. 165). In a security community, collective actions aim not at physical coercion, instrumental calculations, and strategic incentives, but at consensus building (Müller, 2006; Risse, 2000). This is a matter of giving attention to the needs of participating members within an integrated regional area (Deutsch et al., 1957, p. 129). In sum, a pluralistic security community is characterized by the willingness among its members to be convinced by the better argument and thus generally follow the logic of communicative action (Habermas, 1981; Risse, 2000). It rests on the norms of genuine and timely consultation, and mutual responsiveness. If we accept the fact, as pointed out above, that powerful core states contribute to stable normative orders in a security community by practicing responsiveness, the inability or unwillingness of these cores to practice self-restraint, punish norm violators, and facilitate knowledge transfer in their communication with other members should undermine their legitimacy (Koschut, 2016). As Bruce Russett (1998, p. 386) points out, “to be tolerated in any hegemonic role hegemons will have to be “nice” ones who provide collective goods as well as coerce recalcitrants. The Deutsch et al. praise for ‘strong core areas’ needs to be seen in

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this light […] as holding themselves to the same norms they enforce.” If core states practice unresponsiveness, smaller members will almost certainly come to view the asymmetrical power relationship in a security community as a threat to their identity (Sikkink, 2013, p. 162). Ultimately, the norm of meaningful communication is based on the premise that actors are willing to be persuaded instead of insisting on their interests (Habermas, 1981). But this only works as long as there is a basic consensus on values and norms of multilateral practice, as well as mutual trust, that enable the self-restraint of power instincts. NATO forms the institutional framework for channeling transatlantic discourse. If this basic consensus becomes fragile, the self-restraint of the power instincts also decreases. Then, communication only serves to assert one’s own interests with the help of threats, orders, manipulation, or blackmailing. However, if we look at transatlantic communication, this is precisely the way the Trump Administration was dealing with its allies in NATO—as when the US President threatened to “go it alone” if other member states fail to meet their “obligations” (New York Times, 2018; Reuters, 2018). As Tomas Valasek, former Slovak ambassador to NATO, noted: “The biggest of the allies doesn’t just have disagreements with us, but he actually seems willing to walk away” (Washington Post, 2018). Moreover, NATO allies were irritated by Trump’s sympathies for illiberal hegemons. He called Russia and China mere “competitors” but labeled the European Union a “foe,” adding that some countries were “really taking advantage of us and many of those countries are in NATO” (BBC, 2018). Luxemburg’s foreign minister Jean Asselborn replied: “It cannot be that suddenly the Russians and Chinese are competitors and that we are enemies in Europe. Something is not ticking right—let’s say—in the norms” (Der Spiegel, 2018). In 2020, Trump even announced a partial withdrawal of US troops from military bases in Germany to punish Berlin for low defense spending, claiming that the German government had been “delinquent in their payments to NATO.” In front of journalists, he openly blackmailed Germany: “Until they pay, we’re removing our soldiers” (White House, 2020). Again, the role of the US hegemon as the security community’s core state is pivotal here because its ability to shape norms threatens member states’ identities and the “family narrative” within NATO. As a senior German official stated: “We were very emotional, because our relationship with America is so emotional—it’s more of a son-father relationship—and we didn’t recognize our father and realized he might beat us” (New Yorker, 2018).

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Conclusion In this chapter, I argued that the transatlantic security community is based on a liberal normative order. This liberal security order presupposes a minimal consensus among member states on three core norms. The role of a hegemon is key here. Inside the norm regime of a security community, norm leaders are not treated as approximate equals but are woven together in asymmetrical power relationships and implicit hierarchies. As NATO’s hegemon, the US core state plays an important role in building and maintaining security communities because its political and economic resources, as well as social and cultural attraction, facilitates the establishment of common institutions, norms, and meanings, and promotes communication channels and social interaction among the members of the security community. This gives the United States much more leverage to define the security community’s normative order in both material and ideational terms. The liberal normative order of the transatlantic security community, however, became very fragile under the Trump Administration (see Table 8.1). At the value level, the Trump Administration undermined fundamental liberal principles such as the rule of law and free trade. At the level of practice, the President was conditional about the solidarity with NATO allies, and at the level of communication, there was almost a complete lack of mutual understanding and responsiveness. Of course, this was not entirely Trump’s fault. Most of the problems that prepared the ground Table 8.1 State of the normative order of the transatlantic security community during the Trump years

Common values

Multilateral practice

Meaningful communication

Primary values

Peaceful conflict resolution Collective defense

Consultation

conditional

breakdown

(Secondary values) contested Source Own depiction

Responsiveness

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for this, such as allegations of European “free-riding” or the power asymmetry within NATO, have existed for decades.6 However, the way the US dealt with these conflicts changed dramatically in the past four years. The Trump Administration no longer seemed to view NATO as a liberal space of trustworthy allies, but, rather, saw relations with its allies as a zero-sum game of winners and losers. Despite these obvious problems, however, it seems premature to join in the swan song for NATO. Indeed, with the incoming Biden administration there are many indications that NATO will continue to exist. A dissolution or disintegration of NATO cannot be ruled out entirely, but it is not very likely. This is mainly due to two reasons. First, the US needs NATO in its conflicts with other hegemons. When the Cold War drew to a close, NATO lost its central importance in the eyes of many US decision-makers in Congress and in the White House, e.g., consider the sidelining of NATO during the so-called War on Terror or the Obama administration’s troop surge in the Pacific region in the wake of the so-called Asian Pivot. Recently, however, the organization has regained importance for the US in the course of the Russian annexation of Crimea and the threat to US security interests in the South China Sea. The US, in particular, is currently pushing NATO members to invest more in military defense in order to increase the deterrent potential against Russia and China (Defense News, 2016). Second, domestic support for NATO remains high in the US. According to a 2016 survey by the Pew Research Center, a majority of the US population continues to see NATO as “good for the US” (Pew Research Center, 2016). This support has even increased under Trump over the past two years. Granted, this is mainly due to the support from the Democratic camp. Among Democrats, support for NATO is particularly high at 78%, compared to only 47% among Republicans. In 2016, the gap between the two parties was only 6% (Pew Research Center, 2018a). This shows an intensification of the party-political division in the US on NATO politics and seems to indicate that Trump’s criticism of the alliance has generated increasing resonance, at least among Republicans. 48 percent of all respondents in the US say that NATO is not doing enough to solve problems globally (Pew Research Center, 2018b). 6 For example, US President John F. Kennedy told his National Security Council in 1963 that “NATO states are not paying for their fair share and living off the ‘fat of the land’” (Washington Post, 2016).

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Nevertheless, around two-thirds (62%) of Americans see NATO positively, and the trend is increasing: approval of NATO has improved by 9 percentage points compared to 2017. It is the strongest US support for the transatlantic security alliance in recent years. The current crisis surrounding COVID-19 has done little to change this. On an operational level, COVID-19 has impacted negatively on NATO’s missions and overall military interoperability. Moreover, the immense financial costs of cushioning the economic effects of COVID-19 will surely affect political debates on military spending. Some even suggest that NATO deterrence may suffer due the pandemic (Mölling et al., 2020). On a political level, and perhaps surprisingly so, the COVID19 crisis has done little to foster political cohesion and solidarity among NATO members. To be sure, COVID-19 has given attention to allied resilience and preparedness according to Article 3 of the Washington Treaty, and many member states have engaged in civilian and logistical support in response to the pandemic. For example, NATO’s Rapid Air Mobility initiative has facilitated the delivery of medical supplies and personal protective equipment to and from several countries, including the UK, Turkey, the United States, and Italy (NATO, 2020). But NATO, as a military security organization, is not well prepared to assist in combatting a global health crisis. As a result, member states have looked elsewhere for international cooperation and assistance or, as in many cases, pursued national policies. It is still plausible to assume that NATO will continue to exist. But it remains to be seen in which form NATO will continue to exist. The Trump Administration stated many times that it valued NATO as an institution: “Never—never—has an alliance ever been so powerful or so peaceful, and our historic ties must continue” (Pompeo, 2018). The National Security Strategy showed that the Trump Administration understood world politics as a zero-sum game in which the success and increase in power of other actors mean failure and loss of power for the US at the same time. Moreover, US President Trump explicitly included NATO allies in this zero-sum game. Those who do not assert their interests in this game or let themselves be guided too much by the norms and values of an “imaginary international community” will soon find themselves on the loser’s road: “International organizations cannot take the place of national and personal effort or of local and individual imagination; international action cannot replace self-help” (Pompeo, 2018). From the Trump administration’s point of view, NATO was not a security

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community based on mutual trust and mutual identification. Rather, the US President saw NATO as a geopolitical and military strategic resource at best, and a burden for US security interests at worst. If NATO member states cannot rebuild this mutual trust, the current hierarchical normative order could soon degenerate into an anarchical self-help system that no longer functions according to the logic of appropriateness, but follows the logic of consequence. NATO’s future task would then differ significantly from its current role: Its main objective would be defending its area against outside threats and not to promote internal peace. This could have significant implications for the current hegemonic order. For one, the European allies may find it more attractive to pursue other options, working toward a Europe that can defend itself without the US. Moreover, illiberal hegemons, like Russia or China, may be able to exploit a weakening of the transatlantic liberal security order for their own gains. This, then, would not be the end of NATO, but the end of NATO as we know it.

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PART III

Challenging Western Hegemony: Varying Patterns of Contestation

CHAPTER 9

Rising Hegemon? China’s International Ambition and the Politics of Hegemonic Ordering in Asia During the COVID-19 Pandemic Sebastian Harnisch

Introduction The nature and direction of the international order will be shaped by the roles of emerging powers in the decades to come. It comes as no surprise then that there is no dearth in the extant literature on projections regarding what China will want as a rising power (Legro, 2007): Realists claim that as China’s relative power increases, it will attempt to change the rules governing the system (Gilpin, 1981, p. 187). Power theoreticians differ, however, when explaining whether China’s revisionism will be intentional or accidental. In the case of the former, leaders in Beijing would first close the power gap with the US, while concealing their true

S. Harnisch (B) Heidelberg University, Heidelberg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_9

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intentions, and only later shifting policies toward dominance (e.g., Pillsbury, 2015). In the case of the latter, as China is starting to strive for achievement, it is the reactions by others, most notably the US, that triggers escalation because the current and potential future hegemon do not trust each other’s intentions (Liff & Ikenberry, 2014). But power transition and other realist theoreticians remain divided over the question why China’s assertive intentions may change and in what direction that assertive revisionism is heading (Johnston, 2013; Schweller, 2018; Zhang, 2019a). Theorists of interdependence, in turn, hold that the material rise will facilitate social transformation in China, both domestically and internationally. In the People’s Republic, further integration into the world economy will strengthen economic and political interests, favoring greater liberalization at home and abroad (Johnston, 2004). Internationally, China’s growing political and economic weight increasingly requires diplomatic interaction and institutional underpinnings, thereby socializing China’s political and diplomatic elite to develop an interest in upholding and shaping the system that has facilitated China’s rise (Johnston, 2008). This school of thought has been challenged by critics who suggest that US policies of engaging China have not only failed but prevented the US from containing China earlier and thus more effectively (Ratner & Carson, 2019). But, as Alistair I. Johnston has argued, there is ample evidence to suggest that China’s approach to different orders varies substantially over time and issue areas (see also Pang, 2018), leaving critics and conventional accounts of interdependence to explain where that variation originates from (Johnston, 2019; see also Goldstein, 2020). Focusing on the distribution of ideas both in China and beyond, social constructivist scholarship on China’s rise offers a broad variety of different hypotheses on whether and what kind of international order China might want to create. Taking status seeking as the main source of Beijing’s conduct, Yong Deng finds that China’s policies from 1989 to 2008 have been shaped by its unsatisfied status expectations (Deng, 2008; see also Larson & Shevchenko, 2010). Using Chinese sources, Shogo Suzuki argues that China emulates other Western powers when striving for great power status (Suzuki, 2009), while William Callahan centers on the Chinese people’s understandings of China as a rising great power with a humiliated past (Callahan, 2009). Meanwhile, China’s foreign policy community has been engaged in an intense debate over the country’s positioning (dingwei) too (Pu, 2017), with the prominent

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scholar Yan Xuetong, of Tsinghua University, calling for a more robust stance, and Qin Yaqing, of China Foreign Affairs University, pleading for a moderate course of “continuity through change” (Qin, 2014; Yan, 2014). These debates have been stoked by President Xi’s Chinese interpretation of the global community as a “community with a shared future for mankind” (renlei mingyun gongtonti) and China’s growing contribution to it (Zhang, 2019b). More recently, Xiaoyu Pu has conceptualized China’s (re-) positioning as a rebranding strategy of its image in the world. Responding to cross-cutting pressures from domestic and international audiences, the leadership targets domestic expectations by asserting China’s rapidly rising power status, while, when addressing the international audience, it stresses its developing-country status to reassure existing anxieties (Pu, 2019, p. 11). Pu finds that China’s status signaling is inconsistent over various cases with status-emphasizing behavior in some areas and status-shirking behavior in others. Last but not least, and centering on the concept of hegemony, Allan et al. (2018) have challenged existing theories of hegemonic transition and China’s emerging foreign policy beliefs. They contend that the distribution of identity among great and lesser powers determines the probability that a counterhegemonic movement against China may occur. By focusing on the ascription of legitimacy to a hegemonic ideology, they find that the US-led order remains relatively stable. In turn, they purport both that a full integration of China into the US-led order is unlikely because this would challenge China’s authoritarian domestic order, and that a Chinese-led hegemonic order would not receive the necessary backing by great and lesser powers. Against this rich theoretical background, this chapter builds on the (thick) understanding of hegemony introduced in the chapter by Böller and Werner, in order to gauge China’s response to the Trump administration’s policies. Böller and Werner define hegemony as an asymmetrical relationship between a leading state and subordinate states in which the hegemon provides a legitimate, rules-based hierarchical order that is backed up by the provision of material (public) goods and supported by lesser powers (see introduction by Böller and Werner). In doing so, they position hegemony very close to a liberal understanding of authority, i.e., rightful rule based on consent. However, hegemony can also be understood as being based on incentives and as providing club goods for a few rather than public goods for the many. When analyzing the

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current Chinese conceptualization of hegemony, this chapter will include other possible forms of “hegemonic ordering,” i.e., tolerance, economic benefits, as well as a host of practices, such as role taking and making, altercasting (see Ikenberry & Nexon, 2019).1 Thus, and in addition to Böller and Werner’s definition, this chapter suggests that societal support in both the hegemon’s and the subordinate states and the resulting transnational relations may turn out to be crucial for the long-term stability of a China-led hegemonic order (Nordin & Weismann, 2018). In this interactionist role theory account, I argue that Trumpian populism, as a distinctive form of “aggressive retrenchment” on behalf of a limited group among the American population, has tried to altercast China into the role of an “international perpetrator” during the ongoing SARS-CoV-2 pandemic. In turn, I argue that the Chinese leadership has tried to counter this role ascription by presenting China as a defender of the rules-based order and as an important provider of global public goods through a deliberate diplomacy initiative: first with the distribution of personal protection equipment such as masks, and then the delivery of a low-tech but sufficient vaccine, all while the US administration was failing to adequately protect its own citizens and other countries from the COVID-19 pandemic. Theoretically, interactionist role theory is used to account for US populism under President Trump and its interaction effects on China’s role taking (Harnisch et al., 2015). The article contends that role theory is more suitable than both the rebranding and the identity approach. In contrast to Pu’s notion of rebranding China’s image, role theory not only incorporates domestic and foreign expectations, but provides for several interactionist social mechanisms—role conflict, role taking, role making, altercasting, as-if role taking—to ascertain cross-cutting expectations as sources of role ambivalence and counter role taking, and the subsequent opportunities for China to fill the US leadership void (Harnisch, 2011). In contrast to Allen et al. (2018), I stress that, conceptually, national identities are primarily tied to constituting actorness over time by delimiting it from others. In comparison, international roles are inherently tied to social purposes in a group, since they are functional positions constituted by ego, and thus alter expectations directed toward (partially) achieving those purposes (McCourt, 2012, p. 373). In short,

1 I want to thank Jason Franz for pointing this facet out to me.

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while identities tell states who they are, foreign policy roles—ego and alter expectations—suggest what they should do. In the case at hand, this means that, while China under President Xi may have been set on course to become an international public goods provider before the crisis, it was the failed attempt by the Trump administration to provide adequate public health and macroeconomic stability at home and abroad that enabled China to reposition itself as the global public health good provider in the current phase of the pandemic (Norrlöf, 2020). This chapter focuses on the COVID-19 pandemic here for several reasons. First, there is no dearth of studies on trade, investment, military, or high-tech rivalry between the two states, but there is for studies on global health (among others: Ba et al., 2019; Hu & Meng, 2020; Shambaugh, 2020; Small & Jaishankar, 2020). Secondly, while China’s government has sought to strengthen its profile as a global public goods provider for some time (Freeman, 2020), its efforts in the public health sector have been critically discussed in the past (Lee & Chan, 2014; Yoon, 2008). As Jeremy Youde notes, China occupies a central role in global public health provision because of its size and from being the site of origin of several infectious diseases, such as Severe Acute Respiratory Syndrome (SARS) and the H5N1 and H7 N9 influenza strains. But, thus far, it has limited its collaboration in the critical areas of surveillance and information sharing with the world community, and, in particular, with Taiwan (Youde, 2018). Thirdly, I suggest that the US’ aggressive altercasting of China into the role of a “global perpetrator”—with the US President suggesting that the world was suffering from the Chinese government’s malfeasance with China’s leadership “instigating” the pandemic (McNeil & Jacobs, 2020)—has created an opportunity for Beijing to lay bare the dissonance between the US President’s claims and the reality on the ground: the fact that the US has more cases of infection and more new cases per capita than any other liberal democracy and that the Chinese government has been able to dramatically reduce infection rates per capita, to jump started the economy, and to quickly provide a low-tech vaccine to various other countries around the globe.

Symbolic Interactionist Role Theory Lately, role theory has undergone a relational revolution. Early approaches understood international roles as constant social positions tied

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to elite-based conceptions of national purpose, fixed to material structures, or both (Holsti, 1970; Thies, 2010; Walker, 1979). In contrast, the current interactionist role approach conceptualizes roles as functional behavioral patterns, constantly emanating from two sets of interconnected relationships: the relationship between society (the legislative) and the executive branch, and the relationship between a state government and external others, i.e., states, international organizations, and non-state actors (Harnisch, 2014, 2015; Harnisch et al., 2011; McCourt, 2012, 2014). From this perspective, the role of a hegemon is constituted by expectations on two distinct but connected analytical levels. First, hegemons are hierarchical positions in asymmetrical relations with subordinate powers in the international society. In turn, however, these external hegemonic positions are based on the asymmetrical extractive positions of executive branches vis-à-vis their domestic societies and legislatures. In this vein, Jack Snyder has shown that some state-society relationships of hegemons, i.e., autocratic ones, are more prone to aggressive foreign policy strategies and hegemonic overexpansion than others: States in cartelized systems may be highly responsive to interest group pressures, even if this requires international behavior that makes little sense in terms of the objective constraints and incentives posed by the international environment. Conversely, states dominated by unitary oligarchies with encompassing interests will be more responsive to international pressures, since no powerful domestic groups with parochial interests are pressing the state. States in democratic systems may be highly responsive to their electorate, though median voter preferences should typically drive the state to do what is internationally rational in any event. (Snyder, 1991, p. 318)

Building on Synder’s findings, but accounting for the complex ideational nexus between interstate and domestic role taking, I draw upon symbolic interactionism here. It purports that actors, through role taking, give meaning to a situation and to their own behavior (constitutive function) but that they also raise expectations as to how others (in the group) should behave (regulative function). It follows that, by taking on a specific role, an actor may altercast another actor into a complementary role, e.g., victim or perpetrator, leader or follower, etc. (Wendt, 1992, p. 421).

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Operationalizing US Leadership Roles and Trumpian Populism There are different ways to operationalize international roles (Harnisch, 2018). It follows that there are many ways to conceptualize populism as a particular kind of domestic expectation toward international role retrenchment. I build on Gordon Friedrichs’ (2020) argument here that populism represents a specific pattern of domestic-international role taking: first, by recasting the domestic relationship between “the people” and “the elites” as exploitative; and, second, by assuming that a populist perspective of politics requires systemic remedies through a strong (often authoritarian) domestic leader on behalf of “the people.” From this perspective, the nativist populism of the Trump administration repositioned the US global leadership role as having fallen “victim” to domestic and foreign exploitation by liberal and global elites resulting in relative-gains seeking behavior by both allied and rivaling nations. To show the effect of Trumpian populism on US leadership role expectations, I use a quantitative content analysis (quantCa) of the US role conception under President Trump (Harnisch & Friedrichs, 2021). In that study, a (human) preset coding of “assumed” messages—in our case messages related to the role conceptions of Donald Trump about the US leadership role in terms of its functional and relational dimension—was conducted. Using Jacques Hymans’ research on national identity conceptions of world leaders (Hymans, 2006), ten major, foreign policy speeches by Donald Trump between 2016 and 2019 were analyzed, focusing on the US’ “significant others” and the dimensions of the nationalism and oppositional scale. First, the findings show that President Trump’s role conception is directed toward a generic foreign other: The numeric values of the top five most significant external actors are almost equally distributed between US allies, the world community, and enemies of the US (i.e. North Korea, but also China, and Terrorism). Importantly, there are a low number of references to the “West” even though the speeches selected were traditionally addressed to this audience, so that the negligence can be seen as a clear sign of demarcation from this historic bonding narrative. Secondly, the analysis found a high degree of oppositionalism (0.58 on a 0–1 scale) in the role conception. This, in turn, suggests an ambivalent leadership role conception between assimilation and dissimilation vis-à-vis “significant others” and the wider international society. Following from that, it remains unclear on the basis of the empirical data

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what exactly US leadership is expected to do and for whom in the international society. Thirdly, there is a high level of nationalism in President Trump’s speeches that feeds, at least domestically, from an “other” that is opposed to the “people” and that translates into a competitive posture internationally. This finding strongly suggests that, for populists such as US President Trump, the same oppositional role conceptions operating in the domestic realm are at work in international affairs. Fourthly, there is a notable absence of countries of the “Global South,” either as states that require support by the US or as a group of states to be reckoned with as an oppositional force. In conceptual terms, I identify President Trump’s role conception of US leadership as a dominant leadership subtype because of its strong sense of nationalism and the relatively balanced degree of oppositionalism toward any kind of “others.” This unique US leadership role allocation is paired with a low incentive for a broad and inclusive followership. Notably, the balanced oppositionalism toward the international society almost eliminates the traditional friend/enemy distinction in US foreign and security policy and thus establishes a new pattern of equal distance between (current) allies and historical foes. In policy terms then, I identify Trumpian populism as a specific form of transactional “aggressive retrenchment strategy,” emanating from dramatic shifts in economic opportunity after the Global Financial Crisis (GFC) in 2008, and longer-term demographic challenges to the ontological security of (mainly) white Judeo-Christian Americans in the aftermath of the post-material revolution of the 1970s (Inglehart & Norris, 2017). In effect, this populist retrenchment turns the US leadership role from being tied to the production of public goods for most Americans— consumers and producers—into a leadership role that is meant to provide a club good for only a subset of the American populace, i.e., the forgotten white middle class.

US Populist Retrenchment and US-China Competition Under President Trump, US-China policy quickly did away with the US’ traditional posture of both engaging with and containing China’s increasing efforts to shape its regional environment through various initiatives—chief among these being the Belt and Road Initiative, and by

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demanding more respect for its core national interests, including prominent territorial claims in the South China Sea and the situation in Hong Kong (Hu, 2019). Starting with the US National Security Strategy 2017, the US National Defense Strategy 2018, and the State Department’s concept for “A Free and Open Indo-Pacific” (State Department, 2019), the Trump administration designated China as a “revisionist power,” and the most serious challenger to America’s economy, values, and security since World War II (White House, 2020, p. I). Treating China as a “long term strategic competitor,” the administration quickly took an across the board approach that abolished the “strategic partnership” with Beijing against global terrorism, cooperation in global governance (Paris Climate Accord), regional conflict management (Syria), and nonproliferation (Iran) (Hu, 2020). Moreover, since 2018, the administration has considerably broadened the area of strategic rivalry to include Taiwan, the South China Sea, cybersecurity, strategic and conventional military buildup, the trade war, high technology competition, ideological struggle, and Hong Kong (Tellis, 2020). Interestingly, at first the Trump administration did not instrumentalize the outbreak of the global pandemic in the Chinese city of Wuhan, Hubei Province in December 2019. In fact, up to mid-March 2020, the US President not only denied the scope, gravity, and lethality of the pandemic, but also ignored the warnings from his own administration, US intelligence, the scientific community, and the World Health Organization (WHO). Already in May 2018, the administration had disbanded the White House pandemic response team, and, in July 2019, before the crisis broke out, it failed to reappoint an epidemiologist from the US Center for Disease Control (CDC) to the Chinese Center for Disease Control (China CDC). After being informed on January 3, 2020, by the China CDC about the outbreak, the US administration was still claiming that the situation was under control in late January. Indeed, on January 24, the President praised his Chinese counterpart President Xi effusively: China has been working very hard to contain the Coronavirus. The United States greatly appreciates their efforts and transparency. It will all work out well. In particular, on behalf of the American People, I want to thank President Xi! (cited in Ward, 2020)

The WHO declared the COVID-19 pandemic a Public Health Emergency of International Concern (PHEIC) in late January, and several

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administration members issued increasingly strong warnings about a fullblown pandemic imperiling the lives of millions of Americans over the course of February and March, but the US President publicly expressed skepticism toward stronger restrictions. The second phase of the US response started only after the WHO had declared a global pandemic on March 11, with the President seconding a “national emergency” on March 13, thereby granting additional authorities to various departments and agencies.2 The first time the administration issued “Coronavirus Guidelines for America” was on March 16, therewith advising Americans to follow social distancing and additional hygiene practices. In this period, the US administration also changed tracks vis-à-vis Beijing. It engaged in a quickly escalating diplomatic spat over the origins of SARS-CoV-2. To begin with, an article in the Wall Street Journal in February had called China “the real sick man of Asia” and thus drew strong reactions from the nationalist Chinese press, “netizens,” and the Chinese government. On March 4, Chinese Foreign Ministry spokesperson, Zhao Lijian, publicly suggested that the virus had been brought from the US to Wuhan during the Military World Games in the Fall of 2019. This was quickly refuted by President Trump via Twitter, who was now starting to promote the conspiracy theory that the virus had leaked from a high-security military lab in Wuhan (Jaworsky & Qiaoan, 2020, FN 13). In an obvious attempt to back up the President’s claim, the administration asked the US intelligence community in March 2020 to support the unproven theories of the virus’ origins in the Wuhan laboratory (Norrlöf, 2020, p. 1292). The spat calmed down in late March when the US President suggested he would stop using the term “China Virus” “if the Chinese feel so strongly about it” (Suliman & Baculinao, 2020). But the conflict was simmering: On April 1, a report from the US Intelligence community, suggesting that the Chinese statistics on the pandemic were redacted, drew another round of furious reactions from China, who openly suggested that the “century of humiliation” was over, and that they were now prepared to stand their ground (Jaworsky & Qiaoan,

2 On March 14, the US President still insisted: “We’re all in this together. It’s something that nobody expected. It came out of China, and it’s one of those things that happened. It’s nobody’s fault. We all - we all will solve this problem; we’ll solve it well” (White House, 2020).

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2020). In addition, news reports suggested that China was using its position as a central supplier of PPE for political and economic purposes, e.g., exporting masks to some countries (Italy, Serbia) while hindering PPE exports from US companies situated in China to the US, thereby weaponizing US dependencies on health care supply chains from China at a time of crisis (Sutter et al., 2020, p. 42). In the third phase, starting in the closing weeks of the 2020 US presidential election season, President Trump again switched gears. Addressing the United Nations General Assembly meeting in New York in late September 2020, he urged the world community “to hold China accountable for their actions.” He also defended the US response to the pandemic, calling it the most aggressive mobilization since the Second World War, while promising that the US would soon distribute a vaccine and defeat the virus (citation in Herman, 2020). In doing so, the President not only denied China equal status as a member of the international community and as a respectable great power, he also—from a perspective common in China—denigrated the country to a lesser status. This evoked powerful historical images of China’s humiliation during the nineteenth and early twentieth centuries (Jaworsky & Qiaoan, 2020; Wertsch, 2020), because, in Chinese cultural history, hygiene and cleanliness are closely tied to modernity and civility, i.e., status equality with the West (Rogaski, 2004).

China’s Pro-Active Role Making in the Global Pandemic Historically, the People’s Republic has emphasized its role as a developing country when being confronted with expectations to contribute more substantially to global governance. For a long time, financial concerns related to limited resources were matched with strong reservations about ceding sovereignty to international institutions. However, in the aftermath of the Global Financial Crisis (2008) and especially since the onset of President Xi’s reign, China’s leadership has consistently claimed to be willing to enlarge its material contributions to global challenges, including climate change, financial instabilities, conflict resolution, and global development—the latter most notably through initiating the Belt and Road Initiative in 2013 (Freeman, 2020, p. 10). In global health politics, China’s development assistance has been mostly bilateral, and, since its inception in the 1960s, had a strong focus

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on Africa. Then, during the (first) SARS crisis in 2002, the Chinese government refused to provide information and to cooperate with international organizations for an extended period (November 2002–April 2003), and thereby thwarting WHO activities to contain the spread internationally. It then, however, changed course, engaging both the WHO and the international community, and subsequently pushing for Margaret Chan, a Chinese official, to become of the Director-General of WHO in 2009. Notably, in 2014 and 2018, China provided crucial medical assistance to various African countries that were struggling to contain the prevalent Ebola epidemic (Youde, 2018, pp. 173–174). Domestically, after the SARS disaster, the central government invested heavily in building core surveillance and response capacities that include a web-based notifying system directly connecting local, regional, and national officials, as well as the China Center for Disease Control and Prevention (China CDC) (Huang, 2012, pp. 92–95). Surprisingly, this well-designed public health system mishandled early reports of the outbreak in Wuhan, Hubei Province, in late December 2019, resulting in the spread of the SARS-CoV-2 virus, first in China in January and then globally. In this first phase, health officials alerted local and municipal officials directly. They also provided critical clinical information that led to the first genome sequence of COVID-19 on January 11, but some of these health professionals, among them Li Wenliang, were at first reprimanded for their timely warnings. This crucial phase ended only on January 20, when the central government finally formed a Leading Small Group to counter the Coronavirus and enacted a set of unprecedented containment measures, including the lock-down of Wuhan and other major cities and regions, the launching of an aggressive testing and hygiene and isolation regime, as well as a severe on- and offline community policing system (Anderlini, 2020; Huang, 2020). Against this background, the CPC leadership launched an aggressive political and public health effort in the second phase (until May). In the domestic realm, harsh lock-down measures—suspension of public life, including transportation; severe community policing; and jump-starting public health infrastructure, including make-shift hospitals and quarantine centers—brought a quick and persistent reduction of infection and death rates. On March 19, Wuhan reported no new cases, and, by midApril, 80% of China’s industrial production was up and running again. In political terms, the Chinese government co-opted most critiques of its

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earlier mishandling by portraying some whistle-blowers and medical staff that died as “national martyrs.” Soon enough, this new “we-ness” under the slogan “Come on Wuhan, Come on China” was embedded in a new national pride that China had “nipped the virus in the bud,” while other nations were (still) struggling (Gill, 2020; Smith & Fallon, 2020, p. 243). In the international realm, the CPC leadership used highly efficient authoritarian countermeasures to promote China as a new “global public health goods provider,” actively sharing medical, customs, and quarantine management tasks throughout the world (Gauttam et al., 2020; Shuang, 2020). As the global market leader for medical protective gear (43% of global imports) and after having ramped up the production of facial protective masks to 116 Mio. per day during the pandemic, the Chinese government engaged in what has been termed “mask diplomacy” (Wong, 2020). For example, China offered humanitarian assistance and market-based access to protective gear (mainly facial masks) at lower prices to those countries that were short of supplies, and that also maintained strong business ties or friendly political relations with China (Fuchs et al., 2020). Seeking both recognition for China’s achievements and policy positions, as well as commercial benefits, this mask diplomacy was geared toward creating a “club good” among China’s friends and partners (guanxi), rather than providing a public good for the communities and countries most in need (Fuchs et al., 2020). The politics of China’s global public goods production become clearer when dissecting China’s public diplomacy that went along with it. During the second phase of the crisis, and based upon a longer-term trend to promote China’s narrative and diplomatic goals more aggressively, a larger group of Chinese foreign and defense officials engaged in what has been termed “wolf warrior diplomacy,” referring to a Chinese blockbuster movie involving a PLA elite soldier fighting and defeating American-led mercenaries in Africa (Zhu, 2020). While leading (and self-proclaimed) wolf warriors, such as China’s ambassador to the UK, claim that China must defend itself “in a world of wolves,” in particular vis-à-vis the aggressive rhetoric of the Trump administration, the nuances of the campaign launched in December 2019 tell a different story (Molter & DiResta, 2020). The wolf warrior narrative not only involves broad cultural stereotyping of “inadequate responses in Western countries” visà-vis COVID-19, but also demonstrably false claims about unethical behavior in European nursing homes. Its focus has also shifted toward

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countries, such as Australia, that happened to have called for an international investigation into the origins of COVID-19 in China (Bandurski, 2020; Lucanus, 2020). During the third period, starting in late May 2020, international pressure mounted for an independent WHO-led investigation into the origins of the SARS-CoV-2 virus outbreak (Kupferschmidt et al., 2020). Until then Beijing had fiercely resisted such an investigation, but it started changing course in June 2020, arguing that China was prepared to make its “contribution to global health cooperation as a responsible major country.” While criticizing the Trump administration for its plans to withdraw from the WHO, the Chinese foreign ministry held that the “U.S. has been shirking its own responsibilities and undermining global solidarity in combating the virus,” and that there should be a similar independent investigation into the US (citations in Hernandez & Qin, 2020). With occasional infection clusters of domestic transition (e.g., Beijing, Xinjiang) and some imported cases, China’s government became increasingly confident and impatient to roll out its vaccination capacity and to bring it to bear on its status conflict with the US, thus bolstering its commercial and political interests, as well as its global image (Pike, 2020). On May 18, at the opening of the World Health Assembly, President Xi Jinping had proclaimed that China’s vaccines would be made a global public good: “This will be China’s contribution to ensuring vaccine accessibility and affordability in developing countries” (Wheaton, 2020). Chinese authorities then made public in September that two of the leading vaccine companies, state-owned Sinopharm and privatelyowned Sinovac Biotech, had already delivered more than one million shots of a low-tech vaccine to medical and military personnel, as well as company employees under emergency authorization since June 2020 (Tiezzi, 2020). Reflecting its own low infection rates and political and commercial interests, China’s vaccine manufacturers have deliberately used a vaccine development strategy that is geared toward these needs: First, instead of using genetically engineered viral vectors or snippets of RNA, most Chinese phase 3 tested vaccines use an inactivated virus, a long-proven technology. This way, the vaccine is (much) cheaper to produce and easier to handle, but it requires a (comparatively) large industry to produce significant amounts. Moreover, producing large amounts of active virus, before killing them, poses considerable risks,

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while similar vaccines for other respiratory viruses have shown substantial side effects (Cohen, 2020). Choosing a strategy based on a vaccine that is low-tech, quick to distribute, and yet hard to produce in large quantities, China has partnered with more than a dozen countries on five continents, using pre-phase 3 testing in various countries (among others Brazil, United Arab Emirates, Indonesia, Turkey, Chile, and Russia) to forge commercial ties and political relations, as well as to bolster the credentials of the vaccine. Testing in various countries with tens of thousands of probands under different regulatory regimes increases transparency and trustworthiness, thereby (potentially) offsetting reports about the poor quality of products by some of the Chinese companies involved (AFP, 2020). Thus, the precipitance, characteristics, sequence, and primary partner countries of the strategy strongly suggest that the Chinese government seeks to repair its tarnished international image and to improve political ties with countries complaining about Chinese policies in the South China Sea (Malaysia and Philippines) or along the Mekong Delta, where a drought has been worsened by Chinese dams built upstream (Roxburgh, 2020). Leveraging its commercial prowess in the bio-economy sector and low infection rates at home, the Chinese government has also used its surplus domestic capacity to serve its commercial and trade policy interests by tapping an emerging global vaccine market (Cohen, 2020; Tiezzi, 2020). Public good provision not only requires a strong domestic base, it also necessitates a willingness to supply goods without reservations to those in need. It should not come as a surprise that China joined the COVID-19 Vaccines Global Access (COVAX) Facility in October 2020, calling on the US and Russia to follow its lead. Highlighting China’s superior position as a commercial vaccine supplier, Chinese Foreign Ministry spokesperson, Hua Chunying, stressed China’s willingness to “still” support the global initiative: “Even when China is leading the world with several vaccines in advanced stages of R&D and with ample production capacity, it still decided to join COVAX” (China Daily, 2020). So, while China has (technically) become part of the global initiative, and thereby gained an insurance policy if its own vaccines fail, it has preserved its predominant market position through bilateral agreements with some of its most important partner countries around the world (Cohen, 2020).

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Conclusion & Theoretical Implications This chapter has focused on the rivaling hegemonic role claims by the US and the People’s Republic of China during the COVID-19 pandemic. Despite being part of the common parlance of international politics, too few scholars have attempted to bring international role theory to bear on the strategic rivalry between these two. This chapter has shown that an interactionist role theory perspective has several important advantages for ascertaining the effects of domestic expectations on the type and direction of international leadership roles. First, the analysis of the Trump administration’s populist role conception explains why the executive branch has shunned its traditional leadership role in global public health policy. Based on a populist strategy of strategic retrenchment, the Trump administration has engaged China in an escalating zero-sum game, starting to blame China for the pandemic only after ignoring scientific advice and when the number of infections was rising in the US. By altercasting China into the role of the “international perpetrator,” the Trump administration not only tried (unsuccessfully) to deflect the blame for its own failures in providing public health to US citizens, but also withheld the respect upon which China’s status as an equal great power depended. This denial of equal status originates from China’s history-rich domestic status expectations and it is amplified by the legitimacy claims of the Communist Party as the sole provider of public goods for the Chinese people. To the extent that China grows more nationalist and faces criticism from abroad, we should expect the CCP public diplomacy effort going on the offensive, most likely to the detriment of China’s reputation (Gill, 2020, p. 110). Second, and in contrast to Pu’s rebranding hypothesis (Pu, 2019), I traced the Chinese government’s COVID-19 response to both domestic and international interaction effects. Domestically, the dramatic failure and then sudden success in containing the virus, both enabled and necessitated the Chinese government to use the improved domestic situation to promote China’s model abroad through a pro-active mask and vaccination diplomacy, thereby restoring the Chinese people’s pride and trust in the superiority of the system. Thus, while China may think that America is losing (Gewirtz, 2020), President Xi has raised additional domestic expectations that China’s model and wisdom is winning by “making new and greater contributions for mankind” (Xi, 2017).

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Third, when defending China’s equal great power status against US criticism, China’s newborn group of self-proclaimed wolf warriors fell for the nativist nudge of the Trumpian populism’s assault on China’s reputation. By mixing various claims of superiority China’s policies over the US’, of superiority of the East vis-à-vis the West as well as the infallibility of the early Chinese response to the pandemic from scrutiny of the international community, the wolf warriors’ bold narrative undermined China’s claim to a hegemonic leadership role, because of its nationalistic hubris and the ongoing revelations about the initial mishandling of the COVID crisis (Chen & Molter, 2020). In turn, the resulting leeriness fell on fertile ground in parts of Asia, especially where Beijing’s assertiveness in the South China Sea and massive infrastructure projects that often lack transparency and adequate financial and ecological sustainability have disregarded smaller nations’ postcolonial search for sovereignty and autonomy (Heyderian, 2019). Moreover, in autumn 2020, a Pew Research poll found that Beijing’s response to the pandemic had soured global public opinion with a record number of people in nine of the world’s top economies having a negative opinion of China (Silver et al., 2020). Fourth, despite China’s claim to the contrary, its COVID-19 policies are not directed toward providing global public health goods—something that, in a traditional Western reading, requires non-exclusiveness and non-profitability. Instead, as the analysis above shows, not only does the Chinese government’s response exclude the Chinese people on Taiwan from important information and collaboration within the WHO, it also distributes Chinese protective material, medical expertise, technical knowhow, and ultimately vaccines only to a selection of countries, i.e., those that keep a close, if sometimes, conflictual political and/or commercial relationship with Beijing. In doing so, the Chinese government produces a mixed private and health club good for itself and countries who assuage its reputational expectations and its commercial interests. While this is not unusual for governments around the globe, it bodes ill for a government claiming largesse as a public goods provider and seeking approval for its global leadership. Fifth, the dynamics of US leadership role remaking and Chinese asif leadership role taking display that practices of hegemonic ordering have to account for the domestic politics of the hegemonic contender. Neither the populist US leadership retrenchment strategy nor the Chinese public goods provision discourse may be understood without the relative

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repositioning of the executive branch vis-à-vis the people or the former elites. In the case of China, President Xi has carefully nurtured a narrative of “national rejuvenation” in which (Chairman) Mao helped China to “stand-up” (first stage), (Comrade) Deng to “grow rich,” while he himself will see to China “becoming strong” (Zhang, 2019b, p. 13), thereby doing away with collective leadership and rewriting China’s success story as being due to a series of strong(-willed) men (Bandurski, 2020). Perhaps most importantly, this chapter claims that while the Trump administration has certainly failed as a public goods provider to its own people and the international community at large, this does not (automatically) enable China to raise international acceptance for its bold, if haphazard, move to become a global public health provider. In short, the US’ failure to lead enabled China to try to lead, thus far. Moreover, the way the US neglected its leadership role by trying to shift blame onto China and engaging in populist-inspired vaccine nationalism incentivized the Chinese government to overreach its role (re-)making by promoting Chinese selective largesse as public goods production and by proclaiming the superiority of the Chinese response when most nations expected a more learned and humble demeanor.

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CHAPTER 10

Spoiler State? Russia’s Status Seeking and Hegemonic Ambitions Suzanne Loftus

Introduction When analyzing modern Russian foreign policy, it is important to do so in the context of today’s shifting global power structures. Due to a decrease of the US’ share in world GDP, economic and financial troubles, expensive and unsuccessful interventions in the Middle East, and growing American isolationism, it has been argued that the US is experiencing a retreat from the position of primacy it once held after the fall of the Soviet Union (Layne, 2018). Retrenchment from the role of global superpower could severely undermine the US-led liberal world order that was established after World War II by the US and its allies. More factors that need to be considered when assessing whether US hegemony is waning include the unrealized expectation that the rest of the world would democratize after the fall of the USSR, and that Western

S. Loftus (B) George C. Marshall European Center for Security Studies, Garmisch-Partenkirchen, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_10

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liberal democracy would triumph globally in the name of peace. Not only did these expectations not materialize, but many regimes across the world, including already established Western democracies, have moved away from democracy (Freedom House, 2020), therefore weakening the credibility of the liberal project (Kanet, 2018; Loftus & Kanet, 2019). Other major factors in this debate are global governance and multilateralism. Governing institutions, international law, rising armed conflicts, and the inability of the international community to handle those conflicts have further exacerbated the crisis of political liberalism. Moreover, the liberal world order is linked to globalization, which has increasingly come under criticism—in particular by populist and nationalist forces within Western states. Indeed, the world is seeing an increase in protectionism, nationalism, and anti-globalist sentiment. Examples of this include Brexit, the election of Donald Trump, and the rising popularity of Europe’s right-wing radicals. These trends illustrate that the world is undergoing shifts and transitions in certain areas (Burgoon et al., 2017). Moreover, the current coronavirus pandemic that is ravaging the world has accelerating these shifts, as nations are forced to shut down their economies to contain the spread of the virus. Russia has been accused of being a disrupter of the US-led liberal order, and the 2018 US national defense and 2017 security strategies label Moscow as a “challenger” to the liberal order (Department of Defense, 2018; White House, 2017). Most notably, Russia’s “disruptions” have been in the form of illegally annexing the territory of Crimea in 2014, invading Eastern Ukraine that same year, repeatedly interfering in the political affairs of Western nations, carrying out cyber-attacks on Western nations, spreading propaganda that aligns with its world view and divides Western nations politically, and practicing coercive politics in its sphere of influence to prevent nations in the post-Soviet space from joining Western institutions. This chapter analyzes Russia’s behavior in the context of declining US hegemony and argues that it is due to this relative decline in US power and Russia’s relative gains that Russia has been empowered to behave the way that it does. It also argues that Russia behaves in such ways due to the different interpretation it has of what the liberal world order was intended to represent, and due to its advocacy for a more pluralistic international community without a dominant ideology defined by the current hegemon.

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The Liberal International Order The Liberal International Order is the primary organizational principle under which international relations are structured today. It is an agreedupon set of guiding principles consisting of open markets, multilateral institutions, liberal democracy, and leadership by the US and its allies. Coming to an agreed-upon definition of the liberal international order has proved to be a difficult undertaking (Bennett et al., 1997; Deo & Phatak, 2016; Schenoni, 2019; Ying, 2016). The current order can be characterized as a fusion between the modern state system dating back to the Peace of Westphalia in 1648 and the liberal order, which has seen the rise of liberal democratic states and has been led by the United Kingdom and the United States for the past two centuries. This first system is based on the concept of the sovereignty of states, while the second highlights open markets, international institutions, cooperative security, democratic community, collective sovereignty, and the rule of law (Ikenberry, 2011). The world economy became increasingly more liberal through the creation of the General Agreement on Trade and Tariffs, the World Bank, and the International Monetary Fund. These Bretton Woods institutions aspired to be global but were dominated by Western powers and were criticized as reflecting mostly Western economic interests (GMF, 2017; Wade, 2002). After the end of the Cold War, the liberal international order continued to evolve. The ideas of a “responsibility to protect” and “humanitarian intervention” were developed and adopted by the United Nations. These concepts referred to the responsibility of the international community to come to the aid of a nation’s population when the nation itself was either incapable or unwilling to do so. These ideas began to float around after the atrocities committed in the Balkans and in Rwanda in the 1990s and after the NATO intervention in Kosovo which was highly criticized for having violated national sovereignty. In September 1999, Kofi Annan addressed the UN General Assembly and challenged member states to try to find common ground on how to uphold the principles of the charter and to defend our common humanity. He argued that humanitarian intervention was needed as a response to gross violations of human rights. It is not an assault on sovereignty if sovereignty entails the national responsibility for the population’s welfare (United Nations, 2020).

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Here lies a fundamental point of disagreement between the West and the non-West. Russia and China repeatedly veto humanitarian intervention at the United Nations Security Council due to their belief that it violates a nation’s sovereignty. Claiming to be less revisionist than Western powers, they push for the sovereignty of states and inhibit the responsibility to protect and humanitarian interventions—asserting that they are actually defending the principles of the liberal international order agreed upon in 1945 (Haass, 2017). Tensions between Russia and China and the West are not about the liberal international order itself, but about different versions of it. Western powers advocate for more of a liberal order which demands that states follow liberal principles in foreign and domestic policy (Harris, 2015). Russia specifically rejects US dominance in the form of democracy promotion, stating that such promotion is merely a tool for its hegemonic ambitions. It rejects a so-called “ideologybased” foreign policy (Clunan, 2009). Any US effort at regime change or interfering in sovereign states such as in Yugoslavia, Iraq, and Libya has been portrayed as an ideological foreign policy—i.e., a marriage between US military power and liberal anti-pluralism. Russia has often referred to US hegemonic politics as being characterized by “collective unilateralism” as opposed to multilateralism (Makarychev & Morozov, 2011). US leadership is viewed differently by the geographic West and those outside of it. For the geographic West, US leadership is benign and understood in terms of the provision of public goods such as international security, free trade, financial stability, and freedom of navigation—all in line with the interests of “humanity.” Outside of the geographic West, US leadership is viewed as having an ideological agenda, for example, by imposing the Washington Consensus, which reflected the interests of the US and Europe. Thus, US and European actions to uphold the liberal international system are viewed as attempts to retain their power and privilege. “Multipolarity” and an end to hegemony are therefore desired as a way to generate greater international equality (GMF, 2017). In addition, this idea of the “provision of public goods” such as international security and economic stability has been questioned after the US invasion of Iraq and the financial crisis in 2008—events that destabilized the world and questioned the US’s capacity to lead (Layne, 2012). With regard to economic impacts, liberal economists see free trade as a “win-win” and believe that liberalization is therefore a public good. Others see trade

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agreements such as the Trans-Pacific Partnership as an effort at the “geoeconomic containment” of China and other emerging economies (GMF, 2017). The United States under the Trump administration claims that its primacy is being challenged by the “revisionist” powers of China and Russia, who seek to destabilize the liberal international order and possibly replace it with rules of their own (Department of Defense, 2018; White House, 2017). After World War II, the US economy accounted for half of the world’s GDP but now stands at one seventh. The US enjoyed uncontested superiority and could generally deploy its military forces where and how it wanted. Today, however, Russia and China are fielding military capabilities designed to deny America access in times of crisis and to contest its ability to operate freely. Major examples of revisionism stemming from Russia and China include the annexation of Crimea in 2014 and the invasion of Eastern Ukraine, and China’s island-building projects in the South China Sea, which arguably defy international law. Structural Realism in International Relations asserts that international politics have an accurately defined structure. Structure is defined by the distribution of capabilities of actors within the international system (Waltz, 1990). Due to the “anarchic” nature of the international structure, or lack of hierarchical authority, states are constantly threatened by each other and engage in balance of power politics to ensure their survival (Waltz, 1979). Structural realists assert that all states are the same, regardless of regime type or culture, and that all have the same interests due to the anarchic structure of the system. As a result, they can all be analyzed through the same lens (Mearsheimer, 2006). Their ability to achieve their objectives depends on their power capabilities and that of their rivals. When the distribution of power lies with one state, meaning the state possesses the military and economic might to control its rivalries, a hegemon emerges. Once a hegemon emerges, the theory states that rivals will attempt to counterbalance the hegemon in an effort to end the hegemony. For this reason, and the costs associated with remaining dominant, Waltz stated that unipolarity, or hegemony, is the least durable of all international system configurations. Structural Realists argue that China and Russia are engaged in active balancing, and that it is high time for the US to abandon its grand strategy of primacy and deep engagement for one of restraint (Posen, 2014).

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Russia’s Relationship with the US-Led International Order The first fundamental issue between Russia and the West began as soon as the Cold War ended, when expectations about the future security architecture differed. Russian elites wanted to become part of the West, but only in a manner that would allow the established order to be “transcended” and allow Russia to become one of the rule-makers and not just a ruler-follower (Sakwa, 2017). The West, in turn, expected Russia to try integrate itself into the existing Euro-Atlantic community as a defeated world power and accept this new position. In the last thirty years, with the exception of a few short-lived moments, US-Russian relations have been generally strained and have gradually deteriorated over time (Ziegler, 2014). The Russian elite’s views on liberalism can first be assessed after separating liberalism into “charter liberalism,” “liberal humanism,” and “economic neoliberalism.” Charter liberalism can be described as emphasizing “tolerance, diversity, and openness together with agnosticism about moral truth,” and supporting the state as the central actor domestically and internationally (Simpson, 2001). Russia does not oppose the first of these but views the latter two as being “anti-pluralist” and advocating for human rights, democracy, and “Anglo-Saxon capitalism” over state sovereignty (Clunan, 2018). As the best guarantee of Russian sovereignty, the UN system affirms Russia’s rights as a state and recognizes that with greater power should come not only greater rights but also greater responsibility in maintaining global peace and prosperity. Russia uses international and regional organizations as a way to build influence and allies, cooperating in areas of mutual interests and limiting the use of force among great powers. Russia is one of the founding members of the BRICS (Brazil, Russia, India, China, South Africa) club and its related development bank—institutions founded on multilateral liberal tenants but without neoliberal conditionality (Kortunov, 2016). Russia rejects the American “ideology-based” foreign policy as Russian elites consider themselves to be pragmatic realists (Clunan, 2009). Russia has also viewed the West’s democracy and human rights promotion as a threat to its own survival. After the Color Revolutions in Ukraine, Georgia, and Kyrgyzstan, events that Russia is convinced were backed and encouraged by the West, Russia believed its right of regional dominance had been violated. In addition, when NATO stated at the

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Bucharest summit in 2008 that Georgia and Ukraine would one day join the alliance, Moscow, seeing itself as an important actor on the international stage, took this as a serious violation of its interests. The iconic invasion of Georgia occurred a few months later, carrying a significant message with it. Although the invasion was in response to Georgia’s efforts to reintegrate the breakaway provinces of Abkhazia and South Ossetia, Russia claimed to be acting in order to prevent ethnic cleansing and protect the rights of Russian citizens living there. Thus, as Structural Realism would suggest, the move was a clear warning sign and a way to reassert Russia’s claim to be a great power with special rights and responsibilities in its sphere of influence. In other words, the Kremlin was trying to enhance its chances of survival in its regional neighborhood after being faced with threats from abroad (Karagiannis, 2013). Russia also put the West on notice that if it could unilaterally invade in the name of human rights, Russia could too (Makarychev & Morozov, 2011). Russia sees itself as always having been a great power whose interests are to be defended globally. Indeed, one of the main reasons that President Putin has created such a name for himself is that he takes credit for having restored Russian greatness after a period of shame in the 1990s (Loftus, 2018). In 2014, protests broke out in Ukraine after then President Yanukovych refused to sign a trade agreement with the European Union and, instead, opted for an agreement with Russia to integrate into the Eurasian Economic Union. He fled the country and Moscow declared it a coup d’état orchestrated by the United States and the EU. Shortly thereafter, Russia invaded and annexed Crimea, and invaded Eastern Ukraine— again, allegedly to protect the human rights of Russian nationals living there. This was followed by the Russian intervention in Syria. These actions were intended to strengthen its position in the region and in the world. They demonstrate that Russia is prepared to defend its “sphere of influence” at all costs and believes itself to be an important international actor with global security interests and that it will not follow the hegemonic rules imposed by the US, but will rather pursue its own foreign policy interests. So, while the US and its European allies view Russia as a power that wants to destabilize the order, Russia views US leadership of this order as destabilizing and believes that, as a great power, it has the right to express its interest just as the US does.

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Key Processes Driving Russian Behavior and Its Relationship with the Hegemonic Order When the Cold War ended, scholars spoke of how the world had reached “The End of History” and how all nations would eventually democratize, creating a stable and peaceful global order (Fukuyama, 1990). The “Democratic Peace Theory” (Doyle, 1983) became the motivating principle for the spread of liberal democracy. As the theory states, democracies seldom fight other democracies. Therefore, it was assumed that as diverse forms of rule morphed into a singular system of liberal democratic states that practiced free-market capitalism, the world would become a peaceful place and war would end. However, in order to achieve this peace, democracies often went to war in the name of said peace, which in turn rendered the world unstable. This process can be described as “Liberal Interventionism” and it gained a lot of traction at this point in history. Waltz argues that the interventionist spirit flourishes when democracy is ascendant—specifically when a democratic state such as the United States is dominant. Peace is the “noblest” cause of war and when a country with the capabilities of the US is able to create conditions for peace, they may do so by force (Waltz, 2000, p. 13). However, it was myopic to presume countries would democratize simply by adopting free-market capitalism. The theory goes that the more economic development that occurs in a society, the larger the middle class will grow, and the more liberty the population will demand, eventually forcing the elites to concede power and thereby leading to democratization. As Seymour Martin Lipset put it, “[a]ll the various aspects of economic development—industrialization, urbanization, wealth and education—are so closely interrelated as to form one major factor that has the political correlate of democracy” (Lipset, 1960, p. 41). However, multiple examples in modern history suggested this theory was flawed and multiple scholars have in turn succeeded in debunking it (see Acemoglu et al., 2001; Przeworski et al., 2000). According to structural theory in International Relations, hegemony is the least durable of any kind of power arrangement due to the dominant power taking on too many tasks beyond its borders and weakening itself by being spread too thin (Mearsheimer, 2006). In addition, weaker states will always worry about the actions of a dominant power without adequate checks and balances. While, in a bipolar system, the two powers contain each other, with hegemony, the hegemon is left unchecked,

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leaving the international power system unbalanced. Due to this imbalance, weaker states will always seek to bandwagon with other powers to increase their own strength or to bring forth a more balanced international distribution of power (Waltz, 2000). The hegemon, in this case the United States, will seek to prevent new balances from forming elsewhere, which it has done in Europe and in Asia by keeping a large number of troops there and providing security guarantees to surrounding countries. Structural theory would thus claim that, eventually, the efforts to sustain hegemony will exceed the US’s economic, military, demographic, and political resources. Both economically and politically, Russia has steadily diversified outside of the West, therefore “bandwagoning” with other nations such as Brazil, China, and India. Oil prices and rents soared between 2002 and 2008, accelerating Russia’s reserve growth after it paid back its foreign debt, enabling it to reassert its will in international affairs (Gaddy & Ickes, 2016). Russia was soon allowed into the group of developed nations in the WTO in 2011 (BBC, 2011). With this increase in economic strength, it was therefore in a better position to exert its influence abroad and stand up for its foreign policy interests. It is important to note that, since the fall of the Soviet Union, Russia has had the same foreign policy priorities: to restore itself as a great power and retain a sphere of influence in post-Soviet space. As reported by Michael McFaul in 1999, every major political leader and party in Russia in the 1990s recognized that Russia’s economy was in rapid decline. The domestic problems in Russia at the time diminished Russia’s international standing. All political leaders at the time agreed that Russia’s primary foreign policy objective should be to reverse this decline in order to become a serious actor on the international stage. In addition, it was universally agreed to pursue economic, political, and military cooperation with the Commonwealth of Independent States to ensure Russia’s “sphere of influence” (McFaul, 1999). Just as Vladimir Putin had when he became President in 2000, President Dmitri Medvedev reiterated these objectives in the new foreign policy concept, the national security strategy, and the defense doctrine when he was in power. The new foreign policy concept stated that the first priority was to safeguard the security of the country in maintaining and strengthening its sovereignty, territorial integrity, and its strong and authoritative positions as one of the influential centers in the world (Russian Federation, 2008). Russia became more capable of asserting these objectives once its economy recovered, and, with the West’s relative decline, was more able

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to exert its influence abroad. Since this included maintaining a sphere of privileged interests, Russia made sure Georgia and Ukraine would not be able to join the West—and, since it wants to restore itself as a great power, it has extended itself globally, developing relationships in Asia, Africa, the Middle East, and Latin America. The fact that Russia is nowhere near as strong as the US or China explains its use of asymmetric tactics to achieve its goals. So, is Russia a spoiler state? In some ways. It disrupts the liberal international order that was created after the fall of the Soviet Union because it never agreed with it, but its intention is not to dismantle the one that was created after World War II. Is it a revisionist state? Not necessarily, but it has taken revisionist actions. The annexation of Crimea and the support of the rebels in Eastern Ukraine have both defied the territorial sovereignty of a nation, which is revisionist. The reason these actions were taken was to prevent a critically important post-Soviet state from joining European institutions and ultimately NATO, which, for Russia, were revisionist attempts by the West to undermine Russia’s interests as an important international actor. For Russia, Western “expansionism” is revisionist as part of an ideologically motivated foreign policy. The basic premises of the Atlantic Charter, the Paris Charter, liberal humanism, and the liberal part of the liberal international order could only be held in place so long as there was a hegemon imposing the rules all over the world and no power strong enough to actively challenge it. Following the principle of structural theory that hegemony inevitably breaks down as a result of overextension, bandwagoning, and the spreading of global wealth derived from liberal market capitalism, the world is now shifting toward a more multipolar structure, ending US hegemony. Without hegemony, the challenge between spheres of influence becomes more real, as do other opposing interests in international relations.

Are We Headed Toward a Hegemonic Transition? Over the last 50 or so years, Asia has experienced significant economic development that has steadily shifted the concentration of wealth to the East. According to the IMF, three of the four largest economies in the world are now in Asia (China, India, and Japan). When measured in purchasing power parity, China now has the largest economy. By comparison, in the year 1975, six of the world’s leading economies were in Europe and North America (Rachman, 2016). For centuries, the gap

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between the West and the East in wealth and technology was so wide that Western nations dominated international affairs and business despite the fact that the East had a larger population. However, the rapid economic development that took place in Asia in the last decades has narrowed this gap, rendering the population disparities quite significant when it comes to growth projections. By 2030, Europe and North America will account for 13% of the world’s population (United Nations, 2019, p. 6). According to projections by the OECD, over the next 40 years, there will be a significant shift in distribution of global output. By 2060, China’s economy will account for 23% of the global real GDP, while the US share will be 14% (OECD, 2020). This shift in wealth to the East has inevitably made it harder for the US and Europe to generate military, political, and ideological resources needed to impose order on the world. The Obama administration understood the threat posed by the rise of China as it pertained to the position of the US as a global power—an understanding reflected in the phrase “pivot to the east” (Lieberthal, 2011). This entailed a forceful and sustained response to maintain the US world position, although remaining measured and nuanced in order to avoid conflict. It involved increasing diplomatic and military efforts with Asia as China pursued its controversial territorial claims through aggressions in the South China Sea and its ambitious global economic initiative known as the Belt and Road Initiative. The US has also shifted its military resources to the Pacific and has worked to strengthen its network of alliances with India and Japan. Not only has wealth naturally shifted to the East as a result of economic development, but the West has also precipitated some of its relative decline through its own actions. The unsuccessful wars in the Middle East have led to a tarnished image of the West and its ability to lead the world, as have the irresponsible financial decisions that precipitated the 2008 financial crisis. Due to its overextension in the Middle East and the unpopularity of those policy choices among Americans, and due to the domestic consequences of the 2008 financial crisis, the Obama administration concentrated its efforts on nation-building at home, partially drawing back from unsuccessful engagements in the Middle East (Dolan, 2018). The inability of the United States to deal with Syria, coupled with the EU’s paralysis in the matter, reinforced the perception among international actors of an ongoing Western decline. A unique turning point in world affairs also came in 2014, when the Russians were seen as taking the lead in Syria, and when they annexed Crimea.

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The sentiments of protectionism, nationalism, and anti-globalism are on the rise as populist politicians continue to gain influence (Bieber, 2018). This is a direct symptom of discontent with political liberalism and globalization. One of the issues is the concept of outsourcing manufacturing, which has led to a decline in the manufacturing sector of the US economy and hollowed out the middle class (Bartash, 2018). That trend, coupled with increasing technological innovations leading to automation, has contributed to wage stagnation. Wealth distribution is highly unequal in the United States, where the wealthiest 1% of families hold about 40% of all wealth and the bottom 90% of families hold less than one-quarter (Leiserson et al., 2019). This has led to sharp inequality and resentment of migrants as there is a perception that migrant workers compete with the indigenous population for employment. On both sides of the Atlantic, lenient immigration policy has become a symbol of the political establishment’s inability to look out for the interests of the native population with regard to labor and national identity. When more than a million migrants and refugees sought asylum in Europe in 2015, the “migration crisis” exacerbated divisions on the continent as countries struggled to cope with the influx of these people and how to resettle them. It is also important to keep in mind that the majority of these refugees came from Syria and Afghanistan (BBC, 2016), places where Western nations were involved in unsuccessful and expensive wars, further undermining the case for political liberalism. The European Union continues to experience struggles from within. The problems of Greek debt after the financial crisis in 2008 consumed Europe and threatened to break up its single currency. Then, in 2016, the UK voted to leave the EU—a development that would be even more troubling if it encourages other countries to leave or abandon the single currency. By the middle of the Obama years, it was evident that Europe was increasingly unable to take on burdens beyond its borders as the US accounted for almost 75% of the military spending of the 28 member NATO alliance, up from 50% in the year 2000 (Rachman, 2016). If the political will in the US to carry the burden of the alliance wanes, the future of the transatlantic alliance may be in question. These struggles within the EU and NATO represent the difficulties of maintaining political liberalism. If these entities can remain strong and united, it will be in the West’s favor when dealing with challengers from outside the liberal order.

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China, the leading nation behind the debates on whether we are experiencing a hegemonic transition, is more threatening for the West than if the leading nation were to possess a more similar ideology. Unlike other Asian nations such as Japan or South Korea, China is not part of the USled alliance network, it is an authoritarian state, and is a challenger to the system. China’s growing status also legitimizes other similar regime types such as Russia’s. China is a major shareholder in the Asian Infrastructure Development Bank developed in 2015. Although the US pushed its allies not to join, these efforts were in vain. Obama’s plan to implement the Trans-Pacific Partnership would have engaged 12 different nations covering 40% of the world’s trade and excluded China (Council on Foreign Relations, 2019). This initiative was meant to stop the economic domination of China in the Asia Pacific, just as deploying the US navy attempted to stop the strategic dominance of China in the region. Because of the lack of popularity of free trade agreements (and globalization in general) among the American population, the policy did not pass. This demonstrates the seriousness of the political atmosphere in the country as it pertains to American involvement and overextension in the world. During her presidential campaign, even Hillary Clinton had to withdraw her support for the trade deal she had earlier helped to champion (Palmer, 2016). So, it is not a hegemonic transition per se, but a shift of wealth to the East, which brings with it a relative weakening of the West. A relative weakening of the West allows for rising powers to make their mark, and Russia has used this situation to increase its influence in the world, as it has long aspired to do.

Are the Shifts Leading to More or Less Global Stability? The world that was just described is likely to be less stable due to the increasing relative power of other states that now have the ability to influence international relations. As other powers gain influence, there will inevitably be newly-defined spheres of influence. This can be seen with regard to both Russia and China as the West struggles to retain dominance in these areas. As pertains specifically to Russia, the most notable event that depicts the forces described in this chapter is the Ukraine Crisis—the stark symbol for the decline of hegemony. The fact that a country was able to invade

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another country in Europe, annex territory, and continue its involvement there until the present day relatively unscathed, demonstrates that the US no longer has unchallenged control of world affairs. The West did indeed implement its sanctions regime, but Russia has managed to adapt to these sanctions through import substitution and through diversifying its trade partners and therefore has not suffered enough to make it change its behavior (Connolly, 2018). In the development of the Minsk peace plans through the Normandy format, Russia in essence is granted what it wants: an autonomous region in the Donbas. This autonomy from Ukraine will ensure continued Russian influence in this area, thereby paralyzing Ukraine in its quest for Western integration. France and Germany are ready to implement the Minsk agreement, even though it is favorable to Russia. After the peace agreement is signed, Europeans will be able to lift their sanctions regime on Russia, which is in all parties’ interests. This shows the political reluctance of the Europeans to maintain the status quo. There was even talk of rolling back the sanctions regardless of a decision on the Minsk peace process (CSIS, 2015). In a highly-connected global economy, where many actors are dependent on Russia for their natural resources, completely isolating Russia for the actions it took would have too many far-reaching repercussions. It is in the EU’s economic interests to stay connected to Russia, and certainly in Russia’s to stay connected to the EU. Proof of this lies in the ongoing negotiations between Germany and Russia for the development of the Nordstream 2 pipeline, despite harsh sanctions imposed on Russia. What is likely to ensue is cooperation mixed with competition. The nature of modern-day threats has become increasingly more difficult to respond and react to. Russia has been known to use asymmetric tactics to achieve its objectives by picking away at a society’s cohesion and disrupting it from within (Popescu, 2015). Russia uses a variety of tactics including the dissemination of propaganda, supporting populist leaders in Europe who express similar values, forging elite business ties, conducting cyber campaigns that include hacking and interference, and using private military companies to replace the national military in areas such as Ukraine, thereby making it easier to deny involvement. These actions are difficult to respond to in a coordinated fashion, and the more Russia employs these tactics to sow division in Western societies, the less cohesive the responses may be. NATO allies already exhibit a mixed threat perception with regard to Russia (Pezard et al., 2017). Many in the South of Europe are more concerned about the threat of immigration from

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countries in the Middle East and North Africa and do not necessarily consider Russia to be a pressing issue. Conversely, allies in Central and Eastern Europe fear that Russia is capable of interfering in their societies in the same way it has done with Ukraine. Due to the national memories of having been part of the USSR or having been occupied by it at some point, their fears are founded. Western Europe also generally perceives Russia to be less of a problem than the Eastern states. There is increasingly less political will to keep sanctions on Russia as they interfere with business deals, explaining why there is pressure from France and Germany to push for an agreement between Russia and Ukraine. Coronavirus Pandemic Due to the ongoing coronavirus pandemic, Russia is suffering not only from the obvious effects of the pandemic, but also from falling oil and gas prices. Putin has requested the lifting of sanctions to help Russia deal with the pressures from the pandemic. In this current situation, Russia finds its position weakened as Putin needs his economy to stay afloat or he risks losing the support of the Russian population. Here, the West could use this opportunity to force Russia and Ukraine back to the negotiating table. This pandemic will be a catalyst for world power relations to continue heading down the paths they were already on. There is increasing tension between the United States and China as the former blames the latter for the start of the pandemic and its lack of transparency vis-à-vis the international community in providing early warning signs. In addition, instead of acting as a global leader in the fight against the pandemic, the US is focusing on itself and has left a power vacuum that China has rushed into fill. For example, China has sent ventilators and masks to countries in need and is now seen as having been a helpful friend to countries such as Italy and Serbia. In terms of the global economy, there has been an overdependence on Chinese supply chains. The dangers of this have now become obvious, with shortages of masks and ventilators throughout Western nations being commonplace. This realization will inevitably lead nations to re-think their supply chains and develop more regional structures to ensure diversity and safety during future crises. With that in mind, regionalization and confrontation with China are likely to continue, thus rendering international relations more of a zero-sum game with multiple centers competing for power.

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Conclusion This chapter has argued that, due to the world’s share of GDP shifting to the East, the US’s overextension on the international stage, the rising criticism of globalization and political liberalism, the rise of US isolationism, and the crisis of global governance, the US has experienced relative decline as a global hegemon—and thereby leaving Russia more room to pursue its foreign policy interests. However, the US has not yet been replaced by any one nation. And though there is a crisis of political liberalism, there is not yet a viable alternative for a liberal world order. Due to the US’s relative decline, challenger states have experienced relative gains. This chapter does not argue that a hegemonic transition per se is underway, as the US still enjoys primacy in many domains, but it does argue that other powers are gaining relative strength and have become real competitors for the United States. With this competition, the world may see increasing instability as regional centers of powers start to form. Russia and the West are competing for influence in post-Soviet space. It seems clear, however, that Russia has retained a higher level of influence in that region due to the West’s rational calculations that getting involved militarily in order to “come to the rescue” of Georgia or Ukraine was simply not worth the risk. Before Russia modernized its military, or recovered economically from the fall of the Soviet Union, invading Georgia and Ukraine was not even a possibility, as Russia did not have the capacity to do so. Now that Russia has made relative gains, it is freer to act in its interests, and would pose a serious military challenge in the event of a Russia-NATO confrontation in these regions. Due to Russia’s stakes in the region, even the idea of NATO enlargement to accept Ukraine and Georgia did not materialize in 2008. The development of China’s military is also posing a challenge in the South China Sea, where the US is vying to retain its influence. The United States is not prepared to allow Russia and China to have their respective spheres of influence, and will continue to invest in its military capabilities and presence in these regions—increasing the risks of further escalation with regional powers. Ultimately, if Russia and China are able to exert influence in their “near abroad,” and the US proves unwilling or unable to deter this, the hegemonic reach of the US will be circumscribed. China and Russia have similar but also different goals. Both want to see a world free of liberal ideological domination, a more pluralistic international arena where multiple regime types and political cultures can

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co-exist, and an end to US hegemony. While Russia mostly cares about maintaining power in its own region, it acts in asymmetric ways to ensure Western disunity in order to encourage relative decline and to provoke a rupture in the transatlantic community. China’s goals are more ambitious on a global scale with its Belt and Road Initiative and its plans for national rejuvenation (see Harnisch in this volume). The current global pandemic is a catalyst to quicken the processes that are already at work. These include a re-regionalization of supply chains that is likely to form, an increase of zero-sum worldviews, and growing isolationism as national economies try to recover. Meanwhile, in the security sector, contentious space will remain contentious and confrontations are likely to arise. The structural processes that were discussed in this chapter highlight the fact that even if current US policy changes after the era of President Trump, the US is unlikely to see a return to its previous levels of influence.

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CHAPTER 11

Charting a Course Through Stormy Seas: Indian Foreign Policy and the Global Hegemonic Shift David L. Jacobs and Patrick B. Kessler

Introduction Since the inauguration of Donald J. Trump on January 20, 2017, the USA has shifted its foreign policy preferences in order to deal with its perceived hegemonic decline. This led policymakers and researchers to discuss the strength and durability of the liberal international order, as well as a potential hegemonic transition (Acharya, 2018; Friedrichs et al., 2019; Jervis et al., 2018). Most studies focus on challengers to UShegemony like China, which uses its economic capabilities for projects like the Belt and Road Initiative (BRI) or the Asian Infrastructure Investment Bank to further its long-term goal to replace the USA in East Asia and at the top of the global order (Allan et al., 2018; Goh, 2019). Another perceived challenger is Russia, which has undermined established norms

D. L. Jacobs (B) · P. B. Kessler University of Cologne, Cologne, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_11

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and rules through the annexation of Crimea and its use of aggressive strategies in the US, the United Kingdom, France, and Germany since 2016 (Krickovic, 2017). This chapter, however, puts the spotlight on India, which is the third largest economy by purchasing power parity in the world (International Monetary Fund, 2019) and, with $71.1 billion, the country with the third largest military expenditure (Tian et al., 2020). In recent years, Prime Minister Narendra Modi has tried to increase India’s clout on the international stage (Pant, 2019). The focus of this chapter lies on analyzing what role this global power shift played for India’s foreign policy. In doing so, it addresses several related questions: What elements does the current order in South Asia entail? How strong is the influence of the US on shaping this specific order? What is India’s position toward the US in the region and does India sense a US-decline? Is it possible to see trends? For example, does India support the current order and US-leadership or does it perceive this moment as an opportunity to strike and challenge the foundations of regional affairs, not only with regard to the USA as a leader, but also to the norms, rules, and institutions that have been established since Indian independence and the Cold War. Reviewing the literature on hegemony and global power shifts, analyses of rising powers and their foreign policies are nothing new. Currently, the relationship between the two great powers, the USA and China, takes center stage, with the core interest in the topic of escalating tensions (Goh, 2019; Pang, 2018; Tammen & Kugler, 2006). However, this does not mean that India is not included in the realm of research, especially when it comes to its ambitions and struggles in South Asia. India is often characterized as reluctant in its aim of regional hegemony and especially its, at times difficult, relationships with neighboring countries have affected India’s positioning in regional affairs (Pant, 2019). The underlying question in the literature often revolves around whether or not India is able to firmly establish itself as a powerful actor in South Asia and potentially outside the region (Mokry & Destradi, 2011; Wagner, 2012, 2016a; Wulf, 2014). This article is structured into three parts. The first part provides the theoretical basis by explaining the role of second-tier states in a system of hegemonic order. This role is contextualized with the help of hegemonic stability theory (HST) and the theoretical framework established in the introductory chapter. The analysis of India’s foreign policy takes place in section two with the assumption that even though India might perceive

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a US-decline, other dynamics, such as historical or regional intricacies, supersede this factor. The final section summarizes the study’s findings and provides an outlook on future developments with regard to India’s foreign policy and the trajectory of the regional order in South Asia.

Hegemony and Second-Tier States Hegemony was defined in the introductory chapter of this volume. In short, hegemonic order is characterized by three elements: (1) material capabilities, (2) rules, norms, and institutions, and (3) asymmetrical relationships between the hegemon of the international system and all other states (Schenoni, 2019). What follows will build upon this theoretical framework and discuss these aspects further in order to highlight the foreign policy possibilities of second-tier states. Material capabilities are closely linked to the concept of power. Power, which is one of the central, albeit fundamentally contested concepts in IR, can be conceived in two ways (Baldwin, 2013, p. 274). It can be seen from a resource-based perspective and from a relational perspective (ibid.). The resource-based perspective, also known as the “elements of national power” approach, sees power as a commodity of the state (ibid.). Therefore, it is mostly comprised of tangible elements like population size, military expenditure and size of military forces, gross national product (GNP), and size of territory (Schmidt, 2007, p. 47). One criticism of this approach highlights the assumption that all sources of national power are interchangeable and can be used in different policy areas (Guzzini, 2000, p. 55f.). Another critical view sees it as too simplistic, since it omits the fact that “at the end of the day, it is not the mere possession of power resources that matter, but the ability to convert these into actual influence” (Schmidt, 2007, p. 47). This idea forms the basis for the second understanding of power, which rests on Dahl’s famous dictum that “A has power over B to the extent that he can get B to do something that B would not otherwise do” (Dahl, 1957, p. 202f.). With regard to second-tier states in a hegemonic order, material capabilities play a key role as well. As noted by Nolte, second-tier states have significant power resources that distinguish them from the mass of smaller states—this, in some instances, making them regional leaders (Nolte, 2010, p. 890). In such cases, they have a wider range of choice in the formulation of their specific foreign policies as well as more opportunities to pursue their

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national interests (Efstathopoulos, 2015, p. 5). Nonetheless, the material capabilities of these states are not sufficient to challenge the hegemon directly. Rules, norms, and institutions can be highlighted by taking a closer look at HST. Seeing the cause for the economic crisis of the 1930s in the absence of a powerful intervening state, economic historian Charles P. Kindleberger came to the conclusion that a leading state must provide international public goods in order to maintain stability in the international arena (Kindleberger, 1986, p. 13). This state takes on the costs of providing these goods in order to secure stability, from which it profits, and to exert its dominance. Keohane (1980) reformulated this definition of HST in order to incorporate the notion of regimes. He states that the structure created by the most dominant state in a given system is instrumental for the creation of strong international regimes (Keohane, 1984, pp. 49ff.). These regimes build the basis for further cooperation among states, but are also subject to change. A situation in which there is a real or perceived decline of hegemonic power will especially increase the likelihood of a corresponding decline in the strength of international regimes (ibid.). According to Snidal (1985, p. 581), Keohane’s formulation of HST fails to show the originality of Kindleberger’s approach. Unlike with previous concepts of hegemony and power, here, definitions of public or collective goods, while frequently discussed in different fields of economic theory, share a common core (Kaul, 2006, p. 13). Usually, these are goods that benefit all actors in a system. Nevertheless, an individual cost-benefit analysis would not lead to the provision of these goods (Snidal, 1979, p. 533). Since public goods are characterized by jointness and non-exclusion, the hegemon also has to deal with so-called free riders; i.e. other states that, while benefitting from the public good, do nothing to contribute to its provision (ibid., p. 534). Public goods also explain why other states, especially great powers, who could opt to act as a challenger, engage with the hegemon and accept its definition of order, since there are mutual benefits to be had from this engagement, even if the main benefits accrue in disproportionate measures to the hegemon (Smith et al., 2011, p. 27). This is also true for second-tier states, whose interests may coincide with the interests of the hegemon. Even in instances where this is not the case, participating in institutions led by the hegemon can enable second-tier states to increase their realm of influence and, to a certain degree, allows them to shape said institutions according to their own interests (Nolte, 2010, p. 895).

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Finally, it is possible to take a closer look at the asymmetrical relationships between the hegemon and all other states. While this chapter is mainly interested in second-tier states to the current hegemon, the role of the latter has to be explained in order to understand the former’s policies and possible reactions to an actual or perceived shift in power. For Kindleberger (1986, p. 289), the hegemon is key to the system’s stability due to the responsibilities that are bestowed upon it. These include upholding an open market for distress goods, providing countercyclical or longterm lending opportunities, and establishing a stable system of exchange rates. In addition, the hegemon is responsible for ensuring the coordination of macroeconomic policies and acting as a lender of last resort (ibid.). Others argue that it is not so much economic leadership, but the promotion of economic openness by the hegemon that furthers the system’s stability (Gilpin, 1981, p. 95). This openness can be achieved via benevolent but also coercive means. The literature is thus split on the question of what exactly a hegemon provides, leading to the development of distinct versions of HST. The foreign policy behavior of the challenging state and its possible policy options can be extrapolated from the hegemon’s role in HST. Challenging the hegemon leads to periods of hegemonic transition, which tend to destabilize the system, especially if a war between the current dominant state and the rising challenger occurs (ibid., p. 94ff). A second-tier state is not able to challenge the hegemon directly; thus, its policy options are limited. However, an indirect attempt at the upheaval of the status quo can be achieved by bandwagoning with the challenging state (Schweller, 1999, p. 10). An alternative option is the deferral of leadership to the current hegemon by complete acceptance of the current order, efforts to increase national capabilities, or a non-alignment approach. These foreign policy options are also available to second-tier states. Key variables that influence their specific policy choice are the regional context and the existing arrangements in which they find themselves. Specifically, this concerns the presence of threats to their positions in the respective regions (Jesse et al., 2012, p. 18). Especially under circumstances in which a challenger aims to change the existing status quo, second-tier states can choose to oppose these ambitions if said changes are perceived as negatively affecting the distribution of public goods (Manicom & Reeves, 2014, p. 33). Based on these basic assumptions about the second-tier state’s behavior in a situation of a declining hegemon, the following hypothesis can be formulated: If India perceives the Chinese challenge to the current order

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in South Asia as a threat to its position in the region, it will increase efforts to secure its own position by aligning itself closer with the USA.

Analysis of India’s Foreign Policy The following y-centered case study is mainly based on the analysis of secondary data from the respective literature, as well as primary data such as official documents. Thus, the focus of the analysis lies on the explanation of a dependent variable (y) that is influenced by one or more independent variables (x) (Gschwend & Schimmelfennig, 2007, pp. 21– 22). Shifts in global power, specifically the decline of the West in general and the USA in particular, but also the increase of power capabilities in India, represent the independent variables of this study, while the foreign policy reactions of India are the dependent variable. First, we present an overview of the status quo of the South Asian order, its key actors, as well as its fundamental rules, norms, and institutions. Second, India’s key foreign policy initiatives will be examined in order to test the hypothesis. Finally, the empirical findings will be discussed to answer the question of whether India is a source of stable support for the USA or another challenger to its hegemony, and thereby contributing to the global trend of hegemonic transition. Examining the South Asian Order and India’s Position in Regional Affairs In order to analyze India’s foreign policy with regard to the perceived change in the US’ hegemonic position, it is necessary to first identify the specific conditions of the regional order. The region is made up by eight countries that border the Himalayans in the north and the Indian Ocean in the south (Ahmed, 2013, p. 12). Because of its sheer size, India naturally holds the predominant position. It functions as the arch-enemy for the states in its immediate vicinity and it is therefore quite difficult for said countries to accept India’s cooperation, influence, and its role as the regional force. However, India is not necessarily able to establish norms, rules, and dynamics that influence the region (Pardesi, 2017, p. 2). An explanation for this lies in South Asia’s heterogeneity. Ethnic differences and multiple cultural characters are expressed in different languages and religious affiliations (Oommen, 2019, p. 21). The latter can be exemplified by contrasting Bangladesh and Pakistan, which have

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a Muslim majority population, with Sri Lanka, where Buddhists are the majority (DeVotta, 2016, p. 156). This heterogeneity is not only related to national borders, but can also be found within states. In India, people not only practice Hinduism, but also Islam, Sikhism, and Buddhism (ibid.). For this reason, analysts usually note that, unlike other regions, South Asia has less of the regional identity or regional awareness that often leads to the integration of institution-building (Saez, 2011, p. 9). Nonetheless, South Asia does have an institutional body in form of the South Asian Association for Regional Cooperation (SAARC). Founded in the mid-1980s, this institution’s development has been primarily based on efforts of individual politicians, such as the initiative of then President of Bangladesh Ziaur Rahman, rather than the factor of a common identity (Ahmed, 2013, p. 31). In this regard, it is noteworthy that SAARC failed to strengthen economic complementarity and intra-regional trade (Saez, 2011, p. 70). However, from an Indian perspective, this setup of limited regional integration is preferable, since it prevents the coalition building against Indian interests that would normally occur given India’s predominant position in the region and the associated perception by other states that it represents a threat (Dash, 2008, p. 117). The key underlying factor to all regional affairs is the standoff between India and Pakistan. Since the founding of these states in 1947, after gaining independence from British colonial rule, their relationship has been characterized by mutual rivalry and distrust. On three occasions—in 1948, 1965, as well as 1971—this rivalry led to war. Today, nuclear ambitions contribute to this competition (Pervez, 2013, p. 1). Other states in the region are forced to find a delicate balance on how to position themselves. India and Pakistan’s animosity also makes multilateral approaches in the region difficult. For this reason, US policy initiatives for South Asia have, in the past, focused on strengthening bilateral relations and the application of international governance norms (Legro, 2011, p. 184). In connection to the USA’s role in the region, its increasing competition with China has to be noted. The USA has tried to enhance its influence by positioning itself in bi- and trilateral security arrangements in the region and by encouraging similar dialogue and joint efforts among its partners since 2008 (Cooper & Yoshihara, 2014, p. 78). These include, for example, accords among the USA, Japan, and India, or partnerships between India and Japan or India and Australia. Embedded in these accords are provisions on consultations, defense coordination, as well as

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other forms of assistance such as during humanitarian crises (ibid.). Even though India is participating in these agreements, it also tries to remain in a position of strategic autonomy—a fact that has been closely linked to its traditional policy of non-alignment (Brewster, 2012, p. 150). The Chinese side has shown greater assertiveness in the region in recent years and has tried to strengthen its position through the Regional Comprehensive Economic Partnership and projects like the BRI (Saran, 2018, p. 93). Thus, the region is experiencing trends that strive to maintain the existing order, as well as changes that are causing instability to the current system. Nevertheless, the reaction to a US-decline is less pronounced than in other regions. The Different Facets of India’s Foreign Policy Assessing India’s reaction to the global power shift is impossible without first understanding the underlying regional dynamics that result from its domestic politics and how history has shaped the region. India’s domestic situation is somewhat of a hindrance to any interpretation of it functioning as a strong regional power or having hegemonic ambitions. Although the country is projected to surpass China’s population by 2022, becoming the world’s third strongest economy by 2030 and already being the largest democracy on the planet (Pardesi, 2017, p. 2), it still suffers extremely high levels of inequality (World Inequality Report, 2018, p. 126). With such conspicuous disparities between what is and what should be, India cannot focus its resources on outside force and influence projection. However, in order to firmly establish itself as an important regional and global actor, India follows a two-pronged strategy: working domestically to strengthen and promote democratic ideals, and to position itself more prominently in world affairs. In order to communicate the importance of foreign policy for the political domestic agenda, the Indian foreign ministry established a department for public diplomacy in the mid-2000s. In 2011, the India International Institute of Democracy and Election Management was founded with the goal of aiding in the promotion and spread of democratic ideals across India (IIDEM, 2011). Regionally, the India-Pakistan conflict has historically led to extreme tensions between the two countries and is still an ongoing source of struggle. The independence from British rule resulted in India’s transformation into a republic in 1950, while Pakistan adopted a constitution in

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1956 (Talbot & Singh, 2009, p. 2). Ever since, the former Princely State of Jammu and Kashmir has been the main source of conflict between Pakistan and India. Both countries control parts of the region (China has authority over a minor part too), while claiming the whole territory. Indo-Pakistani relations are extremely complex and mostly hostile, which directly impacts India’s potential of filling a void left by a US-decline (Wulf, 2014, p. 53). As the role of a hegemon is not only measured by numbers, but also by assessing whether or not an actor is able to assert power in a region, Pakistan can be considered a hindrance to India (Wagner, 2012, p. 6). It becomes quite evident that India’s role as a regional actor has, to a great extent, been affected by China’s actions, especially over the past two decades (Pardesi, 2017, p. 2). Taking into account China’s extraordinary rise and gains in regional and global power, culminating in the BRI, it is quite certain that this dynamic will persist. China has been increasingly pursued closer ties to Pakistan (China-Pakistan Economic Corridor— CPEC), thus significantly enhancing the prospect of an economically stronger Pakistan. In turn, this negatively affects economic relations between India and Pakistan and will lead to another dispute over the Kashmir region as the CPEC runs through Gilgit-Baltistan in northern Pakistan, a region belonging to Kashmir (Wagner, 2016b, p. 2). Furthermore, over the past decade, several countries of the region have opted to strengthen economic relations with China, as it appears to be the more interesting partner. China does not question authoritative notions in governance and does not promote democratic ideals. Therefore, it has managed to catch up in areas of trade with member countries of the SAARC, which traditionally had closer economic ties to India (Jaishanker, 2019, p. 4; Wagner, 2012, p. 6). Additionally, China has been setting up strategically important military and commercial constructions along its sea lines of communication. In combination with the bigger picture of the BRI, India tends to interpret these actions as a threat to its national security, since this String of Pearls runs through several maritime choke points and has the potential to encircle India (Wulf, 2014, p. 53). As a result, India has been working on strategic maritime undertakings in order to establish itself as a strong naval power. This is of utmost importance as 90% of foreign trade is done via the Indian Ocean, and also affects the issue of safeguarding the delivery of crude oil. India has established different strategic locations on islands near the Strait of Malacca and is building a military airbase on the Seychelles in order to cover the area

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of the Maldives and Mauritius. Additionally, through its Look East Policy, India has established close ties with members of the Association of Southeast Asian Nations, who regard China’s rise with skepticism (Haokip, 2011, p. 250). In addition, the issue of Tibet and the Dalai Lama’s presence in India still lingers over Sino-Indian relations (Mokry & Destradi, 2011, p. 2). Looking at Indian policymakers’ stance on China’s growing assertiveness, it is evident that the threat perception is ever-increasing. Following rising tensions in the Kashmir region between the Chinese People’s Liberation Army and the Indian Armed Forces, Indian Prime Minister Modi stated the following: In the previous centuries expansionism has done the greatest harm to humanity and has tried to destroy humanity. The obsession with expansion has always posed a threat to world peace. And friends, let’s not forget, history is a witness to the fact that such forces have been erased or have forced to relent. (Modi, 2020)

Less diplomatic acknowledgments of China’s actions are expressed by Sharad Pawar (National Congress Party), member of the opposition, and former defense minister of India: When we think of an enemy, the first name that comes to our mind is that of Pakistan. But we need not worry about Pakistan. In the long term, it is China that has the power, vision and programme to act against Indian interests. China is a bigger threat to India. (Pawar, 2020)

Both comments show the extent to which China is characterized as a significant threat to India’s strategic autonomy. Therefore, India’s strategic partnerships with the USA and the West in general are naturally still of major interest to its foreign policy. India appears satisfied with the global status quo for now and seeks to enhance relations with Western countries. Since it wants to be a net security provider in South Asia, India has worked to establish a strategic partnership with the USA (Pardesi, 2017, p. 5). A communications compatibility and security agreement, as well as a logistics exchange memorandum of agreement, signed between Washington, D. C. and New Delhi provides India with increased access to strategic geographical hubs (Buchan & Rimland, 2020, p. 3). This will enhance India’s ability to focus and further develop its Look East Policy, which serves as a strong foreign

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policy priority (Mokry & Destradi, 2011, p. 4). An increased cooperation between the USA and India is valuable to both parties. The USA is able to position itself in the region, counting on an important ally, and India may establish itself more firmly as a frontrunner in the Asian security architecture. Additionally, a strong Indian-US exchange will establish India as an even-stronger player in Asian affairs (Pardesi, 2017, p. 5). More proof of an increased involvement of India in connection with established countries in the global order dynamic is evident in its participation in the Quadrilateral Security Dialogue (QSD). Established in 2007, it reemerged as a reaction to China’s territorial ambitions in the Indo-Pacific region in 2017 (The Times of India, 2017). India has also continuously been working toward closer ties with other strategic partners, such as Japan and Australia. Additionally, India has been engaging in so-called 2 + 2 (foreign affairs + defense) bilateral ministerial level meetings with Japan, the USA, and Australia and trilateral meetings with Japan and Australia as well as Japan and the USA since 2011 (Buchan & Rimland, 2020, p. 3). China has questioned and criticized the newly found enthusiasm around the QSD as a “thinly veiled attempt at containment” (ibid., p. 4). On a global scale, India has been very active in UN peacekeeping and other humanitarian missions, and confidently advocates for a permanent membership in the United Nations Security Council. Through involvement with the G20 and the BRICS, India is increasingly establishing itself as a powerful player. Opting to engage in and push the BRICS is proof of a regional focus and shows the effort to spread and diversify interests. India’s global reach does not go unnoticed and it will host the G20 summit in 2022, coinciding with the 75-year celebrations of independence, and thereby have a chance to present itself to the world as a genuine force (Chaudhury, 2018). The Security Council’s permanent members increasingly view India as an equal. Although India does not yet have a permanent seat, all members have established bilateral strategic partnerships to differing degrees of intensity and reach. By giving consent to a nuclear deal between the USA and India in 2008, the established nuclear world powers and the Nuclear Suppliers Group legitimized Indian nuclear efforts, even though India is not a member of the Treaty of the Non-Proliferation of Nuclear Weapons (Wagner, 2016a, p. 264). To further India’s global position and strengthen its efforts in the international development aid agenda, the Development Partnership Administration was created in 2012. In order to take on these ambitious goals and to adjust to the increased need for personnel, India initiated reforms of its diplomatic corps, as, in 2014, a mere 900 diplomats worked for the Indian foreign ministry (ibid., p. 257).

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Neither Challenger nor Supporter, but Opportunist in a Time of Change India pursues a foreign policy somewhere between being conformist and wanting limited change. The country perceives China as a direct threat to its security and its ambitions in the region. India does not necessarily respond to the shift in global order but rather to the shift of regional dynamics, especially with regard to the growing relationship between Pakistan and China. Thus, US-hegemonic decline is much less of a catalyst for India’s foreign policy. The empirical findings correspond only partially to the assumptions of HST. Although India is somewhat of a reluctant regional power in South Asia, and not always able to achieve its goals in the region, given its own domestic shortcomings, it does pursue new institutional arrangements in order to provide security to the region. Additionally, it is quite apparent that India is trying to strengthen its influence in existing institutional arrangements and build upon existing ties with the West in general. More specifically, India, under Modi, has been strategically developing foreign policy actions directed toward the USA with this in mind. When Trump visited India in February 2020, Modi received him with pomp and circumstance, lined the streets with cheering masses, and gathered more than 100,000 spectators to welcome Trump at Motera Stadium, described as the largest cricket stadium in the world (Slater, 2020). Modi understands to position himself and India favorably toward the president, especially in light of an ever-increasing US-China strategic competition. It appears that actions undertaken by India over the past decade are not necessarily a direct reaction to US-decline, but rather a result of an increased self-awareness: A political epiphany, allowing India to realize that the combination of population size and growth, democratic system, economic and educational progress, and potential strength, might one day lead to the transformation into a viable superpower on the world stage. It is possible to describe India and its foreign policy behavior in recent years as somewhat opportunistic. India, however, is not a direct challenger to the current US-led hegemonic order.

Conclusion The aim of this chapter has been to analyze the influence the global power shift and a hegemonic US-decline have on India’s foreign policy. Findings show that the South Asian intricacies India faces have a significant impact

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on its role in regional dynamics and on the world stage. Given the current power asymmetry between China and India, it is not surprising that India is following a different path than its neighbor and approaches the global power shift in a different manner. The patterns analyzed here indicate a growing instability of the current order, exemplified by India’s ongoing border conflicts with China in the Kashmir region. This has led India to recognize the value of its own standing in a US-led strategic landscape. Therefore, it acts in support of the USA and tries to place itself in a favorable position vis-à-vis the West. Being more inclined to find common ground with Western countries, India is currently satisfied with the goal of regional primacy. Additionally, it is important to note that India is also hindered by various domestic issues. Thus, it cannot channel all its resources into foreign policy and strategic undertakings that would establish it as an overly-powerful actor.

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CHAPTER 12

Dual Hegemony: Brazil Between the United States and China Luis L. Schenoni and Diego Leiva

Introduction Brazilian diplomats rarely miss the occasion to mention that Brazil is the ninth largest economy and the fifth largest country in the world by population and territory, representing roughly half of South America’s aforementioned realms. Yet, true as these statements might be, they disguise the fact that Brazil amounts to a mere three percent of the global economy, one-tenth of US GDP, and one twentieth of US military

L. L. Schenoni (B) Department of Political Science and Public Administration, Konstanz University, Konstanz, Germany e-mail: [email protected] D. Leiva School of Government and International Relations, Griffith University, Brisbane, QLD, Australia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_12

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expenditures.1 Therefore, despite voluminous works about its disruptive agency in world politics (Roett, 2011; Stuenkel & Taylor, 2015), Brazil has always been “too far from God and too close to the US” to achieve substantive autonomy, much less influence, in world politics. In the following pages, we propose that, for those same reasons, much of what was interpreted as evidence of Brazilian agency should be revised, in retrospect, as a rather passive accommodation to the pull of the new heavyweight in world politics; namely, China. This chapter develops a theoretical construct and methodological strategy to describe and understand the travails of Brazilian foreign policy under this hegemonic transition, and the great disillusionment with its foreign policy performance. We propose that Brazil never successfully exited US hegemony, although it did drift away from Washington’s ideal point as it followed the allure of Beijing. While skillful Brazilian diplomacy was able to depict this as attributable to the nation’s own agency and cleverness, the drift was actually made possible by a shift in US attention toward the Middle East and Asia—which loosened its grip on Latin America—and the pull provided by a steadily rising China. Although initially framed as increasing Brazil’s autonomy, this process eventually trapped the country in a novel situation we call “dual hegemony,” which has notably reduced its margin of maneuver—i.e., its autonomy—in foreign policy. Figure 12.1 summarizes our main theoretical insight and helps define what we understand by dual hegemony. The first row of subfigures illustrates the possible variation in autonomy that subordinate states can experience under a single hegemon. Tight hegemony exemplifies a situation where the (geographic) extension of hegemony is rather narrow and the autonomy of subordinated states is limited to a certain segment of possible foreign policies. Under an extended hegemony, the extension of hegemony might increase (including new subordinate states) while the margins of maneuver for them remain the same. Finally, we can think of a loosened hegemony, where the autonomy of subordinate states expands by virtue of the hegemon’s policies. We contend that something like this happened after the 9–11 terrorist attacks, and that US disregard for

1 For a brief exposition of these contrasting views of Brazil in relation to the world, see the response of Ambassador Sergio Danese to Luis Schenoni’s article in La Nación (Danese, 2017; Schenoni, 2017a).

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Fig. 12.1 Implications of dual hegemony for subordinate state autonomy (Source Devised by the authors)

Latin America in the subsequent period allowed Brazilian foreign policy to expand toward areas previously vetoed by the US. The more interesting and novel implications of our argument, however, appear in the second row of Fig. 12.1, where we theorize the implications that two parallel hegemonies might have on the foreign policy of subordinate states. Our literature review (Schenoni, 2019) suggests that, so far, hegemonic stability theorists and more novel debates about unipolarity, hierarchy, and other forms of stratification have tended to theorize what we call regional or divided hegemonies; that is, situations where single hegemons have almost undisputed right to limit the space of maneuver of subordinate states under their exclusive sphere of influence. In situations like the Cold War, for example, there was little or no space for states to participate simultaneously in the US and the USSR spheres of influence—like the Cuban example illustrates neatly in Latin America. In those historical contexts, there was little reason for theorizing how hegemonies interact. Yet, the current power transition between the US and China—or bipolarity, depending on the theoretical standpoint—poses a novel situation in which states can be simultaneously embedded within the hierarchical structures imposed by each of the hegemons. As a result, subordinate

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states that are trapped in this dual hegemony will lose considerable autonomy. This is exemplified by the last subfigure at the bottom right corner of Fig. 12.1, where the two hegemonies overlap, reducing the space of maneuver of subordinate states that are located in the intersection. The theoretical framework presented here has previously been applied to other areas in political science. The boundaries to foreign policy autonomy that we propose might be conceptualized as veto points, for example, in a veto players framework (Tsebelis, 2002). In our application, however, this boils down to very simple set-theoretic implications. Whereas, during the Cold War, states had to choose between the USSR or the US—i.e., there was not an intersection—countries like Brazil that is now under dual hegemony would be trapped in a subset between the US and China, finding it impossible to move toward either the Chinese or the American ideal points. Testing our theory requires a methodology of necessary and sufficient conditions that fit the implications of our set-theoretic framework (Mahoney & Vanderpoel, 2015). In particular, two clear observational expectations can be derived from our argument that Brazil has drifted toward, and eventually become trapped, in dual hegemony. First, for Brazil to be in a situation of dual hegemony, it is necessary that US hegemony loosened, and that Brazil moved toward China, finally falling under its economic and institutional umbrella. This is logically true for the simple reason that dual hegemony (the intersection) is a subset of both American and Chinese hegemonies, and that participation in a superset presupposes participation in the subset. Our first hypothesis, therefore, is that increasing subordination to China, although not solely sufficient, was a necessary condition for that change to take place. Second, being under dual hegemony should prove sufficient for Brazilian exclusion of sole US or sole Chinese hegemony—in the same way that, logically speaking, participation in a subset is sufficient for exclusion from another, non-intersecting subset. Since, both hegemons impose rigid bounds to the foreign policies of the subordinate states within their sphere of influence, dual hegemony should prove, in and of itself, a sufficient condition to constrain any move toward the Chinese or American foreign policy ideal points. In the following sections, we present this argument in a sequential form. Section “The Beginning of Dual Hegemony” presents the movement of Brazil toward the margins of US hegemony and closer to China.

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In section “Consolidation of Dual Hegemony”, we turn our attention to more recent times and how Brazil became constrained by dual hegemony. Here, our focus is on how the new situation of dual hegemony was sufficient to prevent Brazil from returning to a space of sole US hegemony.

The Beginning of Dual Hegemony Brazilian foreign policy under the presidencies of Fernando Henrique Cardoso (1995–2003) and Luiz Inácio Lula da Silva (2003–2011) tends to be described as a successful quest for autonomy which entered a period of decline under Dilma Rousseff’s (2011–2016) government. Under these presidencies, Brazil played a significant role in negotiations at the World Trade Organization, the International Monetary Fund, and the World Bank, as one of the most active developing countries pushing for institutional reform and a redistribution of quotas; especially under Lula, Brazil was also one of the most vocal members of the United Nations (UN) to advocate for the democratization of the UN and reform of the Security Council. Brazil became a member of several other global groupings as well: IBSA (India, Brazil, and South Africa) in 2003, BASIC (Brazil, South Africa, India, and China) in 2009, and BRIC(S) (Brazil, Russia, India, and China; then joined by South Africa in 2010) in 2009— holding coordinating positions mostly on aid, finance, trade, and the environment. Regionally, Brazil attempted to strengthen the political dimension of the Southern Common Market (Mercosur), and was one of the main driving forces behind the creation of the Union of South American Nations (UNASUR) in 2008 and the Community of Latin American and Caribbean States (CELAC) in 2010. These regional organizations overlapped with other, overarching hemispheric institutions traditionally led by the US (Weiffen et al., 2013), creating a space for a relational autonomy (Russell & Tokatlian, 2003) carved partly out of Washington’s lack of interest in the region, and the alleged proactivity of Brazil. Most scholars assign a predominant role to concrete domestic factors when explaining the aforementioned struggle for autonomy (Bernal Meza, 2010; Burges & Chagas, 2017; Schenoni, 2013; Vigevani & Cepaluni, 2007). Although we agree with the importance of these and other domestic factors in fostering Brazilian capacity for autonomy and leadership in the region, it has become increasingly clear in recent times

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that tectonic changes in the international structure might have been a necessary condition for those domestic factors to play a role (see Ramanzini & Vigevani, 2010; Malamud & Alcañiz, 2017). While the US represented 20% of Brazil’s exports and the origin of 23% of its imports in 1994, the hemispheric hegemon has come to represent 12% and 17%, respectively, in 2018 (WITS, 2020). Conversely, China now represents 26% of Brazilian exports and 20% of its imports, having amounted to a mere 1% of imports and 2% of exports back in 1994. Trade is, of course, just one dimension in which the power transition between the US and China affects Brazil, but it clearly lays out the impressive forces that contributed to pulling Brazilian foreign policy away from the US during the Cardoso and Lula presidencies—administrations that coincided with the period of a Chinese-led commodity boom. In other words, we agree that Brazil became seemingly more autonomous during this period (this is observationally correct), but we disagree with those who see the cause of this as arising from within Brazil itself. We propose an alternative argument: that this apparent autonomy might have been the consequence of necessary structural changes pulling Brazil away from the US and toward China. To more systematically test the necessity of US hegemonic loosening and Chinese hegemonic expansion in the creation of room of maneuver for Brazil, we analyze a series of events that are usually represented as examples of Brazil’s successful autonomous foreign policy, but that we see as highlighting the predominant role played by underlying systemic variables. In this comparative exercise, we pick five foreign policy achievements that are often considered evidence of increased autonomy vis-à-vis the regional US hegemony and attributed to Brazilian diplomatic dexterity: the creation of UNASUR, the boycott of the Free Trade Area of the Americas (FTAA), the foundation of the BRIC group; the development of ties with China; and distancing from the US in multilateral institutions. Our goal here is to corroborate the fact that all of these achievements could not be explained without reference to the type of structural pull we associate with dual hegemony. This does not prove the sufficiency of structural factors per se, but will show their necessity for Brazilian agency to manifest.

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The Creation of UNASUR The establishment of UNASUR in 2008 is often taken as a key example of Brazil’s contestation of US hegemony. Since the 2000s, Brazil sought to turn South America into a cohesive region and creates a distinctive regional organization to legitimize its political authority (Spektor, 2016). Along with the political strengthening of Mercosur, Brazil needed an integration scheme that included all South American countries and left out important Latin American states that could compete for leadership, such as Mexico (Burges, 2017). President Lula played a significant role in the creation of UNASUR, and the organization effectively became an active forum for the discussion of regime- and security-related crises in the region. Yet, the creation and early success of UNASUR would have been impossible in a different structural context. The organization was but a part of a broader wave of regionalism in Latin America, enabled by relative decline of the US hegemony (Riggirozzi & Grugel, 2015). Structure can parsimoniously explain both the initial success of UNASUR and its more recent collapse (Mijares, 2020). It is interesting to note that the failures of UNASUR date back to the government of Dilma Rousseff, who tried a continuation of Lula’s foreign policy, and yet was overwhelmed by radicalization in Venezuela, more Chinese and Russian involvement, and a sudden increase in US pressure—systemic factors that severely constrained the UNASUR project. The organization soon became seen as costly, useless, and providing cover for the Maduro regime. More recently, when Trump increased this pressure even more, Bolsonaro ditched UNASUR it tout court. To sum up, while we acknowledge the possibility of Brazilian agency being an important causal factor leading to the creation of UNASUR— one of the main examples of Brazil’s contestation of the US hegemony in this period—we argue that dual hegemony was a necessary condition. First, US “withdrawal,” one of the implications of our dual hegemony argument, was essential for Brazil to expand its leadership in the region. The other systemic factor was China’s rising economic sway over Brazil and Latin America. To be sure, the projection of Brazil’s soft power in the region (Malamud & Alcañiz, 2017) was buttressed by the unprecedented increase in Sino-Brazilian trade during the “commodities boom,” and was stifled when China’s influence in Latin America became so important as to start contradicting Brazilian initiatives.

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The Boycott of the Free Trade Area of the Americas After the Cold War ended, the US envisioned the creation of a Free Trade Agreement (FTA) encompassing the whole Western Hemisphere. Announced by President George H. W. Bush on June 27, 1990, the pressure exercised by Washington in this realm has long been considered a catalyst of Mercosur—regarded in Brazil as a compromise solution between full-blown hemispheric trade openness and single-country protectionism (Schenoni, 2017b). Over its lifespan, Mercosur evolved in peaceful coexistence with the US initiative renamed the Free Trade Area of the Americas (FTAA), and relaunched in 1994 by President Clinton. The discussions for an FTAA famously died at the IV Summit of the Americas in Mar del Plata, in 2005. These decade-long negotiations ended after the presidents of Brazil (Luiz Inácio Lula da Silva), Venezuela (Hugo Chávez), and Argentina (Néstor Kirchner) managed to derail any potential agreement by using particularly harsh ideological discourses that made it impossible to continue the negotiations—while others, like those with the European Union, did continue. The narrative in the scholarship on Lula’s foreign policy tends to describe the episode as a successful “jeitinho,” a sleight of hand in which Brazil was able to stall the debate indefinitely (Burges, 2017). However, this narrative tends to exaggerate Lula’s role in the negotiation vis-à-vis the impact of systemic conditions. It has been previously noted that, even when Cardoso wanted to oppose the initiative during his government, Brazil lacked sufficient economic strength and credibility to do so (Burges, 2017). Conversely, Lula was in a good position to block the FTAA due to the strong China-driven economic growth that the region was experiencing. Another structural factor behind the failure of the FTAA was the War on Terror and the US pivot to the Middle East and Central Asia—and away from Latin America. Although Clinton had exerted less pressure after his failure to renew fast-track authority in 1998 (Phillips, 2003), the prospects of a treaty became particularly dim after the invasion of Iraq. The favorability of President George W. Bush was so low in the region that it made it almost impossible for any Latin American country to support the initiative. Again, this view does not argue that agency was unimportant, but provides sufficient evidence to back the claim that structural changes were necessary to bury the FTAA.

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The BRIC(S) Membership In the twenty first century, Brazil played an active international role, justified by the perception of multiple emerging poles. Many sources record the expansion of this “myth of multipolarity” (Schenoni et al., 2019) or “multipolar mirage” (Schenoni, 2021) at the elite level.2 From all the different groupings of “emerging countries” in which Brazil participated (e.g., G20, IBSA, BASIC), BRIC(S) is the one that arguably has contributed most to the idea of impending multipolarity. It has provided a platform of negotiation for its members (Brazil, Russia, India, China, and South Africa) in multilateral arenas, and, more recently, offered funding for investment in the Global South through the New Development Bank. Being a member of BRIC(S) is commonly offered as another example of diplomatic dexterity in Brazil’s quest for autonomy during this period (Bernal Meza, 2010). Brazil has held important summits of the organization, and Lula certainly enhanced the international image of the grouping. However, this kind of Brazil-centric narrative grossly overlooks the systemic conditions that made Brazil a potential member of the organization. BRIC began to form in the early 2000s as a reaction to US foreign policy (Abdenur, 2014), with Brazil playing a rather secondary role within it. Russia initiated the grouping’s institutionalization in 2006, and the New Development Bank was proposed by India. As mentioned before, Lula was instrumental to enhance the grouping international image, but the pace was set by Russia, India, and (fundamentally) China—countries that are also responsible for the political and economic gravitas of the group. By boosting BRICS, for example, China has deflated the IBSA forum (Abdenur, 2014), an organization in which Brazil could arguably play a greater role without being overshadowed by China or Russia. Similarly, by including Brazil in BRIC(S), China was able to disguise as an impending multipolarity what was sure to become a bipolar world. This 2 The Brazilian Center for International Relations (CEBRI) conducted surveys in 2001 and 2008 of members of the “Brazilian foreign policy community” (Souza 2008, p. 3), including diplomats, scholars, and opinion leaders. When asked if certain countries were going to increase their international influence in the next ten years, respondents’ confidence in BRICS increased 12% between 2001 and 2008, while confidence in established powers dropped by 28%. The final report concludes that “most of the interviewees believe […] the new interna-tional order will tend to multipolarity …” (Souza, 2008, p. 33). Several public opinion polls confirm that this myth managed to trickle down from the elites to the masses (Almeida et al., 2011, p. 32).

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is broadly in line with the “cautious engagement” strategy that China has pursued toward the region in the medium to long term (Leiva, 2020). The “Boom” of Sino-Brazilian Relations Of all the partnerships strengthened by Brazil’s quest for autonomy, the most important was the engagement with China. As mentioned before, China became the top trading partner of Brazil in the first decade of the 2000s, and Brasília became the second major recipient of Chinese loans (28.9 billion dollars by 2018), and the first destination of Chinese investment in the region, with 55% of all Chinese foreign direct investments (FDI) flowing to Latin America and the Caribbean (Economic Commission for Latin America & the Caribbean, 2018). Brazil was the first country to establish a strategic partnership with Beijing in 1993. However, the inflection point came during Lula da Silva’s government with the boom of bilateral trade. After two decades of intensifying their engagements—covering multiple areas such as health, agriculture, and satellite cooperation—Sino-Brazilian relations have become the most comprehensive of all Beijing’s engagements with Latin America (Burges, 2017). The role of Lula da Silva tends to be underscored in the literature as an important explanatory factor behind this process (Cordeiro, 2015), with special emphasis on Lula’s official trip to China in 2004, which included an entourage of more than 430 officials and businessmen. In other words, one of the main narratives of this process holds that Brazil sought out China, and not the other way around. Symbolic as it was, the trip coincides with an inflection point in the amount of agreements signed, and led to the establishment of the China-Brazil High-Level Coordination and Cooperation Committee (COSBAN). In addition, this “aero-Lula” narrative overlooks the fact that China was strengthening its relations with most Latin American countries at the time, following the same pattern evidenced in the Brazilian case. In this sense, there was nothing unique in Lula’s visit to Beijing. For example, that very same year, Chile began the negotiations for what was to become the first Free Trade Agreement between China and a Latin American country. Thus, the “boom” of Sino-Brazilian relations can be mostly explained by the “entrance” of China into the region. This can be seen in the fact that the prices of resources such as copper, crude oil, iron ore, soybeans, and fishmeal more than doubled between 2003 and 2013 (Wise & Chonn

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Ching, 2018) as a result of China’s continuing demand for these raw materials. Moreover, Beijing has been the main actor in all these relationships: setting their “pace,” as well as their limits. The best example of this was the failed attempt to win China’s backing for a Brazilian seat on the UN Security Council. Brazil made significant concessions in order to garner this support—the most relevant being the recognition of China as a “market economy” in 2004 (Almeida, 2010). With hindsight, it has become clear that China pressured Lula’s government for that recognition; this putting the president in a complicated position due to the opposition of domestic industrialists to such a concession (Burges, 2017). But despite all his efforts, Lula could not win Beijing’s support because Brazil simply had nothing to leverage against China. Decreasing Voting Convergence with the US at the UNGA A final example of Brazil’s increasing contestation of the US that is usually mentioned in the literature is its decreasing voting convergence with Washington at the UN General Assembly (UNGA), and its increasing level of convergence with China. As in the case of the boom of SinoBrazilian relations, the importance of Brazil’s agency in the voting behavior at the UNGA has been inflated. Perhaps the clearest example of that tendency was a very influential book by Octavio Amorim Neto, which virtually introduced the indicator and methodology to the study of Brazilian foreign policy alignments. In De Dutra a Lula, Amorim Neto (2012) argued that the dealignment from the US in the UNGA was due to the rise of Brazil in terms of its national capabilities. However, this initial intuition was contested by Luis Schenoni (2012), who, replicating Amorim Neto’s models, found that the same voting pattern applied to all Latin American countries, thus suggesting it was not the rise of Brazil, but the relative decline of the US that explained the trend. Subsequently, other works confirmed this (see Mourón & Urdinez, 2014). Adding China into the mix, George Strüver (2015) demonstrated that, between 1995 and 2011, there was a “zero-sum game” in terms of South America’s voting convergence vis-à-vis the United States and China, moving from convergence with Washington toward Beijing. Gustavo Flores-Macías and Sarah Kreps (2013) noticed the same phenomenon in the Human Rights multilateral regime and other fora, thus reinforcing the idea of the emerging dual hegemony and its “pulling” effects.

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So, although not denying the relevance of Brazil’s agency and the importance of presidential diplomacy, we see the cases reviewed in this section as suggesting that Brazil’s diminished dependence on the US and its diversified foreign policy, mostly toward China, are, in large part, the result of an emerging dual hegemony. Indeed, this was a necessary condition or permissive cause that allowed Brazil’s long-held ambitions to flourish. In the next section, we analyze the difficulties faced by Michel Temer and Jair Bolsonaro—two presidents who tried to enhance BrazilUS relations but were unable to restore full realignment since these same systemic factors had begun to act as constraints.

Consolidation of Dual Hegemony During the first term of Dilma Rousseff as President of Brazil (2011– 2014), the effects of dual hegemony had fully materialized: Brazil had increased its autonomy vis-à-vis the US and created a whole set of new bonds with China. Yet, when economic and political crisis struck, and Rousseff tried to realign with the US, structural factors started to act less like necessary conditions or permissive cause for Brazilian agency, and more like constraints that prevented political realignments. This new situation consolidated after Xi Jinping took office in China (Leiva, 2017) and became more evident in Brazil during Rousseff’s second term in office, when the need for economic reform faced rigid opposition from strong interest groups, many of whom had developed strong international ties with China. While Brazil had surfed the wave toward dual hegemony in the previous decade, it now became clear that swimming against the tide would be impossible. Facing a worsening global economy, the increasing competition between Washington and Beijing, and the fact that China had consolidated its position, Brazil was unable to reorient its foreign policy back in the opposite direction. China’s development of finance started to decline (Myers & Gallagher, 2020) and Sino-Brazilian trade slowed down, but relations remained strong and continued to deepen (Ray & Wang, 2019). Indeed, Brazilian dependence on Beijing had increased significantly, and contributed to external vulnerability and re-primarization.3

3 Re-primarization refers to the process of shifting back from industrial to primary production (Ray, 2017).

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The constraints imposed by China became evident when, on the other side of this dual hegemony, the US turned its attention back to the region. The election of Donald Trump to the US presidency has added more pressure to the mix, as Washington has begun to actively contest China’s increasing presence in the region. Before Trump, this was not considered as a compelling danger for the US (Ellis, 2016), allowing both China’s uncontested “entrance” and Latin America’s “rapprochement” with Beijing. It has become obvious that the current systemic conditions for Latin American foreign policies are far less permissive than the ones in the period 2001–2016. The case of Jair Bolsonaro’s Brazil represents a good test for Brazil’s agency under less favorable systemic conditions, especially considering that his main foreign policy goals were clear: align with the United States, and diminish Brazil’s dependence on China. As in the previous section, we will focus on five cases in which we demonstrate that a condition of dual hegemony was sufficient to thwart Brazilian agency: the Brazilian travails to join the OECD, the tense Brazilian 5G network negotiations, the unwilling moderation of Bolsonaro’s anti-China rhetoric, China’s undesired role in the midst of the COVID-19 pandemic, and Bolsonaro’s frustrated quest to reduce dependency on China. These cases summarize some of the main foreign policy challenges of the Bolsonaro government and notably exemplify how the boundaries imposed by great powers can severely constraint Brazilian foreign policy. US Support to Join OECD Brazil’s intentions to join the OECD began under the short transitional presidency of Michel Temer (2016–2018), following Dilma Rousseff’s impeachment in 2016. The accession of Brazil to the OECD was pitched as an important diplomatic win for the country—being the only country in the world to participate in both BRICS and the OECD serving as a symbol of the country’s pivotal role (Stuenkel, 2017). Brazil’s accession request remained unaltered under Jair Bolsonaro’s government, but in a letter to the OECD Secretary-General on August 28, the US Secretary of State Mike Pompeo stated that the US would back the candidatures of Argentina and Rumania, not Brazil. Some confusing diplomatic backpedaling ensued after the revelation of the letter, with President Trump asserting that Washington did indeed supported Brazil’s candidacy. But the letter remained the official U.S. answer to a request made

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by the OECD Secretary-General for members to begin the discussions with the prospective candidates (Adghirni & Sink, 2019). China was seemingly, one key issue turning the tide against Brazil in the negotiations and, in favor of Argentina. The US had pressured Bolsonaro to cut ties with China—especially regarding the development of its 5G network—to little effect. Meanwhile, Argentina had shown more assertiveness in reviewing concessions previously made to the Chinese related to a satellite launching site in Patagonia. The change could therefore be interpreted as a way in which the Department of State sought to reward Argentina and punish Brazil. Finally, in January 2020, the US reinstituted its full support for a Brazilian candidacy. The support from Washington was celebrated by Jair Bolsonaro and his Minister of Foreign Affairs, Ernesto Araújo as a big diplomatic “win.” They subsequently claimed that Brazil was “building a solid partnership with the United States” (Boadle, 2020). Yet, it is important to note that Brasília had almost no agency in the process. What seems to have determined the final US support for Brazil was the result of Argentine elections; in particular, the loss of Mauricio Macri in his re-election bid against the left-wing candidate Alberto Fernández. China’s Development of the Brazilian 5G Network Since Donald Trump’s arrival in office, the United States has actively campaigned against China’s development of 5G networks in Latin America. US officials have warned Bolsonaro’s government of the security concerns regarding Huawei’s 5G (Rampton & Paraguassu, 2019). Moreover, the Trump administration has explicitly suggested that two of the few “successes” of Bolsonaro’s foreign policy toward Washington may be frustrated if he decides to allow Chinese companies to participate in the bid for Brazil’s 5G network: The agreement on the US use of the Alcântara base and the recently signed US-Brazil cooperation agreement to develop defense technology. The US government threatened Bolsonaro’s government with cancelling the first agreement if Huawei was not banned from the auction (Álvares, 2019), and US officials have already showed concerns that Huawei’s activity in Brazil may hinder the second (Paraguassu, 2020). Despite the pressures from Washington, Brazil seems to have decided to allow Huawei to participate in the 5G auction. Bolsonaro’s decision, however, seems to have been a “concession” to Xi Jinping to amend

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a diplomatic impasse (analyzed in the next section) caused by his son Eduardo Bolsonaro (Campos Mello, 2020). If that is the case, the negotiation around 5G becomes another example of the different “pulls” of the dual hegemony. It also reflects the significant influence that Beijing can exert on Brazil, even with a pro-US president. Bolsonaro’s Anti-China Rhetoric Jair Bolsonaro’s presidential campaign was highly critical of China’s influence in Brazil; to the point of being considered Sinophobia (Campos Mello, 2020). On several occasions, the then-candidate Bolsonaro suggested that “China doesn’t want to buy in Brazil, it wants to buy Brazil” (Spektor, 2018). However, after several disappointments in his attempts to align with the United States (e.g., Washington did not lift the ban on Brazilian meat), President Bolsonaro had to face the reality of Brazil’s dependence on China and change his anti-China rhetoric. The best expression of this shift was the BRICS summit in November 2019, in which Bolsonaro actively engaged with grouping’s leaders, which, as explained before, represent the “South.” Several agreements between Brazil and China were signed during the summit and Xi Jinping offered 100 billion dollars for infrastructure investment in Brazil (Campos Mello, 2019). Bolsonaro’s rhetoric made a 180-degree turn after these announcements, claiming that “China is becoming more and more part of Brazil’s future” (South China Morning Post, 2019). The anti-China rhetoric re-emerged in the middle of the COVID-19 crisis, with one of Bolsonaro’s sons blaming the Chinese Communist Party for the outbreak via Twitter, and his Education Minister making racist comments on the same platform. The Chinese Ambassador to Brazil, Yang Wanming, responded in an unusual assertive manner, demanding official apologies (Phillips, 2020). The Brazilian association of exporters warned the government about the negative effects of this diplomatic crisis on the country’s exports (Jiménez & Benites, 2020). The impasse faded soon after with a phone call between the Brazilian and the Chinese presidents, in which China won an important concession. This episode provides another example of the consolidation of the dual hegemony: The US fueled the anti-China rhetoric, Brazil followed, China punished Brazil and then won a concession.

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The COVID-19 Crisis The effects of the Sino-Brazilian diplomatic impasse went beyond trade, endangering China’s provision of medical equipment necessary to address the COVID-19 outbreak in Brazil. Chinese masks and mechanical ventilators were being negotiated when the president’s son and his Education Minister attacked China via Twitter. Domestically, the episode complicated the already poor handling of the crisis by the government. Then Health Minister, Luiz Henrique Mandetta, had to distance himself from Bolsonaro and actively engage in the negotiations with China to try to secure the much-needed equipment, with several governors deciding to negotiate directly with Beijing (Benites, 2020), and thus bypassing the federal government. While Bolsonaro struggled to secure any equipment from China, the state of Maranhão was able to buy 107 mechanical ventilators and 200,000 masks (CartaCapital, 2020). São Paulo, a state that has strengthened its relations with China significantly under the administration of governor João Doria, secured 342 mechanical ventilators (Jornal Opção, 2020). On top of the federal government’s struggles to manage the crisis, in April 2020, Minister Mandetta claimed that the United States’ massive buy of Chinese equipment was the cause of the cancellation of many acquisitions that Brazil had negotiated with Beijing (Cancian & Uribe, 2020). Days after, it was reported that 600 Chinese mechanical ventilators worth 7.4 million dollars travelling to Brazil were blocked in Miami. The purchase was ultimately cancelled on the grounds of “technical reasons” (Zanini, 2020). When the role of the US in blocking the Brazilian purchases of Chinese equipment went public, Senator José Serra criticized President Bolsonaro and asked him to demand an explanation from Donald Trump about the use of Washington’s economic power to harm the population of a country that is, supposedly, a partner (Mota, 2020). Diminishing Brazil’s Dependence on China During his campaign, Bolsonaro clearly expressed his intention to align with the United States and to diminish Brazil’s dependence on China, understanding very clearly that, for Latin American countries, approaching any of the two poles meant almost inevitable distancing from the other (Urdinez et al., 2016). However, as all the cases above show,

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the Brazilian president has struggled to achieve these objectives due to the new condition of dual hegemony. Despite Bolsonaro’s initial willingness to decouple, Brazil-China relations strengthen in several realms (Stuenkel, 2019)—sometimes even at the cost of displeasing Washington (de Sá, 2019). Beyond the 100 billion dollars for infrastructure investment announced in November 2019, several Chinese companies have participated and won contracts in various sectors of the economy: oil (e.g., bid for the Buzios oil fields), mining (e.g., construction of a steel rolling mill in Marabá), and technology (e.g., launch of the 6th Sino-Brazilian satellite). São Paulo, Brazil’s most populated state and its most important financial and industrial center, began negotiations to increase China’s investment in hydro and solar energy (SP Notícias, 2019). A Chinese company has also begun negotiations for the concession of the Line 6 in the state’s metro railway system (Estadão, 2019). Bolsonaro’s shift in stance vis-à-vis China seems to suggest that he has realized that the country’s dependence on China is deeper than expected, and that the possibility of diminishing it under dual hegemony seems almost impossible. The US has not been willing to reciprocate Bolsonaro’s intentions to strengthen the relationship, the commodities boom is over, and Chinese influence extends beyond the federal government’s reach. The strengthening of the Sino-Brazilian relationship under Jair Bolsonaro, a president that intended to do the exact opposite at the beginning of his government, reinforces our case about systemic opportunities being necessary for true Brazilian agency in foreign policy. The cases analyzed here show that China and the US are the actors that have determined the outcome in each of them, imposing rigid boundaries on the Brazilian space of maneuver, just as we predicted would be the case under dual hegemony.

Conclusions In this chapter, we have provided a new framework to understand the behavior of relatively small countries like Brazil under the current hegemonic transition, developing a concept we dubbed “dual hegemony.” While traditional work on the foreign policy of subaltern states like Brazil has usually focused on the constraints imposed by US hegemony and the foreign policy strategies that such countries might pursue to increase their autonomy, little theoretical work has been devoted to understanding the

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forces at work in a situation in which both the hegemon and its challenger in a global power transition impose constraints upon these actors. We propose that these situations might narrow the space of maneuver for states where the presence of hegemon and challenger overlap. This space corresponds to the intersection of foreign policies that great powers are willing to accept without imposing severe costs or, in other words, a veto. One empirical implication of the argument is that, to be located in a position of dual hegemony, there must be a loosening of the hegemon’s sphere of influence and the subaltern state must move toward the challenger. Looking at the case of Brazil, we corroborate that this fits what we know about five key cases of Brazilian foreign policy “successes” in the twenty first century: the creation of UNASUR, the boycott of the Free Trade Area of the Americas (FTAA), participation in the BRICS group, the development of ties with China, and distancing from the US in multilateral institutions. Although Brazilian agency might have played a role in these developments, changes in the underlying great power structure were undoubtedly necessary for them. A second empirical implication of our argument is that, once in a space of dual hegemony, subaltern states will find themselves in a tight corset imposed by the limits of what both hegemon and challenger are willing to tolerate. Again, focusing on Brazil, we have found this to be true when analyzing the Brazilian travails to join the OECD, the tense Brazilian 5G network negotiations, the unwilling moderation of Bolsonaro’s antiChina rhetoric, China’s forceful role in the midst of the COVID-19 pandemic, and Bolsonaro’s frustrated quest to reduce dependency on China. Our findings suggest that this framework enhances an understanding of Brazilian foreign policy. They also suggest that these dynamics are largely dependent on the foreign policy of great powers like the US and China, and that countries under dual hegemony might find the situation to be increasingly untenable in a context of rising tensions between the poles. Changes in US and Chinese foreign policies might even reduce margin of maneuver to zero, possibly causing the intersection disappear—there would be no possible overlap, as in the Cold War—and forcing countries currently under dual hegemony to make a choice. At the present moment, however, this has not happened, and the dynamics we find in Brazil are probably affecting many other states around the world.

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PART IV

Conclusion & Perspectives: Hegemonic Transition and the Politics of International Order

CHAPTER 13

Fast-Track Towards a Hegemonic Transition? COVID-19 and the Decline of US Hegemony Florian Böller

Introduction On December 31, 2019, health officials in the Chinese region of Wuhan, Hubei Province, reported that they were treating several cases of pneumonia, later identified to be caused by a novel Coronavirus. By midJanuary 2020, evidence of human-to-human transmission of the COVID19 virus began to mount, while the disease was also confirmed outside of China. On January 30, the World Health Organization (WHO) declared a global health emergency (see WHO, 2020), and in the following months,

Electronic supplementary material The online version of this chapter (https://doi.org/10.1007/978-3-030-74505-9_13) contains supplementary material, which is available to authorized users. F. Böller (B) Department of Political Science, University of Kaiserlautern, Kaiserslautern, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_13

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the novel Coronavirus spread across the globe, infecting more than 72 million people worldwide and resulting in more than 1.6 million fatalities by mid-December 2020 (Johns Hopkins University of Medicine, 2020). The pandemic also severely hit the global economy: For 2020, the OECD predicts a decline of real Gross Domestic Product (GDP) of 5.5%, and a growth of the unemployment rate from 5.4 to 7.2% worldwide (OECD, 2020a). The Corona outbreak thus presents an unprecedented external shock to global health and the world economy. The pandemic thus pertains to the question of hegemonic order in several ways. This chapter argues that different national actors showed varied responses towards the pandemic due to their specific domestic institutional setting and dominant societal preferences. In turn, the degree to which different actors were able to tackle the crisis impacts their ability and/or willingness to cooperate on the international level. Put differently, the pandemic reconstitutes the current hegemonic order by forcing states to enact specific economic and social policies and by enlarging or curtailing their power and influence internationally. As a case study, this chapter focuses primarily on the material capabilities that key actors can mobilize to uphold or challenge the current order, and how these actors shape the institutional level of the order through processes of bargaining and interacting. While the pandemic is still ongoing at the time of this writing (December 2020), I will focus on the first 12 months of the crisis and compare two key actors that are currently competing to retain or achieve a hegemonic position: the US and China. The analysis reveals that the pandemic undermined the ability of the United States to provide international leadership that would have helped to maintain its hegemonic position. Domestically, the US was severely hit by staggering numbers of infections and deaths, laying bare the deficiencies of its health care system and the unwillingness of purposeful intervention. In terms of welfare and social policies, the US lacked the political consensus to devote the necessary resources to mitigate the economic costs of the pandemic, in particular regarding unprecedented unemployment numbers and a deep economic recession. On the international level, the relationship between the US and China worsened as the Trump administration sought to find a foreign scapegoat to shift blame for its flawed pandemic management. At the same time, China’s swift economic recovery enabled its leadership to further its international ambitions, portraying itself as a state that commands the necessary means to

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fight pandemics domestically and as a global health provider. Furthermore, the pandemic also entails implications for international institutions—in particular the World Health Organization. Here, the Trump administration withdrew its support while China continued to expand its influence within the organization. The case study thus suggests that the pandemic served as a catalyst for a hegemonic transition as it accelerated the decline of the US relative to its peer competitor. The next section explains my theoretical argument, relying on a “second image reversed” perspective (Gourevitch, 1978). I then show that, while the global pandemic represents an external shock to all actors within the current order, their capacities to deal with the external input varies due to different domestic structures. Finally, I compare the impact on and governmental responses by the US and China, before drawing a conclusion regarding the current transition of the hegemonic order.

Second Image Reversed: Explaining Varied Responses to the Pandemic To conceptualize the context of the COVID-19 pandemic and global hegemonic order, I employ a “second image reversed” argument. Coined by Peter Gourevitch (1978), this thesis contends that change on the international level—the third image according to Waltz’ (1959) classic typology—also affects the second image; i.e., the domestic level. However, systemic shocks do not trigger uniform responses since domestic factors, such as state structures, partisan coalitions, interest groups, and other societal alliances shape the resulting processes of adaptation. The concept was originally applied to the policy area of global economic relations. Gourevitch (1978) and other scholars following his perspective (Katzenstein, 1985; Rogowski, 1989) inspected how international economic developments, and in particular crises events, pressure states to adapt their policies and domestic institutions. The causal path identified by second image reversed approaches—from the international to the domestic level—was already well established among economists. Here, various theories identified how different domestic groups profit from the configuration of world trade, resulting in specific import- or export-oriented regimes on the level of nation states (see Berger, 2000, 50). However, second image approaches in political science are typically more indeterministic than international trade theory in terms of what to expect as the result of systemic inputs, because they emphasize agency

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within the domestic sphere (see Berger, 2000; Gourevitch, 2002, p. 322; Zohlnhöfer, 2005). Thus, domestic institutions and political actors within these settings produce variant policy outcomes: […] however compelling external pressures may be, they are unlikely to be fully determining, save for the case of outright occupation. Some leeway of response to pressure is always possible, at least conceptually. The choice of response therefore requires explanation. (Gourevitch, 1978, p. 911)

Adapted to the case at hand, the pandemic presents an external shock on the international level, to which state and non-state actors react in various ways. Since the different capacities to deal with crises are a consequence of domestic structures, this helps to explain how and in which way actors’ responses to the pandemic diverge. Due to the severity of the crisis and its global scope, the pandemic also impacts the current hegemonic order. It deprives actors of material capabilities to wield power and influence on a global stage, but also provides other actors with windows of opportunities given their resilience in view of the crisis. The first indicator to support this argument can be found when comparing the crisis responses by different regime types to the outbreak of the crisis. While some states took harsh measures to contain the virus— for example, shutting down the economy and enacting hard lockdowns for its citizens—other countries sought to keep businesses open and were hesitant to adopt strict anti-Corona regimes. As Fig. 13.1 documents, democracies were more hesitant to enforce harsh measures than nondemocracies during the first phase of the pandemic (end of March 2020). However, during the second wave of the pandemic (end of November 2020), the mean differences between democracies and non-democracies were not statistically significant. In this later stage, there was also a correlation between the impact of the pandemic in terms of fatalities and different policy responses.1 These results hint at a slower initial response by 1 An ANOVA test via SPSS shows that the mean differences in Corona response measures were statistically significant between democracies and non-democracies (p < .01, partial η2 .05) for the first phase (May 31), while also controlling for the factors of higher Corona fatalities (biweekly average above 1 per one million inhabitants). The factor democracy was insignificant for the second phase (November 30). Here, only the difference in biweekly averaged fatalities per one million inhabitants (threshold > 50 deaths) was statistically significant (p < .001, partial η2 .12; data source: Hale et al., 2020; Roser et al., 2020). Full documentation of the ANOVA test is provided in the online appendix to this volume.

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Fig. 13.1 Stringency of governmental response between regime types (boxplot left: May 31, 2020; right: November 30, 2020) Note. Own depiction. The governmental policy response measured by the Stringency Index (Hale et al., 2020) represents a composite measure from 0 to 100 (100 = strictest), taking into consideration school and workplace closures, travel bans, and other indicators. Democracy variable according to Freedom House Index (2020; democracy = free). Based on 149 countries (states with less than 1 million inhabitants excluded)

democratic regimes, but a higher sensitivity towards COVID-19-related fatalities at later stages of the pandemic. Of course, causes for the observed differences between states are more complex than this empirical snapshot is able to reveal. Yet, more in-depth comparative analyses also point towards the impact of domestic structures and preferences to explain variation in crisis response. Several studies highlight the relevance of domestic institutional settings. Pulejo and Querubín (2020), for example, argue that electoral concerns shape COVID responses by governments. Less stringent measures were adopted if leaders had soon to face re-election. In a similar vein, Béland et al. (2020) trace the differences in policy response between

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the US and Canada back to divergent institutional settings of the health care regimes. Focusing on the level of infringements on constitutional rights enacted by governments to fight the pandemic, Greitens shows that mature democracies were more resilient to democratic backsliding (Greitens, 2020, p. 14). Beyond the institutional aspects, comparative studies also found evidence for the impact of partisan preferences (Hsiehchen et al., 2020), psychological factors within governmental elites (Maor & Howlett, 2020), and the availability of adequate material resources within regimes (Capano et al., 2020). In sum, there is sufficient evidence to hypothesize that domestic structures have been shaping responses towards the pandemic. For example, democracies may be slower to adopt stringent measures to contain the spread of the virus due to institutional factors, such as more complex decision-making processes, a hesitancy to enact infringements on civil liberty rights, and the openness of free-market economies (see Norrlöf, 2020, p. 1287). At the same time, the following comparison between states needs to address not only institutional aspects of the respective regimes, but also the domestic politics behind the COVID-19 responses.

Impact on and Responses by the US The first COVID-19 cases in the United States were detected in January and grew exponentially until early April 2020. At the height of this first wave on April 10, 2020, the US registered 31,865 new cases (7day rolling average). Newly confirmed cases spiked again by mid-June when the US exceeded more than two million infections. While case numbers again declined by the end of July, a third wave of infection began to hit the country by the end of September 2020. On December 14, 2020, a record of 650 new confirmed cases per one million people was reached, almost 50,000,000 infections had cumulated since the first cases in January, and more than 300,000 patients lost their lives in connection with COVID-19 (numbers according to Roser et al., 2020). A comparison with the Coronavirus impact on the European Union also highlights the severity of the pandemic for the US. While the case fatality rate in percentage is lower in the US (1.8 vs. 2.4), recorded cases, as well as fatalities per million inhabitants, are markedly higher in the US than within the European Union (see Table 13.1). In the wake of shelter-in-place orders and partial shutdowns of businesses to contain the spread of the virus, the US economy has suffered

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Table 13.1 Key health and economic indicators of the COVID-19 pandemic 2020

Cumulative confirmed deaths Cumulative confirmed deaths per million people Case fatality rate in percentage Cumulative confirmed cases Cumulative confirmed cases per million people GDP percentage change (at market prices) 2019–2020 Average Unemployment rate 2020 (change from 2019 in percentage points)

China

US

European Union*

4754 3.3

300,479 907.8

301,771 695.0

5 94,427 65.6

1.8 16,520,000 49,904.4

2.4 12,680,000 29,205.7

+1.8

−3.7

−7.5

N.a

8.1 (+4.4)

8.1 (+0.6)

*Euro Area only for economic indicators Note Data as of December 14, 2020. Sources Roser et al. (2020), OECD (2020b)

a severe shock. In the second quarter of 2020, the GDP decreased by 9.0% compared to the previous quarter. At the same time, the unemployment rate surged from 3.8 to 13.0% (OECD, 2020b). In April, 25 million Americans lost their employment—this number surpassing the level of job losses during the Great Recession in 2009 (CRS, 2020). While the economy bounced back in the third quarter of 2020 with a GDP growth rate of 7.4, the US economy is projected to shrink by 3.7% in 2020 overall, with an unemployment rate of 6.6% in the final quarter of 2020. In Europe, the COVID-19 pandemic caused similar economic turmoil, with the Eurozone economy shrinking by 7.5% over the course of 2020. The unemployment rate in the Eurozone is equally high compared to the US (8.1%), but the increase in unemployment is less profound than in the US due to more effective job retention schemes (OECD, 2020c). Despite the hyperbolic claims by the US President that his administration handled the COVID-19 crisis better than any other state (see i.a. White House, 2020a)—an already dubious claim given the record number of cases and fatalities in the US—several analyses point to grave failures in terms of domestic management of the pandemic (see Jurecic & Wittes, 2020; Lopez, 2020; Norrlöf, 2020). In particular, three aspects deserve attention: lack of preparedness for a global health emergency; mismanagement during the early phase of the outbreak; and the politicization of the crisis fueled by the President.

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In regard to preparedness, the US administrative and budgetary resources had been cut back prior to 2020, despite the fact that several governmental officials had warned of major health risks emanating from viruses and other plagues. In May 2017, for example, Director of National Intelligence Dan Coats testified before the Senate Select Committee on Intelligence that the “emergence of a severe global public health emergency is possible in any given year and can have negative impacts on the security and stability of a nation or region” (US Senate, 2020). Yet, President Trump signed a bill in February 2018 that cut more than 1 billion US-Dollars in funding for the Centers for Disease Control and Prevention (CDC). Within the executive branch, the Trump administration also disbanded several positions tasked with disease prevention in May 2018, such as the global health security team within the National Security Council, and a US public health liaison official stationed in China (see Goodman & Schulkin, 2020). US intelligence agencies became aware of the outbreak in Wuhan in late December 2019 and issued clear warnings about the risks for a global pandemic as early as January 3, 2020 (Abutaleb et al., 2020). Despite this available information, the management of the pandemic proved inefficient. Most importantly, the US failed to rapidly expand testing capacities to monitor and contain the outbreak (see Meyer, 2020). Furthermore, by repeatedly downplaying the threat of the virus, the President undercut public messaging efforts to increase awareness and entice compliance with official social distancing recommendations. For example, on February 24, 2020, Trump tweeted that “the Coronavirus is very much under control” (Trump, 2020), despite the extensive spikes in infections occurring during that phase—particularly in New York. The mixed-messaging on the federal level continued despite the national emergency declaration on March 13. By the end of March, most states in the US had issued stayat-home orders and closed schools, restaurants, and other non-essential retail businesses (Treisman, 2020). By mid-May, however, most states had already begun to ease restrictions again and the outbreak of the virus quickly rebounded (see Fig. 13.2). Meanwhile, the Trump administration continued to fuel the politicization of what could have been perceived as a “rally around the flag” crisis. In April 2020, Trump posted a tweet that was perceived as encouraging ongoing protests against stay-at-home orders in states led by Democratic governors (see Itkowitz, 2020). The question when to reopen the economy emerged as a salient topic in the 2020 election campaign, and

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100 90 80 70 60 50 40 30 20 10 0

China

Italy

USA

Fig. 13.2 Stringency of governmental policy measures over time (selected countries) Note. Own depiction. Based on the Stringency Index (Hale et al., 2020; data provided by Roser et al., 2020) which represents a composite measure from 0 to 100 (100 = strictest), taking into consideration school and workplace closures, travel bans, and other indicators. The index shows the highest level of measures taken within a state, irrespective of subnational differences

the Republican Party and its frontrunner advocated the lifting of restrictions early on (Beluz, 2020). Trump also repeatedly sowed mistrust of scientific expertise and contradicted key public health experts, such as the CDC’s Anthony Fauci (Forgey, 2020). However, the politicization did not only originate from the White House. Despite the bipartisan passage of the CARES Act (Coronavirus Aid, Relief and Economy Security)—the key legislation to counter the economic recession and job losses in the wake of the lockdown measures, signed by Trump on March 27—the policy consensus between Republicans and Democrats quickly began to erode. By mid-December of 2020, Congress had still not agreed on the passage of a new stimulus bill. Together with the 2.3 trillion USD CARES Act, the 483 billion USD Paycheck Protection Program (signed in April 2020), and the 8 billion USD Coronavirus Preparedness and Response Supplemental Appropriations Act (signed in June 2020) provided a vital stimulus to the economy. These fiscal counter-measures amounted to 14% of US GDP, which was

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slightly larger than the OECD median (13.4), but smaller than the median among EU member states (15.2) (own calculation based on Elgin et al., 2020). While the stimulus package included funding for short-term compensation programs, it failed to avoid the loss of employment that was achieved by successful job retention schemes in several European economies (see OECD, 2020c). To put the US measures in context, it is also important to note that EU economies not only profited from national measures, but also from a range of financial aid packages agreed upon at the intergovernmental level and coordinated by the European Commission (see IMF, 2020). Thus, while European governments managed to overcome significant institutional hurdles and divergent preferences among member states in order to set up new fiscal instruments that could counter the economic downturn throughout 2020, the US fiscal response to the pandemic remained weakened by political gridlock.2 Foreign Policy Implications The US’ engagement with COVID-19 was shaped by factors nested in its domestic political and institutional structures: A populist President whose re-election concerns induced him to downplay the severity of the crisis, and a polarized body-politic that was unable to overcome partisan gridlock in order to temper the pandemic’s impact. Lacking the domestic capacity to counter the crisis, the United States’ ability to provide international leadership and act in accordance with its traditional role as a benevolent hegemon of the international order was consequently impaired (see Norrlöf, 2020). In contrast to other policy areas—in particular in the economic realm, where the US still possesses the ability to externalize the costs of interdependence (see Tuschhoff in this volume)—a similar strategy was not available for an event such as a pandemic. Rather, the pandemic can be understood as a global “public bad” that might be mitigated through cooperative efforts led and materially supported by the hegemon (see Norrlöf, 2020, p. 1289). The Trump administration chose a different path. In line with the “America First” doctrine’s focus on sovereignty and autonomy, the US 2 In addition, the Federal Reserve also took measures to support the flow of credit to stabilize the economy (see IMF, 2020). In contrast to the swift and continuous intervention of the Fed, important elements of the CARES Act, for example, the Pandemic Unemployment Assistance program, had run out in August 2020 (Zeballos-Roig, 2020).

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did not seek to foster international cooperation and provide leadership within key global institutions. In doing so, Trump broke with traditional hegemonic behavior in three regards. First, the Trump administration opted to cut back US contributions to international efforts fighting the pandemic. In the policy area of global health, the US had previously enacted the role of a benevolent hegemon: for example, by supporting antiretroviral therapy for people infected with HIV/AIDS through the PEPFAR program (see Busby, 2020), and by leading efforts to contain the spread of the Ebola virus in Africa in 2013. Instead of the provision of public goods, the US engaged in predatory behavior by seizing personal protection equipment (PPE) bound for Europe and Canada (Jeffrey, 2020). The Trump administration also reportedly tried (and failed) to co-opt the German biotech company CureVac, which was working on COVID-19 vaccines (Carrel & Rinke, 2020). Furthermore, the US declined to join a European-hosted vaccine donor conference (Emmott & Guarascio, 2020). Such maneuvers fit to a pattern of unilateral strategies by the Trump administration that had already undermined the legitimacy of the hegemon—in particular among European partners (see Norrlöf, 2020, p. 1291). Second, in the midst of the pandemic, the US administration announced it would stop its cooperation with the World Health Organization (WHO). Blaming the organization for its supposedly China-friendly policies, Trump announced in May 2020 that the US would permanently cease its funding and notified the United Nation of its intent to leave the organization—to take effect in July 2021 (Department of State, 2020a). In 2019, the US had provided approximately 15 percent of the regular budget for the organization (Busby, 2020, p. 7). Although the WHO had not been considered as a central institution of the liberal international order before the COVID-19 pandemic, the withdrawal sent a signal—in line with other decisions to withdraw from international agreements in various policy fields (see Heinkelmann-Wild, Dassler and, Kruck in this volume)—that the US under Trump was not interested in maintaining its traditional hegemonic role. Third, while historical examples hint at the possibility of cooperation despite great power rivalry, such as in the case of US-Soviet Union cooperation to eradicate smallpox (Barrett, 2006), the Trump administration’s approach sought to denounce the “Chinese Communist Party’s designs for hegemony” (Department of State, 2020b). In an attempt to shift blame from the apparent mismanagement of the crisis at home, the

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US President accused China of allowing the virus to spread around the globe. In his speech at the UN General Assembly in September 2020, Trump referred to SARS-CoV-2 as the “China virus” and claimed that the Chinese government was controlling the World Health Organization in order to cover-up the pandemic (White House, 2020b). Trump’s speech clearly relied on typical populist narratives of foreign elites endangering US interests, combined with conspiracy theories (see Harnisch in this volume). In doing so, the US administration closed a window of opportunity for cooperation between the US and China. The President instead portrayed himself as pursuing a tough stance against China during the election campaign. Impact on and Responses by China As the first outbreak of the Corona pandemic happened in Wuhan and the disease began spreading from the Hubei province into other regions across the globe, confirmed COVID-19 cases in China rose to 4600 by February 14, 2020 (7-day rolling average, Roser et al., 2020). Despite its significant investments in public health infrastructure following the SARS1 epidemic in 2003, Chinese authorities were not able to adequately assess the severity of the situation and contain the spread of the virus— especially during the initial phase of the outbreak. Instead, governmental officials sought to downplay the seriousness of the epidemic (Dotson, 2020). However, by early January 2020, stern containment measures were implemented by the Chinese government, including the strict lockdown of entire regions, most notably the megacity of Wuhan with its 11 million inhabitants (He et al., 2020, p. 243). It is important to note that the Chinese variant of lockdown—“fengcheng”—was more severe than in the USA or Europe (with intermittent exceptions Italy), having included the suspension of public transport, the banning of private cars, and strict stay-at-home orders (Ren, 2020, p. 424; see Fig. 13.2). Although centralized authoritarian regimes such as China may enjoy an advantage in their ability to swiftly adopt emergency measures—and are less restricted by constitutional and political boundaries like those in Western democracies that preclude harsh infringements of civil rights— the effectiveness of its crisis management was far from a given. After all, China’s political and administrative system was seen as highly fragmented and having a tendency for bureaucratic slack to hamper the mitigation of major health events, such as during the SARS-1 outbreak in 2003

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(see Thornton, 2009). Yet, after its initial mistakes, the central government established a Central Leading Group (CLG) for countering the Coronavirus that was led by senior party officials in order to ensure interadministrative coordination. State-owned companies were mobilized to produce necessary goods to fight the pandemic, and 19 provinces outside Hubei were matched with Hubei districts to assist with medical teams, equipment, and supplies (see He et al., 2020, p. 246). On the local level, the lockdown measures were enforced by a system of neighborhood controls, surveillance by volunteers and local officials, and the mandatory use of tracing apps. This resulted in a level of enforcement unmatched in democratic states like Italy that (nominally) also had drastic lockdowns (see Ren, 2020, p. 428). The measures proved to be effective and the number of new infections declined to below 100 cases by March, and remained comparatively low throughout 2020. Some caution may be in order regarding official Chinese statistics on COVID-19, but even if the numbers are largely under-representing the extent of the pandemic in China, cases as well as fatalities per million people are markedly below the levels in Europe and in the US (see Table 13.1). Following the lockdown measures, the Chinese economy contracted by 10 percent in the first quarter of 2020. However, it quickly rebounded with a growth of 11.7% in the second quarter, thus avoiding an overall shrinking economy for 2020 (OECD, 2020a). The Chinese central government also enacted a stimulus package amounting to 4.7% of GDP, including increased expenditures for health services, unemployment insurance, tax relief, and public investments (IMF, 2020). The overall stabilization of the economy, with a projected growth rate trajectory of 8% in 2021 (OECD, 2020a), sharply contrasts with the developments in the US and Europe. While Western countries were not able to avoid second waves of COVID-19 outbreaks, China’s strict quarantine, contact-tracing, and testing regimes have enabled the country to contain reappearing clusters in the course of 2020. After the initial hit to Chinese trade activities in the first months of the pandemic, its imports and exports regained momentum and exceed pre-Corona levels. As the OECD Economic Outlook in December 2020 states, Chinese exports are not only driven by high demand for COVID-19 related goods, but also by demand for IT technology (OECD, 2020a). Based on the first twelve months since the Coronavirus outbreak, there is no indication

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that Western states have taken significant steps to reduce their import dependency, in particular regarding strategically important goods. Foreign Policy Response China’s push to contest the US-led hegemonic order has long been in the making. Enabled by steady growth of material capabilities (both economically and militarily) over the last decades, Beijing has tried to enact a leadership role in world politics. In contrast to Russia, which has sought to merely contest the liberal world order and act as a spoiler state (see Loftus in this volume), China has sought to broaden its influence within UN institutions in order to shape policies and norms from within the system. This strategy included the successful bid to increase its vote-share within the IMF, where it became the third largest shareholder in 2015. Chinese nationals also claimed leadership positions within the UN, for example, in the Food and Agriculture Organization (FAO), the International Telecommunication Union (ITU), the United Nations Industrial Development Organization (UNIDP), and the International Aviation Organization (ICAO). Overall, Chinese diplomats currently head 4 of 15 UN specialized agencies (see Cheng-Chia & Yang, 2020). This has, in turn, enabled China to deny Taiwan access to the WHO and the ICAO. China’s increasing influence has also become visible within the UN Human Rights Council (UNHRC), which adopted two resolutions in 2018 that reflected China’s preference to circumscribe the scope of human rights in favor of state sovereignty (see Zhao, 2020, pp. 3–4). Outside established institutions of the liberal world order, China spearheaded new initiatives, particularly in the economic realm. Led by China and other BRICS members, the Asian Infrastructure and Investment Bank, and the New Development Bank were founded in 2014. Together with China’s Belt and Road Initiative, its ambitious infrastructure and investment project, the hegemonic contender signaled its intent to translate its economic clout into bargaining power within global economic institutions (see Wang, 2020). Against this backdrop, the COVID-19 pandemic presented a “strategic opportunity” (Gauttam et al., 2020, p. 15) for China to cast itself as a global leader and to promote President Xi Jinping’s vision of a “Community of Shared Future for Mankind”—Xi having described this vision as a doctrine to “position China in the commanding heights of the international competition” (cited in Zhao, 2020, p. 3). While the traditional

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hegemon and its European allies were mired in the pandemic, the Chinese had successfully put the crisis behind them in a short period of time. This enabled China to broaden its global reach in two key ways. First, China tried to cast itself as a global health soft power, seeking to improve its image in response to a worldwide crisis (see State Council Information Office, 2020). Lauded by coordinated propaganda efforts in Chinese state-controlled media, China began to ship medical aid and PPE to countries fighting COVID-19. They also dispatched medical personnel—in particular to African countries that had already established business ties to Beijing (see Gauttam et al., 2020). Due to the situation caused by the pandemic, China was able to capitalize on its position as the largest global supplier of epidemic prevention goods (Fazal, 2020, p. 13). The Chinese government also exploited the opportunity created by the US’ withdrawal from WHO, pledging to step up its financial contribution to the organization. This “mask diplomacy” also exposed existing fault lines within Europe during the early phase of the pandemic, when European solidarity appeared weak in view of national measures (Verma, 2020, p. 207). At the same time, China’s efforts to cast itself as a global health power were hampered by faulty test kits and PPE, as well as by the aggressive rhetoric of its “Wolf Warrior” elite diplomats, who sought to counter Western accusations of a lack of transparency during the early phase of the pandemic (see Harnisch in this volume). China also did not establish itself as a provider of global public goods, as most of the help was authorized on a bilateral basis and even its increased WHO funding fell significantly short of previous US contributions (see Fazal, 2020, p. 4). Second, although not directly related to the pandemic, China also sought to bolster its power position, both in terms of security and economic strength. Here, it seems plausible that the Chinese government was able to exploit the strategic window of opportunity opened by other states’ preoccupation with domestic priorities—especially the US, which was in the throes of a contentious presidential election. Several empirical observations highlight China’s increased post-Corona assertiveness. In April 2020, the People’s Republic designated new “administrative zones” in the South China Sea, including the Paracel and Spartley Islands which are also claimed by Vietnam. Although territorial disputes have lingered for several years, the new measures can be seen as an attempt to formalize control in this area (Thu, 2020).

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Another strategy designed to bolster its power position can be detected in its policy toward Hong Kong. Here, the Chinese government imposed a new National Security Law, tightening its control over the Special Administrative Region and thereby undermining the principle of “one country, two systems.” It is important to note that, in 2019, the Hong Kong government had withdrawn an extradition law due to mounting domestic protests. In 2020, however, China pushed the legislation through despite international criticism, thus exposing the increased level of authority exercised by the Chinese government (Rudolf, 2020, p. 7).3 China also escalated its simmering conflict with Australia and implemented new customs against Australian exports. This move was interpreted as a retribution for the Australian government’s calls to investigate the origins of the Corona pandemic and its disapproval of China’s human rights policies (Khalil, 2020). Here, China signaled its intention to retaliate against international criticism and deploy its economic leverage against weaker states. In the realm of trade relations, the new Regional Comprehensive Economic Partnership, signed on November 15, 2020, and including 15 Asian economies, underscored China’s ability to cooperate within multilateral trade regimes, while the US, under the Trump presidency, had withdrawn from the Trans-Pacific Partnership spearheaded by the Obama administration (see Petri & Plummer, 2020). In sum, these examples show that Beijing sought to take advantage of this international environment by realizing long-held policy goals within several fields, and that, ultimately, China’s international position was stronger than it had been in the pre-Corona period.

Conclusion Was the COVID-19 pandemic the final nail in the coffin of the US-led liberal world order? It may be premature to conclude that China has already established itself as the global hegemon. Yet, as I argued in this chapter, the Coronavirus crisis has exacerbated existing trends in international relations, amplifying China’s influence and status as a global power. 3 While 27—mostly Western states—contested the new Security Law during a session of the UNHRC, the decision was immediately endorsed by 53 other states (see Albert, 2020). This underlines the fact that China has been able to attract sizable international support for its policies within core institutions of the liberal world order.

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Employing a “second image reversed” perspective on international relations, I highlighted how domestic structures shape the way in which states are able to cope with a pandemic. Focusing on the US and China revealed that the inability of the US to fight the Coronavirus at home—and to evade the worst recession since the Great Depression—also constituted a specific international response in line with President Trump’s “America First” strategy. Empowered by its own effective domestic response not only to the pandemic but consequently also to daunting economic challenges, China was able to cast itself as a global leader, capable of dodging existential health and economic crises that have the potential to challenge liberal democracies in substantial ways. With their success being seen in stark contrast to the botched domestic management and unilateral foreign policy of the Trump administration, this strategy yielded some results, yet China’s image in the eye of public opinion in many states is still trailing US soft power (see Pew, 2020). Furthermore, as China took the opportunity to flex its muscles in terms of power projection in the South China Sea, waged a trade war with Australia, and pushed through the new National Security Law for Hong Kong, these strategies further undermined their self-proclaimed image as a benevolent leader in world affairs. Rather than a finalized hegemonic transition, the pandemic generated a leadership vacuum, with neither the US nor China demonstrating the ability and willingness to act as a hegemon in the traditional sense.

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ouse.gov/briefings-statements/president-donald-j-trump-administration-cre ated-best-covid-19-testing-system-world/. Accessed 19 December, 2020. White House. (2020b). Remarks by president Trump to the 75th session of the United Nations general assembly. https://www.whitehouse.gov/briefingsstatements/remarks-president-trump-75th-session-united-nations-general-ass embly/. Accessed 19 December, 2020. WHO. (2020). Timeline of WHO’s response to COVID-19. https://www.who. int/news/item/29-06-2020-covidtimeline. Accessed 19 December, 2020. Zeballos-Roig, J. (2020). Political gridlock is delaying another coronavirus relief bill. Business Insider. https://www.businessinsider.com/gridlock-coronavirusrelief-devastating-consequences-us-economy-unemployment-2020-11?r=DE& IR=T. Accessed 19 December, 2020. Zhao, S. (2020). Rhetoric and reality of China’s global leadership in the context of COVID-19: Implications for the US-led world order and liberal globalization. Journal of Contemporary China. https://doi.org/10.1080/10670564. 2020.1790900 Zohlnhöfer, R. (2005). Globalisierung der Wirtschaft und nationalstaatliche Anpassungsreaktionen. Zeitschrift Für Internationale Beziehungen, 12(1), 41– 75.

CHAPTER 14

Conclusion: A Hegemonic Transition? Florian Böller and Welf Werner

Grasping the Hegemonic Transition The emergence of a multipolar global order and the relative economic decline of the West have been discussed among scholars at least since the 1980s (see i.a. Gill, 1986). Yet, recent developments in world affairs have sparked new attention to the possibility of a hegemonic transition (Coley & Nexon, 2020). Under President Donald Trump, the US has abdicated its traditional role as a global hegemon. Trump’s “America First” policy has sown conflict, insecurity, and distrust among allies, calling into question some of the cornerstones of the Liberal International Order (LIO), such as free trade, human rights promotion, and multilateral institutions. Among other factors, rising inequality, economic crises, and economic

F. Böller (B) Department of Political Science, University of Kaiserslautern, Kaiserslautern, Germany e-mail: [email protected] W. Werner Faculty of Economics and Social Sciences, Heidelberg University, Heidelberg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9_14

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insecurity have contributed to undermine liberal democracies from within. At the same time, in terms of economic and military resources, China emerged from a regional to a global actor and has begun to assert its power in the realm of Asian-Pacific security as well as regarding economic relations toward Europe and Africa. In addition to Chinese competition, other powers, such as India, Russia, or Brazil are eager to pursue their military interests and ambitions and are able to exert influence over regional and partly global affairs (see Bettiza & Lewis, 2020). In view of these developments, this book aims to grasp the extent of a hegemonic transition of global economic and security orders. In doing so, the contributions to this volume provide case studies for a variety of actors and policy fields. The three parts of this book focus on the domestic sources of hegemonic politics by the current leader, its relationship toward allies and institutions, and the bargaining and positional shifts enacted by other states. In this conclusion, we highlight some of the results presented in detail in the individual chapters and discuss implications for the future of the Liberal International Order.

Evidence for an Ongoing Transition In the introductory chapter, we argue that the transformation or break down of a hegemonic order can be identified if one or more of the following processes take place: (1) the material configuration significantly shifts, so that the leading state is unable to fulfill its function as a hegemon; (2) core norms, rules, and institutions break down (either because they are replaced by new arrangements, or because they are contested by actors within the order); (3) social relations between leaders and followers change. Regarding changes in material capabilities, several chapters note that revisionist states—those who contest the LIO—have been able to close the gap toward established Western democratic regimes. The COVID-19 pandemic has further contributed to undermine the ability of Western states to focus on international affairs, due to the necessity to focus on domestic priorities to contain the pandemic and alleviate its economic fallout. However, the US may still be able to act as a provider of global public goods. This is most obvious in the realm of global economic relations, as Herman Mark Schwartz argues in this volume (see also Norrlöf, 2020). Nevertheless, in view of the declining relative capabilities, the provision of global public goods has become less acceptable for

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the hegemon, since the costs of leadership became a source of domestic contestation (see Tuschhoff in this volume). Put differently, the US possesses sufficient economic resources to retain its traditional role, but increasing sensitivity toward the costs of leadership has undermined its ability to realize this role. There is also some evidence addressed in this book that the institutional structure of the LIO has become strained by attempts to contest its core policy principles, and by withdrawal of support from the traditional hegemon (see Adler-Nissen & Zarakol, 2020). As Andreas Falke highlights regarding the WTO, the Trump administration’s unilateral policy has paralyzed this central economic institution. In the area of arms control, US retrenchment has single-handedly destabilized the regime as key agreements, such as the INF, Open Skies treaties, and Iran Deal (see Friedrichs in this volume), were terminated by the US president. Other institutions, however, have exhibited more resilience, but, as Simon Koschut illustrates for the case of NATO, core liberal features of these institutions have become shallow. Key procedural and substantive norms, which allow those institutions to maintain their current functional scope, have been undermined by the US. The case studies in this volume further reveal the extent to which social relations have changed, which has in turn constituted a shift in the politics of hegemonic ordering. Examples of these relationship changes include the role alteration of the US vis-à-vis its allies in the area of arms control and collective defense (see the chapters by Koschut and Friedrichs ), as well as the rivalry between the US and China in the wake of escalating trade wars and the blame game during the COVID-19 pandemic (see Harnisch in this volume). Relations at the level of the hegemonic contenders also influence minor actors within the order, since great power rivalry creates specific incentives as well as limitations for states to realize their preferences.

The Politics of Hegemonic Ordering Taken together, there is sufficient evidence to suggest that the current hegemonic order is being challenged and that a hegemonic transition is taking place. However, these processes have, so far, not resulted in a new equilibrium (see Önis & Kutlay, 2020). In other words, the hegemonic transition is far from being concluded. Rather, the individual chapters in this book highlight that the current hegemonic order is being transformed

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by the actors within the system. This dynamic constellation has created windows of opportunity as well as new constraints for states to redefine their position within the order. It is clear that there is a broad variance of how states (as well as nonstate actors) reposition themselves in view of the hegemonic transition. Some actors claim new hegemonic ambitions and pursue changes to the previously dominant rules, norms, and institutions. In these cases, actors possess alternative concepts of rightful rule that contrast to the status quo. Such actors seek to cast themselves into a leading role in the international realm. However, to implement their ambition to lead, these states need to possess the necessary material resources, since maintaining a leadership role in international affairs entails significant costs, for example in terms of military power projection, economic prowess, or regarding the provision of international public goods. Other actors are rather interested in preserving the status quo ante. These states have typically profited from the previous order or are dependent in terms of security and economic welfare from the traditional hegemon. There are also non-state actors, in particular those of international institutions, who seek to shield their organizations from disrupting influences (see Heinkelmann-Wild & Jankauskas, 2020).1 Thus, status quo defenders are forced to take actions to stabilize the liberal order even if that means to take on new responsibilities. Again, the ability to achieve these goals depends on whether those actors can mobilize the necessary resources. Based on these considerations, we can differentiate between four ideal types of foreign policy behavior, which are on the one hand a reaction to the current hegemonic transition, but which are on the other hand recreating the order themselves (see Table 14.1). The ideal types are clustered along two dimensions. The first dimension considers how actors position themselves toward the status quo ante, which is in our case the Liberal International Order. Actors can either seek to uphold the status quo ante, or they can adopt a transformative orientation to challenge the existing order. The second dimension considers the varying capabilities of the actors to implement their preferences. Broadly conceived, there are states which possess the necessary resources to enact

1 This is not a trivial observation since it suggests that the Liberal International Order is not just a state-made structure that shifts passively in response to state actions.

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Table 14.1 Typology of foreign policy reactions to hegemonic transition Ability to lead Positioning toward status quo ante (Liberal Status quo International Order) orientation Transformative orientation

Capable

China, US under Trump

Incapable France, Germany, India Russia, Brazil

Source Own depiction (see Böller & Harnisch, 2021)

a leading role on the international level, while others are not capable to lead. While the case studies in the individual chapters of this volume provide detailed analyses of the positioning of actors toward the order and their capabilities, which do not necessarily correspond with a basic typology, it is possible to observe some broad patterns. First, some actors have in the past clearly profited from the order and their ideal preference is to preserve the status quo ante. This is evident for many European states, including France and Germany, the two most powerful actors within the European Union. For both actors, the Trump administration’s attack against core transatlantic institutions, such as NATO (see Koschut in this volume), and against traditional patterns of interaction in the economic realm (see Falke in this volume), have exercised considerable pressure to adapt their international positions. This is especially so since the transformative push exercised by authoritarian states threatened key interests of European states, be it in the form of aggressive destabilization strategies implemented by Russia,2 or by economic pressure against smaller European states in the case of China (see Szewczyk, 2019, p. 40). However, both Germany and France have shown limited capacities to implement a leading role and stabilize the LIO. While French President Emmanuel Macron has underscored leadership ambitions at various times and in line with France’s traditional self-understanding, German-French initiatives to increase Europe’s strategic autonomy have, so far, yielded only symbolic results, such as the Treaty of Aachen or the Permanent Structured Cooperation (PESCO)

2 For example, the annexation of the Crimean peninsula and the war in Ukraine or interferences in democratic elections.

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at the EU level (Schreer, 2019). To become leading actors, both states would need to significantly increase their investment in defense, which would in turn have a stabilizing effect on NATO. However, in both states societal preferences and domestic politics foreclose those policy changes for the time being, which renders Germany and France currently incapable to lead. India on the other hand has played a more ambivalent role and has neither fully supported the status quo ante of the liberal order, nor has it articulated a clearly transformative orientation (see Jacobs and Kessler in this volume). India is rather primarily interested in securing its regional influence and seeks to dodge being entrapped in a conflict between the US and China. India clearly lacks the resources to contest China and also needs to avoid to alienate the US. For the case of Brazil, Luis Schenoni and Deigo Leiva note that Brazilian governments have sought to cast themselves as independent and leading actors on the global stage. Yet, the more the global system moves toward a hegemonic transition, the smaller the room for maneuver for a middle power, such as Brazil, may become. This finding is particularly noteworthy as it shows that while some actors profit from a retrenchment by the US in regions such as the Middle East, others find themselves entrapped in a situation of “dual hegemony,” as Schenoni and Leiva term it, where both China and the US act as constraints. Russia also lacks the necessary resources to meet its ambitions to become recognized as a leading power. At the same time, Moscow has profited from the partial retrenchment of the US in the Middle East. Russia’s military intervention in Syria has not only secured an allied regime, but has also entrenched the position of Russia within the region. At the same time, Russia’s economic power is inferior to its outsized military clout. Therefore, its actions focus on disrupting the European security architecture and limiting democratic enlargements in its near abroad. In contrast to China, Russia does not entertain ambitious economic projects, such as the Belt and Road Initiative, and its role within global policy areas, such as the fight against climate change, remains limited (see Loftus in this volume). Second, the two major hegemonic rivals, the US and China, have shown a transformative orientation in recent years. In particular under the Trump administration, the US has abdicated its traditional function as a benevolent hegemon, which had created and consequently stabilized the LIO. Part I and II of this volume document this shift away from a traditional leadership role toward a transformative—some would even argue

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destructive—force endangering key pillars of the liberal order. Guided by the “America First” doctrine, Trump frequently employed unilateral strategies, terminated international agreements from arms control to climate policies, and has attacked liberal institutions of all traits, such as the WTO, the WHO, and NATO. Some authors in this volume argue that the US under Trump has shown isolationist tendencies (see Heinkelmann-Wild, Daßler, and Kruck). They point in particular to hegemonic withdrawal from several UN institutions—most notably in the context of the COVID-19 pandemic: the WHO. Also in regard to global climate policies, the US has opted to abstain from significant efforts of policy coordination and hence deprived itself of influence. In other instances, however, the US did rather change its role than cease its ambition to lead. As Gordon Friedrichs contends in his chapter, the Trump administration’s conception of leadership is focused on exercising dominance, combining an extensive functional scope with an exclusive followership. Also, Andreas Falke and Christian Tuschhoff hold that the Trump administration wants to change the rules of the game, as it perceives that the current system has yielded insufficient gains for the hegemon. All authors agree nevertheless that the Trump administration’s foreign and security policies were tilted against key substantive policies of the LIO. In fact, the severity of the current crisis also stems from the remaining capabilities of the US. The geoeconomic power of the US, its technological advantage in key industries paired with the centrality of the US-Dollar within the global monetary system, still enabled the Trump administration to persist as a leading actor (see Schwartz in this volume). US foreign and security policies under Trump may lack legitimacy, provoke criticism among allies, and have reduced the reliability of its remaining commitments. Yet, in particular minor states are still dependent on the US, in terms of international economic cooperation and specifically trade, but also regarding the US security network. Instead of contesting the old hegemon, some of those states have thus either enacted policies to entice the US to continue its security provisions—for example Israel, Saudi-Arabia, and in Europe, Poland—or have come to terms with the US, such as Mexico and Canada regarding the NAFTA-successor agreement USMCA. China has been identified as the hegemonic challenger long before the election of Trump. In recent years however, the Chinese regime has articulated more clearly its determination to revise the rules, norms, and institutions of the liberal order (Layne, 2018). In particular under

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Xi Jinping’s leadership, the People’s Republic devised ambitious international projects, such as the Belt and Road Initiative that document that it is no longer primarily a regional power in Asia, but that its economic growth has enabled China to extend its scope of influence. Beijing’s power politics in the South China Sea have also been perceived as a direct contestation of the current hegemon’s alliance network, as it undermines or at least threatens to disrupt the military primacy of the US in the Pacific realm. Furthermore, the authoritarian regime has sought to circumscribe the reach of liberal norms, such as human rights and democracy promotion, both within its sphere of influence (especially Hong Kong and Taiwan) and at the international level within the UN Security Council and other international organizations. It is thus clear that China possesses the willingness as well as the necessary capabilities to contribute significantly to the current hegemonic transition. During the COVID-19 pandemic, China sought to expand its global ambitions further, emboldened by its successful pandemic containment strategies and swift economic recovery, and has portrayed itself as the leading actor in global health. However, as the chapters by Harnisch and Böller argue, China’s role transition entails significant limitations. On the one hand, China has not provided global public health goods on a large scale, which would have required non-exclusiveness instead of bilateral and profit-oriented exports. On the other hand, China’s international projects and exercise of power have lacked transparency and have at times been at odds to the security interests of its neighbors (in the South China Sea, but also during the recent border conflict with India). China’s revisionism has thus generated notable contestation not only from the US, but also from minor states in its periphery (see Harnisch et al., 2018). This suggests that achieving and maintaining the position of a hegemon within an order does not only require material capabilities and the willingness to lead. Hegemony is rather to be seen as a relational concept and requires the ascription of authority toward the hegemon (see Allan et al., 2018). A typical hegemonic strategy thus includes the provision of public goods, responsiveness toward the interests of lesser actors within the order, and self-restraint. All three elements are key to generate trust and legitimacy toward the leading actor. If a hegemon fails to entice this support, the order remains fragile as unsatisfied actors will strive for revisions and contest the hegemon as well as the institutional structures of the order.

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Theoretical Implications and Outlook The variance in foreign policy responses leads us to consider the sources of the emerging patterns. In particular, the chapters which focus on the role of the US underscore the importance of domestic politics for the ability to enact a leading role as well as the strategic orientation. As Christian Lammert and Welf Werner, for example, highlight, the inability of the US to provide necessary socio-economic improvements to cushion the downsides of economic liberalism has empowered revisionist preferences within the US. This enabled populist candidates to challenge the status quo of the LIO. Enacting a leadership role is costly and governments within democratic polities need to mobilize sufficient domestic support to realize their international ambitions. Furthermore, Florian Böller contends that domestic institutions and political considerations influence the ability to cope with crisis events, such as the COVID-19 pandemic. This also suggests a particular weakness of democratic states, which are more sensitive toward the costs of leadership, whereas authoritarian states, such as Russia, are able to entertain an outsized military sector at the expense of welfare expenditures, because they may manipulate societal preferences and suppress domestic contestation. Turning to the international system, the case studies also suggest that constraints and incentives resulting from systemic inputs vary. Some states, in particular major powers, may successfully deflect international pressures. Smaller and/or less powerful states may not be able to escape pressures from the outside. Here the evidence presented by Christian Tuschhoff regarding attempts of the US under Donald Trump to externalize mounting leadership costs contrasts with the case studies on Brazil (Schenoni and Leiva) and India (Jacobs and Kessler in this volume), which highlight that less powerful states struggle to escape becoming entrapped in US-Chinese rivalry. Finally, there are also hints that hegemonic transition is “what states make of it” (Wendt, 1992). That means actors still possess “agency” in view of systemic events. The question here is which role do states and societies see for themselves? The role theoretical perspectives adopted by Harnisch and Friedrichs in this volume, for example suggest, that hegemony is made and remade between actors. Actors may ascribe a leading role for themselves, but without commensurate roles adopted by other states, the implementation of those roles remains futile.

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The topical focus of this volume is, as the title suggests, the age of Trump. This focus can be justified with regard to the unprecedented nature of his presidency and the fact that for the first time, a blatant contestation of the liberal order stemmed from the inside, and not only from the outside. May we therefore infer that the situation of a hegemonic transition will simply disappear with the election of a new US president? There are at least four reasons to doubt this conclusion. First, domestic structural reasons suggest that the Biden administration will be limited in the attempt to remake US foreign policy after the Trump era. The deficiencies of the US welfare system have already created scores of voters who hold a deep mistrust toward the capacity of democratic institutions to solve key societal challenges, such as income inequality and adequate healthcare provisions (see Lammert and Werner in this volume). These deficiencies have been exposed even further in the wake of the COVID-19 pandemic, which has cost the lives of more than 300,000 US citizens over the course of 2020. Due to the structural weakness of the US state—and here in particular its capacity to ensure socio-economic participation—the Biden administration will struggle to compensate those parts of the electorate who were negatively affected by the cold winds of globalization (see Tuschhoff in this volume). Another structural reason why an internationalist administration will face difficulties to find domestic support for multilateral leadership is rooted in the US institutional setting. The system of checks and balances assigns important veto-powers to Congress, and the Senate in foreign policy in particular. New treaties to rebuild the LIO may not clear this institutional hurdle. However, without Senate ratification, the reliability of US commitments is severely hampered (see Kreps et al., 2018). Second, and connected to the previous aspect of the limiting effects of domestic institutions, domestic political reasons may impair the provision of global leadership. In this context, it is important to stress that the successful implementation of the US leadership role was facilitated by an overarching consensus between political parties in Congress. This bipartisan consensus already started to crumble since the war in Vietnam and it had completely lost its appeal shortly after the end of the Cold War (see Schultz, 2017). The post-war focus on multilateral trade policies had shown first signs of dissolution already in the 1980s when the US faced symptoms of serious contestation of its economic superiority (Werner, 2004). Since the mid-1990s, foreign policies became increasingly politicized, even in areas, which had been governed by bipartisanship before,

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such as arms control. While some issues, for example regarding NATO, may be less politicized than during the Trump administration, other areas, such as climate policies or nuclear non-proliferation, will likely continue to be subject to political contestation. The third reason to be skeptical of a swift recovery of the LIO is to be found outside the US. The widely diagnosed “rise of the rest” is projected to continue and the relative advantage of Western states will consequently diminish further. The COVID-19 pandemic has the potential to act as a catalyst in this regard. While China was able to contain the virus, Europe and the US were struck by several waves of SARS-CoV-2 outbreaks throughout 2020 and consequently by more serious economic consequences. Fourth, and finally, the status quo ante is difficult to achieve, as other actors, in particular those with transformative orientations, have already re-positioned themselves. Contenders have filled the vacuum left by the US. Examples in this regard include the Regional Comprehensive Economic Partnership in Asia signed in November 2020, which includes China and 14 other states, but excludes the US. Also, in the Middle East, Russia has established itself as a key actor due to its foothold in Syria. Furthermore, some US allies have started to hedge against abandonment by the hegemon, because they fear that the US could again “go rogue” after the next election. In all these cases, the Trump administration has produced a lasting damage to US credibility and trustworthiness. Overall, this suggests that the upper left field in our typology may remain empty—in spite of a more multilateral rhetoric of the new US administration—and that the current hegemonic vacancy may continue to destabilize the global order in the medium and long run.

References Adler-Nissen, R., & Zarakol, A. (2020). Struggles for recognition: The liberal international order and the merger of its discontents. International Organization. https://doi.org/10.1017/S0020818320000454. Allan, B., Vucetic, S., & Hopf, T. (2018). The distribution of identity and the future of international order: China’s hegemonic prospects. International Organization, 72, 839–869. Bettiza, G., & Lewis, D. (2020). Authoritarian powers and norm contestation in the liberal international order: Theorizing the power politics of ideas and identity. Journal of Global Security Studies, 5(4), 559–577.

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Böller, F., & Harnisch, S. (2021). Shifting meridians of global authority: Who is pushing in which direction, and why? In M. Berg & G. Leypoldt (Eds.), Authority and trust in US culture and society: Interdisciplinary approaches and perspectives (pp. 83–105). Transcript. Cooley, A., & Nexon, D. (2020). Exit from hegemony: The unraveling of the American global order. Oxford University Press. Gill, S. (1986). American hegemony: Its limits and prospects in the Reagan Era. Millennium, 15(3), 311–338. Harnisch, S., Godehardt, N., & Hansel, M. (2018). Ergebnisse und Ausblick: Sicherheit in Asien jenseits von Großmachtrivalitäten. In S. Harnisch, N. Godehardt, & M. Hansel (Eds.), Chinesische Seidenstraßeninitiative und amerikanische Gewichtsverlagerung. Reaktionen aus Asien (pp. 313–328). Nomos. Heinkelmann-Wild, T., & Jankauskas, V. (2020). To yield or shield? Comparing International Public Administrations’ Responses to Member States’ Policy Contestation. Journal of Comparative Policy Analysis.. https://doi.org/10. 1080/13876988.2020.1822144. Kreps, S. E., Saunders, E. N., & Schultz, K. A. (2018). The ratification premium. Hawks, doves, and arms control. World Politics, 70(4), 479–514. Layne, C. (2018). The US–Chinese power shift and the end of the Pax Americana. International Affairs, 94(1), 89–111. Norrlöf, C. (2020). Is COVID-19 the end of US hegemony? Public bads, leadership failures and monetary hegemony. International Affairs, 96(5), 1281–1303. Önis, Z., & Kutlay, M. (2020). The new age of hybridity and clash of norms: China, BRICS, and challenges of global governance in a postliberal international order. Alternatives. https://doi.org/10.1177/030437542092 1086. Schreer, B. (2019). Trump, NATO and the future of Europe’s defence. RUSI Journal, 164(1), 10–17. Schultz, K. A. (2017). Perils of polarization for U.S. foreign policy. Washington Quarterly, 40(4), 7–28. Szewczyk, B. M. (2019). Europe and the liberal order. Survival, 61(2), 33–52. Wendt, A. (1992). Anarchy is what states make of it: The social construction of power politics. International Organization, 46(2), 391–425. Werner, W. (2004). Globalisierung und Globalisierungs-backlash. Ein Vergleich zur Zeit vor 1914. In R. Ohr (Ed.), Globalisierung – Herausforderungen an die Wirtschaftspolitik (pp. 9–46). Duncker & Humblot.

Index

A Abkhazia, 201 Active Labor Market Policy, 54 Administrative State, 29 Alter-casting, 133, 186 America First, 1, 23, 45, 154, 157, 268, 275, 281, 287 American Dream, 46 American Exceptionalism, 24, 56 Annan, Kofi, 197 Araújo, Ernesto, 246 Asian Infrastructure Investment Bank, 215 Australia, 88, 184, 225, 275

B Balkan Wars, 197 Bangladesh, 220 Belt and Road Initiative (BRI), 205, 211, 215, 222, 272, 286, 288 Biden Administration. See Biden, Joseph

Biden, Joseph, 61, 100, 290 Bipartisanship, 3, 27, 33, 290 Bolsonaro, Eduardo, 247 Bolsonaro, Jair, 233–248 Brazil, 78, 88, 185, 203, 233–248 Bretton Woods, 4, 46, 48, 50, 53, 197 Brexit, 196, 206 BRICS, 200, 225 Bush doctrine. See Bush, George W. Bush, George H.W., 240 Bush, George W., 56, 135, 240

C Canada, 88, 91, 93, 94, 148, 155, 264, 269, 287 Cardoso, Fernando Henrique, 237 CARES Act, 267 Center for Disease Control (CDC), 179, 267 Centers for Disease Control and Prevention (CDC), 266

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 F. Böller and W. Werner (eds.), Hegemonic Transition, Palgrave Studies in International Relations, https://doi.org/10.1007/978-3-030-74505-9

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Chávez, Hugo, 240 Chile, 88, 185, 242 China, 81, 91, 96, 119, 126, 137, 140, 148, 159, 163, 171–188, 198, 203 China and COVID-19, 270–272 China-Brazil Relations, 233–241 China-India Relations, 215–223 China-US Relations, 171–181 China Shock, 51, 94 CIA, 114 Clinton, Bill, 28, 54, 59, 135, 240 Clinton, Hillary, 33, 61, 207 Cold War, 3, 4, 6, 8, 72, 91, 129, 161, 197, 200, 202, 216, 235, 236, 240, 250, 290 Collective defense. See NATO Community of Latin American and Caribbean States (CELAC), 237 Congress, US, 2, 29, 32, 49, 54, 57, 87, 91, 137, 161, 267, 290 Constructivism, 9, 149, 151, 172 Contestation of US Hegemony, 133, 239, 288 COVID-19, 35, 78, 79, 101, 105, 119–121, 162, 171–174, 209, 248, 259–275, 282 and China, 270–272 and US, 264–268 Crimea, 161, 196, 201, 204 Cybersecurity, 95, 179, 196 Czech Republic, 78

D Democracy promotion, 198 Democratic Party, 33, 61, 62, 120, 161 Democratic Peace Theory, 202 Doha Round, 45, 57, 88, 99 Dollar, 25, 110, 287 Dollar Centrality, 108

Dominican Republic, 78 Dual Hegemony, 233–237 Duterte, Rodrigo, 155

E Ebola, 182, 269 Embedded Liberalism, 23, 47 Eurasian Economic Union, 201 European Commission, 268 European Reassurance Initiative (ERI), 148 European Union (EU), 48, 93, 99, 111, 119, 140, 201 Externalization, 24–26

F Federal Reserve Bank (FED), 108, 268 Fernández, Alberto, 246 Flexicurity, 54 France, 58, 136, 139, 157, 209, 216, 285, 286 Free Trade, 33, 44, 160, 198 Free Trade Area of the Americas (FTAA), 238

G GATT, 44, 48, 93, 117, 197 Georgia, 201, 204, 210 Germany, 51, 91, 111, 113, 136, 139, 159, 208, 216, 285, 286 Gingrich, Newt, 54 Global Financial Crisis (GFC). See Great Recession Globalization, 23, 25, 49, 50, 59, 89, 196, 207, 210 Global Power, 80, 105, 108, 121, 195, 216 Global South, 178, 241 Great Depression, 46, 275

INDEX

Great Recession, 4, 178, 181, 206, 265 Great Society Legislation, 46 Greece, 150 Green Climate Fund, 79 Group of Seven (G7), 78, 155 H Haley, Nikki, 74 Hegemonic decline, 43, 45, 70, 125, 196, 223, 282 Hegemonic Stability Theory (HST), 6, 129, 216, 218, 226 Hegemony definition of, 5–7 Hong Kong, 179, 274, 288 Humanitarian interventions, 197 Hungary, 79 I Illiberalism, 72 IMF, 4, 48, 69, 72, 78 India, 203, 215–216 Indonesia, 185 INF Treaty, 22, 283 Instrument in Support of Trade Exchanges (INSTEX), 140 Intellectual Property Rights (IPR), 95, 110 Interdependence, 24, 172, 268 International Court of Justice, 74 International Law, 11, 75, 154, 199 International Monetary Fund, 197 International Monetary System, 108, 120 International Organization for Migration, 76 Iran, 125–137, 179 Iran Deal. See JCPOA Iran nuclear crisis, 125–135 Isolationism, 77

295

Israel, 78 Italy, 162, 181

J Japan, 88, 92, 99 JCPOA, 21 Jinping, Xi, 179, 184, 244, 272 Johnson, Lyndon B., 46, 52 Joint Comprehensive Plan of Action (JCPOA), 138 Joint Plan of Action (JPA), 138

K Kennedy, John F., 46, 49, 161 Keynes, John Maynard, 47 Kirchner, Néstor, 240 Kyrgyzstan, 200

L Leadership, 128–131, 134, 177, 187 Legitimacy, 3, 73, 98, 130, 133, 152, 186 Liberal International Order, 22, 197 contestation of, 9, 12, 71 crisis of, 3–5, 69–71 Lighthizer, Robert, 75, 97, 98 Lula da Silva, Luiz Inácio, 237

M Macri, Mauricio, 246 Macron, Emmanuel, 139 Mainstream Media, 32 Malaysia, 185 Mandetta, Luiz Henrique, 248 Medvedev, Dmitri, 203 Merkel, Angela, 139, 148 Middle East, 205 Modi, Narendra, 215–216 Montenegro, 157

296

INDEX

Mueller, Robert, 155 Multiculturalism, 28 Multilateralism, 70, 78, 156, 197 Multipolar(ity), 204, 241, 281

N NAFTA, 45, 89, 92 NATO, 2, 25, 69, 72, 75, 76, 90, 147–148, 204, 206, 210 New Deal, 46 New Development Bank, 241 Non-Proliferation of Nuclear Weapons Treaty (NPT), 135, 225 Non-Proliferation Policy, 125–126 Nordstream 2, 208 North Korea, 155, 177

O Obama Administration. See Obama, Barack Obama, Barack, 88, 90, 95, 97, 137, 205, 207

P Pakistan, 220, 221 Paleoconservatives, 28 Paris Climate Agreement, 21, 26, 79 Passive Labor Market Policy, 55 Permanent Structured Cooperation (PESCO), 285 Perot, Ross, 59 Peru, 88 Philippines, 185 Poland, 78, 148, 287 Polarization, 27–29 Pompeo, Mike, 140, 155 Populism, 70, 177, 187, 268 Power Transition Theory, 6, 70, 172 Protectionism, 120

Public Goods, 3, 22, 72, 116, 129, 173, 175, 187, 198, 218, 273 Putin, Vladimir, 195–209

Q Quadrilateral Security Dialogue (QSD), 225

R Rahman, Ziaur, 221 Reagan, Ronald, 44, 59 Regional Comprehensive Economic Partnership (RCEP), 8, 100, 222, 274, 291 Republican Party, 33, 62, 120, 161, 267 Responsibility to Protect, 197 Retrenchment, 178 Revisionism, 199 Role Theory, 125–131, 175 Rouhani, Hassan, 138 Rousseff, Dilma, 244 Rule of Law, 155, 160 Russia, 126, 137, 140, 148, 159, 161, 163, 185, 195 Rust Belt, 51 Rwanda, 197

S Sanders, Bernie, 33, 61, 89 SARS, 182 SARS-CoV-2. See COVID-19 Second Image Reversed Theory, 23, 261–262 Security Community, 147–148 Security Council, 4, 139, 225 Serbia, 181 Serra, José, 248 Sherman, Wendy, 138 Slovakia, 79

INDEX

Smoot-Hawley Tariff Act, 58, 96 Social Contract, 60 Social Media, 33 South America, 233–250 South Asia, 221 South Asian Association for Regional Cooperation (SAARC), 221 South China Sea, 179, 185, 187 Southern Common Market (Mercosur), 237 South Korea, 88, 92 South Ossetia, 201 Sri Lanka, 221 Status (in International Relations), 155, 172, 181, 274 Stolper-Samuelson Theorem, 49, 50 Structural Realism, 199, 202 Syria, 179, 201, 205

T Taiwan, 179 Temer, Michel, 245 Tillerson, Rex, 30 Trade Adjustment Assistance Program (TAA), 49 Trade Expansion Act, 91 Trade Policy, 44, 57, 58, 87–101, 185 Transatlantic Relations, 147–148 Transatlantic Trade and Investment Partnership (TTIP), 58, 88, 90, 117 Trans-Pacific Partnership (TPP), 8, 58, 79, 88, 89, 117, 199, 207, 274 Turkey, 150, 162, 185 Twitter, 32, 248, 266

297

U Ukraine, 196, 199–201, 204 UN General Assembly, 243 UN Global Compact on Migration, 78 UNHCR, 76, 79 UN Human Rights Council, 81 Unilateralism, 22, 44, 57, 77, 87, 154, 269 Union of South American Nations (UNASUR), 237 Unipolarity, 129, 235 United Arab Emirates, 185 United Kingdom (UK), 139, 162, 183, 197 United Nations, 74 United Nations Children’s Fund, 76 United Nations Population Fund (UNFPA), 79 Un, Kim Jong, 155 US-China Relations, 93, 178–185, 259–274 Trade Conflict, 94–99 USMCA, 22, 92 US-Russian Relations, 195–196 USSR, 195

V Vietnam, 273 Vietnam War, 52

W Warren, Elizabeth, 61 Wolf Warrior, 273 World Bank, 4, 48, 69, 72, 197 World Food Program, 79

298

INDEX

World Health Organization (WHO), 79, 81, 179 World Trade Organization (WTO), 4, 21, 45, 48, 51, 59, 69, 72, 74, 75, 77, 88, 93, 97, 99–101, 203 dispute settlement, 92, 98

World War II, 195

Z Zero-sum Game, 90, 161, 162, 186, 209, 211