When Money Talks: Foreign Policy Walks
September 2nd, 2009

The current recession is not only forcing the re-calibration of global capital relations it is also shaping the political leadership in many strategically important countries too . The impact on foreign relations and geopolitical alignment may in some cases be profound with new political leaders firmly embracing a protectionist economic stance, in favor of workers over capital, and social equity over growth. What will be the cost, where will the changes occur? Will the nation state’s role be reasserted?

The historic win of Hatoyama’s Democratic Party in Japan not only breaks a deadlock in parliament but will also deliver a new government focused on addressing the weaknesses of the failing Japanese economy and its impact on social equity. The selection of the new finance minister will be key. With China’s growing economic footprint within the region it will be impossible for Japan to maintain it unboundedly pro-Anglo-US foreign policy, forged on the back of Japan’s failures in the Second World War. If the main driver of future growth is on your doorstep, then smart political leaders will begin to emerge to cash in on the potential gains of such an alignment. With it, will come new capital relations and as a result - perhaps a more balanced foreign policy too - at least from a regional perspective. Hatoyama has already suggested such an outcome. Once stronger economic relations with China have been forged - over time - Japan is increasingly likely to be caught between US and Chinese political-economy interests; and Japanese politicians will doubtless pander to such realities.

Change is also taking place between the US and China. The failing US economy - following an aggressive and expensive foreign policy towards its periphery since 2001 - has not only guaranteed the end of a period of unrivaled US hegemony but is leading to ideological compromises to occur too. Changes in health care at home and increasingly pro-Chinese foreign policy abroad are reflective of the failures of the current (perhaps hardline) economic ideology, and the realization that if one can not contain China, then one must engage it. This signals the end of former US Ambassador Khalizad’s policy of congagement (balanced containment and engagement) thereby acknowledging that the projection of US power in the East is in decline, and South Korea may become the only vanguard in years to come - with India and potentially Pakistan as a last frontier.

For capitalists the cost of recession will be ideology. Political leaders will go for the base over ideology and nationalism and perhaps socialism will be the outcome in many cases. The economic ideology of South America is already reflective of such a reality. Changes in political leadership in countries such as Fiji should also not go unnoticed given that much of the pacific rim could find itself forced to make difficult socio-economic compromises over the near to medium term.

Will the impact of recession also affect global trade regimes, with protection of the nation state placed above free markets given the risks that such a position might have, during a period of unprecedented economic contraction?

Will the recession, with the affect on the real economy only beginning to emerge, increase awareness of the failures of the current economic ideology? If so, what will be the impact for the US on main street, Wall Street and Global Street?

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Created on the 1st of May 1707, as the once largest empire in history and the first industrial state, the United Kingdom of Great Britain has certainly been an important player in world affairs. That all Time Zones start in Greenwich London need not be lost on anyone! With inventions such as the first computer, first combustion engine and train, the first TV, the birth of modern empiricism, the theory of evolution, penicillin, the structure of DNA, football, Rugby, Cricket, Tennis and Billiards, Rolls Royce and Land Rover, William Shakespeare, many countries, the World Wide Web, the Beatles and Rolling Stones, the jet engine, the laws of motion and illumination of gravity; all countries have been touched by the scientific, economic, military and philosophical imagination that is the UK.

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