The world has had a five-year timeout, and we’ve blown it

Opinion: Future historians will ask, what were you thinking?

Mon, Apr 8, 2013, 06:00

Yes, it’s true - a crisis is a terrible thing to waste. But a “timeout” is also a terrible thing to waste, and as I look at the world today I wonder if that’s exactly what we’ve just done. We’ve wasted a five-year timeout from geopolitics, and if we don’t wake up in the US and get our act together - and if the Chinese, Russians and Europeans don’t do the same - we’re all really going to regret it.

Think about what a relative luxury we’ve enjoyed since the great recession hit in 2008. We in the US, the Europeans and the world’s other major powers all have been able to focus almost entirely on healing our own economies - without having to worry about a major war or globe-rattling conflict that would snuff out our fragile economic recoveries or require extensive new defense spending. Relatively speaking, the world in the past five years has had a geopolitical timeout.

But now, everywhere you turn, you see different actors standing with their toes on red lines, seemingly ready and willing, even itching, to cross them at any moment. North Korea’s boy king, Kim Jong Un, who seems totally off the grid, has ordered his strategic rocket forces to be on standby, ready to hit US and South Korean targets at a moment’s notice. Which is why you see the South Koreans starting to wonder aloud whether they should stay on this side of the red line and not be building their own nuclear bomb.

Iran is also steadily getting closer to a similar combination of a homemade nuclear weapon and delivery system, and so far no sanctions have deterred Tehran. Meanwhile, Egypt is running out of money to buy bread for its people and is perilously close to crossing the red line into failed-state status, which would destabilise the whole region. At the same time, Syria’s mad leader, Bashar al-Assad, having been given the choice of “rule or ruin”, has chosen ruin for his country, which is also approaching state collapse, raising the prospect of jihadist militias picking through the rubble to obtain chemical weapons and sophisticated surface-to-air missiles - with no adult supervision.

Finally, the bailed-out euro zone states just had to bail out Cyprus - a bailout by the bailed-out - leading one to wonder just how many more Band-Aids the European Union has left. Maybe you can bail out Cyprus and its people will accept the haircut on their bank accounts, but we are one thin red line away from Spaniards’ waking up one morning and asking why they should keep their money in euros in their banks, when there is a real possibility they could get a similar haircut. Warren Buffett likes to say that if you ever walk by a bank and there is a long line of people out front, “get in it”. A bank run is a terrible thing to miss.

If any one of these red lines, let alone all of them together, get crossed, we will rue the day that we did not use these last five years to make the US economy more resilient. After all, in sports, timeouts are when you catch your breath, try to make sense of what is coming at you at high speed, figure out what has been working and what has not, design a play to win the game and then collaborate on its execution.

Future historians will surely ask how we in America could not agree on sensible near-term infrastructure investment - to upgrade our country with cheap money - paired with a long-term package of tax reforms and spending cuts, phased in gradually as the economy improves, so we have a much sturdier balance sheet to survive any geopolitical storms. We’re now driving around without a bumper and a spare tire, just when the world seems poised to turn into a crash‘n’smash derby. (Kudos to President Obama for still trying for a Grand Bargain. Will the GOP step up?)

But historians will also ask China: What were you thinking? When will you realise that whatever is bad for America is not necessarily good for you? Will it take South Korea, Japan, Vietnam and Taiwan all getting nuclear weapons? China controls food and fuel going into North Korea. It could end the freak show there anytime it wants, by cutting off both and opening its border to refugees. Yes, it is worried about a united, nuclear Korea and a flood of refugees, but America could help facilitate a united, non-nuclear Korea and dealing with refugees.

Then there is the Russian president, Vladimir Putin - the man who was born on third base and thinks he hit a triple, because his country has so much oil and gas. Refusing to ease Assad out in Syria, rather than hanging tough with him, at best could alienate Russia from the next generation of rulers in Syria and at worst could help Syria turn into another Afghanistan. Do the Russians really believe that indulging Iran’s covert nuclear program, to spite the US, won’t come back to haunt them with a nuclear-armed Iranian Islamist regime on their border?

In many ways Russia and China are more irresponsible than the US is. We need to make ourselves resilient but are not. We are being shortsighted. They are being downright harmful. The net result is that we could all look back one day and wish we had used this timeout from any global geopolitical contagion more wisely. I hope historians won’t say that for five years we were lucky. And then we weren’t.

(New York Times service)

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