Haggard-2014-Asia & the Pacific Policy Studies

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Original Article Liberal Pessimism: International Relations Theory and the Emerging Powers Stephan Haggard* Abstract The triumphalism of the immediate post-Cold War period in the United States has faded, and concern about decline has returned. In the field of international relations, the return of power transition models is exemplary of the new mood. This article argues that realist models misjudge the source of foreign policy risks for the United States and its allies. Rather, the standard canon of liberal interna- tional relations theory also suggests sources of pessimism. These include the enduring nature of authoritarian rule, the difficulty of coordi- nating emerging actors through existing international institutions, and the ambiguous effects of increased interdependence on the foreign policy behaviour and leverage of emerging powers. Key words: international relations theory, liberalism, international institutions, demo- cratic peace, interdependence 1. Introduction Following the end of the Cold War, realists predicted that the end of bipolarity would trigger new conflicts. Multipolarity carried intrinsic uncertainties, and balancing against US dominance was inevitable. Both Europe and Asia were vulnerable. But analysts who had long focused on the trans-Atlantic system and the balance of power in central Europe pivoted to the Pacific, which was deemed ‘ripe for rivalry’ (Friedberg 1993–1994). These predictions did not pan out. To the contrary, the immediate post-Cold War period proved a ‘unipolar moment’ (Krauthammer 1990/1991) during which the United States dramatically extended its geostrategic reach. Of particular significance in this regard was not only the collapse of America’s most significant rival but successive rounds of the North Atlantic Treaty Organization expan- sion, an enlarged US presence in Central Asia after the shock of 9/11, the changed political configuration in the Persian Gulf following the invasion of Iraq, and an under- appreciated rapprochement with India. Far from balancing against the United States—as realists should have predicted—countries bandwagoned towards it. Ideological trium- phalism also played a role, as the only coherent alternative to liberal democratic capitalism—state socialism—rapidly deflated in appeal (Fukuyama 1989). The self-congratulatory debate in the United States turned to the durability of American * Graduate School of International Relations and Pacific Studies, University of California, 9500 Gilman Drive, San Diego, California 92093-0519, USA; email [email protected]. Asia & the Pacific Policy Studies, vol. 1, no. 1, pp. 1–17 doi: 10.1002/app5.3 © 2013 The Author. Asia and the Pacific Policy Studies published by Wiley Publishing Asia Pty Ltd and Crawford School of Public Policy at The Australian National University. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.

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Original Article

Liberal Pessimism: International Relations Theory and theEmerging Powers

Stephan Haggard*

Abstract

The triumphalism of the immediate post-ColdWar period in the United States has faded, andconcern about decline has returned. In thefield of international relations, the return ofpower transition models is exemplary of thenew mood. This article argues that realistmodels misjudge the source of foreign policyrisks for the United States and its allies.Rather, the standard canon of liberal interna-tional relations theory also suggests sources ofpessimism. These include the enduring natureof authoritarian rule, the difficulty of coordi-nating emerging actors through existinginternational institutions, and the ambiguouseffects of increased interdependence on theforeign policy behaviour and leverage ofemerging powers.

Key words: international relations theory,liberalism, international institutions, demo-cratic peace, interdependence

1. Introduction

Following the end of the Cold War, realistspredicted that the end of bipolarity wouldtrigger new conflicts. Multipolarity carriedintrinsic uncertainties, and balancing againstUS dominance was inevitable. Both Europeand Asia were vulnerable. But analysts whohad long focused on the trans-Atlantic systemand the balance of power in central Europepivoted to the Pacific, which was deemed ‘ripefor rivalry’ (Friedberg 1993–1994).

These predictions did not pan out. To thecontrary, the immediate post-Cold War periodproved a ‘unipolar moment’ (Krauthammer1990/1991) during which the United Statesdramatically extended its geostrategic reach.Of particular significance in this regard wasnot only the collapse of America’s mostsignificant rival but successive rounds of theNorth Atlantic Treaty Organization expan-sion, an enlarged US presence in CentralAsia after the shock of 9/11, the changedpolitical configuration in the Persian Gulffollowing the invasion of Iraq, and an under-appreciated rapprochement with India. Farfrom balancing against the United States—asrealists should have predicted—countriesbandwagoned towards it. Ideological trium-phalism also played a role, as the onlycoherent alternative to liberal democraticcapitalism—state socialism—rapidly deflatedin appeal (Fukuyama 1989).

The self-congratulatory debate in the UnitedStates turned to the durability of American

* Graduate School of International Relations andPacific Studies, University of California, 9500Gilman Drive, San Diego, California 92093-0519,USA; email �[email protected]�.

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Asia & the Pacific Policy Studies, vol. 1, no. 1, pp. 1–17doi: 10.1002/app5.3

© 2013 The Author. Asia and the Pacific Policy Studiespublished by Wiley Publishing Asia Pty Ltd and Crawford School of Public Policy at The Australian National University.This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, whichpermits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for

commercial purposes.

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dominance. One highly influential accountargued that the unipolar distribution of capa-bilities was virtually immune from challenge(Brooks & Wohlforth 2008). Most liberalinternationalists (Ikenberry 2002) and moder-ate, defensive realists like Steve Walt (2005)were more cautious. They focused on howpolicy choices rather than power per se wouldbe determinative of the new world order, andchided the George W. Bush administration forsquandering American advantage. But evenapparently declinist accounts, such as FareedZakaria’s (2008) The Post-American World,saw the long peace of the post-war era assustainable if the United States respondedjudiciously. Standard elements of the liberaltoolkit—military restraint, multilateralism,encouraging the growth of interdependenceand democracy—could provide the foundationfor an extension, perhaps indefinite, of the PaxAmericana.

Even with the fillip provided by America’srecent economic performance vis-à-visEurope, attention in the United States has onceagain focused on relative decline and its chal-lenges. The causes of the new pessimism aremultiple, but the root source of concern iseconomic. The decade of the 2000s sawunprecedented growth in emerging markets.Although China received most attention, thephenomenon was much broader, and includedgains in Russia, Latin America and South Asiaas well. The global financial crisis, includingits European variant, laid bare an unpleasanteconomic arithmetic: we are increasinglyliving in a two-track growth world, withemerging powers growing very much fasterthan the United States, Europe and Japan. Incontrast with earlier periods of economic con-vergence, some of the countries catching upare not only large—the major Europeancountries and Japan were also significanteconomies—but potentially dissatisfied withthe political status quo.

The problems of measuring national capa-bilities are well known (Chan 2008, ch. 2), buttwo sets of projections provide some sense ofthe shifts in power that are in train. GoldmanSachs (2009)—which first identified the BRICs(Brazil, Russia, India, China) as a distinctive

group—has long-run growth projections thatare not simply linear but also take into accountthe likelihood that growth accelerations arelikely to slow. China has already surpassedJapan and is predicted to become the largesteconomy in the world by the mid-2020s; usingpurchasing power parity exchange rates, thetransition will come sooner. India and Russiawill overtake Japan by 2027 and 2037, respec-tively, and Brazil could overtake Germany by2029. Overall, the BRICs economies takentogether had the potential to be larger than theG6 by 2031.

The most recent issue of the US NationalIntelligence Council’s (2012) Global Trends2030 rolls out a new global power index thatincorporates a broader array of indicators ofnational power, including governance, educa-tion and health, as well as the more traditionalmeasures. Using this metric, the capabilitiesof China and India grow more slowly; forexample, China does not overtake the UnitedStates until the 2040s, and India is just comingwithin striking distance of the European Union(EU) by 2050. But the picture shifts dramati-cally when we consider whole groups of coun-tries and possibilities for shifting alliances asnew poles of power emerge. For example, theNational Intelligence Council’s predicts thatnon-Organisation for Economic Co-operationand Development (OECD) countries will out-weigh the OECD countries by 2030.

As a result of these developments, powertransition models of conflict are back in vogueand have breathed new life into realist analy-ses of international politics. These theories,which predict conflicts between status-quoincumbent powers and rising, revisionist chal-lengers, have a long pedigree in internationalrelations theory (Organski 1958; Organski &Kugler 1980; Gilpin 1981; Modelski 1987;Thompson 1988; Chan 2008 for an overview).But they have recently broken out of theiracademic confines and influenced the publicdebate. John Mearsheimer (2001) remains themost wide-ranging proponent of the pessimis-tic view that changes in the distribution ofpower are destabilising. Aaron Friedberg’s(2012) A Contest for Supremacy: China,America, and the Struggle for Mastery in

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Asia1 and Hugh White’s (2012) The ChinaChoice: Why America Should Share Powerare influential exemplars of the China variant,but examples can be found with respect toRussia (Lucas 2009) and the challenges asso-ciated with a more general decline in Ameri-can centrality.

Liberal theorists of international politicsargue that the single-minded focus on poweroverlooks countervailing forces in world poli-tics that tend to moderate the behaviour ofrising powers. These include the long-run ten-dency towards more liberal if not fully demo-cratic rule, the growing role of internationalinstitutions and the constraining effects of eco-nomic interdependence. In this essay, I arguethat the standard arguments in the liberal canondo not necessarily offer the solace that theyonce did; there is an analytic case for liberalpessimism, and on three distinct grounds.

The first stems precisely from the findingsof the democratic peace literature. Althoughdemocracies may not fight one another, theworld is far from uniformly democratic; infact, the ‘third wave’ of democratisation thatbegan in the 1970s has peaked (Diamond2008; Kurlantzick 2013). The United Statesfaces challenges from an array of authoritarianand semi-authoritarian regimes that arecharacterised by lack of checks on leaders’foreign policy discretion, lack of transparency,political coalitions that are hostile towardsglobalisation and nationalist strategies oflegitimation. Nor should the findings of thedemocratic peace literature lead one to thinkthat democracy alone is a guarantor of foreignsupport for American and Western objectives.New democracies are also breeding groundsfor strongly nationalist tropes, some of themexplicitly rooted in resentment at Americanhegemony.

The second component of the liberal toolkitis institutionalist. Since the publication ofRobert Keohane’s (1984) After Hegemony:Cooperation and Discord in the World Politi-cal Economy, this strand of thinking has been

particularly influential in the Americanacademy. Responding to an earlier wave ofrealist pessimism about American standing inthe world, Keohane argued that internationalinstitutions could forestall the effects ofhegemonic decline by coordinating allies. Wecould enjoy the benefits of multilateralcooperation ‘after hegemony’. However, thisbenign view of the power of international insti-tutions was accompanied by a number ofcaveats about the limits of multilateralism,including collective action problems in theprovision of leadership, and the difficulty ofcoordinating large numbers and accommodat-ing diverse preferences. That global gover-nance is currently stressed is beyondchallenge. It is far from clear that new forums,such as the G20, will be agile or coherentenough to substitute for the gridlock nowvisible on a range of issues areas, from trade toclimate change.

A final source of liberal hopefulness is eco-nomic. This strand of thinking can be tracedfrom nineteenth-century British liberal anti-imperialists like Cobden and Bright, throughAngell and Schumpeter, to the present. Thecore argument is that capitalism is fundamen-tally pacific in nature because making moneyrequires a stable international order. Thisshould be even more true as economic interde-pendence becomes not only more substantialbut also more intricate, for example, encom-passing complex global production networksand supply chains. But this hope may be mis-guided as well. The problem is not only thatsome notable pariahs like North Korea arecontent with autarchy, or that others likeRussia, Iran and Venezuela can finesse therestraining effects of interdependence throughtheir power in commodity markets. Thegrowth of demand from emerging markets isalso creating patterns of South–South tradethat are outside the reach of the advancedindustrial core. Particularly nettlesome exam-ples include Russia’s relations with Syria andIran, and China’s support for North Korea.But the problem is broader, extending fromChina’s growing influence in Latin Americaand Africa, to Russia’s role in Central Asia,and Iran’s and Saudi Arabia’s ability to use oil

1. Were the title not portentous enough, it draws explicitlyon A.J.P. Taylor’s classic The Struggle for Mastery inEurope 1848–1918.

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money to finance the radical revival—bothShia and Sunni—in the Middle East and NorthAfrica.

The larger analytic point is that liberal-institutional theories of world politics—longassociated with hopeful and even idealisticprognoses for the post-Cold War era—in factcan be turned to more cautious and even pes-simistic conclusions. The evolution of theinternational order will be driven by thechoices of the United States and its allies, to besure. But much depends on political develop-ments in the emerging markets themselves,developments over which the United Statesand its allies exercise surprisingly limitedinfluence.

2. Sources of Liberal Pessimism I:A Democratic Peace?

The core tenets of the democratic peace argu-ments are so well known that they can berestated briefly (for example, Russet & Oneal2001). In one of the more empirically robustliteratures in international relations, it has beenshown that democracies are not only less likelyto fight one another—a probabilistic claim—but that there are surprisingly few cases ofwars between democracies in the entirety ofrecorded human history (Weart 1998). Twoimportant extensions of the model go beyondissues of peace and war, to the peaceful reso-lution of disputes and risks of civil conflict.When democracies do face conflicts, they aremore likely than other pairs of countries toresolve them through peaceful means; thedemocratic peace is not just a theory of war.Democracies are also less likely to experiencedebilitating domestic violence and civil con-flict, which have been the major source ofchallenges to international peace and securitysince the end of the Cold War.

However, it is also well known that thedemocratic peace argument has an underside.Democratic states are by no means immunefrom security competition and wars with non-democracies. If the prospects for peace are atleast partly a function of the scope of demo-cratic rule, where do we stand?

Unfortunately, the picture is increasinglyclouded. The Polity IV dataset provides auseful overview of global trends; Polity IVdivides regimes into three categories: outrightdemocracies, outright autocracies and interme-diate ‘anocracies’, regimes that have somelimited forms of political contestation and lib-erties but fall short of full democratic rule. AsFigure 1 shows, the post-war period saw asteady increase in the number of demo-cracies. But for the most part, the wave ofdecolonisation was associated not with anexpansion of democracy but of authoritarianrule. This development was aided and abettedby the competitive realist logic of the ColdWar, which produced acquiescence to authori-tarian regimes on geostrategic grounds.

In the mid-1970s, however, the number ofautocracies peaked as the so-called third waveof democratic transitions gained momentum.Particularly following the collapse of theSoviet Union and successful transitions inEastern Europe, the number of democraciesincreased dramatically and the number of out-right autocracies fell. Political liberalism wason the march.

Yet the early optimism about the prospectsfor democratisation has now dimmed some-what (Kurlantzick 2013); Figure 1 suggests atleast three reasons why the outlook is lesshopeful. The first is that while the number ofdemocracies did indeed rise and the number ofautocracies fell, the number of intermediateregimes also increased quite sharply and hasheld roughly constant. We are now learningthat ‘competitive authoritarianism’ (Levitsky& Way 2010) is not a transitional form butrather a distinctive type of political system thatis surprisingly durable. Second, and morerecently, the long democratic wave that beganin the 1970s and crested following the end ofthe Cold War has stalled and might even bereversing. Nor are the cases at risk politicallytrivial. Among the countries that have experi-enced full or partial retreat from democracy inthe post-Cold War era are Thailand, the Phil-ippines, Sri Lanka, Pakistan, Russia, Nigeria,Kenya and Venezuela.

Finally, the mirror of a plateauing numberof democracies and a steady share of

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intermediate regimes is that the decline in thenumber of autocracies may also have hit limits.Among the remaining autocracies, two typesare particularly troubling: those that haveproven most durable, and are thus less likely tofade away; and those in which authoritarianrule masks deep weaknesses, even statefailure, that are also not likely to reverse anytime soon. Among the first groups are domi-nant party systems, including China and NorthKorea, that have surprisingly strong institu-tional foundations, states with theocratic ele-ments such as Iran and Saudi Arabia, and aplethora of stable semi-authoritarian regimessuch as Russia. Among the latter are the peren-nially problematic failed states: Afghanistan,Yemen, the Central African Republic, andperhaps even larger more significant regionalpowers such as Pakistan, Iraq and Nigeria.

In sum, the advanced industrial states do notface a world in which the march of democracyis ineluctable. To the contrary, the politicalenvironment remains politically heteroge-neous, with a substantial number of authoritar-ian and semi-authoritarian regimes. Realistclaims to the contrary, the challenges toAmerican foreign policy arise not only from

rising major powers, but from medium-sizedand even small and declining authoritarianregimes.

What do we know about the sources of con-flict between democracies and authoritarianregimes? The answers are by no means one-sided. Democratic countries may bear respon-sibility because they believe that ‘regimechange’ of authoritarian systems would be intheir material interests. Alternatively, they maybelieve that intervention can turn aroundperennially fragile states. Partly as a result ofthese twin risks, both defensive realists (Walt2005) and liberal institutionalists (Ikenberry2002) place particular emphasis on the impor-tance of restraint in US foreign policy.

However, the risks of conflict betweendemocratic and authoritarian regimes are alsospawned by the foreign policies of autocrats.Jessica Weeks (2012) argues that personalistleaders and authoritarian regimes headed bymilitary leaders are particularly conflict-prone;the former because they are unchecked, thelatter because they bring military views of theworld to the table.

But the sources of bellicose behaviour arenot limited to the composition of ruling coali-

Figure 1 Global Trends in Regime Type, 1945–20110

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tions; as Solingen (1998) points out, strategiesof legitimation also matter.

Democratic and authoritarian rulers bothuse nationalist appeals to political effect. Butauthoritarian regimes may be particularlyprone to augment purely instrumental, mate-rial bases of legitimacy with nationalistappeals. China demonstrates clearly that theserisks are not simply a result of top-down strat-egies that can be turned on and off, but involvecomplex interactions among authoritarianleaders, mobilised publics and emergent civilsocieties that are imperfectly under statecontrol. Important research by Peter Gries(2004), Zheng Wang (2008), Susan Shirk(2007, 2010) and Jessica Weiss (2013) demon-strate how these political forces manifestthemselves in foreign policy.

Gries and Wang show that beginning in theearly 1990s, the Communist Party made a con-certed effort to refashion state ideologythrough a wide-ranging ‘Patriotic EducationCampaign’ targeting youth that included notonly curriculum reform but memorials andmedia campaigns as well. A curious feature ofthe new ideological turn was to focus not onChina’s more recent ascent, but on the ‘onehundred years of humiliation’ from the mid-1800s to the mid-1900s when China wasbullied, attacked and ultimately torn asunderby imperialist interventions. ‘RejuvenatingChina’ (zhengxing zhonghua) became a domi-nant political slogan during the Zhang Zeminera, but was defined in terms of resistance toforeign political influences rather than throughreference to the country’s material successes.These state efforts merged with an increasinglyaggressive commercial journalism that soldcopy based on nationalist appeals (Shirk 2010).

These new political forces ultimately posedilemmas for the leadership, including in theconduct of its foreign policy (Weiss 2013). Onthe one hand, the mobilisation of nationalistforces—including in the form of anti-foreignprotests—allows authoritarian regimes to sendcostly signals of resolve, and thus generates acommitment to stand firm in any given con-flict. On the other hand, such dynamics onlysend credible signals if they are genuine andplace the government or even regime at some

risk; as Weiss puts it, ‘rent a mobs’ are notcredible.Yet precisely because such nationalistprotest is risky for the regime, it of necessitycreates constraints on state behaviour that arepotentially destabilising, as conflicts over theSenkaku/Diaoyu Islands and the South ChinaSea demonstrate.

There are good theoretical reasons tobelieve that authoritarian regimes may be par-ticularly prone to nationalist appeals given theabsence of legitimation strategies involvingcitizen participation and representation. How-ever, in one of the more interesting and subtlechallenges to the democratic peace literature,Mansfield and Snyder (2005) suggest thatliberalising polities and even new democraciesmay also share these vulnerabilities; Russia,Pakistan and now Egypt are crucial cases inthis regard.

At the other end of the spectrum fromwell-institutionalised authoritarian and semi-authoritarian states are a plethora of failedstates. These are typically coded as authoritar-ian not because of strong central governmentinstitutions but because of the fragmentation ofauthority among competing centres of power,typically a weak central government, regionallybased warlords and/or rebel contenders. Thehumanitarian challenges of failed states werefirst noted in the 1990s (Helman & Ratner1992), and they continued to motivate interven-tions in the post-Cold War period in NorthernIraq, Somalia, the Balkans and East Timor.

But in the aftermath of 9/11, an altogetherdifferent set of concerns arose: that theseweakly governed environments were potentialsources of terrorism, other forms of violenceand asymmetric challenges to major powers.Systematic empirical work now suggests thatthese concerns are legitimate. For example,Piazza (2008)—drawing on a dataset mostlyfrom the 1990s—finds that failed states arestatistically more likely to host terrorist groupsthat commit transnational attacks, have theirnationals commit transnational attacks and arealso more likely to be targeted by transna-tional terrorists themselves. Choi (2010)finds that more robust rule of law dampensterrorism. Summarising recent research, EricaChenoweth (2013) extends the argument to

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the post-9/11 period and suggests that non-democratic governments are more likely toexperience terrorism.

These concerns, in turn, have fuelled inter-ventions that constituted long-running policychallenges for the Western states, most notablyin Iraq and Afghanistan; similar questions nowloom large with respect to Syria. As the demo-cratic peace literature predicts, democraciesdo not necessarily abstain from conflict withauthoritarian regimes. One source of thisfinding is clearly the propensity to intervene infailed states that are seen to pose securityexternalities, either in their neighbourhoods orthrough staging areas and safe havens for moreextensive terrorist networks targeting theadvanced industrial states.

The main points to be made here are simple.The end of the Cold War appeared to promisea gradual, but nonetheless steady, marchtowards greater democratisation. And indeed,progress has been substantial; among themiddle income countries in the G20, most aredemocratic (Korea, Indonesia, India, SouthAfrica, Turkey, Mexico, Brazil and Argentina)and only three authoritarian (China, Russiaand Saudi Arabia).

Nonetheless, the march of democracy hasslowed. Competitive authoritarianism hasrevealed itself as a more enduring form thanwe thought, and the remaining autocraciesmay be precisely the most durable ones. Con-flicts between democracies and autocraciesinvolve political dynamics on both sides, but anumber of features of these systems, includingthe greater weight of the military, high execu-tive discretion in the conduct of foreign affairsand the complex politics of nationalism, arelikely to pose ongoing foreign policy chal-lenges. Moreover, these challenges are notposed only by rising powers, as power transi-tion models presuppose. Rather, they can arisefrom countries with relatively limited butfocused capabilities—Iraq prior to the Ameri-can invasion, Iran and Syria prior to the civilwar—and even from countries, such as NorthKorea, that are declining.

The category of persistent authoritarianregimes encompasses not only the durable, butalso the highly fragile. Some of the more dif-

ficult foreign policy challenges of the post-Cold War period have centred not on risingpowers or even more institutionalised authori-tarian regimes, but precisely on weak states.Moreover, there is little evidence that the state-failure phenomenon is on the wane (ForeignPolicy 2012); indeed, the analysis of the per-sistence of authoritarian rule reveals that a sub-stantial share of these cases fall in the weak orfailed state category.

3. Sources of Liberal Pessimism II:Challenges to Multilateralism

The second component of the liberal modelof international relations is the promise ofinstitutionalised cooperation. If realists areinterested in the conditions that give rise toconflict, and particularly overt militarised con-flict, the liberal intellectual tradition placesgreater emphasis on prospects for cooperation.Not only do international institutions promisemutual gains in particular issues areas, butmembership is postulated to restrain andsocialise state behaviour more broadly; ceterisparibus, increased joint membership in inter-national institutions reduces the propensity foroutright conflict among the members (Russet& Oneal 2001).

Reducing the prospects for war is no meanfeat, and we should applaud it. But this maybe setting a low—if important—bar for whatinstitutions can achieve. Moreover, liberals arenot naïve about the conditions under whichcooperation arises. Although cooperationyields joint gains and the provision of interna-tional public goods—almost by definition—membership in international institutions alsoentails sovereignty costs, as countries areexpected to adjust policies in line withcommon objectives. An obvious postulatefollows: institutionalised cooperation is morelikely to occur among countries that havebroadly similar domestic structures and pref-erences to begin with; put differently, coopera-tion is endogenous.

We, therefore, need to ask what effect the riseof new powers will have on the ability of inter-national institutions to achieve cooperative out-comes. The challenges can be seen by looking

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both at global institutions and the prospects forregional cooperation. The short answer is thatthe rise of new powers poses substantial chal-lenges; relying on existing institutions to inte-grate and socialise new entrants into the statusquo may reflect wishful thinking.

To demonstrate the problem, we begin at theglobal level with a crude but nonetheless inter-esting proxy: the extent to which BRICs havevoted with the United States in the UN GeneralAssembly over the post-war period.2 The theo-retical range for any country is from −1 (never

voting with the United States) to +1 (alwaysvoting with the United States). The results areshown in Figures 2–5. The patterns differacross the countries, but they suggest stronglythat shared democracy is hardly an antidote toconflict within international institutions.

In India, a nearly continuous democracy, wesee substantial volatility in the first half of thepost-war period, but with a mean score thatshows neither close alignment with nor oppo-sition to US positions in the General Assembly.However, we then see a steady decline startingin the late 1970s, followed by a more consis-tently oppositional stance towards the UnitedStates from the 1980s forward. In the case ofBrazil, affinity scores are reasonably high at the

2. A critical limitation of this measure is UN voting takesplace across a shifting mélange of issues and may not behighly consequential; nonetheless, the measure is an inter-esting indicator of divergent policy preferences.

Figures 2–5 Voting with the United States: The BRICs’ UN General Assembly Affinity Scores

India's UN GA Voting Affinity with the UnitedStates: 5-Year Average

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Brazil's UN GA Voting Affinity with the UnitedStates: 5-Year Average

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outset of the post-war period, but fall steadilyduring the military dictatorship (1964–1985).Following democratisation they initially rise,but then retreat again starting in the late 1990s.This shift reflects in part the country’s—andthe region’s—shift to the left during the firstdecade of the twenty-first century.

Russia also exhibits interesting dynamicsassociated with democratisation and the retreatfrom it. During the Cold War period, affinityscores were low, if volatile. Following thedemocratic transition, Russia showed greateraffinity for the United States, but disaffectionfollowed during the long Putin–Medvedev–Putin era. Chinese affinity scores show greater

consistency over time: they are low from thetime China enters the world body, and theyremain low to this day.

If global institutions face constraints asso-ciated with large numbers and highly diver-gent preferences, what about the possibilitythat regional institutions might prove moretractable? Table 1 provides a comparativeanalysis of Europe with two regions in whichthe United States has shown an interest infostering multilateral institutions: the AsiaPacific and the Western Hemisphere. TheAsia Pacific is defined in two alternate ways:by membership in the East Asia Summit—atrans-Pacific outgrowth of the Association of

Figures 2–5 Continued.

Russia's UN GA Voting Affinity with the UnitedStates: 5-Year Average

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China's UN GA Voting Affinity with the UnitedStates: 3-Year Average

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Note: Values between −1.0 and 1.0, with 1.0 = perfect voting affinity.

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Southeast Asian Nation process—and bymembership in Asia-Pacific Economic Coop-eration (APEC), which includes not onlyAsian and North American countries but ahandful of Latin American ones as well. TheWestern Hemisphere is defined as the coun-tries of North, Central and South America,omitting for the purpose of the exercise thesmaller Caribbean countries. The table com-pares the Europe of the EU with the twoAsian and Western Hemisphere groupingsusing indicators designed to capture levels ofeconomic and political development, eco-nomic policy, and international alignments.The table reports mean values on the indica-tors and their standard deviation as an indi-cator of heterogeneity.

The table suggests strongly why the Euro-pean experience of a tightly integrated securityand economic community—despite its currentstresses—is unlikely to be reproduced else-where. Europe is very much richer on averagethan the Asian and Western Hemispheregroupings, although the incorporation of theSouthern and Eastern European countries hasresulted in a more economically diverse unionencompassing advanced and middle incomecountries. However, the differences betweendeveloped and developing countries are evenmore evident in the Western Hemisphere andthe two Asia-Pacific groupings. If we look atdomestic political structures—the topic ofthe previous section—we see evidence thatEurope rests on a solid democratic foundation.The EU is made up entirely of democracies;indeed, it is a prerequisite for membership.Latin America has become more democratic,but political heterogeneity in the Asia Pacificremains substantial. APEC has a mean scoreon regime type that is just below the standardthreshold for democratic rule (6 on the Polityscale from −10 to +10), but the standard devia-tion of regime type in APEC is roughly equalto the mean. For the East Asia Summit group-ing, average democracy scores are lower andthe standard deviation is even higher.

These structural differences are mirrored inmore direct measures of policy preferences thatare likely to be germane for understanding theprospects for cooperation in these two regions.

An aggregate measure of ‘economic freedom’constructed by the Heritage Foundation andWall Street Journal has a strong libertarianfoundation, capturing property rights, freedomof movement for labour, capital and goods—including trade and investment—as well asmeasures of the fiscal burden and price stability.Surprisingly, the mean value of this indicator(although not the standard deviation) for thepan-Pacific APEC grouping is not that muchdifferent than Europe, where larger govern-ments and labour market policies depressscores.

However, when we isolate two dimen-sions of the index dealing with economicopenness—trade and investment freedom—wesee that Europe has a much higher mean scoreand with much lower variance than the Asianand Western Hemisphere groupings. Althougheconomic reforms have dramatically shiftedthe political economy of the Asia Pacific andLatin America over the last several decades,differences in both level of development andopenness to foreign trade and investment placewell-known limits on the ability to reachoverarching economic agreements; Americanambitions to construct either a Free TradeAreas of the Asia Pacific or a Free Trade Areaof the Americas remain distant prospects.

Finally, these differences extend to the highpolitical level as can be seen by revisiting theUN General Assembly affinity scores. Trans-Atlantic affinities are visible in the fact thatEuropeans vote more consistently with theUnited States—although hardly in lockstep—than the Asian or Latin American groupings. Inboth the Asia Pacific and Latin America,however, we see a reprise of the findings withrespect to the BRICs: the affinity score withthe United States is on average negative,although with high variance.

What do these findings suggest about theprospects for multilateral cooperation lookingforward? A first point to make centres on theproblem of large numbers. The dispersion ofpower in the system has not only been associ-ated with the rise of new poles of power but amore general growth in the membership of anumber of core international institutions. Theinclusion of developing countries has obvious

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advantages; for example, the Uruguay Roundand the founding of the World Trade Organiza-tion constituted the broadest multilateral tradeagreement in history, with developing countriesplaying a crucial role. Recent negotiations overthe allocation of quota in the InternationalMonetary Fund (IMF) have shown a willing-ness to accommodate rising powers at least atthe margin. In return, a number of these coun-tries—including China, Russia, Brazil, Koreaand India—reciprocated by making importantmaterial contributions to the IMF’s resources.

However, the fact that the Doha Round andnegotiations on climate change have recentlystalled is not coincidental to the entry of thesenew players; it reflects both the downside oflarge memberships and the increasing difficultyof accommodating highly divergent prefer-ences in global negotiations. As David Victor(2011) has shown convincingly with respect toclimate change, the presumption that countrieswith highly diverse regulatory regimes couldnegotiate and enforce caps on greenhousegas emissions is increasingly in doubt. Theoutcome of the Copenhagen summit alsoshowed in dramatic form that these differencesare not easily finessed through small groupmeetings among the major actors if they do notsee eye to eye on fundamentals. These difficul-ties are reproduced at the regional level. In boththe Western Hemisphere, and particularly inAsia, a complex web of overlapping regionalinstitutions have emerged (Haggard 2013).Nonetheless, the large numbers and divergentpreferences in these bodies have pushed them inthe direction of lowest-common-denominatoragreements.

We should not be alarmist; these difficultiesdo not presage the collapse of multilateralinstitutions, which continue to demonstratetheir utility and durability. But politics withinthese institutions will become more difficult.As the major multilateral institutions becomemore diverse, the deepening of cooperation islikely to occur among smaller groups of like-minded countries rather than through globalagreements or broad regional ones incorporat-ing many members. This fragmentation, inturn, raises additional challenges of institu-tional design. How do we reconcile diverse

trade agreements? How do incentives to par-ticipate in global agreements—including, forexample, environmental ones—shift as majorplayers withdraw into more narrow ones andthe gains from participation fall as a result?Can we assume that alternative forms oforganisation on the part of rising powers—some of which explicitly exclude the UnitedStates—will necessarily redound to Americanbenefit? Before considering those questions, itis important to consider more briefly the thirdleg of the liberal-institutionalist tripod: thepromise of interdependence.

4. Sources of Liberal Pessimism III:New Sources of Demand, NewSources of Influence

The reasons for the commercial peace beganwith the simple observation of the opportunitycosts of war. At a deeper, sociological level, theimportant work of Etel Solingen (1998) showedthat interdependence moderates foreign policybehaviour because it is ultimately rooted inunderlying political coalitions with stakesin existing political–economic relationships.Whatever the underlying source of the finding,most—although not all (Barbieri 1996)—em-pirical studies have found an inverse relation-ship between interdependence and overtconflict (Russet & Oneal 2001).

Just like arguments about the demo-cratic peace and the benefits of multila-teral institutions, these economic accountsneed to be approached with appropriatescepticism. A quite different strand of work oneconomic interdependence—beginning withHirschman’s classic statement—started withthe premise that it was a potential source ofpower and dependence (Hirschman 1980).Indeed, strategies of engagement—drawingemerging powers into networks of interdepen-dence—seemed to assume myopia on the partof the target: that it would not notice that greaterinterdependence might expose the country togreater vulnerability over time. Yet, even ifeconomic ties are not directly manipulated topolitical ends, we have to ask what global pat-terns of economic integration look like. Who isintegrating with whom and with what effect?

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Figure 6 looks at patterns of final importdemand since the end of the Cold War. Themajor trends to be observed are in the mutuallyexclusive high income and middle and lowincome categories; these are subsequentlydisaggregated into the EU (treated as a group),the United States and Japan—the three majorlegs of the advanced industrial state triad—andthe BRICs, clearly dominated by China.Several patterns emerge. First, the advancedindustrial states still account for a substantialshare of total demand; moreover, this would nodoubt rise if we considered only final demand,as some share of imports into the middle andlow income countries is in the form of parts andcomponents destined for re-export. Nonethe-less, the share of low and middle income coun-tries in final demand has risen by 10 percentagepoints in the last decade, reflecting in partgrowing South–South as well as North–Southtrade.

The political implications of these patternsare by no means straightforward. Developingcountries—including China—are still heavilydependent on advanced industrial statemarkets as the engine of their growth. More-over, as they are integrated more tightly into

international production networks, asset speci-ficity rises and dependence on final demandbecomes more not less important. Financialties also pose constraints. Although there isongoing debate about the leverage that China’ssurpluses might pose to the United States, theconsensus is that China is as constrained by thesheer magnitude of its Treasury holdings as theUnited States is. There is precious little waythat China could manipulate or even extricateitself from its co-dependence on US financialmarkets without catastrophic losses of its own(Drezner 2009). As Edward Steinfeld (2010)puts it, China—and emerging markets moregenerally—are ‘playing our game’.

However, just as China might be constrainedwith respect to its broader dependence on theUnited States and advanced industrial states,quite similar arguments have surfaced aroundthe tremendous pull exerted by the Chinamarket in its regional domain. We cannothave the argument both ways: we cannot claimthat China is ultimately constrained by its tieswith the United States while simultaneouslyneglecting the way in which growing interde-pendence with China may have similar effectson the foreign policies of smaller countries.

Figure 6 Country and Regional Shares of World Imports

0%

10%

20%

30%

40%

50%

60%

70%

80%

High income

BRICs

European Union

Low and middle income

Japan

United States

Source: Word Bank Development Indicators, IMF DOTS.

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Growing intra-Asian integration and a newcentre of economic gravity in China couldproduce the dreaded bandwagoning that real-ists so fear, as weaker, dependent trading part-ners accommodate not only Chinese economicbut also strategic interests. Such developmentscould even culminate in a regional economyand institutions from which the United Statesand other countries outside the region wouldbe excluded altogether.

Yet, even if these more pessimistic assump-tions do not materialise, deepening economicintegration with China and other emergingmarkets could nonetheless provide the basisfor three unwanted developments, the first ofwhich goes to domestic political economyquestions. Western firms with strong stakes inemerging markets also become vested interestsin not rocking the political boat, including withrespect to policies that may be designed tocheck or restrain the military and other capa-bilities of rising powers. The most obviousexample of these dynamics is in the politics ofexport controls on China, but the issue can bereplicated in any emerging market where firmshave stakes that may not comport with thestrategic interests of their home governments.

The growing weight of emerging marketsalso complicates diplomacy by reducing lever-age. The ability to coordinate sanctions oncountries such as North Korea, Iran and Syriaconstitutes an example of the dilemma. AsNorth Korea has been sanctioned by theUnited States, Japan and South Korea, thepattern of its trade has shifted ineluctablytowards China. This shift gives China greaterleverage in theory, but it has to date chosen notto exercise it, in effect enabling North Koreanbelligerence. Similar patterns are in play withRussian support for Iran and Syria.

In sum, arguments for the commercial peaceare highly plausible, but they constitute a kindof two-edged sword. On the one hand, theadvanced industrial states do remain a substan-tial, but declining source of final demand in theworld economy. Although South–South tradehas grown, the emerging markets still dependheavily on a world economy dominated by theNorth. Yet, at the same time, it is undeniablethat a shift in patterns of final demand is taking

place, and new lines of commercial influenceare developing among emerging markets.These commercial ties not only provide thefoundation for influence, but they weaken thecapacity of the advanced industrial states tosanction, constrain or even engage adversariesoperating in ‘parallel universes’ of interna-tional trade. These problems of influence areparticularly visible in states that largelyeschew interdependence with the worldeconomy or enjoy the immunities granted byendowments of valued natural resources:North Korea, Iran, Syria and Venezuelaprovide examples from the headlines, but theyby no means exhaust the list.

5. Conclusions: Structure and the Limitsto Strategy

Post-Cold War triumphalism has given way toa more sober view of the foreign policy chal-lenges associated with a more multipolarworld characterised by rising middle incomecountries. Realists argue that it is impossible todivine intentions, that intentions can change,and that the prudent policy is to balanceagainst rising power rather than to accommo-date it. In this view of the world, serious con-flicts of interest are unavoidable, and neitherinternational institutions nor economic inter-dependence provide much solace.

Against these arguments, liberals have coun-tered that clever strategy can prolong the PaxAmericana—the world shaped by the UnitedStates and its European and Asian allies—per-haps into the indefinite future. Internationalinstitutions provide one tool for incorporatingand socialising rising actors; indeed, they mighteven be convinced to share the burdens of pro-viding public goods through collective leader-ship. Moreover, the collapse of state socialismhas left few ideological alternatives to themarket. Try as they might, the successfulemerging markets have little choice but toengage in the world economy.

I have argued that while liberal theories ofinternational relations are certainly plausible,the liberal canon by no means drives towardsa sanguine view of the current internationalorder. There are at least three sources of liberal

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caution if not outright pessimism. The first andmost fundamental has to do with the nature ofdomestic politics in the developing world.There is ample evidence that democracies posefewer risks than authoritarian regimes, and as aresult there are fewer risks in accommodatingthem; US accommodation of Indian nuclearambitions provides a virtual textbook case ofhow domestic political institutions influencedgrand strategy. The problem is that a numberof emerging powers—most notably China andRussia—are not democratic. Nor are risingautocracies the only source of the foreignpolicy challenges the United States and itsallies face; indeed, some of our worst policyheadaches emanate not from rising powers butfrom static or even declining autocracies thatnonetheless appear politically stable: Iran andNorth Korea are examples. In addition to theseproblems, even larger challenges have beenposed by interventions in failed states thatappeared to pose asymmetric threats but endedup as conventional quagmires.

Cutting across regime type is the problem ofconflicts that arise out of nationalist strategiesof legitimation. These strategies have emergedin both transitional democracies and inauthoritarian regimes, fearful that instrumentalappeals will ultimately be used against them.However, just as authoritarian leaders are con-cerned about delivering on material promises,so can they be pinned down by publics overnationalist promises as well.

Second, the political payoffs from institu-tions should not be oversold either. Institutionsfacilitate cooperation, but as social scientistshave noted, there is selection into internationalinstitutions; its fine to say that cooperation isgood, but the conditions for effective coopera-tion are bounded. Emerging markets bring quitedifferent domestic structures, institutions andpreferences to the table, all of which complicatebargaining over new rules and enforcement ofexisting ones. The politics of international insti-tutions have become more contentious, with thelargest risk being not collapse but simply dead-lock; this risk is most evident in the areas oftrade and climate change.

Finally, interdependence offers an importantsource of moderation, particularly as the divi-

sion of labour becomes more intricate throughthe growth of international production net-works. But as with our discussion of democ-racy, many of our adversaries are weaklyintegrated into world markets or are inte-grated with countries—including the emergingmarkets—that do not share our policy preoc-cupations. Others are capable of finessingthe constraints of interdependence on policythrough their power in particular commoditymarkets; it is perhaps not coincidental that anumber of our most thorny policy problemsarise from oil exporters, including not only theusual suspects—Russia, Venezuela and Iran—but Saudi Arabia as well.

The policy implications of this cautionarytale are by no means straightforward, but itmay nonetheless support a liberal foreignpolicy agenda. First, we need to worry lessabout balancing power and more about a diplo-macy that will help shape domestic politicalchange in a more open and less nationalisticdirection. As the United States withdraws fromIraq and Afghanistan, it hopefully walks awaywith some painful lessons about the risks ofregime change in countries with few of theprerequisites for robust democratic rule. Butin those countries where endogenous pro-cesses of democratisation are at work—however messy—we should be aggressivelysupporting them; the Middle East remains thecentral theatre in this regard. With respect tomore durable authoritarian regimes, the find-ings here suggest that the greatest risk of con-tainment strategies is not in the short-run spiralresponses they may generate. The greatestdanger of standing firm may lie in shaping thedomestic political arena in ways that areadverse to our long-term interests, particularlyin generating nationalist enmity.

With respect to multilateral cooperation, astrategy of engagement is certainly better thanthe costly unilateral posture that the UnitedStates struck in the wake of 9/11. But we needto be modest about what can be achievedthrough broad multilateral ventures; the era ofthe grand bargain, such as achieved in theUruguay Round trade negotiations or held outas a promise with respect to climate change,may be over. As a result, it will be imperative

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to adjust expectations of what can be achievedthrough broad groupings, such as the G20 andthe East Asia Summit, and look to smallergroupings of like-minded states that can gen-erate more demonstrable gains from coopera-tion. The Trans-Pacific Partnership will bea critical test of the ‘cascade’ theory ofinstitutionalisation, under which membershipin high-yielding agreements serves to attractnew members.

Finally, continued economic absorption ofnew entrants probably poses the greatestpolicy challenge looking forward. The moder-ating gains from greater economic integrationare real but so are the costs. After see-sawingfor several decades, evidence once againappears to be mounting that the economicintegration of newcomers, and particularlyChina, can in fact have deleterious effects onemployment and wages in the advanced indus-trial states. As on so many other fronts, theultimate liberal warning is that domestic poli-tics and political economy in the UnitedStates—the capacity to resolve fiscal fights,invest in needed public goods, includinghuman capital and return to robust growth—will be a more important determinant ofinternational politics than grand strategy astypically conceived.

July 2013.

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