maintained large numbers of troops in Europe and was indispensable for vital systems like satellite communication, missile defense, and transport aircraft.
Map 2.1 America’s world: Global leadership of the United States in the 1990s
There were certainly tensions between Washington and Western Europe. The United States believed that European countries did not spend enough on the alliance and came to see Europe as an economic competitor. The European Economic Community (EEC) steadily expanded. In 1987, the European Single Act gave more responsibilities to its common institutions and aimed to create an open internal market. Yet, the United States itself was a co-founder of the European project, considering it key to checking the Soviets after World War II.5 More recently, European enlargement proved useful to prevent weak countries, like Greece, from drifting toward Moscow, and to give others, like Turkey, the prospect of stronger ties with the West. If Washington lamented that Europe did not spend enough on the military alliance, Europe became important as the main external buyer of American government debt. There were rows between the two sides of the Atlantic, but these remained family rows.
The situation was similar in East Asia. Here, Washington’s first line of defense consisted of Japan, South Korea, Taiwan, the Philippines, Australia, New Zealand, Singapore, and Thailand. They curbed the Eurasian communist powers like a line of maritime strongholds. In 1989, these Asian partners represented three quarters of the region’s economic output. The United States had over 100,000 troops in the area. It possessed military facilities in South Korea, Japan, and the Philippines. From there, its warships and aircraft patrolled the area. Relations with these countries could be tense. Trade frictions with Japan were recurrent and the Japanese abhorred American military presence. Like with Europe, Washington found that Tokyo could do more to bolster the security partnership. Japan, too, compensated American security commitments by buying American government bonds. The Plaza Accord of 1985 stipulated that Japan would not let its currency depreciate in a way that hurt American exports. Japan was helpful in providing support to other American partners, like Pakistan, or countries that could otherwise drift into the orbit of Beijing and Moscow, like Cambodia and Vietnam. Japan and the United States were the main contributors to the Asian Development Bank (ADB). In 1989, the web of partnerships was strengthened by the establishment of APEC, the forum for Asia Pacific Economic Cooperation.
Beyond these two bulwarks in Europe and East Asia, Washington radiated its influence through international organizations. It had a veto right in the world’s two most important financial institutions: the World Bank Group and the International Monetary Fund. These Bretton Woods institutions were founded in 1944 with the aim of stabilizing financial markets and preventing economic nationalism. The World Bank Group included important specialized affiliates, like a tribunal for international investment disputes and an investment guarantee agency. They all had their headquarters in Washington, DC. A third pillar in the Bretton Woods was foreseen, but did not materialize: the International Trade Organization. It was replaced in 1947 by the General Agreement on Tariffs and Trade, GATT. During the Cold War, the three served as a counterweight to economic initiatives of the Soviets and to advance the Washington Consensus. Coined in 1989, the Washington Consensus concerned the idea, creed almost, that growth required deregulation, low trade barriers, freely floating national currencies, commodity prices set by the international market, dismantlement of state-owned enterprises, and even the privatization of public services altogether.
Openness was the key to growth. Such structural adjustment toward openness became a condition for developing countries to receive aid. The Bretton Woods institutions proposed structural adjustment programs. Washington, together with Europe and Japan, also shaped the agenda of a raft of technical bodies that set global standards for digital communication, aerospace, and pharmaceutical products. If the Cold War still provided an alternative to the West, reality was now summarized as TINA: There is no alternative. This was, in fact, a triple TINA. There was no alternative for the West as a partner, no alternative for the West as an investor, and no alternative to neoliberal policy prescriptions of the West.
In the final years of the Cold War, Western economic influence spread without impediment and so did its military power. Western power projection capacity was unmatched. The Soviets too had long-range strike capacity, but this functioned more as a nuclear deterrence. Out of the world’s 25 aircraft carriers, 20 were owned by Western countries, 15 by the United States. The United States operated many more very large transport aircraft and had started building a formidable new fleet of destroyers and cruisers that plied the world’s oceans. In 1989, NATO defense spending surpassed that of all other countries in the world, the crumbling Soviet Union and China included. Operation Desert Storm, the rain of cruise missiles unleashed in Iraq in 1991, the strikes by stealth bombers, and the speed with which the whole expedition was executed, had just shown how obliterating Western hard power could be. This was a high-tech blitzkrieg.
So, with the Soviet Union in trouble, the whole world appeared to have become the periphery of the West. The center of the emerging new world order would be the United States. It accounted for one third of the global economy and was bordered by two countries that could not threaten it. The Atlantic and Pacific Oceans functioned like a moat around this fortress, guarded by aircraft carrier battle groups. On the other sides of the oceans lay a second line of defense, a line of allied countries that depended on American security and were also tied to the United States by means of commerce, capital, and culture. With Desert Storm, the United States and its partners demonstrated that they could strike overwhelmingly in even the remotest corner of the world. The predominance of organizations like the World Bank and multinationals as providers of capital to almost any country beyond the ring of allies in the Atlantic and the Pacific showed that there was no longer a genuine alternative to the West as an economic partner. Even if officials downplayed the term zealously, the United States arose as a global hegemon.
Economic fragility
The scene seemed set for a long age of Western dominance and the spreading of liberalism. For years, Soviet citizens were literally risking their lives to escape to the West. Its leaders in Moscow recognized failure. The ending of the Cold War kept the United States as the sole protagonist in the spotlight. But the protagonist was bedazzled. It was not even sure of its script. The situation was one of ambivalence: of unabashed strength on the one hand and, on the other hand, doubt that it would last. Rather than being celebrative, there was an odd feeling of gloom. Especially in the United Kingdom and the United States, the shortcomings of a decade of neoliberal reforms by the governments of Margaret Thatcher (1979–90) and Ronald Reagan (1981–9), marked by privatization and liberalization, had become undeniable. This neoliberalism was a reaction against high unemployment and high inflation in the 1970s. In the United States, only half of the population was satisfied with the state of the nation and confidence in democracy slowly retreated.6
The West struggled. It struggled with turbulence outside and disorientation inside. While Thatcher proclaimed the glory of global Britain, hundreds of thousands of citizens demonstrated in London against economic uncertainty and privatization. Confirming the dismal state of the economy, the pound nosedived. Far-right parties gained ground on the European continent. The United States experienced a mini stock market crash in 1989, encountered a bigger one in the autumn of 1990, and subsequently went into recession. Saddening stories appeared about poverty in cities like Detroit. “Most of the neighborhoods appear to be the victims of bombardment – houses burned and vacant, buildings crumbling, whole city blocks overrun with weeds and the carcasses of discarded automobiles,” a reporter put it. “Shopping streets are depressing avenues – banks converted into fundamentalist churches, party stores with bars and boards on their windows and, here and there, a barbecue joint or saloon.”7
Not only in Detroit was the infrastructure dilapidated. In New York, the iconic Williamsburg
