Saying Good Bye to Dubai; Bidding Adieu to Globalization?

Philip Bobbitt's The Shield of Achilles: War, Peace, and the Course of History (Alfred A. Knopf) received a few glowing reviews when it was published in early 2002 but did not get much attention beyond the confines of think-tanks and academia.

Perhaps the book was too heavy for the broader readership (well, with more than 1,000 pages, it certainly was) and it is quite possible that in the aftermath of the Sept. 11, 2001 terrorist attacks on New York and Washington, not a lot of people were interested in reading a Big Picture analysis on the future of globalization.

But, in fact, the scenarios about the prospects of globalization drawn up by Bobbitt were – and are – very relevant to any discussion of the post-9/11 global reality and the campaign against terrorism. If anything, as the controversy over the sale of US port operations to an Arab-owned company has demonstrated, the kind of American nationalist fury that exploded after 9/11 and the ensuing Afghanistan and Iraq wars that have helped ignite Arab and Muslim rage and stir up anti-American sentiment worldwide could become a volatile political mix, and together with more economic nationalist pressure in Europe and the coming to power of left-wing governments in Latin American could end up blowing up the open global economic system, with its emphasis on the free flow of products, investments and people.

Or to put it differently, rising sense of nationalism that manifests itself in antagonism to the "other" – Arab companies in the United States, American companies in Latin America, Arab immigrants in Europe, Latin immigrants in the United States – are likely to provide momentum to the forces of economic nationalism and prove to be the most serious challenge to the idea of globalization.

In his book, Bobbitt sketches the outlines of three possible worlds that could be brought into being by the choices that nation-states, and in particular the global hegemon and other leading powers, make in response to the political, economic and cultural pressures that globalization produces:

First, there is the world of The Meadow that is a society of states in which entrepreneurial "market-state" – replacing the archaic nation-state – has become predominant. In this world, success comes to those who exploit the fast-moving opportunities brought about by high technology and the global market which transcends the borders of the state. The United States, the political-military and economic hegemon becomes the locomotive the drives this global transformation by providing the global "public goods" that are necessary in order to maintain the open system, including by forming coalitions aimed at containing military aggressors and leading the efforts to liberalize trade and investment.

Then there is the world of The Park which reflects an international society in which the values and attitudes of the managerial market-state have prevailed and government plays a far larger role in defining the common interest and using the political power of government to assert that interest. Political and economic interest groups play a crucial role in determining policy outcomes in Washington (and other world capitals). The global economy is being grouped in competing regional markets: a U.S.-led hemispheric bloc; the European Union; an East-Asian system dominated by China.

Finally, there is The Garden in which government's role is less a regulatory and more a central-supportive one, providing long-range strategic planning based on the perceived good of the national society where a sense of common identity based on ethnicity, religion and race overrides individual assertiveness and the power of interest groups. The states here have become more and more protectionist, ethnocentric, and more protective of their respective cultures, creating the condition in which international conflicts, ranging from trade war to military confrontations become more likely.

Bobbitt had written the book during the height of the roaring 1990s, during which political and economic elites, the Davos Men and Women were quite confident that globalization – dramatized by the growing flow of trade and investment across borders, the integration of the former Soviet bloc and China, a booming Wall Street and the birth of the Internet – would indeed create a global political, economic and cultural environment in which would resemble The Meadow. Those were the years when pundits were speculating about the Decline of the State and the rise of the Sovereign Individual and proposing that in a world of corporate mergers, rising immigration, and peaceful coexistence, the answer to "Who is Us?" was not as simple as it used to be.

When the book was published against the backdrop of the bursting of the high-tech bubble, a bearish stock market and 9/11, things were starting to look a bit different. "Us" was suddenly perceived as a national community being under attack by pre-globalization (pre-modern, some would argue) religious fanatics. We were discovering that the Dow would not rise forever to the stratosphere and that the Business Cycle was still alive and well. In fact, Bobbitt warned in the book that a failure by the United States to lead the campaign against terrorism through a multilateral front combined with protectionist pressures in the US would make it more likely that the international system would take the form of The Park and encourage the creation of regional security and economic blocs. In retrospect, he seems to have been too optimistic.

Public Pressure

Indeed, it is looking more and more that many of the elements in The Garden scenario are becoming dominant in the evolving international system as the leaders of the global hegemon are beginning to respond to pressure from a public that is less willing to pay the costs of providing those "public goods" that Bobbitt argued were needed in order to maintain the stability of a free and open global economy and to counter the challenges from nationalism.

Bobbitt introduces us to The Garden by imagining the results of the future 2008 US elections, which led the new leaders in Congress and the White House to conclude that the governance of the preceding years, both Democratic and Republican, has been misguided. A slow recovery from an economic recession encouraged protectionist barriers to trade; these further constrained the global recovery and invited foreign criticism that Americans found irksome.

Moreover, "American preeminence in many arenas was perceived abroad as hegemony and contributed to a US/European estrangement. Traditional ethnocentrism in Asia coupled with mercantile trade policies intensified the sense of mutual alienation that arose between Americans and Asians."

And "in a stunning repudiation of previous policy, a public consensus in the United States emerged that the multilateral interventions in the previous twelve years had been a mistake," creating pressures for US disengagement from the Middle East and other parts of the world, with the Muslim world being the first "to turn its back on the West and the ethos of consumerism, secularism and libertarianism that was the engine of economic growth of this era," leading to increasing suspicions and tensions – and eventually to military confrontations – between the Muslim world and the West.

Bobbitt's book was published before the US invasion of Iraq and even he could not have predicted the disastrous outcome of that military adventure and the way it would affect America's global status, its ties with its European allies and its relationship with the Muslim world.

It is also very doubtful that even Bobbitt's creative imagination would have led him to propose the following scenario: US Congress, reflecting the rising fears and prejudices of their constituents, succeeded in blocking a Dubai-owned company from taking over the management of terminals at six US ports. Considering that Dubai is an model of American-style capitalism in the Middle East and a reliable trade and military partner of the US, Bobbitt would have found it difficult to conceive a scenario in which a company from Dubai would become the target of a nationalist campaign that in the name of national security was setting to close the American market to foreign trade and investment. Such a development would not have made sense under the conditions prevailing in The Meadow or even The Park.

According the Washington Post, the successful effort by US Congress, which was backed by close to 80 per cent of the American public, to force Dubai Ports World to abandon its attempt to take over terminal operations in the US (after buying the British company that operates terminal in five US ports) suggested that "the global message (America) sends – and in particular, to friendly Arab and other Muslim countries – is that we don't really need your money, and in this post-9/11 world we're going to be very picky about whom we do business with."

Other observers would probably dispute such dramatic interpretation of the Dubai debacle, pointing out that if a rival Singaporean bid for the British-based Peninsular & Oriental Steam would have taken control over the US ports, the issue would not have aroused any public and Congressional attention. In fact, foreign companies, including those from Singapore, Taiwan, South Korea and Denmark, are managing the majority of the terminals at US ports, especially the big ones such at Los Angeles and Long Beach in California and New York and New Jersey, and much of the US merchant marine fleet was bought by foreigners, including by Singapore's Neptune Orient Line.

Those who argue that the Dubai flap is not a reflection of a growing economic nationalist sentiment are proposing that fears over Arab terrorism were translated into concerns over the possibility of US strategic assets being owned by Arab companies.

But the fact of the matter is that Americans were sending the same message last year when a company controlled by the Chinese government was bashed and hounded out of town after trying to bid on an American oil firm, UNOCAL. Like in the case of Dubai, a coalition of economic nationalists and security hawks argued that China should be considered as a threat to US national interests and should not be allowed to take over so-called strategic assets such as American energy companies.

'Strategic Asset' Test

And in fact, there is growing pressure on Capitol Hill to adopt legislation that would make it even more difficult, if not impossible, for foreign firms – not only those owned by Arab and Chinese interests – to take over a US firm with national security implications. Hence a Congressional committee has already voted to block the implementation of a new "open skies" accord that would permit foreign investors to own more than 25 per cent of the voting stock of a US airline, and there is now more talk in Washington to apply the "strategic asset" test to other business sectors.

Economists would argue that with the US trade deficit reaching a record US$724 billion, the slowing down of foreign investment in the US economy could lead to higher interest rates and weaken the US dollar. But the fact is that the anti-Dubai campaign had to do more with politics and less with economics. The revolt by both Republican and Democratic lawmakers against the Bush administration's decision to give a green light to the Dubai deal exposed the rising anxiety among most Americans about their country's place in the world. It doesn’t make a lot of sense to the Davos Men and Women who dominate The Meadow or to the government and business technocrats in charge of The Park. But in The Garden, it’s The Political Man – a master in exploiting these fears and anxieties – and not the Economic Man who calls the shots.

If Chinese and Arab companies are helping produce economic nationalist pressures in this country, similar trends can be seen in Europe where a multi-billion dollar bid by Mittal Steel, the global company headed by Indian entrepreneur Lakshmi Mittal has been greeted with hostility in France, Luxembourg and Spain. At the same time, the French government has designated 11 "sensitive" economic sectors to "protect" against foreign bids, after locking out an Italian company from its energy market, while in Latin America, the backlash against American-led "neo-liberalism" has manifested itself in the election of leftist governments in Brazil and Argentina, and the growing power of movements representing the indigenous populations in Bolivia and Peru.

Historians would probably be intrigued by the fact that the first White House occupant to hold an MBA ended up making it possible for the Political Man to make a comeback. But it was President Bush’s post-9/11 nationalist agenda, leading to the mess in Iraq and to bloody quagmire in Mesopotamia that is responsible for the current angry mood among Americans: They watch on television every day the way US designs to bring democracy to the Middle East produce anti-American terrorism and the rising costs on terms of US lives and money: US soldiers are killed, its embassies are attacked and its flags are burned and spit on.

They blame the erosion in US industrial base on the "outsourcing" of jobs to places like China and India. And they are angry over the continuing flood of illegal immigrants from Mexico and Central America. In a way, the controversy over the US ports – where trade is being conducted and where immigrants disembark – has become a symbol of this angry public sentiment that is directed against the outside world and is putting pressure on Washington to reexamine US engagement with the world.

And it is only an opening shot in what could become a very nasty mid-term election campaign during which those wishing to get elected (or reelected) could be expected to bash China and India who are now replacing the United States as the engines of world economic growth of "stealing" American jobs, to call for taking more drastic steps to restrict immigration and to demand that American troops withdraw from Iraq. If the Democrats gain control of Congress in 2004, one could envision how Capitol Hill, in the form of Congressional committees would become a forum in which the Bush Administration’s Iraq fiasco would be investigated in the next two years and ignite even more public pressure to reevaluate U.S. foreign policy.

Welcome to Bobbitt's Garden.