The US Briefing

THE EUROPEAN

FUTURES

OBSERVATORY

The US Briefing

Background

To many observers, the pivotal point in America’s recent past was the fall of the Berlin Wall in 1989. This event signified the end of the Cold War, which resulted in the US becoming the sole Superpower on the world stage. Whilst the allies of the US, particularly those in Europe, managed to reap the benefits of the “Peace Dividend”, the US found itself as the guarantor of world peace and was less able to reap those dividends.

The end of the Cold War coincided with a marked downturn in the world economy. As a response to this recession, the world monetary authorities pumped large volumes of liquidity into the world economy. This resulted in growing economic prosperity throughout the 1990s. In the US, the boom was led by growth in consumer spending, which not only stimulated domestic business, but also sucked in foreign imports.

By the time of the stock market crash in 2001, the US had accumulated sufficient overseas indebtedness to become a net debtor nation. The problem of the “Twin Deficits” appeared to be quite intractable. On the one hand the desire to maintain military spending, to maintain governmental educational and welfare programmes, to avoid tax increases, and to maintain household consumption, led to the need to borrow ever increasing amounts. On the other hand, with the Dollar as the primary world reserve currency, with East Asian trade surpluses with the US, and with the desire of the East Asian nations to peg their currencies to the Dollar, there was no shortage of funds to be lent to the US borrowers. By 2005, the problem of the Twin Deficits was seen by some as the most pressing issue facing the US.

However, it was not the only pressing issue. The US economy remains reliant upon oil imports from the Middle East. This continues to dominate US Foreign Policy. By 2005, as world demand for oil started to outgrow the world supply of oil, the long term price of oil started to rise to reflect the scarcity value of that oil. This made more pressing the policy of spreading democracy throughout the Arab World and gave a sharper point to the War On Terror.

It also created a dichotomy within the American public. On the one hand, standards of living depended upon an open economy freely trading with other partners around the globe. On the other hand, the post 9-11 environment gave rise to a bunker mentality, part of which was a rising tide of economic protectionism. One consequence of this policy was the flight of human capital from the US economy as foreign students came to feel less welcome in the US. Whilst some protectionist sentiment was directed at the off-shoring of software jobs to India, the bulk of the sentiment was directed towards the off-shoring of manufacturing jobs to China, who started to capture the imagination of the American public as a future superpower adversary.

By 2005, the US was facing a number of key challenges:

1. To transform the US economy from one of consumption to one of production.

2. To recapitalise the educational system and technology base.

3. To achieve energy security.

4. To use global forces to strengthen existing alliances.

5. To destroy terrorist networks and establish new security structures.

6. To promote economic opportunity and liberal democracy.

The Imperial Mission

In recent years, there has been a diminution in the authority of the US within the international community. It is your task, by 2025, to set in motion policies that will restore that authority. Your primary task is to ensure the continued vibrance of the American economy, which underpins domestic prosperity and which underwrites the ability of the US to act on the global stage.

By 2025, you will have:

1. Secured the sources of foreign oil imports for the American economy.

2. Contained the economic threat from the developing nations in East Asia.

3. Maintained the preponderance of American military might.

4. Ensured that American interests are predominant in international institutions.

5. Promoted the American Dream as a global panacea.

The Republican Mission

By 2025, you will have:

1. Lessened the dependence of the American economy on foreign oil imports.

2. Lessened the dependence of the American economy on foreign sources of capital.

3. Integrated the US as part of a global collective effort to maintain peace and security.

4. Promoted American interests as part of a joint effort to foster prosperity.

5. Spread economic opportunity and liberal democracy throughout the world.

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