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4.5. Nation states controlled by multinationals

The end of the Cold War brought a renaissance to geopolitical thinking which coincides with the growth of our multinational enterprises. Since most of the world's States now share the same understanding of which underlying factors give them more power, focus has shifted to a single dominant issue, economic interest.

The Cold War was a time of unchanging maps. In less than two decades after it was over, national borders and borders of political and economic interests underwent a degree of change never previously seen in history. In just a few years borders in the Baltic region, Eastern Europe, Russia, the Caucasus, and Central Asia were all redrawn. What is unique is the speed with which these changes took place; with the USA, after its perceived victory, having been acting as an accelerator of history, by deciding to take a series of unilateral initiatives in the international arena.

Foreign affairs are best understood through geopolitical analysis. Geopolitics is about how nation states follow their own interests. We must look beyond the political rhetoric and the window dressing. Nation states follow their own self-interest even when that means damaging the economic position of other nations. We can make a number of observations on the shift in balance from the political to the economic arena.

The two systems, that of the nation state and the multinational enterprise, or public and private interests, work quite symbiotically in this respect. At the same time they are also both aware of what make them competitive together, through cooperation. The nation state has always known about the importance, to assure its own survival and power, of gathering knowledge about the outside world, and the multinationals are quickly learning the same lesson. Those States whose intelligence efforts were successful, such as Britain in the eighteenth and nineteenth centuries, the Netherlands in the seventeenth century, and Spain in the sixteenth century, were all economically prosperous. Earlier many city-states demonstrated similar capacities, for instance Venice, Genoa, Wurzburg, or Augsburg. Today, multinational enterprises are building the same capabilities. It is no longer the case that nation states consider exclusively macro factors and private-sector corporations consider exclusively micro factors. The multinationals are discovering that analysing a political situation may be as important for purposes of gaining a contract as gathering and analysing information about markets and competitors.

Multinationals have neither the time nor the inclination to go in for undercover activity. They have no patience with large bureaucratic structures. Besides, a multinational is willing and able to attract the best minds, and keep them.74 It does not have to sit and wait for employees whose competence belongs to a past generation to retire before it can hope to recruit new staff, as a civil service does. It has low tolerance of mistakes and a more efficient system of rewards (cf. Bacevich 2005).75 These are all considerations suggesting that private-sector organizations will be relatively successful in their intelligence efforts.

The differences between the nation state and the multinational enterprise lie in their goals and objectives. The perspective of the nation state is primarily political, that of the multinational primarily economic. To be more specific, the nation state has a policy perspective, the multinational has a bottom-line perspective on its interactions with the outside world. With the former, you are doing all right so long as you are conforming to directives and regulations, with the latter you are doing fine so long as you are achieving your profit targets. With the shift of power from public to private-sector initiatives, legitimacy of the social system is beginning to require that companies should look as though they are preserving the policy perspective. This is no minor task to achieve.

Western nation states, pressured as they are by private interests, will do whatever they can to make it seem that is not so, and to convince the public that politics is still in the driving seat. In reality that is largely just political rhetoric, as when EU nations today assure their citizens that the economic crisis is under control. The contradictions will be particularly obvious in Europe. Under the American model, government leadership was already weak. De facto, for many generations now, the USA has been in the hands of its large corporations, particularly the arms industry and the health care industry. Via a range of economic incentives these organizations largely decide how senators vote, indeed even what they say. The presidency is a role with relatively little political power (cf. Bacevich 2005). Thus American politics can function successfully only to the extent that the interests of the major corporations coincide with the interests of the nation and vice versa. When voters appreciate the discrepancy they will protest, but changing the American system would take no less than a revolution, even if it were bloodless.

To preserve its economic leadership the US has adopted an aggressive policy towards the rest of the world, in particular in the south-central areas of Eurasia, i.e. the Persian Gulf-Caspian Sea area, which contains about seventy per cent of all known oil reserves. This has set the pace in international politics, for other countries to respond to. This style did not start with the

Bush administration; it was clearly visible much earlier, even under Clinton. With Clinton it was evident that from now on the agenda was to be more about economics than politics, or, as he said in the 1992 presidential campaign, "It's the economy, stupid".

With Obama, only the facade has changed. Everything just looks more altruistic and sounds much nicer. Obama was elected to change things inside the USA. US foreign policy remains largely unchanged, as illustrated by the fact that Obama kept most of Bush's senior military advisers on, did not make an immediate move to close Guantanamo, and has been stepping up the country's military commitment in Afghanistan. If the US and NATO are redrawing now it is because we have lost to the Taliban and because it became impossible to support the puppet regime any longer with its support of the drug industry and its corruption. If the Americans left Iraq, that was because they had lost the war and were outmaneuvered by their own Sunni allies. Do not expect Obama to challenge the interests of the American military complex or American multinationals. Their interests will be the same. Obama is an excellent politician, but he is a politician (not an idealist), and known for compromises. What Obama and many others understood after the failure of the Bush administration was that US involvement in the world could not look unilateral. The US needed to restore its moral position in the eyes of the world, to regain the moral high ground. For this, it was important first to re-establish good relations with the other leading Western powers, to rebuild the voice of the "international community", backed by real force, by the US military, particularly its navy, and by NATO. From a scientific perspective the problem is that there are few empirical articles which explain this, despite all the research conducted.

What is lacking is critical dialogue. Thus, the project to create a representative, fair, and equal UN General Assembly continues to be hobbled by the balance of power in the Security Council. The USA insisted on having the UN on its own territory but refused to pay its membership fees for a long time, until it finally did so in 2009. American influence over the IMF and the World Bank is considerable, and the USA has forced other countries to use the American dollar as a reserve and as a currency for trading in major commodities. Its control mechanisms such as the Federal Reserve and the SEC are not impartial, but answer primarily to industry. They are merely made to seem impartial, comprising boards whose members look like people who have been chosen in terms of their ability to defend the public interest. In the West we have no end of such self-regulating bodies. The Chinese say "You ask your children where they want to go on holiday, and then you decide". China may be more authoritarian, but it does not play these games with its own population.

We should not fall for Asian rhetoric either, that is not what I am saying; but we do need to prepare for the rise of the new superpower. Asian financial leadership is now a reality, and that means we can expect to be exposed to more of its political discourse. When Obama met his principal creditor in November 2009, he encountered a confident Chinese leader. He was there to ask for money, hat-in-hand. When Angela Merkel was in Beijing in February 2012 it was also to ask for money, to save the euro. You have to understand the significance of these visits. The entire Western world has now capitulated economically in front of China. The following trip by the vice-President Xi Jinping to the Western world was a victory parade, preparing for his own position as the most powerful man in the world. In a while, probably sometime in the second half of the present century, China will surpass the Western world in political strength. Long before that it will have built its first aircraft carriers, then it will slowly press the US back militarily, first in the South China Sea, then in the Indian Ocean. American military superiority is still overwhelming, but it is on the retreat, if slowly. Provided the USA does not provoke some incident the transition will be smooth, as it was when China repossessed Hong Kong. Real power is a function of who can gather most resources at a critical pressure point, just as it was in the competition between the USA and the Soviet Union. This time it will happen without the ideology, just with the rhetoric and the forces of economics. China will compete against the West mostly on Western premises, so long as the West accepts "China's special features", that is, their political system based on Confucianism. China will continue to complain about US protectionist policies (an odd complaint, when one considers that China is one of the world's most protectionist markets). This, we may recall, was also the strategy of the Japanese.

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