Is US still a global Hegemonic Power (Essay Sample)

Is US still a global Hegemonic Power
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Is U.S still a global Hegemonic Power
Introduction
Is US still a global hegemonic power? This is one of the questions that have attracted intense debates in the international relations literary circles for years. This paper will argue that the US is still a global hegemonic power though these powers are declining due to various challenges such as it inability to ensure hegemonic stability in the world, the weakening of the Bretton Woods institutions, the diminishing role of the dollar in the international monetary systems, and the emergence of the BRICS. The paper will also argue that diminishing of American multilateralism is the only remaining strong source of U.S hegemonic power, though recent challenges in the WTO have challenged US hegemony.
Global Hegemony
Global hegemony refers to a situation in which one country or nation plays a dominant role of stabilizing, regulating and organizing global economic and political systems. American hegemony started during World War II and peaked immediately after the war (Vagts, 2001). Emergence of America as a global hegemonic power was founded on international and national conditions before the Second World War that provided the US with an opportunity to establish global hegemony. American global hegemony was a consequence of military, political and economic domination. Also it was a reflection of ideological and cultural value diffusion, which helped America to establish itself as a global controlling power. Therefore, America assumed the legitimacy mantle while assuming that it’s new found global dominance was naturally based on historical progress rather than an outcome of competitive shift in political and economic powers (Blumenthal, 1997). America was convinced that it was beyond historical reproach. The nation saw itself as the owners of the future. Its post second world war policy makers and their ideological supporters moved ahead to establish US dominance in the world using direct and indirect means. One of the direct methods US used to establish its pre-eminence was development of several multilateral and international organisations such as United Nations, World Bank, International Monetary Fund and North Atlantic Treaty organisation. These international and multilateral arrangements expanded and reinforced US hegemony. The indirect means used by the US include trumping specific ideological consensus using coercion.
Hegemonic Stability Theory
According to the Hegemonic Stability Theory, an open and liberal global economy such as the one that has been existent in the world since the end of the Second World War needs a powerful leader. The leader uses its position and influence to promote stable international monetary system and liberalisation of trade with a view of advancing its own political and economic interests. This leader can at times coerce states to obey the international economic order for their own security and economic interests. For example, America as a global hegemonic power has played a crucial role in establishment and management of a global economy after the second war, with the help of its cold war allies (Snidal, 1987).
In a book titled The World in Depression 1929-1939, Charles Kindleberger argues that a liberal international economy can only function effectively in the presence of a political leader who would use its influence to create an international economic system. According to Kindleberger, there are several roles that the leader is supposed to play (Kindleberger, 1973) . These include creating and maintaining a liberal trade regime, establishing an international monetary system and playing the role of the “last resort lender” to prevent financial crises. Kindlebergers argues that if the leader declines economically, the regimes that govern the liberal world economy are threatened. It leads to violations of the regimes that govern trade, commerce and international monetary systems. Fragmentation of the world into regional economic blocs is testament to the decline in the ability of America as the global hegemon to hold the liberal world economy together, from a hegemonic stability theory point of view (Webb, 1989).
Using Kindleberger’s hypothesis, America, in the last two or three decades has been unable to fully the leader role of a global hegemon effectively. When America was at peak of its economic pre-eminence, it used to be the president the judge, the jury and the prosecutor, who could seek redress against any country that violated any trade agreement. It could respond against any foreign activity that was deemed unreasonable or unjustifiable. America’s economic sanctions against other nations could be held up by all nations within its trading circles. However, by 1980’s America’s pre economic pre-eminence started facing challenges? For example, nations largely ignored its directives to boycott Cuba. This included its closest ally Britain (Strange,1987). In 1982, Britain led a successful opposition to an American embargo on exports of turbines and other material export to the Soviet Union, which was building a gas pipeline to Germany. As late as 1998, America was forced to waive sanctions against companies that invested in energy projects in Libya and Iran. This is because; countries ignored the sanctions, allowing their companies to invest in these countries. When US companies found out that they were missing out due to the sanctions, U.S was forced to remove the sanctions because European countries had disregarded them and were already reaping profits in these prohibited countries. This disregard for U.S directives in the global economy is enough evidence of the declining leadership role of the U.S. The diminishing hegemonic power of the U.S has led to a weakened international liberal economy because the leader has been unable to enforce rules. Another evidence of the declining leadership role of U.S in the global liberal economy is its inability to play its role as the lender of last resort as premised by the Hegemonic Stability Theory.
U.S single handedly financed reconstruction of Europe after the Second World War. During its hey days as the global economic leader, US was the biggest global lender, a role that ensured hegemonic stability. Between 1895 and 1977, U.S account was always in surplus (Block,1997). However, the account has been on a steep decline since the 80s. In 2002, the balance turned negative for the first time. Instead of being a lender of last resort, U.S has turned into a borrower. In 2002, US borrowed$302 billion which is equivalent to 5 percent of its GDP at that time. The decline in America’s surplus account has compromised its ability to play its role of a lender of last resort from a Hegemonic Stability Theory point of view. Therefore, the leadership role of U.S has declined in the last thirty years, putting its hegemonic status into question.
The Bretton Woods System and the international role of the dollar
This system refers to the international monetary regime that existed from the end of the Second World War to early 70s. It was a monetary order whose role was to govern monetary and currency relations among sovereign states. The Bretton Woods system was designed to combine multi lateral decision making with legal obligations. Its initial scheme was dependent of on the preferences and policies of the U.S which was the system’s most powerful member. This allowed America to assume the role of a global monetary hegemon. America became the world money manager. America exercised its monetary hegemony in various ways. These include creation of an open market, offering of long term grants and loans and opening of a liberal lending policy to provide short term funding in times of crisis. Since the liquidity of the pool fund was inadequate and the most countries’ reserves were nearing exhaustion, America became the ultimate source of global liquidity growth. This helped other countries to stabilize their exchange rates using dollars (Foot, 2006). As a result the Bretton Woods system created a hegemonic monetary regime based on the dollar. The key role played by the dollar in the international monetary realm held the world economy together and also strengthened the American alliance system. The international role of the dollar later became the focal point of the American global political and economic position. America allies were ready to hold the dollars for economic and political reasons. Therefore, US became the currency provider. This conferred US extra ordinary privileges because it was the only country that could print dollars for foreign ventures without attracting any negative consequences. Therefore, the Bretton Woods System and the international role of the dollar were the key pillars of American hegemony (Noyes, 2003). However, at the heart of this dollar system lay serious fundamental contradictions. The huge outflow of American dollars during the Korean and Vietnam may have helped to solve global liquidity problems; however, it became the main Achilles heel that eventually led to the decline of American monetary hegemony. In the late 60s, American balance of payments moved from surplus to deficit creating a severe problem. The inflationary consequences of the Vietnam War diminished international confidence in the dollar (Gilipn, 1987). The decline of international confidence in the dollar shook the foundations of the fixed rate systems used by the Bretton Woods, affecting America’s hegemonic position in the international monetary system. Actually the Vietnam was the first affront to the American hegemony. Since American Hegemony was founded on the Bretton Woods and its fixed rate system based on the dollar, the gradual decline of these systems has also facilitated the decline of American hegemony (Rogowski, 198...