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The Rise and Demise of the British World Order and the Lessons for Global Power

Moderator: Walter Russell Mead, Council on Foreign Relations
Speaker: Niall Ferguson, author, "Empire: The Rise and Demise of the British World Order and Pity of War"
April 30, 2003
Council on Foreign Relations


New York, NY

Walter Russell Mead [WRM]: Hi. Well, I'm glad you could all be here tonight to welcome Niall Ferguson. I'm particularly glad it turns out that his name is "Neil," and not, as I was so often hearing in Washington, "Nile," since I had been presiding over a meeting and calling him "Neil" for an entire hour, (Laughter) I thought, oh, my God, I've just offended him. (Laughter) But it turns out by sheer dumb luck I was right, it is "Neil" Ferguson, who is one of the brightest and most interesting historians I think writing in Great Britain today. And luckily for all of us, he's been writing on a very timely and topical subject, which is to say he's writing about empires. And although his latest book, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power, takes as its explicit subject the British Empire, at more than a few places in this book you can see that he's thinking and offering advice to the America, well, as he would call it, an empire, none of us ever would. And, you know, I find as I read, Niall, I have the feeling that for a very long time now we've been very lucky here in the new Rome in having so many Greeks come over to tell us how we should be running our empire. (Laughter) There is a small part of me that thinks, "Well, what happened to your empire, by the way?" That there are some lessons here. Or is maybe this the fox who had lost his tail explaining to all the other foxes it would be better to cut yours off as well. But actually Niall has some very interesting points of view, some very good advice to give us, and so I'm very happy to welcome him tonight. And I'd like to start off with a first question, which is, is the United States the center of an empire, is there really such a thing as an American Empire, in your view?

Niall Ferguson [NF]: Well, Russell, the only truly amazing thing to me is that Americans don't admit this. (Laughter) And in many ways this I think is the first empire in world history based on a collective suspension of disbelief (Laughter) on the part of the imperial power itself. Now, this could be the basis for a new and uncanny form of imperial strength. After all, if you don't even admit you have an empire, of course potentially you could extend an empire even further than those who overtly do it. But my instinct about this is, that if it looks like a duck and it quacks like a duck, then there's a fairly good chance that it is a duck. And I thought I would illustrate this point with a little quotation, and I'd like to invite you to speculate as to when this document was written. It will be very brief. "Our armies do not come into your cities and lands as conquerors or enemies, but as liberators. It is not the wish of our government to impose upon you alien institutions. It is our wish that you should prosper even as in the past when your lands were fertile, when your ancestors gave to the world literature, science and art, and when Baghdad city was one of the wonders of the world. It is the hope that the aspirations of your philosophers and writers shall be realized, and that once again the people of Baghdad shall flourish, enjoying their wealth and substance under institutions which are in consonance with their sacred laws and their ideals."

Now, if that sounds familiar to you, (Laughter) then I have a shock in store, because that wasn't President Bush in an uncannily eloquent moment, (Laughter) it wasn't the first draft of his address to the Iraqi people that got torn up when W. actually read it through. That was General F.S. Maude in April 1917 issuing a proclamation to the people of Baghdad following a lightning military campaign by British forces that had swept up from Kut to Baghdad, and placed Mesopotamia under British rule, which it would remain under on and off, indirectly and directly, for the better part of 41 years.

So the key point I'd like to suggest is that this is not the first Anglophone empire to invade, let us say, Iraq in the name of the liberation of the people of Iraq. Even, if you like, denial that an invasion is an invasion, that an occupation is an occupation, this denial is something the British long ago perfected as part of the rhetoric of liberal empire. And my sense is that one very strong argument in favor of Americans reading my book is that they will begin to recognize what hitherto they have so brilliantly avoided admitting to themselves, namely, the true extent of the resemblance between the first and the second great Anglophone empires.

It's obvious of course to any Briton why Americans are in denial about the fact that they are an empire. It was I think obvious to Reinholdt Nebrew(?) when he pointed out at the end of the Second World War that the republic now really had become an empire. This insight, by the way, is entirely familiar to all Europeans, and only remarkable to Americans. The point of course is that…and I try to show this in the book…this country's creation myth is that of anti-imperial, particularly anti- British imperial republic. And it's extremely hard when your high schools teach the history of American independence as a war of liberation against an evil empire, to come to terms with the terrible reality, (A), that that was a civil war, not a war of independence, a war within a great English speaking British Empire. And secondly, to come to terms with the fact that this republic, almost from its very inception, began to behave like another British Empire.

Think of the expansion of the frontier on the North American land mass itself, think only of the annexation of the Republic of Texas, interestingly where your President himself comes from, the process of imperial expansion has almost been unceasing in American history since 1898 when the Hipoweye(?) was added, and the Philippines were temporarily added to the American Empire. It's been a sustained tale of expansion, sporadic, occasionally unsuccessful, but expansion into territory, military interventions in sovereign states.

What is happening at the moment is only novel, it seems to me, in one respect so far. It's only novel in that there are elements within the present American administration that more or less admit that this is an imperial project. I can think of at least one senior figure in the Defense Department who only…what…ten years ago spoke the unspeakable when Paul Wolfowitz said what many people were thinking in the intellectual circles around him, that it was time to get real about empire. Now, that cost him a temporary career set back.

But it seems to me the really significant thing at the moment is not what's happening. Interventions in sovereign states, Bill Clinton did it in the case of Yugoslavia without even pretending to get a UN resolution. Now, what is novel now is that some people in positions of power in Washington are daring to admit to themselves, and indeed to others, that this is an imperial project. And my sense is that coming out of denial may actually be a healthy rather than unhealthy development, as it usually is in cases of psychological difficulty. (Laughter)

WRM: Well, the scholar in me is forced to agree that there's a good deal of truth in what you say. As a Jacksonian, my inner Jacksonian, is saying at this point, well, the difference between that British proclamation and the American ones is that the British were lying. (Laughter) We really are there…They with their typical treachery were lying, but we have liberated Iraq. (Laughter)

NF: Well, I just hope, Walter, that you're lying actually. (Laughter)

WRM: But also if we do say that we don't have an empire even as we've grown into the most powerful state perhaps in the history of the world, here again I think it's just an example of us learning from the British model. The British, you say, "Oh, the empire? Yes, (Laughs) we acquired it in a fit of absence of mind, and we've just gone one little step further. The empire? We haven't acquired it at all." In a sense it is essential to the project of liberal empire that it not speak its name. And that the more, in a sense, that you talk about your empire, the more people begin to wonder, well, which is more important, the liberal or the imperial side of it. So one could argue, if one were disposed that way, to say that to start talking about empire and thinking about the strategy of empire…this is actually a point you make in your book, about how around the turn of the 20th Century you had this whole raft of strategists of empire, it was no longer something you took for granted, but had to build and defend…that could be a sign of weakness in turn of the tide, an increased awareness of the phenomenon. Hopefully not. Why did the British Empire fall?

NF: Well, that's a very good question, because there are many, many misapprehensions on this subject. I can think of two offhand that might deter Americans from embracing their existing imperial role. The first of course is the idea that the Empire was overthrown by nationalist movements, by resistance movements following, as it were, the example of Mel Gibson in "The Patriot," struggling against the red coated Nazis. (Laughter)

WRM: Your words, not ours. (Laughter)

NF: An Australian film, worse still. (Laughter) The second argument which might be made, and has been made in the huge literature, is that the Empire ultimately weakened Britain's economic development, and was one of the reasons for Britain's industrial decline, an argument which of course Paul Kennedy made very popular in the late 1980s with his extraordinary powerful and important book, The Rise and Fall of the Great Powers, which drew an explicit parallel, if you remember, between the alleged overstretch of Reagan's United States and the overstretch of the Edwardian empire at the turn of the century.

Now, what I try to argue in the book is that to understand the decline and fall of the British Empire, you have to recognize that there really wasn't any decline, there was just a fall. And the Empire went from zenith to collapse with breathtaking speed for two very simple reasons but very different reasons from those conventionally acclaimed in the literature. The first of these reasons was that the British failed to deter the biggest threat to their long term dominance was by a rival empire, and that rival empire was the German Empire. There were two colossal failures of deterrence, which culminated in 1914 and in 1939 with the outbreak of hostilities in Europe between Britain and Germany. The cost of these wars was the principal reason for the fall of the British Empire, and particularly the bankrupting cost of the Second World War. And I think it's very clear that these wars were results of failures of policy, avoidable failures.

I argued in the book The Pity of War, which I remember discussing with Paul Kennedy here at the Council on a wonderful occasion which some of you may have been present at…I argued there that in 1914 Britain's liberal government had arrived at a completely contradictory position that was to prove fatal to Britain's long term imperial health. And the position was that in the event of a continental war in Europe, in the event of a bid by Germany for European hegemony, that Britain would intervene on the side of France, and indeed on the side of Russia. This was a dramatic change in British foreign policy. The problem was that the liberals failed to will the means. The means would have involved introducing conscription and creating a land army equal to the challenge posed by the by then formidable Germany army. And this failure of policy, this, if you like, paradoxical policy, proved extremely costly, because the Germans were not deterred by the prospect of six or seven British divisions in 1914. And then history repeated itself in the 1930s with a second colossal failure of deterrence on the part of British policy makers. So reason number one for the decline of the British Empire is the failure to deter the principal challenger for global power.

Reason number two has a lot to do with this country. It was, it seems to me, one of the great disasters of 20th Century history that Franklin Roosevelt adopted as one of his— following his reluctant entry into World War II, the dismantling of the British Empire. I tried to show in the book that Roosevelt systematically pursued an anti-British imperial policy from the very outset, and that his reasons for doing this were profoundly wrong headed. You only have to read the account of Roosevelt en route to one of the wartime conferences touching down in Ghana, looking out of the window, seeing a mud hut and an African, and thinking and writing, "My God, this is what the British Empire has done" as if Ghana had been a flourishing, prosperous capitalist economy until the British turned up. Roosevelt's impressions of the British Empire were classically ill informed.

They were typical, it seems to me, of the American anti-imperial prejudice. And they informed his campaign for a post imperial decolonized world after 1945, something that Churchill very quickly came to realize, something also that John Maynard Keynes came to understand. And anybody who wishes further confirmation of my argument should read Robert Skidelsky's brilliant Keynes's Biography. It was Keynes who said in the course of the negotiations of that war…financed in Washington, negotiations he abhorred, he hated coming to America…He found the American politicians insufferably rude because they used to answer the phone when he was in full flight. And that's a warning to any of you with cellphones, to turn them off, because I'm a bit like Keynes in that regard. (Laughter) And Keynes said that "The Americans were picking the eyes out of the British Empire." And in 1945 the eyes were picked right out with the suspension, the immediate suspension, of Lend Lease, and the immediate bankruptcy of the United Kingdom, an American foreign policy decision that did not need to be taken.

One big question one has to ask with the benefit of hindsight…actually without the benefit of hindsight…British colonial office officials constantly asked it in the 1940s, is this. Why did Roosevelt and his advisors make a distinction between the British Empire, which they seemed to abhor, and the demise of which they were eager to hasten, and the Russian Empire, which they never ever advocated the decolonization of? Now, why was this? They called it in the Colonial Office the salt water fallacy, that an empire was only an empire in the eyes of Roosevelt if there was salt water between the metropolis and the colonies. But because the Russian Empire was entirely a land based empire, almost entirely a land based empire, somehow that didn't count. Well, maybe if you're a land based empire yourself, which the United States for most of its history has been, that's a straightforward little piece of double think.

But it had fateful consequences. Think over the history of the Cold War, think over the fundamental decision that informed not only Roosevelt but his successors' policies, to prioritize, (A), the relations in the Roosevelt era with the Soviet Union, (B), good relations with nationalist movements throwing off European colonial empires. Think of the fateful year of 1956, the fiasco of Suez, which was of course a blunder on the part of Eden, never listened to French strategic proposals, (Laughter) as Eden fatefully did. But in the end it was one of those decisive moments in the history of the Middle East, the decision, the rupture between Britain and the United States over the future of the Middle East, and the fundamental decision to back the Nassars against the Britain, was to have profound ramifications not only in Egypt, but in Iraq two years later. Because it was in 1958 that the British-backed Hashimite dynasty was overthrown, and Iraq's agonies properly can be said to have begun. Interestingly, the United States intervened momentarily at that precise moment. There was a realization that this might not have been such a smart idea, but the operation was not followed through, and the intervention was effectively called off.

So, you see, the decline and fall of the British Empire has much more to do with other empires, the German Empire, the Japanese, which I haven't mentioned, and ultimately the American Empire, than it has to do with insurgent nationalists. The British found them pretty easy to deal with. But it's pretty hard to cope with insurgents when you've been declared bankrupt by the United States, which is in effect what happened in 1945.

WRM: Well, I'm feeling more and more wicked here. (Laughter)

NF: Well, if you admit to being a Jacksonian, you certainly should feel that.

WRM: (Laughs) It is I think that Roosevelt's anti- British imperialism actually was not only…his terms said…"I am Dutch," was always Roosevelt's point of view, "And this is what Britain did to Holland in the 17th Century." And Roosevelt enjoyed doing the same thing to the Brits, sort of giving them a taste of their own medicine, as it were. But, I mean, I think there's more and more of a historical consensus that, yes, the British Empire didn't fall, it was pushed, and it was pushed from behind more than pulled down from the front. And the Americans did it, Roosevelt did it, Morgenthau did it, Harry Dexter White did it. But again the Democratic Party probably couldn't have held together any other way. Irish in the north who were never great fans of the British Empire, combined with Southerners in the ex-confederacy who had never forgiven the British Empire for probably the real reason the British Empire fell, which was it failed to support the South against the North in the Civil War, and that would have divided the United States. So in that sense, Abraham Lincoln, not Franklin Roosevelt, destroyed the British Empire. (Laughter) And he destroyed it very cleverly with the Emancipation Proclamation, which made it politically impossible for Britain to intervene. But, listen, I mean, here we've murdered the fairest and finest empire ever known, but we picked its eyes out in its hour of greatest need. Is the American Empire, if that's what it is, is a good thing?

NF: It could be. I certainly want it to be. It seems to me clear that one lesson of the British experience is that though the British Empire did many things wrong, by the time it had become a liberal empire in the 19th and the first half of the 20th Centuries, it had clearly become a force for good in the world. That's to say, when we look at the things that the British Empire systemically did from let us say the 1820s or the 1830s until it was finally broken up in the 1950s, the key things that stand out are the prioritization of economic openness, free trade, free capital movements, free migration, call it, if you like, a kind of Victorian vision of globalization. But it also stood not just for free markets, it also stood for a certain kind of institution, a certain complex of institutions, which in a fascinating way development economists in the last ten or so years in this country have rediscovered.

If you read any of the really interesting and important books and papers published in the last ten years by some of the great economists working in this country today, I think of Robert Barrow, I think of my colleague at NYU, William Easterly's fantastic critique of development economics, one of the most readable books in the shops at the moment, they argue clearly and consistently that economic growth in relatively poor countries requires not only the openness that Jeff Saxe and others emphasized in the '90s, but it also requires certain key institutional structures. It needs the rule of law, it needs to have non-corrupt administration and politics. These are crucial. Property rights, underpinned particularly by common law definitions of property rights, are crucial for the functioning of a market economy. And without that, without the rule of law, civil society too can't really flourish.

Now, there's a fantastic body of literature on all this which I have spent much of my time reading, because Empire is an attempt to integrate that literature with the history of the 19th Century. And when you read it through and check off the things that contemporary economists advise developing economies to do, balance budgets, stable currency, avoid inflation, read through the list, and you find that these are precisely the things that British colonial administrators set out to do. They essentially set out to create a globalized world economy, and to build the institutions within which poor countries could aspire to success within that global economy.

And I try to show in the book that this really works, that it really did deliver in the clear majority of British colonies economic growth. Not only that, but most countries, a clear majority of those that then relinquished British rule, subsequently fared worse economically under the various forms of nationalist government that they adopted. And it's not surprising why. Because what you find if you take sub-Saharan Africa is that nearly every form of colony pretty quickly slipped into institutions calculated to kill economic growth, inflationary fiscal policies, debauched currencies, corrupt civil services and political elites, and the systematic undermining of the rule of law.

If the name of Robert Mugabe hasn't already sprung to mind by this point, it certainly should have. And the supreme irony is that a man like Mugabe loves to blame Zimbabwe's problems on the legacy of empire, the dirty secret about decolonization. This is another thing that dare not speak its name, is that most of the economic failures in sub-Saharan Africa have been due to independence, not the British imperial. And the cost has been high indeed. I cite just one example, neighboring Zambia, the end of British rule in 1960. Per capita GDP in Britain was about seven times that of Zambia, so the gap was of the order of magnitude of seven times. Today it's more like 28 times, because Zambia's economy has not just stagnated, it has positively declined under independence. And it's one of a host of examples one could cite. Virtually the only African country not to have this experience is Botswana.

Ergo, it can work. A liberal Anglophone empire which is committed to economic openness, to creating the institutions that promote growth, to creating the rule of law, to establishing civil society, this can achieve what I'd take to be America's sincere objective, to export its success story to the rest of the world. Right now it's not happening. If you compare capital flows to poor countries today with capital flows to equivalently poor countries 100 years ago, the discrepancy is truly astonishing.

Back in the days of British hegemony, something like 20 to 25 percent of international capital flows went to countries which had a per capita income of 20 percent or less of the United States. Today countries comparably poor receive around 5 percent or less of international capital flows. Why? It's obvious. Because poor countries today are by and large governed by their own corrupt ...

NF: Ah! Ah! (Laughter) Now, what would Keynes have done at a moment like this? I'm more tolerant than Keynes and less clever than Keynes, so I will forgive the ringing phone, and just say to myself…(Speaks in French). I always take the opportunity to use French in American company these days. (Laughter) I'm going to stop there.

WRM: All right. Well, thank you, Niall. And we appreciate the tact that led you not to mention that one of the countries which had an economic disaster after decolonization was the United States under the Articles of Confederation when we had a debauched currency, failure of rule of law and so on and so forth.

NF: Also the US is interesting. It's one of the tiny number of post colonies that actually fared better under independent institutions. And the reason for that is pretty clear, that the institutions were pretty much in place by the time the United States became independent.

WRM: You're done with this. (Laughter) Now you know why they say, "Tamaya danous, et libros ferentes(?)," I fear the Greeks bearing books. (Laughter) Because apparently the policy prescription for all of us is that we should clamor to get back in. (Laughter) But enough of…you know, as much fun as we're having up here, it's actually time to open this up to questions from the floor, so we will do that now. Please wait when you're called on for the microphone, to get there so everyone can hear you. And also please state your name and affiliation before you begin your question. Keep your questions short, make them questions, not statements…even in the United States I think we've learned that much English grammar…so that as many people as possible can get a chance to respond. Yes?

AN: Andy Nagorski, Newsweek. I'd like to really restate the question Walter asked and I don't think you responded to, is what's the benefit, even if one accepts your thesis, of declaring ourselves an empire at this point? And how would it be received in today's world?

NF: Well, let me make clear that I don't actually advocate a declaration. (Laughter) And I think everybody in this room knows exactly what the effect of that would be. In some senses it's redundant though, it's redundant because most of America's critics already consider it an empire, therefore a declaration would merely confirm what they already know. And the biggest problem would be that it would greatly alarm American voters who continue to bask in the illusion that their country's vast overseas military commitments and economic engagements and regular military interventions are in some strange way the actions of a non empire. You see, I don't really care what the United States calls this. For a long time people who study international relations in this country have used the word "hegemony." Something about Greeks seems to appeal to Americans in this particular line. But it's a euphemism, it is a euphemism. Empire can only be excluded as a definition of American power today if one uses the word in a very narrow sense. And I think anybody who seriously thinks about empire would look at the structures of American global power. Look at the deployments of troops. Look at the dependencies. I counted them today, I make it 16. Look at the expansion of American economic and military power and say…if this isn't an empire, then the word has no meaning. So there's no need to declare it, the question is to recognize that it exists. And that with empire comes responsibility.

Now, the most important point of all about recognize, not proclaiming from the rooftops, please don't get me wrong, that the idea of President Bush going on national television and announcing that the republic is now an empire, (Laughter) I mean, really shades of a kind of a Carrion film on Ancient Rome. (Laughter) The republic mustn't ever call itself an empire, because it's a republic. And we all know what happens to republics that proclaim themselves to be empires. There are lessons from Roman history which I think non Greeks could perhaps usefully remind you of. No, the key thing is to recognize privately amongst yourselves that this is the situation, and that therefore certain things follow from that.

For example, it is not an option to send in the Marines and 82nd Airborne, overthrow Saddam Hussein, pull down the statues, fire off some hardware, hold elections, and come home. These sorts of sporadic interventions…which always make me think of one of those cartoons in which a boy opens a box and an enormous boxing glove comes out on a spring…this is not how you run an empire. At the moment the United States has arrived at a form of empire which seems to be almost exclusively military. Only the Defense Department seems to recognize that it's an empire, and it does its side of the operation tremendously well. The lessons have been learned, both at the level of strategy and at the level of tactics and operations, and they've been learned brilliantly.

But the problem is that the follow through seems almost consistently to be absent. Why is that? Why is it that in Afghanistan so little so far has been achieved following the overthrow of the Taliban regime? Why is it that one can already sense what I would call the Haiti on the Tigris scenario in Baghdad, a sense that having achieved the military objective, the United States really doesn't know quite how to go on to the next crucial step. The next crucial step is to get the Iraqi economy to function, and that is a highly complex undertaking. And former Generals are probably the least qualified people to do this, because there are few groups of people more cut off from the free market and its workings than people who operate within the US military. They're almost uniquely unqualified to construct a functioning market economy in the ruins of a totalitarian regime.

People often forget that in 1945 after…what…three or four years of total war, the US military was full of highly skilled specialists, academics and professionals. It was not a professional army itself. So that when the reconstruction of West Germany and Japan occurred, the two most successful achievements of the American empire to date, all kinds of expertise was available in uniform to undertake that job.

Now, I asked a question in the New York Times to which I've yet to hear a satisfactory answer. It was, to put it very crudely, "Where are the Gertrude Belles?" I could equally well have said, "Where are the Galbraiths today?" Where are the people who are willing to go to a country like Iraq and construct from the bottom up the functioning institutions of a market, the institutional basis for a civil society? Above all else, the institutions of the rule of law, where are they? And the answer is you don't really produce them. And this is a fundamental problem, to produce the most effective military force in the world, and not to produce any kind of counterpart to the British colonial service or the Indian civil service, that elite of non-corrupt officials who so ably constructed a civil society that was central to the success of British imperial operations. This is a near fatal omission.

So the answer to the question is, and I hope that it's a satisfactory answer to you, recognizing that America is an empire means recognizing that it is more than simply a military project, that it requires a long term commitment of resources, not just financial resources, but talent, in order to make regime change work. And if you're not prepared to do that, if there is no intention to spend years transforming Iraq into a functioning society, not a Westernized society, leave it's culture alone, for heaven's sake, but a society which has the basic institutions in which the market can function, property rights are protected, and some kind of civil society can develop.

WRM: Very well.

NF: Can I just follow that up with one punch line? (Laughter)

WRM: Please.

NF: This will benefit the United States. This is not going to be some kind of zero sum game in which every dollar spent on the reconstruction of Iraq is a dollar less for American schools and hospitals. A growing dynamic Iraqi economy, which I believe is an attainable objective, will be a source of prosperity and employment for Americans. The idea that the Empire was ever a great millstone around Britain's neck is one that needs to be scotched. It clearly wasn't. And I would happily debate the economic arguments with you if there were time. But the key point is to recognize that for the United States making these countries safe is, (A), economically advisable, (B), it will reduce your long term security costs and the long term threat to the United States from terror. But to intervene militarily and to take the Haiti approach, first the guns, then the elections, then go home, is a recipe for even worse states than existed before.

WRM: Okay, that's great. Please let's all try to be as laconic as possible. (Laughter)

NF: You're talking to me? (Laughter)

WRM: Oh, would I? Would I? (Laughter) I just want to get as many questions as possible. Yes, sir?

TF: Tim Furguson with Forbes. If the new Chinese Empire, as another recent book just entitles it, survives its current crisis, do you see any parallels to the early 20th Century Germany challenge to Britain?

NF: It's conceivable. It's an interesting literature at the moment, and I've spent a lot of time reading it recently, that who is the next big threat literature. And it seems to divide fairly evenly between people who worry about China and the people who worry about Europe, thinking of Charles Cookchin(?) for example. I find it much harder as a European to see a long term strategic threat from the European Union, which kind of leaves China. China is a long, long way behind, militarily, economically, in all kinds of fundamental ways. It's institutionally got disadvantages which I'm not convinced it can overcome. To put it very simply, the jury is still out on the question on can you have a transition to a market economy and retain the institutions of one party rule. And I said before the economists said it, that SARS might just be the Chernobyl moment, when the tension between these two different structures, between economic freedom and political un-freedom starts to become unsustainable.

Now, if you project forward Chinese growth rates as some people do, and I've tried this exercise to amuse myself, you can arrive at the conclusion that in the year 2018 the Chinese economy in terms of gross domestic product will be the same size as, if not bigger than, the American economy, even if you project forward the American growth rates as they've been, quite high growth rates, for the last 20 years. Is that really going to happen? I have my doubts. You know, much of the argument about China tends to be demographic. Look how many Chinese there are, imagine if they were all suddenly rich. (Laughter)

But, you know, let me ask a slightly different question, a demographic question. If one looks at the birth rates around the world, the Chinese birth rate is not especially high. The highest birth rates in the world are almost exclusively in Muslim countries, and it's almost double actually the global average. And if one looks at the Muslim population of the world and does a little projection, to me the possible explosion of Muslim populations poses a much more profound challenge to American hegemony than the possible growth of the Chinese economy. Now, that's not to say that I subscribe to the Huntington view that there's a clash of civilizations in the offing, because we know that these Muslim populations come from many different cultures. And we know that it's perfectly possible indeed…Cyrus Zakaria(?) argued recently convincingly…it's perfectly possible for a Muslamic society to make the transition to democracy. But I do think that might be a bigger story than the much vaunted Chinese takeover. Militarily there's a long way to go before they're anything other than a sort of really big version of North Korea.

WRM: Yes, in the back?

CK: My name is Cedric Kudaros(?). You referred to the successful US actions in Japan after World War II. The professor from MIT who has written the classic book on that subject, John Dower(?), recently cautioned America against comparing the Japanese occupation with anything that would happen in Iraq for a lot of reasons, including the security that an island provided, the fact that there was not a single terrorist incident against America's 250,000 troops during the six years and eight months of operation, the ethnic identity of the Japanese versus the differences in Iraq. Could you please comment on what you think about Mr. Dower's pieces?

NF: Well, no one knows more about this subject than Dower, and I think his work, not only on the occupation, but on the Pacific wars, is some of the most important work to come out of the American history profession in recent years. And I certainly am going to presume to criticize his analysis of the success of the Japanese occupation. The lesson seems to be actually to be more readily drawn from the West Germany experience. Now, clearly the ethnic arguments don't work quite so well there. Though remember that West Germany was a country in turmoil with vast numbers of refugees flooding into it from Eastern Europe. And admittedly the great majority of them were Germans, but they were Germans from very different parts of Europe. That wasn't really the principal challenge though. The principal challenge was the complete destruction of the Germany economy, both by aerial bombardment and by the dictatorship itself which had systematically wrecked market economy, corrupted the rule of law almost entirely, and I think created in the end the worst rogue regime in history.

Now, if one looks at Germany in 1945, with the benefit of hindsight it's easy to say "It was bound to bounce back, they were Germans after all." And this is an argument I constantly hear. And I say, "You know, it's very interesting you should say that, because that's exactly what people said in 1918, `Oh, Germany's bound to bounce back, they're Germans after all.'" Indeed, many, many Americans invested tens of thousands, hundreds of thousands of dollars in the Germany of the 1920s, and lost every single cent. There was no guarantee that Germany was going to be a success after 1945.

And of course, going back to your point about borders, West Germany was in an extraordinarily vulnerable strategic position with all kinds of historic conflicts to the east and to the west threatening at any point to boil over to resume. And I think the better parallel is actually with the colossal success of OMGUS, of the Office of Military Government of US in West Germany in transforming what was a ruined economy, but not only a ruined economy, but a profoundly corrupted society. Never underestimate how easy it is to wreck civil society and the rule of law. Michael Bonner's(?) wonderful book on the Third Reich, which I recommend you all read, shows how profound the cultural revolution was. It was not by any means a foregone conclusion that Germany would morph back into a liberal society, if it had ever been one before. And that in itself is contentious.

But one key thing stands out. Why did West Germany recover economically, and then socially, and then politically? The answer is the Marshall Plan, at least in some measure, kick started an economic recovery in Germany, which was to be the wonder of the post war world. If there's a lesson to be learned from the experience of occupation in 1945, is that you can do wonders with some pump priming and a currency reform. And if that's a better analogy, it's convenient for me because it's the one I know more about.

WRM: Yes, Ma'am?

SG: Selma Gloveman(?), ex-UNDP. I would hope that you would hypothesize on this question. If the actions of the United States after World War II in effect cost Britain its empire, and if going to war, if Britain's going to war against Germany, and needing the United States to come out of the war successful cost it its empire, what would have happened if it had reached an accommodation with Germany for not going to war in terms of what would have happened then to the British Empire? And is anyone hypothesizing about this?

NF: Well, actually quite a number of people have posed that kind of factual question, including…I think I'm right in saying Canon(?), the well known American scholar. (Laughter) Allen Clark, the late, lamented…I'm trying to think of the right term…Byron of the conservative party also made this argument, and he based it on John Chomley's work. Clearly there was a possibility to reach an accommodation with Hitler, because the Germans offered it, and a majority of Churchill's cabinet colleagues favored it. In the reckless minority, he thought it was worth fighting on after the fall of France. And I can answer this question very simply, and I'm going to in order to maximize the number of questions I can take. It would have been a calamity of world historical proportions, unimaginable disaster would have ensued. And we should all I think thank God at least once a month that Churchill prevailed, and that Britain, against all, if you like, logic, fought on alone against the most evil dictatorship of all time, and disbelieved Hitler's lies, because Hitler was lying. And I show in the book actually how much Hitler sucked up to the British, he loved saying how wonderful the British Empire was. And he loved telling everybody how much he admired it and how much he wished to learn from it, and apply the lessons of the Raj in the Ukraine, which he singularly did not do. (Laughter)

It was a lie, because we know from Hitler's war planning in the 1930s that the next step after European dominance was the Atlantic, and indeed the next step would have been the United States. Fortunately for the United States one thing stood between Nazi Germany and world domination, and that was the British Empire. And if the British Empire hadn't existed, if the proponents of decolonization had been heeded at any time since, say, 1857, and Britain alone, the United Kingdom alone, had stood against Nazi Germany, than Hitler would have won the war.

WRM: Yes?

ZK: Hi, I'm Zachary Karabell.

WRM: And your…?

ZK: Fred Alger Management. A question about first principles. If empire is not the acquisition of direct rule of territory and imperialism is not the search to directly acquire territory, then what are those things? And if the United States clearly can go into Iraq or Afghanistan and leave, and no one can prevent us from doing either of those things, then wouldn't it be more accurate to say that we have the capacity for empire and not the will for it? And without the will for it, we're not.

NF: Well, I think that's a perfectly legitimate question, but you seem to be assuming that the United States has not in the past acquired territory. It's quite impossible to imagine any of the operations that we've witnesses ...

NF: You know, that's the supreme irony. My telephone is going. (Laughter) But you know what they say, when in Rome do as the Romans do. (Laughter)

WRM: Oh, for John Maynard Keynes at this hour. (Laughter)

NF: Well, you know what Keynes used to say, "When the facts change, I change my opinions." (Laughter) To try and resume as best I can…almost impossible to recover from that, I think. It's only the second time in my life it's ever happened. It once happened during a performance of "Electra," (Laughter) and Zoe Wanamacker was in the midst of a monologue of really breathtaking power, and a ghastly noise interrupted it, (Laughter) my phone. I thought I had learned my lesson, but it only proves that one ...

WRM: That's why you had to come here, right? (Laughter)

NF: I was run out of town, I've never been to a theater since in London. (Laughter) But the point that you seem to I think omit is that the United States' military capability entirely depends on the control of territory. The military bases, the network of military bases that extends around the globe, the bases that have been accumulated systemically since the 1890s, which were substantially added to at the end of the Second World War, and which continue to be indispensable for the exercise of imperial power.

But territory matters less now. It matters less. It's not irrelevant, but it matters less than it did in the days of the Roman empires. It matters less not least because, like the British Empire, the American Empire can rely on its dominance of the seas in order to exert global power. An awful lot of the American Empire floats. This is a floating and flying empire. And it was never possible really before the British Empire in the 18th Century to construct an empire on the basis of flotation, much less flight.

In that sense I think the American Empire is an empire despite the fact that its territorial extent is currently roughly half, slightly more than half, of the territorial extents of the British Empire at its zenith. You might be surprised to realize that the American Empire is already so big, but it is. And it's just a fallacy, it seems to me, to say, "Oh, no, that doesn't count, because most of that land mass is the United States." But the United States is in itself an empire. Let me put it to you that you could write America's history as follows. The construction of an empire by the 13 former colonies of the Eastern Seaboard, and their empire is a very tightly knit empire, it's been much more tightly integrated…colonies like California and Texas consider themselves far closer to the metropolis than any colonies of the British Empire did. You've got one very big Ireland, if you like to think of it that way. (Laughter) But in the end it seems to me the analogy holds good. And this is a huge territorial empire that you are currently running. And although most of the territory is within the political borders of the United States, quite a lot of it isn't.

WRM: Okay, yes?

DS: I'm Dan Sharp with the Royal Institution World Science Assembly. I gather from our title that our object is to see what we can learn from the British Empire that might help us, particularly in Iraq. And I'm a bit puzzled about what lesson we derive from your comments. You've criticized rather roundly our approach to building institutions in Iraq. And so I reflect on your comments extolling the virtues of the British colonial office in the decades of time that you had to build those institutions in your colonies. And then you told us it was a complete failure. That after independence, everything went bad. What are the lessons we should derive from the British Empire experience for how we manage Iraq?

NF: Well, it's quite a relief that somebody's finally asked the question. I'm rather at the mercy of my interlocutors this evening. (Laughter) The answer is that of course if you look at the persistence of democracy after decolonization, it's still more likely to have taken the former British colonies than elsewhere. Being governed by the British was clearly better for the chances of democratization than being governed by anybody else. And that of course is one very good reason why India, one billion Indians ...

WRM: Except the Americans. (Laughter)

NF: Well, I'm not sure whether the American example is helpful here, but let's put America to one side.

WRM: Germany, Japan ...

NF: Yes, democracy persisted here remarkably well, even after decolonization. The big question is how you can learn from Britain's relative lack of success in the Middle East. Now, remember, 41 years of formal and informal control was not a long time by the standards of the British Empire if you count up the duration of imperial presence in, say, the Caribbean, in other parts of Asia. A hundred years plus was the norm. And so one very simple lesson that one could learn from Britain's experience in the Middle East might be that if you really expect to transform the institutions of a society like Iraq, it's a very, very long and time consuming process. And one must be realistic about that. There is no necessary reason why the institutions of the rule of law of civil society should just pop up out of the soil by themselves. After all, it took long enough to take form even in Western Europe.

The second lesson I would draw, and this is an extremely important one that I've come to understand better since being here, is that coordination between the military, economic and civil agencies of empire is crucial. And what is woefully absent in Washington, DC, today is any serious coordination between the Defense Department, State Department, the International Monetary Fund, the World Bank which is actively boycotting this operation, as far as I can understand. An absence of coordination which to British eyes is completely baffling. A hundred years ago, a little further back, let's go to 1882…in 1882 the British invaded Egypt. And they did so to avert a debt default, and they did it in very much the spirit actually of the occupation of Iraq today, that is to say, they claimed they weren't going to stay.

In fact between I think it was '82 and 1922, they promised the international community they would leave Egypt 66 times, which I think must be some kind of record for diplomatic mendacity. (Laughter) And they then set about creating institutions which they thought Egypt needed. Public finance was Anglicized completely under the benign despotism of Lord Crumer(?), a product of the Bearing banking family. Now, what is really striking about the Egyptian operation, the longest and I think most successful of Britain's Middle Eastern operations, is the brilliant coordination between the financiers, the civil authorities, and the military, and the very careful way in which the military was kept in check. The titular Aserdar(?) of Egypt was a formidable figure, a very dangerous figure, with ambitions that were far in excess of the conventional British general. But he was never allowed to dominate Krumer.

Now, I think the lesson that really needs to be learned here is that if you embark on imperial projects, there needs to be close cooperation, close cooperation between the military and civilian authorities, and the civilian authorities need to dominate. There is nothing, in my mind, more dangerous historically than an empire dominated by the generals. The lessons of Rome are very, very clear in this regard. And you as a republic need to take those lessons to heart. There is a very, very strong sense, and one gets it constantly, that this is an empire built by imperial pro counsels whose training is a military training. People who are trained by the US military may not be as respectful of the liberties that you as non military men and women hold dear, as you assumed. It would be very surprising in the history of mankind if they were. That seems to me to be the biggest and most important lesson that my book has to offer the American Empire.

WRM: Well, listen, this has really been a terrific session, and I know we all want to thank Niall for sharing these thoughts, this much advice. (Applause) This is the last meeting that I'm scheduled to preside over while Les Gelb is President on the Council on Foreign Relations. And while he couldn't be here tonight, he very much wanted to be but could not be, I don't think it would be appropriate for me to close an occasion like this without just saying how much I appreciate what Les has done for the Council and for me. During the next couple of months we'll all have I think a number of chances to say something to him personally and institutionally and in various ways. But I think you'd all want to join me in thanking Les for making the Council the kind of place it is today. (Applause) And, Niall, write another book, and come back soon. Thank you.

NF: Not too soon. (Laughter)

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