The triumph of geopolitics, part 1

The smoke may be clearing from the "12 Day War" in the Middle East but it is now clearer than ever that Pax Americana is on the wane. The implications are as enormous as they are historic.

They’re calling it the “12 Day War”: a series of aircraft and missile exchanges between Iran and Israel. The US also joined in with a spectacular stealth bombing of multiple Iranian nuclear technology sites.

The ostensible causus belli was intelligence that Iran was close to developing a nuclear weapon. Such claims had been circulating for years. But this time round, or so it appears, the claims had become convincing.

So, chalk up another country to the list of those bombed by the US in recent years. Yes, they call this “Pax Americana”, but one could be forgiven for some confusion as to the true meaning of the “Pax” part.

But no country can be in any doubt: the US has a formidable military and the willingness to use it. Will that be enough to keep rogue nations in line in the coming years? Perhaps not. There are growing cracks in Pax Americana, some of which have become rather obvious.

One aspect that remains solid is the so-called “Special Relationship” between the US and UK, one that has endured for over a century. By tradition, following his successful 2024 electoral victory, Prime Minister Sir Keir Starmer’s first conversation with a foreign head of state was with the president of the US.

There is a good reason why the UK and US have been mostly foreign-policy friends during this time: their geopolitical interests have been quite well-aligned. They are probably likely to remain so. But the strategic importance of the Special Relationship is not what it once was.

For several reasons, Anglo-American power has been in relative decline for decades. The US in particular now relies excessively on “negative” rather than “positive” power. And recent military innovations enable small, flexible and relatively inexpensive military units to deny access to areas of strategic, international importance.

Pax Americana, which replaced Pax Britannia many decades ago, is thus now on the wane.

The specific reasons why will be addressed in turn below. First, a brief history of the Special Relationship and why it is likely to remain intact, if less effective in future.

From enemies to allies

“In international relations, there are no permanent friends or permanent enemies, only permanent interests.”

– Lord Palmerston

For numerous reasons, but ones that boil down to a preference for self-rule, 13 US colonies elected to secede from the British Empire in 1776. The ensuing war, primarily a guerilla-style conflict with few major pitched battles, lasted seven long years.

The assistance of France was essential to the colonies’ eventual success. As the Royal Navy was stretched thin around the world, opportunistic French naval support helped to tip the balance.

Hence the US was born not only as an enemy of Britain but as an ally of France.

In 1812 the US and UK would square off yet again. Britain would invade and burn Washington, DC to the ground before the US sued for peace some two years later.

Where were the French that time? Well, in 1798 much of their navy had been sunk or captured by Lord Nelson’s fleet at the Battle of the Nile. Much reduced, the remaining French Navy frequently operated together with the Spanish thereafter. Nelson discovered the combined fleet off Cape Trafalgar in 1805 and delivered the coup de grâce.

The French Navy would not recover until long after Napoleon had been sent into permanent exile following his defeat at Waterloo in 1814. For the rest of the 19th century, Britannia ruled the waves.

This included the Caribbean, where multiple Spanish Imperial territories sought independence. In a precursor of what would become the Special Relationship, there was some opportunistic cooperation between Britain and the US to support these regional rebellions.

However, until the final years of the 19th century, the US was preoccupied by domestic affairs. Westward expansion, tariff and tax disputes and the festering divide over slavery led to the outbreak of Civil War in the 1860s. A prolonged economic depression followed thereafter.

It was only in the 1890s that the US would again take on a European power in war. Perhaps unsurprisingly, it was Imperial Spain.

Although the cause may forever remain unknown, the US battleship Maine suddenly exploded in Havana Harbor in 1898. The US promptly accused the Spanish of sabotage and declared war.

The US now had a large, modern navy. Cuba lay only 90 miles off the Florida coast. Thousands of miles away, Spain could do only little to protect its prize Caribbean possession. Before long, it sued for peace.

In the settlement that followed, the US gained not only Cuba, but the prime Pacific territories of the Philippines, the Marshall Islands and Guam. The US now had a small, yet global, empire of its own. And the UK was now a nominal ally rather than an enemy.

Two empires aligned

US economic and military power and influence continued to grow. By the outbreak of war in Europe in 1914 the US was already the world’s largest economy, with the implied ability to rival any navy in the world, if desired.

The bulk of the US population preferred to remain neutral in the war. But the war had a huge impact on US trade. The Royal Navy blockaded Germany. In return, German u-boats attempted to isolate Great Britain from essential overseas supplies by sinking as much commercial shipping as possible. Eventually, the Congress voted to declare war on the central powers, in part to protect US shipping from the constant threat of German submarine attacks.

When the smoke cleared in 1918, US President Wilson pushed his League-of-Nations agenda, but this proved futile. The US public wanted no further entanglement with Europe. Traditional US isolationism reasserted itself.

Such was the context when the Washington Naval Conference of 1922 took place. The conference goal was to place limits on an emerging naval arms race, something that was believed to have contributed to the outbreak of war in 1914.

It was at this conference that, for the first time, one can see the clear emergence of the Special Relationship.

The US and UK now had good reasons to work together. Both had empires that included Pacific territories. Both had growing commercial ties in China and elsewhere in east Asia.

And both were fearful of the rapidly growing Japanese Imperial Navy.

During the conference, the US went so far as to spy on the Japanese delegation. It is not known whether the intelligence gathered was shared with the British or not. There is strong circumstantial evidence that it was, however, as the US and Britain negotiated for a similar outcome: a 5:5:3 ratio for the allowed number of capital ships in the US, UK and Japanese navies, respectively.

France and Italy also participated in the conference. Their ratios were both set at 1.75. Germany did not participate because, under the terms of the Versailles Treaty, it wasn’t allowed to have a deep-water navy at all.

In theory, were Japan to ally with both France and Italy, their total combined strength would more than match either the US or UK at 6.5:5. In practice, such an alliance would be unlikely, as these countries did not share any major interests in common.

But even if such an alliance were to occur, the combined strength of the US and UK would still give them a 10:6.5 advantage.

Following the conference, therefore, the US and UK not only had the largest potential combined naval force, but they now also had similar interests. The age of coordinated, Anglo-American naval dominance had begun. It wasn’t enough to prevent the outbreak of WWII, but it was enough to help win it.

WWII sealed the Special Relationship. Franklin Roosevelt and Winston Churchill worked closely together to win the war, including an agreement to appoint supreme commanders by theatre: Field Marshal Montgomery in the Mediterranean, Generals Eisenhower in Europe and MacArthur in the Pacific.

The two countries also agreed, together with their Soviet ally, not to seek a separate peace with either Germany or Japan.

The Suez debacle

Following WWII, Pax Britannia gave way to Pax Americana. But the Washington Naval Conference should be seen as initiating the passing of the baton.

That passing didn’t go perfectly smoothly. Indeed, Britain wouldn’t just let it go. Together with France and Israel, it invaded the Egyptian Sinai in 1956 without first informing US President Dwight D. Eisenhower.

While the Suez operation was an initial military success, the Soviet Union threatened to intervene on behalf of its ally Egypt with nuclear-armed bombers. An escalation to a global nuclear conflict suddenly seemed possible.

Furious that the UK had acted without US approval, President Eisenhower told Prime Minister Anthony Eden in no uncertain terms that, unless the UK immediately halted its offensive and withdrew from the Sinai, the US would effectively pull the plug on its critical financial support for Great Britain, most probably triggering a general financial and currency crisis.

Staring that bleak prospect in the face, Eden quickly caved and, soon thereafter, resigned. The baton had now well and truly passed to the US.

The metaphorical sun sets on the British Empire

In the Cold War conflicts to follow, the UK would play the role of junior partner. The US Navy would maintain freedom of navigation and, from time to time, the Royal Navy would play a supporting role.

The Falklands Campaign of 1982 would be the last time that the Royal Navy would engage in a major operation on its own. It did so, however, with formal approval from US President Ronald Reagan following the failure of negotiations with Argentine leader General Galtieri.

After the Cold War ended, the UK would continue to support US objectives, even when these were highly controversial, such as the wars in Afghanistan, Iraq, Libya and Syria.

Due to the ever-shrinking Royal Navy, the duty of maintaining freedom of navigation today falls almost entirely to the US Navy.

But is the US Navy still up to the task? And is the US economy even able to maintain it?

No and no. Let’s now turn to the reasons why the sun is setting on Pax Americana.

Relative Anglo-American economic decline

As explained above, the Special Relationship came into existence under the tremendous economic and maritime dominance of the British Empire and the United States during the 1920s. Both benefited enormously from global trade facilitated by the general freedom of navigation provided by their navies.

Following victory in WWII, the Anglo-American share of the global economy was in excess of 50%. Today, it is less than 25%. And it is still declining.

The rise of China, India and the so-called “Global South” is the primary reason for this development. But this doesn’t tell the entire story.

Already prior to WWII, Great Britain had a welfare state that needed high taxation for funding. Following WWII, this welfare state would grow far larger and more expensive. By the 1970s, even at extreme rates of taxation, Britain faced national bankruptcy.

The US provided something of an economic lifeline while Britain, under Margaret Thatcher, implemented some supply-side economic reforms and developed the North Sea oil fields. These measures shored up government finances at the time.

The US began building its own welfare state in the 1960s. Although this lagged well behind that in Britain, in the ensuing decades the US caught up somewhat. If you combine US federal, state and local governments, there is no longer a large difference in the overall economic share of the public sector in both countries.

With the public sector generally far less productive than the private, neither country has the same sort of economic dynamism that underpinned the power of the Special Relationship during the 20th century. Productivity growth is anaemic. Per-capita real income growth in the UK – the effective standard of living as it were – has not increased for a generation.

The US has fared somewhat better overall, due in large part to its vast natural resources, but the trend is much the same.

The US also shoulders the vast bulk of the global defence burden within the Special Relationship, with its share of defence spending as a percentage of GDP roughly double that of the UK.

The financial and defence assistance the US provides to Ukraine, Taiwan, Israel and other allies is also far larger than anything the UK offers.

With both countries’ debts and debt-servicing burdens now at historic highs, the cost of maintaining the massive military required to enforce Pax Americana, even with the Special Relationship intact, is simply prohibitive. It cannot continue.

Over-reliance on “negative power”

Power on the international stage comes in multiple forms, including economic and military. These can be “positive” or “negative”. Positive forms of power are those based on common interests, such as a willingness to trade together for mutual benefit. Or to form a defensive alliance.

Positive power can be cooperative or competitive. Imagine two countries competing to offer a more favourable environment for international investment. That’s positive for both.

By contrast, negative power is adversarial and coercive. It is not necessarily military in nature. Economic sanctions are in widespread use today.

In the heydays of Pax Britannica and America, the US and UK relied to a great extent on positive rather than negative power. They offered freedom of navigation for all via their control of the seas. They encouraged international trade and market-based economic competition more often than not.

There were exceptions. Britain controlled the trade within its empire. And the US occasionally exercised a heavy hand on Central and South America.

During the Cold War, as the British Empire slowly fell apart, the Soviets took advantage of those situations in which the UK and US relied on negative power to exercise control.

They offered an alternative. Their support of Egypt during the Suez crisis is a prominent example. The Soviets provided both economic and military aid to Cuba, which also led to crisis. Multiple sub-Saharan African countries became Soviet clients, as did North Vietnam.

None of that made the Soviets the “good guys”. Not at all. But it is only natural in international politics that a country facing the pressure of negative power seek support from whomever might provide it. And that means negative power can have negative consequences.

Following the overthrow of the Iranian Pahlavi dynasty, installed by the US and UK, there began a prolonged Anglo-American exercise of negative power against Iran which continues to this day.

Notwithstanding recent US military action, this has been primarily economic in nature. The US in particular has sanctioned Iran for nearly half a century in various ways and has forced its allies, also an application of negative power, to do the same.

In more recent years, the US has practically written the book regarding how to lose friends and alienate allies through the undisciplined, perhaps even reckless application of negative power against enemies and allies alike.

Iran has long been a flash point. More recently, following the outbreak of war in Ukraine, Russia’s trading partners, which include China and India, have also been targeted, if unsuccessfully.

Saudi Arabia has become more assertive, threatening to sell French bonds if EU member countries confiscate Russian assets or intervene militarily in Ukraine. Given Saudi Arabia’s large holdings of sterling bonds, it could threaten the UK with the same.

The UK has played along with US sanctions for the most part although it has used what diplomatic room for manoeuvre it has to lose and alienate fewer friends. But as a result of the general shift from a reliance on positive to negative power, the UK’s international standing has suffered too.

Through sanctions, the US can deny access to much of the modern financial market infrastructure, causing huge friction in trade. But there is a possible response to that.

By banding together as the BRICS – Brazil, Russia, India, China and South Africa – and within the Shanghai Cooperation Organisation, the Global South can better find workaround solutions to US sanctions policies and their means of enforcement.

This is the key reason why sanctions on Russia have been so ineffective. Indeed, a case can be made that they have done more economic harm to Europe and even the US and UK than they have to Russia.

Together with her nominal allies, including China, who have not participated in sanctions, Russia has found workarounds. Russian oil still flows around the world. Oil revenues still flow back into Russia.

The BRICS also appear to be working on building a parallel global financial system that will be able to function without access to SWIFT (the global clearinghouse based in Belgium), the BIS (the “central bank of central banks”) and other Bretton-Woods legacy financial institutions such as the International Monetary Fund and World Bank.

As Newton might have said, for every action – severe sanctions and asset confiscation in this case – there is a reaction. Russia and her nominal allies are not going to merely sit by and take it. They will respond. So far, they are responding in ways that make such actions less effective and arguably further unite them against what they see as an unwelcome exercise of negative power over global trade and finance.

In part 2, we will turn to recent advances in military technology and how these are undermining Pax Americana in critical ways.