A New Era: American Hegemony Comes to an End

The not-so-spectacular outcomes of the G20 Summit will not go down in the history books. Of much more historical importance is the apparent loss of importance of the U.S., which is losing its worldwide dominance more quickly than Obama can enjoy it.

Luckily, during peacetime, no historical battles like Trafalgar or Waterloo are necessary in order to change the balance of power in the world. Today, it happens in small strides, day by day — and then becomes apparent at meetings such as the G20 Summit in Seoul. At Seoul, the end of American dominance in the world could be observed. The “Century of America” is coming to an end.

Ever since World War I, the United States was the most important military and economic power. Twenty years ago, after the fall of the Soviet Union, they became the single superpower. As former U.S. President George H.W. Bush said concerning a “New World Order,” he thought of it as embodied by the Pax Americana: the peace in the Western world brought on by U.S. victories abroad. Since then, however, it has all gone downhill.

The U.S. still dominates militarily, but in spite of this they can no longer afford a solo effort such as the war in Iraq. Economically, they are still by far the largest nation, but the fate of the economy is now in the hands of Europe and China. Barack Obama, who was in favor of a multilateral world order (in contrast with Bush junior), has to experience the bitterness of what this means in practice. Once loyal allies such as Germany are openly criticizing the monetary policies of the U.S. Federal Reserve.

At the Summit briefing, “undervalued currencies” were not on the discussion table (like the U.S. wanted), but cautions were rather made against competitive devaluation. Clearly, China would have been implied with the former, while the second can also be applied to the United States.

From the new G20 President Nicolas Sarkozy (France is taking over the G20 presidency from South Korea in 2011), the organization of twenty of the most important industrial and developing nations has decided to start a policy discussion on the currency system. Brazil’s finance minister Guido Mantega emphasized where this could lead to after the Summit: the strengthening of other reserve currencies at the expense of the U.S. dollar.

It was also symbolic that the Summit took place in Asia, and in a country which was hosting such a major international event for the first time. The Koreans have shown that a meeting of this magnitude can be informally and amicably organized — and it can be done even without grotesque security precautions like in Canada a few months before.

The self-confidence of such medium-sized nations also shows, then, that the American dominance will not follow a Chinese path. Mankind is perhaps actually attempting this with a new world order, because for the first time the deciding factor of power in the world lies no longer with military equilibrium, but rather with economic interdependence.

At one time Bill Clinton sometimes came to similar summits an hour late for no reason, and all the others had to wait for him. Obama is more polite and punctual. However, it is no longer certain that they would wait for him as well.