The Economic Consequences of Mr. G.W. Bush's Foreign Policy. Can the US Afford it?

Abstract

Current analyses of the so-called neoconservative turn in US foreign policy tend to neglect its economic requirements and consequences. This is probably due to their long-run and uncertain nature, and yet one expects the foreign policy choices of a global power to be made with a clear understanding of their probable long-run economic costs and sustainability. The economic implications of unilateralism for the US may be complex and may stretch far beyond the accounting of the Afghan and Iraq campaign. The phenomenon that we should examine, if unilateralism is going to be a lasting choice, is a return to huge external borrowing requirement since Reagan’s “Star Wars” programme. The paper, intended for a non-economist readership, seeks to ascertain whether the ensuing scenario will be stable and sustainable from two interrelated perspectives. The first one draws together the various possible consequences suggested by standard international economic analysis. The second one is a historical-comparative analysis of the position of the US in the present global economic system vis-a-vis the previous experiences of Great Britain before World War I, and the US after World War II.