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Foreign Policy

Avoiding the Kindleberger Trap

Dec 01, 2023
  • Xiao Bin

    Deputy Secretary-general, Center for Shanghai Cooperation Organization Studies, Chinese Association of Social Sciences

2023 is doomed to be an eventful year, with international conflicts continuing to flare up — from eastern Ukraine to the South Caucasus to the Middle East. Conflicts may change or even overthrow the existing international order. But a revision or reconstruction of the order will trigger competition between the world’s major powers. To gain the upper hand in the changing the international order, each power will go all out to safeguard its own interests while counterbalancing its rivals to prevent them from acquiring interests that prevail over their own. In this way they expect to keep their fate in their own hands.

That’s why rational powers will choose strategies based on the behaviors of their rivals to protect their own interests, whereas irrational powers are likely to fall into the strategic trap schemed by rivals. Among the possible snares, the most harmful is the Kindleberger Trap. 

Strategic self-harm 

The Kindleberger Trap is omnipresent in great power competition and can determine the outcome. This is because the trap usually arises in underdeveloped regions, places that require global powers to support high-cost but low-output strategic attrition. However, the powers will easily tumble into a trap in which they see their strategic resources effaced. In the bipolar era of the Cold War, the United States and Soviet Union were scrambling for supremacy in the third world. After France left Indochina, the U.S. became the global power to vie for hegemony. It started the Vietnam War during the presidency of John F. Kennedy and expanded it during the Lyndon B. Johnson administration. By the time Richard Nixon took office, the war had cost the U.S. an estimated $176 billion.

From 1950 to the early 1970s, the Soviet Union was in growth mode. The U.S. began to fear that it would lose the Cold War when it saw the Soviet economy growing faster than its own. Therefore, the Nixon Doctrine was put forth and the U.S. adjusted its strategic forces in the third world. Meanwhile, the Soviet Union took advantage of the American strategic adjustment to expand into the third world at all costs, to edge closer to becoming the global hegemon. For example, it backed Cuban and Vietnamese troops in sweeping across Angola and Indochina and controlled the big power in East Africa — Ethiopia. Across the pond, the U.S. did not make much effort to intervene. However, just five years later the Soviet Union could no longer sustain its expansion. Its GDP growth rate began to fall steadily in 1975. It was not until 1979, when the Soviet Union invaded Afghanistan, that the Ronald Reagan administration started to fight back, and the Soviets found themselves caught in the crossfire both domestically and externally. Anatoly Dobrynin, the Soviet ambassador to the U.S., recalled that no senior government official came to consult them before the Afghan invasion about how the U.S. would react. 

Getting out of order 

In the past few years, the global order built by the United States has been rapidly losing order. In June 2020, the Council on Foreign Relations published “Perspectives on a Changing World Order” compiled by scholars from the U.S,. China, Italy, India and Russia.

 “The global distribution of power is inexorably shifting. … The United States is also growing more reluctant to bear the costs of world leadership,” it said. After Donald Trump, who outlined the “America first” policy, stepped down, Joe Biden’s “liberal hegemony” failed to prevent the world from getting out of order. Instead, the process is gaining speed under the multipolar world order promoted by Vladimir Putin. Therefore, America’s liberal hegemony and Russia’s multipolar world have influenced the international community’s basic understanding of global conflicts. Factionalism has replaced pacifism. The plight of being out of order would cause difficulties for the international community as it tries to unite to reverse the trend amid world views that are ripped apart. Major powers trying to save the situation fall into the self-consuming Kindleberger Trap. 

Evading risks 

With the international order in flux, major powers in competition with one another should circumvent the Kindleberger Trap. Russia has paid a heavy price for the Ukraine War. Its military spending now makes up 40 percent of its national budget and its modernization process has stalled. However, Russia seems to have learned a lesson from the U.S.-Soviet Union rivalry. It initiated a strategic contraction only five months into the war. In this way, Moscow responded to the Biden administration’s liberal hegemony and opened the door for an expansion of Washington’s leadership. Russia sought to induce the U.S. to damage its own strategic strength to relieve pressure from the war in Ukraine and from a domestic economic downturn.

Whether the U.S. has sunk into the trap designed by Russia is unknown. However, the latest Treasury Department figures showed a budget deficit of $1.7 trillion in 2023, as noted in a New York Times report on Oct. 20. Apparently, in major power competition, miscalculation is extremely dangerous for countries without sufficient mechanisms for course corrections. Being scrupulous, flexible, pragmatic, restrained and tolerant is key for them to gain a competitive edge. If a great power is excessively self-consuming and tired of contending, it will probably just hand the opportunity for success over to its rivals. 

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