The hard fall of soft power

This week marked the passing of Joseph Nye, the well-known international relations scholar who coined the term ‘soft power’. This, he argued, was the kind of power wielded by a nation when it is admired and emulated abroad and its culture is consumed beyond its own borders. Nye believed that soft power complemented ‘hard’, military power — and for a relatively brief moment after the fall of the Berlin Wall, the United States unquestionably enjoyed dominance in both.

There is strange irony in the fact that Nye’s death came as the White House is accelerating its efforts to destroy what remains of American soft power. Donald Trump has ruthlessly attacked the rule of law in his pursuit of ‘mass deportations’ and his administration’s attempts to intimidate elite US universities have the potential to wreck their global reputation.

The gutting of the United States Agency for International Development (USAID) and the effective end of US foreign aid has been estimated to risk around 25 million deaths that might otherwise have been prevented. US soft power is at its lowest ebb since at least the Vietnam War, and probably since its emergence as a world power.

Perhaps the biggest unanswered question in world politics right now is how much China wants to assume the mantle of leadership that the United States under Trump seems intent on sloughing off. To judge by its spending on traditional overseas development aid, the answer seems to be that China is not yet willing to spend its way to replacing the United States in the soft power tournament.

Other forms of national soft power require freedom of expression and speech that allow the projection of all that is good and ill in countries, a form of transparent introspection — such as has been on display in South Korea — that limits Chinese influence globally.

Shahar Hameiri and Lee Jones argue in this week’s lead article that there has been a convergence in the way that foreign aid budgets are being spent: Western governments are becoming more like China in slashing direct spending and instead focusing on mobilising private investment, with a turn towards less transparency and lower standards.

Beijing, meanwhile, having made a huge splash with its infrastructure lending agenda in 2015, has become more frugal and now makes fewer loans for major infrastructure projects. Much of its aid now is aimed at protecting overextended Chinese banks from the consequences of their gung-ho overseas lending practices.

It has not been a great decade for the idea of foreign aid more generally. Spending from traditional donors in the West has dwindled in practical terms, as governments have found new ruses to reclassify other kinds of expenditure, such as on refugee resettlement, as ‘foreign aid’.

Trump’s move to shutter USAID and fold its rump into the Department of State has parallels, albeit more dramatic, to Boris Johnson’s move to cut British aid and incorporate the Department for International Development into the Foreign Office in 2020, and Tony Abbott’s similar moves with Australia’s aid agency, AusAID, which was absorbed by the Department of Foreign Affairs and Trade in 2014.

These moves had a dual motive: first, to save pennies in an area of spending with a very small domestic political constituency, and hence at minimal political cost. Second, to more formally align spending with national diplomatic priorities rather than humanitarian needs.

For China, the geopolitical advantages of its Belt and Road sovereign lending spree are perhaps not quite as obvious as they seemed to many at the time the initiative was launched. But it is hard to deny that many developing nations in Africa and Asia have acquired finance for hard infrastructure — particularly in electricity generation and transportation — that they would have struggled to obtain without China’s help.

Though many are now struggling with repayments, the counterfactual scenario, in which the infrastructure gap was allowed to widen even further, is one that would have further constricted growth in the world’s poorest countries.

Development aid alone will not lift poor countries out of poverty. Only rapid economic growth will do that. The worst aspect of the retrenchment of aid is that it is accompanied, particularly in the United States, by a ferocious return to protectionism that will depress global growth and make industrialisation difficult, if not impossible, for some of the world’s least developed countries.

Trump’s tariffs have already caused immense difficulties for lower-middle income industrialisers like Cambodia. They also threaten to close off critical development pathways for extremely poor countries like Lesotho, smashed by a punitive tariff that has nothing to do with its trade policy and everything to with the Trump administration’s economic ignorance. It is imperative that those middle powers that still believe in global public goods keep their own markets open to exports from countries shut out of the United States.

The collapse of foreign aid in this global environment will have devastating impacts. Even if China wanted to completely replace the United States in the provision of its foreign aid, it is not clear that it has the capacity. American retrenchment will have inevitable consequences, not just for the welfare of the world’s poor today, but also for the prospects of long-term economic growth that will make foreign aid redundant.

As Hameiri and Jones conclude: ‘However much the West and China may wish to compete for the Global South’s affections, the constraints of their respective political economies limit their offer’.

Economic growth and poverty reduction are about to get a lot more difficult for the poorest countries in the world. Great power competition between China and the United States may be heating up, but it seems — tragically — that it may take the form of hard power contestation, with all of its attendant negative externalities, not soft power. The world’s poor will pay the price.

This article was published by the East Asia Forum.