The aftermath of the 200-08 financial crisis saw the word “leverage” become a popular addition to commonly-used English words. Referring to the use of debt or borrowed funds to amplify returns on investment, leverage, simply put, makes a sweet deal sweeter.
Soon, it became one of the prime catalysts of the impending turmoil that engulfed the whole world. A quick extrapolation into international politics suggests that even there, leverage is still king. A devastating weapon in the hands of mighty countries alone. Consider that.
History is replete with examples of the use of leverage as policy and means to an end. In the 1973 Arab-Israeli war, Arab members of the Organisation of Petroleum Exporting Countries (OPEC) imposed an embargo against the US, not only in retaliation to its decision to re-arm the Israeli military but also to gain an upper hand in the post-war peace talks. Here, the leverage remained the black gold: oil.
The International Monetary Fund and World Bank routinely bail out struggling economies. However, this saving of their neck goes hand in hand with political pliancy on the behalf of their wealthy donor countries! Leverage: bridging loans.
US President Ronald Reagan sold arms to Iran even when it had been put under international embargoes. The leverage he had eyes on: superpower clout.
Not long ago, Saudi Arabia asked Pakistan to pay back its much-touted loan of almost $2 billion in the wake of a diplomatic spat that saw Pakistan rail against the Saudi-led OIC over the Kashmir issue
Across the world, political campaigns necessarily rely on financing –
no matter how harsh its criticism may be. Similarly at play is the consequent and tacit expectation of these leaders doing the bidding of their donors post-elections. Leverage – sizeable donations.
Not long ago, Saudi Arabia asked Pakistan to pay back its much-touted loan of almost $2 billion in the wake of a diplomatic spat that saw Pakistan rail against the Saudi-led Organisation of Islamic Cooperation (OIC) over the Kashmir issue. Leverage – loan default.
All these examples confirm three notions. Firstly, morality and principles are first to be sacrificed at the altar of political expediency. Secondly, there are no permanent friends or enemies in global diplomacy. Only permanent national interests. Lastly, leverage – positive or negative – will be used wherever a stronger country needs to herd the weaker ones into line. While leverage works both as a carrot and stick, it is more of the latter than the former.
In this backdrop where leverage is still the king in international politics, what can the mighty get away with? And what can the weak do? For the wealthy superpowers, there isn’t much that they can’t get off scot-free for! This couldn’t be more obvious than the recent flashpoint in the Israeli-Palestinian conflict. The world heavyweights continued to support Israel as coverage by international media showed a similar bias. Israeli casualties were described as ‘killed’ while Palestinian fatalities were called “deaths.” You see, choosing the correct language also acts as leverage in the hands of closet interests. Whereas, in actuality, each loss of life should be mourned equally. And what about the downtrodden of this world? They can only plead, grovel and request. They can’t demand. And that is the fundamental truth of international politics, particularly one steeped in leverage. Thus, the weaker nations – especially the ones without any sort of leverage – shouldn’t expect any handouts from the wealthy. They will have to make it on their own and thus, should start quickly on the difficult road to self-reliance. This might give them a faint chance of not being wronged in the future.
History is replete with innumerable accounts where poor and defeated countries have picked themselves up by their bootstraps. Post-World War II, Germany and Japan became hallmarks in automobile engineering. The nascent US made a name for itself in defence production. Using an abundance of cheap labour, Far East and South East Asia excelled in manufacturing and industry. In a hostile region, Israel focused on technology and became a leader in computing and mobile applications. After independence from Malaysia, Singapore – a minnow surrounded by sharks – became the shipping hub for the entire region; ensuring its longevity in the comity of nations. Devoid of other appealing options, the UK ramped up its services sector–expressly after surviving two devastating World Wars. The result? Now, all these countries hold some sort of leverage to further their well-defined national interests in the global arena.
Unfortunately, this remains the only way out for nations at the bottom rung of the ladder: at the receiving end of leverage. That is, develop competencies; excel in some particular domains; create your own space in the world; expand your exports; focus on homegrown strengths and finally, define and keep national interests foremost.
“Blessed are the meek, for they will inherit the earth!” The jury is still out on that one.
The writer is Director Programmes for an international ICT organization based in the UK and writes on corporate strategy, socio-economic and geopolitical issues