Regime matters

A recurring error in Western analysis is to not take ideology (particularly religious ideology) or regime structure seriously in analysing the behaviour of other states. Historian A J P Taylor's famous statement that:

In international affairs, there was nothing wrong with Hitler except that he was German. 

is a manifestation of this. But so is the notion that if we just talk it out, a solution can be found.

Sadly, this is not even remotely always true. As freelance journalist-blogger Michael J Totten observes:

If Hamas simply wanted independence for a Palestinian state, the two sides would only have to work out the details. But Hamas wants to “liberate” and “end the occupation” not of the West Bank but of Tel Aviv, Haifa, and Jerusalem. It isn’t possible to negotiate a deal with these people. They aren’t interested in negotiating anything more than a temporary cease-fire. Hamas and the entire ideology behind it must be eliminated or at least marginalized before an end to the conflict will be in sight.

Quite. Bargaining requires that the other party is accepted as a legitimate bargainer and that bargains with them are things to keep. Neither proposition is self-evident or universal.  Even if these two propositions are accepted, differing assessments of relative power can still frustrate successful bargaining. As historian Geoffrey Blainey observes in The Causes of War, it is only when the two sides have converging views of their relative power that wars end. 

Limits of geopolitics

Geopolitics does matter. If you look at the triads of the UK & Ireland, US & Canada, Australia & New Zealand, size and geography does much to explain why the bigger in each pair is more militarily engaged with the world than the smaller in each pair--which can "free ride" off the efforts of its larger neighbour. But only because each does not feel threatened by its larger neighbour: on the contrary, each acts on the basis of being shielded by it.  Hence geopolitics is not determinative. Canada and the US might be neighbours, but that both are British-descended, English-speaking, common law, neo-Europe federal democracies does more than mere geography to explain their interactions.  

Regime matters

Regime structure affects foreign policy because it affects the outlooks, fears and aspirations of the regime. Second Reich Germany pursued Weltpolitik because it was a way of using nationalism to politically mobilise the expanding middle class behind the dynastic-aristocratic regime. Leading to the most disastrous military investment in history, the Imperial German Navy or Kaiserliche Marine--large enough to make Britain feel threatened (and so to ally with traditional rivals France and Russia against Germany), not actually large enough to defeat the Royal Navy. Leading to Germany's defeat in the Dynasts's War and the collapse of its dynastic-aristocratic regime.  (The War also brought down the dynastic regimes of the Danubian Monarchy, Romanov Russia and the Ottoman Empire.)

Just as regime structure is affecting the foreign policy of the People's Republic of China, hence:

China’s relations with many states, especially those to its south and to its east, have spiraled downward in recent years. By now we should realize that Beijing’s troubles with the international community have little or nothing to do with others.

Instead, according to the analysis of Beijing University political scientist Shi Yinhong, they are a product of:

the nationalism promoted by the Communist Party, the beliefs of senior leaders, and the dynamics inside the People’s Liberation Army. China, in short, is trapped in dangerous currents, almost all of them attributable to the flaws inherent in its particular brand of authoritarianism.

Or, to put it another way, a rather unpleasant mixture of the features of the regime structure of Second Reich Germany prior to 1914 and of Imperial Japan prior to the start of the Pacific War. US political scientist Walter Russell Mead points out that there are some very significant differences between the strategic situations of Second Reich Germany and the People's Republic, but the similarities are enough to be worrisome. 

Regime constraints

A useful 2007 paper compares (pdf) C16th Habsburg Spain and C18th Great Britain as states using borrowing to finance military effort. The paper argues that Habsburg Spain (which ended up regularly repudiating debt) actually made a greater fiscal effort to sustain its borrowing than did C18th Great Britain (which never repudiated its debt). On the contrary Great Britain relied more upon fiscal repression (i.e. keeping interest rates low) to finance its, ultimately much more successful, war efforts.

Having recently read Fragile by Design (2014), that suppressing private competition for credit was part of the Bank of England bargain was perfectly clear. Especially as, once the Second Hundred Years War against France had been won, said bargain was progressively re-done to open up private access to credit.

What I found a little surprising about the 2007 paper by Mauricio Drelichman and Hans-Joachim Both is that they did not refer to a rather crucial difference in political regime between C16th Habsburg Spain and C18th Britain--that the former was a highly autocratic regime and the latter a Parliamentary regime. They do note that C16th Habsburg Spain relied largely on foreign borrowing while C18th Britain relied overwhelmingly on domestic borrowing, but do not seem to have thought through why that might have been the case.

Autocrats find it difficult to borrow internally, because those subject to their power are not in a good position to make reliable bargains. Such as, for example, repayment of funds borrowed.

Parliamentary regimes are in a much better position to borrow domestically, because the legislature is in a position to ensure the bargains are kept (and the funds are spent congenially). It is no accident that bonds start in the mercantile Serene Republic of Venice just as its government was becoming more consultative and Parliamentary.

So, autocratic Habsburg Spain was not much able to tap into domestic funds, so had to pay whatever interest rates the foreign bankers demanded. Which rose higher and higher with each repudiation of debts. (This is called "bankruptcy", but it is not really the same as a private--particularly not a corporate--bankruptcy, as the state continues on its way.)

Conversely, C18th Great Britain was in a great position to borrow domestically, because Parliament had the power to enforce bargains and the borrowing was for purposes that cohered with the interests of those represented in Parliament. Hence the British state could engage in "fiscal repression", with low interest rates, while it defended and expanded the commercial possibilities of those represented in Parliament. (Habsburg Spain's strategic aims were rather less broadly grounded.)

So, regimes matter.


[Cross-posted at Skepticlawyer.]