Niall Ferguson earned his doctorate in history at Oxford University. He is the author most recently of Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (Basic Books, 2002).

His other books include Paper and Iron: Hamburg Business and German Politics in the Era of Inflation, 1897-1927 (Cambridge University Press, 1995) which was short-listed for the Longman/History Today Book of the Year award; The World's Banker: The History of the House of Rothschild (Weidenfeld & Nicolson, 1998) which won the Wadsworth Prize for Business History; The Pity of War (Allen Lane/Penguin Press, 1998) which was also published in the U.S. and Germany; and The Cash Nexus: Money and Power in the Modern World, 1700-2000 (Allen Lane/Penguin Press, 2001) which was also published in the U.S., Germany, Italy, Spain, South Korea, and Turkey.

In addition, Ferguson edited Virtual History: Alternatives and Counterfactuals, a highly regarded book of "what if" history. Literary Review found it "quite brilliant, inspiring for the layman and an   enviable tour de force for the informed reader...A wonderful book...lucid, exciting and easy to read." Ferguson has contributed eleven chapters to books edited by other scholars. "Clashing Civilization or Mad Mullahs: The United States between Informal and Formal Empire" in Strobe Talbott (ed.) The Age of Terror (Basic Books, 2001) is of special interest to Americans.

Ferguson is also a prolific writer of journal articles. In Britain a sampling includes: "Public Finance and National Security: The Domestic Origins of the First World War Revisited," in Past & Present, 1994; "Keynes and the German Inflation," in the English Historical Review, 1995; and "Constraints and Room for Manoeuvre in the German Inflation of the Early 1920s" in the Economic History Review, 1996. In the United States some of his articles for 2003 are: "America: an Empire in Denial" in the March 28 Chronicle of Higher Education; "The Empire Slinks Back" in the April 27 New York Times; and "Hegemony or Empire?" in the September/October Foreign Affairs.

We gratefully acknowledge The Koret Foundation for a gift that has made possible the publication of this issue of Pacific Rim Report.

The question that I want to address this evening was inspired by my work on the British Empire, but the more time that I have spent in the United States, the more I have begun to see that my work on the British Empire has profound and important implications for the United States today. I want to try and draw out this evening some of those implications by addressing the question, "Is America, today, an empire?" The supplementary question is: "Should it be one?"

Empires are often best understood with the assistance of an atlas so let me begin by showing you some maps. (Not reproduced here for copyright reasons.) What I want to try and do this evening is to suggest to you that from a purely geographical point of view, the United States today has a distinctly imperial character. Now, in order to avoid needless semantic debate, let me make one thing absolutely clear. Empire is about more than the formal rule of foreign peoples. It is at least as much about, economic penetration, military projection, and cultural influence. In other words, if one were to define the American Empire too narrowly to include only those parts of the world which are under American control but are not parts of the United States and therefore not represented in Congress, it would be a very small thing indeed. It would include essentially Puerto Rico, and a few small islands scattered around the world which the US Air Force and Navy use as bases. My definition of empire is broader than that, and to illustrate what I mean, let discuss the first of my maps.

McDonald's is an organization that sells franchises to make their hamburgers and so the "McDonald's" map of the world map shows where in the world McDonald's has located its restaurants. In the past 10 or 15 years, the company has ceased to be primarily an American concern: the majority of McDonald's outlets are now outside the United States. What I like about this map is that it shows you where McDonald's is well-represented as a company,

but it also shows you where it is not represented. You will notice that there are virtually no branches of McDonald's in Sub-Saharan, or indeed Saharan Africa, with the exception of South Africa. I simply want to plant the idea in your mind that from the vantage point of the people who run McDonald's company, it is a global concern. Indeed, there was a recent interview with an executive of the McDonald's company in the Financial Times in which he extolled the benefits of being an authentically global company with the ability to reach markets throughout the world.

Now let me show you another map of the world. Some of you may know this map. Those of you who have never seen it before should take note. This is the world as it is seen from the United States Department of Defense, dividing it into five military commands, one of which, Central Command, or CENTCOM, will be well-known to you because it was the command responsible for executing the invasion and occupation of Iraq this year. In geographical terms, CENTCOM is in fact the smallest of the great commands of the US military. I am particularly impressed by the scale and scope of EUCOM, the command responsible for my own part of world, namely Europe, but also for Greenland, most of Africa, and all of Russia as far as the very farthest eastern parts of Siberia. EUCOM is also responsible, interestingly, for Israel. Now, this is not to say that the United States controls all the territories of the world, but it is to say that in the eyes of the American military it is capable of projecting its military power anywhere--literally anywhere--in the world.

But there is a third way of looking at the American Empire. Not simply in economic terms, not simply in military terms, but also in cultural terms. Disneyland is an interesting caricature of the world, it seems to me. It was in looking at a map of Disneyland that it struck me most forcibly that in cultural terms, too, there is a powerful, and some would say almost irresistible, American Empire. Joseph Nye, my future colleague at Harvard University, has often argued that American power is partly 'soft' power, by which he means that the influence of the United States owes much to the fact that it is attractive to other peoples. Without having to try terribly hard, America has made its own culture, including the culture of the Disney entertainment empire, irresistibly attractive to cultures quite different in origin from the culture of the United States.

Ladies and gentlemen, these three maps which I have introduced are intended to epitomize the three faces of American empire: the economic face, the McDonald's map; the military face, the Pentagon map; but also the cultural face, the Disney map of the world. To most of the rest of the world. to most Europeans certainly, it is self-evident that the United States today is an empire. Indeed, it is one of the greatest and most powerful empires in all history. I should say. that by my calculations there have been 69 empires in all of human history. I thought I should count them up because I felt it was important to emphasize that, exceptional though the United States is in many ways, as an empire it is not especially unusual; it is just the 69th (or 68th, actually, because you could argue that the European Union is the most recent of all the empires there have been.) It certainly is expanding very rapidly eastwards at the moment, but it is just the latest in a long succession of empires extending their influence militarily, economically. and culturally beyond the original borders of the state from which they have sprung.

This is obvious to everyone in the world except to you. By which I mean that I think I can say safely that the majority of Americans would reject quite vehemently the idea that the United States is an empire. One reason for this is that their political leaders consistently reject the idea themselves. I could have quoted many, many recent Democrat as well as Republican political figures at this point, but I have decided to select just one representative quotation from Defense Secretary Donald Rumsfeld:

"We're not a colonial power. We've never been a colonial power. We don't take our force and go around the world and try to take other people's real estate or other people's resources ...That's just not what the United States does. We never have and we never will." (27 February 2003)

Colin Powell used almost exactly the same line of argument in a lecture he gave in Washington in September. President George W. Bush has said similar things on numerous occasions. In fact it is not a peculiarity of the Bush administration to deny that the United States is an empire. Representatives of the Clinton administration said much the same; Richard Nixon said much the same in the early 1970s. It is a consistent trope, indeed, of American politics over the past century, really since the time of Theodore Roosevelt, who was, I suppose, one of the very few American presidents to have toyed with the idea of formal American imperialism.

American leaders have consistently denied that the United States is an empire and I think that most Americans are inclined to agree with this, though not all. I think particularly, speaking here in San Francisco, I should acknowledge my awareness of the fact that a substantial and influential part of what might be called the American left, at least since the later 1960s, has acknowledged and consistently argued that the United States has engaged in imperialism. But this is very much a minority view and one which I think has in many ways been discredited or marginalized since its zenith of influence at the time of the Vietnam war.

What I want to argue this evening is very simple. I want to suggest to you that there is a great paradox about this [American] empire in denial. And the paradox goes like this: In economic terms the United States is a daunting hegemonic power, if you like that word 'hegemon', which to me is in many ways simply a euphemism for 'empire'. It is, to use a wonderful French neologism, 'une hyperpuissance', a 'hyper-power' in military terms. It is also a cultural colossus. By many if not all significant measures, the United States today has greater economic resources, military firepower, and cultural reach than the British empire ever had, even at the very height of its power.

But, there are three fundamental sources of weakness which undermine the capability of the United States to function as a global empire. The first of these deficits is economic. The second of these is a deficit of manpower. And the third of these--perhaps the most important deficit of all--is an attention deficit. Indeed, what I want to try and argue this evening is that the United States is the first empire in history to suffer from an 'attention-deficit disorder'. And although this has the air of a rather glib, Oxonian joke, it is in fact a deadly serious problem. What I want to suggest to you this evening is that the combination of great power, of great capability with a short attention span could prove to be a fatal one in more than one part of the world where the United States is currently exercising, to all intents and purposes, an imperial role.

The economic power of the United States is almost unique in world history, and I want to show you the ways in which it is unique in its scale. There are many different ways of quantifying economic power. Let me try to illustrate the different ways in which this can be done to give as clear an idea as I possibly can of just how big the American economy is.

The World Bank computes gross domestic product (GDP) in a number of different ways. You can measure GDP in terms of current US dollars, and you can adjust it in one of two ways. You can adjust to allow for the fact, to put it very crudely, that a Big Mac costs somewhat more in the United States than it does in China, in other words, adjusting for 'purchasing power parity', and you can also adjust in such away as to eliminate the effects of inflation and exchange rate fluctuations over time.

If you do these various things, you come up with the figures that I have produced in FIGURE 1, derived from the most recent World Bank statistics for last year. What it shows you is the percentages of US GDP accounted for by the other great powers of the world today, the smallest of which is the Russian Federation, and then India, China, Japan, and the European Union. It is just possible to demonstrate parity between the European Union and the United States if you calculate in constant 1995 prices, but by almost any other measure, the United States economy is quite clearly the largest in the world. Let me put it differently. Depending on how you compute it, US GDP accounts for between 22% and 31% of all world output. The lion's share of global economic growth in the last five years has been accounted for by the United States, and to be absolutely specific, by private consumption in the United States. I will come back in a moment to the significance of this.

To set this in some sort of historical perspective let us compare the shares of world output of the United States and the United Kingdom since 1820 (FIGURE 2). Even at the very apex of its imperial power the United Kingdom never accounted for more than a tenth of total world output, whereas today the United States, as I have said already, accounts for between a fifth and nearly a third of the world's economic output depending on how you compute it. And this indeed is not the very peak of American economic power; in relative terms the United States economy was even larger in the aftermath of the Second World War when the other great economies of the world had taken such a beating. These are very daunting numbers, and they are truly breathtaking when one considers what a small percentage of the world's population lives in this country.

Let me briefly turn to the scale of American military might. If you simply compute the amount of money that the United States spends on its military it vastly exceeds the amount of money spent by the other great powers in the world. Indeed, FIGURE 3, which attempts to show some totals of military expenditure for the great powers, flatters the European Union quite considerably because the members of the EU spend a great deal of money on their military, but they spend it in a tremendously inefficient way.

Most of the money is spent on conscript armies which are barely of any use from a military point of view; they are woefully under-equipped, they are rather badly trained, and according to one senior NATO general I spoke to recently, only about three percent of them are combat-effective at this time. So, the purely financial measures of military capability understate the extraordinary scale of the American advantage.

One of the more interesting historical perspectives that I can offer you this evening is a comparison of the geographical deployment of American and British troops at two different imperial moments, 1881 in the British case, and the year 2000 in the case of the United States, the most recent figures that I have been able to get from the Statistical Abstract [of the United States]. One of the most interesting things that is worth pointing out is that in the heyday of the British empire, roughly the same number of British troops were deployed overseas as are currently deployed overseas by the United States, around about a quarter of a million, but the concentrations and the distribution were rather different.

As you can see from FIGURE 4 the British had a larger proportion of their forces in Asia because, of course, India was the jewel in the imperial crown, while the United States continues to have a very large military presence in Europe as a legacy, of the Cold War. Still, I think it is more than coincidental that the respective total figures are so similar. Both the United States today and Great Britain a hundred years ago favored the substitution of labor for capital; in other words, they relied much more on technology to project their military power than on manpower. A quarter of a million troops is not a great number

when your military claim is to police the world, and the most significant thing about both British and American imperial power is how much it relied, and relies, on technology: naval technology in the British case, naval, aerial, and indeed extra-terrestrial technology in the American case.

But now I come to the paradox. The United States is clearly vastly wealthier; has, as it were, vastly more resources over which to dispose, than the United Kingdom of a hundred years ago, and its firepower vastly exceeds what the British Empire ever had. Indeed, it is worth

remarking that there was no period when the British armed forces were so far ahead of the competition as the armed forces of the United States are today.

Nonetheless, there are, as I said earlier, three fundamental deficits which help explain why, despite these colossal resources, the United States is a relatively unsuccessful empire. The first of these will be obvious to at least some of the people in this room already: although vastly wealthy, the United States is a debtor empire, and this markedly contrasts with its British predecessor (FIGURE 5).

It also will be well-known to some of you that since the early I980s the current account deficit of the United States has grown very rapidly indeed, and is now equivalent to around 5% of the American gross domestic product. What is even more striking is the way in which the United States' net investment position relative to the rest of the world has shifted from surplus to deficit (FIGURE 6).

Right up until 1984-5 the United States was still, in net terms, an international creditor. Only in the relatively recent past has this ceased to be case and it has happened with dramatic speed. Today the net international investment position of the United States is minus 25% of American GDP. This is an extremely important difference between this anglophone empire and the last great anglophone empire.

What FIGURE 7 does is to compare the net foreign investment of Britain between 1875 and 1913 and the United States since the early 1960s. What is very striking, it seems to me, is that whereas in its imperial heyday Britain was a very substantial net exporter of capital--it was quite literally the world's banker--the United States today has become the great borrower of the world. This seems to me of profound importance. Those who speak of 'dollar diplomacy' (and there was a dollar diplomacy in the past for the United States) have a problem when it comes to the present because it is much harder to have dollar diplomacy when the dollars are borrowed from elsewhere. Let me expand on precisely what this signifies since it has a great deal of resonance given that we are meeting here under the auspices of a Center which studies the Pacific Rim.

Foreign holdings of the burgeoning American federal debt have grown very rapidly since the early 1990s (FIGURE 8). According to the most recent figures released by the us Treasury nearly half of the us federal debt is now held by foreigners. What is particularly interesting is to know which foreigners are buying the increasing volume of us Treasury bonds. The principle buyers in the last year or so have in fact been the central banks of Japan and China. The extent to which the United States' fiscal policy and consumption generally are dependent on inflows of capital from Asia is really quite extraordinary. It is absolutely clear that without the willingness of Asian institutions to invest in the bonds issued by the US government, interest rates in this country would have risen significantly higher than they have in the past six months. Whatever the economic significance of this, its strategic significance should now be clear.

For the United Kingdom a hundred years ago the world was a simple place, a place in which Britain was the bank manager; it made the loans and it had the power that the lender, the creditor, generally has. Today, however, the United States is becoming ever more reliant on the goodwill not only of Asia but also of Western Europe, which is another major holder of American dollar-denominated assets. One question I would ask is, whether or not you can be a powerful debtor empire; whether a debtor empire can ever hope to be as powerful in economic terms as a creditor empire?

In many ways what I have said so far understates the looming scale of this dependence. In an article in the most recent edition of the magazine The National Interest Larry Kotlikoff, an economist at Boston University, and I explore the significance of the fact that the official fiscal statistics for the United States seriously understate the impending fiscal crisis of both the Social Security and Medicare systems.

FIGURE 9 shows you, firstly, the federal debt held by the public, which is around $5 trillion in size, and the US gross domestic product for this year, which is just over $10 trillion, but the large bar on the far right of the chart tells you the rather alarming story of the scale of the imbalance in federal finances over the long term. If you calculate the present value of all the future tax revenues of the federal government and the present value of all the future expenditures of the federal government, the 'hole'--the difference between these two numbers--is of the order of $44 trillion.

To give you an idea of precisely what this generational imbalance means, let me offer you some rather terrifying fiscal arithmetic. It has been calculated by Kotlikoff and colleagues who are concerned with the so-called 'generational accounting' method of fiscal analysis that you could do four possible things to close the gap which currently exists in federal finances (FIGURE 10).

You could cut all government purchases by nearly two-fifths, you could cut all government transfers by 44%, you could raise all taxes by a quarter, or you could raise just the federal income tax by 68%. It need hardly be stated that no American politician could propose any one of these policies and expect to be anything other than electorally annihilated. So, one of the puzzles that we face is that there is a profound latent crisis in the finances of the United States federal government which no politician dare acknowledge. The dependence of the United States on foreign capital can only increase until such time as Americans recognize that particularly the system of Medicare, but also to a lesser extent the system of Social Security, are chronically unbalanced and will become more so as the so-called 'baby-boom' generation retires. These are profound economic weaknesses the full magnitude of which very few Americans I know appreciate.

So, that is deficit number one. I told you that this wasn't going to be a bunch of laughs when you were laughing at the beginning. And it gets worse. The second great deficit which characterizes the United States is already obvious in Iraq today. It is clear that the United States has deployed its maximum available combat-effective troops in Iraq. Only by going 'cap-in-hand' to the United Nations Security Council, as it has done this week, and seeking a resolution creating a United Nations peacekeeping force, can the US hope to succeed in policing postwar Iraq effectively. To put it very crudely, the US turns out to be incapable of putting sufficient boots on the ground. This is not surprising (FIGURE 11).

The size both of the defense budget and of us defense capability in manpower terms has been declining steadily not only since the end of the Cold War, but one could say since the end of the Korean War. When one looks at exactly where American service personnel are it is quite interesting to realize that relatively few of them are deployed overseas. The percentage (as FIGURE 12 shows) of us service personnel stationed in the United States is quite high, over 80%. A relatively small of number of American personnel, particularly since the end of the Cold War, have been deployed overseas. So, although there is a manpower shortage overseas, that partly reflects the fact that the American military prefers to stay home. This is a general American syndrome, it seems to me.

In an article I wrote for the New York Times Magazine earlier this year I argued that the phrase 'don't go there' sums up the attitudes of the United States as a whole, not only of their military personnel, but of the population in general. Relatively few Americans want to spend long periods of time overseas. This is still and will continue to be for the foreseeable future a country that imports more people than it exports. Relatively few Americans aspire to settle overseas.

Compare this, ladies and gentlemen, with the way in which Great Britain functioned a hundred years ago and, indeed, had functioned since the early 17th century when it began to populate parts of the 'New World'. Imperial Britain exported people at an astonishing rate. More than 22 million people left the British Isles between the early 17th century and the 1950s. It was an empire based in very large measure on overseas settlement and of course on the willingness of British soldiers to fight abroad. If you look at the number of Americans who actually live abroad today it is a remarkably small number and most are actually concentrated either in Mexico and Canada or in Western Europe (FIGURE 13).

They are not, in fact, to be found in areas we might regard as strategically crucial today to the United States: scarcely any Americans live in the Middle East outside Israel. So this is not only an empire with relatively few soldiers on the imperial periphery; it is an empire without settlers willing to go and live on the imperial borderlands. This seems to me a fundamental source of weakness. It is extremely hard to impose your authority by relying exclusively on a small mobile force of a quarter of a million troops and not a great deal else.

As I see people in the audience looking at their watches, this is an appropriate point at which to turn to the question of the attention deficit. I don't mean to suggest anything disparaging. It seems to me the real point about the attention deficit disorder is that it is inherent in the American political system. It is characteristic of this kind of democracy that it is very hard to elicit long-term commitment from the electorate to the nasty business of imposing the will of the United States on hot, poor countries. Let me try and explain precisely what I mean by this. It used to be said, certainly in the period of the first Gulf War, that the United States had "kicked the Vietnam syndrome." I take 'Vietnam syndrome' to mean the tendency for public support to diminish in the face of military difficulty.

Well, as FIGURE 14 shows, it is very far from the case that the Vietnam syndrome has been kicked. In reality the Vietnam syndrome has got worse. On the one side of this chart you have the public approval of the Iraq situation (left hand axis) and you can see that it has fallen by about 20% since April of 2003. The black line--I am afraid to say it is a rather chilling and macabre chart from this point of view--shows the cumulative coalition deaths, including British as well as American troops, although the clear majority--something like 300 of the total--are indeed Americans. What this chart shows you is that in a remarkably short space of time, and for a total body count of just over 300, public support for the situation in Iraq has declined by a fifth. Compare this with the comparable statistics for the Vietnam War (FIGURE 15).

Once again one can see a decline in public approval coinciding with a rise in American casualties. But two things, I think, will have immediately struck you. Firstly, the 20% fall in public approval of the War in Vietnam took much longer to happen; it was spread over several years in fact in the mid-1960s. The second point is that a great many more Americans had to be killed before public approval fell by as much as 20%--something in the region of 40,000 to 50,000 killed in action.

When I talk about an 'attention-deficit disorder' I mean something quite specific. I mean the willingness of the American electorate to persist with difficult overseas operations. It seems to me that this attention deficit has become a more rather than a less serious problem since the 1960s. Now, nobody would say, even for a moment, that it isn't tragic that 300 American servicemen have lost their lives in Iraq; of course it is. But in the great scheme of military history this is a relatively small total of casualties for an operation of this scale. It is also, ladies and gentlemen, not a very long time, in imperial terms: a mere six months. Six months after the end of the Second World War I can assure you that West Germany was not in particularly impressive shape. Had you visited Japan six months after V-J Day you would not have seen much sign of the impending economic miracle.

The most important point that I am going to make this evening is this: If the United States is serious about what euphemistically is called 'nation-building', in countries as difficult to contend with as Afghanistan, as Iraq--and let us not forget Bosnia and Kosovo--it must recognize that to introduce the institutions of the free market, of the rule of law, and ultimately of representative government in such countries cannot be done in a time frame of six to twelve months. It cannot be done in a time frame of 24 months; I doubt very much if it can be done in the space of four years. And yet all American politicians, because of the very nature of the democratic system in this country, are under pressure to deliver results in precisely those short time frames. If one attempts to calculate the duration of British occupations the average comes out to between 100 and 150 years. When the British occupied Iraq at the end of the First World War General F.S. Maude declared on arriving in Baghdad (it took about 21 days, incidentally, for him to get there), "Our armies do not come into your cities and lands as conquerors or enemies, but as liberators." If that sounds familiar to you, it should.

The idea that one can impose liberty, that one can force people to be free is not an invention of recent American history. It has been a characteristic feature of anglophone empires since the 18th century. Even the idea of an "empire of liberty" which Thomas Jefferson used was being used by Edmund Burke in England, long before the Declaration of Independence, to justify British imperial rule as superior to French or Spanish imperial rule.

It is a fundamental, if you like, common factor between the two great anglophone empires that they aspire to bring economic, legal, and ultimately political freedom to foreign countries living under less satisfactory regimes. Their aspirations have much in common but there are these three fundamental differences. The first, as I have said, is that the American aspiration has to be financed by borrowing from abroad. The second is that whereas the British were willing to go and live in the hot, poor countries they sought to transform, Americans are profoundly reluctant to do so; there is a manpower as well as an economic deficit. But, third, the most important weakness of all, is that whereas the British thought in terms of decades if not in centuries when they embarked on nation-building, Americans are inclined to think in terms of months.

Let me offer you some brief conclusions, and then fall silent and invite you to ask me some questions.

As a matter of fact, ladies and gentlemen, I do not think that of the three deficits just noted the economic one need, necessarily, be fatal. Why shouldn't the Japanese and Chinese, and indeed the Europeans, fund American consumption indefinitely so long as Americans are consuming their exports? And why shouldn't it ultimately be possible to bring the costs of the Medicare system under control? These things are conceivable. The manpower deficit is, I think, also solvable. We took a step towards solving it today. If it is possible to get a United Nations peacekeeping force into Iraq in support of the American authority (and I think that is what the resolution agreed to today says) then before very long there will be other troops on the ground doing those low-intensity conflict policing jobs that the US Marine Corps hates to do. This is a step in the right direction. It was never wise to embark on any project of so-called nation-building unilaterally. It will always be necessary to draw on other forces to make the job of peacekeeping viable. This is solvable, too. I don't see any reason why the UN shouldn't provide quasi-mercenaries to [Coalition Provisional Authority Administrator L. Paul] Bremer's authority. It is surely in the interest of all the members of the Security Council to avert a complete collapse of order in Iraq.

I would also offer you a Roman solution to the problem of the manpower shortage. I was very struck by the fact that a number of those soldiers in Iraq earlier this year who received Purple Hearts for their role in the invasion force were simultaneously receiving citizenship. The American legions, rather like the Roman legions, are already offering an extremely attractive deal; serve in the armed forces and become a civis romanus--become an American citizen.

You also have in your prisons a wonderful reserve force of manpower. It is really quite extraordinary to have two million mainly young and able and violent men incarcerated in penitentiaries who might be much more profitably used, as indeed their counterparts were used in the British empire. There would be no Australia, as we know it today, had it not been for the decision to take the inmates of the prison hulks of 18th-century and early 19th-century Britain and send them into exile in the Antipodes. Incidentally, I make this proposal not in the spirit of Jonathan Swift, but quite earnestly. It is completely grotesque to have so many people locked up, engaged in an entirely futile existence at these universities of crime studded around your country. Two million prisoners and 250,000 combat-effective troops is no way to run an empire. The manpower shortage is solvable; it merely requires a little creative reallocation of your resources.

So, I believe the fiscal and manpower deficits can be solved. But I do not believe that the attention-deficit disorder can be cured. I wish that weren't the case, but it does seem to me inherent in the American political system and, indeed, in American political culture that long-term occupations of remote foreign places are not popular. This is tragic because it means that the worthy enterprises of nation-building and regime change in failed states and against rogue regimes will fail. And they will fail for one very simple reason; if you take nothing else away from what I say tonight, take this away: empires are not based exclusively on coercion. They are also, and indeed primarily, based on the cooperation and collaboration of local elites. That is the most important lesson of my book, Empire. It wasn't the 900 Oxford-educated elite 'mandarins' in the Indian civil service who single-handedly ran British India. British India ran because the Indian elites had an interest in making it run.

But why, ladies and gentlemen, why would anyone want to collaborate with a provisional authority that will be gone within the space of 12 to 24 months? What possible incentive could there be for an ambitious Iraqi to link his fortunes to a regime, no matter how benign its intentions, that will soon disappear? It is impossible to elicit the collaboration and cooperation of local elites if your time frame is so short, and that is why the more the United States declares that it will leave Iraq soon, the more it promises to go, the more difficult it will be to establish order in that country. This is the central paradox of American power. And this is not an insight unique to the United States in Iraq today. It is a general truth associated with all imperial structures of rule.

It worries me deeply that this great nation with all its wealth, with all its ingenious weaponry, is already teetering on the brink of a premature abandonment of the projects it has undertaken in Afghanistan and Iraq. I very much hope that Americans will realize the danger of a premature exit from either of these countries. Al Qaeda came of age in the anarchy of Afghanistan; the rogue regime of Iraq could yet be replaced by afar worse regime, a nightmare scenario which combines revolutionary Iran with Milosevic's Yugoslavia and the economics of modern-day Haiti. Ladies and gentlemen, the stakes are extremely high. My belief is that the United States is an empire but an empire in denial. It is already performing all the classical functions of all the great empires of the past. But, until it attains self-knowledge, this empire will, I fear, be one of the least successful in all history.

Thank you very much.

AUDIENCE QUESTIONS

In an article you wrote I recall you asking, "What does Britain get out of going into Iraq?" My recollection of your conclusion was "very little, if anything." Did Britain get anything out of it, or was it a bad mistake?

There are two different questions here. The first is, "Did Great Britain get anything out of participating in the recent invasion and occupation of Iraq?" I think not. I think one of the peculiarities of Britain's position today is that it currently straddles the Atlantic divide in away which is almost inherently dysfunctional.

Being the loyal ally of the United States in military terms is all very well, but it becomes impossible for the United Kingdom to get any material benefit from this in so far as it's a member of the European Union in all economic negotiations. This is the paradox of the British situation. So, in a sense Britain could not really expect to gain from its loyalty in 2003 because it would be impossible, as long as we are members of the European Union, for us to receive any special treatment in economic terms from the US. That is why, I think, from a narrowly British standpoint, Mr. Blair's policy is actually a rather risky one.

I happen to think that Mr. Blair has been morally right in what he has done, and I don't say that very readily because I have often criticized him in the past. But I think Mr. Blair has made the case for the war against Iraq more eloquently than any American spokesman. And indeed I think his speech in the House of Commons shortly before the war was one of the great speeches of post-WWII British politics. But if you ask yourself what this does for the narrow self-interest of British subjects--and I still call them subjects, not citizens--it is very hard to see.

Your second question can also refer back in time. What did Britain gain from its first occupation of Iraq? And this is a very interesting question. It is amazing how few Americans know about the British occupation of Iraq after the First World War, because it seems to me to be the most obviously relevant case study we could turn to at this time. What the British did was really very ingenious, and they did it on a shoestring. After the end of WWI they ensured that they controlled Mesopotamia and then they very swiftly created a governmental structure in their own image, the constitutional monarchy of the Hashemite King Faisal. The mandate that they established with League of Nations authority, in other words with international legitimacy, continued from the end of WWI until the early 1930s. Indeed, informally the British remained influential in Baghdad right up until 1958. During that period it was not just important but vital that the British Empire retained power in the Middle East. With the end of British power in the Middle East in the 1950s came the end of the British Empire.

So it seems to me that there are two separate questions here. One is, what can one gain from controlling one of the key strategic parts of the Middle East, and the answer is, a great deal. Both economically and strategically it makes a great deal of sense for the United States to exert power in Iraq. The second question is, what's in it for America's allies? And that I think is much harder to answer because it is far from clear to me how the United Kingdom can benefit from this policy other than in one simple, but important respect--being well-liked in the United States.

If, ladies and gentlemen, the supporters of Arnold Schwarzenegger should succeed in amending the American constitution in such a way that it is possible for one not born in this country to run for presidential office, Mr. Schwarzenegger will have to watch out because Mr. Blair, I think, will be a far stronger candidate.

I admire your writings a great deal, but I think you are a little bit off the mark with your presentation. Aren't the differences between the American empire, if you want to call it that, and the British empire so great as to overwhelm the historical comparisons? If you ask economists they will tell you that only non-economists worry about deficits, the effects of which depend on the growth in the economy. In terms of manpower you have a similar problem; you talk about boots on the ground and your 1930s commander from Britain taking 21 hours to get to Baghdad, but today in the world of globalization and instant communication this is all irrelevant. And as for the attention-deficit disorder, the Americans were in Europe for 40 years. Who actually has this disorder? Who slept while Bosnia in the backyard of Europe was falling apart?

One of the most common illusions of the present age of globalization is to believe that it has nothing in common with any previous era of human history. But let me take you back a hundred years. A hundred years ago international financial commodity and labor markets were in fact more integrated than markets are today. There was freer trade, there were no restrictions on capital movement, and there were no restrictions on migration such as those that currently exist. I would argue, and indeed I am happy to demonstrate to you at great and tedious statistical length, that globalization today is far less global than it was a hundred years ago, because most capital flows today are actually within the developed world; virtually none goes to the poor countries of the world.

One of the best arguments for the British Empire is that it acted as a kind of channel for capital export to poor countries. Only about two percent of total international capital flows today go to countries with a per capita income of a third or less than the United States. If you go back a hundred years somewhere between a third and a half of all international capital flows went to poor countries and that was because those poor countries were under some form of British rule. Therefore, there was a no-default guarantee. You would be much more likely to invest in Rhodesia a hundred years ago than you would to invest in Zimbabwe today.

I actually think that in terms of communications revolutions the late 19th century has everything in common with our own time. When the telegraphs were laid across the oceans, when the great revolutions occurred that transformed steamship and rail travel, the world contracted, in relative terms, even more dramatically than it has contracted in our own time with the advent of jet planes and the internet. In that sense we are living through a kind of second age of globalization. And that is why, it seems to me perfectly legitimate to look back a hundred years ago and try to learn lessons for the present. We flatter ourselves in thinking that our world is so different from the world of a century ago.

Now the second point about manpower is a crucial one. No amount of mobility can compensate for the fact that right now the United States is at full stretch. It would literally be beyond the capability of the US military to undertake another invasion. The problem of North Korea could only be resolved with resort to airpower; there really aren't any land forces available. In that sense I think the manpower issue is crucial. It is crucial in Iraq already, and it already acts as a serious constraint on America's strategic options.

You brought up Bosnia and I am only happy to agree with you. The role of the United Kingdom and, indeed, all the European powers in the Bosnian crisis was catastrophic, and it was entirely to the credit of the Clinton administration that it belatedly recognized the need to intervene. And we shouldn't forget that in intervening ultimately in Kosovo, Bill Clinton did something rather more radical than anything that's been done by George W. Bush because that intervention didn't have a UN Security Council resolution backing it--something that is conveniently forgotten by most of Mr. Bush's Democrat critics.

You made one last point that I would like to address. There are two, maybe three cases which I didn't mention, but I should have mentioned, when the United States has succeeded in bringing about regime change and successful nation-building, when rogue regimes have been transformed into model democracies with free market economies. Those cases are West Germany and Japan, and one might also mention South Korea. What's interesting about those cases is that they are the only cases when the US has maintained a military presence of any great duration. The fact that the military presence is still there today seems to me to speak volumes for my case; when the US has committed itself long term it has succeeded. Where the interventions have been of short duration--one thinks of Somalia, Haiti; one could mention so many--then it has been unsuccessful.

If I have interpreted your remarks correctly the justification for the American-British invasion of Iraq was essentially oil. How does the average American benefit from the corporate quest for economic domination?

Well, actually, you mentioned oil, I did not. I do not regard oil as being the prime reason for the invasion of Iraq. It certainly is much more important to West European countries and indeed to Japan that Middle Eastern oil reserves should be accessible than it is to the United States. If this war was about oil the French would have fought it.

The really interesting thing about the war is that it had really too many justifications for them all to be credible. The most important one, and here we enter controversial territory, but bear with me, was the credibility of the United Nations itself. I know very few people who can tell me the total number of UN Security Council resolutions issued with respect to Iraq. If I were a mean kind of speaker I would invite you to guess. [From the audience: "14!"] No, in fact there have been 22 in the space of just four years and if one goes back to 1991 it is an even larger number. These resolutions were systematically defied by Saddam Hussein, and indeed the weapons inspection regime failed once with what can only be described as French connivance and was, in my view, failing a second time. The credibility of the UN itself was at stake earlier this year and it seems to me that when historians write the history of this period they will look back and say, paradoxically, that the credibility of the UN was restored by the American and British action. That is certainly one inference one could draw from today's resolution which in effect sanctions the authority established by the United Kingdom and the United States in Iraq.

But there is a second and more important justification. This was a terrible regime. Human Rights Watch estimates 300,000 civilian victims of Saddam's tyranny. The only real criticism that can be made of American foreign policy is that it took too long to intervene to overthrow this tyrant, not that it did it at all. From a purely human rights perspective this was, I think, a just war, and oil, I would argue, was really of secondary importance. The real significance of oil is that it is urgently needed in order to help finance the reconstruction of the country now that it has been liberated.

Is the media and news technology that this country and other developed countries have actually a contributing factor to the attention-deficit disorder? Isn't expecting events [in Iraq] to go faster a trend not necessarily confined to America?

Well, I think the idea that the 24-hours news channel is a near universal phenomenon is indisputable. Nor is the idea that one yearns for the 90-minute war peculiar to the United States. But it is the US that is in the position of strategic superpower. It is the US that has to make and secure long-term public support for these commitments. So when I say there is an attention-deficit disorder it is not so much that it is unique to the United States, it is just that it matters so much more here than it matters, say, in Western Europe.

The three faces of the American power are the cultural, the military, and the economic, but the deficits that you bring up mostly affect the military aspect. Can you give some context of how cultural and economic power affect the American empire?

I think I have probably talked at excessive length about the economic deficits in the sense that it is extremely perilous for the United States to rely as much as it does on the good will of foreign investors. And it is good will. The returns that foreign investors get on American long term bonds are very low, and indeed have been negative for Europeans as a result of dollar-depreciation. This, it seems to me, is a potential if not an actual source of vulnerability.

One of the big questions we have to address here is what would happen if foreign investors revised downwards their assessment of the credit worthiness of the United States. What would happen if they no longer purchased this growing stream of bonds issued by the federal government? One obvious thing is that interest rates at the long end of the curve would go up, and that would send mortgage rates up, too. One of the fascinating things we have to face, ladies and gentlemen, is the possibility of a simultaneous increase in long-term interest rates and a decline in the dollar. For economists this is rather a nightmare because these two shocks have opposing and contradictory effects. Nobody, in fact, knows what could happen. We are, I think, much closer to a major shift in expectations of the sort we saw in the mid-1980s than many people in Washington are prepared to admit.

But the point that you raise that is really interesting is a legitimate one as far as the cultural question was concerned. I said very little indeed about American culture after I showed you the map of Disneyland, and I was conscious of the omission as I was talking. There is a great paradox about American popular culture: it is possible to imbibe it and yet to hate America. This is easy to detect wherever one goes. It is the terrorist in the Nike trainers [athletic shoes]. It is the French teenagers who will enjoy Terminator III, but at the same time denounce American imperialism.

When Joseph Nye and I have debated the nature of soft power I always come back to a kind of bottom line. The problem with soft power is that. well, it is soft. If you go back to the 1930s the British empire had a fantastic window of opportunity to demonstrate the efficacy of soft power because it was in the inter-war period that the British Broadcasting Corporation--the BBC--hit on the idea of broadcasting in foreign languages. The BBC World Service foreign language campaign was one of the most inspired bits of inter-war empire building. Interestingly the very first BBC foreign language service was in Arabic.

The British always had a very shrewd idea of which parts of the world mattered most, but by the mid-1930s they were broadcasting in all the major European languages and it caused the Nazi regime a great deal of difficulty because German language BBC broadcasts were secretly listened to by many Germans under the Third Reich, and indeed it became illegal to listen to them under Hitler. But at a time when the BBC had a virtual monopoly on this kind of soft power, did it actually work?

The answer is, not really. It didn't really stop in any way the decline of British imperial power and I feel the same way about CNN and MTV. In the end they do a tremendous job of projecting American ideas and values all over the world. It is almost impossible to escape from these networks if one travels in the developed world. Does it fundamentally enhance American power? Does it make the United States a more legitimate hegemon in foreign eyes? No. It is almost wholly ineffective, it seems to me. Clearly there is no deficit when it comes to culture; the US exports a great deal more than it imports and yet paradoxically this great cultura1 surplus' really doesn't seem to help. If one looks at the Global Attitude Survey published by the Pew Research Center for the People and the Press, this is a very striking finding. People on the one hand imbibe a great many American values but at the same time they express their hostility to the United States. That is the trouble with soft power; it is soft.