Robert Samuelson March 23, 2013

For the record, it’s worth noting that Russia’s swift seizure of Crimea confounds and contradicts one of the hopeful axioms of conventional wisdom. The presumption — rarely stated openly but widely believed — has been that the growing economic interdependence of nations reduces traditional geopolitical conflicts. Globalization deters war. Countries have too much to lose to risk conflicts that will antagonize trading partners and international investors. The tendency is to “work things out” rather than threaten these vital relationships.

This vision of a world pacified by economic self-interest is largely an American one. It projects U.S. optimism onto the rest of the world. Americans’ obsession with “getting ahead” defines us. It provides a common denominator for inclusion. The shared striving for economic success mutes differences of religion, region, race and ethnicity, where conflicts and contrasts are more unyielding. We can all join the rush for riches without sacrificing the exclusionary aspects of our personal identities. What worked for us can work for everyone. It is easier to settle economic disputes than more stubborn disagreements stemming from heritage, history and values.

Up to a point, the past half-century has vindicated this vision. Its greatest achievement is the European Union, which started as “the common market” and demonstrated that economic integration can muzzle the animosities of centuries of war. “Our story is of enemies making peace,” as one E.U. official says. Conflicts along national lines haven’t disappeared, but they have moved from battlefields to bureaucracies.

The end of the Cold War gave the vision another boost. The competition between capitalism and communism was settled. The American money chase seemed to go global. Cross-border trade and investment increased rapidly. The emergence of middle classes in some countries (South Korea, Brazil, India, China) provided strong constituencies for economic development. Although conflicts didn’t vanish, they seemed to originate increasingly from non-state actors (al-Qaeda), regions (Africa) and countries (Afghanistan) at the fringes of the global economy.

This economic ideology was uplifting. For some countries, it rationalized reduced military budgets. But in annexing Crimea, Russia defied the norms of this new world order. Russia resorted to military power, not diplomacy. It disregarded the threat to its economic interests and the economic interests of its trading and investment partners. It flaunted its nationalism.

We’re relearning an old lesson: History, culture, geography, religion and pride often trump economics. The nation-state remains, reminds Harvard political scientist Jeffry Frieden, author of “Global Capitalism: Its Fall and Rise in the Twentieth Century.” It defines its interests on its terms. Vladi­mir Putin, not illogically, sees Russia threatened on its borders by an U.S.-led coalition that, Frieden says, “is hostile in the sense that most people in the West would like to see Putin’s regime go — it’s authoritarian; it frustrates our interests.”

Globalization could never swamp everything else. Economics is not omnipotent. One blow to this mythology was the 2008-09 financial crisis. Markets promote prosperity and deliver benefits, but they also stir instability and impose costs. The world may be flat, as columnist Thomas Friedman argued in his 2005 book, in that modern societies compete and cooperate in a large global system. But the world remains round in the sense that traditional geopolitical conflicts, aspirations and pressures often dictate events. (Think Iran.)

What’s left is a messy mix of old and new. Countries pursue their goals in ways that involve, but are not limited to, their economic interests. (Think China and, yes, the United States.) Global economic integration has run ahead of political integration, and the divergence is a source of instability. Putin surely knew that his move against Crimea would have adverse repercussions — and they have. Writes one Financial Times commentator:

“Russian companies and banks have withdrawn billions of dollars of deposits from U.S. and European banks, fearful that the money could be seized or frozen in the event of tough sanctions. Likewise, Western institutions have been busy minimizing their exposure to Russian banks and industrial companies.”

The financial turmoil has (so far) been limited and localized. The same can be said of the sanctions imposed by the United States and the European Union to deter further Russian moves against Ukraine. These have been tempered for understandable reasons. As diplomatic levers, the tools of globalization are a double-edged sword. Mutually beneficial economic transactions, if reversed abruptly or forcefully, can become mutually destructive.

All this could change in a flash. Crises are inherently hard to predict and subject to miscalculation. Whatever happens, we’ve been given a harsh refresher course in realpolitik.

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