Joseph S. Nye Jr. (born 1937), Harvard University Distinguished Service Professor, is also the Sultan of Oman Professor of International Relations and former Dean of the Kennedy School. He received his bachelor's degree summa cum laude from Princeton University, did postgraduate work at Oxford University on a Rhodes Scholarship, and earned a PhD in political science from Harvard. He has served as Assistant Secretary of Defense for International Security Affairs, Chair of the National Intelligence Council, and Deputy Under Secretary of State for Security Assistance, Science and Technology. In 2004, he published Soft Power: The Means to Success in World Politics; Understanding International Conflict (5th edition); and The Power Game: A Washington Novel.
For further bio details please see:
http://en.wikipedia.org/wiki/Joseph_Nye 
http://ksghome.harvard.edu/~JNye/fullbio.html

Current trends in international affairs and the U.S. policy

My job is to start the discussion about the applications of the current trends in world affairs to US policy. Perhaps we should start with the end of the Cold War. What is most remarkable about the end of the Cold War, besides the fact that it was a peaceful ending, was that it left a situation which was unprecedented in world history; of one power which was much greater then all the rest. Traditionally, in world politics we usually think of balances of powers: when there is one power that is strong, other powers team up against it to prevent it from becoming too strong. During the entire period of the Cold War we used to talk about bipolarity of the U.S. and the Soviet Union as a balancing power. Before World War 2 we used to think of multi-polar balance of power: five major powers. That was also the pattern of 19th Century Europe. Traditionally in world politics there has been a balancing of power. Now for about the last half century we had a bi-polar balance. However, with the end of the Cold War, one of the balancers, the Soviet Union vanished.
With the end of the Soviet Union ends enters a time when we have the American superpower and no balancer. The whole concept of superpower was a term developed after the 2nd World War. Unlike the period before WWII when we had many balancing powers, at the end of WWII just two countries remained much larger than the rest: the U.S. and the Soviet Union. They were given the name superpower. At the end of the Cold War one of the superpowers implodes, leaving a very strange world, in which you have only one superpower.
That type of world is something we are still trying to come to terms with in American policy and the rest of the world as well. It is worth remembering that we often find it hard to understand where the U.S. is in terms of power. For example, if you think back 15 years ago, the conventional wisdom about American power was that the U.S. was in decline. America was finished. There was a number of bestselling books that talked about the rise and fall of great powers, and that the U.S. is going away like Phillip the Second’s Spain or Victoria’s Britain. It was finished. Quite obviously that new conventional wisdom that was widely believed in 1990 turned out to be wrong. The new conventional wisdom at the end of the Cold War is that it is a unipolar world with one superpower. That can go on for a long time.
An American columnist Charles Krauthammer, who writes for the Washington Post and Time magazine, coined a phrase in 2001 which he called the new unilateralism. He said is that because the U.S. was so powerful and there was no one to balance American power, the Americans should decide what they though was right and just do it; others would have no choice but to follow. The phrase new unilateralism was quite popular in the first term of the current Bush Administration.                           
One of the problems is that if we are not very good at predicting American power, and if 15 years ago we got the predictions totally wrong, then what should we be predicting now for 15 years into the future? Are we so sure that the U.S. will remain the world's only superpower? What should that mean for American policy? These are the questions we a wrestling with at this time. If you take the view of the U.S. as the only superpower, there are some who say this prediction of decline is going to come true.  
At the World Economic Forum in Davos, there was a discussion about the so-called power shifts. There were some people who said that one of the great power shifts that occurring now is that we start seeing the end of the American superpower. There are even some who argue that Iraq war was to the U.S. as the Anglo Boer War was to Edwardian England. A war which, in the end Britain won, but turned out to be the forerunner of the decline that followed.
Let's step back and look at the pros and cons of the assessment of the American power today. If you think of power, it is the ability to get the outcomes you want. It is a simple way of defining it. You can do that in three major ways: by threatening people militarily using the hard power;  to do it by inducing people, with payments (aid, bribe, economic power etc.) economic power; and you can do it by attracting people so they want the outcomes you want get the outcomes you want i.e. soft power.
If we look at each of those three dimensions – military, economic and soft power – let's see where the U.S. stands. It seems to me that in terms of military power the U.S. is the world's only superpower. This is likely to remain that way for quite some time to come. If you look at the expenditures in military affairs, U.S. military budget is about half of the world total. When you are half of the world total, it is hard for other countries to put together a balance of power, which could balance you. You would have to have everybody to agree to be in the Alliance against the U.S. to get anything near a balance. That is rather unlikely. So based just on military expenditures and capacities, the Americans do look like a single military power.
It's not just expenditures that matter in terms of military power. It's what you get for your investment. What you get for your investment depends – for an important part - upon the application of technology. The so called revolution in military affairs which began couple decades ago applies new information technologies to traditional military expenditures. Is generally argued to be an area in which the U.S. remains well ahead. Other countries can develop some of these technologies themselves, they can steal it, and they can get some of the capacity. However, there is a difference between having some of the technology and having the whole system of systems. In that integration of the technology in a system of systems it is generally agreed that the Americans are well ahead and are likely to stay there. This is based primarily on the fact that in the American economy the information revolution has been in the forefront. The American economy is the one which was most adept in responding to what is sometimes called the so-called third industrial revolution. Itt was the application of computing and information into the economy. That begins to take off at the end of the 20th century and has been led, for the large part by the United States.
Indeed, you can argue that indeed it was of the reasons that we had a collapse of the Soviet Union was not the particular actions of Ronald Reagan or Mikhail Gorbachev or something. The underlying reason was that the Soviet centralized economic planning system was unable to adapt to the third industrial revolution. It was very good in dealing with the second industrial revolution: creating steel factories, big electric plants, other planning economy's projects. Yet, the third industrial revolution relies on such short product lifetimes (sometimes 3 months, 6 months to a year), that if you wait for a planning system to do it, by the time they have get permission from Moscow back to the factory and then back to Moscow, the product line becomes obsolete. In that sense people say the difference is that the central planning system which helped the Soviet Union so much in recovery after World War 2, (in that period of growth the Soviet Union had in the 1950s) was good for then, but very bad for later. The Soviet inability to adapt is the basic cause of its decline, as some people said: the central planning system is all thumbs and no fingers.
In that sense, if one looks at the military power of the U.S. its likely that it is so strong not simply because of a large expenditure, this huge defense budget, but also because it rests on economy which has been in the forefront of the information revolution which is thereby based on the technology which is applied for the revolution of military affairs. In the 1950s and 60s we used to say that economic progress comes from the spin off from defense expenditures. The Pentagon has its large projects that feed the American economy. Nowadays it is often quite the opposite: not a spin of but spin on. It is the creativity of the private sector which helps in the military.
So if you look at the American military power today, it's to to see any country with the capacity to match the U.S. in military power. However, it is worth noticing that military power has its limitations. Americans have a tremendous capacity for power projection. No other country in the world can project power as far away from its homeland as the U.S. Yet, there is a great difference between projecting power in the so called open spaces (space, air, sea etc.), and actually projecting power so that you can occupy and maintain occupation in a foreign country. Americans are finding out now that they have that superb military machine for winning wars but not for winning peace. If you look at Iraq, the interesting thing is that in 3.5 weeks Americans won the war but in 3.5 years they were not able to win peace. Partly that is because military power is much more difficult to apply when you have to deal with the nationalistic population and in the post-colonial era. Therefore, the Americans have a predominant military power and it is likely to be particularly useful in the global commons but not so useful in the local neighborhoods.
If you turn to the second dimension of power, economic power, there I think the U.S. also has a preponderant position. And it's likely to remain so for sometime in a sense that the U.S. economy is equal to the next three economies combined. With  all of its problems, the American economy remains quite a dynamic economy. People will be look at those problems and say: how can you be optimistic about the American economy when its current account deficit is as high as it is? When China holds a trillion dollars of American reserves, if China were to drop or cash in these reserves, they could bring the Americans to their knees.
In analyzing interdependent economic power, you have to look at the symmetry and interdependence. In these terms, U.S. and China are quite symmetrical. Some people, like Larry Summers the president here at Harvard call it a financial balance of terror. If China were to drop or change all its dollars to other currencies, it could bring the U.S. to its knees but it would also bring itself to its ankles. So it will also terrible to China. The major problem that China faces is the problem of modernization, change and hope. In China you have 450 million people who have risen out of poverty but there is another 450 million left behind. You have a lot of state-owned enterprises which are to be closed to get more dynamism and build modern economy. However, then you have these unemployed people, a large floating population sometimes estimated at 100-150 million people who are wandering from city to city without a permanent base. This is a prospect of instability. So the Chinese figure they need exports to American markets to be able to provide these jobs which provide political stability and hope. The last thing they want to do is drop their dollars and create a problem for the American economy which puts up tariffs against Chinese goods which in turn creates political instability inside China. That is what Summers means when he talks about a balance of financial of terror. If we have balance and there is symmetry and economic interdependence there is not much power. If you depend on me, and I don't depend on you then I have an economic power.
If we look at the American economy I think it is a lot better that what many experts predict e.g. in terms of Chinese holdings of US dollars. The most important thing is a greater role of productivity. If you have a high rate of growth of productivity then you will be able to grow for the future, which will allow you to grow out of the current problems we have now.
For the large part the American fiscal deficit and trade deficit are the result of domestic policies. It is essentially because the government spends more than it takes in which leads to these deficits. That's curable if you have a high rate of growth of productivity. The information revolution I referred to earlier, has created proper base for American productivity growth. So while other countries will grow in their economic strength, I think that U.S. is still a more powerful economic power that any other country and it will remain so.
What about the soft power? I define it as an ability to get what you want through attraction rather than coercion or payment. Soft power stems from a country's culture, its values, and its policies – when these attract others. Traditionally, the U.S. has been very strong in soft power. In fact, if you look back to the period of the Cold War, you could argue that that Cold War was not won by American hard power alone. It was won by a combination of hard and soft power. Hard power balanced Soviet military power, but it was soft power i.e. the attractiveness of culture and ideas behind the Iron Curtain that ate away the belief in communism at home. Therefore when Berlin wall finally collapsed, it collapsed not under the barrage of artillery, but from hammers and bulldozers yielded by people whose ideas have changed. That is an example of successful soft power.
In recent years, the Americans have probably less soft power that they had in the past. There has been a considerable decline in soft power measured by public opinion polls. A large part of this has to do with Iraq war. Some of this started even before the Iraq war as a result of new unilateralism. Also we have to mention the Kyoto approach, to the fact that Americans became less popular in the world etc. It is interesting to see that America looses about thirty points of its attractiveness on average in all the European countries. It is even worst in the Muslim countries. In Indonesia, the largest Muslim country, U.S. attractiveness level fell from about ¾ in 2000 to less than 15% after May 2003 when Iraq occupation started.
So if you look at these measurements, you can say that it has been a decline in American soft power, i.e. the ability to make others do what you want them to do through attraction. When you become so unpopular in other countries it creates problems for foreign policy which becomes more costly. For example, in 2003 the President of Mexico said he wanted to help George Bush to win the Second UN Security Council Resolution on Iraq but by that time the U.S. was so unpopular inside the Mexican Parliament that their President could not support Bush. So actually Mexico was against the U.S. at voting for the Second UN Security Council Resolution on Iraq. That is exactly an example of how the decline in the soft power has an effect and costly consequences.
Is that a permanent decline? We don't know. There have been periods in the past where the U.S. was very unpopular, e.g. in times of the Vietnam War, but, within a decade, it renewed our attractiveness. We don't know when the Iraq War will be over, whether after that America will gain some degree of its attractiveness, or will it be a permanent damage done to American attractiveness.
In any case, look at these three dimensions of power. In military power, America seems preponderant and will remain for some time. In economic power, America is also likely to remain preponderant. In soft power, since it has declined, the U.S. may go higher or stay where it is.
If one looks back at historical examples, one can ask: what is the chance that other countries will form a balance against American power? Many realists (William Pristol, Robert Keagan) say it is the law of nature that a balancing coalition will form. The argument is that China would be the central balancer. It is growing in an extraordinary way, e.g. at 11% of economic growth this year. Robert Keagan writes that in the 21st century China will have the same role as Germany played in the 20th century.
The trouble of this analogy is that in the 20th century Germany had already passed Britain in overall industrial strength by the 1900s. That is not the case with China and the US today. China's economy now is about 1/8 of the size of the U.S. economy. If China continues to grow at a rate it grows now, and the U.S. grows at a rate America grows now, it's possible that the Chinese economy will be equal in size of the American economy by 2030-40. But even if this happens, there is still a problem with per capita income. The Chinese will not meet the per capita income until the end of the century. So, unlike the German analogy, China is quite long way from passing the U.S. In that sense, we have also to remember that China faces a number of problems. For example, China has not resolved the problem of political participation. In contrast with China, the neighboring India has a democratic constitution; there is a mechanism for participation of these increased middle classes in companies' growths. However, the case of China become larger than the U.S. and a core balancer of the U.S. is questionable as well as rather exaggerated by some of the current forecasters.
The other candidate for balancing the U.S. would be the EU. If you look at the EU, there is an entity which has the population larger than the U.S., has an economy equivalent to the size U.S. has technological and military sophistication. So in that sense it could become a balancer but there are two questions that one has to ask. Are the European publics are willing to come together to form a larger entity which has single defense and foreign policy? There is of course a single defense and foreign policy but it is pretty loose in terms of pulling together. So there is question of how much Europe will become one entity for using its power. The other question is: do European publics want to spend 4-5% of their GNP on defense and military affairs? Most probably an opinion poll show 'no'. Yet, only spending 4-5% for defense could make the EU equal to the U.S. in military terms. So the chance that Europeans will be the balancer of American power I think also seems to relatively slight.   
If you look behind that, people sometimes mention India. But India is behind China. It is not likely to catch up to the US for at least 20-30 years from now.
One can then turn to coalitions. What about Russia, China, India together? To some extent that already happens. It is the so called soft balancing. If these three countries are sometimes annoyed with the U.S. (and the US can sometimes be very annoying), they will sometimes coordinate their diplomacy in the UN Security Council. However, if one talks about a serious balance of power with coordinated military planning etc., it's pretty unlikely. China, India, Russia each have great suspicions of each other. Russia looks at China, and China looks at Siberia, and that's the question what's the future of Siberia. If you look at India and China, Indians are (on the surface) friendly-oriented toward China. However India has a great deal of concern about the rise of Chinese power. So, this India-Russia-China coalition, seems to me, will occur for diplomatic purposes from time to time but is unlikely to serve as a balancer of American power.
If that's true, what I have said so far, does that mean that the U.S. is the sole superpower and a new conventional wisdom as expressed by Krauthammer is correct? I would say 'no'. I think that new challenges to the U.S. will come from a different direction. It will come from the effects of the information revolution and globalization. What has happened in the later part of the 20th century, the information revolution not only undercut the Soviet Union while boosting the U.S., it also empowered non-state actors. Think of the following: from 1970 to the year 2000, the costs of computing and communications were down a thousand times (!). When something drops as dramatically as that it has quite dramatic effects. For example, if the costs of an automobile had gone down as rapidly as the costs of computing and communications, you could buy a car today for $5. When the price of the technology drops so dramatically, the barriers to entry go down giving entry to anybody who was previously priced out of the market can now play the game.
I'll give an example. In 1970, if you wanted to have instantaneous global communication between, let's say, Bucharest, South Africa, London and New York, you could do it, but it was very expensive. The difference is today anybody can has that capacity just entering an internet-café. Two weeks back in London, I saw a sign 'Internet café – one pound one hour'. It is about two dollars! It means that the previously restricted capacity for only limited amount of major players is now free.
Or another example: in 1970s only U.S. and the Soviet Union had the capacity to take one-meter resolution pictures of the Earth with reconnaissance and intelligence satellites which cost billions and billions of dollars to obtain. Today anybody can go on the internet and get even better photograph with half-meter resolution for pennies. So capacities previously restricted basically to governments only are now available to non-state actors. This doesn’t mean that governments have been surpassed by non-state actors but it does mean that the stage has become more crowded.
Today, non-state actors can have serious impact. Some of them are benign such as Oxfam and Greenpeace, others malign such as Al Qaida. It is which a non-governmental organization with cells in 50-60 different countries. It's worth noticing on September 11th a non-governmental organization killed more Americans that the government of Japan did at Pearl Harbor in 1941. That's different, that's a new dimension of politics. Today, non-state actors have capacities that were previously reserved to governments. They can bring more damage; that's new in world politics. We have had terrorism and non-state actors long before but the capacity of this kind with a new role has been greatly enhanced by the information revolution and globalization.
What this means is when we are trying to assess U.S. policy and how we should use our power, we have to be more realistic then we have been over the last half-dozen years or so. To day that the U.S. is an unprecedented power and it can do whatever it wants, is to make a big mistake. Power depends on context, it is a relationship. For example, if one country has five thousand battle tanks and this country has ten battle tanks and that type of tank is 500 times stronger than the other, the outcome will still depend on the context, i.e.  whether this battle takes place in a desert or in a swamp. So you have to specify the context of power before you know what you are talking about with power. Many people measure only resources saying that this proves how powerful this or another side is, but they are not specifying the context.
What's interesting about world politics today is that three quite different contexts in which power is distributed very differently, and that has implications in policy. I use the analogy of the three-dimensional chess game, in which you play not only horizontally but vertically at the same time. On the top board of military relations among the states the world stays unipolar for reasons I said earlier. Americans are likely to remain the world's only military super power for quite some time to come. On the middle board of economic relations among the states, the world is already multipolar. This is an area where the EU acts as an entity. The Commission of the EU can make economic decisions for the whole group. China is becoming an increasing power, Japan as well. So if the U.S. wants to trade or an antitrust it has to get an agreement from these other countries.
The situation is unipolar on the top board context and multipolar on the middle board. If we go to the bottom board of that three-dimensional chess game, the board of transnational relations (cross-border relations outside of government) you'll find that the power is chaotically distributed. No one is in charge. If you think about such things like spread of pandemics or Asian flue, or international crime, transnational terrorism, global climate change, these transnational movements are not controlled by anybody. In that sense to talk about this bottom board as under American hegemony is nonsense. The only way Americans can do anything in this area is by cooperating with other governments. It is interesting that most of the biggest threats we face today come from this bottom board of international relations, not form the top board or the middle board of this three-dimensional chess game.
That has an important implication for policy. It means that as you look at the American policy you have to find how you get help from others to deal with this new set of threats. The views which were popular with the first term of the Bush administration have already changed somewhat with the second administration. There is a greater realization in the second term that we are going to need more cooperation from others if we are to accomplish what we want. We are already beginning to see those changes in the American policy for the more cooperative and multilateral functioning and I suspect that will be more true after the 2008 election whether it is won by a Democrat or a Republicans. I believe this trend, this pendulum, is essentially swinging back the reason I think that is based upon what I call the fundamental paradox of American power.
The paradox of American power is that the strongest country the world has seen since the days of the Roman Empire, compared to other countries, is unable to protect its own citizens acting alone. On one measure of power we are a unipolarity that will remain for sometime. However the challenges that will come from this bottom chessboard of transnational actors where we can't deal without the help of others. We are beginning to realize that our policies are going to have to adjust. They need to be more cooperative, and to build institutions and relations with others to able to effectively deal with those challenges.    This is what I mean when I talk about the structure or power and its implications for American policy.
Soft power is the ability to attract. A lot of soft power is produced by civil society. That is a great source of soft power, but the government cannot control it. Simply, most people have more contact with American culture and society not American government. What the government can control is public diplomacy. We spend about 1.5 billion on public diplomacy. There is however, a limit to public diplomacy which you have to realize. The more it is propaganda, the more it is selling our message, the less credible it is.  The more you spend on propaganda with a congressional mandate to get our message out, the less valuable it is. It is the off message things that increase your credibility.
The government cannot control soft power completely. When it does have programs to use soft power it has to be awfully careful with how it does it. Governments do have control over policy. The extent to which policies are seen as legitimate in the eyes of others the more likely they are to build up attraction. There are things a government can do in a strategy but we are not very well organized to do that.
So when you say can your government have a strategy on soft power, the answer is “yes, but with difficulty, but not if you have not even organized yourself to ask the question.”