Recent years can be compared with a forgotten crisis. Edward Bonham Carter looks back to when his own great grandfather was prime minister
In June 1914, Archduke Franz Ferdinand was shot in Sarajevo by Serbian nationalist Gavrilo Princip. In London, markets barely registered the event. It was only a month later when Austria delivered an ultimatum to Serbia that investors woke up to its implications.
What followed, according to Richard Roberts, author of Saving the City, The Great Financial Crisis of 1914, was “the most severe systemic crisis London has ever experienced”. It was not a typical crisis in that it was not preceded by enormous overborrowing and wild speculation. Instead there was a “displacement” moment in the form of the Austrian ultimatum – an extraordinary event that drastically altered investors’ perception of risk.
The collapse of Lehman Brothers in September 2008 was a similar moment.
The response to Austrian aggression was a dramatic fall in European markets. Investors rushed to turn their assets into cash or gold. The London Stock Exchange closed its doors for the first time since its establishment in 1801.
Panic spread quickly via the telegraph and a newly established global financial system, affecting some 30 countries. At the heart of this system was the City of London. Thanks to its openness the City had become a settlement hub for much of the world’s trade payments and had the largest securities market.
A key way to transfer money for cross-border trade was the sterling bill of exchange, making the pound the de facto reserve currency for the world at that time and meaning large amounts of debt were owed by overseas investors to British banks. Unfortunately, no one had considered what problems this connectivity might cause if things went wrong. Almost 100 years later, no one in 2008 had considered the full implications of even greater connectivity between banks, until it was too late.
The first to be hit by the crisis were the “jobbers” or market makers who could not price securities that everyone wanted to sell. Many firms went out of business. Second were the money markets (where big banks trade shortterm loans and deposits). Worried that loans would not be repaid, merchant banks such as Rothschilds and Schroders refused to issue more sterling bills, meaning no one could borrow money. Instead banks called in their loans, withdrew funds from the Bank of England and hoarded gold.
This deepened the crisis and briefly caused a run on the Bank itself. Six million pounds in gold was paid out in just three days, worth some £1.3bn today. Many turned against bankers as they did a century later. Herbert Asquith, my own great grandfather and the prime minister at the time, described bankers as “the greatest ninnies … like old women”.
In order to arrest the crisis and prevent mass bankruptcy, the British state was compelled to intervene on an enormous scale. Had it not done so, raising funds for the coming war could have proved much more difficult – and the outcome might have been different.
The Bank of England, then independent of government, acted quickly. Backed by the Treasury, it used taxpayers’ money to “save the City”, handing out unprecedented financial assistance to banks, equivalent to 40pc of public expenditure – a gigantic sum. Markets soon stabilised as a result and no major financial institution went under, but it would be several months before the stock exchange reopened its doors. In that time, the world would have entered a total and bloody war, so overshadowing the financial crisis that it was largely forgotten.
The great recession is less likely to be forgotten. State intervention in financial markets is now so great that any hint of policy change can move markets dramatically.
The question is: where do we want to be 100 years from now?
The centennial anniversary of the First World War is a time for sober reflection and deep thought about the causes and consequences of this human tragedy. It has been quipped that hindsight is 20/20, but being so far removed from the actual event itself nowadays, it appears as though hindsight through today’s polarized polemics is nearsighted. History is being reinterpreted for short-term political points, forgetting that the British intent of the original conflict was for a long-term and farsighted transformation of the European (at the time, recognized as “global”) power arrangement. Of course, not everything turned out as intended, and dark horses emerged to offset these carefully crafted plans and/or reap undeserved dividends. No matter that one hundred years has already passed, the same geostrategic objective is the same – the seafaring powers must utilize all methods (including intrigue and massive bloodletting) to prevent the continental powers from colluding against them. The continuum of history eerily shows that shadows of the past still hang over the head of the future, and the thematic lessons leading up to and following World War I still dangerously ring true today.
It is commonly said that “geography is destiny”, and to a very large extent, geographic location is a strong determinant of action. Alfred Mahan and Halforth Mackinder understood this very well at the turn of last century. Mahan published “The Influence of Sea Power Upon History” in 1890, which argued that sea power is key to controlling the land. Mackinder took this a step further in 1904, writing in “The Geopolitical Pivot of History” that sea power’s obvious geographic limitations necessitate a strong control over the Heartland in order to dominate Eurasia. This was originally understood as Central Asia, but it has shifted over time.
Why It Mattered Then
- British Foreign Secretary in 1914 Sir Edward Grey was the key instigator of the WWI.
The UK and Germany were engaged in a fierce naval armaments race up until the eve of World War I. Although the British Navy was supreme, Germany was clearly a rising threat to this hegemony. Additionally, Germany and Austria-Hungary were the masters of Central Europe and Russia controlled the Heartland (essentially ‘winning’ the Great Game). Russian historian Nikolay Starikov brilliantly argues that the UK, using its centuries-long diplomatic expertise (and cunningness) in great power balancing, instigated Germany and Russia into war after the events of Sarajevo in order to destroy its two greatest foes (in different Eurasian theaters) in one fell swoop.
Why It Matters Today
Brzezinski, writing in “The Grand Chessboard” in 1997, cautions American decision makers about the possibility (then distant, today more realistic) of a German-Russian alliance that would isolate America from Europe, and thus, collapse America’s Eurasian strategy. Accommodating for this geopolitical reality, it now makes sense why there is so much Western guilt mongering against Germany for supposedly starting World War I – the objective is to keep Germany and Russia divided and prevent their future policy coordination. The spate of Color Revolutions is aimed solely at penetrating the former Soviet Heartland and removing Russia from the Great Power game. On the naval front, the US is trying to bait China into a disastrous collision course with its Southeast Asian neighbors over disputed maritime territories.
The combination of sea and land power, properly coordinated and applied across Eurasia, is the basic formula for global control. A moment’s glance at the map of American overseas naval and military deployments easily proves Mahan and Mackinder’s theories without any words necessary. Because geography cannot be changed, these ideas will continue to guide the US and any other aspiring global hegemon. In today’s world, the US has merged Brzezinski’s Eurasian Balkans concept with Gene Sharp’s mass agitation tactics (abetted by social media networks) to conceive the weapon of Color Revolutions to accomplish just that.
The Hobbesian Alliance System
Countries enter into military alliances with one another for some kind of perceived benefit, which may vary depending on the actor. Even if such alliances do not de-jure mandate mutual military defense, if the known perception is that it does entail such a commitment, then the parties’ reputations and prestige may strongly be at stake if they do not carry through with their expected obligation. The larger alliance systems grow, the more convoluted they become, eventually ensnaring all that are weaved into the web. Large-scale wars can thus start based on miscalculation or peripheral events.
Why It Mattered Then
- Russian 1914 poster “Entente Cordial”. Shown are the female personifications of France, Russia, and Britain. In center, Russia holds aloft an Orthodox Cross (symbol of faith), Britannia on the right with an anchor (referring to Britain’s navy, but also a traditional symbol of hope), and Marianne on the left with a heart (symbol of charity/love, probably with reference to the Sacré-Cœur Basilica) — “faith, hope, and charity” being the three virtues of the famous Biblical passage I Corinthians 13:13. The poster reveals a candid Russian stance towards her “allies” in WWI.
The obligational perceptions surrounding alliances played an important part in the long fuse leading up to World War I, as Starikov writes that “up to the beginning of WWI, the Entente alliance was not framed by treaty!” Clearly, there was always a “way out”, but due to duplicitous British diplomacy (also duly elaborated upon by Starikov in his works), the situation was carefully framed for Germany and Russia as though there was no alternative. Once activated, the stringy alliance complex exponentially multiplied until most of the entire continent (and the Middle East via the Ottoman Empire) were engulfed in total war. A relatively trite event in the grand scheme of contemporaneous politics (a political assassination in the continental periphery) led to an all-out conflagration in its core.
Why It Matters Now
After the Cold War, NATO continued to grow unabated, gobbling up the remnants of the Warsaw Pact and part of the former Yugoslavia and Soviet Union. Although mutual military defense is not legally binding in NATO (Article 5 does not explicitly stipulate military assistance, leaving it up to each member state to make that decision on its own), the perception is that it is. This means that the US and its cohorts may get dangerously drawn into a regional conflict in order to save face. Turkey’s provocative actions in Syria or its failed plans for a false-flag attack there should send alarm bells ringing for the rest of the world. The same can be said for Poland and Lithuania, also NATO members, in regards to their plans to create a joint brigade with non-member Ukraine. Clearly, one middle power in a major alliance can draw the rest of its twenty-seven members into a disastrous calamity. Leaving NATO aside, the US has a mutual defense agreement with Japan, whom it has been egging on to provoke China. The security guarantees provided by America to Israel and Saudi Arabia could also easily suck it into a regional war with Iran.
Military alliances are a type of nearly sacrosanct agreement that states enter into with one another, placing their prestige and the lives of their citizens on the line for their partners. They should not be entered into as a form of political statement. The larger the alliance is, the greater the chance for unintended outbreaks of major war and for middle players to manipulate the other members. It is totally unstable when Obama, in referring to the US, proudly tells the graduating class of West Point that, “From Europe to Asia, we are the hub of alliances unrivaled in the history of nations.” Exceptionally dangerous are so-called “defensive” alliances that only have a track record of offensive military action (e.g. every NATO war). Alliances can complicate the political situation just as much as they can clarify it.
(Distant) Manipulative Balancing Powers
The balance of power and divide and rule concepts are as old as the pages of time, yet equally as old is the knowledge that the more distant the practitioner of these strategies, the less likely they are to be directly affected by the negative consequences of their actions. This makes them more calculating and lethal in the damage potential that they can reap in the targeted theaters. The power of the manipulative balancing state must also be taken into account. If a strong state is manipulating weaker ones, then the risk potential of negative consequences decreases; likewise, once strong states begin manipulating their peers, the risk for negative consequences (even if the states are distant from one another) dramatically increases.
Why It Mattered Then
The UK had historically been the prima donna of balance of power and divide and rule policies in Europe, and it played this role perfectly in the lead-up to World War I. As outlined by Starikov, UK Foreign Secretary Edward Grey diligently played all the continental powers off against one another in order for his country to reap the anticipated benefits of a continental Hobbesian conflict. The consequences of the war did not exactly pan out as anticipated (as is wont to happen with any grand strategic gambit), but nonetheless, it is important to note the impact of the UK’s interference in the Great War’s genesis. Its vision of European balancing and divide and rule directly contributed to the tragedy, whether advertently or inadvertently.
Why It Matters Now
The US has replaced the UK as the world’s global balancer and practitioner of Divide and Rule. Its new policy of Lead from Behind is a euphemism for these practices. It appoints regional allies to carry out what are perceived to be mutually advantageous policies (to the objective advantage of the US’ grand strategy, but only to the subjective advantage of the ‘ally’s’) while Washington supervises and manages events. Turkey and Poland are the prime examples of this policy at work, and the CIA and FBI’s influence over the Kievan junta is yet another application of this. More sinisterly, Color Revolutions can also trace their birth to a (distant) manipulative power trying to manage regional events to its own interest. By globally manipulating multitudes of players simultaneously, a critical risk of mismanagement and unintended consequences arises. This is all the more apocalyptic due to advances in military technology (nuclear weapons, drones, cyber warfare, etc.) that can level the playing field between the manipulating and the manipulated great powers.
(Distant) Manipulative balancing powers paradoxically have both foresight and blindness. They have a certain vision of what global or regional order should look like, yet in order to bring this idea to fruition, many complicated moves must be made in advance. The blindness stems from the fact that when risky gambits of huge consequence are made, unintended consequences of varying nature usually follow, and more than likely, these tend to have some type of disastrous result for some or all of the affected parties. The more distant and strong the manipulative power is, the more likely it will have grandiose (and dangerous) visions of what the future should look like and will actually act on those desires. Even if this type of actor is only manipulating a small or middle power, if the eventual target is a power of equal or near strength, then it is the same as trying to manipulate that said power (e.g. US manipulation of Ukraine to offset Russia). This never leads to peaceful and stable results.
These are the unintended consequences that occur due to grand manipulations and plans gone awry. They are impossible to accurately predict, and they may only sometimes seem expected in hindsight. Dark horses are the wild cards that surprisingly alter the dynamic at play and bring about a change that the original manipulators did not at all intend. They seemingly come out of nowhere.
Why It Mattered Then
In accordance with Nikolay Starikov’s argument, the UK’s intention in escalating the Sarajevo events into a European war was to eliminate two of its primary rivals simultaneously, Germany and Russia. London anticipated itself having a free hand to dictate its will all across Eurasia, from Berlin to Baghdad and from the Barents Sea to the Bering Sea. History, however, would not have it that way, and a few notable black horses reared themselves on to the scene:
The US entered World War I and was able to have deciding power in the makeup of post-World War I Europe. The UK was no longer the king of the continent, and from that moment onwards, its global sway began to relatively decrease as America’s rose.
Japan, observing from afar how the European fratricide was weakening the collective power of the colonial states, took some German Pacific territories and set its designs on larger pan-Asian conquests less than two decades later.
Russia rose from the ashes, internally transformed as the Soviet Union but externally similar to its Imperial boundaries.
The Turks waged what they identify as a war of independence, overturning the Treaty of Sevres (which sought to carve up European spheres of influence in Anatolia) and replacing it with the Treaty of Lausanne.
These four dark horses were unpredictable in 1914, yet by 1924, they came to define a significant part of the international arena.
Why It Matters Now
Just as the British gambit for power in fomenting the opening salvos of World War I led to the unexpected emergence of several power centers, so too did the US’ unipolar debacle after the end of the Cold War. China, who the US had allied with in order to counter the USSR, experienced the fastest economic rise in the history of mankind, and it is on pace to surpass the US’ economy this year. Russia once more rose from its knees, with Putin returning the country to its historic great power status after the 1990s decade of downturns. In fact, both Russia and China are now enjoying the best state of mutual relations in their history. This has led them to coordinate their policies in the UN, BRICS, APEC, and the Mideast and North Africa. Clearly, this is not how American policy planners anticipated their “unipolar” world looking back in 1991. In fact, the multipolar future is growing out of the unipolar past, and the process appears to be irreversible now.
To channel Donald Rumsfeld, “there are unknown unknowns”, and it is impossible to predict what consequences will result from any given action. Nevertheless, it does seem that the larger the scale of the endeavor, the larger the actor is that’s initiating it, and the larger the target(s), the more likely the dark horses will be extremely profound and impactful. It can therefore be assessed that the US’ “battle for Eurasia” will accordingly result in an untold myriad of dark horses that can completely upend the global balance of power.
Second and third-tier states (non-great powers) are always subject to the threat of manipulation, but this threat becomes a fact after a (distant) manipulative balancing power decides to pursue its strategic vision. These states are guaranteed to be victimized to some extent or another if they are in the theater of operations, and their victimization will be profited upon by the manipulating state. This may take the form of outright betrayal, backtracking on previous promises, or de-facto subserviating the second/third tier partner against its will or expectation. First-tier states can have respectful relations with second/third-tier ones, but once the first-tier state goes on the offensive to pursue its (messianic) vision, these relations immediately become dispensable and nothing more than political poker chips.
Why It Mattered Then
- Faisal ibn al-Hussein (1885-1933), King of Iraq from 1921 to his death. Take note of the flag of Arab Kingdom of Syria, which crowned Faisal as its King in March of 1920 and collapsed under French conquest four months later.
Two of the main problems in the Mideast can be traced back to this period: the Israel and Palestine issue and the region’s artificial, colonial borders. The Arabs were encouraged to rise up against the Turks in exchange for their independence after the war, per the McMahon-Hussein Correspondence, but this obviously did not occur. While the roots of the Israel and Palestine question during this time are well known (the Balfour Declaration), what is lesser known is the betrayal of the Arab Kingdom of Syria after World War I.
The Damascus Protocol of 1914 set the basis for the 1915-1916 McMahon-Hussein Correspondence, in which the borders of the future Arab Kingdom of Syria were to be specified. This was to include all of modern-day Syria, Lebanon, Israel, most of Western Jordan and Iraq, and parts of southern Turkey. Duplicitously, the British were at the same time busy conspiring with the French to divide the Mideast into colonial zones through the Sykes-Picot Agreement. Later, they concluded the Balfour Agreement in 1917 (which overlapped with the territory promised to the Arab Kingdom of Syria), clearly indicating that they never had any intention of honoring their promises of securing an independent Arab state centered around Syria. The destruction and occupation of the Arab Kingdom of Syria by France in 1920 doomed the dream of Syrian independence until after 1946. Even so, the French had by then forcibly dislocated Lebanon from Syria and even gave up Hatay Province to Turkey in 1939, despite both areas historically being part of Syrian civilization for centuries.
The betrayal of Syria after World War I is a textbook case of political pimping, and its legacy is the mangled Middle East of today.
Why It Matters Now
- US Ambassador April Glaspie met Saddam Hussein on July 25, 1990, just a week before the Iraqi invasion of Kuwait.
Second and third-tier states are more endangered now than ever before. Brzezinski’s destructive Eurasian Balkans strategy specifically targets the states in the Rimland, the majority of which fit this category (excluding India and China). Color Revolutions, for example, aspire to create a geopolitical earthquake to shatter the Eurasian Rimland and bring about the collapse of the Heartland. Other times, however, more traditional methods of warfare are employed hand-in-hand with diplomatic deception. The most stunning case is Iraq’s military engagement Kuwait in 1990.
April Glispie, the US Ambassador to Iraq at the time, all but gave Saddam the “green light” for his actions. Afterwards, this was used as justification for US military deployments in Saudi Arabia and the Gulf, the First and Second Gulf Wars, and the project for a “New Middle East”. The Arab Spring is but the latest iteration of the US’ grand strategic plans in the region, but had it not been for the First Gulf War (brought about by misleading assurances that the US would not intervene, in the same vein as the British assured the Germans in the run-up to World War I), none of this may have happened and at least over one million lives could have been spared.
Just as the Arabs were falsely promised freedom for rebelling against the Turks and Saddam was misled to believe that Iraq could have Kuwait, (distant) manipulative balancing powers typically exploit second and third-tier states solely to promote their own strategic objectives. Very rarely do they carry through with their promises or enact long-term assistance to their ‘allies’. These people and states are objects in the pursuit of greater goals, and being accorded as such, they are disposed of when they are no longer useful. By understanding the predatory nature of political pimps such as the UK and the US, second and third-tier states can work to avoid the fate that befell the Arab Kingdom of Syria and Saddam Hussein.
- Map of Europe after WWI until 1929
Dangerous Double Standards
Double standards can only be ‘stable’ if they are imposed by an unrivalled global hegemon – in all other cases, or once that aforementioned power begins to decline or others rise up against it (which inevitably happens), these double standards dangerously open up a Pandora’s Box of dark horses and black swans. Regardless, states (or groups of states) that feel they are in a position of overwhelming power and influence may take to the imposition of double standards out of pure short-sighted political convenience. It is easier to apply one standard to the vanquished and another to the victors.
Why It Mattered Then
The double standards of self-determination and ethnic nationalism are perhaps the most dangerous hypocrisies of the past century. After World War I, the victorious powers played a balancing game over ethnic blood. Their double standard was intended to reshape the map of Europe to their own liking, empowering some and handicapping others. Ironically, some states felt both effects. This was brought about by linking and separating various ethnic groups, uniting some while creating diasporas out of others.
Ethnic groups that were forcibly divided:
Germans (Treaty of Versailles)
Hungarians (Treaty of Trianon)
Ethnic groups allowed to be united:
The Germans and Hungarians sought to change this artificial balance of ethnic distribution, hence one of the causes of World War II. The Poles and the Romanians, while housing the vast majority of their ethnic groups within their borders, had substantial minorities as well (Ukrainians and Belarusians for Poland, Hungarians for Romania). They were ‘nation states’ in the sense that the dominant nationalities were Polish and Romanian, but they were not ‘pure’ nation states because of their large minority groupings. Czechoslovakia was something altogether different, a hodgepodge of Germans, Czechs, Slovaks, and Hungarians. It was an unnatural entity created purely for political purposes. The double standards over ethnicity prevalent all throughout Europe in the post-World War I era would eventually spark the Second World War.
Why It Matters Now
Once more, self-determination and ethnic nationalism have been set free from Pandora’s Box, albeit this time by the US and its allies. Beginning in Kosovo, which had been declared an “exception” to the rule, an ethnic group violently agitated for (and received international military support for) self-determination and unilaterally declared it in 2008. At that time, Putin said that “The independence of Kosovo is a terrible precedent. In effect, it breaks up the entire system of international relations, a system that has taken not even decades but centuries to evolve…And undoubtedly, it may entail a whole chain of unpredictable consequences.” He concluded by saying that “Ultimately, it is a double-edged sword, and the other edge will bash them on the head some time”, which is very well what happened in the case of South Ossetia, Abkhazia, Crimea, and possibly, Donbass and the entirety of Novorossiya…and the cat has only just begun to jump out of the bag.
Double standards never result in stability, and they carry within them the seeds and embryos for future conflict and disorder. The question is how long it will take for the double standard to mature into a full-fledged problem, and what form and scope the opposition to this false standard takes. As is seen by the cases of post-World War I Europe and the modern-day world, certain double standards completely revolutionize international politics and can bring about the most unpredictable of outcomes. They are a sure recipe for eventual disaster.
The themes and consequences of World War I still eerily hold true today. The difference, however, is that the scope of instability and the potential theatre of operations has leapfrogged from Europe to all of Eurasia. Whereas the British were the prime drivers of pre-World War I balance of power politics and divide and rule policies, the US has now inherited this throne. The NATO alliance, having long outgrown its purpose and swelled itself with needless members, represents the most unstable military grouping that may very well bring about a war by miscalculation.
The geopolitical calculus remains the same – the seafaring power (the US) and its allies cannot allow a combination of continental states (Russia, China, Iran, and India) to unite in repelling it from Eurasia. Brzezinski’s Eurasian Balkans stratagem and Gene Sharp’s tactics have united in creating a dangerous new weapon of global warfare – Color Revolutions. The combination of Color Revolutions with the Kosovo Precedent, carried out under the aegis of US/NATO ‘leadership’, has fractured modern-day international relations and carries the potential to upend the peace between Great Powers that has prevailed for nearly 70 years.
From John Bull charging across the Channel to take charge of Europe to scrapping dogs of all nations, these remarkable caricatures and cartoons show how cartography can be turned into a rhetoric of war