The Globe and Mail (Canada)
June 28, 2014 Saturday

Debate: Is 2014, like 1914, a prelude to world war?

by: Richard J. Evans, Harold James


In 1914, nobody thought a global war was about to be unleashed. There
were regional conflicts and acts of terrorism, and there had just been
a global financial crisis, but, as politicians and bestselling books
argued at the time, the deep financial and diplomatic ties between the
powers would prevent any larger clash. Some see parallels today: Major
powers are pitted against one another in Ukraine, the South China Sea
and the Middle East in a similar economic and diplomatic environment.
But others feel that the post-Second World War order is so different,
and the world so much less militant, that any comparison is
unrealistic. Here we present two of the world's best historians of the
period on either side of this debate

No

As we approached the centenary of the outbreak of the First World War,
journalists and historians in Britain and the United States began to
suggest similarities with our own time. "A century on," The Economist
remarked last Dec. 21, 'there are uncomfortable parallels with the era
that led to the outbreak of the First World War."

The catastrophe that overtook Europe and the world in 1914 was
unleashed, the magazine argued, by Germany, a rising power that
challenged the supremacy of the British Empire, the global superpower
of the day. Now, the magazine claimed, "the United States is Britain,
the superpower on the wane, unable to guarantee global security. Its
main trading partner, China, plays the part of Germany, a new economic
power bristling with nationalist indignation and building up its armed
forces rapidly." Others, notably the historian Niall Ferguson and
Japanese Prime Minister Shinzo Abe, have echoed this alarmist view.

How plausible are these parallels? Do we really need to worry that
history is about to repeat itself right on cue for the 100th
anniversary of the war? We might start by asking how it began. Before
1914, the key trouble spot was located in the Balkans. As the
Turkish-led Ottoman Empire was forced out of the region, all the new
Balkan states armed to the teeth, buying up the latest weaponry from
Europe's leading arms manufacturers with loans supplied by the
British, French and German governments. All of these countries were
politically unstable, with governments periodically overthrown by
force, notably in the Serbian coup of 1903; state bankruptcies in
Greece and Bulgaria; and terrorist organizations flourishing, notably
the Serbian "Black Hand" and the Internal Macedonian Revolutionary
Organization, which pursued policies of assassination to gain their
objectives.

In 1912-13, the Balkan states took advantage of an Italian attack on
the Ottoman territory of Libya to gang up on Turkey.

They forced it back to the gates of Istanbul in the First Balkan War,
then fought each other to a standstill over the spoils of victory in
the Second Balkan War. The key influence in turning these regional
conflicts into a world war, however, was the fact that these regional
conflicts also involved the Great Powers.

Independent Serbia in particular, having expanded its territory thanks
to the retreat of the Ottomans, was keen to incorporate further
territory, inhabited by ethnic Serbs, that lay within the borders of
the Austro-Hungarian Empire, run from Vienna.

It was a Bosnian Serb, Gavrilo Princip, whose assassination of the
heir to the Austrian throne in Sarajevo in June, 1914, lit the fuse
that led to the outbreak of a general European war just over a month
later, as the Austrians blamed Serbia, Russia leapt to Serbia's
defence, the Germans backed Austria, and the French backed Russia.

The road from a regional conflict to a global one seemed all too easy.
Yet since 1945 the occurrence of a similar sequence of events has
seemed unlikely. One major reason for this lies in everything that has
happened in the intervening century.

Since 1945 we have feared a general war just as European politicians
did between 1815 and 1905. Then, fear of the upheaval and destruction
caused by the French Revolutionary and Napoleonic wars brought the
major European states together time and again in what was known as the
Concert of Europe to resolve potential conflicts through international
conferences.

The Concert of Europe, like the United Nations of today, provided a
forum in which diplomats and statesmen could work together to avoid
war, and it largely succeeded.

There are clear parallels with the situation in our own time. The
postwar settlement in 1945 rested on a general recognition that
international co-operation in all fields had to be stronger than it
had been under the League of Nations, the UN's ill-fated predecessor.
The destruction caused by the Second World War, with its 50 million or
more dead, its ruined cities, its genocides, its widespread negation
of civilized values, had a far more powerful effect than the deaths
caused by the First World War, which were (with exceptions, notably
the genocide of a million or more Armenian civilians by the Turks in
1915) largely confined to troops on active service. In 1945, Hiroshima
and Nagasaki provided an additional, terrible warning of what would
happen if the world went to war again.

In 1914, by contrast, very few people had any idea of the cataclysm
that was about to descend on them. They thought the war would be short
and sharp, limited in duration and scope, like the wars of the decades
after 1815. Partly because of this record, war was seen by many in
1914 as not only inevitable but positive. When it came, the conflict
appeared to many as a release, a liberation of manly energies long
pent up, a chance to do something glorious in a prosaic age.

The breakdown of the multipolar system of international relations
under the Concert of Europe was a major factor leading to the outbreak
of war. Up to 1904-5, Britain had regarded France and Russia as its
main rivals for global influence, but as dangerous Anglo-French
colonial differences in Africa were settled, and Russia turned away
from Asia following its defeat by Japan, the rise of Germany took
centre stage, and Europe divided itself, along the lines of the later
Cold War, into two armed and increasingly antagonistic camps.

Today's Balkan tinderbox has been replaced by the Middle East. But
neither here, nor in East Asia, does it look as if regional disputes
are going to escalate into global conflict.

China is not challenging the United States militarily but
economically; and, in any case, it is far too simple to see the
complex origins of the First World War as rooted in a German challenge
to the British Empire: its roots lay in the Balkans, not in the North
Sea.

Yes As we get closer to the centenary of Gavrilo Princip's act of
terrorism in Sarajevo, there is an ever more vivid fear: It could
happen again. The approach of the 100th anniversary of 1914 has put a
spotlight on the fragility of the world's political and economic
security systems.

At the beginning of 2013, Luxembourg's Prime Minister Jean-Claude
Juncker was widely ridiculed for evoking the shades of 1913. By now he
is looking like a prophet.

By 2014, as the security situation in the South China Sea
deteriorated, Japanese Prime Minister Shinzo Abe cast China as the
equivalent to Kaiser Wilhelm's Germany; and the fighting in Ukraine
and in Iraq is a sharp reminder of the dangers of escalation.

Lessons of 1914 are about more than simply the dangers of national and
sectarian animosities. The main story of today, as then, is the
precariousness of financial globalization, and the consequences that
political leaders draw from it.

In the influential view of Norman Angell in his 1910 book The Great
Illusion, the interdependency of the increasingly complex global
economy made war impossible. But a quite opposite conclusion was
equally plausible - and proved to be the case. Given the extent of
fragility, a clever twist to the control levers might make war easily
winnable by the economic hegemon.

In the wake of an epochal financial crisis that almost brought a
complete global collapse, in 1907, several countries started to think
of finance as primarily an instrument of raw power, one that could and
should be turned to national advantage.

The 1907 panic emanated from the United States but affected the rest
of the world.

The aftermath of the 1907 crash drove the then hegemonic power - Great
Britain - to reflect on how it could use its financial might.

Between 1905 and 1908, the British Admiralty evolved the broad
outlines of a plan for economic warfare that would wreck the financial
system of its major European rival, Germany, and destroy its fighting
capacity.

Britain used its extensive networks to gather information about
opponents. London banks financed most of the world's trade. Lloyds
provided insurance for the shipping, not just of Britain but of the
world.

What pre-1914 Britain did anticipated the private-public partnership
that today links technology giants such as Google, Apple or Verizon to
U.S. intelligence-gathering.

Since last year, the Edward Snowden leaks about the National Security
Agency have shed light on the way that global networks are used as a
source of information and power.

For Britain's rivals, the financial panic of 1907 also showed the
necessity of mobilizing financial powers. The U.S. realized that it
needed a central bank analogous to the Bank of England. And that New
York needed its own commercial trading system.

Some of the dynamics of the pre-1914 financial world are now re-emerging.

Then, an economically declining power, Britain, wanted to use finance
as a weapon against its larger and faster growing competitors, Germany
and the U.S. Now, America is in turn obsessed by being overtaken by
China - according to some calculations, set to become the world's
largest economy this year.

In the aftermath of the 2008 economic crisis, financial institutions
appear both as dangerous weapons of mass destruction and as potential
instruments for the application of national power.

In managing the 2008 crisis, the dependence of foreign banks on
U.S.-dollar funding constituted a major weakness, and required the
provision of large swap lines by the Federal Reserve. The U.S.
provided that support to some countries, but not others, on the basis
of an explicitly political logic, as international-trade specialist
Eswar Prasad demonstrates in his new book on the "dollar trap."

Geopolitics is intruding into banking practice elsewhere. Before the
Ukraine crisis, Russian banks were trying to acquire assets in Central
and Eastern Europe. Chinese banks are being pushed to expand their
role in global commerce. After the financial crisis, China started to
build up the renminbi as a major international currency. Russia and
China have just proposed a new credit-rating agency to avoid what they
regard as the political bias of the existing (American-based)
agencies.

The next stage in this logic is to think about how financial power can
be directed to national advantage in the case of a diplomatic tussle.
Sanctions are a routine (and not terribly successful) part of the
pressure applied to rogue states such as Iran and North Korea. But
financial pressure can be used much more effectively against countries
that are deeply embedded in the world economy.

The test is in the Western imposition of sanctions after the Russian
annexation of Crimea. President Vladimir Putin's calculation in
response is that the European Union and the U.S. cannot possibly be
serious about the financial war. It would turn into a boomerang:
Russia would be less affected than the complex financial markets of
Europe and America.

The threat of systemic disruption generates a new sort of uncertainty,
one that mirrors the decisive feature of the crisis of the summer of
1914. At that time, no one could really know whether clashes would
escalate. That feature contrasts remarkably with almost the entirety
of the Cold War, when the strategic doctrine of mutually assured
destruction left no doubt that any superpower conflict would
inevitably escalate.

The idea of network disruption relies on the ability to achieve
advantage by surprise, and to win at no or low cost. But it is
inevitably a gamble, and raises the prospect that others might, but
also might not, be able to mount the same sort of operation. Just as
in 1914, there is an enhanced temptation to roll the dice, even though
the game may be fatal.

Sir Richard J. Evans, a historian at Cambridge University who
specializes in 19th- and 20th-century European history. "There are
similarities, but the world order of 2014 is far more stable and
cooperative than in 1914."

Harold James, a professor of history at Princeton University's Woodrow
Wilson School who specializes in European economic history. "The
combination of financial globalization and escalation-prone conflicts
is creating the same volatile conditions as in 1914."

Associated Graphic

Allied troops near Ypres: In 1914, few people had any idea of the
cataclysm to come. Today, however, the risks of escalation in clashes
like the one in Ukraine, above, are clear.

AP/EPHREM LUKATSKY