Category Archives: A Piece of My Mind

Harold Macmillan and the Butterfly Effect in Political Risk Analysis

 Mastering Real World Bolts from the Blue

Political risk analysis is only as good as the unplanned-for real-world events that it rubs up against. However elegant the assessment, however spot on the analysis, it must survive contact with the random. Or, as when John Kennedy asked British Prime Minister Harold Macmillan what worried him, the sage old premier supposedly replied, “Events, dear boy, events.”

While by definition such random events are beyond human control, that does not mean that they cannot be analytically managed. It is the job of the political risk analyst to identify weak spots in today’s political constellations, links that can be broken when an unforeseen event blows up, where a single spark can ignite a prairie fire, such as occurred following the assassination of Archduke Franz Ferdinand in Sarajevo in 1914, precipitating the calamity of the Great War.

Dealing with the “butterfly effect” in foreign relations—wherein small random events can have outsized consequences—is a major commandment necessary for mastering political risk analysis. Analysts must check, and check again, for a global system’s weak links, waiting for the day when they must be instantly shored up in order to head off potential disaster.

Macmillan Strives to Salvage Britain’s Place in the World

 All through his passage through time he had been haunted by unwanted ghosts, both of his own life and that of his country. Now, in December 1962, Harold Macmillan found himself in the Bahamas, attempting to save what could be saved—to salvage the reputation of Great Britain as one the world’s great powers.

The broader context of the Nassau Conference was that of Britain’s place in a post-Suez world. Greatly regretting the damage that he had personally done as Prime Minister Anthony Eden’s Chancellor of the Exchequer during the Suez crisis—initiated by President Gamal Abdel Nasser when he nationalised the Suez Canal in Egypt on July 26, 1956, a butterfly effect that had seemingly come out of nowhere—Macmillan used his subsequent premiership to make a grand effort to repair British foreign policy.

When forced to choose between France/Europe and the United States, he came down strongly on the side of Washington, setting about rebuilding the “special relationship.” One of the many ways Macmillan did this was to jointly work with the American nuclear program. In fact, the Prime Minister’s staunch unwillingness to disclose US nuclear secrets to France contributed to Paris’s veto of Britain’s proposed entry into the European Economic Community. Shorn of its empire and cut off from Europe, Macmillan had put all of his strategic eggs into the American basket.

However, once again an unforeseen event threatened Britain’s newfound place in the world. The special relationship was in danger of collapsing, and all over the inadvertent cancellation of an obscure missile program.

The Skybolt Crisis

 Skybolt, a ballistic missile jointly developed by the UK and the US during the early 1960s, had run well over projected costs. Without giving any thought to the broader strategic symbolism of Skybolt—the fact that it served as a concrete illustration for the enduring Anglo-American strategic partnership—the Kennedy administration had unilaterally cancelled the program because it had become enormously expensive, and also because it was so far behind schedule that it would have been obsolete before it was even deployed.

However, utterly unexpectedly, the cancellation of Skybolt provoked a crisis of confidence between the United States and Britain. The optics of the cancellation caused unthought-of tensions, as it looked as if the US was yet again (as at Suez) cutting the UK down to size, this time high-handedly divesting London of its independent nuclear deterrent. Given that Macmillan had staked everything on the centrality of the special relationship, the Skybolt crisis came to be seen as a litmus test of the true post-Suez value of the US-British alliance as a whole. It was in this atmosphere of unexpected existential crisis that the December 1962 Nassau conference was convened.

Macmillan finally triumphs over the butterfly effect

The Prime Minister was left to walk a very fine diplomatic line at Nassau. He was eager not to alienate the Americans, but also absolutely needed to ensure Britain’s independent nuclear deterrent. Macmillan had to either convince Kennedy to countermand his original order and retain Skybolt, or secure a viable replacement, which in this case was the Polaris missile. Britain’s perceived status as a great power hung in the balance.

Fortunately for Macmillan, he was just the sort of man Kennedy instinctively liked: brave, stylish, witty, and unflappable. And it was at this pivotal moment, with the President wavering, that the Prime Minister successfully managed to save his world from the butterfly effect.

Standing to speak, Macmillan invoked his own horrendous experiences in World War I (where he had been wounded three times, once severely), and eloquently detailed to the Americans what Britain had sacrificed for the world in its storied past in the greater cause of preserving Western civilization. After tugging at the President’s heartstrings, the Prime Minister dropped the hammer. Macmillan directly demanded Polaris, and pointedly noted that a failure to get it would result in a dramatic strategic reappraisal of British foreign and defence policy.

Kennedy, at last realizing what was at stake in Nassau—how devastating the Skybolt controversy was proving for Macmillan in particular and the special relationship in general—quickly agreed to provide Britain with Polaris missiles on extremely favourable terms. The Prime Minister had (just) managed to stop random events from upsetting his world yet another time.

Conclusion: Macmillan’s warning

 The Prime Minister had a parting political risk warning for the President. In Nassau in December 1962, on the evening they both arrived in the Bahamas, Kennedy and Macmillan—at the Prime Minister’s urging—walked alone together for a long time, a rarity given Kennedy’s ever-present and vast staff.

They immediately hit it off, talking not only about the Skybolt crisis and domestic politics but also about their shared interest in history and the things in their lives that both found ridiculous, funny, or deadly serious. It was during this intimate walk that Macmillan queried Kennedy as to what he feared most. The President, ever the literal rationalist, admitted that nuclear weapons and the American balance-of-payments deficit were the two issues that most frightened him. Kennedy was scared of the known.

However, when the President asked Macmillan what frightened him the most, the Prime Minister (perhaps mythically) replied, “Events, dear boy, events.” Macmillan, unlike the modern, cerebral President, knew from his own bitter experience that it is the unknown that is to be most feared by analysts of all stripes, as it can—at a stroke—upend the best-laid plans of mice and men.

This article was published by Princeton University Press, April 5, 2018.

Dr. John C. Hulsman is the President and Co-Founder of John C. Hulsman Enterprises (www.john-hulsman.com), a prominent global political risk consulting firm. For three years, Hulsman was the Senior Columnist for City AM, the newspaper of the city of London. Hulsman is a Life Member of the Council on Foreign Relations, the pre-eminent foreign policy organisation. The author of all or part of 14 books, Hulsman has given over 1520 interviews, written over 650 articles, prepared over 1290 briefings, and delivered more than 510 speeches on foreign policy around the world. His most recent work, To Dare More Boldly; The Audacious Story of Political Risk, was published by Princeton University Press in April 2018 and is available for order on Amazon.

 

Knowing the Nature of the World You Live In: Or the Trials and Tribulations of George Harrison

One of the most vital political risk commandments to master is knowing the overall nature of the system you are evaluating in terms of its power distribution. For instance, are you assessing the unipolar Mediterranean Pax Romana of the Augustan age, the complex multipolarity of the post-Napoleonic European order painstakingly constructed Castlereagh and Metternich, or the bipolar Cold War world of the US and USSR? Only by knowing the nature of the world you live in—and its stability–can any policy or any analysis actually hope to be successful.

The best (and most entertaining) way to look at the change of power dynamics in a world order is to chronicle the startlingly quick unravelling of the greatest pop group in history. The Beatles went in lightning fashion from a period of artistic and commercial dominance in the mid-1960s (with Rubber Soul, Revolver, and Sgt. Pepper’s Lonely Hearts Club Band) to their demise in 1970 (following Let It Be and Abbey Road) in a blink of a historical eye. Why was this and what can the sad demise of the Fab Four tell us about global systems?

The Beatles’ System Falls Stunningly Apart

In the mid-1960s, the rather rigid structure lying behind the Beatles’ creative and commercial success—on most albums their lovable (and newly knighted) drummer Ringo Starr was given at most one song, George Harrison had at best two or three, with the rest being Lennon-McCartney originals—became the group’s unquestioned modus operandi. The system worked because it reflected the genuine creative power realities within the group at the time.

This pattern—the accepted rules underlying a bipolar world dominated by Lennon-McCartney—was followed with metronomic efficiency. On Rubber Soul, there are eleven Lennon-McCartney tunes, two penned by Harrison, and one by Ringo. Revolver is graced by eleven Lennon-McCartney songs, while Harrison had three and Ringo none. Sgt. Pepper’s in many ways amounts to the apogee of John and Paul’s creative dominance; fully twelve of the thirteen songs on this masterpiece were written by Lennon-McCartney, with George managing only one and Ringo none.

But by now George Harrison had had enough. In any other group he would have served as a first-rate front man, as both a performer and a writer; now he simply couldn’t get much of his increasingly prodigious output on the records. The creative balance of power within the group was decidedly shifting, even as the Beatles’ modus operandi stayed the same. Chafing at the creative bit, and frustrated that he simply wasn’t allowed to crack the Lennon-McCartney duopoly, Harrison grew increasingly resentful that his efforts to grow as an artist were being given short shrift.

In a sense, such a rigid response to Harrison’s rise is entirely understandable. John and Paul echoed back to him what established status quo powers have been saying to rising powers since time immemorial: “Why should we change anything, given how well things are going for us?” While that certainly was true in this case—the Lennon-McCartney bipolar world had taken the Beatles to undreamed-of creative heights—so was the fact that George Harrison, an immensely talented man in his own right, was not being given real opportunities to rise in the Beatles’ system.

The Beatles as a Frightening Metaphor for Today’s World

So let’s jump through the looking glass, taking our Beatles analogy a geopolitical step further. View John Lennon in the mid to late 1960s as a stand-in for the Europe of today: increasingly preoccupied with Yoko Ono, self-involved with the many demons of his past and present, more worried about his own personal problems and situation than about the Beatles as a whole, and eager to shed his responsibilities in the band.

See Paul McCartney as the United States, unhappily aware he is the last man standing, the force (after the death of their unsung manager Brian Epstein in August 1967) holding the group together. It fell to Paul, both by virtue of his ambitious personality and John’s lack of interest, to take over the running of the band. The others resented his increasing dominance, even as he resented the fact that they all benefited from his desire to keep the show on the road, the system ticking over. It is little wonder McCartney veered from unilateralism to isolationism in doing so. Paul is the harassed ordering power.

Imagine George Harrison as today’s rising powers (China, India, and the other emerging market powers), resentful and distrustful of the old system of dominance and eager to strike off on their own, either within a newly re-constituted group that makes room for their growth or in a new band.

And finally, conjure Ringo as the world’s smaller powers, desperate to work with everyone, to keep a stable system going, even as he is glumly aware that whatever happens will affect him far more than he can impact any outcome. Strikingly, the Beatles of the late 1960s and the global political world of today are eerily in line with one another.

By the time of Let It Be (1970), it is all over. For anyone who has watched the excruciating May 1970 film of the making of the album, the lowlight has to be when an exasperated Paul runs into a beyond-caring George, who mockingly tells him he will play whatever Paul wants, however Paul wants, all the while meaning exactly the opposite.

A Lennon-McCartney duopoly no longer makes sense to two of the three key protagonists. George Harrison no longer wants to wait for the other two to take notice of his creative flowering. John Lennon no longer wants to carry the significant burden of keeping the group together, given his other preoccupations and weariness at being the co-leader of a system he increasingly cares less and less about.

Neither of these systemic shifts happened out of the blue, and both had been commented on for several years. But nothing systematically changed to keep up with these altered creative and power realities. The world had changed. The creative power constellation within the Beatles had changed. But the power dynamic within the group had not. This is the classic definition of a failed system. Everyone knew exactly what he was referring to when Harrison named his fine first post-Beatles record All Things Must Pass.

 Using our analogy: How the West can avoid the Beatles’ fate

The first and foremost priority for the West is to accurately see the evolving power structure of the new world we live in, as the Beatles failed to do. It must not fight to uphold a unipolar or bipolar status quo that is beyond saving. To paraphrase the great Italian writer Lampedusa, if things are to stay as they are, everything must change. For the relative decline of the West and the rise of the rest is a fact, it is the undoubted historical headline of our age. This reality does not call for the resigned fatalism so popular now in Europe, but instead to adjust the power realities of global governance to the rapidly changing multipolar world we now find ourselves in.

So the West must adopt a new strategy if it is to avoid the systemic fate of the Fab Four. It must re-engage George Harrison—particularly the emerging and established democratic powers such as India, Indonesia, South Africa, Israel, Brazil, Argentina, Australia, Japan–on new terms that actually reflect today’s changed multipolar global geopolitical and macro-economic realities. It must forge a new global democratic alliance with these rising regional powers, making them partners in defending the global status quo.

Let it be.

This article first appeared in  MarketWatch, March 28, 2018. 

Dr. John C. Hulsman is the President and Co-Founder of John C. Hulsman Enterprises (www.john-hulsman.com), a prominent global political risk consulting firm. For three years, Hulsman was the Senior Columnist for City AM, the newspaper of the city of London. Hulsman is a Life Member of the Council on Foreign Relations, the pre-eminent foreign policy organisation. The author of all or part of 14 books, Hulsman has given over 1520 interviews, written over 650 articles, prepared over 1290 briefings, and delivered more than 510 speeches on foreign policy around the world. His most recent work, To Dare More Boldly; The Audacious Story of Political Risk, will be published by Princeton University Press in April 2018 and is available for order on Amazon.

 

Will the US ever escape the Losing Gambler Syndrome in Afghanistan?

The Losing Gambler Syndrome is a fact of the human condition that casino magnates have come to well understand. When someone loses big at the tables, almost always they have an overwhelming urge to invest ever more resources to make good on their catastrophic losses, rarely bothering to think about the reasons for these losses in the first place. Dad cannot go back to Mom telling her he has lost the kids’ college fund at the roulette table, so he keeps playing . . . and keeps losing. The reason for his demise—the terrible odds—is never analytically addressed.

Policymakers are not immune to this folly, often doubling down on a bad assessment emotionally in order to wipe the slate clean of their intellectual mistakes. I saw this doleful analytical process up close and personal in Washington as the Iraq War slid toward the abyss; very often those policymakers urging ever-greater efforts in Iraq from the American people did so largely to make good on their already monumental strategic losses.

History’s graveyard is replete with losing gamblers

Anyone who has ever walked the mile and a half in that beautiful, tragic open field between Seminary and Cemetery Ridges at Gettysburg knows that the Confederate assault on the third day of the battle should never have been made. The simple reason for Pickett’s disastrous charge is that Robert E. Lee had emotionally invested too much at Gettysburg to easily turn back. The famed Confederate general was both desperate and overconfident, a fatal combination. Lee was held intellectual hostage by his tantalizing near success (and actual failure) on the second day of the battle, becoming an unwitting prisoner of the Losing Gambler Syndrome.

Likewise, as the years rolled by without the United States ever finding a political ally in South Vietnam with local political legitimacy, it never seems to have occurred to Lyndon Johnson that the lack of such a partner was a sure sign to get out, not to redouble his efforts.

When will they ever learn?

Tragically, the losing gambler’s curse continues today, with America’s seemingly endless war in Afghanistan being a textbook example. Within of few months of 9/11, American-led forces had routed the Taliban and dislodged al-Qaeda from its bases. However, then the war goals fatefully shifted. To prevent al-Qaeda’s resurgence, the US ended up endlessly propping up weak, corrupt, unrepresentative governments in Kabul.

As these governments did not have sufficient organic political legitimacy, the US found itself mired in an unwinnable situation, as without Taliban involvement in the central government (the Taliban represent almost exclusively the interests of the Pashtun, the largest single tribe in the country) any local rule was bound to be seen as inherently unrepresentative. This political reality is at the base of the 16-year unwinnable war in Afghanistan.

Doubling down yet again

Yet President Trump’s ‘new plan’ (there have been an endless number of these over the past decade and a half) does nothing do to deal with this central political conundrum. Despite in his campaign saying the war in Afghanistan had been ‘a total disaster,’ the President was persuaded by his respected Secretary of Defense, James Mattis, and former National Security Adviser H.R. McMaster, to increase American troop levels in-country to 16,000, ignoring the fact that during the Obama administration 100,000 American soldiers had been fighting there, all to no avail.

I suspect a key reason for this strange decision is that both Generals Mattis and McMaster served with distinction in Afghanistan. Like Lee, President Johnson, and the neo-conservatives huddled around George W. Bush, both have invested too much emotionally and practically to turn back, whatever the fearful odds.

So an unwinnable war is set to continue, as the unsolvable political reality at its base goes unremarked upon. The losing gambler’s syndrome tells us that once resources and intellectual credibility have been expended, it is all too tempting, whether met with crisis or entranced by near-success, to keep doing what has been failing up until that point. It is entirely understandable to do this, but as Gettysburg, Vietnam, and Iraq point out, practically disastrous. Policymakers must instead have the courage to look at failure straight in the eye and make adjustments to mitigate its effects, rather than doubling down and inviting more.

Dr. John C. Hulsman is the President and Co-Founder of John C. Hulsman Enterprises (www.john-hulsman.com), a prominent global political risk consulting firm. For three years, Hulsman was the Senior Columnist for City AM, the newspaper of the city of London. Hulsman is a Life Member of the Council on Foreign Relations. The author of all or part of 14 books, Hulsman has given over 1520 interviews, written over 650 articles, prepared over 1290 briefings, and delivered more than 510 speeches on foreign policy around the world. His most recent work, To Dare More Boldly; The Audacious Story of Political Risk, will be published by Princeton University Press in April 2018. It is available now for order on Amazon.