Weekly Geopolitical Report – American Foreign Policy: A Review, Part II (October 10, 2016)

by Bill O’Grady

Last week, in Part I of this study, we examined the four imperatives of American policy with an elaboration of each one.  This week, we will discuss why each is important.  We will examine why there has been a “drift” in American foreign policy since the end of the Cold War.  This drift has now reached a critical point as the U.S. appears to be backing away from its postwar trade policies and the geopolitical imperatives that avoided WWIII.  As always, we will conclude with the impact on financial and commodity markets.

The Importance of the Imperatives

To review, the U.S. had four geopolitical imperatives after WWII.  They were:

  1. Deal with the Soviet Union, in particular, and the threat of global communism, in general
  2. Maintain peace in Europe
  3. Maintain stability in the Middle East
  4. Maintain peace in the Far East

All four of these imperatives were critical to maintaining global peace.  Preventing the expansion of communism was “job one,” but removing the “German problem” from Europe was also very important as was keeping tensions manageable between China and Japan.  Although it was difficult to justify supporting authoritarian regimes in the Middle East on moral or ethical grounds, it was necessary to maintain stability.  Essentially, American foreign policy was designed to contain communism and freeze three potential conflict zones in Europe, Asia and the Middle East.

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