Editor's note: This is part two of a two-part series. The first part is available here.

The United States as Superpower

Last year was disastrous for the United States' superpower status. It did not achieve a single one of its most important foreign policy objectives.

Despite its involvement in the Middle East, the region has become more unstable and dangerous, making violence and armed conflict more likely. An emboldened Iran and a resurgent cross-border Shi‘a community spanning from Lebanon to India seem to be the only substantial changes and this can hardly be seen as a promising development for the region.

Moreover, North Korea has joined the nuclear club. The United States repeatedly warned that a nuclear test would be deemed unacceptable, but North Korea went ahead anyway. And apart from sanctions, judged by most observers to be of little effect, no repercussions were dished out. The world's sole superpower was challenged by this "rogue nation" on one of the most important global security issues and America allowed them to get away with it.

Even Iran has chosen to neglect warnings from the United States about its nuclear programs. And while the UN Security Council imposed sanctions, the five permanent members do not appear to be wholeheartedly committed to their decision. Even worse, it demonstrates that the United States is unable to garner support for a global issue like non-proliferation, which affects every nation-state's security.

Nevertheless, the United States has been more successful than most people give it credit for when it comes to homeland security. Since September 11 there have been few high profile attacks and none on U.S. soil. The United States has also been relatively successful in pressuring nation-states to deny opportunities for terrorists to train, regroup and develop new tactics. This has crippled many terrorist organizations, pushing them back to small-scale attacks. Unfortunately, America's "good work" is overshadowed by the Iraq War, which has also tarnished its image as a superpower. In an ironic twist of political fate, the War on Terror has robbed the United States of its laurels won from improving homeland security.

The Iraq War has cost the United States it its centerpiece of foreign policy: Promoting the spread democracy.

The exigencies of war has also cost the United States the moral high ground in international politics and demystified the belief among other nation-states that it stands for principles worthy of emulation. The strength of a superpower is in its ability to lead and have others follow, not because they fear the consequences of not doing so, but because they want to. Only in this way can it avoid costly military actions that dampen its world standing.

The war in Iraq has also raised doubts over the utility of future U.S. military interventions in other theatres.

Facing rising powers, such as China, the United States is caught between the devil and the deep blue sea. Opening the door for potential rivals on the global stage is the price you pay for acknowledging new partners, but excluding them puts the whole burden on the United States, thus depleting its economic and military resources even further. The U.S. economy may not be strong enough to bear the burden of any protracted war, considering that its combined current account deficit is almost approximately 10 percent of GDP.

Thus the Iraq War is at least partly financed by China, creditor countries in Asia and oil exporting countries in the Middle East. While this presently serves their interests, this does not mean they support the United States in Iraq. The United States has made itself an economic hostage to foreign powers; some are allies and others are potential challengers. If alliances and preferences among the above mentioned group change, the United States might be forced into an agonizing reappraisal of its abilities to continue the Iraq War.

Suppose these countries are no longer willing to finance American debt and for various reasons begin offloading their accumulated dollar reserves. The dollar would be devalued even more than it already is and such an event would further highlight American impotence in protecting the value of its currency. It would certainly not paint an image of a strong United States capable of defending its own interests.

The United States used to lead on currency valuations, as in the case of the Japanese Yen appreciation in 1985. But nowadays the United States has to apply a mixture of threats and pleas to get countries like China to appreciate its currency. And when leadership is absent, other actors start to contradict and challenge the written and unwritten rules.

Consequences for the United States

Unfortunately, recent events will probably produce an unprecedented swing in American attitudes towards the rest of world. Since World War I American foreign policy has either been isolationist or internationalist in terms of world affairs. However, we may see a rise in U.S. nationalism-the pursuit of America's own interests coupled with neglecting global leadership.

The impact of September 11 on the American mindset pointed to a turn around from an open American attitude to a suspicious and inward looking America steered by fear about what comes from abroad.

The majority of Americans believed that the world praised the American model, admired the American way of life and looked forward to adopting a variant of its democratic political system. But now, Americans question all of this. This crucial change of mindset may lead Americans to withdraw from the world stage, instead of engaging global challenges.

It is not difficult to understand the loss of morale. The ordinary American asks why American soldiers should be killed and tax-dollars should be spent in places like Iraq if U.S. policy is seen by foreigners as some kind of misguided attempt to export an uninvited political model that causes people to react by attacking the United States, its allies and its interests abroad.

The Iraq War has been compared to the Vietnam War. There are some similarities. For example, a large majority of Americans justified both wars from a moral and political standpoint. The Vietnam War was seen in the larger context of the Cold War and the fight against Communism, while the Iraq War is perceived as fighting terrorism. Both the moral high ground and strategic explanations kept public support high, but then as the conflict dragged on, it became clear that these reasons could not stand up under closer scrutiny.

With American casualties mounting and the spread of cell phone photographs of the realities of war being sent home, the war may not be morally sustained by strong public support. Additionally, the strategic reasoning for "staying the course" is no longer attractive to the American public as a moral impetus, and until this is acknowledged, the Iraq War will never enjoy the support of a majority of Americans again.

The feeling that the United States is losing the scepter as the guardian of the moral high ground is accentuated by the fast waning international support for the Nuclear Non-Proliferation Treaty (NPT). The depletion of U.S. resources by the Iraq war makes it more and more unlikely that America is capable of putting a coalition together among the five permanent members of the UN Security Council to stop North Korea and Iran. In reality, the NPT has been replaced by a tacit acknowledgment that proliferation is unavoidable.

A string of other countries are lining up to watch how things play out. If Iran and North Korea are not forced to toe the line, the temptation for other countries to contemplate nuclear weapons may be overwhelming. This can be witnessed in Japan, where the government is opening the door for a nuclear discussion, which is perceived by many to be a quantum leap.

The U.S. response has been to develop a missile defense system. This policy is tantamount to turning its back on the world and failing to prevent more nations from going nuclear. It illuminates a shift in foreign policy thinking: let's spend less time on the world and concentrate on making the homeland safer.

This same mindset comes into the fore when the focus shifts to globalization. In the past, American jobs were lost to competition between other advanced economies like Europe or Japan. This was deemed as more or less a fact of life. Now, the villain seems to be a rising China, heightening economic insecurity. The perception is that China is either not playing by the rules and must be punished or that the rules are lopsided to the detriment of American workers.

But as long as the U.S. economy keeps trucking, the risk of an abrupt change in U.S. economic and trade policy will be unlikely. But if the United States heads into a severe economic downturn, the temptation to protect American jobs may be irresistible.

It may not be what the U.S. elite wants, but the combination of September 11, the devolution of the NPT and the pressure caused globalization may result in an American withdrawal from its role as the global superpower. Shouldering the responsibility for keeping the world on an even keel and doing so in accordance with American principles may be too costly, both politically and economically.