Creditor Power And Hegemony Shift

The relationship between international debt and international political power is one of the crucial topics in IPE study. It has been confirmed repeatedly in the history of modern time international relations that diplomatic strategies center on national debt would influence the power transition between states in a direct manner.International debt is not only an issue related to economic arena, but also a political issue as well. This paper focus on how America get involved in European affairs, finished hegemonic shift smoothly, and became the later hegemony power in1917-1945 by using its creditor power. The author holds that American use of creditor politics continued through the whole period in her way of pursuing hegemonic power. The U.S obtained hegemonic power in the exchange of creditor power on Britain with political power by using ’relation power’ between economic and political areas successfully.This paper follows two dimensions from a broader view:historical study and theoretical exploration. This study brought out the concept of "creditor politics" on the base of absorbing insightful points both in interdependence theory and power exchange theory, and structured an analytical framework on the transition between creditor power and political power which covers both side of static structure and dynamic change of creditor politics. The author holds the possibility of creditor politics operation in the static structure of transition between creditor power and political power is often decided by both system pressure that actors confront and actor’s position in exchange network.In dynamic structure of power exchange, the cost of creditor power politicalizing and the needs of both creditor power and debt power would determine the reality of power exchange. The realization of transition between creditor power and political power relies on the interaction between static structure and dynamic structure.The U.S creditor power on Britain set up under British hegemony, but Germany’s challenge to Great Britain in the First World War provided America great opportunity to use its creditor power politically. Britain had to borrow heavy debt from America in order to finance its allied power, and at the same time had to keep relatively higher level internal debts due to historical tradition. Britain’s situation in the mire of debts offered America a possibility of keeping and expanding its creditor power to Britain. America enhanced its employ of creditor power during Second World War, and deprived the hegemony power from Great Britain successfully by using so-called "linkage strategy" in interdependent theory.The major way of American use of creditor politics includes:Firstly, despite of the general appeal of debt canceling by European countries, America signed debt founding agreement with these countries. By this way, America not only protected its creditor power but also managed to embrace higher ethic virtue, and gradually earned European admits of American hegemony.Secondly, controlling the international flow of gold and goods prices by using debt liquid system, the US implemented the shift between creditor power domination to currency power domination.Thirdly, by financing the defeated Germany, America established the casual link between American creditor power, European debts, and Germany reparations, and buried a bomb in European political dispute for American advantage.Fourth, in armament area, under the principle of "repay the debts, or reduce armament expenditure", the US dragged down Britain’s economy by imposing debt pressure and arm race, and finally earned British citizens’ recognition of American power mentally.Finally, Under the policy of’ ended up the war debts with nothing definite" America gave up the creditor power to Britain, and by making concession on economy benefit, accomplished power shift from economic power to worldwide political power successfully. The cost of using creditor power politically was high for America, but the benefit was even greater in consideration of the overall power shift to herself.In light of American’s creditor power, this study analyzed the interaction between political power and economic power in American struggle for hegemony with Britain. This point of view here is different from the former studies which focus on political power in hegemony transition between Britain and American. This study also pay close attention to the "aggressiveness" and "strategic concern" in American foreign policy, which shows how later rising powers acquired and amplified their national power by using of few preponderant policy instruments.Thus, the struggle for supremacy in economic area between American and Britain which expressed through credit relations was actually the overture and chorus of political conflict. This could be a complementary interpretation for Anglo-American hegemony transition which was the "key issue in 20 century international relation history compilation".The study of American creditor politics history could be helpful in stimulating strategy thinking of china’s "creditor position". This paper suggests that china should keep long-term vision on its involvement in global governance, and promote our global political influence by releasing part of creditor power in exchange for the increasing economic interdependence between china and the world. This is "the proper interest sense" in china’s foreign policy and the necessary cost in setting up the image of "responsible power".