The Coming Financial Pandemic

The U.S. financial crisis cannot be contained. Indeed, it has already begun to infect other countries, and it will travel further before it's done. From sluggish trade to credit crunches, from housing busts to volatile stock markets, this is how the contagion will spread.

For months, economists have debated whether the United States is headed toward a recession. Today, there is no doubt. President George W. Bush can tout his $150 billion economic stimulus package, and the Federal Reserve can continue to cut short-term interest rates in an effort to goose consumer spending. But those moves are unlikely to stop the economy's slide. The severe liquidity and credit crunch from the subprime mortgage bust is now spreading to broader credit markets, $100 barrels of oil are squeezing consumers, and unemployment continues to climb. And with the housing market melting down, empty-pocketed Americans can no longer use their homes as ATMs to fund their shopping sprees. It's time to face the truth -- the U.S. economy is no longer merely battling a touch of the flu; it's now in the early stages of a painful and persistent bout of pneumonia.

Meanwhile, other countries are watching anxiously, hoping they don't get sick, too. In recent years, the global economy has been unbalanced, with Americans spending more than they earn and the country running massive external deficits. When the subprime mortgage crisis first hit headlines last year, observers hoped that the rest of the world had enough growth momentum and domestic demand to gird itself from the U.S. slowdown. But making up for slowing U.S. demand will be difficult, if not impossible. American consumers spend about $9 trillion a year. Compare that to Chinese consumers, who spend roughly $1 trillion a year, or Indian consumers, who spend only about $600 billion. Even in wealthy European and Japanese households, low income growth and insecurities about the global economy have caused consumers to save rather than spend. Meanwhile, countries such as China rely on exports to sustain their high economic growth. So there’s little reason to believe that global buyers will pick up the slack of today’s faltering American consumer, whose spending has already begun to drop.

Because the United States is such a huge part of the global economy -- it accounts for about 25 percent of the world's GDP, and an even larger percentage of international financial transactions -- there's real reason to worry that an American financial virus could mark the beginning of a global economic contagion. It may not devolve into a worldwide recession, but at the very least, other nations should expect sharp economic downturns, too. Here's how it will happen:

TRADE WILL DROP: The most obvious way that a U.S. recession could spill over elsewhere in the world is through trade. If output and demand in the United States fall -- something that by definition would happen in a recession -- the resulting decline in private consumption, capital spending by companies, and production would lead to a drop in imports of consumer goods, capital goods, commodities, and other raw materials from abroad. U.S. imports are other countries' exports, as well as an important part of their overall demand. So such a scenario would spell a drop in their economic growth rates, too. Several significant economies -- including Canada, China, Japan, Mexico, South Korea, and much of Southeast Asia -- are heavily dependent on exports to the United States. China, in particular, is at risk because so much of its double-digit annual growth has relied on the uptick of exports to the United States. Americans are the world’s biggest consumers, and China is one of the world's largest exporters. But with Americans reluctant to buy, where would Chinese goods go?

China is also a good example of how indirect trade links would suffer in an American recession. It once was the case that Asian manufacturing hubs such as South Korea and Taiwan produced finished goods, like consumer electronics, that were exported directly to American retailers. But with the rise of Chinese competitiveness in manufacturing, the pattern of trade in Asia has changed: Asian countries increasingly produce components, such as computer chips, for export to China. China then takes these component parts and assembles them into finished goods -- say, a personal computer -- and exports them to American consumers. Therefore, if U.S. imports fall, then Chinese exports to the United States would fall. If Chinese exports fall, then Chinese demand for component parts from the rest of Asia would fall, spreading the economic headache further.

A WEAK DOLLAR WILL MAKE MATTERS WORSE: Already, the economic slowdown in the United States and the Fed's interest rate cuts have caused the value of the dollar to drop relative to many floating currencies such as the euro, the yen, and the won. This weaker dollar may stimulate U.S. export competitiveness, because those countries will be able to buy more for less. But, once again, it is bad news for other countries, such as Germany, Japan, and South Korea, who rely heavily on their own exports to the United States. That's because the strengthening of their currencies will increase the price of their goods in American stores, making their exports less competitive.

HOUSING BUBBLES WILL BURST WORLDWIDE: The United States isn't the only country that experienced a housing boom in recent years. Easy money and low, long-term interest rates were plentiful in other countries, too, particularly in Europe. The United States also isn’t the only country that has experienced a housing bust: Britain, Ireland, and Spain lag only slightly behind the United States as the value of their flats and villas trends downward. Countries with smaller but still substantial real estate bubbles include France, Greece, Hungary, Italy, Portugal, Turkey, and the Baltic nations. In Asia, countries including Australia, China, New Zealand, and Singapore have also experienced modest housing bubbles. There's even been a housing boom in parts of India. Inevitably, such bubbles will burst, as a credit crunch and higher interest rates poke holes in them, leading to a domestic economic slowdown for some and outright recession for others.

COMMODITY PRICES WILL FALL: One need only look at the skyrocketing price of oil to see that worldwide demand for commodities has surged in recent years. But those high prices won't last for long. That's because a slowdown of the U.S. and Chinese economies -- the two locomotives of global growth -- will cause a sharp drop in the demand for commodities such as oil, energy, food, and minerals. The ensuing fall in the prices of those commodities will hurt the exports and growth rate of commodity exporters in Asia, Latin America, and Africa. Take Chile, for example, the world’s biggest producer of copper, which is widely used for computer chips and electrical wiring. As demand from the United States and China falls, the price of copper, and therefore Chile’s exports of it, will also start to slide.

FINANCIAL CONFIDENCE WILL FALTER: The fallout from the U.S. subprime meltdown has already festered into a broader and more severe liquidity and credit crunch on Wall Street. That, in turn, has spilled over to financial markets in other parts of the world. This financial contagion is impossible to contain. A huge portion of the risky, radioactive U.S. securities that have now collapsed -- such as the now disgraced residential mortgage-backed securities and collateralized debt obligations -- were sold to foreign investors. That's why financial losses from defaulting mortgages in American cities such as Cleveland, Las Vegas, and Phoenix are now showing up in Australia and Europe, even in small villages in Norway.

Consumer confidence outside the United States -- especially in Europe and Japan -- was never strong; it can only become weaker as an onslaught of lousy economic news in the United States dampens the spirits of consumers worldwide. And as losses on their U.S. operations hit their books, large multinational firms may decide to cut back new spending on factories and machines not just in the United States but everywhere. European corporations will be hit especially hard, as they depend on bank lending more than American firms do. The emerging global credit crunch will limit their ability to produce, hire, and invest.

The best way to see how this financial flu spreads is by watching global stock markets. Investors become more risk averse when their economies appear to be slowing down. So whenever there's bad economic news in the United States -- say, reports of higher unemployment or negative GDP growth -- there are worries that other economies will suffer, too. Investors sell off their stocks in New York and the Dow Jones plunges. You can expect a similarly sharp fall when the Nikkei opens in Tokyo a few hours later, and the ripple effect then continues in Europe when opening bells ring in Frankfurt, London, and Paris. It's a vicious circle; the market volatility culminates in a kind of panicky groupthink, causing investors to dump risky assets from their portfolios en masse. Such financial contagion was on prime display when global equity markets plummeted in January.


Optimists may believe that central banks can save the world from the painful side effects of an American recession. They may point to the world’s recovery from the 2001 recession as a reason for hope. Back then, the U.S. Federal Reserve slashed interest rates from 6.5 percent to 1 percent, the European Central Bank dropped its rate from 4 percent to 2 percent, and the Bank of Japan cut its rate down to zero. But today, the ability of central banks to use monetary tools to stimulate their economies and dampen the effect of a global slowdown is far more limited than in the past. Central banks don't have as free a hand; they are constrained by higher levels of inflation. The Fed is cutting interest rates once again, but it must worry how the disorderly fall of the dollar could cause foreign investors to pull back on their financing of massive U.S. debts. A weaker dollar is a zero-sum game in the global economy; it may benefit the United States, but it hurts the competitiveness and growth of America's trading partners.

Monetary policy will also be less effective this time around because there is an oversupply of housing, automobiles, and other consumer goods. Demand for these goods is less sensitive to changes in interest rates, because it takes years to work out such gluts. A simple tax rebate can hardly be expected to change this fact, especially when credit card debt is mounting and mortgages and auto loans are coming due.

The United States is facing a financial crisis that goes far beyond the subprime problem into areas of economic life that the Fed simply can't reach. The problems the U.S. economy faces are no longer just about not having enough cash on hand; they're about insolvency, and monetary policy is ill equipped to deal with such problems. Millions of households are on the verge of defaulting on their mortgages. Not only have more than 100 subprime lenders gone bankrupt, there are riding delinquencies on more run-of-the-mill mortgages, too. Financial distress has even spread to the kinds of loans that finance excessively risky leveraged buyouts and commercial real estate. When the economy falls further, corporate default rates will sharply rise, leading to greater losses. There is also a "shadow banking system," made up of non-bank financial institutions that borrow cash or liquid investments in the near term, but lend or invest in the long term in nonliquid forms. Take money market funds, for example, which can be withdrawn overnight, or hedge funds, some of which can be redeemed with just one month's notice. Many of these funds are invested and locked into risky, long-term securities. This shadow banking system is therefore subject to greater risk because, unlike banks, they don't have access to the Fed’s support as the lender of last resort, cutting them off from the help monetary policy can provide.

Beyond Wall Street, there is also much less room today for fiscal policy stimulus, because the United States, Europe, and Japan all have structural deficits. During the last recession, the United States underwent a nearly 6 percent change in fiscal policy, from a very large surplus of about 2.5 percent of GDP in 2000 to a large deficit of about 3.2 percent of GDP in 2004. But this time, the United States is already running a large structural deficit, and the room for fiscal stimulus is only 1 percent of GDP, as recently agreed upon in President Bush’s stimulus package. The situation is similar for Europe and Japan.

President Bush's fiscal stimulus package is too small to make a major difference today, and what the Fed is doing now is too little, too late. It will take years to resolve the problems that led to this crisis. Poor regulation of mortgages, a lack of transparency about complex financial products, misguided incentive schemes in the compensation of bankers, wrongheaded credit ratings, poor risk management by financial institutions -- the list goes on and on.

Ultimately, in today's flat world, interdependence boosts growth across countries in good times. Unfortunately, these trade and financial links also mean that an economic slowdown in one place can drag down everyone else. Not every country will follow the United States into an outright recession, but no one can claim to be immune.



A World Without Islam

What if Islam had never existed? To some, it's a comforting thought: No clash of civilizations, no holy wars, no terrorists. Would Christianity have taken over the world? Would the Middle East be a peaceful beacon of democracy? Would 9/11 have happened? In fact, remove Islam from the path of history, and the world ends up exactly where it is today.

Imagine, if you will, a world without Islam -- admittedly an almost inconceivable state of affairs given its charged centrality in our daily news headlines. Islam seems to lie behind a broad range of international disorders: suicide attacks, car bombings, military occupations, resistance struggles, riots, fatwas, jihads, guerrilla warfare, threatening videos, and 9/11 itself. Why are these things taking place? "Islam" seems to offer an instant and uncomplicated analytical touchstone, enabling us to make sense of today's convulsive world. Indeed, for some neoconservatives, "Islamofascism" is now our sworn foe in a looming "World War III."

But indulge me for a moment. What if there were no such thing as Islam? What if there had never been a Prophet Mohammed, no saga of the spread of Islam across vast parts of the Middle East, Asia, and Africa?

Given our intense current focus on terrorism, war, and rampant anti-Americanism -- some of the most emotional international issues of the day -- it's vital to understand the true sources of these crises. Is Islam, in fact, the source of the problem, or does it tend to lie with other less obvious and deeper factors? For the sake of argument, in an act of historical imagination, picture a Middle East in which Islam had never appeared. Would we then be spared many of the current challenges before us? Would the Middle East be more peaceful? How different might the character of East-West relations be? Without Islam, surely the international order would present a very different picture than it does today. Or would it?


From the earliest days of a broader Middle East, Islam has seemingly shaped the cultural norms and even political preferences of its followers. How can we then separate Islam from the Middle East? As it turns out, it's not so hard to imagine.

Let's start with ethnicity. Without Islam, the face of the region still remains complex and conflicted. The dominant ethnic groups of the Middle East -- Arabs, Persians, Turks, Kurds, Jews, even Berbers and Pashtuns -- would still dominate politics. Take the Persians: Long before Islam, successive great Persian empires pushed to the doors of Athens and were the perpetual rivals of whoever inhabited Anatolia. Contesting Semitic peoples, too, fought the Persians across the Fertile Crescent and into Iraq. And then there are the powerful forces of diverse Arab tribes and traders expanding and migrating into other Semitic areas of the Middle East before Islam. Mongols would still have overrun and destroyed the civilizations of Central Asia and much of the Middle East in the 13th century. Turks still would have conquered Anatolia, the Balkans up to Vienna, and most of the Middle East. These struggles -- over power, territory, influence, and trade -- existed long before Islam arrived.

Still, it's too arbitrary to exclude religion entirely from the equation. If, in fact, Islam had never emerged, most of the Middle East would have remained predominantly Christian, in its various sects, just as it had been at the dawn of Islam. Apart from some Zoroastrians and small numbers of Jews, no other major religions were present.

But would harmony with the West really have reigned if the whole Middle East had remained Christian? That is a far reach. We would have to assume that a restless and expansive medieval European world would not have projected its power and hegemony into the neighboring East in search of economic and geopolitical footholds. After all, what were the Crusades if not a Western adventure driven primarily by political, social, and economic needs? The banner of Christianity was little more than a potent symbol, a rallying cry to bless the more secular urges of powerful Europeans. In fact, the particular religion of the natives never figured highly in the West's imperial push across the globe. Europe may have spoken upliftingly about bringing "Christian values to the natives," but the patent goal was to establish colonial outposts as sources of wealth for the metropole and bases for Western power projection.

And so it's unlikely that Christian inhabitants of the Middle East would have welcomed the stream of European fleets and their merchants backed by Western guns. Imperialism would have prospered in the region's complex ethnic mosaic -- the raw materials for the old game of divide and rule. And Europeans still would have installed the same pliable local rulers to accommodate their needs.

Move the clock forward to the age of oil in the Middle East. Would Middle Eastern states, even if Christian, have welcomed the establishment of European protectorates over their region? Hardly. The West still would have built and controlled the same choke points, such as the Suez Canal. It wasn't Islam that made Middle Eastern states powerfully resist the colonial project, with its drastic redrawing of borders in accordance with European geopolitical preferences. Nor would Middle Eastern Christians have welcomed imperial Western oil companies, backed by their European viceregents, diplomats, intelligence agents, and armies, any more than Muslims did. Look at the long history of Latin American reactions to American domination of their oil, economics, and politics. The Middle East would have been equally keen to create nationalist anticolonial movements to wrest control over their own soil, markets, sovereignty, and destiny from foreign grips -- just like anti-colonial struggles in Hindu India, Confucian China, Buddhist Vietnam, and a Christian and animist Africa.

And surely the French would have just as readily expanded into a Christian Algeria to seize its rich farmlands and establish a colony. The Italians, too, never let Ethiopia's Christianity stop them from turning that country into a harshly administered colony. In short, there is no reason to believe that a Middle Eastern reaction to the European colonial ordeal would have differed significantly from the way it actually reacted under Islam.

But maybe the Middle East would have been more democratic without Islam? The history of dictatorship in Europe itself is not reassuring here. Spain and Portugal ended harsh dictatorships only in the mid-1970s. Greece only emerged from church-linked dictatorship a few decades ago. Christian Russia is still not out of the woods. Until quite recently, Latin America was riddled with dictators, who often reigned with U.S. blessing and in partnership with the Catholic Church. Most Christian African nations have not fared much better. Why would a Christian Middle East have looked any different?

And then there is Palestine. It was, of course, Christians who shamelessly persecuted Jews for more than a millennium, culminating in the Holocaust. These horrific examples of anti-Semitism were firmly rooted in Western Christian lands and culture. Jews would therefore have still sought a homeland outside Europe; the Zionist movement would still have emerged and sought a base in Palestine. And the new Jewish state would still have dislodged the same 750,000 Arab natives of Palestine from their lands even if they had been Christian -- and indeed some of them were. Would not these Arab Palestinians have fought to protect or regain their land? The Israeli-Palestinian problem remains at heart a national, ethnic, and territorial conflict, only recently bolstered by religious slogans. And let's not forget that Arab Christians played a major role in the early emergence of the whole Arab nationalist movement in the Middle East; indeed, the ideological founder of the first pan-Arab Ba'th party, Michel Aflaq, was a Sorbonne-educated Syrian Christian.

But surely Christians in the Middle East would have at least been religiously predisposed toward the West. Couldn't we have avoided all that religious strife? In fact, the Christian world itself was torn by heresies from the early centuries of Christian power, heresies that became the very vehicle of political opposition to Roman or Byzantine power. Far from uniting under religion, the West's religious wars invariably veiled deeper ethnic, strategic, political, economic, and cultural struggles for dominance.

Even the very references to a "Christian Middle East" conceal an ugly animosity. Without Islam, the peoples of the Middle East would have remained as they were at the birth of Islam -- mostly adherents of Eastern Orthodox Christianity. But it's easy to forget that one of history's most enduring, virulent, and bitter religious controversies was that between the Catholic Church in Rome and Eastern Orthodox Christianity in Constantinople -- a rancor that persists still today. Eastern Orthodox Christians never forgot or forgave the sacking of Christian Constantinople by Western Crusaders in 1204. Nearly 800 years later, in 1999, Pope John Paul II sought to take a few small steps to heal the breach in the first visit of a Catholic pope to the Orthodox world in a thousand years. It was a start, but friction between East and West in a Christian Middle East would have remained much as it is today. Take Greece, for example: The Orthodox cause has been a powerful driver behind nationalism and anti-Western feeling there, and anti-Western passions in Greek politics as little as a decade ago echoed the same suspicions and virulent views of the West that we hear from many Islamist leaders today.

The culture of the Orthodox Church differs sharply from the Western post-Enlightenment ethos, which emphasizes secularism, capitalism, and the primacy of the individual. It still maintains residual fears about the West that parallel in many ways current Muslim insecurities: fears of Western missionary proselytism, a tendency to perceive religion as a key vehicle for the protection and preservation of their own communities and culture, and a suspicion of the "corrupted" and imperial character of the West. Indeed, in an Orthodox Christian Middle East, Moscow would enjoy special influence, even today, as the last major center of Eastern Orthodoxy. The Orthodox world would have remained a key geopolitical arena of East-West rivalry in the Cold War. Samuel Huntington, after all, included the Orthodox Christian world among several civilizations embroiled in a cultural clash with the West.

Today, the U.S. occupation of Iraq would be no more welcome to Iraqis if they were Christian. The United States did not overthrow Saddam Hussein, an intensely nationalist and secular leader, because he was Muslim. Other Arab peoples would still have supported the Iraqi Arabs in their trauma of occupation. Nowhere do people welcome foreign occupation and the killing of their citizens at the hands of foreign troops. Indeed, groups threatened by such outside forces invariably cast about for appropriate ideologies to justify and glorify their resistance struggle. Religion is one such ideology.

This, then, is the portrait of a putative "world without Islam." It is a Middle East dominated by Eastern Orthodox Christianity -- a church historically and psychologically suspicious of, even hostile to, the West. Still riven by major ethnic and even sectarian differences, it possesses a fierce sense of historical consciousness and grievance against the West. It has been invaded repeatedly by Western imperialist armies; its resources commandeered; borders redrawn by Western fiat in conformity with its various interests; and regimes established that are compliant with Western dictates. Palestine would still burn. Iran would still be intensely nationalistic. We would still see Palestinians resist Jews, Chechens resist Russians, Iranians resist the British and Americans, Kashmiris resist Indians, Tamils resist the Sinhalese in Sri Lanka, and Uighurs and Tibetans resist the Chinese. The Middle East would still have a glorious historical model -- the great Byzantine Empire of more than 2,000 years' standing -- with which to identify as a cultural and religious symbol. It would, in many respects, perpetuate an East-West divide.

It is not an entirely peaceful and comforting picture.


It is, of course, absurd to argue that the existence of Islam has had no independent impact on the Middle East or East-West relations. Islam has been a unifying force of a high order across a wide region. As a global universal faith, it has created a broad civilization that shares many common principles of philosophy, the arts, and society; a vision of the moral life; a sense of justice, jurisprudence, and good governance -- all in a deeply rooted high culture. As a cultural and moral force, Islam has helped bridge ethnic differences among diverse Muslim peoples, encouraging them to feel part of a broader Muslim civilizational project. That alone furnishes it with great weight. Islam affected political geography as well: If there had been no Islam, the Muslim countries of South Asia and Southeast Asia today -- particularly Pakistan, Bangladesh, Malaysia, and Indonesia -- would be rooted instead in the Hindu world.

Islamic civilization provided a common ideal to which all Muslims could appeal in the name of resistance against Western encroachment. Even if that appeal failed to stem the Western imperial tide, it created a cultural memory of a commonly shared fate that did not go away. Europeans were able to divide and conquer numerous African, Asian, and Latin American peoples who then fell singly before Western power. A united, transnational resistance among those peoples was hard to achieve in the absence of any common ethnic or cultural symbol of resistance.

In a world without Islam, Western imperialism would have found the task of dividing, conquering, and dominating the Middle East and Asia much easier. There would not have remained a shared cultural memory of humiliation and defeat across a vast area. That is a key reason why the United States now finds itself breaking its teeth in the Muslim world. Today, global intercommunications and shared satellite images have created a strong self-consciousness among Muslims and a sense of a broader Western imperial siege against a common Islamic culture. This siege is not about modernity; it is about the unceasing Western quest for domination of the strategic space, resources, and even culture of the Muslim world -- the drive to create a "pro-American" Middle East. Unfortunately, the United States naively assumes that Islam is all that stands between it and the prize.

But what of terrorism -- the most urgent issue the West most immediately associates with Islam today? In the bluntest of terms, would there have been a 9/11 without Islam? If the grievances of the Middle East, rooted in years of political and emotional anger at U.S. policies and actions, had been wrapped up in a different banner, would things have been vastly different? Again, it's important to remember how easily religion can be invoked even when other long-standing grievances are to blame. Sept. 11, 2001, was not the beginning of history. To the al Qaeda hijackers, Islam functioned as a magnifying glass in the sun, collecting these widespread shared common grievances and focusing them into an intense ray, a moment of clarity of action against the foreign invader.

In the West's focus on terrorism in the name of Islam, memories are short. Jewish guerrillas used terrorism against the British in Palestine. Sri Lankan Hindu Tamil "Tigers" invented the art of the suicide vest and for more than a decade led the world in the use of suicide bombings -- including the assassination of Indian Prime Minister Rajiv Gandhi. Greek terrorists carried out assassination operations against U.S. officials in Athens. Organized Sikh terrorism killed Indira Gandhi, spread havoc in India, established an overseas base in Canada, and brought down an Air India flight over the Atlantic. Macedonian terrorists were widely feared all across the Balkans on the eve of World War I. Dozens of major assassinations in the late 19th and early 20th centuries were carried out by European and American "anarchists," sowing collective fear. The Irish Republican Army employed brutally effective terrorism against the British for decades, as did communist guerrillas and terrorists in Vietnam against Americans, communist Malayans against British soldiers in the 1950s, Mau Mau terrorists against British officers in Kenya -- the list goes on. It doesn't take a Muslim to commit terrorism.

Even the recent history of terrorist activity doesn't look much different. According to Europol, 498 terrorist attacks took place in the European Union in 2006. Of these, 424 were perpetrated by separatist groups, 55 by left-wing extremists, and 18 by various other terrorists. Only 1 was carried out by Islamists. To be sure, there were a number of foiled attempts in a highly surveilled Muslim community. But these figures reveal the broad ideological range of potential terrorists in the world.

Is it so hard to imagine then, Arabs -- Christian or Muslim -- angered at Israel or imperialism's constant invasions, overthrows, and interventions, employing similar acts of terrorism and guerrilla warfare? The question might be instead, why didn't it happen sooner? As radical groups articulate grievances in our globalized age, why should we not expect them to carry their struggle into the heart of the West?

If Islam hates modernity, why did it wait until 9/11 to launch its assault? And why did key Islamic thinkers in the early 20th century speak of the need to embrace modernity even while protecting Islamic culture? Osama bin Laden’s cause in his early days was not modernity at all -- he talked of Palestine, American boots on the ground in Saudi Arabia, Saudi rulers under U.S. control, and modern "Crusaders." It is striking that it was not until as late as 2001 that we saw the first major boiling over of Muslim anger onto U.S. soil itself, in reaction to historical as well as accumulated recent events and U.S. policies. If not 9/11, some similar event like it was destined to come.

And even if Islam as a vehicle of resistance had never existed, Marxism did. It is an ideology that has spawned countless terrorist, guerrilla, and national liberation movements. It has informed the Basque ETA, the FARC in Colombia, the Shining Path in Peru, and the Red Army Faction in Europe, to name only a few in the West. George Habash, the founder of the deadly Popular Front for the Liberation of Palestine, was a Greek Orthodox Christian and Marxist who studied at the American University of Beirut. In an era when angry Arab nationalism flirted with violent Marxism, many Christian Palestinians lent Habash their support.

Peoples who resist foreign oppressors seek banners to propagate and glorify the cause of their struggle. The international class struggle for justice provides a good rallying point. Nationalism is even better. But religion provides the best one of all, appealing to the highest powers in prosecuting its cause. And religion everywhere can still serve to bolster ethnicity and nationalism even as it transcends it -- especially when the enemy is of a different religion. In such cases, religion ceases to be primarily the source of clash and confrontation, but rather its vehicle. The banner of the moment may go away, but the grievances remain.

We live in an era when terrorism is often the chosen instrument of the weak. It already stymies the unprecedented might of U.S. armies in Iraq, Afghanistan, and elsewhere. And thus bin Laden in many non-Muslim societies has been called the "next Che Guevara." It's nothing less than the appeal of successful resistance against dominant American power, the weak striking back -- an appeal that transcends Islam or Middle Eastern culture.


But the question remains, if Islam didn't exist, would the world be more peaceful? In the face of these tensions between East and West, Islam unquestionably adds yet one more emotive element, one more layer of complications to finding solutions. Islam is not the cause of such problems. It may seem sophisticated to seek out passages in the Koran that seem to explain "why they hate us." But that blindly misses the nature of the phenomenon. How comfortable to identify Islam as the source of "the problem"; it’s certainly much easier than exploring the impact of the massive global footprint of the world’s sole superpower.

A world without Islam would still see most of the enduring bloody rivalries whose wars and tribulations dominate the geopolitical landscape. If it were not religion, all of these groups would have found some other banner under which to express nationalism and a quest for independence. Sure, history would not have followed the exact same path as it has. But, at rock bottom, conflict between East and West remains all about the grand historical and geopolitical issues of human history: ethnicity, nationalism, ambition, greed, resources, local leaders, turf, financial gain, power, interventions, and hatred of outsiders, invaders, and imperialists. Faced with timeless issues like these, how could the power of religion not be invoked?

Remember too, that virtually every one of the principle horrors of the 20th century came almost exclusively from strictly secular regimes: Leopold II of Belgium in the Congo, Hitler, Mussolini, Lenin and Stalin, Mao, and Pol Pot. It was Europeans who visited their "world wars" twice upon the rest of the world -- two devastating global conflicts with no remote parallels in Islamic history.

Some today might wish for a "world without Islam" in which these problems presumably had never come to be. But, in truth, the conflicts, rivalries, and crises of such a world might not look so vastly different than the ones we know today.