Thirty years ago this month, the world began a massive pivot from one era to the next. It started in August 1989, when Hungarians, Austrians and East Germans gathered for a pan-European picnic in the Hungarian border town of Sopron. Hundreds of East Germans took the opportunity to flee to the West, and the once-feared Hungarian border guards did nothing to stop them. On Monday, European dignitaries – including German Chancellor Angela Merkel and Hungarian Prime Minister Viktor Orban, two rivals competing for the soul of Europe – marked the occasion at a ceremony in Sopron. European history was defined there some three decades ago, but since then, the Continent has been trying to come to a common understanding of that definition.

Hope and Illusion

The events in Sopron were the beginning of the end of Soviet hegemony in Eastern Europe. In 1945, the Soviets had reached as far west as any Russian power ever had before. But by the late 1980s, the Soviets had been unraveling for some time, in part because the decline in oil prices and the rise in defense expenditures weakened them in such a way that their already inefficient system could not cope. Mikhail Gorbachev tried to buy time and gestured that he was not an enemy of the West by withdrawing to the Soviet borders. But it’s hard to stop a retreat once it has started, and by January 1992, the Soviet Union itself had collapsed. The empire that the czars had created fragmented into its component parts, and the borders of Russia retreated even farther east.

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Russia was no longer what it once was. Neither was Europe. The division in which the Continent had been frozen throughout the Cold War no longer existed. There was a sense of joy with the signing of the Maastricht Treaty, which created the European Union – a bloc that would move eastward into territory once dominated by the Soviets. It was a time of great hope and illusion. The EU’s anthem was based off “Ode to Joy” from Beethoven’s Ninth Symphony. With the Cold War over, the perpetual peace that Immanuel Kant had prophesied seemed at hand.

The pivot was also felt outside of Europe. 1989 was the year of the Tiananmen Square protests. Chinese protesters demonstrated for liberal democracy, carrying with them their own version of the Statue of Liberty. They believed that establishing a market economy could lead to democracy. The Central Committee believed otherwise, and the protests in Beijing did not go the way of the demonstrations in Sopron. Tanks appeared to stop the demonstrations. An unidentified man tried to block a row of tanks but failed. His fate is still unknown. And so, in 1989, China decided what kind of country it would be. It was a country ruled by the Communist Party, which permitted some limited private economic activity but never gave any power away that it could not take back.

According to economic and political philosophy theories, China’s approach should not have worked. But it did. China replaced Japan as the economy that many believed would overtake the United States. Japan, having recovered from World War II by exporting cheap goods to the U.S. and other countries, was an economic miracle. But the United States confronted Japan over its habit of blocking imports from the U.S. while flooding American markets with its own products. Threats were made by both sides, but they were not necessary. Exporters flourish only when they have customers and substantial profit margins. Japan held on to its customers by slashing prices. But as prices went down, so too did Japanese companies’ ability to pay off their loans. And with that, the banks crumbled. Japan was hurled into an economic crisis and lost its status as the most amazing economy ever seen. People hoping to get a job at an investment firm stopped studying Japanese and started learning Mandarin instead. It was the changing of the guard, with all fantasies blazing.

It was also the time when the Islamic world came alive. For nearly a decade in the 1980s, Iraq and Iran had been fighting a war in which casualties were well above 1 million. From the U.S. perspective, Iran became an enemy of the United States with the fall of the Shah, while was an ally of the Soviet Union. The Middle East was a jewel to be fought for, in large part because the Persian Gulf contained the oil on which the global economy depended. A war between Iraq and Iran was, therefore, the best of all worlds, as both countries were focused on each other, neither had time to bother the U.S., and the Soviets were indifferent.

But the stakes were extremely high for Iran and Iraq. The prize for the victor would be control of the Persian Gulf and the ability to dominate the Muslim world. When the war finally came to an end, neither side had won, but Iraq came as close as it could get. And it believed, rightly or wrongly, that the U.S. had agreed to let it take control of Kuwait if it won the war against Iran. So in August 1990, Iraq invaded and occupied Kuwait, though it stopped short of invading Saudi Arabia.

Saddam Hussein seemed to think he had an understanding with the United States. The problem was that, in 1990, his Soviet patrons, including Gorbachev, were nowhere to be found. This meant that if the U.S. opposed Saddam’s invasion of Kuwait, the Soviets would not come to Iraq’s aid. In fact, no one came to Iraq’s aid. Instead, the U.S. created a coalition of 39 countries – ranging from Belgium to Honduras – to force Iraq out of the country.

The End of Geopolitical Confrontation?

After the collapse of the Soviet Union, the belief arose that the end of the Cold War meant the end of the age of great geopolitical confrontation. The United States was victorious, and its task was to manage a global system consisting of subordinate friends and an occasional rogue regime, which is where that strange term originated. Iraq certainly had a rogue regime as it didn’t respect the U.S. and wanted to invade other countries. What was stunning was how many countries, including some former Soviet allies, rallied to the American call. Some believed that the world would be like this forever and that it was now all about economics – or, more precisely, making money. The coalition, they argued, indicated a new world order.

Other things were at work of course. U.S. forces were asked to block the Iraqis from entering Saudi Arabia. For some deeply religious Muslims, the presence of American troops near Mecca and Medina was sacrilege. Some who felt that way had fought in Afghanistan against the Soviets, were paid by the Saudis, were trained by the Pakistanis and were managed by the Americans. They had wanted to destroy the Soviet presence in Afghanistan but were angered by the American presence in Saudi Arabia. It was the soil that gave rise to al-Qaida.

The period from 1989 to 1992 was extraordinary. The rising in Eastern Europe inspired Tiananmen Square, which in turn made it clear that China was still a communist country with a quasi-free market. The Japanese economic miracle came crashing down, setting the stage for China to take over. The United States became the unchallenged leader of the world, punishing rogue states and, without any intention or understanding, laying the foundation for 9/11.

There are vortexes that emerge at certain times. 1945 was such a moment in which the entire world was redefined. But 1945 came out of a singular event: the defeat of Japan and Germany. What is fascinating about 1989-1992 is that the forces driving the changes over that three-year period were many.

The common denominator is that countries like the Soviet Union, Japan and Iran had simply run out of room to maneuver, leaving the door open to countries like China to step through. The Soviet Union, Iran and Japan had all emerged from World War II weakened and struggled to recover. This massive pivot happened about 45 years later and gave us today’s China, the jihadists and a Russia still trying to recover.

George Friedman
George Friedman is an internationally recognized geopolitical forecaster and strategist on international affairs and the founder and chairman of Geopolitical Futures. Dr. Friedman is a New York Times bestselling author and his most popular book, The Next 100 Years, is kept alive by the prescience of its predictions. Other best-selling books include Flashpoints: The Emerging Crisis in Europe, The Next Decade, America’s Secret War, The Future of War and The Intelligence Edge. His books have been translated into more than 20 languages. Dr. Friedman has briefed numerous military and government organizations in the United States and overseas and appears regularly as an expert on international affairs, foreign policy and intelligence in major media. For almost 20 years before resigning in May 2015, Dr. Friedman was CEO and then chairman of Stratfor, a company he founded in 1996. Friedman received his bachelor’s degree from the City College of the City University of New York and holds a doctorate in government from Cornell University.