The following speech was given by Douglas Rediker for the Truman National Security Project in Washington, DC on May 1, 2009.

Green-shoots and optimism aside, let's agree that no one really knows how the economic crisis will play out or when it will end. There are those who believe that we have reached the bottom and others who believe that we have only reached a "temporary bottom."

But one thing is certain -- from a foreign policy perspective, the current crisis is likely to be a driving geopolitical force for a long time.

A month ago, the Director of National Intelligence opened his Annual Threat Assessment to Congress with the statement that: "the primary near-term security concern of the United States is the global economic crisis and its geopolitical implications."

Think about that for a moment. The US is engaged in two military wars, facing the threat of a nuclear Iran and the reality of nuclear Pakistan and North Korea, and tackling terrorism, amongst other things ... and yet the number one security concern identified by the DNI was financial.

The financial crisis raises several security and foreign policy issues that warrant our attention, all of which have serious strategic, security and foreign policy implications for this country.

First, the crisis poses a risk that some countries may find themselves in such economic straits that traditional sources of funding their basic government obligations leave them stranded and desperate. In part, as the US and other large countries increase their borrowing to support stimulus packages and other spending, we run the risk of exacerbating the crisis in these economically vulnerable countries, because our borrowing needs are so large, that we suck up so much liquidity from the capital markets that there is simply nothing left for them.

This economic squeeze may thus lead to friends and allies that are less able to meet defense and humanitarian commitments. It may also lead to an increased likelihood of "bad actors" (no names here) who may seek to make mischief as our attention is focused elsewhere.

How we anticipate or react to these situations will have regional, if not global implications.

Second, the crisis puts into play certain basic assumptions about how the world's fundamental economic and financial systems operate, including the role of the US dollar and American financial hegemony.

And third, the crisis potentially accelerates a challenge to the American-led status quo -- a status quo in which free markets, democracy and the Washington Consensus assure the US of the leading role in political, economic and ideological affairs around the globe.

In looking at the changing global landscape in the context of this crisis, the U.S and our allies need to be aware and pay close attention to countries heading ever closer to an economic cliff. It is in these countries that economic disaster and domestic political instability could lead to abrupt political change -- change that could have broader, regional impact.

We've already seen governments fall in Central and Eastern Europe, the Baltics and Iceland, and witnessed riots and protests in Western Europe and South East Asia.

Out of this crisis, we are likely to see certain other governments acting and reacting differently than they have in the past. Our models need to be updated, as these other countries operate from shifting positions of both absolute and relative strength, using levers that we, in the US, have not recently considered seriously.

The most obvious example of this is China, with its large holdings of US assets, and its desire to protect the value of those assets. In recent months, China has stepped up its public and private efforts to protect its national economic interests, in part by putting the "US dollar as global reserve currency" question on the table.

First, Prime Minister Wen Jiabao publicly expressed his "worry" about the possibility of dollar erosion as a result of the US stimulus and other spending measures announced by the US. Next, the Governor of the Chinese Central Bank released a public policy paper advocating a call for consideration of a "new super reserve currency" specifically, Special Drawing Rights or SDRs, which are international reserve assets created and managed by the IMF. Then China entered into $95 billion of Yuan currency swaps with countries around the world, ranging from Argentina to South Korea. And now, it appears possible that the next Chinese contribution to the IMF, estimated to be around $40 billion, could take the form of an SDR-denominated bond issue, rather than through traditional methods such through the New Arrangements to Borrow or NAB.

Personally, I do not believe that these steps are at all sinister. Rather, they are very rational steps from the Chinese perspective - both economically and strategically. But they are also reflective of a new more publicly assertive approach by China, which often makes policy on the basis of according economic interests its highest priority.

As I have stated this on many occasions, I do not see an end to US dollar dominance as a reserve currency anytime soon. But, global powers with global reserve currency status gain enormous strategic and economic benefits from that position, and history demonstrates that this position can be lost if internal and external economic and political forces are taken for granted and not adequately recognized and addressed.

We also must take seriously the potential consequences of this crisis on the loss of unquestioned US financial hegemony and ideological leadership in the world.

This crisis has re-opened for debate several fundamental questions that many, especially in the US, had, until recently, thought were settled and no longer open for discussion. These include what economic and political models might best be followed by governments seeking to advance the development and growth of their own countries in this difficult economic environment.

These discussions are not merely academic. Rather, with banks and even entire countries' solvency being called into question, these are immediate issues that have real world applications. Even our own US Government is grappling with issues relating to the role of the state in the free-market, the benefits of pursuing mercantilist policies and the extent of how we regulate the private sector. If we in this country are debating nationalization of banks, insurers and autos on Sunday morning talk shows, then imagine what the debate looks like elsewhere in the world.

The United States still enjoys sole military super-power dominance. But, following the collapse of the Soviet Union, we also enjoyed sole super power status in finance as well. We were central to the world's capital flows and led the charge in preaching the Washington Consensus. This dominant financial role provided enormous political and strategic benefits to the US.

But even before the economic crisis took hold, the financial world was already becoming increasingly multi-polar. Financial centers in London, Hong Kong, Singapore and Dubai, increasing central bank reserves in Asia and in the Gulf and increasingly attractive investment opportunities around the globe allowed capital to flow into, out of, and through markets all around the world.

The rapid development of financial centers around the world and the increasing wealth transfer from richer nations to developing ones, meant that the US no longer held the only set of keys to the world's financial markets. The financial world had already become multi-polar.

Then came the financial crisis, and with it a very real and serious challenge to the existing economic and political status quo. So much so that, at the conclusion of last month's London Summit, British Prime Minister Gordon Brown himself declared: "the Washington Consensus is over."

Now, today, it is not uncommon to hear talk around the world not only of the death of the "Washington Consensus" but also of its possible replacement by a "Beijing Consensus."

Those who advance this Beijing Consensus argument can't always agree on what it is (which makes it hard to call it a consensus) -- but in general it refers to the allure of some element of public ownership of the commanding heights of the economy, gradual reforms over shock therapy, greater skepticism about the free flow of capital and trade and a belief that economic reform can and should take place prior to political and cultural change.

I am hesitant to embrace the idea that the world is tilting towards a Beijing Consensus. Nevertheless, it is hard to argue that some of its elements have become increasingly present on the world stage.

For example, in sharp contrast to only 15 years ago, national/state-owned oil companies now own more than three-quarters of the world's known oil reserves. While in finance, who would have guessed that a mere 18 months after the frenzy over the alleged threats posed by state-owned sovereign wealth funds, the US government would find itself owning large positions in its own banks and insurance companies?

As for the best way to address the international challenges growing out of the economic crisis, we need to start with three related areas.

The first is to make sure the multilateral institutions we have in place, like the IMF and World Bank, have sufficient legitimacy and financial capability to support the next Iceland, and the next Iceland after that -- to see this crisis through. IMF loans may come with strings attached, but they are mainly financial strings, not strategic ones.

Second is to recognize that one of the most positive changes brought on by this crisis has been the elevation of the G-20 group format as the principal forum for discussing these issues. this forum, while undoubtedly cumbersome and unwieldy, is nevertheless preferable to the G-7, in that it is more broadly representative of the regions and economies of the entire world, not just Western Europe and North America.

The most tangible result from the G-20 meetings so far has been the increased financial and political focus on the IMF to ensure that financial resources are available to those countries that may need them - thus avoiding the political consequences of a country with no where to turn for help at its most desperate moments.

The third point, related to the others, involves the transfer of a basic financial markets concept to the geo-political arena. In difficult times, cash is king.

Today, the United States is the world's largest debtor, while many developing nations are among the most cash and reserve rich. We need to work with cash-rich countries to ensure that they feel that it is in their individual and collective self-interest to act responsibly and to use their liquidity to provide support where it is needed, to prevent economic and political disasters and to act as responsible stakeholders in the global economic system.

It is imperative that we continue the process begun last month at the London Summit, and work together to ensure that we minimize the global impact of the economic crisis and ensure that it doesn't develop into a political crisis.

How the US responds to this changing landscape will likely determine the extent of continued US global leadership for years to come. Luckily, at the recent G-20 Leaders Summit, President Obama and his team demonstrated a high degree of awareness of the depth of the challenges that these economic issues pose to the US in the foreign policy arena.

One recent incident is deserving of special attention. Last fall, Iceland, a NATO member, found itself facing imminent financial collapse. When its pleas for immediate help went unanswered by its traditional allies, it went public with its last ditch approach to Russia for a 4 billion Euro loan.

While the Russia deal was never consummated, Iceland's prime minister's words at the time were chilling: "We have not received the kind of support that we were requesting from our friends, so in a situation like that, one has to look for new friends."

In spite of an understandable desire to focus inward and attempt to right our own domestic ship before we look to the impact of this crisis abroad, we must not lose sight of the global strategic issues that an economic crisis of this scale presents. Even the optimists agree that the full force of the global economic crisis has not yet been felt. At times like these, no country should have to look for new friends.