For American policymakers, the end of the Cold War was, above all, a self-affirming experience. The four decades of global competition with Soviet communism had cast doubt on whether the United States was the most powerful or most righteous country in the world, but the peaceful and precipitous collapse of communism in the late 1980s appeared to confirm that it was indeed both. Looking to the future in the early 1990s, American policymakers were guided by two steadfast beliefs. First, they believed that the United States should remain the most powerful country in the world, and that American primacy in world affairs would receive the consent of the vast majority of other countries for the foreseeable future. Second, they believed that the United States’ form of political and economic organization – liberal democratic capitalism – was destined to benignly conquer the globe, and that it was the job of the US government to accelerate its expansion.

The scholarly debate on the causes of the end of the Cold War has placed significant emphasis on the role of communist economic stagnation in bringing about the collapse of communism. This chapter brings a new material factor – communist sovereign debt – to the forefront, and in so doing, it offers a redefinition of the materialist explanation for the end of the Cold War. The global financial history of the end of the Cold War has four important implications. First, it makes the timing of the end of the Cold War far less contingent upon Gorbachev’s rise than previously thought. Second, it allows us to refine the causal connection between Soviet relative decline and the peaceful nature of the end of the Cold War. Third, global financial history transforms our understanding of Western leverage over the events that comprise the end of the Cold War. And fourth, the history of sovereign debt in the Eastern Bloc de-exceptionalizes the revolutions of 1989 in world history and places them within the context of broader global currents that continue to this day.

Bush’s long-term vision was one of a world in which unparalleled American power underpinned a global liberal international order based on universal principles of human freedom – or at least on the United States’ interpretation of those principles. It was in part this vision that led the United States to act forcefully in the first crisis of the post–Cold War, triggered by Saddam Hussein’s invasion of Kuwait on August 2, 1990; a crisis that provided the backdrop against which Bush delivered his “new world order” speech. After a moment of initial hesitation, the United States decided to act decisively to expel Iraqi forces from Kuwait.