Features > February 16, 2007

Eyes Off the Prize (cont’d)

Increasingly Beijing, New Delhi and other Asian nations, including Thailand, are talking about using their surplus dollars to create their own financial institutions, such as an Asian Monetary Fund, that would lend Asian surpluses to Asian borrowers. Not only would this diminish the United States’ ability to dictate economic policy to borrowers, it would cement regional ties by giving Asian nations a vested interest in each other’s development and stability.

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Meanwhile, Iran poses its own threat to the dollar. Currently, the global oil and natural gas trade is conducted mainly in U.S. dollars. Since countries need to pay for their oil in dollars, they strive to acquire them, and this further strengthens both demand for the dollar and its central role in the world economy. But Iranian President Mahmoud Ahmadinejad has begun talking about selling Iranian oil and gas for Euros and other internationally traded currencies. If Iraq does indeed fall into the Iranian orbit, as many fear it will, and if Iran can get Iraq to follow suit, along with Iran’s ally Venezuela, about a third of the world’s energy would no longer be traded in the dollar, but in Euros or other currencies.

Another worry for Washington is that Tehran and Beijing have close military ties and are deepening their efforts to keep the United States out of energy-rich Central Asia, an area that has always been seen by Beijing, Moscow, Tehran and New Delhi as their backyard. In the months following the 9/11 attacks, Washington surprised these regional powers by using the international alarm over global terrorism to establish new military bases in Tajikistan, Uzbekistan and Kyrgyzstan. Washington also used its clout to buy major oil fields in the area and created the strategically important Baku-Tbilisi-Ceyhan pipeline, which allows Western countries to directly access the Caspian Sea’s energy reserves without needing to go through Russia or Iran.

Shi Yinhong, director of the American Studies program at the People’s University in Beijing, is concerned that tensions in the region heightened last year when the United States supported the “color” revolutions that toppled pro-Russian and pro-Chinese allies in Ukraine, Georgia and Kyrgyzstan, and replaced them with pro-Western democrats. In response, the region’s rising powers and disgruntled dictators are pooling their umbrage against the United States’ geopolitical dominance under the diplomatic shell of the six-nation Shanghai Cooperation Organization (SCO), says Madhav Nalapat, professor of geo-politics at the Manipal University in southern India. “The SCO is well on track to becoming an organization that directly challenges the geopolitical reach of the United States,” he says. “China is in the driver’s seat because it sees itself as the next United States.”

Initially, the Chinese-founded SCO had only five other members: Russia, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. But in July 2006, Iran and India (as well as Pakistan and Mongolia) were inducted as observers and are expected to become full members soon. This would formally unite China, Russia, India, and Iran in a quasi-military alliance for the first time, fueling talk of an emerging axis between these four powers that could balance, and maybe even threaten, U.S. influence in the region.

Indications of this crested this past year when Moscow, Beijing and New Delhi defended Tehran against the United States’ attempts to curb its nuclear activities by imposing sanctions. In fact, New Delhi, often seen as the most pro-United States of the four countries, even threatened to walk away from a much sought-after civilian nuclear deal of its own with the United States if Washington pushed it too hard to support the sanctions against Iran. The SCO has also asked the United States to withdraw all of its troops from the K-2 air base it set up in Kazakhstan just after the 9/11 attacks. Meanwhile, both Russia and India have established new military bases in Tajikistan, not far from the U.S. base there.

The economic endgame in all this is to dilute Washington’s hold over the Caspian Sea’s energy reserves, says Robert Karniol, Asia-Pacific editor for Jane’s Defense Weekly. China and India, the world’s fastest-growing energy consumers, want to divert Central Asia’s energy resources toward their own economies, and Iran and Russia, the region’s largest energy suppliers, are keen to reduce their dependence on sales to the West.

Both Russia and India have begun to talk of a Central Asian “energy club” that would create a regional gas grid, pipeline network and oil market, and China is already constructing a pipeline through Kazakhstan that would give it direct access to Russian and Caspian Sea oil. New Delhi and Beijing have raised Washington’s ire by backing a more audacious proposal to convert the prized Baku-Tbilisi-Ceyhan pipeline, which has been designed to bring gas to Europe, into a supply route for Asia. New Delhi wants to extend the pipeline to Syria, where oil could be loaded onto tankers and shipped to Asia through the Red Sea.

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Perhaps most significantly, however, the rise of China, India and Iran is increasingly weighing down what Joseph Nye, a former chairman of the National Intelligence Council, which provides the president and intelligence agencies with National Intelligence Estimates, calls the United States’ “soft power”—the attractiveness of American ideas, culture and values.

After the end of the Cold War, a U.S.-defined system of secular democracy and free markets was widely hailed as the universal governance model. Now, the increasing diffusion of Chinese, Indian and Iranian ideas, culture and values is increasing the soft power of these countries. This is most evident in the increasing global appetite for their cultural exports, including movies, books, fashion and art. As more and more people—including Westerners—consume Chinese, Indian and Persian culture, they are developing a greater appreciation and regard for these countries, making it easier for Beijing, New Delhi and Tehran to put their points of view out to the world.

For example, the success of the Chinese Communist Party in bringing more people out of poverty than any other country in history and in rebuilding China’s global clout is making China, not the United States, the model for many nations, particularly in Africa and Asia. This sentiment was loudly mouthed by some African leaders during the recent Africa summit in Beijing. Even in democratic India, ministers, businessmen and laypeople often talk admiringly of China’s one-party system, wishing its effectiveness for themselves.

For its part, Iran is directly challenging the United States’ democratization push in the Middle East with its own unique notion of Islamic democracy. Given the way things are shaping up in Iraq, Palestine and Lebanon, it’s likely that Iranian ideas and values and not American ones will shortly become the dominant force in the region.

U.S. attempts to defend democracy after the recent military coup in Thailand have also been undermined by China, and, more disturbingly, Beijing and New Delhi have been the main opponents of a U.S. plan to take military and economic action against the government in Sudan, which is committing genocide in the Darfur region. As a U.S. diplomat in Beijing puts it, “We just cannot exert our will anymore. We have to consider what China and India think before we do anything.”

If the trajectory of China, India and Iran’s resurgence is not derailed by the substantial problems facing these countries—poverty, corruption, religious turmoil and widening imbalances in income—the world of 2037 will look substantially different from today, with Americans carrying much of the negative burden of the change. Yet, as Nye points out in his book, The Paradox of American Power, any U.S. attempt to undermine or contain the emergence of these new powers could backfire just like Britain, France and Russia’s attempts to contain Germany, Japan and Italy backfired a century ago. There is already a growing sense in China, India and Iran that the neo-conservatives are likely to push the United States into repeating the mistakes of colonial Europe. The much-touted Project for the American Century developed by Paul Wolfowitz and company is seen by many analysts in China, India, and Iran as a direct challenge to their vision of an Asian Century. The ensuing resentments are already igniting new waves of anti-Americanism in these countries and elsewhere.

A stable and balanced world order will only emerge if the United States can arrive at negotiated understandings with China, India and Iran over how their new and growing financial, energy and military interests can be achieved within a globally acceptable framework. Even if this approach is pursued with the best of intentions, it could short-circuit under the burdens of the complexities and contradictions that plague relations and interests between the West and the rising East, as well as between China, India and Iran themselves.

Yet neither the United States nor Europe is investing the time and resources required to engage astutely with a resurgent China, India and Iran. Unlike the men, materials and money invested in understanding and dealing with the Soviet Union during the Cold War, the tidal wave of change coming from the East remains on the periphery of Western mindsets.

Thirty years from now, the greatest cost of the war in Iraq might well be that it proved to be the siren song that lured the United States away from its natural if challenging course, onto the rocks.

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• Reader Comments

  US Empire heading for the final fall. HOORAY !!!!!!

  Posted by blondemike on Feb 16, 2007 at 11:16 AM

  Leftover hubris from Manifest Destiny, industrial and commercial economic “miracles”, as well as fighting fascistic and socialistic militants to a stand-still (most of the pivotal events taking place within only a little more than a century), could be argued to have helped the US overreach itself recently, to the extent that it has actually done so (which is arguable). The author implies that this includes the overselling of secular democratic republicanism. It may be so. Many civilizations have fallen into the trap of thinking themselves to be eternal, incapable of failure, destined to lead the world, etc. No reason (at all!) to think the Americans are immune from this sort of self-mythologization.

  Actually, we’re pretty mired in it.

  I still have a pretty strong attachment to the ideals underlying secular democratic republicanism, but considering my cultural background and the historical period I grew up in, it’s not a surprise.

  The caveats that came to my mind about China, Iran, and India when I read the article include:

  China: Blistering fast growth may foster some pretty precipitous market corrections, i.e. recessions. If severe enough, I wonder if it could trigger some sort of neo-Maoist backlash, if the differential between the quality-of-life for upwardly mobile urban minorities and the hundreds of millions of peasants in the hinterlands widens. The Chinese tradition (incl. their “communist” incarnation) of unopposable authority also gives me pause. I tend to associate the overweaning thirst for control with decision-making trends that provoke dissatisfaction, anger, subversion, disruption of economic and social systems, etc.

  India: Population density, and growth rate. It may be so that India can stabilize or at least moderate its population issues in time to NOT devour every good thing that their recently charged-up economy can offer, but prosperous humans don’t demand less from their environment, they demand more. They especially demand more for their children’s generation, as the symbol of the success of their own. If they follow the pattern of having fewer children as they prosper, as other countries have done, perhaps they can reduce this problem (FYI, the current pop. growth rate is 1.38% per year, which if unchanged would double India’s population in a little over 50 years… a lot when you already have 1.2B people).

  Iran: Insofar as the “Islamic democracy” mentioned in the article, the big inhibitor to that will be if there’s any sustained enthusiasm for sharia law across the Muslim world. Sharia is not predicated upon participant-citizens directing society’s moves. It’s basic thrust is obedience to what is perceived/touted to be God’s law (subject, of course, to the ruling cadre telling us what “God’s law” implies, when Quran and Hadiths do not spell this out). If sharia is any different than any other totalitarian system (with all of their weaknesses), I have yet to have it explained to me exactly how it is different. I wonder too about how the Shia and Sunni factions will relate in the future. They’ve hated each other’s guts since long before there was a US, global capitalism, Western cohesion, etc.

  Just a few musings. I’d be provisionally glad to see a more multilateral world evolve, but I think it’s far from certain that the three ancient powers will necessarily retake center stage. If nothing else, I think it’s quite plausible that each would see the others as rivals, as soon as their current perceived rivals to their West decline enough (to the extent that they do). And you know how “great powers” behave when they perceive a rival, eh?

  Posted by Kuya on Feb 18, 2007 at 10:05 PM

  … the principal dynamic shaping life in the year 2037 will be the re-emergence of three ancient nations: China, India and Iran. Their powerful economies, muscular militaries, ambitious politicians, nationalistic populaces and resurgent cultures will irrevocably alter the lives of the 2.9 billion people who will then be living within their borders. 

  Ummm, probably not.  None of their economies are very strong, their militaries are decidedly lacking, Iran, India, and China are fragmented into ethnic and religious constituencies, and their cultures are becoming more Westernized.  Granting that Iran’s and China’s politicians are ambitious (one out of five ain’t bad?), when has this ever served to build a world class economy?  It is more likely a recipe for disaster; think Hitler, Stalin, Mao, Pol Pot, and Saddam.

  Iran’s economy is in terrible shape, due to the mismangement, inefficiency, and corruption of the ruling mullahs.  There is no obvious reason to group Iran with China and India, as Iran is radically different in size (much smaller), ruling philosophy (Jihadist terrorist), and economic capability (near zero, in spite of underutilized and mismanaged oil wealth). 

  The economies of China and India are growing rapidly from a very low base, following years of socialist mismanagement, inefficiency, and corruption.  China and India are the recipients and beneficiaries of Western capitalist and technological expertise, which they have eagerly embraced.  India has long since adopted democracy, but China is trying to avoid democracy, which will present an interesting set of problems: can free-market capitalism coexist within a corrupt totalitarian state? 

  China in particular is refusing the democratic and rule-of-law principles that have made the democratic West strong, and there is no hope of China growing strong while avoiding the most important principles that have made the West the economic and cultural leader of the world.  While Pocha is frothy about the growth of China and India (he is deluded in failing to note that the Irani economy is in long term decline, consonant with reasonable expectations of a rigidly controlled totalitarian economy), there is absolutely no prospect that China will grow to the levels Pocha anticipates. 

  China’s rapid growth superimposed on a corrupt and unstable base will certainly produce economic disruption, probably sufficient to destroy the totalitarian political structure.  China is far and away the largest political entity in history that lacks a political philosophy, since the decay and termination of socialism as a guiding philosophy in China.  Consequently, there is no loyalty to a cause except for the ruling class that is loyal only to the cause of its own advancement. 

  Increasingly Beijing, New Delhi and other Asian nations, including Thailand, are talking about using their surplus dollars to create their own financial institutions, such as an Asian Monetary Fund, that would lend Asian surpluses to Asian borrowers. Not only would this diminish the United States’ ability to dictate economic policy to borrowers, it would cement regional ties by giving Asian nations a vested interest in each other’s development and stability.

  Posted by scorp on Feb 18, 2007 at 10:44 PM

  Pretty dense, Pocha.  The United States economic policy IS “development and stability” for Asia and everywhere.  Why else do you think Nixon went ot China?  Have you been asleep for the last twenty years, like Rip van Winkle? Don’t you have any awareness at all outside you idiotic socialist agenda?

  Yet, as Nye points out in his book, The Paradox of American Power, any U.S. attempt to undermine or contain the emergence of these new powers could backfire just like Britain, France and Russia’s attempts to contain Germany, Japan and Italy backfired a century ago. 

  Ummm, I must have missed that chapter in the history book.  The last I heard, the fascist totalitarian states had been defeated, and had become prosperous peace-loving democracies.  You obviously have later information.  Can you provide a reference?  I would be ever so grateful.

  The real paradox is in means and goals.  Totalitarian states have to bear the cost of imposing controls, making them inefficient and incapable of competing in a global economy.  But when they surrender control, and establish free-market, rule-of-law, capitalistic democracy, prosperity and freedom thrives.  You can see this process in action in Chile, Ireland, and Estonia, all of which have grown substantially in the last few years.  You can also see the process in reverse.  Chavez is wrecking the Venezuelan economy right before your very eyes.

  Posted by scorp on Feb 18, 2007 at 10:45 PM

  Scorpy Doobie AKA Master Bates, from what rock did you just crawl out of ? China has a very strong economy and is still the fastest growing economy in the world. And India is moving up rapidly. Chile has 60% of its people below the poverty line including 40% in Santiago alone. Ireland has developed quite a bit but it started from a low base. The USA is in very serious trouble. Reagan’s #2 at Treasury, Paul Craig Roberts, has a piece titled “Economists In Denial: Blind To Offshoring’s Adverse Impact” in the Feb 6, 2007 Manufacturing and Technology News. Our debt, both governmental and personal is the highest in history and most Americans have ceased to save at all ! Debt driven consumption is exceeding US productive output by over 800 BILLION annually. Most of the investment in US plant has been by foreigners. Foreigners now own 2.7 TRILLION more of the US than the US owns abroad. Right now China is still supporting us but how long can this go on ? Alan Blinder, former Fed Vice-Chair, estimates that 50 MILLION US jobs could be outsourced !  Scorpy Doobie AKA Master Bates, we can’t get McDonald’s built fast enough to replace these jobs. So far Venezuela is doing well and have you noticed, Scorpy Doobie AKA Master Bates, that all of South America is voting in socialists. Colombia is the sole holdout and they are starting to crumble.  The fascist states were authoritarian, not totalitarian, and they remain authoritarian, in Germany you can be imprisoned for thought crimes. Japan’s culture is thoroughly authoritarian and they even have central planning more now than before WW2. Chomsky calls Japan an example of successful Communism, as usual he’s right. By the way, neither India or China started from a low base. India was far better off under the Nehru socialists than as a Brit colony, in fact the Brits largely deindustrialized India during their rule and Mao’s China was about 20 times the GDP of Chiang Kai Chek. The worst threat to world peace has been the US Government since 1898 when they stole Hawaii, Cuba, Puerto Rico, Guam, the Phillipines and other countries through a phony atrocity story campaign against Spain remininiscent of the lies people like Scorpy Doobie Master Bates made up about Saddam Hussein. Carter and Reagan supported Pol Pot, the Vietnamese Communists overthrew Pol Pot.

  Posted by blondemike on Feb 19, 2007 at 12:12 PM

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