American Dual Containment in Asia

Last month I published an article in Geopolitics entitled “American Dual Containment in Asia.” In brief, I argued that a double containment of both Islamic fundamentalism and of China is the likely US strategy in Asia in the coming decades. The containment of salafism in the Middle East is bound to be hard and violent (as it already is), because Al Qaeda and associated movements are so genuinely revolutionary and dangerous. The containment of China is likely to be soft until the Chinese decide just how much they wish to challenge the reigning liberal democratic order. In the last year, many seem to fear that China is ramping up in this direction. Hence my prediction that India will be a pivot in this containment line. It is a unique ally for the US, because it is worried about both China and Islamic fundamentalism, and because it is democratic. In this way, it is unique among American alliance choices. Here is abstract:

“US grand strategy after 9/11 turned from post-containment drift to preemption. But the costs are high – suspicion of American power, hedging by traditional allies, expensive, go-it-alone ventures like Iraq. Tried-and-true containment better reflects American values. While forward in the world, containment is also defensive. It reassures skittish partners and reflects liberal, anti-imperial US preferences. In Asia, containment would deter the primary contemporary challengers of US power – radical Islam and Chinese nationalism – without encouraging a Bush-style global backlash. In a reductive analysis of US alliance choices, this article predicts a medium-term Indo-American alliance. India uniquely shares both US liberal democratic values and the same two challengers; it is the likely pivot in a US-backed neo-containment architecture in Asia.”

Here are the relevant graphs that, I hope, make the argument clearer:

Graph 1. Contemporary Revisionists to the ‘American System’

		Power
		High	Low
Commitment	High (Revolutionary)		Islamist-Jihadist Networks, Iran ?
	Low (Dissatisfied)	China ?	Rogues (Cuba, North Korea, Venezuela)

 

 

The good news above is that just about everyone accepts the international status quo – roughly, the liberal international political economy led by the US (what Ikenberry calls “the American system”). While al Qaeda is clearly a scary revisionist – i.e., the they want to dramatically rewrite the international order by refounding the caliphate, e.g. – they are also pretty weak. The only powerful revisionist is China, and no one knows yet just how much she seeks to change things. This is good for the US, insofar as it backstops the international order, and it is also good for the many states in Asia and Europe that function within that order. Although the internal challenges to the liberal order are growing (i.e, the Great Recession), there is currently no powerful and revolutionary external challenger like the Nazis or USSR were.

 

 Graph 2. Contemporary US Alliance Picks

 

	Competitors		Values
	China	Islamist- Jihadist Networks
Great Britain/NATO		X	X
Russia	X	X
Japan/East Asia	X		X
Israel/Arab clients		X	X?
India	X	X	X

 

This graph tries to reductively explain the appeal of India as an alliance partner. It uniquely shares the both the geopolitical interests of the US in Asia; that is, it is worried about both Islamism and China. And it shares our liberal democratic values. Russia is an obvious point on shared interests – the ultimate driver of alliances of course – but it is so erratic and semi-dictatorial, that is still distasteful despite the ‘reset.’

The most controversial part of this analysis is certainly my open claim that China will be a target of US soft containment, and maybe hard in the future. I should say here that I do not want this. I am very aware of the self-fulfilling prophecy problem; i.e., if we openly come out and say China is an enemy or threat, then by doing so, we make it into one. And certainly articles like mine are exactly what the Chinese declaim – a not-so-secret effort by US analysts to keep China down and such. And see Barnett on why I am completely wrong, if not dangerous, about China. But as an empirical prediction, I do think it holds. China’s growth and current values (populist nationalism, deep historical grievance, residual communism) are just too rapidly destabilizing, and I think Barnett doesn’t give nearly the necessary attention to the security dilemma problems China creates on its periphery. (IMO, Barnett overfocuses on China and G-2 coziness, while missing the nervousness in places like Korea, Japan, Singapore, and Indonesia.)   For my own writing on why I think the ‘China threat’ school is likely to win this debate, try here.

Finally, I should say in fairness that my own perception of China-as-threat has declined somewhat, in part because I visited the place. This strikes me as natural; closeness and exposure frequently breed understanding, and I like to think that all the nice Chinese scholars and hospitality I experience were in fact real. But the liberal values of academics exposed to new ideas and travel as a professional requirement hardly apply to populations and elites, especially those as nationalist as China and the US. The misperception likelihood is huge here; remember the Bush 2 administration came in ready to take on China until 9/11 happened. This will likely reassert itself as American dependence on Chinese financing grows and as the GWoT (hopefully) winds down. (Another problem here is the peer-review process. Articles take years to between the first inspired write-up and the end-point of publication. Reviewers send you back to the drawing board, and the pipeline effect means that even after final acceptance you may wait a year or more to see it in print.)

2011 Asia Predictions (2): Middle East, South Asia, Russia

Russia to the World – Bite me!

 

For my 2011 East Asia predictions (predictions 1-3), try here.

Last year, I put up 2010 predictions for Asia and Korea. Last week, I evaluated those predictions. This week come my 2011 predictions. It’s a fun exercise, if only to see how bad you blow it 12 months from now…

4. The Middle East peace process will go nowhere.

Why: Ok, this is not a particularly challenging prediction. Yet, we can always hope, but my guess is our hopes will once again be dashed. There are no elections coming up which might open possible policy shifts, and none of the big players seem to be rethinking much. Indeed, everyone seems fairly comfortable with the status quo, the current mix of intransigence and inaction. Particularly the Israelis seem to be fairly comfortable with the drifting-toward-apartheid status quo. And Obama, like so many POTUS before him, seems burned out with trying to resolve this tangle. So I don’t see anything suggesting real movement by anybody. Indeed, I increasing think that the two-state solution is pretty much gone; as Pillar says, wth are the Israelis thinking? So the status quo is pretty much the future: stasis.

5. India will back off on Afghanistan to give some room for US success and less Pakistani paranoia.

Why: This prediction is a little gutsier. If India continues to intervene in Afghanistan to encircle Pakistan, then Pakistan will never properly democratize, nation-build itself, or repress its Islamist-Taliban buddies, because they will remain a tool to use against India and to control Afghanistan after we leave. My sense is that there is growing recognition of this ‘AfPak’ logic. Increasingly it is clear that the Afghan war is irresolvable without some kind of Indo-Pakistan rapprochement. That is not likely and not my prediction, but I do increasingly see the Indians talking as if they are already a great power. If so, then Pakistan isn’t that important anymore. If India is just a regional power, then Pakistan is big trouble. But if India is a great power, then Pakistan is just a sideshow. So if India is growing up as a great power – they got Obama to support a UNSC seat for them last year – then Pakistan is the past. Far more important for India is the relationship with China and America, and Indian moves to encircle Pakistan in Afghanistan ultimately harm the US and aid China (by pushing Pakistan toward China) – exactly the opposite of its preferred outcome if it is a global power. Yes, India wants to reduce and humiliate Pakistan as it has Bangladesh, but I reckon the Indians increasingly see the costs of such pointless ideological satisfactions. India cannot retake Pakistan. Even without Pakistan’s nukes in the way, an Indian reabsorption would be colossal expensive and permanently delegitimize it as a great power. In short, global India has increasingly little to gain by provoking regional Pakistan. Even Kashmir isn’t really worth it: poverty, mountains, and fanatics – why bother? India has already won the Indo-Pak competition, as just about everyone knows. Pakistan is a paranoid faux-democracy riven by militarism, religious fanaticism, and terrorism. India is none of those things, so it can just savor Pakistan’s implosion and move on. Pakistan to India today is less like East Germany to West Germany, and more like Mexico to the US.

6. Russia will stay a Corrupt Mess, and Putin will genuinely reemerge.

Why: For several years now we have all been hoping that Putin might actually recede from the spotlight, that Medvedev might actually become a meaningful figure, that law might slowly push back corruption there, etc. All this was captured by the Obama administration expression ‘the reset.’ By 2011, it is time to admit this is over. The signal moment for me last year was the open farce of the Khodorkovsky trial – rather than the various gas tricks with Eastern Europe, stomping on local NGOs, or journalist murders (awful as all that is) – because ending ‘legal nihilism’ (ie, corruption) was Medvedev’s signal political promise. Well here was the big chance to show that with just a bit of movement on the biggest court case in Russia in a decade, one the world was watching. A little restraint might have convinced people that Medvedev wasn’t wholly a marionette of the old man. Instead, as Ioffe notes, Putin didn’t even both trying to cover up the sham. If I were an investor, I’d dump my rubles today. Putin just gave Wall Street (and the West) the finger. So I predict in 2011, that it will become widely acknowledged that Putin is still the chief, that he will be yet more public in preparation for reassuming the Russian presidency in 2012, that Russo-US cooperation will therefore slide, and that Russia’s political economy will stay a black market nightmare. To be sure, these aren’t exactly gutsy predictions, but it does seem to me that 2010 was an important year regarding the direction of the Putin-Medvedev tag-team, and the year’s events clearly downgraded the latter for all the world to see. We now know that Medvedev is a joke. So in 2011, given the looming presidential election and Putin’s consequent need to reassert himself for it, Medvedev will fade to black.

When to Just Give Up on Territory Disputes: Palestine, Kashmir, Dokdo?

One of the most basic tenets of almost all IR theorizing is that states are territorial, literally, and obsessed with holding, if not expanding what space they have. Even if you aren’t Alexander the Great or Napoleon, out to conquer whatever is there, you still want to hold on to at least what you have. Territory is a fundamental requirement of statehood (ask the Kurds), and more is better given land’s inherent scarcity. The logic for this is simple. There is only so much real estate in the world. Barring extreme scenarios like suddenly easier land reclamation (from the sea) or interplanetary colonization, space on earth is finite. So the race to control space is by definition a zero-sum game (the Scramble for Africa). If I have it, then you don’t. The more you have, the more secure you are from others (the further away they are), the more people you probably have, the more resources you are likely to find under the ground, etc.

And this logic is backed up by loads of empirical evidence. The Japanese fight individually with Russia, Korea, and China about islands. The USSR and China fought a border war, as did the PRC and Vietnam. The US Union invaded the Southern Confederacy. The Israelis and Palestinians seem ready to kill each other over inches of barren desert. I recall reading somewhere that after the Israeli withdrawal from the Sinai, Egypt sued Israel in the World Court over several hundred feet of extra space Israel wanted to hold for a hotel or something. (Egypt won.) And the above map makes clear just how severe the territorial dilemma can be for micro-states like Israel. (Do not take the source of the map as my endorsement of Israeli policy in the occupied territories; I chose it just because it makes my point well.) No state wants to be dismembered, and lots of blood in history has been spilt trying to expand one’s land space (imperialism).

But Israel’s endless troubles holding the Palestinians, much less converting the Palestinian space and people into exploitable resources rather than manpower and money sinks, or India’s endless quest to quell and hold Kashmir, raise a good IR theory question: when is it time to just give up and take less? I am not sure if this question has been researched much because we worry, obviously, more about expansionism and irredentism than voluntary cession. But there are some good examples of this also. This article got my thinking how Sudan’s Arab elite has simply decided to throw in the towel after 25 of years of civil war with the south. 15 years ago, Ethiopia’s government decided to do the same with Eritrea. And Britain, I think, secretly hopes the Northern Irish Catholics will outbirth the local Protestants and vote for republican unification, hence ridding Britain of the endless Irish question. In Korea, I frequently argue that Korea needs Japan more than Japan needs Korea, because NK is so scary, unification with it will be so expensive, China is so big, and the US is in relative decline in Asia. Hence, it would make national security sense for Korea to try to come to some kind of deal on its island dispute with Japan (the Liancourt rocks [Dokdo]). Better relations with Japan would help Korea prepare for the Chinese challenge and bolster it in the stand-off with NK. Nor is there anything of value on Dokdo (it’s a bunch of rocks, like most of the West Bank too) and because it is uninhabitable, control of Dokdo has no implications for division of the sea or seabed. In short, the benefits of a deal are high.

So there is a cost-benefit analysis at work here. At some point, an enduring, costly stalemate may just not be worth it. I can see a few reasons why:

1. Your country is already pretty huge, or the land disputed is comparatively tiny. If I were India, I think I would be pretty close to giving in on Kashmir. India is huge, both geographically and demographically already. How much does Kashmir really matter when you already have 1.3 billion people ? For Israel though, the problem is much more acute. The IDF has argued for years that the West Bank adds ‘strategic depth’ to little Israel, which, disregarding the  moral dimension, is accurate. By this dimension, the Eritrean succession surprises me, because it land-locked Ethiopia. I would have thought that would be a national interest worth toughing it out for…

2. There are no natural resources or other immediate, tangible national interests. Dokdo’s control does not alter any material element in the Korea-Japan relationship. If anything, it wastes Korean money to artificially keep people and services stationed there that would not otherwise exist but for this dispute. This is no ‘resource war.’ So what great benefit do you get beyond that patriotic tingle in your chest?

3. The disputed territory is not ‘holy ground.’ I think this is the most tricky condition, because these sorts of disputes, zero-sum in nature and frequently rooted in long-standing neighborhood grudges, are exactly the sort of thing that get layered in over-heated nationalist rhetoric about holy struggles, national identity, God-given missions and all that sort of metaphysical talk. Witness the Jewish right in Israel talking about biblical claims from Moses to the West Bank, or Hamas’ reverse claim (also made up) of the centrality of Jerusalem to Mohammed’s revelation (it was just a sideshow in the big Arabian picture). For a hysterical and mawkish Korean version of Dokdo as holy ground, try here (be sure to listen to the song). I think there is a good dissertation here.

Korea’s Post-American Alliance Choices (1): India?

 

This will be an occasional series. The US is entering a period of decline. Its ability and willingness to meet its alliance commitment to South Korea is waning. So Korea is, quietly, beginning to poke around in Asia. It is setting up preferential trade areas where possible, signing up whomever it can for ‘strategic partnerships,’ and generally branching out in the region. This serves both its desire to be a more regional player (rather than be permanently trapped in its peninsular ghetto with NK) and its growing need for friends beyond the US. The US has neither the money nor the domestic will to fight another Korean war. So it makes sense for Korea to look around, even if no one will admit that that is what it is doing.

On Monday, I spoke on the radio about this. Last week, the president of Korea had a state visit to India. India is a good choice for several reasons. Like Korea, India is

1. a liberal democracy with a lot of religious diversity.

2. worried about China’s rise.

3. an American ally.

4. Bonus: India is not Japan.

While more common than in the past, stable democracy is still hard to find in Asia. It makes sense for Korea and India to hang together. Of course, the closest democracy to Korea is Japan, but the mutual loathing is so severe, that Japan is a last ditch alliance choice for Korea. Further, both have a good tradition of internal tolerance based on their religious diversity. Everyone knows of India’s of course, but Korea too is one of the most religious fragmented states in Asia (sizeable minorities of Catholics, Buddhists, born-again protestants, and agnostics, with no dominant bloc).

This commonality of values is complemented by a commonality of interests, or rather an interest: China. Both are edgy about its quick rise (no surprise there), and both continue to hedge it and ally with the US in order to do so.

The downsides though are high. India is far away. It does not have the two-ocean fleet necessary to project serious power into Northeast Asia, and it is still losing the race with China.

__________________________________________________________________

TRANSCRIPT – DR. ROBERT E. KELLY, PUSAN NATIONAL UNIVERSITY

BUSAN E-FM: “MORNING WAVE”

MONDAYS, 8 AM

February 1, 2010

Petra:

So President Lee went off to India last week. What happened? Why is this important?

REK:

Two reasons. First, Korean has a trade relationship with India. Second, Korea is slowly poking around Asia for other friends and possible partners.

Petra:

Ok. Is Korea’s trade with India significant?

REK:

Middling. Korea is India’s 9^th biggest trading partner. That is ok. But there are 1.3 billion Indians, and they are getting wealthier. So it makes sense for Korea to try to push into this market. This is similar to the growth of China. As China and India both develop and get wealthier, their huge internal markets will attract interest from around the world.

Petra:

So if this was basically a trade mission, why did President Lee go?

REK:

Well, it was more than that. President Lee was a guest of honor for India’s big national holiday. It was an official state visit. Such trips fit President Lee’s style of diplomacy. First, the president has increasingly used his position to act as a salesman for Korea industry. You may recall his earlier bout of commercial diplomacy in the United Arab Emirates regarding Korean-designed nuclear power plants. Second, the pursuit of trade agreements has grown into a major Korean foreign policy tool in the last decade or two.

Petra:

Can you explain that a little more?

REK:

Sure. The bedrock of Korean foreign policy is the security alliance with the United States. But increasingly Korea has looked for an autonomous economic foreign policy. And Korea’s chosen manner of reaching out, especially in Asia, is trade deals. Korea has sought all sorts of preferential and free trade areas, and President Lee has made this a regular focus of his trips abroad.

Petra:

Has it been successful? I thought Korea belonged to the World Trade Organization which organizes global trade rules.

REK:

That’s true. But the WTO is stuck right now. The current round of trade negotiation, begun in Doha in Qatar in the Middle East, has been bogged down for years. With the Doha round frozen, Korea has turned to bilateral and regional trade deals in its foreign policy. This trip to India, as well as the recent sale of nuclear reactors in the Middle East is a part of this process.

Petra:

So the WTO is stuck, and President Lee is trying to push Korean exports on his own on these trips?

REK:

Yes, that’s right. In international relations, we call this commercial diplomacy, and President Lee is getting quite good at it. The big prize, an FTA with the US, is still out of reach though.

Petra:

Ok. Let’s stay with India. You said something about Korea looking for other friends and partners. What does that mean?

REK:

Well Korea is a tight neighborhood. It is surrounded by three big countries – Russia, Japan, and China – who have traditionally bullied or informally dominated the Korean peninsula. Korea’s political geography, or geopolitics, is quite poor; it is encircled. This is the great benefit of the US alliance. The US is too far away from Korea to dominate it, but the US alliance does help Korea prevent itself from being dominated by others. As long as US troops are in Korea, Korea can push back any encroachment by China, Japan or Russia.

Petra:

So what does this have to do with India?

REK:

Well, the US is in trouble now. The US deficit is gigantic. The US public debt is too. The US is fighting two hot wars in the Middle East, and several clandestine conflicts there as well. It is eight and a half years now since 9/11, and Americans are exhausted with all these wars and conflict.

Petra:

Does that include Korea?

REK:

Not really, but Americans certainly don’t want to get pulled into a big conflict here. As most Koreans know, the US military footprint in Korea is shrinking, and the US will officially relinquish wartime authority of the Korean military in 2012. In short, the US is increasingly looking for ways to lower the costs of the Korean alliance.

Petra:

So Korea is shopping for other friends?

REK:

Probably, quietly. I certainly would be. The US looks at Korea, and it sees a wealthy modern country that it believes should be able to defend itself without much US assistance. So Korea is wise to begin to think about friends and possible allies beyond simply the US.

Petra:

So can India be an ally to Korea?

REK:

Maybe. India has some definitely upsides for Korea. Like Korea, India is a democracy. Democracy in Asia is still somewhat rare, so Indo-Korean cooperation on security makes good sense. India also worries a lot about China’s rapid growth. India has an ongoing border dispute with China, much as the two Koreas and China do over the ancient Koguryeo role’s in history. So there is a community of values between India and Korea – liberalism, democracy, religious tolerance – as well as a community of interests – careful observation and response to China’s rise. Finally, both Korea and India are American allies.

Petra:

So how is the Korean government proceeding?

REK:

Well President Lee and the Indian prime minister agreed to upgrade Indo-Korean ties to a ‘strategic partnership.’ That implies that the two see each other as more than just trading partners or friends. President Lee pursued the same approach with US President Obama in the summer 2009. But for observers, it is hard to know the details of this new partnership. There will be regular meetings between officials of the two countries’ ministries, but it is hard to know how serious this will be.

Petra:

So there is no Indo-Korean alliance in the offing?

REK:

Probably not. Better to see this another sign that Korea is aware that the US is in trouble because of the long war on terrorism and the huge financial burden of the crisis. Korea is wise to start poking around for new friends, if not trade partners, and India is a good choice.

Petra:

Thank you coming again, Professor.

Learning to Live with Asian Nuclear Proliferation – Israel, India, Pakistan, North Korea, Iran…

I worry about nuclear proliferation as much as anyone else, but the level of our hysteria over the creeping nuclearization of Asia is only met by our inability to do anything serious about it. I think it would be far more intelligent for us to start thinking seriously about strategy in a nuclearizing world. But we don’t; instead, we insist on a vision of nuclearization that ended decades ago when Israel became the first unofficial member of the nuclear club. Frequently we evoke nightmare images (‘a smoking gun in the shape of a mushroom cloud’) that scare the hell out of the West, but we have no palatable options to stop these programs. Slow but steady nuclearization increasingly seems likely beyond the ‘approved’ nuclear powers of the Non-Proliferation Treaty (NPT). So let’s get used to it and think about it differently.

I say this because it looks like the nuclear hysteria machine is gearing up again around Iran. You remember the last two iterations of this show – Iraq in 2002, and India and Pakistan in 1998. But short of Iraq-style invasions, which no one wants to repeat, it does not seem like there is much outsiders can do to stop a sovereign state’s determined nuclear drive. The technology is out there – the genie can’t go back in the bottle – and there are too many profiteers like North Korea or A. Q. Khan willing to sell nuclear technology. Further, we undermine the NPT regime when we look the other way on some states’ nukes (Israel, India) but flip out over others – Iran, Pakistan, NK.

We seem to have a cycle whereby we claim that ‘absolutely cannot tolerate’ Country X – especially with its dangerous record – with nuclear weapons. We write hyperventilating editorials like this and this. We create bloviating right-wing think-groups with scary names like the Committee on the Present Danger who tell us that WWIII or another 9/11, only with nukes this time, is around the corner! Then, we go to the UN Security Council to get some sanctions and what not, and then we go back again, and again, and then again. We hypocritically invoke the sacred NPT, even though the nuclear-haves have made no serious effort to meet their NPT obligations to the nuclear have-nots. Country X presses on anyway, because nuclear weapons, as de Gaulle famously said, are a prerequisite for great power status. Finally at some point, the CIA says Country X is 1-2 years away from weaponization, and we start talking about air strikes. If you think this sounds familiar, it should. We did this on NK in 1994 and then again after 9/11, Iraq in 2002-03, and today on Iran. At some point, I am sure Huge Chavez will say he needs nukes to defend the revolution against imperialism, and the US Senate will absolutely bananas. All we need to complete the show is an appearance by Dick Cheney to say that if there is even a 1% chance that Myanmar has weapons of mass destruction, we should bomb them. However the show ends with Country X getting the nukes after all, and no does anything because it is too scary, expensive, and unpopular at home.

If I sound cynical, it’s only because the reality is that we are in fact adjusting ourselves to an increasingly nuclear world. I don’t want these shady regimes to have nukes any more than anyone else, but, 1. what are we going to seriously do to stop them? and 2, it increasingly looks like we can slow their drives for awhile and contain their worst proliferation instincts.

1. Short of invading them or setting up an extremely strict UN cordon, it is nearly impossible to stop states committed to nuclearization. NK has proved this. It endured the worst (man-made) famine since the Great Leap Forward in the 1990s, but it still clawed its way into the nuclear club. We could attack incipient nuclearizers, but we tried that in Iraq, and it was a hugely unpopular disaster. No one is willing to invade NK or Iran or Pakistan simply over the nukes. The other alternative would be extremely tight UN sanctions to prevent the inflow of the parts and technology necessary. But the only serious UN cordon effort – of Iraq in the 1990s – failed badly, because the neighbors cheated so much, and because the cordon’s PR was atrocious. Saddam made the world think that Iraqi children were starving because of US/UN cruelty. So the sanctions were eased with the ‘Oil-for-Food’ program. But Saddam of course immediately pilfered that program, and, in UN HQ, ‘Oil-for-Food’ degenerated into corruption. In short, it is practically impossible to seal the nuclearizer off enough, and no one wants to go to war just over a nuclear program.

2. For as much as we worry about spiraling proliferation, we have managed to retard its spread, and more generally, we are learning to live with it. The new US Proliferation Security Initiative has helped contain NK nuclear technology. We bullied Kaddafi in 2004 into giving up any hopes of nukes or other weapons of mass destruction. Remember how the Indo-Pakistan nuclear competition was supposed to lead to rolling proliferation in Asia and the Middle East? That has not happened too much. We can get UN sanctions that will slow nuclear drives, even if total isolation is impossible.

In short, there are steps we can take to slow nuclearization and dampen proliferation. So the process need not occur too fast. We can buy time. But it increasingly it looks like we need to adjust to third world, particularly Asian, nuclearization. We need to start thinking about how to adjust beyond apocalyptic, all-or-nothing declarations about how we can never tolerate the spread of nukes and that military options need to ‘be on the table.’ That sort of  moralizing, black-white rhetoric encourages nuclearizers to buck up and stick it to the ‘empire’ for telling them what to do. Besides, we never follow up on these threats – it’s just too dangerous and democratically unpopular. So we just look foolish in the end.

Careful with that ‘Decline of the West’ Riff – We’ve Heard It Before

The conventional wisdom on the financial crisis is that it symbolizes or accelerates a transfer of power from West to East, from the US and EU to China and India. I think this is wildly overrated.

1. We have heard this before – and not just in the 20th century, but the West has proven extremely (frustratingly, if you’re from somewhere else) tenacious in leading the world pack since its breakout in the 16th century. Here are a just a few examples. Long before bin Laden, Islam was supposed to replace errant western Christianity, but failed at Vienna in 1683. Politically, Islam has never properly recovered. In the 19th C, the Chinese thought the western marauders a troublesome nuisance who would eventually recognize the superiority of the Middle Kingdom. It took 50 years of humiliation for that fantasy to finally fade. At the same time, pan-Orthodox/pan-Slavic Russians like Dostoyevsky and Alexander II thought the West would sink under its own corruption and decadence; instead that happened to the Romanovs. 1917 ignited the communist revolutionary wave (‘we will bury you’) that was supposed end capitalism and imperialism. After 75 years of unparalleled effort and bloodletting, it failed practically and morally. 1929 too supposedly revealed the inanity and shallowness of gilded age capitalism which macho fascist vitalism would sweep away. Despite exhaustion and disillusionment from WWI, western democratic capitalism hung on again, emerging stronger than ever, arguably, in 1945. By the 1960s, the new non-western future was supposedly in decolonization. The huge populations of the third world would modernize and turn the global system upside down. Instead they fell into Huntington’s decay and begged for debt relief. In the 1970s, the US failure in Vietnam and stagflation supposedly made the world multipolar, helped the Soviets to parity, and sparked a New International Economic Order. Reagan ended that sham. In the 1980s, came the declinism of Paul Kennedy and Walter LaFeber, this time based on massive US trade and budget deficits. The wholly unanticipated Clinton-dotcom boom put that fiction to rest too. And 9/11 of course was to spark an umma-wide uprising to humiliate the US as jihad had humbled the USSR in Afghanistan. Inside it pulled the US even more deeply into the Middle East.

2. China and India have huge hurdles before they even approach US/western power. They have massive internal structural problems – corruption, stifling bureaucracy, poor courts, bad information (propaganda and lack of disclosure), mediocre education systems for generating human capital, irregular treatment of foreigners and FDI. Development-at-all-costs too has resulted in enormous environmental liabilities that are now affecting lifespans. Do superpowers really have to spray-paint their grass green before an Olympics? They also lack the cultural software of entrepeneurialism and individualism that encourage the ‘animal spirits’ to take chances (worse in Confucian China than more liberal India). And finally, China is not democratic yet, which means a wrenching and usually expensive transition still has to come (think SK in the 80s, plus Indonesia in the late 90s, plus the end of the USSR all rolled into one). This will include restive provinces that will inevitably try to take advantage of the transition to push for autonomy. India of course is already, thankfully, liberal democratic, but it has found embracing wealth-generating capitalism extraordinarily difficult. There is no national consensus for it; all those tech companies that fixed Y2K have to keep redundant energy generators on-site in case there is a power failure. Finally both are still extraordinarily poor by OECD standards (to which neither belong). Between them both they account for half the world’s poorest people (most of the rest are in Africa). Don’t let Thomas Friedman’s stories about a zillion IT engineers in Bangalore or individual Chinese cities just focused on the production of cardigans or baseballs mask the reality that India and China together have something like 800 million people living in subsistence agriculture. Both economies are wildly unbalanced with relatively weak currencies, semi-dysfunctional politics, terrible corruption, and huge unresolved social resentment and poverty. That is not the future, at least not yet.

3. I think the best analysis of the geopolitical fallout of the crisis is here. Walter Russell Mead argues that actually the crisis will encourage states only tepidly committed to capitalism to once again turn toward statist, populist alternatives (think Chavez). Predatory elites will use the crisis as cover to resist liberalization. This will only continue the economic stagnation and political confusion of the Middle East, Russia/central Asia, Latin America, and Africa. The question is whether the Asian rimland states will go this way too. (I don’t think they will.)

So geopolitically, it is better to think of the crisis as a deck-clearing exercise, a shake-out of weak players and also-rans that will reinforce the leaders rather than damage them relatively. The leaders will slide, but the weakest will slide even more. As an analogy, think of how the dotcom bust killed off lots of wannabes on the internet. Only the strong survived that bloodbath. And my guess is that will be the real effect here. The crisis will reinforce the value of those very qualities that have catapulted the West to the top – market pricing, clean courts and banks, transparency, a free press (to spotlight failure), democracy (to insure the peaceful aggregation of conflicting interests and citizen grievance), etc, etc.