This upcoming Sunday, January 17th, marks the 25th anniversary of the beginning of Desert Storm, a.k.a. the Gulf War, a.k.a. The First Iraq War. Since then, the US Air Force has flown combat missions over the northern and southern Iraqi “no fly zones,” combat missions in Operation Desert Fox and the Second Iraq War, combat patrols in the aftermath of that war, and now combat missions vs. the Islamic State. That is 25 years of unceasing combat for the Air Force (and also the aviators of the US Navy) in the greater Persian Gulf region. The period encompasses the administrations of four consecutive US presidencies. Additionally, US forces had been actively engaged in combat operations in the region under the previous two presidencies, Reagan and Carter. Indeed, the roots of this engagement are found in The Carter Doctrine, which also has an anniversary approaching. President Carter, in his final State of the Union address on January 23, 1980, committed the United States to becoming the fulcrum of power in the Persian Gulf in order to secure our national interests there. Oil being the lifeblood of the national and international economies and the Persian Gulf being the largest single repository of “easy oil,” those interests are substantial – the total cost of US operations in the region since 1/23/80 are over 7000 service members killed, over 50,000 wounded and trillions of dollars spent.
Those lives lost and damaged are tragic – the real best and brightest of the last several generations. We owe it to them to continually question whether the Carter Doctrine has been worth their sacrifices. While it is true that we as a nation could have chosen to funnel all that money and effort into searching for alternative energy sources that would negate the importance of the Gulf region, it remains true that there is no such source on the horizon that equals the what we get from oil. So, for their sacrifices, the men and women of the military (and the taxpayers who fund them) have given us decades of relative peace and prosperity. That run is being tested today, so my conclusion is not final and is subject to revision, but my honor and salute to those who have been serving on that front line for so long is not.
This chart posted at Business Insider last week shows how the British, American, Russian and Chinese empires have risen and declined over the last 200 years. It indicates that China is on a steady ascent and will overtake the US in the next few years.
However, if you were to extend this chart back another half century, and to include lines for France and Germany, you would see that France had surpassed Britain before its failed attempt at hegemony that ended with Napoleon’s defeat. And you would then see that Germany had surpassed both Britain and the US before it’s own hegemonic bid had been finally defeated after two world wars. So the relative decline of the lead economy does not automatically presage global ascendancy by its replacement. Indeed, when we examine the hegemonic cycles of the modern era, we see that the victor in hegemonic struggles always has a more open society than the failed challenger, and it is always on the periphery of the World Island, not at the core.
Of course, this does not guarantee that the US will continue its hegemony; an outside contender such as India might eventually take up leadership of the world system (nor, of course, does it prove that China is doomed to fail). What it does indicate is that the final phase of our current cycle is near.
The steady success of ISIL in carving out a secure territory in Syria and Iraq is upsetting some old geopolitical equations. Iran, seen by some as the likely “savior” of Iraq (or, at least, of its current government), is lobbing threats at the Kurds. Turkey, meanwhile, long fearful of a Kurdish state, now considers embracing an independent Kurdistan to serve as a buffer against Iraqi violence and Iranian power. The offshore power broker – the US – does not know what to do, because what might turn out to the best choice is also unthinkable: Iran is currently the greatest threat to American interests in the region, and the force most likely to take the fight to the Iranians and to halt their geostrategic progress is, in fact, ISIL. ISIL is closely (if complexly) affiliated with the al Qaeda organization with which the US has been at war since 9/11/2001 (and, arguably, for much of the decade prior to that as well). It would be a nearly impossible sell to the American public – especially to the veterans and their families who have sacrificed so much for the last decade and a half – but at some point it may well be in America’s best interest to throw its support behind ISIL in order to thwart Iran.
Russia’s resurgent geopolitical power is dependent on it’s vast energy wealth. That makes the Russian energy sector a juicy target for policies aimed at punishing Russian machinations in Ukraine.
However, America’s European allies are dependent on Russia as their primary energy source. That creates a dilemma – how to get European support for meaningful sanctions that won’t end up hurting themselves as much or more as the intended targets?
The US is trying to thread the needle by targeting Russia’s energy future while keeping its current productivity intact. Although it remains a major exporter, Russia’s reserves of conventional oil are in steady decline. However, as reported here in the past, Russia has immense shale reserves. Shale oil has resuscitated the US oil industry (oil production in the US hit a 26 year high last year and the Energy Information Agency projects continued growth to a 40 year high next year). No other nation has been able to leverage their shale resource as effectively as the US, and Russia needs access to US experience and technology if they want to similarly extend their own energy industry.
Therefore, the Atlantic allies are crafting sanctions that will prohibit participation in Russian shale (and Arctic) energy development by Western companies. Of course, there is nothing preventing the Kremlin from retaliating by squeezing current exports to the allies, anyway. It would end up just being a test of wills. And, so far, Putin has demonstrated ownership of much more of that particular resource as well.
In response to resurgent Russian militarism in Ukraine, two recent analyses have laid out the need for both Sweden and Finland to join NATO. First, in the online edition of the journal Foreign Affairs, Jan Joel Andersson, a senior research fellow at the respected and influential Swedish Institute of International Affairs (SIPRI), laid out the case for both Nordic nations to finally join the Atlantic Alliance. This week, Andrei Akulov from the Russian think tank Strategic Culture Foundation, has detailed a number of military and political signals from within the Swedish government that indicate a renewed willingness to examine NATO membership.
According to new figures (and an alternate formula to typical GDP comparison) from the World Bank, China is expected to pass the United States as the world’s largest economy sometime later this year. The World Bank is comparing Purchasing Power Partity (PPP), which is intended to standardize GDP across currencies and make direct comparisons of how economies work internally. However, GDP is still the better measure of how economies compare in the globalized world because it takes differences in exchange rates into account.
In any case, China is going to pass the US sooner or later, but what that means remains to be seen. In the two previous cycles of the world system, France’s GDP likely surpassed England’s in the late 18th/early 19th century and Germany surpassed the United Kingdom in the late 19th/early 20th centuries (see Angus Maddison for reconstruction of early GDP levels) , yet both still lost their challenge for hegemony.
Even after China becomes the world’s largest economy, it may not hold that position for very long. China is facing a severe demographic crisis and, like Japan, will face an declining work force supporting an ever growing retiree population. Indeed, it may fall off the demographic cliff even before the largest waves of retirees hit – last year, the working age population declined for the first time in history, a decline that will continue. As the Financial Times notes:
Unless the country can keep lifting the labour force participation rate (for example by getting more women into the workforce or persuading older people not to retire), China will struggle to expand its labour force by even 1 per cent per year. To sustain economic growth of more than 7 per cent, productivity would need to grow by 6-7 per cent a year across the entire economy. This would be a tall order in any country. In China, where the labour-intensive services and agriculture sectors make up half the economy, it is well-nigh impossible.
Of course, a decelerating China does not mean the US will regain the top spot . . . India may well pass both nations. And my analysis continues to be that India will be the next global hegemon, either in the next immediate cycle, or following one more term by the US.