US-China’s Warring Trade

Influence of the U.S. is waning is without doubt and rise of China at least economically is not a matter of debate. Russia and Iran are also successfully taking advantage of this condition in their own way in certain spheres. Recently Turkey has joined the club of carving out its own sphere of influence. The division between the U.S. and its allies continue to grow. Different allies of the U.S. are by themselves becoming rivals of each other as the U.S. power continues to wane.

American invisible empire though battered still continues to exist. Let us first look at different pillars of empire and then analyse how each of them is behaving in this tumultuous period. Finally, which of these organic pillars are left out and which will eventually come to terms in order to form a new type of global system will be analysed here.

History of Empire

Today’s US empire is actually a continuation of the British Colonial Empire which by itself is a result of rising of sea dominating Western Europe especially the Iberian Peninsula. What Portuguese and Spanish started by migrating to New World (Americas), pirating and conquering ports, the Dutch consolidated by conquering Kingdoms of old South East Asian civilizations, British extended by conquering empires across the globe. After the Battle of Plassey and Opium Wars, old production powerhouses of South Asia and China fell respectively and British pioneered industrial revolution and made the Western world the center of production by the mid-19^th century.

As new Western powers followed industrialisation, oversupply relative to demand and struggle for supremacy among Western nations (mainly Britain, the U.S., and Germany) grew manifold. After two world wars, British Empire got converted into US empire with almost all British-French-Dutch sea dominating and other colonial assets transferred to the U.S. The strength of the U.S. economy is almost 30% of global GDP and the threat of communism from the Soviet Union pushed the ruling class of West Europe to accept the U.S. domination. The rise of nationalist and communist ideologies in newly independent colonies and semi-colonies of Asia-Africa-Latin America gave Soviet upper hand over the U.S. up to early-1970s. But since the mid-1970s, the U.S. innovated a new way of maintaining Empire.

The U.S. tried to deal oversupply crisis by creating demand in asset trading where asset prices are inflated by channeling debt into the U.S. asset market. The continuous debt is ensured by the imperial assets across the globe. Gradually, the U.S. transferred all its production bases to cheap labour countries mainly China and specialised in asset trading. This made US economy de-industrialized and indebted to countries like China, Japan, Saudi, etc. As a resulting backlash against empire within the USA started. Both rises of Obama and Trump showed that more and more Americans are criticizing US external involvement. Military involvement in Iraq and Afghanistan and shadow war instigation in Syria and Libya proved to have weakened the empire.

Different Pillars of Empire

Let us now discuss different pillars of the invisible US Empire:

• Pentagon, CIA, FBI, NDS are security apparatus of the empire both inside the U.S. and abroad.

• Bankers, Financial Institutions and corporate class who manage the economy and commerce across the globe.

• The Neo-Liberal society across the globe both inside and outside the U.S. who wants to follow debt based asset trading gifted American way of life. They are sometimes organized under various NGOs, political parties, academia, Unions, popular media and sometimes live as unorganized individuals.

• Internal Bible Belt of the U.S. which is often said to be ultra-nationalist, religious and white supremacist or at least white preservationist.

• Free riding ruling class of different countries across the globe whose survival depends on the existence of the empire. Most important of them are Israel, Saudi Arabia, India, and Japan.

Pentagon and Free Riders Alliance

Pentagon looks after all imperial assets of the empire. One important public service that US navy serves is that it controls the choke points of international trade through the sea. Since the rise of West, almost 85% of international trade done in seas. So Pentagon, on one hand, gives security to world trade and on the other hand controls the global economy through this service. Pentagon also tries to control land by ensuring security to several countries ideally located surrounding Eurasian island.

Among them, Pentagons protection to Saudi Arabia and Israel ensures oil economy since West Asia is the most important supplier and reserve of oil. This protection ensures petrodollar credit channel to US financial market that keeps its asset trading profitable and value of US Dollar high. It also implies US production is nonprofitable and this is why USA’s number position as manufacturer hub reduced to nothing. Manufacturing gradually migrated to East Asia mainly China for its cheap productive labour. Here comes Pentagon’s role in guarantying security and “peace” in global manufacture centre of East Asia.

Japan and Taiwan are the most important benefactor of this involvement of Pentagon. China, Japan, and Saudi Arabia are most important sovereign or real creditors to US Federal Reserve that feeds to US financial market. Here China has emerged as top exporter and manufacturer in the world by exporting to the U.S. The U.S. bought Chinese products from debt disguised as profits from asset trading. Since 2008 this arrangement proved to be unsustainable. China began to create demand by investing in infrastructures both home and abroad and gave it a name Belt Road Initiative (BRI).

Other than BRI, China also invading financial domination of USA by forming International Payment System (IPS) against US SWIFT and also launching oil-gold-yuan scheme for oil sellers against petrodollar arrangement. Russia, Iran, Iraq, Nigeria, and Venezuela already accepted the scheme. Saudi which determines oil price is still reluctant to accept Chinese deal since it continues to receive Pentagon security guaranty. So it is clear that while China will seek an end to Pentagon involvement, Saudi, Israel, and Japan will need it hard. We will now see how events in Iraq-Afghanistan and North Korean nukes helping China to force Pentagon out from East Asia, West Asia, and South Asia.

Failure of Pentagon & Neo-Liberalism in Iraq and Afghanistan

History will never forget how Pentagon’s involvement in East Asia helped Japan, South Korea, and Taiwan to industrialise. The threat of communism from the Soviet Union and China and peasants’ demand for land reformation forced Pentagon to destroy feudal barriers of Japan, South Korea, and Taiwan and help them industrialise through calculated investments from the U.S. After fall of Soviet communism, the empire thought it is the only Islamic world that is left to be conquered by the Western ideology of neoliberalism. The empire thought it can emulate the success of East Asia in West Asia and South Asia.

Though the U.S. started was against Afghanistan as was against terrorism and war against Iraq as the measure against weapons of mass destruction, in few years the U.S. changed its goal to imposing democracy and liberalism on those countries. These countries are not strong in technology and so their states are easy to defeat. But the cradle of civilization has strongest society and family bondage and high birth rate. This is what the U.S. failed to recognize. The 19th-century Western philosophers like Marx and Mill are well versed in Arabian and Islamic scholars like Ibn Khaldun and Ibn Vasoom. But 21st-century academia proved to be quite ignorant about Afghanistan and Iraq. These people are watching the rise and fall of civilization since ages.

They have learned from history that primitive sustains, civilization perishes. The U.S. must have tackled this mindset. High birth rate ensures the high capability to wage guerrilla war and this is how Pentagon was caught in a quagmire. While Pentagon failed to arrest insurgency, neoliberalism failed to break the age-old mindset of the society. The U.S. tried to push democracy into the society. But it displaced Sunnis from power in Iraq and the demographic edge of Shites went in favour of Iran. As Shite led Iraq became an asset for Iran, Saudi and Israel began to complain. After 2008 crisis, when the rise of China in the global economy was evident and Pentagon’s failure to tame an insurgency was clear, neoliberals tried to push Muslim Brotherhood model throughout the Arab world in the name of “Arab Spring”.

By this model, they tried to popularize a consumerism and democracy friendly Islam. While Turkey and Qatar became its proponent, Saudi monarchy thought it to be the threat to its rule. Michael Hanlon’s theory of dividing the present Muslim nations on principles of European nation-state further enraged US allies like Pakistan which was feeling the heat of Afghan refugees and tribal uprising due to US war in Afghanistan, Turkey which felt Kurdistan threat and obviously Israel-Saudi which found the Shite crescent to grow from this imperial adventure. “Arab Spring” resulted in the loss of Saudi ally Mubarak, loss of China-Russia ally Khadafi and destabilization of Iran-Russia ally Assad. Turkey and Qatar were encouraged by the rise of Brotherhood in Tunisia and Egypt.

But events got derailed in Libya and Syria. Saudi, Qatar, and Turkey competed for influence. Watching disasters in post-Khadafi Libya, Iran and Russia got involved in Syria to help Assad. While Saudi, Qatar, Turkey competed for influence over the anti-Assad lobby, Iran-Russia was united behind Assad. The rise of Islamic State (IS) broke down the anti-Assad lobby even further. It also forced USA to openly back Kurds against IS. This enraged Turkey. Gradually, Iran-Turkey-Russia mutually got engaged in settling the future of Syria amicably.

Turkish lobby supporting Brotherhood in Syria got kicked out by nationalist President Erdogan after a failed coup against the later. Erdogan was afraid that Turkish external engagements with Brotherhood only emboldening Kurds across Syria-Iraq and Turkey. He understood with help of Iran-Russia he can alienate Kurds and help Sunnis of Syria and Iraq most. Failure of “Arab Spring” emboldened non-Western China, Russia, and Iran to criticize the model of democracy and liberalism. Neoliberalism lost its soft power massively after failure in “Arab Spring”.

Coastal Neo-Liberals vs Internal Bible Belt

Empire’s economy proved to be unsustainable and military to be incompetent. So neo-liberal soft power projection went on not only in the Muslim world and abroad but also within the USA. Obama was made first black President in the American history. He came to power with anti-war stand but failed to pull out from any front. He used less military to avoid American death but used more drones. His “Arab Spring” adventure produced no results. But neoliberals went on with first female President Agenda.

While coastal the U.S. prospered from debt that empire brought to the U.S., interior Bible belt had to bear the cost of job losses due to deindustrialisation. The later was also disgusted about neoliberal social tools like feminism; break down of families, the huge flow of migrants mainly Hispanics from Mexico, gradual demographic tilt away from the whites. Trump caught their attention and he claimed he can do away with all the evils.

Trump questioned the very process of making US production non-competitive. This implies he is questioning the fact that China, Japan, Saudi, EU, S. Korea, India all are having the trade surplus with the U.S. and loading this surplus as debt inside US economy making US dollar value high and production non-profitable while finance lucrative. He even called for US-Mexican border wall to help white Americans doing manual jobs. Trump won 2016 Presidential election which implied fall of neoliberals inside the U.S. as well.

DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy and position of Regional Rapport.