"I understand not everyone agrees with that, or anything else :-)"
I stand firmly in disagreement with that statement!!
:-)
I'm out; post 'em if ya got 'em, smoke 'em if you don't; don't Bogart that article, esp if it is one of Roach's clips.
Rat
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China Expands. Europe Rises. And the United States . . .
By Fred Kaplan
The New York Times
Sunday 26 December 2004
It's a risky business to predict the decline of the American empire. Ask Paul Kennedy, the Yale historian, who issued such a forecast in his 1987 book, "The Rise and Fall of Great Powers," only to witness an almost immediate American resurgence.
Yet the signposts, at the end of this year, are ominous. As an economic power, the United States no longer sets the rules, much less rule the game. As a military power, it vastly outguns the rest of the world, but has a harder time translating armed might into influence.
On March 1, the European Union announced that it was raising import tariffs on a long list of American products, and would go on raising them each month until Congress repealed a subsidy for American exporters that had been ruled illegal by the World Trade Organization. Congressmen railed against this intrusion but finally gave in. Americans realized that, in the global economy they largely created and for 60 years dominated, they could no longer do whatever they wanted.
Last month, China's president, Hu Jintao, embarked on a 12-day tour of Latin America, and wound up making commitments to invest $30 billion in the region. China is now Brazil's second largest trading partner and Chile's largest export market. In trade, technology, investment, education and culture, China has been displacing the United States all across Asia, and is now starting to do the same in America's backyard.
There is nothing necessarily alarming about an expansive China or an emergent Europe, except perhaps that they coincide with a growing American dependence on both.
The United States government spent $650 billion more this year than it raised in revenue, and financed the deficit largely by borrowing from foreign central banks, mainly those of Japan and China. They have been willing creditors because American consumers send much of the money right back by purchasing foreign-made products. It's a neat balancing act, to a point. But the American accumulated debt to foreign investors has now swelled to $3.3 trillion - 28 percent of gross domestic product, nearly double the share of four years ago.
In the 1990's, the United States admonished Mexico and Argentina to get their economic houses in order. This month, the Chinese premier gave Washington a strikingly similar lecture.
These imbalances are not inherently disastrous. The Chinese get something out of the deal, a ready consumer market for their overheated production lines. If they stop lending to the United States, it would cause a deep recession here, but then Americans could not buy as many of their goods, and the recession would ricochet right back to Asia.
It's a variation on the old joke: If you owe the bank $1 billion, the bank owns you; if you owe the bank $1 trillion, you own the bank.
But what if another trillion-dollar customer walked into the bank? The bankers might be more willing to foreclose on the debtor, knowing that they could pick up business from the new tycoon.
The European Union, in many respects, is looking more and more like this new tycoon. Its currency, the euro, has risen in value by 35 percent against the dollar in the last three years.
Again, that is not necessarily bad. In theory, a falling dollar makes American exports cheaper, attracting demand that then boosts the dollar; a rising euro crimps European exports, which then lowers the euro; equilibrium is restored. In reality, this process unfolds slowly and shakily: in October, for instance, American exports rose, but American imports soared, too.
A more serious consequence of the dollar's fall is that the euro has become more rewarding for foreign investors, and they are reacting accordingly. In 2001, Middle Eastern oil-producing countries kept 75 percent of their currency reserves in dollars; now the figure is 61 percent, with much of the rest in euros. Chinese and Russian central bankers are also shifting reserves. This trend, at some point, could set off a spiral: the dollar declines, causing further sell-offs, leading to a further decline, and so on.
When the dollar has fallen in the past, the United States was a net creditor and there was no serious rival currency. Neither condition holds true now. As The Economist recently put it, "Never before has the guardian of the world's main reserve currency been its biggest net debtor."
Financiers and diplomats are beginning to ask: How much longer will the dollar remain the world's principal reserve currency? One could also ask, how much longer can the United States remain, as Madeleine Albright put it, "the indispensable country" of world politics?
This year, the United States spent nearly as much on its military as all other countries combined. No other nation possesses, or aspires to, anything like the reach of American armed forces.
Yet, if someday the United States finds that it can no longer count on foreigners to bankroll its deficits, it may also find that it can no longer afford a globe-spanning military. The war in Iraq has already stretched America's forces to the limit. In the 1970's and 1980's, when Pentagon strategists spoke of a two-front war, they envisioned having to fight simultaneously in, say, Germany and Korea. Today, they mean Mosul and Falluja.
About 40 percent of the American troops in Iraq are from the National Guard and Reserves, "weekend warriors" who never figured on serving long combat tours. As a result, Guard recruitment has fallen by 30 percent. If there is no large Guard and Reserve, there is no large Army. In short, not only has the Iraq war been harder than many imagined, it has also made going to war elsewhere a less practical option - and a less credible threat.
The economic trends are worrisome because they stem not just from market forces but also from politics. As T. R. Reid notes in his new book "The United States of Europe," the euro "was specifically designed to challenge the global hegemony of the dollar." Similarly, China's rivalry with the United States in Asia and Latin America isn't a side effect of economics; it's an explicit ambition.
These challenges will take decades to unfold, and may not succeed. China may recoil from its manufacturing boom and its excesses; Europeans could revert to age-old continental tensions. The United States may revive itself through changes in policy.
Meanwhile, power is not transferring so much as dispersing. It may turn out, if trends continue, that no country or bloc of countries possesses the combination of economic and military power needed to reward the good, deter or punish the bad and impose international rules, order and security.
A multipolar world can be a chaotic place. The danger is not so much that the United States may lose power, but that the globe's new rivals may fail to strike and manage a balance of power. End-of-the-year Cassandras traditionally predict doom, gloom and anarchy. This year they're looking less preposterous.
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Fred Kaplan is the national security columnist for Slate.
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Go to Original
Yet Another Great Game
By Stephen Glain
Newsweek International
20 December 2004 Issue
If a report circulating among senior members of America's defense establishment is any guide, the Sino-American war for future petroleum supplies has already begun. According to the 80-page study, Beijing has identified the United States as "a paramount threat to its energy security and economic stability" and is busily establishing a "string of pearls"-forward deployments of surveillance stations, naval facilities and airstrips-to safeguard the petroleum-transport route from the Persian Gulf to the South China Sea. Once it controls Asia's vital sea lanes, the report goes on, China may then move on some of the world's key oil reserves-perhaps by replacing the United States as Saudi Arabia's patron and protector, or by seizing a strategic oil pipeline in the Russian Far East. The Chinese, the report says, "equate energy security with physical possession or control of energy supplies" and "have a tendency to see securing their energy security as a zero-sum game."
Nowhere is that more clear than in sub-Saharan Africa, where Chinese oil and natural-gas companies have over the past several years inked deals with regimes such as Sudan's, ostracized by the West for its complicity in atrocities committed against villagers in Darfur. "It's very effective and farsighted diplomacy," says John Tkacik, a China expert at the Heritage Foundation in Washington. "They look to where their opponent is not and discreetly place their pieces in unclaimed areas of the map, which in this case is Africa."
In staking out Africa, however, Beijing is setting itself up for a seismic rivalry with the -United States, which has identified the region as key to its efforts to diversify its oil sources away from the unstable Middle East. In the aftermath of 9/11, a U.S.-Israeli study group recommended that Washington prevent "rivals such as China" from horning in on Africa's natural resources, while the Pentagon study says, "Chinese companies are investing in East, West, and North Africa and [the Chinese Army] has sent troops to protect its energy investments in Sudan" -an assertion long rumored by human-rights groups and other Africa experts but never confirmed. In turn, American oil companies have raised their profile in Africa amid rumors that the United States is planning to build a military base in the oil-rich Gulf of Guinea. "In Africa," says Jamal Qureshi, an oil-markets expert at PFC Energy in Washington, "you've got new players, with China as a possible counterweight to the U.S. There could be elements of confrontation."
Before 9/11, U.S. oil companies generally kept their distance from such countries as Sudan, the Democratic Republic of the Congo and Libya, due to political risk, concerns over human-rights violations, sanctions or all three. True, U.S. firms have done business with autocracies like Nigeria, despite the Bush administration's public snubbing of President Olusegun Obasanjo. But until now, such deals have been cut on a piecemeal basis-unlike those recently struck by state-owned China National Petroleum Co. (CNPC) as part of an official policy of nurturing diplomatic ties in exchange for oil concessions.
During the cold war, China reached out to Africa in political solidarity with its nonaligned nations, and to block them from having relations with Taiwan. Indeed, Africa accounts for a dwindling share of the 27 or so countries that still recognize the island state over China. Now China is supporting developing countries as part of a transparent bid for economic gain, and its petrodiplomacy extends worldwide.
In October Beijing agreed to buy up to $100 billion in Iranian petroleum and gas and to help develop a major Iranian oilfield near the Iraqi border-evidence of an evolving Sino-Iranian alliance that is featured in the Pentagon report. Earlier this year Beijing signed a 25-year deal to develop natural-gas reserves in Iran-despite U.S.-led sanctions-and it is increasingly active in the Gulf states. Iranian Oil Minister Bijan Zanganeh recently said that the strengthening Tehran-Beijing link was "neutralizing" U.S.-imposed sanctions. "Japan is our No. 1 energy importer for historical reasons... but we would like to give preference to exports to China," said Zanganeh.
Africa, though, remains the new oil frontier for both China and the United States. Since Chinese President Hu Jintao's February goodwill mission to oil-producing states, Beijing has signed agreements with Algeria, Gabon and Nigeria, and is discussing similar deals with Niger, Chad, the Central African Republic, Congo and Angola. In return for access to raw materials in Africa, China is financing and building roads, dams, airports and energy grids, signing free-trade agreements and even promoting Africa at home as a tourist destination. Within the next half decade, according to energy analysts, Africa is expected to account for nearly a third of the oil China purchases overseas, up from 25 percent today.
Once oil-independent, China has over the last decade become increasingly reliant on imports, which now account for 60 percent of its oil consumption, up from 6.4 percent in 1993. Within the next five years, according to Beijing, China will be importing 50 million tons of oil and 50 billion cubic meters of gas annually. Even for a country more concerned with human rights, those kinds of numbers would remove many inhibitions.
In 2001 Beijing identified Sudan as the springboard for its campaign to triple its overseas oil production within four years, despite U.N. sanctions against the Sudanese regime. CNPC now dominates a consortium of Asian companies drilling Sudan's fields under license by Khartoum. Through a subsidiary, CNPC took a lead role in building a 1,500-kilometer-long pipeline from the main oilfields to the Red Sea and built a refinery near Khartoum with a 2.5 million-ton processing capacity. Safely distanced from the chaos in southern Darfur, these facilities have helped swell Sudan's oil output to 345,000 barrels per day, up from 270,000 in 2003, and provide an estimated 8 percent of China's total oil consumption.
The sales have also helped finance Khartoum's arms purchases from Beijing; the government is thought to be nurturing a Sudanese arms industry with Chinese technology. "Khartoum is emboldened and encouraged by China's assistance," says Jemera Rone, a Sudan specialist for Human Rights Watch. "It is using petrodollars to manufacture arms, many of them knockoff versions of Chinese weapons."
The Sino-Sudanese ties are complicating U.N. efforts to isolate Khartoum for its alleged complicity in massacres and rapes in southern Darfur. Beijing has blocked or diluted several U.S.-sponsored draft resolutions condemning Khartoum, and has signaled it will veto further sanctions. Washington, which needs Chinese support in Security Council matters regarding Iraq, is unlikely to push Beijing on Sudan.
While the United States appears to have conceded Sudan to China, it is active elsewhere in Africa. U.S. President George W. Bush has made a point of meeting with leaders of such countries as Chad and Congo, which in the past barely registered on Washington's foreign-policy map. The African Oil Policy Initiative Group, a confederation of oil executives, members of Congress, White House officials and consultants, has recommended that the United States work openly with Nigeria to secure Africa's oil-rich areas and enhance the prospects for foreign investment. It has also urged the Pentagon to build a naval base at the oil-rich islands of So Tome and Principe, and to permanently deploy a large force of U.S. troops there. Some analysts even suspect that the deliberate way in which the United States lifted sanctions on Libya earlier this year was a move to check China's growing influence in Africa. If China sees energy security as a zero-sum game, so, it appears, does its American rival.
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