In Europe, the economy continues to implode. In the UK, analysis by the FT shows, unsurprisingly, that it is the lowest paid who, as ever, will bear the brunt of the economic downturn – while companies like Ernst and Young, which aided and abetted Lehman Brothers in its misdemeanours, go on and on.
Although the big business lobby likes to blame public sector profligacy for the so-called PIGS crisis (and therefore prescribe public sector austerity as the cure), the private sector bears the main responsibility – most clearly in Spain, where the national debt stock stands at about 53 per cent of GDP – among the lowest in the eurozone – while private sector debt stands at a staggering 178 per cent.
Meanwhile, in the USA, as the oil spreads through the Gulf, so do conspiracy theories. The finance sector, however, continues on, despite wave after wave of shameful incidents, the latest culprit being Litton Loans, the sub-prime arm of Goldman Sachs, “America’s foreclosure king”, specialising in loans to (and repossessions from) the US’s poorest home-owners. And America’s global power is declining; it has already lost its hegemony in the Middle East.
The disaster in the Gulf and the crisis in Europe are good indicators of a totally transforming geography of power in the world today. The centre of gravity is no longer the old Atlantic.
As Stephen Walt writes,
Asia’s share of world GDP already exceeds that of the United States or Europe, and arecent IMF study suggests it will be greater than the United States and Europe combined by 2030. Europe has already become a rather hollow military power, and the current economic crisis is going to force European states-and especially the United Kingdom — to cut those capabilities even more. Needless to say, hopes that the euro might one day supplant the dollar look rather hollow today. Politics within many European countries is likely to get nasty as austerity kicks in, and there will inevitably be less money and less support for Europe’s various philanthropic projects in Africa, Central Asia, or the Middle East. Such activities won’t disappear entirely, but it’s hard to see how they can continue at anywhere near their current levels.
China in particular continues to rise. This article analyses China’s strategic interests in Latin America, in the US’s back yard. This article describes its strategy in Africa. China is also on the move in crisis-torn Europe, with the Vice Premier Zhang in Greece this week to grease the rusting wheels of Greek capitalism.
To be sure, China is a new form of global superpower, but that does not mean it is fundamentally different from the old imperialist powers.
While China’s public pronouncements may at times appear mercurial, they are more likely part of a well-conceived strategy. On one hand, China seeks to leverage benefits consistent with being a developing country, plays upon the west’s historical guilt over colonialism, and exploits the west’s continued belief that economic development will inexorably lead to pluralism. On the other hand, it does not hesitate to attempt to parlay its growing power into influence whenever and wherever it can. This Janus-like strategy gives China leeway and flexibility in crafting its international political and economic policy.
And despite occasional posturing from American liberals and conservatives, China and the US remain tied together in an intimate web of shared interests.
However, in China itself, the workforce is getting restive. In a highly unusual move, the prime minister has acknowledged worker grievances.Following the Honda strikes in Guangdong, a Toyota parts manufacturer in Tianjin is now out. This excellent article shows how the wildcat strike at Honda sheds new light on the suicides at Foxconn, suggesting Chinese labor is reaching a tipping point.
And, along with the China, the new global geometry of power continues to tip towards the oil producing states, especially in the Persian Gulf region, as the BP disaster seems to be doing little to encourage us to break our dependency on petroleum. Global spare capacity is around 6 million barrels per day, nearly all of which is in OPEC countries (around 4.2 million barrels per day of this is in Saudi Arabia) – and these countries are reaping the benefits of a weak Euro caused by the PIGS crisis. Jadwa, one of Dubai’s biggest companies, has just bought one of the largest new office complexes on the Southern edge of London’s financial district, at a serious bargain price.
In turn, the Arab oil states and China are increasingly drawing together:
As Washington’s influence in the world and the Middle East wanes, Gulf countries are weaning themselves from their traditional orientation toward and dependence on the United States. America’s post-war political and economic supremacy in the region is now threatened as a result of its own foreign policy, but equally so by the rise in importance of the emerging powers. No country has capitalized on the shifting landscape more thanChina, which has, consistent with its actions globally, moved assertively to strengthen its ties with the Gulf region generally and in particular with its most important economic and political power, Saudi Arabia.
However, critical voices are in denial about the new geometry of power, and continue to act as if America and its close allies, including insignificant Israel, remain the geopolitical driving forces. Time to wake up.
New Politics Review 