New economic order rises in the East
August 12, 2009
By Etienne Swanepoel
The current global order is an outcome of World War II. Since then the US has been the predominant superpower, and following the collapse of the Soviet Union, the only one. Also since the latter, the astonishing rise of China has become the economic story of the past 20 years or so. India is not far behind.
Economic power at some point translates into geopolitical aspirations as nations seek to protect their vital interests. The latter is shorthand for a bunch of stuff.
These include: the obvious, such as economic power, the projection of that power, and relationships with like-minded allies; and the less obvious, or soft, power, such as culture, and aid to nations that are not quite deserving of the term allies but whose acquiescence in the predominant geopolitical order is important in order to assist in the sterilisation of likely or potential peer competitors, or simply just to maintain the existing global order.
Regrettably (in light of climate change), the vast bulk of global energy requirements will still be derived from hydrocarbons for at least the next 30 years or so.
At least 70 percent of oil reserves that will be available for production over this period are located in the Middle East and the Caucasus, both regions forming part of the eastern hemisphere (as that term is understood in its narrow sense, that is, excluding Europe).
In short, in the next few decades as oil becomes an increasingly scarce resource, to paraphrase Bill Clinton's 1992 campaign call in relation to the US economy, "it's about the oil, stupid".
The US is heavily involved in power projection in the eastern hemisphere. Apart from just the plain power projection typical of superpowers, the functionality of US involvement in that hemisphere includes the objective of laying part claim to those energy reserves.
The obvious point is that without the security of supply of essential raw materials, including energy, in the long term economies atrophy and starve.
In the case of superpowers, it affects their long-term geopolitical calculations and ambitions.
In fact, their very status as a superpower may be adversely affected, if not fundamentally undermined or arrested.
In addition, as many nations of the eastern hemisphere are likely to be the most dynamic from here on in, any medium- to long-term geopolitical scenarios will strongly feature that hemisphere in their geopolitical sums.
US strategy in the eastern hemisphere will in all probability have future geopolitical and global economic consequences. It is where superpower competition will most likely be decided in the future.
Both India and China are located there. Russia's centre of power also resides in that hemisphere. Though it is unlikely to compete against the US in the future in the same fashion as India and China, Russia will remain a formidable rival of the US due to its considerable nuclear arsenal.
In engaging with China and India, the US will, of course, be at a considerable disadvantage. Its centre of power is in another hemisphere.
It is economically costly and logistically difficult to project power against competitors who enjoy a home base advantage. As such, the US should conserve its geopolitical and economic power in that hemisphere as best as it can.
Not only is the future location of likely superpower competition situated in the east, it will also be the location of by far the greater part of the production of global economic output. Hence, the US must carefully choose its vital interests in these areas. Whatever it does may affect those vital interests, both economically and geopolitically. At stake quite possibly is the retention of its economic power through the next two decades and beyond. Economic power determines geopolitical clout.
If the US slips in either sense, the global economic order will probably change irreversibly in whatever direction chosen by its replacement(s).
Although the current economic and financial crisis has exposed the fault lines in US geopolitical and economic hegemony, changing superpowers may in the next two decades or so be even more disruptive.
The Bretton Woods system shaped the geopolitical and economic landscape after World War II. We are arguably entering a similar reorganisation of the global order.
This time, though, nations in the east will more than likely dictate terms, as was the case with the US 60 years ago.
The eastern hemisphere is a complex geopolitical environment. It follows that US strategy in that hemisphere is also complex. In this series of articles, we will examine some of the detail of the US strategy there. It is therefore of interest to examine US strategy in, for example, Afghanistan in order to understand, in part, the scope of US strategy there.
The US launched strikes on al-Qaeda training camps in Afghanistan following the attacks on the World Trade Center on September 11, 2001. Nato forces soon thereafter ousted the Taliban government. It has been unstable (or less stable) ever since.
Most importantly, al-Qaeda has dispersed and now allegedly operates training camps in Yemen, Somalia, the Frontier Tribal Areas of Pakistan and, of course, it still has a presence in Afghanistan.
It also has sympathisers in Europe. The Taliban maintains a capable operational capability in Afghanistan; and has also expanded its area of operations and interests into Pakistan's Frontier Tribal Areas.
Viewed from the inception of the US war on terror, the Afghan war is now reaching the medium term. What have the results been so far, what are the likely future outcomes from here on and what likely long-term geopolitical consequences will arise from a US-centric perspective?
The primary objective of US strategy in Afghanistan was to destroy, if not substantially impair, the operational capability of al-Qaeda at the seat of its then power.
In the process of doing so, it was forced to engage with the Taliban, the chief sponsor of al-Qaeda. At the inception of the conflict, the interests of all three contestants converged in a fixed geographical area. Each had a core interest in contesting the other in Afghanistan.
As George Friedman of Stratfor, a leading independent geopolitical consultancy, states in a recent article on the conflict the interests of the US, al-Qaeda, and the Taliban were symmetrical in Afghanistan.
This is no longer the case as al-Qaeda has dispersed its operations there.
In the next article, we will examine how that dispersal of al-Qaeda has affected the interests of the US and the Taliban in Afghanistan. It will then be interesting to look at likely US policy responses and what these may mean for oil and gas markets in the future.
Etienne Swanepoel is a partner at Webber Wentzel. The opinions expressed are his own
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