Global Power Shift

This is just a series of observations that support my idea that we are living in what, in a few decades, will be seen as tumultous times.

Recently, there was a news item that stated that by 2020, China will become a larger economy than the US; and by 2050, India will top even China, leaving the US a distant third. This is not someone's wishful thinking, but just the magic of compounding – of economic growth, rather than of your money in a bank.

Today, we are all living at the crossroads of history. A subtle power shift, significantly visible in time frames of decades, but barely perceptible at the time frame level of a day or a week, is happening all the time. Witness the following:

• The Arab Spring happened over a period of months and still seems dramatic. I doubt if the spring has completely spent itself. It is not yet all cool in Syria and Egypt, and it may yet erupt again in some other nation(s).
• Technology laughs at national and geographic borders. Accountability and clean governance pressures were earlier driven within each nation's power centres, laterally. However, now there are vertical pressures that cross national borders earily – thanks to telecom, internet, satellite broadcasting and global moneychangers (both, traders and speculators).
• Unregulated or unpoliced space soon becomes populated with groups that thrive on chaos and absence of regulation. Witness Somalia, Sudan, South Sudan, etc. to see the truth of this.
• Unregulated pockets in otherwise regulated economies also give birth to chaos. While this is not to be taken as an approval of the concept of a police state, it is sobering to hear Paddy Ashdown cite a fact that 60% of the $4M that funded the 9/11 bombings passed through the WTC itself!
• Now, the enemy is within each country. Thus, for properly defending a country, the defence ministry may need to speak to the Health ministry (to protect against pandemics); Ministry of Commerce and Industry (the hi-tech infrastructure of the country is sensitive and vulnerable to attack), Home Affairs (to track infiltrators), and Transportation (Air/ ship/ road security). Defending our borders is just not enough.
• The maximum vulnerability is at all “interconnection points” (airports, docks, bus and train terminals). So defending at such points necessarily means overlap in responsibilities and powers. Hence, working with others efficiently is a capability all need to develop.
• Defence co-operation is not enough. Nations and people living in them need to realize that war is an immensely expensive zero-sum game that can go on infintely to their collective detriment. Only then can long-festering disputes cool down sufficiently to permit normal life.
• In 1945, when WW-II ended, there were about 100 countries. Today, there are nearly 200. We are adding almost 1.5 new  countries a year on an average over the last 67 years.  At the same, time, we have witnessed European countries lowering the borders and becoming a single currency area (that initiative is arguably in the endgame stage already).
• Siberia has such inclement weather that in the Far East province of Russia (area double of India) less than 60 Lakh people live. Greater Mumbai has double that population! However, it is a source of power for Russia – most of its natural gas and oil is sourced from this vast area. Surprisingly, this is a source of power for China too! Global warming has given rise to vast wheat fields in Siberia – but there is no one in Russia to feed. Russia's population is shrinking. But we see that some 600,000 Chinese migrate to Siberia, cultivate wheat during the summer on vast leased farm tracts, and come back home every year. This wheat feeds a good proportion of the Chinese population.
• China is controlling a larger and larger part of the world – without firing a shot. They are, quite literally, either buying them up, or colonizing through sheer numbers of immigrants. They are “partnering for prosperity” with several poorer countries, notably in Africa. Thereby, it is creating a China-centric circle of influence that rivals that of the US already. China has trade relationships with Korea, Japan and other countries in the neighborhood, and lower tariffs for poorer countries. In Singapore, Vietnam and Malaysia, the ethnic Chinese population is a significant, loosely united power bloc. In BRICS and in the Asian Free Trade Zone, China is assuming an increasingly dominant role. For example, on Iran, both China and Russia have vetoed UN Resolutions sponsored by the US for increased sanctions. China is still the largest customer of Iranian oil, with India being second.
• Chinese yuan is threatens to emerge as an alternative reserve currency in addition to the dollar and euro, which (when, not if, China can get away with it) will deflate the US balloon much faster than one can imagine. When that happens, the US will be awash (not overnight, but over a finite period of, say, 3 years) with inflation of  the trillion dollars of bonds that China won't need. Thus, the US seems poised to deteriorate as a global power. Inflation robs from the poor, and shifts even more economic power to the rich, so it will exacerbate social tensions in the US, as the feeling is already rife that the US bends backwards to accommodate the rich, at the cost of the poor. The recent BRICS meet discussed this concept, but shied away from pushing immediately for it. If, and when, yuan gets adopted as an alternative reserve currency, the power shift will accelerate.

I intend to develop this line of thinking further in coming days and weeks. I welcome inputs in the form of comments from anyone who has more to contribute to this line of thinking.

Is the West afraid of democracy?

In recent times, governments in both, the US and Europe have shown that this could indeed be true!

We now look at a few examples in recent years, of the West running scared of true democracy.

• Hamas was democratically elected as the governing party in a free and fair election which the US itself had approved of holding. Since that victory, neither Israel nor the US have recognized the Hamas government as a legitimately elected government in Gaza and the West Bank. All its talk of exporting democracy to justify ousting despots has been shown to be hollow and self-serving.
• The US also took an inordinately long time before ditching its long-time ally Hosni Mubarak, and throwing their lot with a spontaneous non-violent democratic uprising in Egypt.
• The current move to scuttle Palestine's application to be recognized as a country and admitted to full membership of the UN via a US veto in the Security Council is another example of the US running scared of democracy in action. The vote in UNESCO, where the US has no veto, shows what would happen if true democracy were allowed to prevail. 107 countries voted for admitting Palestine as a member of UNESCO while 14 countries (basically the US, Israel and like-minded countries) voted against.
• Poland, Czechoslovakia, among several countries, wanted a referendum (the most democratic method, where every citizen can participate in the decision) to decide on the Lisbon Treaty (proposing constitutional change in the EU). However, they were all prevailed upon to not hold the referendum; instead, elected representatives alone ratified it.
• Ireland, however, held a referendum and the proposal to join the EU was defeated. A year later, another referendum was forced to be held in Ireland on the same question when enough votes swung in favour of the Lisbon Treaty. That decision was hailed as a resounding endorsement of the Lisbon Treaty. This is a new kind of democracy where you repeatedly ask the same question, till you get the answer you want.
• The most recent case is when the Greek PM, George Papandreou proposed that the rescue package cobbled together by Germany and a few other EU countries be voted on by the people of Greece (referendum). It had the effect of a hungry cat among a flock of alarmed pigeons. Why should the prospects of a Greek referendum trouble the richer countries?
• Because Greece as a country is any way in a soup, whether they agree to the rescue package, or don't. It is has a choice of entering 8-ft deep water, or 25-ft deep water. The real rescue package is not for Greece, but for the banks in the developed countries that are holding Greek government bonds that have fallen steeply in value. For them, it s the difference between accessing EU's rescue funds to rescue them from the fallout of poor investment decisions and not getting that access, and bearing the entire loss themselves. With the backdrop of Occupy Wall Street campaign, and the widespread anger against bankers, a referendum would almost certainly return a resounding “NO” to the EU package.
• So it is not a surprise that Papandreou was prevailed upon to abandon his idea of a referendum. It continues the long saga of the democracies fearing democracy.