The US Needs to Change the Way it Deals With the Rest of the World–or it Risks Being Left Behind

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On March 17 the Asian Infrastructure Investment Bank (AIIB) received a significant boost in international credibility when European nations, France, Germany and Italy followed the United Kingdom in joining the AIIB, despite stern criticism from the United States. These four countries are not only leading players in the European Union, but they comprise the 4th, 5th & 6th largest economies in the world (Italy is ranked 8th) and are among the US’ closest allies. More European countries are likely to follow suit as Switzerland and Luxembourg are preparing to do. Asian countries such as New Zealand, Thailand and Singapore have already joined, and staunch US allies South Korea and Australia seem likely also. The AIIB is a China-led international infrastructure bank, part of China’s challenge to the global financial monopoly enjoyed by the US, since the dollar is its reserve currency.

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China’s reasons for creating it’s own version of the World Bank (WB) are straight forward. The BRICS (Brazil, Russia, India, China, South Africa) have long resented the financial monopoly that western countries, particularly the US have in the WB and International Monetary Fund (IMF). The status quo was birthed by Bretton Woods system established in 1944. Critics point out it is no longer the 1940s and the system needs to reflect the changing balance of power in the 21st century.

Before the creation of AIIB the BRICS tried to work within the system by demanding a greater say in the IMF. In 2010 a deal was introduced to give emerging economies more power. But the US is the largest IMF stakeholder and US lawmakers must approve any such deal. Republicans consistently block its approval. American reluctance to reform led China to attempt to create a financial system not dominated by the West.

American criticism against the AIIB are concerns that the institution will not meet western standards on transparency, the environment and other issues. However BRICS leaders fire back that the US and Europe no longer have credibility to dictate such standards given their mishandling of the 2008 global financial crisis which caused economic chaos throughout the entire world.

In hindsight this development could prove pivotal for the future of the global economic system not only because it evidences China’s commitment to dismantle the dollar as the reserve currency, but given United States Treasury Secretary Jacob Lew’s public criticism of European countries joining the AIIB, it is increasingly evident, that the world is changing. Non-western countries are increasingly vying for a share of the geopolitical pie. If the world’s lone superpower wishes to retain considerable influence, American leaders would do well to recognize this and act accordingly. The longer it takes for the US to wake up to this new reality, the harder the fall will be and the less influence the US will be able to retain as global power continues to shift Eastward.

china_papersover_us If the US continues to block necessary reforms to the IMF and WB while criticizing European allies who join (for their own financial self-preservation), the fallout could potentially be momentous. At worst, the US creates a new layer to the developing geopolitical rivalry between the US-China and forces even the closest American allies to choose sides against the US. At best, the US jeopardizes the strength of the Trans-Atlantic alliance and being left behind as a new international system emerges, trapped in its web of denial.

Is Asia like pre-World War I Europe?

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Between the international headlines about the East China Sea and comments made at the World Economic Forum in Davos, Switzerland this week, it is very clear that China and Japan are not getting along.  The two countries have a history, which leaves many wondering if the two are on a collision course yet again.  China and Japan seem to disagree on everything, from the Senkaku/Diaoyu islands, to each country’s investment in Africa, to both countries investing more in their respective militaries, the list goes on.

At the World Economic Forum, Japanese Prime Minister Shinzo Abe compared the testy relationship between China and Japan to that between Britain and Germany which in part, led to the outbreak of World War I.  As someone endlessly fascinated with the Great War, I agree that the geopolitics of Asia is looking startlingly similar to that of Europe 100 years ago, but I disagree with the Japanese leader that China-Japan of today is Britain-Germany in 1914.

1002px-Map_Europe_alliances_1914-en.svgBritain’s inability to handle Germany’s rise was one of the major issues that resulted in World War I.  Beginning in the 19th century, Britain was the preeminent power in the world and controlled 25% of the world’s population with its superior navy.  Yet with the unpopular Boer war, Queen Victoria’s death and Kaiser Wilhelm’s no-so-hidden desire to establish a German Empire on par with the British Empire, Britain was insecure of its status. The fear of Germany overtaking them led British leaders to seek out an alliance with France, it’s 1000 year rival; and Russia, which was largely seen as a backward autocracy.

China’s_Critical_Sea_Lines_of_CommunicationA century later the world is in the same situation.  The United States, after being world’s preeminent power in the 20th century, in the 21st century faces losing that status.  At the moment China leads the way with an economy that is estimated to become the world’s largest before 2020, and other BRICS nations vying for power on the international stage.  However China’s rise has been met with skepticism, not just from the United States but from its neighbors.  Although its leaders insist on a peaceful rise, many argue its actions say otherwise, case in point being the dispute over the Senkaku/Diaoyu islands.  China recently set up a defense zone around the islands, leaving Japan and South Korea anxious.  Although Japan has shaky relationships with its neighbors in its own right, many are putting that aside to counter-balance China.

Recently PM Abe was a guest of honor in New Delhi on India’s Republic Day on Saturday. This after Japan’s defense minister was in New Delhi for talks on expanding bilateral defense ties.  The Japanese leader has long felt that India can provide a crucial counter-weight to China and so seeks to expand Japan-India ties.  India and China have a rivalry also, dating back to 1962 over a shared border.  Japan (and India) are also expanding their relationships with African countries, with both attempting to distinguish themselves from China’s widespread influence on the continent.

PM Abe is right that a war in Asia would spell disaster for the world. The rivalry between Britain and Germany was that between a longtime empire and an rising power–just as the tension between the US and China is today.  However as much as I understand PM Abe’s fear, I can see the seeds of war being planted already.  Japan is investing more into its military, solidifying alliances with other countries in the region and seeking to outdo China in Africa.  What is more startling is that Japan is not alone.

History has a way of repeating itself but never in the exact way.  So although there are some differences between Europe a hundred years ago and Asia today, the major themes remain the same.  The leaders of today will face the same decisions as leaders a century ago.  That leaves the question, can the world avoid making the same mistakes of the past?

Devyani Khobragade and the future of India-America relations

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The diplomatic-political row between India and the United States over the treatment of Indian diplomat Devyani Khobragade has both countries more or less scrambling to prevent it from derailing an important alliance between the world’s largest democracies.

Khobragade was arrested by federal marshals in New York City on charges of visa fraud and human trafficking related to how much she was paying her nanny, Sangeeta Richard.  She was arrested and strip-searched before being released on bail.  The Indian government was outraged and has since retaliated by rolling back privileges previously given to American diplomats in India.  Some Indian politicians have taken it further and suggested that gay partners of American diplomats should be arrested, as Khobragade was, since homosexuality has recently been criminalized by the Indian Supreme Court.

Indian politicians are furious, but many Indian-Americans applaud the arrest and the Indian citizenry is slightly divided but mostly upset at what they call blatant disrespect of their diplomats by the US.  Curious enough, every time I started to write about this I learned new information that literally changed my opinion on who was right and wrong.

I’ve observed American, British and Indian media coverage on this and while there are reasons to be suspicious of both Devyani Khobragade and Sangeeta Richard, it is incredibly clear that the US did not take their time to get all the facts and rushed to arrest Khobragade.  The American government “evacuated” the Richard family from India Sangeeta Richard was under criminal investigation by the Delhi High Court.  In doing this the US not only interfered with the Indian judicial process but sent the message that the US government does not respect India’s judiciary enough to communicate with it about what was going on and allow India to handle a situation from within its own borders.  India rightly points out that this is not acceptable behavior from a country that calls itself India’s ally.

I’ll also highlight that I only heard about Delhi’s investigation into Richard when I watched Indian coverage.  However the British news released information revealing Sangeeta Richard’s dubious motives.

I honestly do not know who is the victim here–Khobragade or Richard.  The truth is probably somewhere in between.  But as an American, I’m aware of the racism in American bureaucracy.  European diplomats on American soil have been accused of crimes much worse than this, and American authorities did not treat them the same way they did Khobragade.  India knows this and is rightfully angry.  Also, India has elections in 2014 which is also playing a background role as both the ruling party and main opposition seek to use this situation to demonstrate what they would bring to Indian Foreign Policy, that they will stand up to the West.

Furthermore, even if the case against Khobragade was air tight, the United States owes India respect as an ally, the world’s largest democracy and a rising power to not rush to arrest and prosecution like they did.  On his 2010 visit to India, President Obama praised India, calling it “a true democracy”, and America’s partnership with India, one that defines the 21st century.

Which brings me to my main point in even writing about this.  India has every right to be angry, and unless Khobragade has committed a crime on American soil (which it’s looking less likely that she has), she should be released, her passport returned and an apology issued to India not just for her quick arrest and strip-search but for American authorities completely bypassing India’s judicial system.

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India and the United States are the world’s largest democracies.  It does neither country any good to be on opposite sides, particularly the US.  China is continuing to rise economically and according to Forbes, is poised to become the world’s largest economy by 2016.  China is also spreading its influence beyond its borders to Africa, in particular.  India is pursuing partnerships with African nations as well, and if America wants to retain any type of leverage in a world system where the balance of power is shifting away from the US, it would seem self-evident that a partnership with India would not only benefit the US more given our shared ideologies, but it would provide a deterrent of sorts to China should it become overzealous in its pursuits on the world stage.

As in the 20th century, Britain was our indispensable ally–our shared language, heritage and government linked us together as countries with similar interests.  In the 21st century, the world order is not what it was in 1945.  Britain has accepted this, so must the United States.  I’m not advocating for US-India’s relationship to replace the “special relationship” between the US-UK, but we share the same similarities with India as we do with Britain.  It is a grave mistake to discount India as Asia becomes the global center of power, with China at the top and India poised to overtake Japan and become the world’s third largest economy by 2028 according to London’s Centre for Economics and Business Research.

All of this is to say, the United States no longer runs the world and must not act like it does. This is all part of the cycle of history, but if the US wants to maintain it’s world power status it must realize it is no longer the world’s most powerful, but one of many great powers.