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.

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Narendra Modi gets to work cultivating alliances that could prove pivotal for India and international relations

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India’s new prime minister Narendra Modi is not wasting any time toward improving the economic situation in his country. The West (which previously shunned Modi) is not hesitating to embrace Modi as he seeks to make India a lucrative place to do business and for foreign investment.

Earlier this month, top British leaders met with Modi and his Foreign Minister and Indian business leaders in Mumbai for two days as they discussed expanding bilateral trade (already up to $15.8 million) and foreign investment from Britain into India. The talks included the sale of arms as India, already the world’s biggest arm importer seeks to build up its defense.

The United States announced Secretary of State John Kerry and Secretary of Defense Chuck Hagel travel to India in late July-early August to discuss expanding India and the US’s bilateral relationship.

The relationship between the world’s largest democracies has been testy at best under the Obama Administration after being strong during the Clinton and Bush Administrations. Frank Wisner, the US ambassador to India under Clinton told the Express Tribune that as Obama has focused on China’s rise, India has trouble seeing where it fits in to Obama’s policy. As Modi is likely to be in power for foreseeable future, the time to cultivate a viable US-India relationship is now. Especially if Modi succeeds in replicating the economic success he oversaw in Gujarat, in the rest of India.

But India is not just looking to the West for alliances.

Despite tensions over border clashes, Modi met with Chinese leader Xi Jinping earlier this week in Brazil, days ahead of the BRICS summit.  Modi wants to resolve conflicts with China, emphasizing their shared similarities in an attempt to invite Chinese investment in Indian infrastructure.  In turn Xi Jinping invited Modi to Asia-Pacific Economic Cooperation (APEC) meeting in November.

If these former rivals could manage to put aside their differences for a mutually beneficial partnership, it would be an amazing example in international politics.  More than that India and China make up 40% of the world’s population on the continent to where power is shifting.  India seeks for the world to take it seriously and China seeks to undermine US hegemony in Asia.  India and China working together could prove consequential for the world.

So far Modi appears to be pragmatic, and it’s working.

BRICS come together in Brazil as they seek to challenge the West

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Just days after the end of the World Cup, Brazil was the gathering place for another international meeting: the annual BRICS summit.  BRICS (Brazil, Russia, India, China, South Africa) is an association of five emerging national economies.  It represents 3 billion people around the world, 21 percent of global economic output, and has contributed more than 50% of the world’s economic growth in the past decade.

However, it remains to be seen whether it can be a real force on the world stage or whether it will remain a nominal association without any real clout.  The West remains critical.  Nevertheless the BRICS remain determined to change the world order as it exists under American financial hegemony.  Their 3-day summit came with the announcement of the creation of a New Development Bank, to challenge the World Bank (WB) and the Contingent Reserve Fund, to challenge the International Monetary Fund (IMF).  India stressed they want to make sure all members (which could eventually include non-BRICS nations) have equal voting rights unlike in the Western-run WB and IMF.

The question I have is will the BRICS always be an economic association?  Or will it become a political one as well?  It is telling that these five nations with different political systems could come together, recognizing they have a lot to gain from each other, knowing they could change the world.  But if they gain economic clout, given 3 of the 5 BRICS are countries that have historically challenged the status quo, adding a political element to their association could add a further challenge to the US and the West that is neither hostile nor belligerent, but that simply tells the US, that it is not calling the shots anymore.

However plausible this is, it is a long ways off.  For one, it remains to be seen if the BRICS can be an economic force.  Second the BRICS focusing on economics effectively allows them to focus on what can benefit their national economic needs, and avoid political differences that could tear them apart.

Although China and Russia are getting close, it is not a marriage of love.  Russia needs allies and China wants to buy Russia’s gas.  China’s foreign policy is based on noninterventionism for its own self-interest.  India’s foreign policy under Narendra Modi remains to be seen but he is pragmatic like Xi Jinping and is focused on improving India’s economic situation.  Historically India has been non-aligned, thus it would not be surprising for India to have a similar foreign policy to China’s.

On the other hand, Russia could give them no choice.  The BRICS have been largely silent during the Ukraine-Russia conflict but the recent plane crash of Malaysia Airlines Flight 17 could force them to step away from Russia.  India wants more responsibility on the world stage and is making a case to be a permanent member on the United Nations Security Council. However lukewarm Britain and France’s political response is, it is unlikely they will allow India veto power if it seems ‘too close’ to Russia.

Russia and China Set Out to Change the World Order As We Know It

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Russia and China’s developing alliance was in the news last week as Vladimir Putin signed two agreements while visiting Shanghai.  The first brings $450 billion worth of Russian natural gas to China over 30 years, in a demonstration to the West that Russia still has friends in the midst of growing political isolation.  Experts caution that this move is largely symbolic.  For the moment, Russia still needs Europe to buy its gas.  China, welcomes any natural resources it can access.

The minimal American media coverage focused on whether this deal threatens the United States, with US officials responding that not much should be made of this deal since there is nothing special about Russia and China having bilateral relations with each other.  Perhaps there is nothing special about a deal that is largely symbolic for now anyway.

The same cannot be said about the second agreement however.  Russia and China also agreed to bypass the US dollar in bilateral trade.  America’s financial hegemony partly comes from the American currency being the reserve currency in international trade.  This allows the US to spend beyond its means and have a significant influence abroad.  As the world becomes more multi-polar, there is a strong desire among the BRICS nations to change the status quo.  Russia and China agreeing to do just that is a first step, especially if more BRICS follow suit.

Russia is pushing this relationship as a show of power in the face of Western condemnation, but China can be described as a benevolent opportunist.  Its leaders appreciate the access to raw materials and a chance to challenge the US while at the same time not going beyond certain limits.  Russia-China’s combined strength is already felt in international diplomacy, as both countries use their veto power on the United Nations Security Council to stop resolutions proposed by other members of the P5.

Whether American leaders are willing to admit it or not, Russia-China’s new friendship is one to watch.  No it is not an ideological friendship but a marriage of mutual interests, which might be more effective than a union of affection.  The closer these countries become, the more they will resist US actions in the East and elsewhere, and be invulnerable to American retaliation.  Russian and Chinese leaders have come together for one common goal: to change the world order as it currently exists.

American Foreign Policy in 1914 and 100 years later

An eternal historian, my mind instinctually looks to the past to analyze global affairs in the present.  As President Obama walks a fine line between pursuing American interests abroad and tending to domestic issues, it is becoming clear that Americans have little interest in foreign affairs.  For one between the economy, voting rights and other issues, many Americans feel there is enough going on at home that needs attention.  But also, after more than a decade of two fruitless wars abroad that did nothing except damage the United States’ image, many Americans have simply lost the desire to use American power to solve the world’s problems.  In December 2013 the Pew Research Center reported that 52% of Americans believed the country should remain out of global affairs.

Yet international crises keep manifesting themselves.  Tensions between Russia and Ukraine still has Europe on edge over what Vladimir Putin will do next and China’s continued rise has its neighbors apprehensive, particularly over the disputed islands in the South China Sea, and the list goes on. But that does not change American apathy toward events outside our borders.  In March of this year, at the height of the Crimea-Ukraine-Russia crisis, Pew reported that while 29% of Americans thought the government should take a hard stance on Russia, 56% did not want the United States to get too involved in the situation.

This is eerily similar to American foreign policy a century ago in 1914.  After a brief attempt early in the 20th century to create an overseas American empire similar to the empires of Europe, the United States retreated inward and remained so when the Hapsburg heir was assassinated.  In fact, most Americans had no idea of the tensions in Europe at the time.  In both world wars, the United States refused to involve itself until American lives were at stake.

A century later, talks of a third world war slowly grow with every new crisis.  But Americans remain focused internally while other countries fear the future of international relations if America removes itself from the global stage.  In its May 3rd issue, the Economist highlighted that American hesitance to intervene militarily has our allies on edge amid fear that American enemies are emboldened.  The United States is no longer the world’s policemen as it was in the 1990s after the Soviet Union collapsed.  But Americans not caring about the world’s affairs unless it directly threatens us is nothing new.  Even in the beginning years of American nationhood, there was no foreign appetite.

More than that, America can no longer get away with what it did before.  Not only are other countries rising for their share of the geopolitical pie but America simply does not have the money to fund a long-term military campaign.  American military might is still at the top but even that is slipping albeit slowly and other countries are catching up.

American leaders will deny the country is in decline but as a historian, I will not ignore the parallels.  In the early 20th century, Britain, which controlled 25% of the world’s population and the world’s most powerful navy, was insecure of its status as a global power after Queen Victoria’s death and an unsuccessful South African war which left it politically isolated in Europe.  Similarly, in late 2013 Pew reported that 53% of Americans see the country less powerful and less important than it was 10 years ago.  In truth, the world is becoming more multipolar, also similar to 1914.

Indeed this is the cycle of history.  World powers never remain world powers forever.

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.