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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Scotland’s bid for independence and what it means for international relations

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The results have just been announced, that Scotland will not become an independent country and end a 300 plus year union. Even so, this vote will have profound effects for the UK and the international community.

Scotland’s bid for independence was fought hard on both sides. British politicians like Prime Minister David Cameron emphasized Scotland’s increased economic and political strength as a part of the UK. First Minister Alex Salmon highlighted the differences between Scotland and the rest of the union. In short Scots in favor of independence felt and still feel different, separate from the rest of the UK.

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 If Scotland seceded, the UK would’ve lost one-third of it’s land mass and 8% of it’s population. A Scotland-less UK would also be more likely to leave the European Union, which has always had an ambivalent relationship with the supranational organization.  The Conservatives have vowed to have a referendum on EU membership if they win next year’s general election.  As Scots are more left leaning, the UK would be more likely to leave without Scotland’s votes.

Also, the UK’s underwater nuclear weapons are in Scotland. Some have raised the issue if the UK lost possession of its nukes, would it continue to be a world power? Would it still be deserving of veto power on the United Nations Security Council? Nations such as India, Japan and Germany have openly declared they want “permanent member” status, making the argument that it no longer makes sense for the concentration of power in the international organization to be confined to five countries. A UK without Scotland would’ve further illustrate this argument.

However even though Scotland remains part of the UK, there will be consequences for Britain.  David Cameron has promised increased powers for Scotland, Wales and Northern Ireland if Scotland voted “NO” on independence but it remains to be seen what he or any of the other party leaders can feasibly do.

The ethnic nationalism that pushed the UK to the brink of national divorce is not confined to the island nation. Separatist and regional movements in Spain, Germany, Italy and Belgium watched the results of this vote very carefully. Whether Scotland became independent or not, Europe is at a critical moment in its history.  Groups all over the continent are challenging the modern definition of the nation-state.  Beyond Europe, in China, Canada and the Middle East, Scotland’s bid for independence motivated other ethnic groups to examine what ties them to the nation-state.

Just like the Global Recession has forced nations to turn inward, as seen in the recent elections in the European Parliament, so now too are groups within nations.  In a post-modern international system, the concept of the nation-state is slowly eroding as individuals groups, ethnic, religious and linguistic groups challenge globalization and centralization in the nation-state.