The horizon is not so far as we can see, but as far as we can imagine

The Russia China Axis continues to form

So, the Russians and Chinese, after 10 years of haggling, have signed a gas deal worth 400 billion or so.

The timing is not coincidental, of course: Russia needs to diversify who it sell to.  The next major step, which will be years in coming, is arranging how to supply India.

The US has been pivoting against China, reassuring its allies in the Pacific, that US ocean, that it is on their side against a China which is pushing territorial claims aggressively.  China knows that many in the US consider it the real enemy: the real threat, because of its burgeoning economy and its massive industrial base (shipped to it by American capitalists, selling China the rope to hang the American Empire with.)

As I have noted before, the price of the Ukraine is a firm alignment of Russia with China.  Russia needs China’s goods, money and political support; China will also be happy to have a security council ally and buy all those Russian commodities.

Japan is a firm American ally, and likely to remain so. It will increase the size of its military, but Japan’s long stagnation has now turned into actual decline, with regular trade deficits with no end in sight, since it has been shipping much of its industry offshore, and not creating the new generations of the best or cheapest goods.  Demographic decline, likewise, continues, and Japanese xenophobia makes it impossible for them to use immigration as a cure, while the declining economy and tight pressed quarters means there’s no reason to expect the Japanese themselves to start breeding.

Europe has firmly aligned with America, indicating willingness to cut its own throat with trade sanctions against Russia, if necessary.  South America and central America is unlikely to align en-masse with America for obvious historical reasons: America has been the enemy of most states there for over a century, with its willingness to attempt to overthrow any government it doesn’t like.

The Middle East grows less important as solar and alternative sources for oil come on line, and as their own reserves deteriorate.  To be sure, it will matter for decades yet, but it is no longer the most important region on the earth.  Sub-Saharan Africa, sadly, is largely irrelevant: they will sell their resources to whoever pays for them.

This leaves India s the last major country in play.  But for them, the smart play is to stay out of it, keep good relations with both sides, and let China and the US slag each other, coming up the middle to be the next hegemonic power.

To be sure, many will say that China and the US can never seriously fight: they need each other too much.  Such people are fools: American consumers grow weaker, US treasuries are a sunk asset, and China will have to move to a domestic consumer society at some point: raising the income of their own citizens and selling the goods to Chinese.

The game of empire never ends, it only changes.  The Russians are now aligned with the Chinese because of European and American stupidity: Putin and the Russians, for many years, longed to be Europeans and it would have required only a little respect to keep bring them into the Western camp.

Such strategic mistakes often seal the fate of Empires.


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26 Comments

  1. bobs

    Good analysis. (Way off about India though. China and India were about equal 25 years ago: today China’s economy is 3 times bigger than India’s.)

  2. Ian Welsh

    Yes, I know it’s not as powerful. But it’s still a power, and it may yet surge. The US/China showdown is a ways off — remember, the decline of Britain took place over decades even after the 1st war.

  3. jcapan

    From here on the ground, a pretty sound assessment of Japan. (Though I’d prefer the breeding is left to animals and plants).

    But if demographic growth is what markets want, I’d say demographic “decline” might be our only salvation. God knows the world doesn’t need more consumers, both of necessary resources and unnecessary trinkets. Less mouths to feed, less energy … less is more ultimately. Perhaps only by starving the beast, can we hope to build something new and sustainable.

    Anyway, think I came across this via Yves:

    http://www.newscientist.com/article/dn24822-japans-ageing-population-could-actually-be-good-news.html#.U4AxKCjm7g0

    “With 127 million people, Japan is hardly empty. But fewer people in future will mean it has more living space, more arable land per head, and a higher quality of life…”

    I’m not really that sanguine—the transition is almost assuredly going to be a bitch. 30 million less people by 2050! I might be more hopeful if war apologists weren’t so firmly entrenched, bent on austerity and the completion of neo-liberal reforms begun under Koizumi.

  4. stirling

    Good sharp rundown, you guys are tweeting this to a bunch of people right?

  5. As to your last point, the deteriorating relationship between Western Europe and Turkey is like a microcosm of this.

  6. BlizzardOfOz

    Such strategic mistakes often seal the fate of Empires.

    Ian, this implies that decisions were made strategically, but do you actually believe that? Are the decision makers behind the Ukraine policy strategic thinkers who have a kind of patriotic interest in the long-term interests of the United States, or are they a hodgepodge of useful-idiot quacks, self-interested opportunists, IBGYBG profiteers, unpatriotic globalists, etc? Obama (opportunist) Victoria Nuland (globalist), and Kerry (useful idiot) at least seem pretty clearly to fall in the latter category.

  7. Jeff Wegerson

    The British empire didn’t have global warming nipping at its heals. I see events moving much faster because of it and because of communications compression. Unfortunately faster doesn’t correlate with better. It’s also much harder to speed up the engineering of fossil energy than solar and wind (imho only). I could see that as being the race to the swiftest. I think that when that one takes off, and it’s walking over to the chocks now, then the bets placed around fossil get quickly changed. That could include the U.S./Europe ancestral one. Intra-family feuds can get ugly fast.

  8. Greg T

    Excellent general overview. I would include the following ,Ian:

    1. There is no certainty Japan will continue as a US vassal state, especially as the US weakens geopolitically. If the Japanese are forced to remilitarize, this will put increasing strains on their already weak economy.

    2. I’m not sure I agree that the EU is firmly in the US camp. There are signs that Germany ( the major player in the EU ) is resisting US influence. German industry has significant business ties with Russian energy suppliers and the US cannot promise them alternative supplies. The Germans are also suspicious of US intentions given the NSA spying revelations.

    3. Iran is poised to become the major regional player in the Middle East. Israel knows this ,which is why they are so desperate to attack them. As US influence wanes, Israel loses its bedrock of support. As US support for Israel declines, I could see a regional encirclement of Israel with Iran and Saudi Arabia applying pressure from either end.

    4. I guess what I’m saying is that the US is much weaker than your post suggests. Maybe I’m wrong here. I think America is losing its ability to control global events. This makes the next 10-20 years particularly dangerous.

  9. EGrise

    @BlizzardOfOz:

    I get what you’re saying: the decisions are strategic in nature and scope and have long-term strategic consequences, but they aren’t recognized as such by the decision takers who only seem to view things in the short-to-medium term. Venal people making strategic decisions for base reasons with disastrous results.

    @Greg T:

    I agree with all your points. In the near term I think a smart Europe (by which I mean primarily Germany) could play the US, Russia and China off each other, but where that lands them in the long term is anyone’s guess.

  10. S Brennan

    Putin and the Russians, for many years, longed to be Europeans and it would have required only a little respect to keep bring them into the Western camp.

    Such strategic mistakes often seal the fate of Empires.

  11. John Glover

    “The Russians are now aligned with the Chinese because of European and American stupidity: Putin and the Russians, for many years, longed to be Europeans and it would have required only a little respect to keep bring them into the Western camp.”

    Actually, you could say the same thing about the Chinese.

    But the Europeans, particularly European elites, still have it in their heads that they are somehow superior human beings, and that their place in the world is a consequence of this moral superiority. Showing respect to non- Europeans is implicitly questioning this. This they really can’t do.

    What’s become increasingly obvious over the last two decades – to me at least – is that respect is shown, it usually is faux respect, being shown with a view to obtaining a material advantage. Ultimately, the country involved learns that they have been duped, and learns never to trust the Europeans/Americans again.

  12. Neal Deesit

    “…American capitalists, selling China the rope to cut America’s throat.”

    Fortunately, America’s waning industrial production is still sufficient to produce personal-size metaphor mixers.

  13. I’m fairly relaxed about anyone who tries to cut my throat with a rope.

  14. bulldozer

    @ Neal, sorry asshole, that personal-size metaphor mixer is Canadian. America doesn’t even produce those anymore.

  15. Ian Welsh

    Thanks for catching the mixed metaphor. Fixed.

  16. VietnamVet

    This is an excellent summary. The Russia China Axis is not the result stupidity or naivety. The unelected deep state is addicted to greed and power. It takes risks huge for selfish needs. Collateral damage from their wars and climate change is inevitable. The Ukraine Crisis is a direct result of their need for more people and resources to exploit.

    Unverified reports indicate that Chechen Muslims are fighting in Eastern Ukraine with the Separatists. No doubt financed by the neo-conservative/neo-liberal alliance that is intent on starting a civil war on Russian’s border in order to destabilize it and loot it again. Since Americans won’t fight their colonial wars for them since Vietnam and the voluntary army can only fight two small wars at a time, they have had to hire Jihadists who have and will continue to strike back at their paymasters whenever they can.

  17. someofparts

    J. Wegerson – “I see events moving much faster because of it and because of communications compression. Unfortunately faster doesn’t correlate with better.”

    Dwight McDonald said that two factors that are crucial for revolutions are time and personnel. There needs to be as much time as possible for the transition and there need to be people on hand who are capable of running the new government once it’s in place.

    J. Glover – “But the Europeans, particularly European elites, still have it in their heads that they are somehow superior human beings, and that their place in the world is a consequence of this moral superiority.”

    I get the impression that when it comes to feeling superior to those in other nations, the Chinese are a match for Europeans any day of the week.

  18. bob mcmanus

    “Chechen Muslims are fighting in Eastern Ukraine with the Separatists. No doubt financed by the neo-conservative/neo-liberal alliance”

    Chechens have been funded by SA for decades, haven’t they?

    I still think this is about Syria as a pivot-point for like Moscow to Mali, London to Abu Dhabi. And America may not have a long-term strategy but America isn’t in charge anymore. And the ones that in charge think in decades and centuries, dynasties.

    The plan has always been raw materials to China and finished goods to America and paper to SWFs in extractive economies.

  19. Ron

    To jcapan,

    There has been a mini-baby boom in Japan the last few years. The country has been rushing to open new daycares as it tries to support working families that are having kids. We were very lucky to find a good spot.

    Abe has been paying a little bit more than lip service to working moms, but even a little is more than his predecessors.

    The demographic decline is real, but people are living and life continues.

  20. Ron

    eh, should have searched some more… http://blogs.wsj.com/japanrealtime/2013/06/07/birthrate-rises-but-births-still-fall/

    Japan did slightly better recently but no real silver lining in sigh.

  21. jcapan

    I was going to ask you for some data on your initial claim. I understand the temptation to anecdote, depending on the area you live in, whether all your friends are having kids, etc.

    As for women being treated better in the workforce, the question is if there’ll be sufficient enforcement to the lofty rhetoric he’s been spouting off. 30% of mgmt. positions being held by women by the 2020 Olympics!? How? By gunpoint, massive payouts, public shaming, litigation? At my last company, of 117 mgrs. there were exactly zero women.

    But as repellent as I find the LDP, even they’ve seen the light—it’s either women or waves of immigrants. Xenophobia > chauvinism, for the time being.

  22. Celsius 233

    In the end, a bankrupt (morally/financially) America is finding it’s out of ammo.
    The American leaders have relied on military force/violence/superiority to further its agenda.
    There is not a clever or thoughtful way to deal with foreign policy to be found; aggressive policies breed enemies exponentially. Which of course, is obvious to all but the dead.
    America’s status as a world leader is no longer a given; and this Russian/China alliance is likely the very real beginning of the end of American hegemony.
    That the leaders of America do not recognize their own folly/hubris/impunity, is the surest sign of rot from within.
    The sooner the better for the rest of the world…

  23. AmericanEmpireStrikesBack

    what about american innovation? It’s at its peak, in my opinion, at the current moment. In that respect, if countries want to solve tomorrow’s problems, having an alliance with america is key.

  24. Without an American presence, Russia and China will annihilate each other in short order. The only thing that keeps these two from each other’s throats is their mutual hatred of the West and America.


    What’s Your Emergency?

  25. Brian M

    American innovation in what, exactly, AESB? “My company makes an ap that turns my cell phone screen different colors to reflect my mood”.

    American innovation seems to be 110% devoted to either enabling the unemployed to sell their services at poverty piecework wages to those with good jobs (the vaunted “sharing economy”) or enabling the owners of capital to further consolidate their control over all distribution and sales (Instead of 100,000 local stores and services….Amazon). I am not sure how the vaunted innovation can support an economy of 300 million people, especially given a population that prides itself on aggressive ignorance and self-destructive behaviors.

  26. ProNewerDeal

    Ian (or commenters),

    Could you post your take on the apparent nonsensical US Fed Govt policy on China.

    1) On 1 hand, Obama states the focus of his imperial “foreign” policy is the “Asian Pivot” to “contain China”, & that is more important than the Middle East.

    2) On the other hand, Obama continues his predecessors’ economic policy of pro-US mfg job offshoring to China, low/no tariff, & a decade+ significant trade deficit with China. This hurts the US worker, both in the number of jobs & the median wage of the remaining jobs as it increases the Reserve Army of the Unemployed and hurts worker bargaining power.

    Since military power comes from economic power, why does the US Fed Gov strengthen China’s economic & thus military power on one hand, & then overhype the concern about China’s military power on the other hand?

    I guesstimate that this China policy is an example of the US being a kleptocracy. The US mfg outsourcing oligarchs want the policy, the MIC contractor (Lockheed, etc) oligarchs want the “Asian Pivot” as an excuse for more Corporate Welfare towards an unnecessary military build-up for their companies. Both factions of oligarchs, motivated by short-term profits, get the policy they want, by purchasing the Fed Govt poli-trick-ians via campaign contributions, even though the policies are at cross-purposes.

    What do you think?

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