Features » February 16, 2007

Eyes Off the Prize (cont’d)

Increasingly Beijing, New Delhi and other Asian nations, including Thailand, are talking about using their surplus dollars to create their own financial institutions, such as an Asian Monetary Fund, that would lend Asian surpluses to Asian borrowers. Not only would this diminish the United States’ ability to dictate economic policy to borrowers, it would cement regional ties by giving Asian nations a vested interest in each other’s development and stability.

—————————–

Meanwhile, Iran poses its own threat to the dollar. Currently, the global oil and natural gas trade is conducted mainly in U.S. dollars. Since countries need to pay for their oil in dollars, they strive to acquire them, and this further strengthens both demand for the dollar and its central role in the world economy. But Iranian President Mahmoud Ahmadinejad has begun talking about selling Iranian oil and gas for Euros and other internationally traded currencies. If Iraq does indeed fall into the Iranian orbit, as many fear it will, and if Iran can get Iraq to follow suit, along with Iran’s ally Venezuela, about a third of the world’s energy would no longer be traded in the dollar, but in Euros or other currencies.

Another worry for Washington is that Tehran and Beijing have close military ties and are deepening their efforts to keep the United States out of energy-rich Central Asia, an area that has always been seen by Beijing, Moscow, Tehran and New Delhi as their backyard. In the months following the 9/11 attacks, Washington surprised these regional powers by using the international alarm over global terrorism to establish new military bases in Tajikistan, Uzbekistan and Kyrgyzstan. Washington also used its clout to buy major oil fields in the area and created the strategically important Baku-Tbilisi-Ceyhan pipeline, which allows Western countries to directly access the Caspian Sea’s energy reserves without needing to go through Russia or Iran.

Shi Yinhong, director of the American Studies program at the People’s University in Beijing, is concerned that tensions in the region heightened last year when the United States supported the “color” revolutions that toppled pro-Russian and pro-Chinese allies in Ukraine, Georgia and Kyrgyzstan, and replaced them with pro-Western democrats. In response, the region’s rising powers and disgruntled dictators are pooling their umbrage against the United States’ geopolitical dominance under the diplomatic shell of the six-nation Shanghai Cooperation Organization (SCO), says Madhav Nalapat, professor of geo-politics at the Manipal University in southern India. “The SCO is well on track to becoming an organization that directly challenges the geopolitical reach of the United States,” he says. “China is in the driver’s seat because it sees itself as the next United States.”

Initially, the Chinese-founded SCO had only five other members: Russia, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. But in July 2006, Iran and India (as well as Pakistan and Mongolia) were inducted as observers and are expected to become full members soon. This would formally unite China, Russia, India, and Iran in a quasi-military alliance for the first time, fueling talk of an emerging axis between these four powers that could balance, and maybe even threaten, U.S. influence in the region.

Indications of this crested this past year when Moscow, Beijing and New Delhi defended Tehran against the United States’ attempts to curb its nuclear activities by imposing sanctions. In fact, New Delhi, often seen as the most pro-United States of the four countries, even threatened to walk away from a much sought-after civilian nuclear deal of its own with the United States if Washington pushed it too hard to support the sanctions against Iran. The SCO has also asked the United States to withdraw all of its troops from the K-2 air base it set up in Kazakhstan just after the 9/11 attacks. Meanwhile, both Russia and India have established new military bases in Tajikistan, not far from the U.S. base there.

The economic endgame in all this is to dilute Washington’s hold over the Caspian Sea’s energy reserves, says Robert Karniol, Asia-Pacific editor for Jane’s Defense Weekly. China and India, the world’s fastest-growing energy consumers, want to divert Central Asia’s energy resources toward their own economies, and Iran and Russia, the region’s largest energy suppliers, are keen to reduce their dependence on sales to the West.

Both Russia and India have begun to talk of a Central Asian “energy club” that would create a regional gas grid, pipeline network and oil market, and China is already constructing a pipeline through Kazakhstan that would give it direct access to Russian and Caspian Sea oil. New Delhi and Beijing have raised Washington’s ire by backing a more audacious proposal to convert the prized Baku-Tbilisi-Ceyhan pipeline, which has been designed to bring gas to Europe, into a supply route for Asia. New Delhi wants to extend the pipeline to Syria, where oil could be loaded onto tankers and shipped to Asia through the Red Sea.

—————————–

Perhaps most significantly, however, the rise of China, India and Iran is increasingly weighing down what Joseph Nye, a former chairman of the National Intelligence Council, which provides the president and intelligence agencies with National Intelligence Estimates, calls the United States’ “soft power”–the attractiveness of American ideas, culture and values.

After the end of the Cold War, a U.S.-defined system of secular democracy and free markets was widely hailed as the universal governance model. Now, the increasing diffusion of Chinese, Indian and Iranian ideas, culture and values is increasing the soft power of these countries. This is most evident in the increasing global appetite for their cultural exports, including movies, books, fashion and art. As more and more people–including Westerners–consume Chinese, Indian and Persian culture, they are developing a greater appreciation and regard for these countries, making it easier for Beijing, New Delhi and Tehran to put their points of view out to the world.

For example, the success of the Chinese Communist Party in bringing more people out of poverty than any other country in history and in rebuilding China’s global clout is making China, not the United States, the model for many nations, particularly in Africa and Asia. This sentiment was loudly mouthed by some African leaders during the recent Africa summit in Beijing. Even in democratic India, ministers, businessmen and laypeople often talk admiringly of China’s one-party system, wishing its effectiveness for themselves.

For its part, Iran is directly challenging the United States’ democratization push in the Middle East with its own unique notion of Islamic democracy. Given the way things are shaping up in Iraq, Palestine and Lebanon, it’s likely that Iranian ideas and values and not American ones will shortly become the dominant force in the region.

U.S. attempts to defend democracy after the recent military coup in Thailand have also been undermined by China, and, more disturbingly, Beijing and New Delhi have been the main opponents of a U.S. plan to take military and economic action against the government in Sudan, which is committing genocide in the Darfur region. As a U.S. diplomat in Beijing puts it, “We just cannot exert our will anymore. We have to consider what China and India think before we do anything.”

If the trajectory of China, India and Iran’s resurgence is not derailed by the substantial problems facing these countries–poverty, corruption, religious turmoil and widening imbalances in income–the world of 2037 will look substantially different from today, with Americans carrying much of the negative burden of the change. Yet, as Nye points out in his book, The Paradox of American Power, any U.S. attempt to undermine or contain the emergence of these new powers could backfire just like Britain, France and Russia’s attempts to contain Germany, Japan and Italy backfired a century ago. There is already a growing sense in China, India and Iran that the neo-conservatives are likely to push the United States into repeating the mistakes of colonial Europe. The much-touted Project for the American Century developed by Paul Wolfowitz and company is seen by many analysts in China, India, and Iran as a direct challenge to their vision of an Asian Century. The ensuing resentments are already igniting new waves of anti-Americanism in these countries and elsewhere.

A stable and balanced world order will only emerge if the United States can arrive at negotiated understandings with China, India and Iran over how their new and growing financial, energy and military interests can be achieved within a globally acceptable framework. Even if this approach is pursued with the best of intentions, it could short-circuit under the burdens of the complexities and contradictions that plague relations and interests between the West and the rising East, as well as between China, India and Iran themselves.

Yet neither the United States nor Europe is investing the time and resources required to engage astutely with a resurgent China, India and Iran. Unlike the men, materials and money invested in understanding and dealing with the Soviet Union during the Cold War, the tidal wave of change coming from the East remains on the periphery of Western mindsets.

Thirty years from now, the greatest cost of the war in Iraq might well be that it proved to be the siren song that lured the United States away from its natural if challenging course, onto the rocks.