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Collision Course: The Gathering Storm of Conflict Between the United States and China
As the global landscape shifts, the intricate dynamics of trade, technology, and power struggle culminate in an ominous crescendo, heralding the inevitability of a collision between the US and China.
The July summit held in Vilnius by NATO evoked a somber atmosphere reminiscent of a funeral, as if the alliance had suffered the loss of a close family member – Ukraine. In response to NATO's inability to dislodge Russia from Ukraine and its effort to expand its influence right up to the Russian border, member nations endeavored to rejuvenate their resolve by rallying support for their next significant endeavor – countering China, now designated as their primary strategic adversary. In anticipation of this forthcoming confrontation, NATO declared a commitment to extend its military presence all the way to the Pacific.
The strategy entails dismantling China's military alliances and trade partnerships, with an initial focus on Russia, commencing with the conflict in Ukraine. President Biden has articulated that this conflict will possess global ramifications and is projected to span numerous decades, eventually isolating and weakening China.
The trade sanctions imposed by the United States on Russia serve as a preliminary test for potential similar sanctions against China. However, only NATO allies have actively engaged in this endeavor. Paradoxically, rather than crippling Russia's economy and fulfilling President Biden's forecast of reducing the ruble to insignificance, NATO's sanctions have inadvertently fostered greater self-sufficiency, boosting its balance of payments, international monetary reserves, and thereby strengthening the ruble's exchange rate.
To compound matters, despite the lack of success in employing trade and financial sanctions against Russia, and notwithstanding NATO's setbacks in Afghanistan and Libya, NATO member countries have committed themselves to employing analogous tactics against China. The global economy is envisaged to be divided between the US/NATO/Five Eyes coalition on one side and the rest of the world, referred to as the Global Majority, on the other. EU Commissioner Joseph Borrell characterizes this division as a cleavage between the US/European enclaves (the Golden Billion) and the encroaching “Jungle,” symbolizing an external threat akin to an invasive species imperiling their cultivated domains.
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Economically, NATO's actions from its military buildup preceding the assault on Ukraine's Russian-speaking eastern territories in February 2022 have proven to be profoundly ineffective. The original U.S. strategy aimed to drain Russia's resources to the point of economic destitution, triggering a popular uprising that would depose Vladimir Putin and usher in a pro-Western neoliberal leader capable of severing Russia's ties with China. This would then pave the way for America's overarching scheme to galvanize Europe into imposing sanctions on China.
Complicating the assessment of NATO, Europe, and the United States' trajectories is the realization that conventional assumptions about nations and classes acting in their economic self-interest offer limited insights. The customary framework of geopolitical analysis, which presupposes that economic and financial concerns heavily influence the political decisions of most nations, is inadequate. Furthermore, the auxiliary presumption that governing officials possess a reasonably accurate comprehension of the underlying economic and political dynamics adds another layer of complexity. Consequently, prognosticating the future often entails unraveling these intricate dynamics.
The Western alliance of the US and NATO has spearheaded this global fragmentation, yet paradoxically, it is poised to be the major casualty. Within NATO's ranks, member countries have already witnessed Ukraine exhaust its stockpiles of firearms, artillery, tanks, helicopters, and other military equipment that had been amassed over a span of fifty years. However, Europe's misfortune has given rise to a lucrative prospect for the American military-industrial complex, enabling it to capitalize on a burgeoning market for re-supplying Europe. In its pursuit of garnering support, the United States has championed a fresh paradigm for approaching international trade and investment, pivoting towards the concept of “national security” – a notion designed to fortify a U.S.-centered unipolar global order.
The global landscape is undergoing a stark division into two distinct blocs: a post-industrial alliance composed of the US and NATO on one side, and the majority of the world's nations, referred to as the Global Majority, on the other.
Growing concerns among U.S. diplomats were evident as Germany and other European nations increasingly relied on imported Russian resources such as gas, oil, and fertilizer as essential components for their industrial sectors, including steel and glass production. The rising prominence of China as the “workshop of the world” further exacerbated these worries, especially as the U.S. experienced a process of deindustrialization. The apprehension stemmed from the realization that China's rapid growth, coupled with the expansion of the Belt and Road initiative benefiting Eurasian nations, had the potential to shift the epicenter of global economic growth away from the U.S. This shift posed a risk to American interests in maintaining a unipolar world economy centered around the dollar, with trade influenced by U.S. protectionist unilateralism.
In a bid to align with the U.S. agenda of undermining the Russian economy and facilitating regime change, certain European countries, including Germany, chose to sever trade ties with Russia. This decision had the unintended consequence of eroding the energy foundation of their industries. The termination of the Nord Stream pipeline exacerbated matters, plunging the economies of Germany and its European counterparts into depression marked by widespread bankruptcy and unemployment. As a substitute for Russian gas, NATO nations now face significantly higher costs for U.S. liquefied natural gas (LNG) – up to six times the previous price – and are compelled to invest in new port facilities for its physical import.
Over decades, European leadership influenced by U.S. interference in elections have effectively mirrored what Boris Yeltsin did in Russia during the 1990s – willingly sacrificing their industrial economies and dismantling profitable trade and investment connections with Russia and China.
The subsequent phase involves a potential halt to trade and investment between Europe, the U.S., and China, despite the fact that these NATO countries have reaped benefits from their robust trade relationships with China, relying on them for a wide array of consumer goods and industrial resources. The prosperous trade routes now stand on the precipice of being severed. NATO leadership has issued warnings about the “risk” of depending on Russian gas and other raw materials, as though Russia or China might exploit this dependency for political or economic leverage.
This narrative, however, raises the question: Submission to what? The answer lies in submitting to a paradigm of mutual gains that deviates from the U.S. economy.
Ironically, the efforts of the US and NATO have inadvertently spurred Russia, China, and their BRICS partners to chart an independent course, beginning with a united Eurasia. This emerging core, encompassing China, Russia, and Eurasia along with the Global South, is cultivating a mutually advantageous multipolar realm of trade and investment.
Conversely, European industry has been profoundly impacted, resulting in economies heavily reliant on the United States at a considerably higher cost than their previous partnerships. European exporters have lost access to the Russian market and are adhering to U.S. demands to abandon their foothold in the Chinese market. In due course, they may also sever ties with the expanding BRICS membership, encompassing nations from the Near East, Africa, and Latin America.
Rather than isolating Russia and China while solidifying U.S. economic control, U.S. unipolar diplomacy has inadvertently isolated itself and its NATO allies from the rest of the world – the burgeoning Global Majority, which is advancing while NATO economies are regressing along a path of deindustrialization. Remarkably, while NATO voices concerns about the “risk” of engaging with Russia and China, it appears oblivious to the potential loss of its industrial viability and economic sovereignty to the United States.
This narrative deviates from the conventional “economic interpretation of history,” which anticipates governments supporting the interests of their foremost business sectors. This prompts us to revisit the question of whether economic factors will dictate the contours of global trade, investment, and diplomacy. Could a post-economic NATO configuration emerge, leading its members down a trajectory akin to the swiftly depopulating and deindustrializing Baltic states and post-Soviet Ukraine?
Such a development would indeed represent an unconventional form of “national security.” From an economic standpoint, the U.S. and European strategy of self-isolation from the rest of the world appears so significant and far-reaching in its implications that its consequences could be likened to those of a world war.
The ongoing conflict involving Russia on the Ukrainian front could be perceived as the opening salvo of World War III. In many ways, this confrontation is an extension of the aftermath of World War II, when the U.S. established international economic and political institutions that aligned with its national self-interests. The International Monetary Fund, in particular, has played a role in imposing U.S. financial control and propagating dollar dominance within the global economy.
The World Bank extends loans in dollars to governments for the development of export-oriented infrastructure, effectively subsidizing US/NATO investors who exercise control over oil, mining, and natural resources. Simultaneously, it fosters a trade dependency on U.S. agricultural exports while encouraging plantation agriculture, rather than domestic food-grain production. The United States asserts its demand for veto power in all international organizations it becomes a part of, including the United Nations and its affiliated agencies.
The inception of NATO often suffers from misconceptions. While ostensibly presented as a military alliance initially aimed at safeguarding Western Europe from the perceived threat of Soviet conquest, NATO's pivotal role was to employ the pretext of “national security” to supersede European domestic and foreign policies and subject them to U.S. dominance. A reliance on NATO was enshrined in the constitution of the European Union. Its overarching aim was to ensure that European political leaders adhered to U.S. directives, while opposing leftist or anti-American ideologies, pro-labor initiatives, and governments with the capacity to obstruct control by a U.S.-aligned financial oligarchy.
NATO's economic agenda aligns with the tenets of neoliberal financialization, entailing privatization, governmental deregulation, and the imposition of austerity measures on the workforce. European Union regulations limit governments from running budget deficits exceeding 3% of their GDP, effectively curtailing the application of Keynesian-style policies aimed at stimulating economic recovery. In the present context, heightened expenditures on military weaponry and government subsidies for energy costs are compelling European governments to curtail their social spending. The trajectory of bank policy, trade strategies, and domestic legislative processes mirrors the U.S. neoliberal model, which has contributed to the deindustrialization of the American economy and the accumulation of debt within the financial sector, where the bulk of wealth and income is currently concentrated.
In the post-Vilnius era, the global perspective on trade and international relations has undergone a significant transformation, now viewed through the lens of “national security” rather than economic advantage. Any engagement in trade is regarded as a potential “risk,” susceptible to disruption and destabilization. The primary objective has shifted from pursuing trade and investment gains to fostering self-sufficiency and autonomy. For Western nations, this entails the isolation of China, Russia, and the BRICS bloc, all aimed at cultivating a full-scale reliance on the United States. Thus, from the U.S. perspective, ensuring its own security involves creating a network of foreign dependencies, preventing other nations from loosening the grip of U.S. military and political diplomacy.
The perception of any trade or investment with countries outside the United States as inherently involving “risk” is a projection of the manner in which U.S. diplomacy has wielded sanctions against nations that resist submission to U.S. dominance, privatization, and economic subjugation. The notion that trade with Russia and China may lead to political dependency is more fiction than reality. The emerging alliance of Eurasian, BRICS, and Global South nations seeks to foster mutually beneficial trade relations, underpinned by robust government oversight of money and banking as public utilities, along with essential monopolies that guarantee basic human rights, including healthcare and education. Furthermore, pivotal monopolies such as transportation and communication are retained in the public domain, assuring affordability rather than succumbing to monopolistic pricing.
A notable proponent of anti-China sentiment is Germany's Foreign Minister, Annalena Baerbock, who has advocated for “de-risking” trade with China within the NATO framework. The perceived “risks” encompass China's ability to curtail critical exports, much like the U.S. restricted European access to Russian oil exports. Moreover, the contention is that exports might indirectly bolster China's military capabilities. Curiously, virtually any economic export could theoretically be linked to military applications, even basic food supplies intended for feeding a potential Chinese military.
In a similar vein, the recent visit of Treasury Secretary Janet Yellen to China emphasized the underlying military potential inherent in all forms of trade, thereby intertwining trade dynamics with elements of national security. According to this viewpoint, any trade, including seemingly innocuous transactions like food exports, can be construed as having the potential to support military endeavors.
The demand articulated by the U.S. and NATO urges Germany and other European nations to construct an “Iron Curtain” against trade interactions with China, Russia, and their allied counterparts, ostensibly to mitigate the perceived risk associated with such engagements. Paradoxically, it is primarily the U.S. that has been the architect of trade sanctions against other nations, a stance not mirrored by China and many Global South countries. The genuine risk here is not that China might wield trade sanctions to disrupt European economies, but rather that the United States will impose sanctions on nations that defy the trade embargo it champions.
This conception of "trade is risk" reframes foreign trade through a national security prism, detaching it from economic rationale. In practice, this “national security” stance translates into a collaborative effort to reinforce U.S. unipolar control over the global economy. The notion of risk conveniently sidesteps the potential consequences of redirecting European gas and energy trade towards U.S. corporations. Instead, the perceived danger lies in trade connections with nations that the U.S. deems “autocracies,” referring to countries that prioritize government-driven infrastructure investment and regulation over U.S.-style neoliberalism.
The global landscape is undergoing a division into two distinct blocs, each embodying distinct economic philosophies. Notably, only the United States has resorted to the imposition of trade sanctions on foreign nations. Furthermore, the United States stands alone in rejecting international free trade regulations, viewing them as potential threats to both its economic and military control. On the surface, the resulting fracture between the US/NATO coalition and the expanding BRICS alliance – comprising Russia, China, Iran, and the Global South – might appear as a clash between capitalism and socialism. However, a deeper examination reveals that this contrast between capitalism and socialism fails to encapsulate the complexity of the situation.
The challenge lies in the contemporary interpretation of the term “capitalism.” In the 19th and early 20th centuries, industrial capitalism was anticipated to evolve towards socialism. During this period, industrial economies, including the United States, advocated for government subsidization of essential services to ease the burden on labor. This approach diverged from placing the entire responsibility of basic needs like healthcare and education onto employers. Furthermore, the avoidance of monopoly pricing was achieved through the designation of natural monopolies – such as transportation and communication systems – as public utilities. This transition to a mixed economy model supported the competitiveness of national industries on a global scale.
China has embraced a similar approach to industrial capitalism, focusing on socialist policies to elevate the labor force and enhance overall prosperity. Unlike a narrow pursuit of wealth by industrial capitalists, China's policies encompass broader socioeconomic improvements. Notably, China has incorporated an industrialized banking system that channels credit into productive investments, setting it apart from the predatory and unproductive credit characteristic of contemporary finance capitalism.
However, the evolution of capitalism in the Western world post-World War I has taken a different trajectory. Classical political economy's aim of liberating markets from entrenched rent-seeking classes inherited from feudalism – including landlord, financial, and monopolistic interests – has faced a counteroffensive. This rentier sector has strived to reprivatize gains from land rent, interest, and monopolies. Furthermore, it sought to reverse progressive taxation, extending tax benefits to financial magnates, landlords, and monopolists.
Under the contemporary guise of finance capitalism, the Finance, Insurance, and Real Estate (FIRE) sector has emerged as the dominant force and economic planner. Consequently, economies have taken on a neofeudal aspect, characterized by the dominance of financial interests. Historical patterns of financialization have fueled wealth and income disparities, nurturing oligarchic structures. As interest-bearing debt spirals, an increasing share of labor and business income is funneled into servicing debt. This dynamic curtails domestic consumption, resulting in austerity measures and exacerbating economic polarization.
The outcome is deindustrialization as economies gravitate towards creditor-debtor polarity. A notable example is Britain, where this pattern unfolded following Margaret Thatcher's tenure, culminating in a “light touch” regulatory framework that facilitated financial manipulation and fraud.
Similarly, the United States underwent a profound shift in wealth and income allocation, driven by Reagan-era tax cuts favoring the affluent, deregulation initiatives, and Bill Clinton's alignment with Wall Street under the “Third Way” paradigm. The latter represented neither industrial capitalism nor socialism; rather, it encompassed finance capitalism, which profited by siphoning wealth from industry and labor through both exploitation and indebtedness.
The Democratic Party's subsequent embrace of deregulated finance was exemplified by the 2008 financial crisis and Barack Obama's bailout of subprime mortgage lenders, coupled with substantial foreclosures impacting countless individuals. Economic policymaking transitioned from government oversight to financial institutions, which extended their influence to government bodies, central banks, and regulatory entities.
U.S. and British diplomats are actively promoting a predatory pro-financial economic philosophy on a global scale. However, this ideological campaign faces a significant challenge posed by the stark contrast between the faltering and de-industrialized economies of the U.S. and the UK, and China's remarkable economic progress achieved through the tenets of industrial socialism.
This divergence between China's robust economic achievements and the Western nations' struggle with debt-laden austerity policies is at the core of the present-day Western initiative against countries that seek political autonomy from U.S. diplomacy, all while striving to enhance their citizens' quality of life. This ongoing ideological and inherently political global struggle bears a resemblance to the religious conflicts that once ravaged European nations over numerous centuries.
The ongoing scenario appears to reflect a discernible “Decline of the West.” U.S. diplomats have managed to solidify their economic, political, and military leadership over their European NATO partners. This apparent ease of success has fostered a belief that they possess the capability to assert dominion over the entire globe, even as their economies languish in de-industrialization and overwhelming debt, rendering them scarcely equipped to settle their foreign debt obligations or offer substantial contributions.
The prevailing dynamic suggests an unfolding narrative of the “Rise of the East,” as nations like China forge ahead with an economic model that prioritizes industrial prowess and socioeconomic advancement, juxtaposed against the Western world's struggles to sustain its dominance amid dwindling industrial output and mounting financial encumbrances.
The era of traditional imperialism characterized by military conquest and financial dominance has reached its conclusion.
Historically, there existed a sequence of strategies for a leading nation to establish its imperial domain. The most ancient method was through military conquest, a means that necessitates a substantial army to occupy and exert control over a foreign land. However, the United States lacks the manpower to undertake such conquests, having discontinued the draft following the Vietnam War. Consequently, it has turned to proxy forces like Al Qaeda, ISIS, Ukraine, and Poland, mirroring its reliance on foreign-made industrial goods. Its military resources are depleted, and it lacks the capacity to domestically muster an occupying force.
An alternative method to establish imperial power was through economic influence, which hinges on rendering other nations dependent on U.S. exports. After World War II, the rest of the world, grappling with devastation, was coerced into acquiescing to U.S. diplomatic maneuvers, granting it monopoly control over essential resources. Agricultural dominance became a potent tool in cultivating foreign reliance. The World Bank, for instance, discouraged self-sufficiency in food production, advocating instead for plantation export crops and opposing land reform. Furthermore, U.S. and NATO-linked entities like British Petroleum and Shell wielded authority over global oil trade. The pursuit of control over global oil trade has long underscored U.S. trade diplomacy.
This strategy proved effective in asserting dominance over Germany and other NATO nations. By sabotaging the Nord Stream pipeline, Western Europe's access to Russian resources – including gas, oil, fertilizer, and crops – was severed. The aftermath saw Europe plunged into industrial recession and economic austerity. Key sectors like steel were lured to the United States, along with skilled European labor.
Presently, electronic technology and computer chips are pivotal in cementing global economic dependence on U.S. innovation. The United States aspires to monopolize “intellectual property” and extract economic rent through high pricing for advanced computer chips, communications, and arms manufacturing.
Nonetheless, the U.S. has itself succumbed to deindustrialization and dependence on Asian and other nations for its own products, failing to reciprocate the reliance it seeks to foster. This trade interdependency leaves U.S. diplomats apprehensive, fearing other nations might wield the same coercive trade and financial tactics that the U.S. has deployed since the mid-20th century.
With trade sanctions emerging as the U.S.'s remaining tool of control, it collaborates with its NATO allies to destabilize economies that resist its unipolar economic, political, and military hegemony. The U.S. is fostering a new form of industrial protectionism under the guise of national security concerns.
Should China adopt U.S.-style trade policies, it could cease supplying NATO countries with crucial mineral and metal exports required for computer chip production and related inputs, undermining America's global diplomatic influence.
The U.S., burdened by substantial debt, soaring housing prices, and exorbitant healthcare costs, struggles to compete and reindustrialize without drastic reforms like debt reduction, the restoration of public healthcare and education, and the dismantling of monopolies through progressive taxation. Yet, the influence of the powerful Financial, Insurance, and Real Estate (FIRE) sector impedes such transformative changes.
As a result, the U.S. economy has floundered, rendering America a Failed State, incapable of addressing its systemic shortcomings.
Following World War II, the U.S. accumulated a substantial portion of the world's monetary gold reserves, thereby enabling the imposition of dollarization on a global scale. However, concerns persist regarding the availability of U.S. gold reserves held by the Treasury and New York Federal Reserve, potentially sold to private buyers and speculators. Rumors circulate that European central bank gold reserves have been liquidated. Germany's request to repatriate its gold was met with evasion from the United States, which refused to make its actions transparent.
The financial predicament facing the United States is exacerbated when considering how it can meet its foreign debt obligations to countries looking to reduce their dollar holdings. The U.S. is limited to printing its own currency and is resistant to divesting its domestic assets, despite imposing such demands on other debtor nations.
In the quest for viable alternatives to gold, one potential option is utilizing U.S. investments in Europe and other nations as collateral. However, the act of foreign governments taking this step might provoke U.S. officials to respond by seizing their own investments within the United States, potentially igniting a cycle of mutual appropriation.
The United States is currently striving to establish a monopoly over electronic technology. Yet, this endeavor hinges on securing raw materials inputs, many of which are currently under China's dominance. This includes crucial resources like rare-earth metals (abundant but environmentally taxing to refine), gallium, nickel (with China controlling refining processes), as well as Russian helium and other gases essential for computer chip engraving. Notably, China recently announced its intent to impose restrictions on these pivotal exports starting from August 1, 2023. It wields the power to curtail supplies of vital materials and technology to the West, serving as a shield against the West's “national-security” sanctions targeted at China. This development is a direct outcome of the U.S.'s warnings about an impending trade dispute.
Should U.S. diplomacy press its NATO allies to shun China's Huawei technology, Europe may find itself left with a less efficient and costlier alternative. This decision would contribute to a growing separation between Europe and China, the BRICS alliance, and the burgeoning global majority – a self-sufficient alignment that transcends the scope established by Sukarno in 1954.
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